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
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 WDCO and Glendale have attempted to identify and disclose those conflicts that may affect you, as a customer. Each of WDCO and Glendale takes the precept of fair dealing with its customers seriously. Their respective Chief Compliance Officer seeks to identify, disclose, and enforce procedures designed to neutralize the effects of its conflicts of interest on their customers. In dealing with potential conflicts, each of WDCO and Glendale requires integrity and the use of good judgment and discretion exercised in a manner expected by its policies and values. Listed below are areas of potential conflict, and the steps each of WDCO and Glendale has taken to ensure that its customers are treated fairly.
Market Making. WDCO and Glendale may make markets in hundreds of issues, which means that they may take the other side of your trade. That is, when you are selling, WDCO or Glendale may be buying, and vice‐versa. WDCO and Glendale may be taking a position in a stock you are selling, or selling a stock you are accumulating. WDCO’s and Glendale’s respective obligation is to ensure that you receive the best national bid or offer price for your transaction, and when possible, offer price improvement on your trade. WDCO and Glendale also have an obligation to pass through the best price they receive when they represent your order and to refrain from “front running” or trading ahead of your order. Supervisors for each of WDCO and Glendale review their respective transactions daily to ensure that customer orders are filled at the best available price.
Compensation Practices. Compensation grids for both WDCO and Glendale are completely product neutral, so no representative has an incentive to prefer one type of product over another. Because WDCO and Glendale do not make recommendations, each firm avoids the problem of brokers pushing higher grossing products. The compensation grid also does not contain thresholds that might encourage a representative to engage in inappropriate activity in order to qualify for a higher payout. Neither firm sells proprietary products or participates in sales contests.
- Glendale is a minority owner of WDCO and has the right, under specified terms, to purchase the balance of WDCO. WDCO and Glendale ensure that transactions involving parties that are clients of both firms do not receive preferential treatment or advantage over other clients.
- Globex Transfer, LLC is a transfer agent under common control with Glendale. Globex Transfer may be the transfer agent for the issuers’ securities in which WDCO and Glendale make a market. Globex may hold positions or actively trade in issuers in which both WDCO and Glendale make a market. WDCO and Glendale ensure that transactions involving transfer agent clients and issuers for which they make markets do not receive preferential treatment or advantage over other clients.
Hiring. As part of screening applicants for employment, both firms review an applicant’s 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.
Training. WDCO 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 each 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.