A2. RCC.Registr.SEC.Turnkey Registr Package
RIA COMPLIANCE CONSULTANTS, INC.COMPLIANCE SERVICES AGREEMENTTURN-KEY INVESTMENT ADISER REGISTRATION SERVICE
This Compliance Services Agreement, which includes and incorporates the attached schedulesand/or addendums, (the "Agreement") is between RIA Compliance Consultants, Inc., a Nebraskacorporation located at 6910 Pacific Street, Suite 102, Omaha, Nebraska 68106 ("RCC" or “RIACompliance Consultants”), and investment adviser as identified below (the "Client").
Section 1. Scope of Engagement & Compliance Services Are Limited
This scope of this engagement and the compliance services available from RCC under thisAgreement are limited as described in Exhibit A attached hereto and incorporated herein(“Compliance Services”). The term “Securities Regulator” as used in this Agreement refers to theprimary U.S. securities regulator of Client as an investment adviser. RCC does not provide anyassistance with or services for compliance requirements of foreign securities regulators.
Section 2. Fees & Term
RCC's fees, expenses, initial retainer, method of payments, billing practices, replenishment ofretainers, term and refunds for this engagement are described in Exhibit B attached hereto andincorporated herein and the Minimum Fixed Fee and Hourly Rate Schedule attached hereto andincorporated herein.
Section 3. Client’s Duties
Section 4. Nature of Compliance Consulting Relationship
RCC is a compliance consulting and services firm. Although RCC has an affiliate that is a law firmknown as Bryan Hill Law (“BHL”) and RCC may have an individual on its staff that is also licensedas an attorney offering legal services in a completely separate capacity and through BHL, RCC isnot a law firm or an attorney and does not provide legal services. RCC is not serving as Client’sattorney.
In general, a licensed attorney is regulated by his or her state supreme court through the use ofrules of professional conduct and ethical requirements, minimum education and examinationrequirements, mandatory professional liability insurance coverage, client trust accountprocedures and trust account audits and a disciplinary process. Unlike a client of an attorney, aclient of RCC will not receive the advantages of such regulatory oversight since the complianceconsultant occupation is not licensed by state government.
A compliance consulting relationship with RCC is not provided those legal and professionalprotections that normally exist under an attorney-client relationship such as the following: (i)privileged communication between an attorney and client; (ii) the requirement for an attorney touse a client trust account for safekeeping of legal fees paid in advance by a client; (iii) therequirement for an attorney to maintain professional liability insurance; or (iv) prohibitionspreventing an attorney from having impermissible relationships with clients, representing otherpersons with conflicting interests, receiving referral fees from third-party vendors, or prospectivelylimiting liability for malpractice through contractual provisions in a client agreement.Unlike an attorney, RCC does not utilize a client trust account for the retainer or consulting feespaid in advance by a client, does not follow trust accounting procedures (and is not supervised bya regulator or third-party) for such retainer or consulting fees paid in advance, and either prohibitsor severely limits the circumstances and time period for refunds, and consequently thisarrangement with RCC lacks the safeguards associated with an attorney's client trust account.Due to limitations in the software used by RCC to prepare invoices, there may be referenceslocated on requests and/or invoices to a “trust” account; however, Client acknowledges thatdespite any such references, RCC does not utilize a client trust account.Unlike an attorney, RCC is not fiduciary. Unlike an attorney, RCC is not required to maintainprofessional liability insurance. Unlike an attorney, RCC is utilizing several contractual provisionswithin this Agreement in which Client waives any and all liability for certain claims and agrees tolimit the extent of RCC’s liability for malpractice for other claims. Unlike an attorney, RCCreceives referral fees from vendors participating in the Strategic Alliance Program and otherreferral programs of RCC.
If RCC provides Client with comments regarding an investment advisory agreement or otheragreement, this does not constitute and should not be deemed as legal advice. Such commentsprovided by RCC are not a substitute for a review, revision and approval of Client's investmentadvisory agreement or other agreement by an attorney in Client's jurisdiction. Client understandsthat any comments provided by RCC regarding Client's investment advisory agreement or otheragreement have not been prepared by an attorney to comply with the laws of Client's localjurisdiction. Client acknowledges that by relying upon comments provided by RCC without locallegal counsel's review and approval, Client is undertaking the risk that Client's investmentadvisory agreement or other agreement is not legally enforceable and may fail to best protectClient's interests.
In the event that a securities regulator initiates an enforcement proceeding against Client claimingClient violated applicable law, Client will need to retain legal counsel to represent Client beforethe securities regulator. Although RCC may serve as an expert resource to Client and Client'slegal counsel regarding industry practices, RCC is not a substitute for retaining appropriate legalcounsel.
There is no guarantee that consulting work performed by RCC will be favorably received by theapplicable securities regulators.
RCC strongly recommends that prior to executing this Agreement, Client should retain anattorney, who is not affiliated with RCC, to review and provide Client with independent adviceregarding the terms of this Agreement.
Client initials:
Section 5. Non-Exclusive Relationship with RCC
Client does not have an exclusive client relationship with RCC. RCC may have other clientsreceiving services from RCC which are competitors of Client and/or include former supervisedpersons of Client. RCC may also have other clients that have a business alliance, broker-dealeror vendor relationship with Client or Client’s associated persons.
Section 6. Strategic Alliance Program & Other Referral Arrangements
RCC has established the Strategic Alliance Program and other referral arrangements wherebyRCC has agreed to publicize the services and/or products of Strategic Alliance members andcertain third-party vendors and refer or introduce such Strategic Alliance members and third-partyvendors to Client. Depending upon the third-party vendor, Client may receive discounts orspecial offers from the Strategic Alliance member or third-party vendor. RCC receivescompensation from each Strategic Alliance member and third-party vendor referred or introducedby RCC which may include an annual fixed fee and/or a percentage of the fee charged by thethird-party vendor to Client. This creates a conflict of interest for RCC and biases the objectivityof RCC and its employees when referring, introducing, referencing or otherwise discussing suchStrategic Alliance Members and third-party vendors. Client is under no obligation to utilize theservices and/or products of Strategic Alliance members and other third-party vendors referred orintroduced to Client by RCC.
RCC is not affiliated with the Strategic Alliance members and any other third-party vendors anddoes not control or supervise the services or products of the Strategic Alliance member or otherthird-party vendors. Client acknowledges that RCC’s referral, introduction, discussion or otherreference to these Strategic Alliance members or third-party vendors does not mean that RCChas performed any level of due diligence on the services or products of the Strategic Alliancemembers or other third-party vendors referred or introduced by RCC. Client acknowledges andagrees that RCC is not liable for any damages that result to Client from the actions or inactions ofa Strategic Alliance member or third-party vendor referred or introduced by RCC.
RCC is not making any recommendation to Client about whether Client should utilize the servicesor products of a Strategic Alliance member or other third-party vendor. Client acknowledges thatClient’s determination to use the services or products of a Strategic Alliance member or any otherthird-party vendor is an important decision and should not be based upon a third-party vendor’sparticipation in the Strategic Alliance Program or referral, introduction or reference by RCC. Aswith any service provider, RCC recommends that Client perform its own due diligence on eachStrategic Alliance member or third-party vendor referred or introduced by RCC. Before engagingthe services or utilizing the product of a Strategic Alliance member or third-party vendor referredor introduced by RCC, Client agrees to perform its own independent investigation and evaluationto make sure that the applicable service or product of the Strategic Alliance member or third-partyvendor is the best fit for Client and meets Client’s performance requirements and regulatory andcybersecurity obligations.
Section 7. Non-Solicit of RCC Employees
Without the written consent of the president of RCC, during the term of this Agreement and for aperiod of twelve months after this Agreement's termination, Client and Client's affiliates will notengage in any of the following activities: (1) directly or indirectly solicit, contact, negotiate with, orin any manner attempt to induce any individual, who is currently employed by RCC andpersonally works or worked with Client while affiliated with RCC, to terminate his or heremployment with RCC; nor (2) hire or engage any individual, who is currently employed with RCCand personally worked with Client while at RCC, as an employee or a compliance consultant(outside of an engagement through RCC). Under no circumstances will this section prevent aClient from soliciting or hiring a current or former RCC employee, who is licensed as an attorney,to serve as the Client's attorney.
Section 8. Client's Confidential Information
In providing Compliance Services, RCC will acquire information of a confidential nature relating toClient's business activities and its investment advisory customers. RCC hereby agrees tomaintain the confidentiality of Client's information and shall not use, publish, or otherwise discloseany such confidential information pertaining to Client without Client’s express written consent.
If Client provides RCC with possession of any investment advisory related document, Client willredact (blackout or remove) at least partially the legal name of each investment advisorycustomer and any full or complete brokerage account numbers, bank account numbers, policynumbers, credit card numbers, driver's license numbers, passport numbers, visa numbers, socialsecurity numbers, tax identification numbers, passwords and dates of birth of investment advisorycustomers before providing RCC with possession of such document containing this confidentialinformation. For example, if Client intends to provide RCC with a document which includes nameof investment advisory customer (e.g., Thomas Andrew Smith) with a full date of birth(01/14/1973), Client will redact or black-out the investment advisory customer’s name to onlyshow “Smith” (or a customer number if utilized by the firm) and date of birth to only show “1973”.
RCC recognizes that Client may be subject to the provisions of the Securities and ExchangeCommission's Regulation S-P, or other privacy rules promulgated under the Gramm-Leach-BlileyAct (the "GLBA"). RCC represents that it is a nonaffiliated third-party service provider that isexcepted from the notice and opt-out requirements pursuant to the GLBA.
To the extent that Client is utilizing RCC to assist with registering and/or notice filing as aninvestment adviser or investment adviser representative, Client authorizes RCC to disclose, asreasonably necessary, confidential information about Client’s business activities to the applicablesecurities regulators as part of the investment advisor registration process.Nothing in this Section will diminish or restrict RCC's right, as later described in this Agreement,to use for the benefit of another party any materials that are the same (except for Client's name, CRD number or associated persons' names) as or similar to the materials prepared by RCC forClient under this Agreement.
Section 9. Not Work Made for Hire & Limited, Non-Exclusive License
RCC shall retain sole ownership of the copyright of all materials prepared by RCC under thisAgreement. After removing Client’s name, Client’s CRD number and the names of Client’sassociated persons, RCC may use the materials prepared by RCC under this Agreement forparties or investment advisors other than Client without any limitations, restrictions or charges toRCC. Under no circumstances shall any materials prepared by RCC pursuant to the Agreementconstitute works made for hire under copyright law. Client will execute any necessary forms orpapers that RCC considers necessary to secure RCC’s copyright with no charge to RCC.RCC shall grant Client a limited, non-exclusive license to use the materials prepared by RCCunder this Agreement in the following manner and under only these conditions:
Section 10. Not Intended to Detect Fraud
Client understands that RCC is not a fraud examiner and the Compliance Services providedunder this Agreement are not intended to detect or prevent fraud including but not limited toinaccurate or false calculation or valuation of assets under management, false statements ofthe Form ADV, bribery, extortion, identity theft, forgery, misrepresentation, collusion tocircumvent internal controls, selling away, unlawful sale of unregistered securities, failure toregister as an investment adviser or an investment adviser representative thereof, failure toregister as a securities broker-dealer or a registered representative thereof, Ponzi schemes,insider trading, undisclosed outside business activities, inaccurate or false fee calculations,a loan from an investment advisory customer, a bribe, insider trading, front runninginvestment advisory customer trades, cherry picking profitable trades for personalaccounts, misappropriation of limited investment opportunities owed to customers,cybersecurity breach, identity theft, wire fraud, unauthorized disbursement, theft,embezzlement, misappropriation or unlawful conversion by Client or Client’s owners, directors, officers, employees, investment adviser representatives, solicitors, custodians,third-party money managers, vendors or outside professionals.
Section 11. Miscellaneous
(a) Counterparts. The parties may execute this Agreement on any number of counterparts, andall of the counterparts taken together shall be deemed to constitute one and the same instrument.
(b) Severability. If any part, term or provision of this Agreement is held to be illegal, in conflictwith any law or otherwise invalid, the remaining portion or portions shall be considered severableand not be affected by such determination, and the rights and obligations of the parties shall beconstrued and enforced as if the Agreement did not contain the particular part, term or provisionheld to be illegal or invalid.
(c) Force Majeure. In the event either party is unable to perform its obligations under the termsof this Agreement because of acts of God (including fire, flood, tornado, earthquake, storm,hurricane or other natural disaster), terrorism, war, cyberwar, invasion, espionage, cyberespionage, act of foreign enemies, rebellion, strikes, equipment or transmission failure or damagereasonably beyond its control, or other causes reasonably beyond its control, such party shall notbe liable for damages to the other party resulting from such failure to perform or otherwise fromsuch causes.
(d) Headings. Section and paragraph headings in this Agreement are included for convenienceonly and are not to be used to construe or interpret this Agreement.
(e) Representation of Signatories. Each of the undersigned expressly warrants and representsthat they have full power and authority to sign this Agreement on behalf of the party indicated andthat their signature will bind the party indicated to the terms hereof.
Section 12. Acknowledgements, Disclosures Limitations, Requirements & Terms ofSchedules & Addendums
Client has read, understands and agrees to the acknowledgements, representations, disclosures,limitations, requirements, and terms made by RCC to Client within the attached Exhibits,Disclosures, Schedules and Addendums or any RCC revisions of these documents provided toClient.
Section 13. No Third-Party Beneficiary
This Agreement and the Compliance Services provided under this Agreement are for theexclusive benefit of Client. The materials prepared under this Agreement are not provided for thebenefit of a third-party such as a broker-dealer, custodian, or investment adviser that has abusiness relationship with Client or an individual or entity who is a recipient or customer ofClient’s investment advisory services.
Section 14. Choice of Law and Venue
This Agreement shall be governed by and construed according to the laws of the State ofNebraska without giving effect to its choice of laws principles. The parties agree that all actionsand proceedings arising out of or relating directly or indirectly to this Agreement or any ancillaryagreement or any other related obligations shall be litigated solely and exclusively in the state orfederal courts located in Omaha, Nebraska.
Section 15. Client Should Independently Evaluate Whether to Hire RCC
Client understands that the determination to use a third-party compliance services provider is animportant decision and should not be based solely upon advertisements or self-proclaimedexpertise. A description or indication of limitation of RCC’s Compliance Services does not mean that an agency or board has certified RIA Compliance Consultants, Inc. as a specialist or expertin investment advisor compliance. RCC has not been certified by an agency or board as aspecialist or expert in investment advisor compliance. Client acknowledges that RCCrecommended that Client conduct an independent investigation and evaluation of RCC prior toexecuting this Agreement.
Section 16. Limitation of Liability
IN NO EVENT WILL RCC'S AGGREGATE LIABILITY TO CLIENT FOR ANY AND ALLCLAIMS RELATING TO THE COMPLIANCE SERVICES PROVIDED UNDER THISAGREEMENT, WHETHER IN CONTRACT OR NEGLIGENCE, EXCEED THE FEES PAID BYCLIENT FOR THE COMPLIANCE SERVICES PROVIDED UNDER THIS AGREEMENT.
Exhibit A - Scope of Engagement & Compliance Services
RCC will provide investment advisor compliance services to Client during the Agreement Periodas set forth herein Exhibit A ("Compliance Services").
Client and RCC will agree mutually upon a timeline which reasonably distributes the workassociated with the Compliance Services during the term of the Agreement.
In the event Client would like to modify the Compliance Services listed in Exhibit A after executionof this Agreement, a written request must be provided to RCC. Changes to the ComplianceServices listed are contingent upon the written agreement of both RCC and Client.
Investment Adviser Registration Services - Client, or an entity controlled by Client, (collectivelyreferred to as “Client”) intends to register as an investment advisor with a securities regulator inthe United States selected by Client (“Securities Regulator”), and RCC will provide Client with itsinvestment advisor registration service as described within this section.Regulatory Guidance - RCC will conduct an interview of Client's principal responsible forcompliance (or designee) regarding Client's strategic goals, business model, investment advisoryservices, custody of investment advisory customer accounts, number of customers and criteria forcustomers, fee structure, regulatory history, and leadership and organization structure. Based onthe information disclosed by Client, RCC will prepare the regulatory documents described belowand provide guidance regarding the registration process of the Securities Regulator.IARD Entitlement - RCC will prepare the FINRA Entitlement applications required to establishClient's IARD/Web CRD account.IARD Service Bureau - If approved by Client, RCC will electronically enter and file (via Client’sIARD/Web CRD account) applicable application documents such as the Form ADV and Form U4prepared by RCC on behalf of Client during the registration process with the Securities Regulator.Form ADV Part 1 - RCC will prepare a Form ADV Part 1A, Part IB if applicable, Schedule A,Schedule B, Schedule C and Schedule D in accordance with Client’s disclosures about its businessmodel and regulatory history and the requirements of the Securities Regulator.Form ADV Part 2A – RCC will prepare a Form ADV Part 2A in accordance with Client'sdisclosures about its personnel, business model and regulatory history and the publishedrequirements of the Securities Regulator.
Appendix I Wrap Fee Brochure - In the event that Client sponsors a wrap fee program, Client willneed a disclosure document pursuant to Form ADV Part 2 Appendix 1 Wrap Fee Brochure._____ Form ADV Part 2A Appendix I Wrap Fee Brochure Is Included under ConsultingFee; or_____ Form ADV Part 2A Appendix I Wrap Fee Brochure Is Not Included UnderConsulting Fee, and There Will Be An Additional Charge In Order for RCC toPrepare Such an Additional Document.Form ADV Part 2B - At the request of Client, RCC will prepare Form ADV Part 2B brochuresupplements for up to _______ supervised persons of Client (“Number of Form ADV Part 2BBrochure Supplements”). In the event that Client requests RCC to prepare Form ADV Part 2Bbrochure supplements for additional supervised persons beyond the Number of Form ADV Part2B Brochure Supplements, RCC will charge an extra fee (in addition to the Consulting Fee) foreach additional supervised person. The RCC consultant will discuss and disclose the additionalfee prior to preparing additional brochure supplements. In the event that Client requests RCC to prepare a Form ADV Part 2B supplement brochure for any supervised person, who has a “yes”answer or adverse history on the Form U4, RCC also will charge an hourly consulting fee at theRCC consultant’s standard hourly billing rate disclosed later in this Agreement (in addition to theConsulting Fee described later) with a minimum charge of one hour.Form ADV Part 3 – If applicable (i.e. serving retail investors) when applying for registration withthe U.S. Securities and Exchange Commission or certain state securities regulators requiringsuch document, RCC will prepare one (1) investment advisory Form CRS/Form ADV Part 3relationship summary for Client’s investment adviser firm based upon Client’s disclosures toRCC. Client is required to study the Form ADV Part 3 instructions and then review and finalizethe draft Form ADV Part 3 for accuracy and consistency with other disclosure documents andanticipated/actual practices. Upon Client’s written request, RCC will file the final version of FormADV Part 3 with the SEC via the IARD system (if Client has established RCC as user underClient’s IARD account). To the extent that Client has any financial, criminal, disciplinary, orregulatory disclosure filings or other adverse history (as defined below) for the Form ADV Part 3,any assistance with drafting or consulting on such disclosures will be handled on the RCC staffmember’s standard hourly rate, as disclosed in the RCC Minimum Fixed Fee & Hourly RateSchedule, in addition to and separate from the Consulting Fee described below.Registration in Other States – When applying for registration as an investment adviser with astate securities regulator (not notice filing as an investment adviser registered with the U.S.Securities and Exchange Commission), based on the information that Client provides RCC aboutits anticipated investment advisory customers and places of business, RCC will advise Client asto those other states initially requiring Client to register as an investment advisor. The ConsultingFee later described under this Agreement only covers the preparation of investment advisorregistration documents for filing in Client's home state with Securities Regulator and up to_____other states. In the event that Client requests RCC to prepare for submission an investmentadvisor application for other states which are not disclosed herein, RCC's charge is generally$495 per additional state and includes up to two hours and thirty minutes of research andconsulting by RCC regarding the investment advisor application for such state.
Notice Filing in Other States – When applying for registration as an investment adviser with theU.S. Securities and Exchange Commission (not registering as an investment adviser with a statesecurities regulator), based on the information that Client provides RCC about its anticipatedinvestment advisory customers and office locations, RCC will advise Client as to those otherstates initially requiring Client to notice file as an investment advisor. RCC will prepare the noticefiling with the state securities regulator in Client’s home state and up to ______ other states. Inthe event that Client requests RCC to prepare for submission a notice filing for other states whichare not disclosed, RCC's charge is generally $95 per additional state.
Form U4 – RCC will prepare the Form U4 (via Web CRD system) to register up to _______individuals as investment advisor representatives (referred to as "IAR" or collectively "IARs") ofClient's anticipated investment advisor. RCC will verify Form U4 disclosures are consistent withClient's Form ADV disclosures. In the event that Client requests RCC to prepare the Form U4 foradditional IARs beyond the disclosed number of IARs, RCC will also charge an extra fee (inaddition to the Consulting Fee) for the preparation of each additional Form U4. The RCCconsultant will discuss and disclose the additional fee prior to preparing additional brochuresupplements. In the event that Client requests RCC to prepare or revise any disclosureinformation related to a “yes” answer or adverse history on the Form U4 or requests RCC toprepare any additional state forms other than the Form U4 for the previously referencedindividual(s) seeking to register as an IAR(s), RCC also will charge an hourly consulting fee at theRCC consultant’s standard hourly billing rate disclosed later in this Agreement (in addition to theConsulting Fee described later) with a minimum charge of one hour.IARD Funding - RCC will give guidance on the amount necessary for Client to fund theIARD/Web CRD account to cover the registration and user fees that will initially be charged by theIARD/Web CRD and applicable securities regulators.Miscellaneous Registration Documents – When registering with a state securities regulator and ifapplicable, RCC will notify Client of any additional miscellaneous investment advisory registrationdocuments as specifically required by the formal administrative rules of the Securities Regulatorthat must be submitted as part of the initial registration process. When requested, RCC willprovide assistance in preparing miscellaneous state specific investment advisory registrationdocuments (except investment advisory agreement, balance sheet and income statement). RCCdoes not provide accounting advice including whether Client’s balance sheet or Client’s incomestatement are prepared in accordance with generally acceptable accounting principles or whetherClient satisfies net worth requirements.Regulatory Assistance - RCC will assist Client in preparing Client’s written response to theSecurities Regulator regarding any questions associated with Client's investment advisorapplication. To the extent that there are no claims by the Securities Regulator that Client violatedapplicable law and likewise no claims by Client that the Securities Regulator has violatedapplicable law, RCC will provide, upon Client’s request, assistance with answering questions orcorrecting deficiencies of the investment advisor application identified by the Securities Regulator.Client is aware that RCC is not a law firm and does not provide legal services. Client understandsRCC's consultant is not acting in the capacity of an attorney for Client when assisting Client withrespect to the Securities Regulator’s questions or required changes. Client understands furtherthat RCC is not serving as Client’s spokesperson, advocate or otherwise representing Clientbefore the Securities Regulator. Client acknowledges that Client is solely responsible forverifying the accuracy and truthfulness of any draft documents and/or filings in which RCCassisted Client.Adverse History - To the extent that RCC assists with any disclosures, questions or corrects anydeficiencies identified by the Securities Regulator regarding any regulatory or professionaldisciplinary history, criminal history, arbitrations and lawsuits, tax liens, bankruptcies or pendingregulatory inquiries or proceedings of Client or Client's associated persons for purposes of theForm ADV and/or Form U4 (“adverse history”), RCC also will charge an hourly consulting fee atthe RCC consultant’s standard hourly billing rate disclosed later in this Agreement (in addition tothe Consulting Fee described later) with a minimum charge of one hour.120-day Update Amendment Filing – When applying for registration with the U.S. Securities andExchange Commission and if applicable, RCC will notify Client of due date for filing theamendment to report that Client has reached or exceeded $100 million in regulatory AUM. Uponnotice from Client, RCC will prepare the 120-day amendment filing based on information providedby Client.Customized Compliance Manual & Code of Ethics - RCC will prepare written compliance manualand code of ethics as it relates to the topics listed below and Client's disclosed business modeland preferred practices. Depending upon the investment advisor requirements of the SecuritiesRegulator and Client’s disclosed business model and preferred practices, the compliance manualand code of ethics will address the following topics: registration and notice filing requirementsincluding representative licensing; investment advisory customer communications (advertisingand correspondence);social media and networking websites; best execution; books and records;business continuity and disaster recovery; code of ethics; personal securities transaction andholding reports; investment advisory customer complaints; custody; investment advisorycustomer directed brokerage; trading practices including soft dollar arrangements; solicitorarrangements; privacy of investment advisory customer information; Form ADV disclosures andannual offer; insider trading; proxy voting; political contributions; handling whistleblowercomplaints; Schedule 13D, 13F, & 13G filings; and foreign customers. Upon presentation of theinitial draft of the compliance manual and code of ethics to Client, RCC will be available for a one-hour consultation to address any questions or revisions requested by Client. This one-hour isincluded and not in addition to the Budgeted Hours. If Client requires assistance beyond the one hour consultation, such services will be provided at the RCC consultant’s standard hourly billingrate referenced in this Agreement.Sample Forms - In addition to the compliance manual and code of ethics, RCC will offer Clientcertain sample forms to assist Client in performing various compliance duties. The sample formsare not customized to Client. At a minimum, the following sample forms will be offered to Client:annual compliance calendar checklist, books and records documentation log, suggested list ofcompliance files and reports, code of ethics acknowledgement form, compliance manualacknowledgement form, sample customer privacy policy notice, and customer privacy noticerequest / receipt log. Client will be responsible for customizing and implementing any suchsample forms to the requirements of and in accordance with Client’s compliance manual andcode of ethics.RCC offers no promise nor guarantee that Securities Regulator will approve Client’s applicationto register as an investment adviser or the application(s) of Client’s supervised person(s) toregister as investment adviser representative(s).
Exhibit B – Fees & TermsConsulting Fee
RCC will provide up to _____ hours of work by its consultants ("Budgeted Hours") to complete theCompliance Services described above in exchange for a fixed fee of $________ ("ConsultingFee"), which is required to be paid in advance prior to RCC commencing any consulting workunder this Agreement. The Consulting Fee is based upon representations made by Client aboutthe investment adviser registration (e.g., number of sates, number of investment adviserrepresentatives, disciplinary/legal history or services) which has been confirmed in Schedule 3.To the extent that this information changes, RCC reserves the right to adjust the Consulting Fee.In the event that RCC exceeds the Budgeted Hours, RCC may require Client to pay a retainer inadvance (“subsequent retainer amount”) and will charge Client an hourly fee at the RCCconsultant’s standard hourly billing rate in accordance with Minimum Fixed and Hourly FeeSchedule. Any subsequent retainer amount paid by Client after the Consulting Fee is nonrefundable and must be utilized for consulting services of RCC within 12 months of suchpayment; subsequent retainer amount will not be available to apply against the fees of RCC after12 months from payment of such subsequent retainer amount.Upon RCC’s initial presentment of the Form ADV Part 1A, Part 1B if applicable, Part 2A, Part 3 ifapplicable and/or Appendix I if applicable to Client, seventy-five percent (75%) of the ConsultingFee paid in advance will be considered earned by RCC, ten percent (10%) of the Consulting Feewill be considered earned upon initial presentment of the Form U4(s), or equivalent if required,and Form ADV Part 2B supplement brochure for each IAR identified in this Agreement, andfifteen percent (15%) will be considered earned by RCC upon presentment of the initialpresentment of the WSP/CoE.
Adverse History
Based on disclosures previously provided by Client to RCC regarding an adverse history forpurposes of the Form U4 and/or Form ADV, Client will submit an additional retainer fee of$________ (“Adverse History Retainer”) for the hourly consulting services as explained in theAdverse History section in Exhibit A. This Adverse History Retainer is based upon an estimate ofthe amount of time that will be involved in discussing, researching and preparing any disclosureinformation related to the adverse history disclosed by Client to RCC. Additional fees may be duebased on the actual time spent by the RCC consultant discussing, researching and preparing thepotential or actual disclosure information related to Client’s Adverse History. Prior to RCCcommencing any consulting work under this Agreement, the Adverse History Retainer is requiredto be paid in advance and in addition to the Consulting Fee previously described in thisAgreement. The Adverse History Retainer is non-refundable (even if the hourly consulting relatedto the adverse history does not exhaust the Adverse History Retainer) and must be utilized forconsulting services of RCC within 12 months of such payment.
Retainer
Client will pay in advance to RCC the amount of $_________, which is the Consulting Fee plusAdverse History Retainer, as an initial retainer prior to RCC commencing any consulting workunder this Agreement.Retainer payments (including the advance payment of the Consulting Fee or additional hourlyconsulting for adverse history) made to RCC are not held in a client trust account. Retainerpayments made to RCC are not maintained in a separate account for the benefit of Client. Aretainer payment is a general asset of RCC upon RCC’s receipt of such retainer payment.
Term of Engagement
The Registration Service provided by RCC under this Agreement will be considered concludedupon the soonest of any one of the following events: (a) Client’s written approval; (b) theSecurities Regulator’s written or electronic (via the IARD system) approval of Client’s applicationas an investment advisor; (c) the Securities Regulator’s verbal or written denial or indefinitepostponement of the Client’s application as an investment advisor; and/or (d) if Client does notsubmit a registration filing with Securities Regulator, 90 days following the initial presentment ofall the investment advisor registration documents (unless otherwise agreed upon in writing).Written supervisory procedures and code of ethics services (“WSP/CoE Service”) will beconsidered concluded upon presentment of initial WSP/CoE.Either Client or RCC may initiate early termination of the Registration Service provided under thisAgreement before completion of all the Registration Service by giving the other party writtennotice of such termination.In the event that Client initiates early termination of the Registration Service (within 12 months ofthe execution of this Agreement) before RCC commences any work for Client, RCC will refundthe consulting fees paid in advance less an early termination fee of $495 (“Early TerminationFee”) and any charge incurred by RCC for processing the original credit card transaction(“administrative charge”). Such refund will be paid to Client within 30 days of receiving Client’swritten notice of early termination.In the event that Client initiates early termination of the Registration Service under this Agreementafter RCC commenced work for Client and prior to RCC’s actual presentment of the Form ADVand Form U4 or WSP/CoE, RCC is entitled to deduct from the advance payment of consultingfees an amount equal to the RCC consultant’s standard hourly billing rate previously disclosed foreach hour of work by RCC pursuant to this Agreement. The remainder, if any, of the advancepayment less the Early Termination Fee and any administrative charge originally paid for using acredit card will be refunded by RCC to Client. Such refund will be paid by RCC to Client within 30days of receiving Client’s written notice of early termination.In the event either party initiates in writing early termination of the Registration Service under thisAgreement after RCC has presented Client with the Form ADV, the Form U4, and/or theWSP/CoE, RCC is entitled to deduct from the advance payment an amount equal to thepercentage of the Consulting Fee specified above in the Payment Terms Section for suchdocument. If RCC provided any other services pursuant to Payment Terms Section of thisAgreement, Client authorizes RCC to deduct such amount from the Consulting Fee or otherconsulting fees paid in advance. The remainder, if any, of the advance payment of anyconsulting fees less any administrative charge originally paid for using a credit card will berefunded by RCC to Client if early termination is requested within the 12 months of the executionof this Agreement. Such early termination refund will be paid by RCC to Client within 30 days ofreceiving Client’s written notice. Client will pay in full RCC within 30 days of receiving a finalinvoice of any and all consulting fees due under the Payment Terms Section that are stilloutstanding after the above described deductions of the consulting fees paid in advance.If Client either through action or inaction does not review an investment advisor registrationdocument, fails to submit a filing, delays a filing, postpones a filing, or withdraws a filing as aninvestment advisor application after RCC has presented investment advisor documents (e.g. theForm ADV, Form U4 and WSP/CoE), this will not be deemed as an early termination and Clientwill not be entitled to a refund or write-off of any portion of the Consulting Fees under suchcircumstances.If the Securities Regulator delays Client’s approval as an investment advisor, such action will notbe deemed as an early termination. Client will not be entitled to a refund or write-off of anyportion of the Consulting Fees as a result of the Securities Regulator’s denial of Client’s investment advisor application or a delay of the approval of Client’s investment advisorapplication.If Client does not commence the investment advisor registration application process within 12months of the execution of this Agreement and does not initiate in writing an early termination ofthe Registration Services and refund request within such 12 month period, the RegistrationServices will cease and the Consulting Fee will be treated as earned by RCC.
Payment via Credit Card
RCC can accept payment via credit card or ACH withdrawal. Client agrees that if Client has adispute with RCC, Client will not raise this dispute with Client's credit card company/ACHprocessor or seek adjudication of any dispute with RCC through or by Client's credit cardcompany/ACH processor. Client agrees that if Client pays the consulting fees via credit card orACH, Client will not instruct Client's credit card company, ACH processor or bank to reverse suchcharges. If Client cancels the credit card or bank account on file with RCC or the credit card on fileexpires during the duration of the Agreement and subsequent payments are still due, Client willprovide RCC with another valid credit card or bank account to use for payment of the ConsultingFee.
Invoice Delivery
RCC will deliver the invoice electronically to Client, and Client will be responsible for paying theoutstanding amount, if any, within 30 days of presentment of invoice.
RIA COMPLIANCE CONSULTANTS, INC.
SCHEDULE 1 – DISCLOSURES & COMPLIANCE SERVICE LIMITS
The following are important disclosures by RCC and limitations related to the service provided by RIA Compliance Consultants, Inc. (“RCC”) and acknowledgements and representations by Client under this Agreement.
Client acknowledges that state securities regulators typically require an individual who is a direct or indirect owner of a state registered investment adviser firm to register as an investment adviser representative, and RCC cannot offer any assurances that the owner of Client’s state registered investment adviser firm will not be subject to such requirements.
If Client is a state registered investment adviser, Client acknowledges that (a) the state may require Client to submit annually certain documents directly to the state securities regulator (outside of the IARD/CRD system), (b) it is Client’s obligation to check with the state securities regulator as to whether there are any documents required to be submitted (outside of the IARD/CRD system) to the state securities regulator on an annual basis and also to carefully review any communication from the state regulator with respect to such annual submissions outside of the IARD/CRD system, and (c) Client will be responsible solely for the submission of such documents as required by the state securities regulator.
Client acknowledges that certain solicitor activities on behalf of a private fund and/or private fund manager may constitute acting as a broker-dealer under the Securities Exchange Act of 1934 as amended depending upon the facts. Client further acknowledges such analysis and advice regarding this issue is outside the scope of the Compliance Services under this Agreement, and to the extent that Client provides solicitor services to a private fund or utilizes solicitors for a private fund, Client agrees to retain legal counsel to provide advice to Client regarding the broker-dealer registration requirements.
Client understands that if Client provides investment advisory services through an investment adviser representative who is also an insurance agent and/or registered representative of a broker-dealer and such investment adviser representative discusses advisory, broker-dealer and insurance services and products in combined fashion at a single meeting (depending upon the facts and circumstances), there is a risk that an investment advisory client or a securities regulator may try to hold Client and/or such investment adviser representative as a fiduciary as it relates to these other non-advisory capacities (e.g., insurance, broker-dealer). Client acknowledges that the services of RCC do not include providing compliance advice as to Client about how to provide such non-advisory services or products in accordance with any fiduciary duty or applicable standard of care.
RCC will not be responsible for the verification of the information and documentation provided by Client. RCC will not be responsible for verifying the accuracy or truthfulness of any information, document or statements provided by the owners, directors, officers, employees, investment adviser representatives, custodians, third-party money managers, vendors or outside professionals (such as attorneys and accountants) of Client. RCC will not be responsible for verifying statements in the Form ADV are accurate and truthful. Client will be solely responsible for verify the accuracy and truthfulness of all documents prepared by RCC on Client’s behalf.
Client acknowledges that Client is solely responsible for both (a) identifying and bringing to RCC’s attention Client’s business practices and outside business activities which are in conflict with an investment advisory client’s interest and/or Client’s fiduciary duty and (b) then verifying that any such conflicts have been eliminated or disclosed and mitigated and that Client is meeting its fiduciary duty. RCC offers no assurances that RCC will identify revenue streams, business practices, arrangements and/or outside business activities which are in conflict with an investment advisory client’s interest or otherwise a breach of Client’s fiduciary duty; moreover, due to the nature of a consulting relationship, RCC anticipates that depending upon the circumstances, there will be some conflicts of interest and/or breaches of fiduciary duty which RCC does not identify to Client. RCC is not a substitute for Client and Client’s directors, officers, managers, employees and representatives from regularly and carefully reviewing Client and its affiliate’s sources of revenue, business practices, arrangements and outside business activities for purposes of identifying conflicts of interest and breaches of fiduciary duty.
Client understands that RCC does not serve as a supervisory principal, the compliance department or the chief compliance officer of Client. Client’s compliance with applicable laws and rules for an investment adviser is not being outsourced to RCC under this Agreement. In order to meet Client’s regulatory obligations, Client’s executive officers and staff must devote significant time and focus to compliance each week and be actively involved in Client’s compliance program. Client’s executive officers and staff are solely responsible under this Agreement for whether Client is meeting its regulatory obligations.
Furthermore, Client acknowledges that Client as an investment adviser has a fiduciary duty to eliminate conflicts of interest and prevent an investment adviser from taking unfair advantages of a client. If a policy or practice, internal or external business relationship/arrangement or outside business activity creates a conflict of interest, Client is fully aware that Client must make full and fair disclosure of all material facts and mitigate the conflict of interest, and Client must act in client’s best interest at all times.
Client understands that a securities regulator is not approving or offering an opinion of specific conflict of interest disclosure language and mitigation measures in the Form ADV when Client’s application to register as an investment adviser is approved by the securities regulator, and a previous examination by a securities regulator with no applicable findings does not mean that the securities regulator has approved of the specific conflict of interest disclosure language or mitigation measures in Client’s Form ADV. Client acknowledges that regulatory focus and priorities change over time and whether a securities regulator views a conflict of interest as especially problematic for an investment adviser can change from year to year. Likewise, a securities regulator’s expectation of acceptable disclosures/mitigations by an investment adviser also can change from time to time. Due to this ever-changing environment, Client should regularly review and re-review its business practices for conflicts of interest on a regular basis and any conflict of interest disclosure language and mitigation measures in light of the most recent regulatory developments.
Although RCC may assist Client with identifying conflicts of interest, RCC does not take responsibility for identifying, disclosing and mitigating conflicts of interest. Regardless of any assistance or advice provided by RCC, Client is solely responsible for identifying conflicts of interest and disclosing/mitigating such conflicts and correspondingly re-reviewing its policies/practices, business relationships/arrangements and outside business activities for conflicts of interest.
RCC strongly recommends that Client make every attempt to avoid and prohibit any internal policy, procedure or practice, internal or external business relationship/arrangement with an affiliate or third-party or outside business activity of supervised persons which creates a conflict of interest. Client acknowledges that it is solely Client's responsibility to identify and determine whether to avoid/prohibit a particular conflict of interest. To the extent Client does not avoid/prohibit the policy, procedure, practice, relationship/arrangement or outside business activity creating the conflict of interest, Client acknowledges that an investment adviser firm must explicitly disclose, in writing, all conflicts of interest using robust and reasonable disclosure language that the investment adviser firm's investment advisory clients will fully and sufficiently understand in a clear and concise manner, and Client must also disclose its policies and procedures to control for and mitigate the conflicts of interest so Client is able to evidence that it is acting in the investment advisory client's best interest. Any assistance or advice provided by RCC regarding the identification of a conflict of interest, the drafting of disclosure language/mitigation procedures of a conflict, or the assessing/testing of such disclosure/mitigation of a conflict is not a recommendation, endorsement or safe harbor by RCC that Client should engage in such conflict of interest. RCC offers no assurance that any advice, draft language or procedure or assessment/test provided by RCC with respect to a conflict of interest will be effective and meet the expectations of a securities regulator. In the opinion of RCC, the most prudent practice is for Client to avoid and prohibit any policy/procedure, internal or external business relationship/arrangement with affiliates or third-parties or outside business activity which creates a conflict of interest.
Client Initials:
MINIMUM FIXED FEE & HOURLY RATE SCHEDULE
Annual Compliance Program Packages
To the extent that Client is currently subscribed to a standard (non-customized) Annual Compliance Program package of RIA Compliance Consultants, Inc. (“RCC”), the following is the monthly rate for the packages listed below which will be effective upon the renewal date of the Annual Compliance Program:
RCC reserves the right to change the annual fee by giving Client 30 days’ notice prior to the renewal date of the Annual Compliance Program.
Sample Forms
To the extent that Client requests a sample form available on RCC’s Online Store for Compliance Tools and Services or requests RCC customize such a sample form, RCC may charge Client the current published price for the sample form (if not available to Client under Client’s current Annual Compliance Program subscription) plus the additional hourly work by RCC’s staff to discuss such form with Client and customize the sample form to Client’s specifications and/or requirements.
Hourly Rates
To the extent that Client is subject to an hourly fee arrangement or has exceeded budgeted consulting hours (or is outside the scope of services) under a fixed fee arrangement and is currently subject to an hourly fee arrangement with RCC, the following are the current hourly rates of RCC’s staff billed in five-minute increments:
The assignment of a particular staff person of RCC to work on a task or project is at RCC's sole discretion and will be based upon availability, skills and expertise of each staff person.
Tasks/Activities Subject to Minimum Fixed Fee
To the extent that Client is subject to an hourly fee arrangement or has exceed budgeted consulting hours (or is outside the scope of services) under a fixed fee arrangement and is currently subject to an hourly fee arrangement with RCC and RCC performs a task/activity or set of tasks/activities listed below on the Minimum Fixed Fee Schedule, Client will be charged the greater of the hourly fees incurred using the current hourly rates or the minimum fixed fee listed below on the Minimum Fixed Fee Schedule. RCC reserves the right to add, change and delete the tasks/activities and corresponding fees of the Minimum Fixed Fee Schedule effective immediately upon RCC giving client notice of applicable additions, changes or deletions.
Investment Adviser Representative Documents
Advertising
Other Registration Documents & Filings
Subsequent Changes to Minimum Fixed Fees & Hourly Rates
RCC reserves the right to raise the minimum fixed fees or hourly rates indicated in the Minimum Fixed Fee & Hourly Rate Schedule after giving the Client a 30-day advance notice of the new minimum fixed fees and hourly rates.
Other Tasks/Activities Not Listed under Tasks/Activities Subject to Minimum Fixed Fee
In addition to the Tasks/Activities Subject to Minimum Fixed Fee, RCC also may offer a fixed fee in lieu of an hourly rate for certain other specific tasks or activities not stated above. Prior to charging a fixed fee which is not already listed under the Tasks/Activities Subject to Minimum Fixed Fee stated above, RCC will provide a quote of the fixed fee in writing for Client's approval prior to beginning of such task/activity.
RIA Compliance Consultants Inc.
Schedule 4 – Sample Forms Disclosure
Please understand that these sample documents are provided to you on “as is” basis with no warranty.
These sample documents have not been customized to your investment adviser’s business model, the factual circumstances related to your situation, the specific investment advisory rules of your investment adviser’s securities regulator or your investment adviser’s written supervisory procedures and code of ethics. These sample documents may not be applicable or appropriate for your investment adviser. There may be several assumptions underlying these sample documents which are not identified or explained in the sample document. You should not consider these sample documents as an exhaustive, comprehensive or definitive list of the items necessary to meet your investment adviser’s obligations under the applicable investment adviser laws and rules.
These sample documents are not intended to detect or prevent fraud, selling away, Ponzi schemes, undisclosed outside business activities, inaccurate or false fee calculations, theft, misappropriation or unlawful conversion of client funds.
Due to changes of investment adviser laws and rules, these sample documents may become outdated and need to be updated or discontinued. Since these sample documents may not reflect the specific investment advisory requirements of your securities regulator, please check with the securities regulator(s) with jurisdiction over your investment adviser before using this document.
These sample documents are not a substitute for retaining a compliance professional to advise and assist you regarding your investment adviser’s compliance program. Unless otherwise agreed to in writing, you understand that you have not engaged RIA Compliance Consultants, Inc. in a consulting relationship by merely utilizing these sample documents. Additionally, please understand that unless otherwise agreed to in writing, RIA Compliance Consultants, Inc. is not responsible for customizing these sample documents, updating these sample documents, preparing your investment adviser’s written supervisory procedures or code of ethics, or notifying you of changes to the investment advisor laws and rules.
To the extent that these sample documents are related directly or indirectly to a contract or potential legal dispute, you should also consult with your attorney. RIA Compliance Consultants, Inc. does not provide legal services or serve as your attorney.
Unless RCC advises you in writing to contrary, ADV1 Annual Amendment Service includes the following: preparing the Form ADV Part 1 Annual Update filing through the IARD system; updating Item 4E of Form ADV Part 2; uploading the revised Form ADV Part 2 to the IARD system and submitting the amended Form ADV Part 1 and Part 2 through the IARD system. IARD Renewal Service consists of the following: providing an outline of important dates and follow-up reminders throughout the renewal period; notifying the client of any documents that must be submitted directly to state securities regulator if investment adviser is registered with the state securities regulator; retrieving from the CRD system and providing the client with a copy of the CRD Rep Roster Report; providing the client with IARD funding information; retrieve from the IARD system and provide Client with a copy of the Client’s initial and final renewal statements; and monitor Client’s IARD renewal account and to verify that the account is funded in a timely manner, if funding is not credited specific reminders will be provided.
RCC will require certain deadlines of Client for returning questionnaires and for reviewing drafts sent by RCC. Client acknowledges that it will need to comply with any deadlines published by RCC in order for RCC to ensure that the amendments are filed no later than 90 days after the Client’s fiscal year end. In the event Client misses a deadline published by RCC for returning a questionnaire or reviewing the initial draft Form ADV filing, RCC cannot offer any assurances that the Form ADV amendment will be filed timely and RCC will bill Client an additional $255 to process the late submission or response.
Unless RCC advises you in writing to contrary, ADV1 Annual Amendment Only Service includes the following: preparing the Form ADV Part 1 Annual Update filing through the IARD system; updating Item 4E of Form ADV Part 2; uploading the revised Form ADV Part 2 to the IARD system and submitting the amended Form ADV Part 1 and Part 2 through the IARD system.
Unless RCC advises you in writing to contrary, IARD Renewals Only Service consists of the following: providing an outline of important dates and follow-up reminders throughout the renewal period; retrieving from the CRD system and providing the client with a copy of the CRD Rep Roster Report; providing the client with IARD funding information; retrieve from the IARD system and provide Client with a copy of the Client’s initial and final renewal statements; and monitor Client’s IARD renewal account and to verify that the account is funded in a timely manner, if funding is not credited specific reminders will be provided.
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Signed by Bryan Hill Signed On: 11/22/2021
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