SEC Rule 606 – The SEC has adopted rules to improve public disclosure of order execution and routing practices. Under Rule 606, Allen & Company is required to make publicly available quarterly reports that, among other things, identify the venues to which customer orders are routed for execution. Allen & Company routes all eligible OTC and Listed orders directly to LPL Financial, LLC for execution. In addition, Allen & Company is required to disclose to customers, upon written request, the venues to which their individual orders were routed. By making visible the execution quality of the securities markets, the rules are intended to spur more vigorous competition among market participants to provide the best possible prices for investor orders. Current Information
In the event of an internal or external significant business disruption, if telephone service is available, our registered associates will take customer orders or instructions and contact our clearing firm, LPL Financial, on their behalf. In the event that our offices cannot be reached directly, our clients may contact LPL Service Center directly at 1-800-558-7567 or the mutual fund company directly using the number provided on the statement.
CUSTOMER IDENTIFICATION PROGRAM
On April 30, 2003, the Department of Treasury, through the Financial Crimes Enforcement Network, and the SEC jointly announced a final rule to implement Section 326 of the PATRIOT Act. Among other things, Section 326 requires ALCO to implement reasonable procedures to verify the identity of any person seeking to open an account, to the extent reasonable and practicable; to maintain records of the information used to verify the person’s identity; and to determine whether the person appears on any lists of known or suspected terrorists or terrorist organizations provided to broker/dealers by any government agency. The procedures were implemented on October 1, 2003.
This new rule also requires that, among other things, ALCO notify their customers, before the account is opened, about the new customer identification requirements. A notice will be placed on our website. Files and evidence will be maintained in both the customer’s file and in compliance.
Information contained within this site is for informational purposes only. It is general in nature and should not be construed as a solicitation of business or as advice designed to meet the needs and objectives of individual investors.
Each individual investor’s needs, risk tolerances and financial objectives differ significantly. All investment products mentioned within this site will not fit the suitability standards and investment objectives for all investors. It is recommended that investors meet with a qualified financial advisor and discuss which products will best suit their requirements.
This information should not be considered an offer or solicitation to buy or sell any given security. It is not our intention to state or imply, in any manner, that past results and/or profitability is an indication of future performance.
FINRA PUBLIC DISCLOSURE NOTIFICATION
LPL Financial, LLC (LPL) provides centralized cashiering, bookkeeping, execution and other service related to the settlement of securities trades initiated by Allen & Company of Florida, LLC, LPL clears trades and performs administrative functions as agent for Allen & Company of Florida, LLC. LPL undertakes a supervisory role with respect to the conduct of sales or related operation of Allen & Company of Florida, LLC, who sells securities.
In accordance with The Financial Regulatory Authority (FINRA) Protection Rule, we are providing you with the following information:
The FINRA Public Disclosure Hotline telephone number is (800) 289-9999
The FINRA internet web site address is: www.finra.org
A copy of an investor brochure that includes information concerning the FINRA Disclosure Hotline can be obtained by calling the Public Disclosure Hotline or accessing the FINRA website.
Securities purchased on margin are LPL Financial, LLC’s collateral for the loan to you. If the securities in your account decline in value, so does the value of the collateral supporting your loan, and as a result, the firm can take action, such as issue a margin call and/or sell securities or other assets in any of your accounts held with Allen & Company at LPL Financial, LLC in order to maintain the required equity in the account. It is important that you fully understand the risks involved in trading securities on margin. These risks include the following:
You can lose more funds than you deposit in the margin account.
The firm can force the sale of securities or other assets in your account(s).
The firm can sell your securities or other assets without contacting you.
You are not entitled to choose which securities or other assets in your account(s) are liquidated or sold to meet a margin call.
The firm can increase its “house” maintenance margin requirement at any time and is not required to provide you advance written notice.
You are not entitled to an extension of time on a margin call.
Mutual Fund Breakpoint Discounts
Disclosure Statement –Before investing in mutual funds, it is important that you understand the sales charges, expenses, and management fees that you will be charged, as well as the breakpoint discount to which you may be entitled. Understanding these charges and breakpoint discounts will assist you in identifying the best investment for your particular needs and may help you reduce the costs of your investment. This disclosure document will give you general background information about these charges and discounts. However, sales charges, expenses, management fees, and breakpoint discounts vary from mutual fund to mutual fund. Therefore, you should discuss these issues with your financial advisor and review each mutual fund’s prospectus and statement of additional information, which are available from your financial advisor, to get the specific information regarding the charges and breakpoint discounts associated with a particular mutual fund.
Sales Charges – Investors that purchase mutual funds must make certain choices, including which funds to purchase and which class share is most advantageous. Each mutual fund has a specified investment strategy. You need to consider whether the mutual fund’s investment strategy is compatible with your investment objectives. Additionally, most mutual funds offer different funds offer different share classes. Although each share class represents a similar interest in the mutual fund’s portfolio, the mutual fund will charge you different fees and expenses depending upon your choice of share class. As a general rule, Class A shares carry a “front-end” sales charge or “load” that is deducted from your investment at the time you buy fund shares. This sales charge is a percentage of your total purchase. As explained below, many mutual funds offer volume discounts to the front-end sales charge assessed on Class A shares at certain pre-determined levels of investment, which are call “breakpoint discounts.” In contrast, Class B and C shares usually do not carry any front-end sales charges. Instead, investors that purchase Class B and C shares pay asset-based sales charges, which may be higher that the charges associated with Class A shares. Investors that purchase Class B and C shares may also be required to pay a sales charge known as a contingent deferred sales charge (CDSC) when they sell their shares, depending upon the rules of the particular mutual fund.
Breakpoint Discounts –Most mutual funds offer investors a variety of ways to qualify for breakpoint discounts on the sales charge associated with the purchase of Class A shares. In general, most mutual funds provide breakpoint discounts to investors who make large purchases at one time. The extent of the discount depends upon the size of the purchase. Generally, as the amount of the purchase increases, the percentage used to determine the sales load decreases. In fact, the entire sales charge may be waived for investors that make very large purchases of Class A shares. Mutual fund prospectuses contain tables that illustrate the available breakpoint discounts and the investment levels at which breakpoint discounts apply. Additionally, most mutual funds allow investors to qualify for breakpoint discounts based upon current holdings from prior purchases through “Rights of Accumulation,” and future purchases, based upon “Letters of Intent.” This document provides general information regarding Rights of Accumulation and Letters of Intent. However, mutual funds have different rules regarding the availability of Rights of Accumulation and Letters of Intent. Therefore, you should discuss these issues with your financial advisor and review the mutual fund prospectus to determine the specific terms upon which a mutual fund offers
Rights of Accumulation – Many mutual funds allow investors to count the value of previous purchases of the same fund, or another fund within the same family, with the value of the current purchase, to qualify for breakpoint discounts. Moreover, mutual funds allow investors to count existing holdings in multiple accounts, such as IRAs or accounts at other broker-dealers, to qualify for breakpoint discounts. Therefore, if you have accounts at other broker-dealers and wish to take advantage of the balances in these accounts to qualify for a breakpoint discount, you must advise your financial advisor about those balances. You may need to provide documentation establishing the holdings in those other accounts to your financial advisor if you wish to rely upon balances in accounts at another firm.
In addition, many mutual funds allow investors to count the value of holdings in accounts of certain related parties, such as spouses or children, to qualify for breakpoint discounts. Each mutual fund has different rules that govern when relatives may rely upon each other’s holdings to qualify for breakpoint discounts. You should consult with your financial advisor or review the mutual fund’s prospectus or statement of additional information to determine what these rules are for the fund family in which you are investing. If you wish to rely upon the holdings of related parties to qualify for a breakpoint discount, you should advise your financial advisor about these accounts. You may need to provide documentation to your financial advisor if you wish to rely upon balances in accounts at another firm.
Mutual funds also follow different rules to determine the value of existing holdings. Some funds use the current net asset value (NAV) of existing investments in determining whether an investor qualifies for a breakpoint discount. However, a small number of funds use the historical cost, which is the cost of the initial purchase to determine eligibility for breakpoint discounts. If the mutual fund uses historical costs, you may need to provide account records, such as confirmation statements or monthly statements, to qualify for a breakpoint discount based upon previous purchases. You should consult with your financial advisor and review the mutual fund’s prospectus to determine whether the mutual fund uses either NAV or historical costs to determine breakpoint eligibility.
Letters of Intent – Most mutual funds allow investors to qualify for breakpoint discounts by signing a Letter of Intent, which commits the investors to purchasing a specified amount of Class A shares within a defined period of time, usually 13 months. For example, if an investors plans to purchase $50,000 worth of Class A shares over a period of 13 months, but each individual purchase would not qualify for a breakpoint discount, the investor could sign a Letter of Intent at the time of the first purchase and receive the breakpoint discount associated with $50,000 investments on the first and all subsequent purchases. Additionally, some funds offer retroactive Letters if Intent that allow investors to rely upon purchases in the recent past to qualify for a breakpoint discount. However, if an investor fails to invest the amount required by the Letter of Intent, the fund is entitled to retroactively deduct the correct sales charges based upon the amount that the investor actually invested. If you intend to make several purchases within a 13 month period, you should consult your financial advisor and the mutual fund prospectus to determine if it would be beneficial for you to sign a Letter of Intent.
As you can see, understanding the availability of breakpoint discounts is important because it may allow you to purchase Class A shares at a lower price. The availability of breakpoint discounts may save you money and may also affect your decision regarding the appropriate share class in which to invest. Therefore, you should discuss the availability of breakpoint discounts with your financial advisor and carefully review the mutual fund prospectus and its statement of additional information, which you can get from your financial advisor, when choosing among the share classes offered by a mutual fund. If you wish to learn more about mutual fund share classes or mutual fund breakpoints, you may wish to review the investor alerts available on FINRA Web site. See http://www.finra.org/Investors/ProtectYourself/InvestorAlerts/index.htm, or visit the many mutual fund Web sites available to the public.
The Securities and Exchange Commission requires all brokerage firms, including Allen & Company of Florida, LLC, to inform their client’s as to whether such firms receive payment for order flow. Order flow refers to the process by which your orders are executed. Seeking to execute a client’s order into the best available market, a brokerage firm may execute the order as principal, or may route the order to an affiliated or non-affiliated broker-dealer or exchange specialist for execution.
Allen & Company of Florida, LLC, would like its clients to be aware that the firm does not receive any payments for order flow from any broker or dealer, national securities exchange, registered securities association or exchange member to which it routes customer’s orders for execution.
For more information please contact Allen & Company’s Compliance Officer.
Revenue Sharing Disclosure
Revenue Sharing Disclosure
The following disclosure is being provided to you as a consumer of investment products and services. The purpose of the disclosure is to inform you of how Allen & Company of Florida, LLC, and its Financial Advisors may be compensated. This does not take the place of any prospectus or offering memorandum that should be review in making an investment decision.
WHAT FORMS OF COMPENSATION DOES ALLEN & COMPANY RECEIVE?
In the normal course of business, Allen & Company and its Financial Advisors receive compensation and other payments related to the sale of securities and providing investment advisory services. Among the types of revenue and compensation Allen & Company and its Financial Advisors receive are commissions, compensation from assets invested in the sweep money market funds, distribution fees, 12b-1 fees and reimbursement of training, educational, and forms of promotional expenses. In addition to the above compensation, Allen & Company may enter into agreements to receive additional revenue, also known as revenue sharing.
WHAT IS REVENUE SHARING?
Revenue sharing means that Allen & Company accepts money from product sponsors such as mutual fund companies, insurance companies, and real estate investment trust (“REIT”) companies in addition to the sales revenue it earns when a customer purchases one of these products. These revenue sharing fees are frequently referred to due diligence or marketing allowances.
HOW IS THE AMOUNT OF REVENUE DETERMINED?
The amount of revenue Allen & Company receives from each product sponsor is based on the volume of sales Financial Advisors transact with each product sponsor, a percentage of assets held at the product sponsor, or a flat amount negotiated between the product sponsor and Allen & Company.
WHY DO PRODUCT SPONSORS SHARE REVENUE WITH ALLEN & COMPANY?
Revenue sharing is a way for product sponsors to advertise, to educate, and potentially increase sales.
DO FINANCIAL ADVISORS RECEIVE A REWARD OR BONUS FOR SELLING PRODUCTS OF PRODUCT SPONSORS WHO ARE REVENUE SHARING?
No. Allen & Company does not give Financial Advisors a reward or bonus for selling shares or products of the specific product sponsor. Financial Advisors recommend products based on each customer’s needs and objectives. Allen & Company does not permit or allow any form of sales contests based on specific products.
WHO RECEIVES THE ADDITIONAL REVENUE?
We use the additional revenue to support our marketing and training efforts.
HOW DOES ALLEN & COMPANY USE THE ADDITIONAL REVENUE?
We use the additional revenue to support our marketing and training efforts.
WHO CAN I CONTACT SHOULD I HAVE ADDITIONAL QUESTIONS?
If you still have questions, you may contact your Financial Advisor. Updated information about Allen & Company’s revenue sharing and differential cash compensation arrangements may be obtained by going to Allen & Company’s website (Regulatory Disclosure) or by calling your Financial Advisor at 1-800-950-2526.
Securing Your Confidential Information
How Allen & Company , LLC and LPL Financial Secures Your Information
To protect your information and assets, Allen & Company and LPL Financial employs extensive physical, technical, and procedural security controls at all of our facilities. We actively monitor and enforce compliance to our security policy and its related procedures. We regularly review, update, and modify our policies and procedures to respond to new threats and to adapt to changes in technology.
Allen & Company and LPL Financial employees and customers receive thorough training in our security policy and are held accountable for adhering to the policy. Employees who work directly with customers also receive training in other related risks, such as identity theft.
Although we cannot fully disclose all that we do to protect the personally identifiable information of our customers, here are just a few measures we take:
- We employ strong authentication and password protocols.
- We enforce inactivity timeouts on our computers.
- We maintain and regularly test our firewalls.
- We continuously update our anti-virus and anti-malware protection.
- We employ threat monitoring/intrusion detection.
- We utilize encryption to protect our customer and employee data.
- We have mandatory training for employees, customers, and managed representatives.
LPL Financial is a member firm of the Securities Investor Protection Corporation (SIPC). Membership provides account protection up to a maximum of $500,000 per client, of which $250,000 may be claims for cash. For an explanatory brochure, please visit http://www.sipc.org/. Through London Insurers, LPL Financial accounts have additional securities protection to cover the net equity of client accounts up to an overall aggregate firm limit of $600 million, subject to conditions and limitations.
London Insurers rely on SIPC to determine the extent of losses incurred by individual LPL account holders. This additional protection covers losses above limits available from SIPC and would be payable up to a total of $600 million.
The account protection applies when a SIPC member firm fails financially and is unable to meet its obligations to securities clients, but it does not protect against losses from the rise and fall in the market value of investments. This extensive coverage reflects a strong commitment to serving your investment needs.
Investor and Municipal Advisory Client Education and Protection
Allen & Company is registered with the U.S. Securities and Exchange Commission and the Municipal Securities Rulemaking Board (MSRB);
Information about the MSRB can be viewed at the MSRB; http://www.msrb.org
Allen & Company makes available a copy of the investor brochure that is posted on the website of the Municipal Securities Rulemaking Board. The Brochure describes the protections that may be provided by the Municipal Securities Rulemaking Board rules and how to file a complaint with an appropriate regulatory authority.