General Disclosures

Certain information in this website is proprietary to Pacific View Asset Management, LLC (“Pacific View”) or Pacific View Asset Management (UK) LLP (“Pacific View UK”). It is intended only for current clients and qualified prospective clients of either or both Pacific View or Pacific View UK, or the authorized agents of those clients or prospects.

The information contained in this website is provided as of specified dates. Neither Pacific View nor Pacific View UK has any obligation to update, supplement, or correct any such information, although they reserve the right to do so and to remove or restate any information, in their sole discretion.

Pacific View is an institutional asset management firm registered with the SEC as an investment adviser.

Pacific View UK is a UK-based subsidiary of Pacific View Asset Management, LLC. Pacific View UK is authorized and regulated by the Financial Conduct Authority (FCA), and is an exempt reporting adviser with the U.S. Securities and Exchange Commission.

Professional Credentials: Although a credential may represent the evidence of an ethics certification and ongoing educational efforts by a representative, no credential can guarantee that a representative is the best advisor for you.

Pacific View claims compliance with the CFA Institute Asset Manager Code of Professional Conduct. This claim has not been verified by the CFA Institute.

Additional information regarding Pacific View Asset Management, LLC and Pacific View Asset Management (UK) LLP may be found at: http://www.adviserinfo.sec.gov.

Pacific View Asset Management (UK) LLP Pillar 3

Pacific View Asset Management (UK) LLP Pillar 3 Disclosure

Overview

The Financial Conduct Authority (“FCA”) in the United Kingdom is responsible for the implementation of the 2006 Capital Requirements Directive of the European Union, which sets forth the regulatory capital framework for the financial services industry in the EU.  The framework consists of three pillars:

  • Pillar 1 specifies the minimum capital resources a firm is required to carry to cover business risks;
  • Pillar 2 sets out the supervisory risk review process to be used to determine whether additional capital should be maintained against any other risks not covered under Pillar 1; and
  • Pillar 3 specifies the disclosure requirements that firms are required to make with respect to capital, risk exposures and risk management processes.

The FCA regulations for the disclosures required under Pillar 3 are contained in the Prudential Sourcebook for Banks, Building Societies and Investment Firms (“BIPRU”).  Further, information on BIPRU can be found on the FCA’s website (www.fca.org.uk).

Pacific View Asset Management (UK) LLP (“Pacific View (UK)” or the “Firm”) is authorised and regulated by the FCA as an investment management firm and is categorized as a BIPRU 50K limited licence firm.  In accordance with Chapter 11 of BIPRU, the Firm is required to make Pillar 3 disclosures.

Disclosure Overview

The Firm will make Pillar 3 disclosures annually.  The disclosures will be published at www.pacviewam.com and will be as at the Accounting Reference Date (31 December).  It is anticipated that the Firm’s Pillar 3 disclosures will be updated as soon as practicable after completion of the Firm’s financial statements.

The information contained herein has not been audited and does not constitute any form of financial statement.

Pacific View (UK) is permitted to exclude disclosures where the information is regarded as immaterial, proprietary or confidential.  Disclosures herein have been made in compliance with BIPRU11.

The Firm

Business Structure

The disclosures contained in the document relate to Pacific View (UK)’s business.  Pacific View (UK) is a privately held firm that is controlled by partners (corporate and individuals) (the “Members”) that are active in its business.

The Firm’s audited financial statements are prepared in accordance with FRS102 on a solo basis and there are no other affiliates for audit and regulatory capital purposes.

Risk Management

The Firm seeks to mitigate risk by implementing sound systems and controls and considers risk management to be a continuous process.   In assessing the risk appetite of the Firm, consideration has been given to identifying the material risks facing Pacific View (UK)’s operations.   As an asset manager that invests in equity securities of publicly-traded companies, Pacific View (UK) is mainly exposed to credit and market risks.  Additionally, there is some exposure to business risk and certain other risks described below.  Each of these risk exposures is regarded as typical for a business engaged in the activity of asset management.  Pacific View (UK)’s Compliance Officer, in conjunction with senior management, monitors and manages the risk exposures of the business.  The current nature, scale and complexity of the business does not warrant an independent risk management function.

Material risks include those risks at both the client (fund) level and at the firm (entity) level, taking the form of loss of revenue, loss of assets or higher costs of operating the business.  These risks are detailed in Pacific View (UK)’s Internal Capital Adequacy Assessment Process (“ICAAP”) and are periodically reviewed by compliance, finance and senior management.  Two specific factors have been considered in defining Pacific View (UK)’s risk appetite: firstly, the likelihood of occurrence of an event, and secondly, the impact level of that event.

Further information on Pacific View (UK)’s risk exposures is provided as follows:

  • Credit Risk. As an asset management firm, Pacific View (UK) is subject to credit risk to the extent the Firm’s counterparties do not meet their obligations as they become due.  The Firm’s most significant credit counterparties are its fund investors.  The Firm receives investment management fees on a periodic basis, computed based on the value of each underlying investor’s holdings in the investment funds managed by the Firm.  Pacific View (UK) is also allocated a percentage of net profit based on investment performance.

Pacific View (UK)’s free cash flow is placed on deposit at financial institutions.  Most of the deposits are placed with the Firm’s main corporate banking relationship.  Depending on amounts involved, other financial institutions may be used to manage the liquidity of the business.  Eligible financial institutions are approved by senior management.  The credit rating and financial strength of each such institution is subject to an annual re-appraisal and senior management periodically monitors credit ratings.  Pacific View (UK) does not utilise risk mitigation techniques (i.e., credit default swaps) to minimise financial exposure to deposits at financial institutions.

  • Market Risk. As a BIPRU Firm, Pacific View (UK) does not have on balance sheet trading risk.  The only potential exposures are non balance sheet trading exposures, i.e., to foreign currency held on deposit and assets or liabilities held in foreign currency, such as receivables, on the Firm’s balance sheet.

Pacific View (UK)’s core regulatory capital, surplus capital and free cash flow are primarily invested in cash deposits.  To mitigate against market risk, Pacific View (UK) does not invest capital that is (i) needed to meet its core regulatory requirements, or (ii) needed to fund the operations of the business.

  • Liquidity Risk. The FCA have set forth in BIPRU 12.3 and 12.4 liquidity provisions for investment firms in order to promote and maintain (1) systemic stability, (2) the soundness of financial institutions and (3) consumer protection.  Pacific View (UK) is categorised as a “non-ILAS Firm,” and, therefore, is not subject to the Individual Liquidity Adequacy Standards.   The Firm, however, is subject to the systems and control requirements of BIPRU 12.3 and 12.4

Given the Firm’s small size and limited scope, it does not believe it poses systemic risk.   In addition, the Firm does not deal with retail clients, who are afforded a higher level of protection by the FCA.  The ICAAP assesses the capital adequacy of the Firm on an annual basis and takes into consideration that the Firm’s continued operations are dependent on the stability of its investor base and the continued performance of the funds it manages.  Significant investor redemptions would result in a shut down of operations and a return of capital to investors.

  • Operational Risk. Operational risk refers to the risk of a direct or indirect loss resulting from inadequate or failed internal processes, people and systems, or from external events.  Pacific View (UK)’s attempts to mitigate the impact of operational risks by (i) maintaining adequate capital, (ii) aligning the interests of staff members through remuneration tied to the success of the firm, (iii) maintaining key operating procedures, (iv) periodically reviewing the operations of all material business groups, and (v) keeping Pacific View (UK)’s business, structure and operational requirements relatively simple.
  • Concentration Risk. The Firm’s business could suffer if institutional investors shift their asset allocations to other funds or other types of investments.  There is little Pacific View (UK) can do to minimise this risk, except to continue to align the Firm’s interests with those of its investors.  In addition, ongoing marketing efforts attempt to bring in new investors and diversity to the investor base of the Firm.

Concentration risk at the fund level is the risk that exposures to specific sectors or asset concentration could result in losses to Pacific View (UK). Funds managed by the Firm follow certain investment guidelines to mitigate concentration risk.

  • Business Risk. Business risk arises from changes in the core structure of the business that would prevent Pacific View (UK) from carrying out its business plan and desired strategy.  Pacific View (UK) is a small, closely held organisation, where the Members are closely involved in the day-to-day operations of the business.  All material structural changes to its business are subject to discussion by the Members.
  • Insurance Risk. Pacific View (UK) maintains fiduciary liability (also referred to as professional indemnity) and criminal liability (also referred to as errors and omissions) insurance policies which are set at a limit which Pacific View (UK) considers appropriate for its business and subject to a deductible which Pacific View (UK) can reasonably afford to meet if called upon.  Pacific View (UK) would be exposed to potential losses in the event that an error occurred and its insurer was unable to recover anticipated insurance settlement proceeds.  In order to minimise the risk of loss arising from insurance risk, Pacific View (UK) attempts to obtain insurance solely from well- capitalised insurance firms.

Capital Resource Requirements

The Firm’s Pillar 1 requirement is calculated as the higher of:

  1. The Base Capital Requirement (€50k);

or

  1. The sum of:

Credit Risk Capital Requirement; and

Market Risk Capital Requirement;

or

  1. The Fixed Overheads (13 weeks) Requirement.

As of December 31, 2015, the highest of these was calculated to be the third measure, i.e., the Fixed Overheads (13 weeks) Requirement.

Pacific View (UK) has calculated its capital needs in accordance with the relevant FCA regulations and has a surplus of regulatory capital over its Pillar 1 capital on a solo basis.

Pillar 2

The approach of the business to assessing the adequacy of its internal capital in order to support current and future activities is contained in Pacific View (UK)’s ICAAP.  This process includes an assessment of the specific operational, business, credit, market and other risks to the Firm’s business and the internal controls in place to mitigate those risks.  As a limited license firm, additional capital does not typically mitigate the risks to which Pacific View (UK) is exposed. These risks are tested under different scenarios in order to provide a robust picture of exposures for the business.  Finally, an assessment is made of the probability of occurrence and the potential impact, in order to arrive at a level of required capital.

As a result of this process, the Firm has concluded that it will hold sufficient regulatory capital to meet its requirements under Pillar 2.

Remuneration

Pacific View (UK) has classified two of its Members (who serve as the Firm’s portfolio managers) and its Compliance Officer as “Code Staff”.  The aggregate level of remuneration earned by Code Staff is disclosed in the annual audited financial statements.

Pacific View (UK) has determined that it is a “Tier 3” firm and has applied proportionately and, where relevant, has disapplied various provisions of the FCA Remuneration Code.  As a Tier 3 asset manager, Pacific View (UK) has set the risk parameters of its investment strategy independent of any remuneration considerations.

Business Continuity Planning

We have developed a Business Continuity Plan which describes how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will need to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information on our business continuity plan. As part of our Business Continuity Plan, we intend to quickly recover and resume business operations after a significant business disruption. The plan includes safeguarding our employees and property, making a financial and operational assessment, protecting the firm’s books and records, and allowing us to continue to operate our business. In short, our Business Continuity Plan is designed to permit our firm to resume operations as quickly as possible, given the scope and severity of the significant business disruption. Our Business Continuity Plan addresses: data back-up and recovery; all mission critical systems; financial and operational assessments; alternative communications with customers, employees, service providers, and regulators; alternate physical locations for employees; critical supplier, contractor, and counter-party impact; and regulatory reporting.

Significant business disruptions can vary in their scope, such as only our firm, a single building housing our firm, the business district where our firm is located, the city where we are located, or the whole region. Within each of these areas, the severity of the disruption can also vary from minimal to severe. In a disruption to only our firm or a building housing our firm, we will transfer our operations to an alternate site as needed and would expect to recover and resume business within one business day. In a disruption affecting our business district, city, or region, we will transfer our operations to a site outside of the affected area, and would expect to recover and resume business within one business day. In either situation, we plan to continue operations and notify clients in a timely manner. If the significant business disruption is so severe that it prevents us from remaining in business, we will provide our client’s prompt notice.

Contacting Us

If after a significant business disruption you cannot contact us as you usually do at (415) 318-5800 or via electronic communications, you should contact your custodian that maintains custody of your assets. If you have questions about our Business Continuity Plan, you can contact us at (415) 318-5800.

http://www.pacviewam.com/contact-us/

Privacy Statement

We understand your privacy is important and we have always been committed to maintaining your confidentiality. This notice will help you understand what types of nonpublic personal information -information about you that is not publicly available- we may collect, how we use it, and how we protect your privacy. We recognize that you expect your personal information to be handled in a professional, confidential manner and we have adopted policies to safeguard your privacy. This statement explains the circumstances, under which we may collect, maintain and use any non-public personally identifiable information that you provide us.

We collect information about you to help us provide services to you, offer new products or services, and fulfill legal and/or regulatory requirements. The types of information we collect may include:

  • Information we receive from you on account opening applications or other forms (for example, your name, address, tax identification number, and assets).
  • Information about your transactions with us or others (for example, your transaction history, account balance, payment history, or parties to transactions).
  • Information that we may receive from a consumer reporting agency such as your credit worthiness and credit history.
  • Information provided via our websites and electronic (including e-mail) or other forms of communications.

We do not share non-public personal information about you with unaffiliated third parties unless: (1) it is necessary to complete a transaction on your behalf; (2) it is necessary to protect you against fraud, comply with a subpoena or other court or regulatory order or is otherwise required or permitted by law; (3) the party is providing services or support to us and in such capacity has agreed to maintain the confidentiality of the information it receives in providing those services and has also agreed that it is prohibited from using any information obtained for their own purposes outside of providing services to us. We do not sell your personal information to anyone. In the event of a company level transaction or similar event, including, but not limited to, a combination, merger or buyout, we may transfer your information to such combined, new or successor entity.

We limit access to your personal and account information to those employees who have a need to know that information in order for us to provide products, services, support or assistance to you and who have been trained on the proper handling of personal information. We also maintain physical, electronic, and procedural safeguards to protect and guard your nonpublic personal information. If you decide to close your account(s) or become an inactive customer, we will continue to adhere to the privacy policies and practices as described in this or subsequent notices.

We reserve the right to change or update our Privacy Policy and this statement at any time. You will receive appropriate notice of any such changes.

Electronic Communication

Electronic communications and any attachment to such communications may contain information that is confidential or legally privileged and/or deemed to be material non-public information. If you are not the intended recipient of an electronic communication, you must not retransmit, copy, use or disseminate the communication or any attachments thereto. If you have received the communication in error, please immediately notify the sender and delete the message. Electronic communication transmissions cannot be guaranteed to be secure or error-free as information could be intercepted, corrupted, lost, destroyed, incomplete, or contain viruses. The sender therefore does not accept liability for any errors or omissions in the contents of the message. If the electronic communication contains a forwarded message or is a reply to a prior message, the sender may not have produced some or all of the contents of the message or any attachments. The electronic communication is provided for informational purposes and should not be construed as a solicitation or offer to buy or sell any securities or related financial instruments.