Policy

All registered representatives, investment advisor representatives or licensed administrative personnel (collectively “registered associated persons”) with Mutual Securities, Inc. and Mutual Advisors, LLC (collectively “Mutual”) are required to transfer their outside brokerage accounts to Mutual’s clearing or custodia platforms (Mutual Securities: NFS; Mutual Advisors: Fidelity, Schwab). All outside brokerage accounts must be disclosed through the Outside Brokerage Account Form upon joining Mutual, or prior to any new outside brokerage accounts being established. Registered associated persons that are just joining Mutual have 30 days to transition their outside brokerage accounts to Mutual or receive an exception, as outlined below.

 

What is an Outside Brokerage Account?

An outside brokerage account is any account that is able to hold reportable securities in the account and is not held with Mutual. Reportable securities are defined as any security, except: government debt, mutual funds, money markets or cash equivalents, or unit investment trusts. The following are examples of accounts that are not considered outside brokerage accounts:

·         401(k) account at a direct product sponsor (i.e., Nationwide) – only investment options are mutual funds

·         Variable annuity account – only option for investments are mutual fund sub-accounts

·         Bank account only able to hold cash, money market or bank CDs

 

Which outside brokerage accounts must be disclosed?

Any registered associated person with Mutual is required to disclose all personal or related accounts (collectively “covered accounts”). Covered accounts include:

·         Accounts for the registered associated person’s spouse;

·         Accounts for the registered associated person’s child, or spouse’s child, provided the child resides in the same household or is financially dependent upon the registered associated person;

·         Accounts for any individual where the registered associated person has control of the account (such as power of attorney); or

·         Accounts for any individual where the registered associated person has control of the account and whose financial support such registered associated person materially contributes (such as a parent’s account managed by a registered associated person, where the registered associated person provides material financial contribution to the parent, even if not named in a power of attorney). 

 

Are there any exceptions?

The following three scenarios are allowed as exceptions to this policy:

·         The account is being held through the registered associated person’s RIA platform.

·                     Mutual will receive data feeds on these accounts as a part of oversight responsibilities.

·         The account is being managed by a third-party manager on a discretionary basis, so the registered associated person is not actively directing investments in the account; or 

·                    Mutual will require duplicate confirmation and statement to be sent to the Home Office by the custodian.

·         The account is coded as liquidation only.

·                     Mutual will require verification from the custodian and require duplicate confirmations and statements to be sent to the Home Office by the custodian.

 

These accounts are still considered to be outside brokerage accounts and must be disclosed through the Outside Brokerage Account Form. Any exceptions outside of those listed above must be approved in writing by the Chief Compliance Officer.

 

Requirements

Mutual Securities, Inc. and Mutual Advisors, LLC (Collectively “Mutual”) require the associated persons to transfer their outside brokerage accounts to Mutual Securities (NFS) or an approved RIA custodian providing data feeds directly to Mutual. Exceptions to this requirement MUST have prior written approval from Compliance Department. If an exception is granted, duplicate confirmations and statements must be provided to Mutual from the outside brokerage account dealer firm. A quarterly fee of $100 will be assessed for manual review of duplicate confirmations and statement, per account. This includes, but is not limited to, accounts with a commodities firm to trade securities futures Transactions in unit investment trusts and variable contracts or redeemable securities custodied directly at product companies are exempt from this requirement. 

An associated person’s personal and related accounts (collectively “covered accounts”) are subject to review by Mutual. Covered accounts include (i) the spouse of a person associated with Mutual; (ii) a child of the person associated with Mutual or such person’s spouse, provided the child resides in the same household or is financially dependent upon the person associated with Mutual; (iii) any other individual over whose account the associated person of Mutual has control; or (iv) any other individual over whose account the associated person of Mutual has control and to whose financial support such associated person materially contributes.

An associated person must pre-clear any personal reportable securities transactions if the security is being traded by clients on the same day, it is not able to be blocked with those client trades AND it does not meet our de minimis standards. Mutual’s de minimis standards are defined as a transaction meeting all of the following three criteria: 1) trade is less than $10,000, 2) security being traded has an average daily trading volume over 100,000 shares AND 3) the security is traded on one of the domestic exchanges, such as the NYSE/AMEX/NASDAQ.