Important Information You Should Know
PRIVACY STATEMENT OF JOHN THOMAS FINANCIAL
The confidentiality of client information is an important concern of John Thomas Financial. We take precautions to safeguard personal client information at all times and we will remain vigilant in protecting that information. The provisions of this privacy notice will apply to former clients as well as current clients.
John Thomas Financial collects personal information about you that is necessary to provide financial products or services. We may obtain this information from the following sources:
Information we receive from you on account applications, forms and other materials that you provide to us, whether in writing, in person, by telephone or by any other means. This information may include your name, address, telephone number, social security number, occupation, assets and income.
Information about your transactions with us or a non-affiliated third party such as account balances, payment history and account activity.
Information we receive from a consumer-reporting agency, such as your credit bureau reports and other information relating to your creditworthiness.
John Thomas Financial will only disclose certain information about you, as permitted by law, under the following circumstances: Where we believe, in good faith that disclosure is required under law to cooperate with regulators or law enforcement authorities. To consumer reporting agencies.
To our service providers to help us process your application or service your accounts. These service providers, in turn are required to protect the confidentiality and security of any information we give to them and may not reuse it for any other purpose.
John Thomas Financial restricts access of your personal accounts(s) and information to those employees who require access to that information in order to provide products or services to you. We maintain physical, electronic and procedural safeguards that comply with the industry standards to safeguard your nonpublic personal information. Third parties who have access to such personal information must agree to follow appropriate standards of security and confidentiality.
We trust that this clarifies John Thomas Financials, position on client confidentiality and look forward to being of service to you in the future.
CUSTOMER IDENTIFICATION PROGRAM NOTICE/ THIS IS A PUBLICATION OF THE FINRA
Important Information You Need to Know About Opening a New Account
This Notice answers some questions about your firm’s Customer Identification Program.
What types of information will I need to provide?
You may also need to show your driver’s license or other identifying documents.
A corporation, partnership, trust or other legal entity may need to provide other information, such as its principal place of business, local office, employer identification number, certified articles of incorporation, government-issued business license, a partnership agreement, or a trust agreement.
U.S. Department of the Treasury, Securities and Exchange Commission, FINRA, and the New York Stock Exchange rules already require you to provide most of this information. These rules also may require you to provide additional information, such as your net worth, annual income, occupation, employment information, investment experience and objectives, and risk tolerance.
What happens if I don’t provide the information requested or my identity can’t be verified?
We thank you for your patience and hope that you will support the financial industry’s efforts to deny terrorists and money launderers access to America’s financial system.
All securities sold and payment for all securities bought must be delivered by the settlement date (typically 3 business days) indicated on the confirmation issued for each trade. Similarly, the proceeds of any sale will be credited to your account or remitted by check on the settlement date per your instructions.
Attn: Cash Management
For agency executions in institutional trading, John Thomas Financial supports DVP/RVP deliveries. All trades are processed by John Thomas Financial and are cleared through Sterne Agee and Leach.
GOOD ‘TIL CANCELLED (GTC) BUY, SELL STOP, SELL STOP LIMIT ORDERS:
All GTC (also known as an “Open Order”) orders remain in effect until canceled or executed.
ORDER EXECUTION (SEC RULE 606):
The venue to which individual orders are sent for execution are available upon request. There is a quarterly report with this information available on the firm’s website, www.johnthomasbd.com. This information for the previous 6 months will also be provided upon written request.
CLEARING FIRM / JOHN THOMAS FINANCIALS FUNCTIONS:
We would like you to understand the different functions performed by our firm and those of our clearing agents, Sterne Agee & Leach, Inc. a division of Sterne Agee Capital Markets Inc. In general, we provide front-office services and the clearing firm performs back-office or operation type functions. Our front-office services include such matters as the opening and approval of accounts, the acceptance and transmittal of orders by John Thomas Financial, and personnel for execution on the various markets according to instruction, etc. Additionally, it is our exclusive function to supervise all personnel directly or indirectly involved with your securities transactions and all your business handled by our personnel in light of applicable rules and regulations, which govern the securities industry.
The activities of Sterne Agee & Leach, Inc., our clearing firm, include certain centralized cashiering, bookkeeping, and execution functions for your cash and margin accounts. In addition, Sterne Agee & Leach, Inc. handles the delivery and receipt of securities purchased or sold by clients, receives and distributes dividends and other distributions, processes exchange offers, rights offerings, warrant exercises, tender offers, and redemptions. Sterne Agee & Leach, Inc. also extends credit for the purchase or sale of securities in margin accounts in accordance with the margin agreement between the account holder and Sterne Agee & Leach, Inc.
The firm maintains appropriate records in order to carry out the respective roles in the clearance relationship. When you have inquiries or questions concerning your account, kindly address such correspondence to our office and the proper party will promptly reply.
PAYMENT FOR ORDER FLOW DISCLOSURE:
John Thomas Financial does not receive payment for order flow. The Securities and Exchange Commission requires that all registered broker-dealers disclose their policies regarding receipt of “payment for order flow”. The Commission defines “payment for order flow” as “any monetary payments, services, property, or other benefits that result in remuneration, compensation, or consideration to a broker or dealer from any broker or dealer, national securities exchange, registered securities association, or exchange member for execution, including but not limited to research, clearance, custody, products or services, reciprocal agreements for the provision of order flow adjustment of a broker or dealer’s unfavorable trading errors, effort to participate as underwriter in public offerings; stock loans or shared interest accrued thereon; discounts, rebates, or any other reduction of or credits against any fee to, or expense or other financial obligation of, the broker or dealer routing a customer order that exceeds that fee, expense or financial obligation”.
INVESTMENT OBJECTIVES DEFINITIONS
Below please find a general description of ‘Investment Objective Definitions’ related to the Investment Objective(s) you choose on the “Account Application”.
MARGIN DISCLOSURE STATEMENT
John Thomas Financial is furnishing this information to you to provide some basic facts about purchasing securities on margin, and to alert you to the risks involved with trading securities in a margin account. Before trading stocks in a margin account, you should carefully review the margin agreement we have provided you. Please consult your investment executive or the firm management regarding any question or concerns you may have with your margin account(s).
When you purchase securities, you may pay for the securities in full or you may borrow part of the purchase price from your brokerage firm. If you choose to borrow funds from your firm, you will open a margin account with the firm. The securities purchased are the firms collateral for the loan to you. If the securities in your account decline in value, so does the value of the collateral supporting your loan, and, as a result, the firm can take action, such as issue a margin call and/or sell securities in your account, in order to maintain the required equity in the account.
It is important that you fully understand the risks involved in trading securities on margin. These risks include the following: You can lose more funds than you deposit in the margin account. A decline in the value of securities that are purchased on margin may require you to provide additional funds to the firm that has made the loan to avoid the forced sale of those securities or other securities in your account.
The firm can force the sale of securities in your account. If the equity in your account falls below the maintenance margin requirement under the law, or the firm’s higher “house” requirements, the firm can sell the securities in your account to cover the margin deficiency. You will also be responsible for any shortfall in the account after such a sale.
The firm can sell your securities without contacting you. Some investors mistakenly believe that a firm must contact them for a margin call to be valid, and that the firm cannot liquidate securities in their accounts to meet the call unless the firm has contacted them first. This is not the case. Most firms will attempt to notify their customers of margin calls, but they are not required to do so. However, even if a firm has contacted a customer and provided a specific date by which the customer can meet a margin call, the firm can still take necessary steps to protect its financial interests, including immediately selling the securities without notice to the customer.
You are not entitled to choose which security in your margin account is liquidated or sold to meet a margin call. Because the securities are collateral for the margin loan, the firm has the right to decide which security to sell in order to protect its interests. The firm can increase its “house” maintenance margin requirements at any time and is not required to provide you with advance written notice. These changes in firm policy often take effect immediately and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause the member to liquidate or sell securities in your account.
You are not entitled to an extension of time on a margin call. While an extension of time to meet margin requirements may be available to customers under certain conditions, a customer does not have a right to the extension.
TRADING HALTS / CIRCUIT-BREAKERS
Significant problems may arise when market-wide “circuit-breakers” halt trading on exchanges. Broker-dealers and their customers are confronted with trading halts, thereby obviating trading for a period of time. When “circuit-breakers” halt trading, we make every effort to post a timely notice on our website.
The SEC provided the following guidelines concerning order handling:
Absent customer instructions to the contrary, orders that are pending at the time of the halt, and new orders received after the halt has commenced, should be treated as “Good Till Cancelled” orders and be held by the member for execution at the reopening of the next trading session.
“At-the-Close” orders (including “Market-at-Close” orders) pending at the time trading is halted should be treated as cancelled orders. Members should not accept, or forward to a market, any new orders related to closing prices received during a trading halt.
TRADING / VOLATILITY / RISKS
** Recent events show that the way some stocks are traded is changing dramatically, and the change in trading methods may affect price volatility and cause increased trading volume. The price volatility and increased volume present new hazards to investors, regardless of whether trading occurs on-line or otherwise. Please be advised that market orders in highly volatile stocks may be subject to wide price variation and late reporting. Given this enormous volatility, the buy or sale execution price may vary widely from the quote reflected to you at the time of your order. You may wish to consider placing limit orders during these periods to help protect you against these fast and unpredictable variations in price. Quotes given on these issues are “subject quotes” and may not accurately reflect the current price as the market is changing so violently. If you do not fully understand the current market in any of these securities you are urged to call your broker for clarification. Further please note that if you have a margin account, these volatile stocks currently require 50% maintenance. Please check often with our Operations department to determine if there are any changes to the margin requirement for any issues in your account.
SECURITIES INVESTOR PROTECTION CORP INSURANCE COVERAGE
John Thomas Financial is a member of SIPC, which protects securities of customers of its members up to $500,000 (including $100,000 for claims of cash). Both SIPC and the additional coverage provides protection in the event of a member firm failure and do not insure against market decline.
Sterne Agee & Leach, Inc. has purchased an additional policy from Lloyds of London. The policy provides an additional $24.5 million per each client account with an aggregate limit of $100,000,000., above that provided by SIPC. Neither SIPC protection, nor the protection in excess of that provided by SIPC, covers a decline in the value of a customer’s assets due to market loss. Explanatory brochure available upon request or at www.sipc.org.
OPTIONS ON MARGIN REQUIREMENTS
Minimum-equity is $50,000. Depending on your positions, the minimum equity requirement may even be higher. Further, there is a minimum liquid net worth requirement. Please check with your account executive for details.
John Thomas Financial archives and reviews outgoing and incoming e-mails. It may be produced at the request of regulators or in connection with civil litigation.
ACCESSING YOUR ACCOUNT ONLINE
We strongly urge you to request access to your account online. Ask your account executive for information on Online Access.
Mutual Funds Breakpoint Discounts
Before investing in mutual funds, it is important that you understand the sales charges, expenses, and management fees that you will be charged, as well as the breakpoint discounts to which you may be entitled. Understanding these charges and breakpoint discounts will assist you in identifying the best investment for your particular needs and may help you reduce the costs of your investment. You should contact your financial consultant to obtain a free Disclosure Statement. You may also visit the FINRA website www.finra.org for additional information.
Fees and Charges
You understand that John Thomas Financial may charge and collect commissions and other fees for executions, and any other services to you, and you agree to pay such commissions and fees at the prevailing rates. You understand further that such fees may be charged from time to time, including an annual service and/or inactivity fee disclosed with your account statement, and you agree to be bound thereby.
FINRA Web Site
For more information on the firm and/or its registered representatives, visit the FINRA web site @ www.finra.org.
For more information or to Opt-out of any portion of this agreement please contact our Compliance and/or Operations Departments at 212-299-7816 or 212-299-7814 or write to us at our office located at: 14 Wall Street 23rd Floor New York, NY 10005.
Business Continuity Plan
BCP DISCLOSURE STATEMENT
John Thomas Financial ("the Firm") is a fully disclosed broker-dealer and member of FINRA, SIPC and NASDAQ. FINRA Rule 3510 requires each member firm to create and maintain a business continuity plan. In accordance with the rule the Firm has developed a plan to ensure the continuity of operations during business emergencies and disruptions.
The plan is designed to address key areas of concern including but not limited to the following:
Events creating a sudden business disruption (“SBD”) may vary in nature. They can affect only the Firm, the building where the Firm is located, the entire business district where the Firm is located, or a wider disruption, such as the entire regional where the Firm is located. The Firm fully intends to continue to conduct its securities business during periods of disruption of any and every type.
In the event an SBD prevents clients from contacting the Firm and/or their Financial Consultants by using the primary phone number, fax number, or email address of the location where the clients’ accounts are serviced, clients may contact the Firm and/or their Financial Consultants by using the secondary contact information provided below:
For clients whose accounts are serviced at the Firm’s corporate headquarters located at 14 Wall Street, 23rd Floor, New York, New York 10005, Telephone No. 212-299-7800 (Toll Free 800-257-1537), Fax No. 800-598- 9945.
If an SBD disrupts both the primary and secondary methods of contacting the firm, customers should contact John Thomas Financials clearing firm, Sterne Agee at (800-264-4863), and/or product sponsors at the number provided on quarterly statements.
In the event of an SBD, the Firm will immediately establish a location for utilizing its back up and communications systems in order to continue servicing clients’ accounts. Business continuity plans are subject to change and modification. No contingency plan can eliminate all risk of service disruption, but the Firm’s Business Continuity Plan is calculated to minimize such risks.
Should you have any questions concerning our business continuity plan, or wish to see the full plan you may submit a written request for additional information to our Customer Service Department located at: