FORESTERS EQUITY REGISTERED MEMO # Judith Gil, Vice President Compliance

Transcription

1 FORESTERS EQUITY REGISTERED MEMO # FC TO: FROM: US Field Judith Gil, Vice President Compliance DATE: September 20, 2013 RE: Revised NAA -Annuity Risk and Fee Disclosure-Switch Disclosure Form Home Office Registered Principals have reviewed a number of incomplete New Account Applications, Annuity Risk and Fee Disclosures and Switch Disclosures when reviewing for suitability and final approval of transactions. And, since; we now accept certain EIA and FIA purchases through our pay grid, requiring full disclosure when a transaction involves fixed and advisory business, we have amended the following three (3) documents. See enclosed samples of the documents for the following revisions: New Account Application - NAA Page 1 Under the Patriot Act Information section of the form, we clarified that the number on the Government Issued Photo ID is required in the space provided. Page 2 - Added a section relevant to potential Entitled Reduced Sales Charges; and the Source of Funds section now include annuities. In the Other Investments section, added language relative to Household Accounts in order to capture potential breakpoints. Page 3 - Clarified that the Investment Objective is required information and the risk tolerance category definitions now align with our Risk Tolerance Questionnaire. Additionally, that the Applicant, and if applicable, the Co-Applicant s risk tolerance is required information. Foresters Equity Services, Inc Member FINRA, SIPC 6640 Lusk Blvd Suite A-202, San Diego, CA T

2 Annuity Risk and Fee Disclosure Page 1 Clarified completion of the form is required for all annuity purchases and added Statement of Understanding (SOU) and Annuity Company Disclosure Document language applicable to EIAs and FIAs. Under the Qualified Retirement Accounts section added language relative to a Detailed Rationale is required. Page 2 A question has been added as to whether the Registered Representative is the same representative that recommended the existing product intended for reinvestment in the new annuity. Section d) Added language requiring new annuity sub-accounts to be listed and, if applicable, a listing of the existing sub-accounts. Additional blank spaces have been provided on the declining surrender charge grid. Page 3 Prospectus Receipt section has been revised; adding SOU and Annuity Company Disclosure language. And a statement has been added relative to the client having read and understood the SOU or Annuity Company Disclosure Document specific to the new annuity. We revised the Risk Tolerance Assessment statement and added Right to Examine language to the Free Look statement. Switch Disclosure Form Because FINRA is focusing on the potential for undisclosed switches, the firm is requiring a Switch Disclosure Form to be completed and submitted whenever a switch involves advisory business. The language: IA Platform, Other and N/A have been added to the form under the New Investment title. In our highly regulated environment it is paramount that we take the time to accurately document the information asked for on all the forms that are forwarded to the Home Office for review and processing. Please begin using these September 2013 revisions immediately. They are accessible for download from our website, and are also fillable. Effective October 1, 2013 we will no longer accept the previous versions. Attachments (3) Sample Documents CC: Frank L. Smith, CEO and President Stephen Cheeseman, Chief Compliance Officer Administrative Staff Foresters Equity Services, Inc Member FINRA, SIPC 6640 Lusk Blvd Suite A-202, San Diego, CA T

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6 New Account Application 6640 Lusk Blvd, Ste A202 San Diego CA Primary Applicant Co-Applicant Title Client Name Title Client Name Mailing Address Mailing Address City, State, Zip City, State, Zip Street Address (If different than Mailing Address) Street Address (If different than Mailing Address) City, State, Zip City, State, Zip Home Phone Cell Phone Home Phone Cell Phone Fax Fax Date of Birth Marital Status # of Dependents Date of Birth Marital Status # of Dependents What is your role for this account? Patriot Act Information Trustee Custodian for UTMA/ UGMA 529 beneficiary To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. What this means to you: When you open an account, we will require your name, address, date of birth and other information that will allow us to identify you. We are also required to view your driver's license or other identifying documents. Joint account owner Relationship to Primary Applicant Patriot Act Information Authorized signer for corp. Other: SSN Country of Citizenship SSN Country of Citizenship # # Government Issued Photo ID Number Indicate type of photo ID below Place of Issuance Government Issued Photo ID Number Indicate type of ID below Place of Issuance Driver s License Passport Other: Driver s License Passport Other: Rep: Did you view the client s ID? Yes No Rep: Did you view the client s ID? Yes No Employment Information Employment Information Employer (Check here if retired ) Position (If retired, please list previous occupation) Employer (Check here if retired ) Position (If retired, please list previous occupation) Employer Address Employer Address Industry Affiliations Are you or an immediate family member employed by or associated with the securities industry or a financial regulatory agency? Industry Affiliations Are you or an immediate family member employed by or associated with the securities industry or a financial regulatory agency? Yes No Yes No If yes, please provide name, relationship and entity name. If yes, please provide name, relationship and entity name. Investment Experience Investment Experience Mutual Funds yrs mos VAs/VULs yrs mos Mutual Funds yrs mos VAs/VULs yrs mos ETFs yrs mos Other yrs mos ETFs yrs mos Other yrs mos Version September 2013 Page 1 of 4

7 About This Account This application is for: Opening a New Account Updating an Existing Account Completing a Change of BD Product Type (Check all that apply): Mutual Fund Financial Planning Advisory Account Annuity (Annuity Risk & Fee Disc req d) VUL (Illustration Required) Account Type Individual (Non-Qualified) Joint Tenants WROS Joint Tenants TIC Custodial For Minor Trust (Copy of Trust docs req d) Corporation (Articles of Incorp req d) Traditional IRA Roth IRA Education Savings Account 529 plan (529 Plan Ack may be req d) 401k (Complete App for Company; plan docs req d) 403b Profit Sharing or Money Purchase Plan SEP/ Simple (Complete app for each participant) Other (Please specify): This purchase may be entitled to a reduced sales charge for the following reason(s): Letter of intent $ Rights of Accumulation for $ NAV Investment Company for Required I plan to use this account for the following (check all that apply): Generate income for current or future expenses Steadily accumulate wealth over the long term Partially fund my retirement Wholly fund my retirement Market speculation Paying for education expenses Purchasing a house Preserve wealth and pass it on to heirs Other: Time Horizon What is your investment time horizon for this account? 0 5 years 5 15 years More than 15 years Liquidity needs Of what priority is the ability to easily convert to cash all or a portion of this account without experiencing significant loss? Very high Medium High Low Applicant Financial Disclosure Annual Income Liquid Assets The investments in this account will be: Less than 1/3 of my financial portfolio More than 2/3 of my portfolio Roughly 1/3 to 2/3 of my portfolio Annual Expenses Source of funds for this investment: Life insurance Annuity* Pension/retirement* Funds from other investment* Sale of business or property *Switch Disclosure Form may be required Non-recurring Expenses Inheritance Gift Income Other Timeframe for nonrecurring expenses: 0 5 years 5 15 years More than 25 years Net Worth (exclusive of primary residence) Co-Applicant Financial Disclosure Annual Income Net Worth (exclusive of primary residence) Federal Tax Bracket % Liquid Assets Federal Tax Bracket % Other Investments & Household Accounts (Current holdings to identify your financial situation) Investment Type Holding Firm Amount ($ US) Annual Expenses Nonrecurring Expenses Timeframe for nonrecurring expenses: 0 5 years 5 15 years More than 15 years Other Investments & Household Accounts (Current holdings to identify your financial situation) Investment Type Holding Firm Amount ($ US) Version September 2013 Page 2 of 4

8 Investment Objective and Risk Tolerance Please review the investment objectives and risk tolerance categories below. An investment objective is a financial goal that helps determine the type of investments. Capital Preservation: The object of capital preservation is to protect your initial investment by choosing investments that minimize the potential of a loss of principal. The long-term risk of this strategy is that returns may not offset inflation. Income: The primary objective of the income strategy is to provide current income rather than the long-term growth of principal. Growth: Select the primary investment objective for this account (REQUIRED). If choosing more than one objective, please rank in order of priority. Objective Capital Preservation Income Growth The objective of the growth strategy is to increase the value of your investment over time while recognizing a high likelihood of volatility. Speculation: A speculative objective assumes a higher risk of loss in anticipation of potentially higher-than-average gains by taking advantage of expected price changes. You recognize and are able to bear the full risk of the loss of some or all principal in such investments. Rank Risk tolerance is your ability and willingness to lose some or all of your original investment in exchange for greater potential returns. Conservative: Conservative investors want to preserve their initial principal in this account, with minimal risk, even if that means their accounts does not generate significant income or returns and may not keep pace with inflation. Moderate: Moderate investors are willing to accept some risk to their initial principal and tolerate some volatility to seek higher returns, and understand they could lose a portion of the money invested. Balanced: The Balanced investor seek investment opportunities that strike a balance between risk and return. Accepting moderate market fluctuations in return for long term growth are the characteristics of the balanced investor. Growth: The Growth investor aims to achieve greater long term growth potential by accepting considerate fluctuation s in its investments. The Growth investor is comfortable with investing for long term and does not require current income from the investment. Aggressive: Aggressive investors are willing to accept high risk to their initial principal, including high volatility, to seek higher returns over time, and understand that they could lose all or a substantial amount of the money invested. Indicate the risk tolerance for applicant and co-applicant if applicable (REQUIRED). If you are unsure of your risk tolerance, please consult the Foresters Equity Risk Tolerance Questionnaire. Applicant Conservative Moderate Balanced Growth Co-Applicant Conservative Moderate Balanced Growth Speculation Aggressive Aggressive Prospectus Receipt/Statement of Understanding/Annuity Company Disclosure By signing this application, I/we acknowledge having received a prospectus, Statement of Understanding or disclosure document for the following investments and understand that it should be read prior to making an investment. Prospectus, Statement of Understanding or Disclosure Document Name Document Date Receipt of Funds Checks should never be made payable to the individual Registered Representative or Investment Advisor Representative Check(s) made payable to: Amount Date Version September 2013 Page 3 of 4

9 Disclosure Information USA Patriot Act Important Information About Opening A New Account To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account. What this means to you: When you open an account, we will require your name, address, date of birth and other information that will allow us to identify you. We will also ask to view your driver s license or other identifying documents. Foresters Equity Services, Inc. ( Foresters Equity ) utilizes the service of a third party to independently verify a customer s identify. The verification is done using information provided by other sources including consumer-reporting agencies, public databases, or other sources. FINRA / SIPC Public Disclosure The Financial Industry Regulatory Authority ( FINRA ) FINRA Hotline: (800) is open Mon - Fri 8 am to 8 pm Eastern Time. FINRA Regulation, Inc. Public Disclosure P.O. Box 9401 Gaithersburg, MD Fax: (301) FINRA has available to the public a brochure describing the public disclosure program. The FINRA Regulation will distribute its brochure titled FINRA Regulations Public Disclosure Program: An information Service for Investors to investors who contact the FINRA through the hotline number. Securities Investor Protection Corporation ( SIPC ) th Street, N.W., Suite 800 Washington, DC Tel: (202) Fax: (20) asksipc@sipc.org To obtain information about SIPC you may access a plain English brochure at Customer Complaint Disclosure In the event you wish to contact Foresters Equity regarding a conccern or complaint, contact the Compliance Department at (800) or at the address listed in this brochure. Arbitration Agreement Customer hereby agrees that Foresters Equity Services, Inc. ( Foresters Equity ) shall open an account in the name(s) listed as account holder(s) on the Foresters Equity New Account Application. Customer agrees to read and be bound by the terms of the New Account Application as currently in effect and as amended from time to time. If customer does not receive or understand the New Account Application, customer will notify Foresters Equity immediately. Customer certifies under penalty of perjury that (1) the number shown on the New Account Application is the correct taxpayer identification number, and (2) that customer is not subject to back-up withholding. Customer acknowledges that the customer and Foresters Equity are jointly responsible for determining the nature, potential value, and suitability of any particular investments, transaction, or investment strategy. Foresters Equity does not give legal or tax advice regarding particular investments. All parties agree to settle by arbitration any controversy between the customer and Foresters Equity and/or any Foresters Equity officers, directors, employees, or agents relating to the New Account Application, customer account or account transaction, or in any way arising from customer relationship with Foresters Equity as provided on this New Account Application. The following disclosures are made pursuant to applicable self-regulatory organization requirements: 1. All parties to this agreement are giving up the right to sue each other in court including the right to trial by jury, except as provided by the rules of the arbitration forum in which a claim is filed. 2. Arbitration awards are generally final and binding; a party s ability to have a court reverse or modify an arbitration award is very limited. 3. Pre-arbitration discovery (the ability of the parties to obtain documents, witness statements and other discovery is generally more limited than in arbitration than in court proceedings. 4. The arbitrators do not have to explain the reason (s) for their award unless, in an eligible case, the joint request for an explained decision has been submitted by all twenty (20) days prior to the first scheduled hearing date. 5. The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry. 6. The rules of some arbitration forums may impose time limits for bringing a claim in arbitration. In some cases a claim that is ineligible for arbitration may be brought in court. 7. The rules of arbitration forum in which the claim is filed, and any amendments thereto, shall be incorporated into this agreement The customer agrees, and by opening an account for the customer, Foresters Equity agrees that all controversies which may arise between the customer and the broker-dealer concerning any transaction or the construction, performance, or breach of the New Account Application or any other agreement between the parties, whether entered into prior, on, or subsequent to the date hereof, shall be determined by arbitration. Any arbitration under this agreement shall be conducted pursuant to the Federal Arbitration Act before FINRA or the Municipal Securities Rulemaking Board and in accordance with the rules prevailing at the selected organization. Extraordinary Events Foresters Equity shall not be liable for loss caused, directly or indirectly, by government restrictions, exchange or market rulings, suspension of trading, war, strikes or other conditions beyond Foresters Equity s control. Foresters Equity is committed to providing our clients with secure and continuous access to their investments in a variety of adverse business environments using a corporate Business Contingency Plan ( BCP ). In the event of a local area business related disruption, Foresters Equity maintains offsite hardware, software, and data storage capabilities as well as alternative office capabilities which will allow us to resume the processing of business within one business day. In the event of a major catastrophe effecting the southwestern united States, Foresters Equity maintains alternative hardware, software, and office resources in Toronto, Canada which will allow us to resume business processing within three business days. It is our expectation that during this catastrophic outage, our clients will be able to contact the investment companies holding their investments directly. Privacy Notice This privacy policy applies to Foresters Equity and the Independent Order of Foresters ( Foresters ). Collection We collect non-public personal information about you from the following sources: Information we receive from you on applications or other forms; Information about your transactions with us, our affiliates, or others; and Information we receive from a consumer reporting agency. Confidentiality and Security We do not disclose any non-public personal information about our members, customers, prospective members, former members or former customers except to employees within Foresters corporate family with a need to know it, suppliers and service providers, the Medical Information Bureau, and to comply with the law. Disclosures We may disclosure the following information to companies that perform marketing services on our behalf or other financial institutions, including those with whom we have joint marketing agreements or affinity credit card agreements: Information we receive from you on applications or other forms, such as your name, address, zip code and telephone number; Information about your transactions with Foresters, our affiliates or others, such as your coverage, premiums and payment history. A complete copy of Foresters privacy policy is available at By signing below, I acknowledge that I have reviewed and received the New Account Application and accept all of its terms. I represent that I have authority to open this account and to take all actions with respect to the account on my behalf or, if this account is established on behalf of a named organization, on behalf of the named organization. I will notify you immediately if my authority changes in any way. I affirm that the foregoing information contained in the New Account Application is accurate and reflects my current status. I am aware that the information is relied upon by the representative in servicing my account. If any of the information changes, I will notify my registered representative of such changes immediately to enable him/her to provide me with current information which will help me meet my investment objectives. I have read and understand the terms of the Foresters Equity Services Privacy Notice contained in the disclosure section of the New Account Application. I understand that the New Account Application contains an Arbitration Agreement Clause contained in the disclosure section of the New Account Application and I agree to resolve any disputes arising out of my account by arbitration. Applicant Signature Date Co-Applicant Signature Date I confirm this signature to be the signature of the client. Printed Registered Representative Name Representative Number Branch Number Telephone Number Registered Representative Signature & Date Branch Office Principal Signature & Date Home Office Principal Signature & Date Foresters Equity Services, Inc. Member FINRA, SIPC 6640 Lusk Blvd Ste A202 San Diego CA T: Version September 2013 Page 4 of 4

10 . REV. September 2013