Special Insight: Ukraine Conflict – Investment and Operational Updates, Opportunity for Further Dialogue

Investment Update

Last week we communicated our thoughts on the immediate and long-term implications of Russia’s invasion on markets and portfolios. As a reminder, Pathstone clients’ direct investment exposure to Russia and Ukraine is minimal. Our investment strategy team remains focused on second and third derivative impacts on markets that may arise from commodity inflation, geopolitical escalation, and the impacts of a growing number of government-imposed sanctions and changes to corporate behavior. Where we do have direct exposure, our investment selection team is working closely with our investment managers to ensure those investments are handled prudently as well as in accordance with applicable sanctions. Your advisory team will be in close contact should anything change.

Operational Update

Pathstone’s compliance, operations, and technology teams are also closely monitoring the potential business impacts of the current conflict. The firm remains well-positioned and our operations unaffected:

Compliance

Pathstone routinely monitors our engaged clients and entities through the sanctions lists published by the Office of Foreign Assets Control (“OFAC”) of the US Department of the Treasury. OFAC administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States.

Operations

We are in close contact with our custodial and trading partners to determine implications for trading and money movements. We believe our partners have acted swiftly and thoughtfully to the rapidly changing landscape. In general, we’ve observed that U.S. and non-U.S. custodians, mutual funds, and other trading counterparties have imposed restrictions above and beyond the specifically sanctioned securities. Response varies by institution, but we continue to expect any transactions involving Russian-based securities to be very limited.

Technology

The current conflict is likely to increase attacks from both opportunistic criminal organizations and nation-states. Pathstone focuses on several key areas to ensure a robust response to cybersecurity-related threats:

• Our employees are the first line of defense. We engage in regular mandatory training events and conduct monthly tests to raise awareness of current threats.
• A security operations center monitors our cloud-based and on-premise systems around the clock.
• We possess state-of-the-art endpoint protection along with automated patching to protect our systems from threats.
• Pathstone also performs regular third-party testing of our security along with assessments and frequent updates of our incident response plan.

As always, we welcome further discussion on any of these topics.

Humanitarian Perspective

In honor of Employee Appreciation Day (March 4), Pathstone provided all team members with a “Gift for Giving.” This initiative provides employees an opportunity to direct a Pathstone-funded donation to a charitable organization of their choice. Many teams collectively chose to use that gift in support of organizations providing humanitarian aid to refugee organizations, including those directly supporting Ukrainian refugees.

For those clients who would like to participate in a session to explore the longer-term geopolitical and economic ramifications of current events, please join us Thursday, March 17 as we host renowned foreign policy expert David Miliband, President and CEO of the International Rescue Committee and a former Foreign Secretary for the U.K. David will share his deeply informed insights with the Pathstone community. Please click here to register.