Summary of policies that have been updated since January 1, 2024:

Cryptocurrency Policy Summary

• Prohibited:
• MALLC prohibits IARs from providing advisory advice on:
• Crypto-currency investments (e.g., Bitcoin)
• Initial Coin Offerings (ICOs)
• Other crypto-currency products
• Allowed:
• IARs may provide advice on:
• ETFs or closed-end funds registered with the SEC, "registered crypto-fund assets"
• Investment Limits:
• Initial holdings of registered crypto-fund assets must be limited to 10% of the client household value
• If a client’s holdings exceed 10%, the IAR must:
• Reduce the holdings to comply with the limit
• If the client refuses to reduce holdings, they must sign a risk acknowledgment form

 

Leveraged and Inverse ETF Summary

• Introduction:
• Leveraged and Inverse ETFs aim to deliver multiples or the inverse of an index’s performance over a single trading day.
• Holding these ETFs beyond a single trading day introduces unique risks, as long-term performance may diverge significantly from funds stated objective[DS1] .
• These risks are exacerbated by market volatility.
• Advisor Responsibilities:
• Advisors must understand the risks before recommending Non-Traditional ETFs.
• These ETFs should only be used within a defined asset allocation strategy tailored to the client’s risk tolerance and investment objectives.
• Compliance Oversight:
• Purchases in Non-Traditional ETFs, not exited the same day will be flagged for compliance review and a questionnaire sent to the advisor to determine if the recommendation is part of a defined asset allocation strategy appropriate for the client.
• Positions held for over 6 months will be flagged for compliance review and a questionnaire sent to the advisor to determine if the recommendation is part of a defined asset allocation strategy appropriate for the client.
• Positions exceeding 10% of a client’s household value will be flagged for compliance review and a questionnaire sent to the advisor to determine if the recommendation is part of a defined asset allocation strategy appropriate for the client.

 

Reverse Churning Policy Summary

Introduction:

• Reverse churning occurs when clients are placed in fee-based accounts without sufficient activity to justify ongoing fees.

Policy & Procedure:

• Assessments are conducted at the household level.
• Quarterly reviews will check whether any trades were made in the past 12 months.
• Households with no activity in the previous 12 months will be flagged for further review.
• Assessment of flagged accounts to determine if an asset-based fee is still in the client’s best interest.
• If flagged, advisors will complete a questionnaire to justify whether the asset-based fee remains appropriate

• Flagged accounts will be assessed based on:
• Asset size
• Client investment objectives
• Frequency of advisor-client interactions
• Advisor’s time spent reviewing and servicing the portfolio
• If the fee structure is deemed appropriate, MALLC will document the rationale for maintaining it. 

Supporting Documentation:

• Detailed records of all reviews conducted, including:
• Findings and actions taken
• Client interactions (meetings, phone calls, emails) to document advisory services
• Client agreements and rationale for using a fee-based account

Supervision & Controls

• The CCO or designee oversees the review process and ensures compliance.
• Random audits of fee-based accounts will be conducted to identify potential issues.
• Accounts with minimal activity or services over an extended period will require a senior management review.
• The CCO will review this policy annually
• Policy updates will be communicated to all relevant personnel.