HEIGHTENED RISK SECURITIES DEPOSIT
The trading of Heightened Risk Securities entails a high degree of financial and legal risk for brokerage firms and their clients. These securities often involve issuer’s with more lenient financial reporting requirements, less available market data, high volatility, limited liquidity and increased regulatory burdens.
Our clearing firm will accept the deposit of Heightened Risk securities (HRSR), however, an in-depth review of the shares will take place prior to receiving approval to deposit and sell.
DOCUMENT REQUIREMENTS FOR HRSR
1. Client Acknowledgement and Exhibit A
This is a two page document. Page 1 requires a dated signature. Page 2 requires dated initials. We can accept a photocopy or electronic version of this form.
2. Questionnaire for Microcap and Unregistered Security Policy
Form must be completed in its entirety. It must be signed and dated where indicated on page 2. We can accept a photocopy or electronic version of this form.
3. Stock Power
Two stock power forms. EACH stock power form should be signed but NOT dated. (Stock Power forms go stale and become unusable after 90 days.) Return the ORIGINAL stock power forms (2 each) to us.
We cannot accept photocopies or electronic versions of this document.
4. Seller’s Representation Letter for Non-Affiliates
This document must be signed and dated where indicated. We can accept a photocopy or electronic version of this form.
5. Legal Opinion
A legal opinion will also be required for the low-priced security review. Any fees associated with obtaining a legal opinion will be client’s responsibility.
1. Issuer must be current in their filings.
2. Documentation to support how the shares were acquired are needed.
The HRSR process will run more efficiently and cost effectively if you provide me with comprehensive documentation to support how you acquired your shares. This includes, but is not limited to copies of subscription agreements, contracts, selling agreements, filings, opinions, evidence of consideration etc.
There are fees involved in this process. These are the most common fees charged by our clearing firm. Other fees may apply.
*All above fees are subject to change.
The account will be charged a minimum of $1,000.00 at the onset of the heightened-risk security review. Additional fees may be charged.
Depending upon the completeness of the paperwork we submit to the clearing firm, the entire process could take between 7-15 business days. This, of course, can be shorter or longer timeframe, depending upon circumstances that evolve.
Note: The clearing firm will charge for any additional reviews made necessary because we omitted required documentation. That is the reason we ask for a comprehensive package of back-up documentation at the beginning of this process. We try to keep our clients’ expenses as low as possible.