OPENING AN ACCOUNT AT GLENDALE SECURITIES, INC.
Thank you for your interest in opening an account at Glendale Securities, Inc. (“Glendale”). In addition to retail and online trading, we specialize in providing stock certificate deposit services for shares that are eligible for resale which are either registered or otherwise exempt from registration. We place some restrictions on what business we will accept and occasionally, we encounter business that we do not feel will be a good fit for us. We will try and inform you quickly if we feel we will be unable to accept your business.
Section 5 of the Securities Act requires brokerage firms to do extensive due diligence to ensure that neither they nor their customers are participating in the sale of securities that are not registered or do not qualify for an exemption from registration. This effort requires that we ask for extensive documentation related to each deposit and, consequently, means that there is significant expense involved. Glendale requires $900.00 for certificates that do not contain a restricted legend and $1000 for certificates that do contain a restricted legend. These funds cover due diligence reviews by both Glendale and its clearing firm, as well as all courier, medallion and deposit fees with transfer agents and DTC. In the event that we clear a certificate for you and you elect to electronically transfer the position to another firm, there will be an additional due diligence fee of $1000.00 per position transferred.
Trading in low priced issues can generate obligations at DTC out of all proportion to the value of securities being traded. It isn’t fair to us, our clearing firm, or to you, but it is the reality we must work within. DTC has styled these fees as “Illiquidity charges” or “Domination fees”, and they can profoundly affect the number of shares we are able to trade in any settlement cycle. You agree to be bound by whatever trading limitations we may find it necessary to impose in order to protect our liquidity. Generally, transactions larger than 20% of the average daily trading volume of the last 20 days will result in DTC charges, and the cost to finance those charges from trade date to settlement date will be billed to your account at an annualized charge of 20%, with a $25.00/day minimum. This includes all trades done at the clearing firm in an issue during the same settlement cycle, so you may find yourself being charged a pro rata share of illiquidity fees on trades much smaller than 20% of the daily volume. Domination charges will be passed through at cost, with a minimum fee of $5.00/day. Although we will attempt to obtain as much liquidity as possible for you when you want to trade, it would not be unusual for us to have to tell you that you must limit your transaction size to fewer than 10,000 shares at a time. We appreciate your cooperation and understanding of these limitations.
CONFLICTS OF INTEREST AT GLENDALE SECURITIES, INC.
Conflicts of interest are present in many contexts in the financial services industry. There is no ‘one-size –fits all’ framework through which firms can manage conflicts, and we have attempted to identify and disclose those conflicts which may affect you, our customer. We take the precept of fair dealing with our customers seriously. We have appointed a Conflict Officer whose function is to identify, disclose, and enforce procedures designed to neutralize the effects of our conflicts of interest on our customers. In dealing with potential conflicts, we require integrity and the use of good judgment and discretion exercised in a manner expected by our policies and our values. Listed below are areas of potential conflict, and the steps we have taken to ensure that our customers are treated fairly.
Glendale Securities, Inc. (“Glendale”) makes markets in several hundred pink sheet and bulletin board issues, and this means that we may take the other side of your trade. That is, when you are selling, we may be buying, and vice-versa. We may be taking a position in a stock you are selling, or selling a stock you are accumulating. Our obligation is to ensure that you receive the best national bid or offer price for your transaction, and where possible, offer price improvement on your trade. We also have an obligation to pass through the best price we receive when we represent your order, and to refrain from “front running” or trading ahead of your order. Supervisors review our transactions daily to ensure that customer orders are filled at the best available price.
Our compensation grids are completely product neutral, so no representative has an incentive to prefer one type of product over another. Because we do not make recommendations, the firm avoids the problem of brokers pushing higher grossing products. The compensation grid also does not contain thresholds which might encourage a representative to engage in inappropriate activity in order to qualify for a higher payout. The firm does not sell proprietary products or participate in sales contests.
Mundial Financial Group LLC
Mundial Financial Group, LLC (“Mundial”) is a FINRA registered broker dealer that is owned by some of the principals of Glendale. Mundial enters into agreements with certain issuers to participate in private placements of their securities. Mundial receives compensation from issuers for selling private placements to its customers. Glendale may make a market in the issuer(s) that are selling shares via a private placement.
Globex Transfer LLC
Globex Transfer, LLC (“Globex”) is a transfer agent under common control with both Mundial and Glendale. Globex may be the transfer agent for the issuers’ securities in which Glendale makes a market or in which Mundial is a selling group member participant.
Glendale ensures that transactions involving parties that are clients of either of their affiliated firms receive no preferential treatment or advantage over other issuer’s clients or transfer agent clients. Mundial or Globex may hold positions or actively trade in issuers in which Glendale makes a market or for whom Mundial provides private placement or other selling group participant services.
As part of screening applicants for employment, Glendale reviews those individuals’ employment and regulatory history, as well as their financial standing, to identify and not hire individuals who may be prone to engage in inappropriate activity or who have poor ethical standards.
Glendale has incorporated training on ethics and conflicts of interest into its firm element training program to ensure that employees recognize when a conflict of interest exists, and make appropriate decisions about handling the conflict in a manner that is consistent with the firm’s policies, procedures and ethical standards.
Outside Business Activity
Registered representatives are required to submit a request for approval of any outside business activity. These requests are reviewed by the firm to ensure that the activity does not conflict with the interests of the firm or its customers. If outside activity is approved, this information is added to the representative’s Form U-4, the details of which can be viewed by the public at FINRA’s website: www.brokercheck.org.