Broker Dealer Analysis
Wall Street can be a rewarding as well as frustrating
experience. Principals of our firm have spent the better
part of century involved in all aspects of the industry
as members of the exchanges, chief executives of
broker-dealers, arbitrators and officials for the NASD
and exchanges and on the floor of the New York Stock
Exchange itself. We have acted as consultants to people
that want to get into the business, people that are in
the business that want to get out of it and finally
people that have been affected by it in one way or
are experts in transaction analysis, exchange and SEC
rules and regulations, listing and delisting
requirements, arbitration procedures and the
circumstances under which it can be avoided, the proper
firms to bring public certain types of financing and all
of the accruements that go with being a full time member
of the community.
associates have also been deeply involved in the banking
community as both consultants, advisors, expert
witnesses and strategists. We have been instrumental in
arranging financing for a number of substantial bank
thought that it would be of interest to our readers to
have some insight into what a brokerage firms deem their
own responsibilities to itself and to its customers.
Each firm is obliged to have a manual which presents
it's policies as they relate to salesman and customers.
Often, these documents are used in litigation by savvy
investors attempting to show that the firm did not
follow its own internal policies.
case we are presenting is that of a firm that hires
Independent Contractors instead of its own brokers in an
attempt to avoid both the withholding of taxes and the
responsibility for surveillance.
"Alice in Wonderland" firm is affiliating with a firm
that already has a clearing agreement and the new kid on
the block is just going to "tuck in". This type of
arrangement is probably the most complicated and is an
attempt by a none-member firm to keep its own identity.
document is semi-standard for what it is and serves to
cover the firm to some degree when the employees go off
on their own agenda. Policing salesmen to a large extent
is impossible and if someone wants to take advantage of
his role, there is almost no stopping him.
material enclosed is representative but the names have
been altered to protect the innocent.
we can interpret any of the industry jargon for you,
e-mail us at
Chapman Spira & Carson. LLC.
we will come right back at you. Happy reading
Merrill Goldman and Company Inc.
WRITTEN SUPERVISORY PROCEDURES
NASD, NYSE, SIPC, MSRB & SIA
Date of Revision: November 1, 1998
Although these procedures offer a complete guide to firm
procedures certain sections or topics may not be needed
or used by certain personnel. To that effect, certain
section may be deleted from these manuals.
should also be noted that certain appendixes may also be
SECTION 1: COMPLIANCE
SECTION 2: FIRM PROCEDURES & COMPLIANCE
SECTION 3: SALES PROCEDURES
SECTION 4: BRANCH OFFICES
SECTION 5: MARKET MAKING ACTIVITIES
SECTION 6: UNDERWRITING PROCEDURES
SECTION 7: MUNICIPAL SECURITIES
SECTION 8: OPTION PROCEDURES
SECTION 9: SALES FORCE SUPERVISION
APPENDIX 1: OPTION STRATEGIES AND CUSTOMER POLICIES
APPENDIX 11: BRANCH OFFICE PROCEDURES AND POLICIES
APPENDIX III: NEW YORK (19X) OFFICE PROCEDURES
Merrill Goldman and Company Inc. is a registered
brokerage firm that was founded 1937. The company
offers quality investing services to clients across the
country. The company has raised over 500 million
dollars in equity capital, and has participated in over
215 initial public offerings.
Specialties of the firm and its management include,
Order Execution, most aspects of Corporate Finance,
Evaluation and Research of small to medium size
companies, Equity Market Development, and International
Finance, Consulting and Management.
Merrill Goldman when dealing with retail customers
strives to provide quality service, and to develop a
relationship with each and every customer. The company
maintains its corporate headquarters in New York, from
which the company manages its operations throughout the
Merrill Goldman conducts its securities transactions on
a fully disclosed basis through Ajax, Gourgem and Cheat,
Inc. in New York, New York. Merrill Goldman has put in
place a communication and supervisory structure designed
to facilitate open communication and cooperation. To
that end, brokers are encouraged to talk and meet
regularly with their branch managers and off ice
operations coordinators. Communication with regional
and corporate officers is also available. Thus below
are listed the organizational structure of Merrill
Goldman Corporation. Throughout these procedures Mr.
Dirtender and Weasel will be referred to and considered
the senior management of Merrill Goldman Corporation:
Rhufus A. Rulebender - President & CEO
Alphonso Trustmenot III - Vice President & CFO
Marjorie Misfeasance - Vice President & COO
Dickie Dirtender Administration and Operations
Chief Compliance Officer
Regarding supervision of:
OPERATIONS & SALES:
COMPLIANCE & BOOKS/RECORDS All compliance questions and
procedural policies should be addressed to the immediate
supervisor, who can then contact either Dirtender or
Merrill Goldman Corporation is engaged in business as a
Broker/Dealer conducting a general securities business
on a fully disclosed basis including general securities,
municipal's, options and direct participation programs.
Merrill Goldman Corporation was incorporated in New York
and maintains current registration or membership in the
1. A Broker/Dealer registered with the Securities &
Exchange Commission - (SEC) -[Filing # 8-3948573
2. A member of the National Association of Securities
Dealers, Inc. - (NASD) - [Rm. ID. # 00405685
3. A certified broker/dealer by the State of New York,
Department of Corporations.
4. A member of the Municipal Securities Rulemaking Board
5. A member of the Securities Investor Protection
Corporation - (SIPC)
6. A member of the New York Stock Exchange and other
While these procedures outline firm policies and
guidelines, branch and/or regional managers do hold the
right to enforce stricter policies. These policies
would be added as a supplement to these procedures.
- COMPLIANCE -
following section outlines the basic compliance
principles expected by all personnel registered or
unregistered to follow while associated by Fleecem and
Howe. Further information regarding compliance is
available through the NASD manual, of which several
copies are maintained in each office.
please consult either the manual or your General
Securities Principle regarding compliance for specific
questions. Throughout this manual any mention of review
or approval by a Principal shall constitute a physical
signature or initials of the first and last document for
review in any series.
- BASIC PRINCIPLE OF CONDUCT:
firm adheres to the basic principles of conduct as
outlined in the NASD Manual under Section III paragraph
1. However, due to the nature of business that Merrill
Goldman conducts, service is of the utmost importance,
and thus principles and conduct are expected to excel
above those outlined in the Manual. Personnel breaking
the guidelines set forth by the firm will be subject to
termination and or punishment by the NASD.
- GIFTS AND GRATUITIES:
firm does not encourage the use of gifts or gratuities
between brokers and clients. Regulations regarding
specifications of gifts and or gratuities may be found
in the NASD Manual. Before receiving a gift or gratuity
personnel should consult with the appropriate principal
within the firm, any gift or gratuity not approved in
writing by a principle may result in termination or
- SHARING OF ACCOUNT:
Merrill Goldman does not allow brokers to share accounts
- REGISTRATION AND LICENSING:
is required that all personnel conducting securities
business be registered with both the NASD and each state
in which they wish to conduct business. The firm also
strongly encourages each registered representative to
become a registered principle as to manage and supervise
activities of other brokers at the firm. To discuss
these policies further please consult the NASD Manual
under Section III paragraph 27 and the NASD By-Laws
Schedule C. Please discuss registration within certain
states or jurisdictions with your branch manager or the
designated person appointed by Merrill Goldman
Section 1. 5
- PRINCIPALS FOR SPECIFIC AREAS AND BOOKS AND RECORDS:
Most operational and procedural questions and
supervision are managed by Louise Onenote and Helen
Off-key. Should any problem arise please contact either
of them regarding operations, procedures or firm
policies. Louise Onenote is responsible for the
finances and accounting of the firm and Merrill
Goldman's books and records.
- BACKGROUND INVESTIGATIONS:
firm maintains the right and will conduct background
into prospective employees, to ascertain by
investigation the good character, business repute,
qualifications, and experiences, the firm will also
request a "Form U-5" from previous employers in the
securities industry. For further information, please
refer to Section III, Paragraph 27 of the NASD Manual.
- CURRENCY COMPLIANCE AND REPORTING:
The firm does not allow the use of cash currency to
settle securities transactions.
- ANNUAL COMPLIANCE MEETING:
firm requires that all registered employees meet
annually to discuss firm procedures, changes in rules or
regulations and compliance standards. Two meetings are
conducted by the senior management of Merrill Goldman
Corporation and will generally be held during the fall
and spring of each year.
- ACCEPTANCE OF NEW ACCOUNT:
firm will open accounts for new clients given the
appropriate information is received, and the firm
accepts the customer. Each new account application will
be approved by an officer (branch manager), [either
signed or initialed] and will not be opened, nor will
any business be conducted regarding said account without
- REQUIRED PAPERWORK FOR ACCEPTANCE OF NEW ACCOUNTS
Merrill Goldman does allow its registered personnel to
open new customer accounts without prior completed
application with Branch Manager approval. However, if
in 30 days a completed new account application is not
received a letter will be sent to the customer (copy to
the RR) requesting a completed new account application.
If in 60 days a completed new account application has
not been received a report will be sent to the broker of
record notifying that the account will be frozen in 30
days if a application form is not received. If in 90
days a new account application has not been received the
account will be frozen and no further business will be
conducted until the application is received.
- PRIVATE SECURITIES TRANSACTIONS:
Before participating in any private securities
transaction, any associated person shall provide written
notice to the firm through the sales supervision
principle, describing the proposed transaction and the
proposed role of the employee. Further information
regarding NASD Regulation and firm procedures can be
obtained in Article III Section 40 of the NASD Manual.
Section 1. 11 - OUTSIDE BUSINESS ACTIVITIES:
Each person associated with the firm in any registered
capacity that conducts outside business activities must
inform the firm through written notice and will not
enter into such outside activities without the written
approval of the managing principal.
MAINTENANCE OF WRITTEN SUPERVISORY PROCEDURES (WSP's)
Gordon Gooddog will be responsible for reviewing the
Written Supervisory Procedures 's of the firm every 6
months. During this review, updates regarding current
procedures or regulations will be conducted. Upon
updating these procedures, the changes will be
disseminated throughout the firm.
- MAINTENANCE OF SERIES 7 LICENSE
Merrill Goldman Corporation is its efforts to comply
with NASD guidelines against the hanging of securities
licenses has implemented the following procedure. For a
broker to be considered active, a nominal amount of
commission must be generated every 6 months. This
amount of gross commission must equal at least $500.00.
Should a registered representative not generate said
commissions a letter will be sent from the firms
compliance department informing the broker of the NASD
Guideline and our request for them to make their license
in twelve months the nominal commission has not been
generated the firm will begin termination
- NEW BROKER ORIENTATION MEETINGS
Merrill Goldman requires that all registered personnel
attend a company "New Broker Orientation" within the
first 90 days of registration. If this requirements is
not met termination may result.
unable to attend a extension may be granted in writing
by a branch manager, or a local NBO meeting may be
held. Should this happen, a written exception or notice
of attendance must be received by the firm's compliance
- NBO ENFORCEMENT POLICIES
a broker has not attended a NBO meeting after 60 days, a
letter will be sent by the firm's compliance to the
broker informing them of firm policy.
- INDEPENDENT CONTRACTOR'S AGREEMENT
signed and completed Independent Contractor's Agreement
(ICA) must be on file with Merrill Goldman Corporation.
If an ICA is not on file termination may result. The
firm will notify all brokers that do not have an ICA on
file and allow a 30 day time period to meet compliance.
- FIRM PROCEDURES AND COMPLIANCE-
- REGULATION T:
Regarding Regulation T, customer extensions and buy-ins,
the firm follows the procedures of its clearing agent,
Gourgem and Cheat, Inc. . Information regarding
Regulation T can be found in the NASD handbooks as well
as by consulting a branch manager.
HANDLING OF CUSTOMER FUNDS, SECURITIES, AND DOCUMENTS:
handling of customer funds, certificates, and documents
may only be conducted by a registered principle of the
firm, or personnel authorized by the firm to handle such
funds. These funds are not held by the firm, and must
be forwarded to Gourgem and Cheat, Inc. immediately,
there will be no exceptions. All checks should be made
payable to Gourgem and Cheat, Inc. . In the event that
customer funds and/or securities are received by Fleecem
and Howe, such funds and/or securities will be forwarded
to Gourgem and Cheat and full and complete
documentation will be maintained by authorized and
supervised personnel of the firm.
At no time may checks or money orders be deposited in
the Representative's personal bank account.
COMMINGLING OF CUSTOMER FUNDS ARE A DIRECT VIOLATION OF
FIRM POLICY AND NASD RULES & REGULATIONS.
violation of this policy is grounds for termination and
will be reported to the appropriate regulatory agencies.
- SALES LITERATURE AND CORRESPONDENCE:
correspondence being sent out on
behalf of the firm, or by an employee of the firm shall
be reviewed and approved by an officer (branch manger),
[either signed or initialed].
sales literature must be approved by the firm's
compliance officer as well as the branch manager and
advertisement department of the NASD in Washington D.C..
incoming mail will be opened by either the branch
manager, or a person designated by the branch manager.
Upon opening of the mail ft will be distributed to the
- CUSTOMER COMPLAINTS-.
customer complaints will be handled by the branch
mangers, and copies of such complaints will be held at
each branch office as well as the home office.
Immediate action will be taken by the branch manager and
the firm's compliance officer to resolve any problems.
Gordon Gooddog is responsible for the handling of
- FREE RIDING AND WITHHOLDING:
firm does not allow any Free-Riding or Withholding and
will take severe action against any employee discovered
conducting such action.
- INSIDER TRADING:
firm in no way or form approves of or makes available
material, non-public information to its salespeople or
its clients. Both Rufus Watchguard and Maria
Nosegrabber are responsible for reviewing the firms,
employees and insiders, accounts. These accounts are
reviewed quarterly in an effort to uncover any unusual
or illegal transactions. These reviews include
comparison of recent press releases and financial
reports by the issuing companies to activities within
each account to uncover such activities governed as
Merrill Goldman creates a complete "Chinese Wall" to
restrict non-public information gained during corporate
finance and research activities from reaching
unauthorized personnel. Any breach in this "Chinese
Wall" will result in immediate action, and expulsion
from the firm if necessary.
firm will coordinate public information to support the
activities of the firm on occasion, however this is in
the due course of business. Employees are required to
undergo a program to explain the firms procedures
regarding the above mentioned policies and such policies
are reviewed annually at the compliance meeting in
March. In the event that a
Registered Representative becomes aware of insider
information, they shall report to the firms compliance
officer, who will then contact if necessary the proper
regulatory authorities for instructions.
- OUTSIDE BROKERAGE ACCOUNTS
and effort to enforce the above procedure Merrill
Goldman Corporation requires that all employees and
registered personnel maintain brokerage account only
with Merrill Goldman Corporation. In the event that a
written exception is granted, duplicate confirmations
and account statements must be sent to the firm's
compliance officer. Merrill Goldman will require an
annual update as to all accounts held by its registered
and non-registered personnel. Should any misstatements
or conflicts arise immediate action will be taken and
termination could result.
- RESTRICTED STOCK AND RULE # 144:
Restricted stock is that which is currently unregistered
under the Securities Act of 1933, or stock owned by an
insider or officer of the issuing company. Policy and
procedure regarding restricted stock is as follows:
Restricted stock must be held for one year before the
stock is eligible for sale.
Upon verification of the holding period, the stock may
be sold given the appropriate paperwork and
authorization is completed.
Regarding stock restricted due to the position of the
holder of the shares (i.e. Insider, Director, etc.)
other restrictions apply:
The Insider is restricted to the number of shares he or
she may sell. These restrictions are as follows: The
greater of 1% of the outstanding shares of stock or the
average weekly volume of the previous four weeks.
Upon approval by a registered principal Rule #144 Forms
should be completed and mailed as follows:
3 Original Copies to:
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
1 Original Copy to the:
NASDAQ Market Surveillance,
9513 Key West Ave.
Rockville, MD 20850
Original Copy to Gourgem and Cheat, Inc. :
Original Copy to be Held in our Files.
- DISCRETIONARY ACCOUNTS
discretionary account is one which a customer grants to
the Registered Representative or registered Principal
the authorization to transact securities on his/her
is the policy of Merrill Goldman Corporation that
discretionary accounts are not allowed.
- DIRECT PARTICIPATION PROGRAMS:
following procedures should be observed in the
distribution of any limited partnership (business
related to retailing of private limited partnership
interests). All limited partnerships must be approved
by the firm's corporate finance committee, as well as
the compliance officer .
Should a Direct Participation Program be approved in
such a manner the following procedures will be
implemented upon distribution.
- OFFERING MEMORANDUM:
offering memorandum i.e., prospectus will be kept,
controlled and distributed by the designated person at
- OFFERING MEMORANDUM LOG
offering memorandum will be entered in log form and
numbered. Offering memorandum which do not result in a
sale should be collected after the offering is closed.
- OFFEREE QUESTIONNAIRE
salesperson desiring to have a copy of the memorandum
delivered to a potential purchaser should complete the
form of Offeree Questionnaire, or sufficient substitute,
and return to the appropriate person in the branch/OSJ
COVER LETTER - PROSPECTIVE PURCHASER
cover letter will be prepared for the prospective
purchaser and sent along with a copy of the memorandum.
This cover letter will request the prospective purchaser
to indicate receipt of the memorandum by signing and
returning a duplicate of the letter in the envelope
- SAMPLE COPY - NOT FOR DISTRIBUTION
Occasionally an attorney, accountant or other financial
or legal advisor may be in need of a copy of the
offering memorandum. At such time the offering
memorandum should be stamped "sample copy - not for
distribution" and the cover letter should also designate
this when sent.
- CLOSE OF OFFERING
the close of the offering, copies of letters, logs and
any return copies of the offering memorandum should be
returned to the home office - attention Compliance
-(K) (2) (D ACCOUNT - SPECIAL RESERVE BANK ACCOUNT FOR
THE EXCLUSIVE BENEFIT OF CUSTOMERS
required by SEC Rule 15c3-3 (e) the home office will
maintain a copy and forward all checks which will be
made payable to the issuer or issuers escrow agent.
Should customers mistakenly make checks or bank drafts
payable to Merrill Goldman Corporation instead of the
issuer or issuers escrow agent the (k) (2) (i) account
will be utilized (in and out same day).
- SUBSCRIPTION AGREEMENT - SUITABILITY
required by Section 28 (c) a subscription agreement and
suitability questionnaire per issue will be reviewed and
endorsed by the Registered Representative and approved
by a Principal of the firm for each accredited and
non-accredited investor. The branch will maintain a
copy and forward originals to the home office.
- NASD RULE 88-84
accordance with NASD rule 88-84, wherein all registered
representatives must have a designated supervisor,
Merrill Goldman Corporation has the following procedures
to comply: Upon any person or persons becoming
classified as registered representatives with Merrill
Goldman Corporation they will be assigned to a specific
Each branch/OSJ has a branch manager who will be a
General Securities Principal and therein responsible for
said registered representative's direct supervision.
Each branch office will maintain a list of all
registered representatives assigned to their specific
branch/OSJ office. In addition, the home office will
maintain a master list that contains all registered
representatives company wide with their respective
branch/OSJ office and thus their direct supervisor. The
home office will also maintain a list of all branch
managers and their designated branch/OSJ office.
addition, each registered representative, individually
or collectively and not less than annually, at an
interview or meeting will participate wherein compliance
matters will be discussed.
- OUT OF STATE REQUIREMENTS/PROCEDURES
Merrill Goldman Corporation will have available at its
principal/main office all records for each state in
which the firm has registered. All states will receive
updates and/or amendments through the Central
System (CRD). Furthermore, where required, applicable
states shall receive copies of
1. An annual audit ninety (90) days after fiscal year
2. Renewal of Registration filed on annual basis through
3. A copy of all amendments to Form BD
OUT OF STATE CLIENTS
Registered Representatives are reminded that neither
sales or sale solicitation may be made in any state in
which the Registered Representative and firm is not
licensed, and the securities which are offered must be
qualified for sale in the state. Solicitation is defined
to include communication, written or verbal, which may
be construed as an offer to sell any security. A new
Registered Representative or one who has just
transferred from another securities firm is not
authorized to do business for Merrill Goldman
Corporation in another state until the Representative
receives a written statement from our firm advising that
he/she is property registered.
- STATE REGISTRATION FEES
is the responsibility of the registered representative
to pay for all registration fees in connection with
securities business conducted in any particular state.
SECTION 3 - SALE PROCEDURES
- EXECUTION OF ORDERS:
execute securities orders the ticket must be submitted
to the firm wire operator. Upon his/her receipt the
order will be wired to Gourgem and Cheat, Inc.
Alternatively, the appropriate exchange where they will
be executed in a timely fashion. Merrill Goldman
Corporation also holds the right to execute customer
orders itself on NASDAQ Issues or in those issues in
which the firm makes a market.
Reporting of execution will happen upon execution
directly from the exchange or Gourgem and Cheat to the
branch office from which the order originated. The home
office will keep copies of all tickets and execution
reports entered by the firm, as well as all Good Till
Cancel orders and Day Orders in behalf of the branch
offices. All International,
Bond and Mutual Fund orders will be telephoned upon
execution to the appropriate branch personnel. All
tickets will be reviewed by a principal.
- NEW ACCOUNT FORMS AND REQUIREMENTS:
firm will open accounts for new clients given the
appropriate information is received, and the firm
accepts the customer. Each new account application will
be approved by the branch manager [either signed or
initialed] and will not be opened, nor will any business
be conducted regarding such account without required
approval. The representative that opens an account will
be required to understand the investment objectives of
the customer. The customer will also need to sign a W-9
or W-8 for the Internal Revenue Service. Should this
form not be completed upon the generation of sales
proceeds 31% will be withheld for possible tax
- ACCOUNT REVIEW AND UPDATE:
account information including customer account
statements will be reviewed and updated no less than
every 12 months. During this review, necessary account
information will be confirmed and review for any unusual
or illegal activity will also be conducted. This review
will be conducted by Gordon Gooddog or personnel
designated by him.
- RECOMMENDATIONS TO CUSTOMERS:
firm demands that each broker know their customers and
understand their objectives to investing. Any
malpractice, or misconduct will be grounds for
dismissal. Recommendations should be made to achieve the
client's investment objectives in the most cost
efficient manner.Any disregard for the wishes of a
customer and their investment objectives will be
immediately reviewed by the direct supervisor.
Section 3.5 - REVIEW OF BUSINESS DOCUMENTS:
firm does conduct an annual review of ALL business
documents and materials. Eli Elliott is responsible for
this review, and will either sign or initial documents
that have been reviewed.
- MISUSE OF CONFIRMATION OR STATEMENTS:
misuse of confirmations or statements will result in
severe action by the firm and may result in termination.
REVIEW OF - TRANSACTIONS:
transactions will be reviewed by the branch manager on
the trade date. This comparison will include a review
of the ticket information as compared to the
confirmation information, to define any discrepancies
and to assure that no illegal conduct has taken place.
Should a discrepancy be uncovered the operational staff
will take the necessary steps to either canceled or
reverse the order.
salesmen are required to maintain current and accurate
records of their customer's investment objectives, as
well as investment positions. A history of transactions,
trades, deposits and withdrawals will be maintained by
each registered representative for their customers. The
records must be kept readily accessible for two years.
All records will be periodically reviewed by supervising
principals who will include branch managers and head
- BRANCH OFFICES -
Merrill Goldman maintains several branch offices, each
registered with the NASD. Each office is managed by a
General Securities Principal, and each office maintains
current NASD/MSRB Manuals as well as the Firm's Written
Supervisory Procedures. The SIPC logo and sign will be
displayed at all Offices of Supervisory Jurisdiction.
Merrill Goldman has branch office locations at the
41 Bowery Street, Suite 711
New York, New York 10283`
Branch Manager - Wiggle Free
Office Number - 2364Q
branch manager and his/her designates (qualified General
Securities Principal's) will manage the office and Its
day to day operations. On a weekly basis, communication
will be conducted from the home office to discuss the
weeks, business and any problems or issues that should
compliance problems will be copied to the home office,
where action will be initiated. Each branch office will
be visited and reviewed no less than once a year by Ruby
Oswald or his/her designate (qualified General
Securities Principal). All branch coordination and
compliance will be assisted by Judith Latefordindin..
- BRANCH OFFICE RESPONSIBILITIES:
Each branch office will be assigned a Branch Manager, an
Assistant Branch Manager, an Order Clerk, and an office
support person. The branch manager will be responsible
for the day to day operations of the branch office.
Currently the firms has 31 Branch Office(s).
- BRANCH RECORDS AND FILES FS:
- DAILY TRANSACTION BLOTTER:
Copies of trade tickets and the daily transaction
blotter will be maintained by the branch office/OSJ with
CASH RECEIPT & DISBURSEMENTS / SECURITIES
RECEIVED & DELIVERED BLOTTERS
Cash Receipts and Disbursements Blotter - A
chronological record of the receipt and disbursement of
Securities received and Delivered Blotter - A
chronological record of the receipt and delivery of
securities to the clearing firm Both blotters will be
maintained at the home and branch offices of Merrill
Goldman Corporation. All securities and funds should be
forwarded on the same day received.
- ORDERS/TRADE TICKETS
off ices will transmit all orders to the home off ice
for entry and execution. Upon execution the home office
will report to the OSJ for confirmation of execution.
- SALESMEN RECORD-KEEPING
Each Representative must keep a record of transactions
for each customer.
- CORRESPONDENCE FILE
separate chronological correspondence file will be
maintained by the branch/OSJ. Per Section 27 (c) a
review of correspondence of salesmen pertaining to
solicitation sent to members of the public will have
written approval (by signature or initial) by the
- CUSTOMER COMPLAINT FILE
branch/OSJ will maintain a customer compliant file as
part of its books and records. It is the firm's policy
that the home office will respond quickly to written
customer complaints and to maintain copies of such
complaints along with the written response, including
all appropriate support documents as may be necessary.
written customer complaint information will be cross
filed with the home office. All complaints must be
communicated to the home office - Compliance Department
Advertising and promotional communications must be
approved in advance by the Compliance Department located
at the home office. Such approval is to be received in
writing following a review of the actual advertisement
or promotional literature. This rule extends to any and
all sales literature, newsletters, brochures, display
advertisements, promotional articles, and other
communications intended to further the activities of the
branch/OSJ and its representatives.
- MARKET MAKING ACTIVITIES -
Cheatem and Howe Securities Corporation Market Making
Symbol -- CHEAT
- SUPERVISION OF ACTIVITIES
supervision of Trading and Market Making activities will
be conducted by Maria Nosegrabber, Vice President of
Operations for Merrill Goldman Corporation. Decisions
regarding firm policies and guidelines will be directed
by Mr. Nosegrabber on a day to day basis.
- MARK-UP POLICIES
firms mark-up policies regarding Market Making
Activities are as follows: In general a 5% markup will
be considered to be excessive although the firm will
hold the right to charge more than 5% on transactions
that warrant such a fee. However in calculating the
mark-up the firm will evaluate, all relevant
circumstances, including market conditions with respect
to such security at the time of the transaction, the
expenses involved, and the fact the firm is entitled to
a profit; and if the firm acts as agent for the customer
in any such transaction, the firm will not charge the
customer, more than a fair commission or service charge.
firm's market makers will report all volume and
quotation information as designated by Schedule D in the
NASD By-Laws. This will include reporting of all
volume, purchases and sales, no later than 5:00 PM
Eastern Standard Time in the securities which it is a
market maker. If the firm conducts no transactions then
a number of "O" will be reported for daily volume.
These volume reports shall be entered via a NASDAQ
terminal, in the case of equipment malfunction or
failure, volume reports shall be telephoned to the
Regarding National Market System, securities in which
the firm makes a market, the firm will report
transactions through the Transaction Reporting System
within 90 seconds of execution as required by Schedule G
by the NASD By-Laws.
Regarding "Non-NASDAQ" securities, the firm will report
on a daily basis at the end of the day all volume in
principal transactions. The firm will report in the
case of the Non-NASDAQ securities through the reporting
system, the highest price at which ft sold and the
lowest price at which it was purchased any non--NASDAQ
security, the total volume of purchases and sales
executed by ft in any Non-NASDAQ security, and whether
these transactions were conducted with customers or
other broker/dealers. These reports will be as specific
as described in Schedule H to the NASD By-Laws.
firm will also report any information regarding its
market making activities as the Association shall
require. On a monthly basis the firm will report to the
NASDAQ System such data on securities quoted in the
NASDAQ System as the Association shall require.
- REPORTING OF SHORT INTEREST
accordance with ARTICLE III Section 41 in the NASD Rules
of Fair Practice, the firm will report a total of
"short" positions in all customer and proprietary firm
accounts in securities included in the NASDAQ System and
shall regularly report such information to the
Corporation in such a manner as may be prescribed by the
Corporation. Reports shall be made as of the close on
the settlement date falling on the 15th of each month,
or, where the 15th is a non-settlement date, on the
preceding settlement date.
- HOURS OF BUSINESS
firm's market makers will be open for business from 9:30
Eastern Standard Time and will close no earlier than
4:00 PM Eastern Standard Time.
- CLEARING OF TRANSACTIONS
firm will clear all transactions conducted as a market
maker through Gourgem and Cheat, Inc., through which the
firm operates under a fully disclosed basis.
- CRITERIA FOR THE FIRM TO MAKE MARKETS
firm will only make markets in securities, in which it
believes there is a fundamental growth available and a
reasonable profit could be made. Generally ft will also
consider securities in which its sales force is active
in. Currently the company plans to make markets in
either National Market system Securities, or NASDAQ
Securities or Non-NASDAQ Over the Counter Securities.
company will not make markets in the shares of
designated securities, defined as a company with less
than 2 Million dollars in Net Tangible Assets and a
stock trading below $5.00.he decision in which
securities to make a market in will be made by the
trader, however his will be reviewed by the Management
firm will allow short-selling on securities, and will
open margin accounts for such transactions.Currently the
firm verifies through Its clearing agent, Gourgem and
Cheat, Inc. that the stock is available in its Stock
Loan Department, allowing the short order to be placed.
Thus, each short transaction is reviewed by a registered
principal at Fleecem and Howe.
- LIMIT ORDERS
Regarding Limit Orders the firm will always execute
customer orders over the firm's proprietary orders.
LONG & SHORT TICKETS
tickets executed and entered shall be marked as to
whether the seller is long or short the stock. If the
sell is a short sell, the firm's procedures regarding
such sales shall be implemented.
- FREE RIDING
Under no circumstances does the firm allow free riding.
Such action will result in immediate action by the firm
and could lead to termination.
- DOCUMENTATION AND SEC RULE 211
firm's trading activities will be the result of Its
opinion as to the direction of the price of said
security.This opinion will be the result of continued
due diligence on the company. The firm will maintain
due-diligence files on all companies that A makes a
market in, and will update these files as often as
possible given the performance of the underlying
- BEST EXECUTION COMPARISON
executing orders from the Trading Department the firm
will take the following procedures to try and insure the
best execution possible for its clients. This task will
be handled via the video terminal of the NASDAQ System.
On this system all quotes from current Market Makers
will be compared and the execution will take place at
the best possible location. In the event that a
security is not listed on the NASDAQ System and
information is not available via the video terminal the
firm will contact at least 3 market makers to ascertain
as to the best possible execution price.
- PAYMENT FOR ORDER FLOW
Currently the company does not have a relationship in
which ft is compensated for the direction of order
flow. Should the company in the future enter into such
a relationship the necessary steps would be taken to
inform its clients of such a relationship.
- CURRENCY REPORTING
firm does not allow the use of cash currency to settle
- SOES SYSTEM PROCEDURES AND GUIDELINES
Merrill Goldman intends to make a market in National
Market System Securities will also participate in the
Small Order Execution System or SOES. The firm
recognizes the purpose of this system to aid in an
efficient manner the execution of small orders by retail
customers. The firm will utilize this system for such
transactions.To comply with NASD regulations the firm
will do the following: The firm will not execute orders
using the SOES system for professional traders.
When evaluating whether certain transactions are in
compliance with the rules regulating SOES, with regards
to size, the firm will undertake to decide if the
transaction(s) are from one decision maker of the
investment, either from a single account, or from
numerous accounts with common control.The firm will not
enter agency orders into SOES in which the firm
currently is a market maker.
firm will make all the necessary reporting requirements
as set forth in the SOES System, which in general are
the same as NMS Securities. This will include reporting
the trade, price and volume within 90 seconds of
execution and daily volume to the appropriate market
- UNDERWRITING PROCEDURES -
- GUN JUMPING
When the firm participates in an underwriting, ft will
not begin its marketing efforts until the appropriate
registration statement has been filed. Then during this
'Cooling Off' Period the firm will allow the
dissemination of Preliminary Prospectuses "Red Herrings"
to potential investors and will accept Indications of
Interest. However, in no way will the firm sell
securities, or openly market this issue to the general
public. All information will be reviewed by a
registered principal to ensure that all regulations are
- HOT ISSUES
Hot issue is any offering that trades at an immediate
premium in the after market. The firm will not withhold
any shares of a Hot Issue for:
The Firms Accounts
Officers, Directors, partners, employees or agents
of a member.
Immediate family of the above mentioned people.
Anyone acting in a fiduciary manner regarding the
Officers of banks, insurance companies, or
institutional accounts or their immediate families.
However, the firm may sell insubstantial amounts to the
people mentioned above in Numbers (3),(4), and (5) if
securities were sold in accordance to their normal
investment practices.If the firm is the acting managing
underwriter ft will take the responsibility to ensure
that the above criteria and that compliance to
regulations regarding Hot Issues are followed.
Merrill Goldman will take a 30% haircut on securities
positions realized through a firm commitment
underwriting. Upon entering into such an agreement the
firm will take a 30% haircut on the entire position the
firm will place less its selling concession. The firm
will maintain this haircut as long as any of these
securities remain in Its inventory.
- CHINESE WALL
Merrill Goldman has erected a "Chinese Wall" so that
confidential and inside information received during
Corporate Finance and Underwriting work will not be
realized to its general sales force. Any breach in this
wall may result in termination with the firm or
punishment. The procedures to protect this information
will be reviewed by Maria Nosegrabber, and Rufus
Watchguard on a quarterly basis to ensure that the
non-public information obtained by the firm will remain
SECTION 7 - MUNICIPAL SECURITIES -
- MUNICIPAL SECURITIES RULEMAKING BOARD
term "Board' shall mean Municipal Securities Rulemaking
annual fee will be paid to the Board by Merrill Goldman
Corporation with respect to each fiscal year end of the
Board in which the firm conducts a municipal securities
business. Such fee must be received at the office of
the Board in Washington, D.C. no later than February
15th of the fiscal year for which the fee is being paid
along with a written statement listing the name, address
and SEC registration number (8-22805).
- MUNICIPAL SECURITIES PRINCIPAL
Chip Vincent Claxton Overton IV is the qualified
Municipal Securities Principal who will review the
Each municipal security transaction
Customer complaints involving municipal securities
All correspondence regarding municipal securities
- MSRB MANUAL
firm will maintain a copy of the updated MSRB Manual and
will also maintain the appropriate records on all
- MUNICIPAL SECURITY - CUSTOMER COMPLAINTS
Merrill Goldman Corporation maintains an MSRB customer
complaint file as part of its books and records. It is
the firm's policy to respond quickly to written customer
complaints and to maintain copies of such complaints
along with the written response including all
appropriate support documents as may be necessary.
- INVESTOR BROCHURE
Pursuant to MSRB Rule G10, an investor brochure will be
delivered to all customers that file complaints
regarding Municipal Securities transactions.
Municipal securities activity is subject to the
guidelines outlined under Home Office records and Files.
- OPTION &
- OPTION PRINCIPALS
Einstein is the qualified/designated Compliance
Registered Options Principal (CROP).
Thelma Einstein is the Registered Options Principal
(ROP) and Senior Registered Options Principal (SROP).
Notification of the firm's ROP, SROP and CROP has been
filed with the NASD.
- QUALIFICATIONS OF REPRESENTATIVES
Representatives having taken and passed the Series 7
examination since May, 1977 is qualified for both puts
and calls. Any Representative having taken and passed
the Series 7 examination prior to April, 1977 will
provide proof of having taken an additional examination
before engaging in put and call transactions.
- OPENING OF OPTION ACCOUNTS
No order from a customer will be accepted for an option
transaction unless the customer's account has been
approved for option trading by the CROP or designated
In approving a customer's account for option trading,
due diligence will be exercised to ascertain the
essential facts relative to the customer regarding
his/her financial situation, investment
history,investment objectives, accounts with other
brokerage firms, and level of option trading.
The background and financial information upon which the
customer's account has been approved for option trading
shall be sent to the customer within fifteen (15) days
after the date of approval for verification, if the
information is not contained in the customer's account
The written options agreement shall be obtained from the
customer within fifteen (1 5) days after the customer's
account has been approved for option trading.
All option transaction will be approved by the SROP
prior to entry, as designed by the CROP.
Before approving an investment partnership account for
option trading a written document shall be obtained
designating the person or persons authorized to sign
each agreement on behalf of the partnership and that
such authority specifically includes option trading.
- OTHER PROCEDURES
All order tickets will be initialed by ROP.
A periodic review of accounts having option transactions
will be made by the ROP to determine if the Registered
Representative is observing the suitability standards
applicable to each of his/her customers, relative to
recommended option trades.
Registered Representatives are prohibited from making
unwarranted, exaggerated or false claims with respect to
transactions in options.
Merrill Goldman Corporation will be responsible for
delivery of an options prospectus/applicable booklets at
or prior to the time an account is approved by option
Registered Representatives shall not recommend to any
customer an option transaction unless the Representative
has reasonable grounds to believe upon the basis of
information furnished by the customer and after
reasonable inquiring by the Representative that the
recommended transaction is not unsuitable for the
Registered Representatives shall not recommend to any
customer an opening option transaction unless he has
reasonable basis for believing that the customer has, at
the time of the recommendation, such knowledge and
experience in financial matters that he may be capable
of evaluating the risk of the recommended transaction
and is financially able to bear the risk of the
- MAINTENANCE OF RECORDS
A file will be maintained for all options related
customer complaints and will contain all necessary
information to conduct a thorough investigation of the
complaint, regarding the Registered Representative, date
the complaint was received and what action was taken (if
The firm will have option prospectus and/or applicable
booklets concerning options for walk-in customers.
The firm will maintain the appropriate personnel records
for option principals.
- EXERCISE ASSIGNMENT PROCEDURE
Merrill Goldman Corporation will follow the exercise
assignment procedure prescribed by the clearing
broker-dealer, which executes the transaction.
- REGULATION T - OPTIONS
is important that Registered Representatives become
familiar with the basic concepts of Regulation T and
Merrill Goldman Corporation's 'house" rules, and that
Representatives advise their customers of applicable
requirements before they enter into an options
transaction.For purpose of Regulation T, exchange traded
options have no loan value. Although such options may
be purchased either in a special cash account or in a
margin account, full payment must be made within the
time required by Regulation T, unless the account has
available funds to cover the purchase.Full payment for
exchange traded options purchased in a special cash
account must be made promptly.
While Regulation T requires deposits of cash or
securities to meet commitments for exchange trade
options made in a margin account within five business
days, R should be noted that settlement by clearing
firms and the OCC are on a next-business-day basis.
The firm, thereof, must pay out cash for options
purchased on behalf of a customer several days before
the required deposit is due pursuant to Regulation T.
This potential drain on the firm's cash ran be avoided
by requiring a deposit from the customer earlier than
the date mandated by Regulation T.
compliance with amendments to Appendix E Article 111,
section 33 of the NASD Rules of Fair Practice regarding
uncovered option accounts, Merrill Goldman Corporation
has the following policies and practices:
- APPROVAL OF UNCOVERED OPTION ACCOUNTS
The Compliance Registered Option Principal (CROP) or
his/her designate shall carefully review the new account
application and other applicable
agreements/documentation for items stated in Appendix E
'Interpretation of the Board of Governors.' In general,
a customer must have a minimum total net worth of
$100,000 to $200,000 with a significant portion being
liquid net worth. In addition to net worth, the CROP or
his/her designate shall pay special attention to
customer's age, number of dependents, investment
objectives, prior investment experience in securities
including options, and anticipated amount of funds to be
approved for options.
accounts shall be approved by the CROP or his/her
designate prior to the entry of any uncovered option
CROP, and in his/her absence the Senior Registered
Options Principal (SROP)shall maintain written record of
the reason(s) for the exception approval with each new
account that is approved for uncovered options which
does not meet Merrill Goldman set standards.
Merrill Goldman Corporation will impose the highest
equity requirements for each account involved in
uncovered options as set among its correspondence
broker, regulation T, any option exchange, or any other
regulatory agency that Merrill Goldman Corporation is
Section 8.9e -
Merrill Goldman Corporation requires all customers to
execute and submit the "Special Statement for Uncovered
Option Writers" letter before approving any account for
uncovered options. This document shall be maintained
with the customer's new account application.
- SUPERVISION OF UNCOVERED OPTION ACCOUNTS
All orders marked "sell to open" shall be reviewed prior
to entry by the SROP or his/her designate.
All uncovered option trades shall be reviewed the day
after trade date by the SROP of his/her designate.
All uncovered options accounts shall be reviewed monthly
by the CROP or his/her designate through review of
customer monthly statements.
Section 8.1 1
RISK DISCLOSURE STATEMENTS
Within three days of a principal signing or initialing
an account that will transact in options, a Risk
Disclosure Statement will be sent to the customer
explaining the risks regarding option trading.
- SALES FORCE SUPERVISION -
is the goal of Merrill Goldman Corporation in its
efforts to supervise its sales force to maintain on
average 10 registered representatives (Series 7) to each
general securities principal (Series 24). To accomplish
this task, as well as to create and maintain an
effective chain of communication and supervision the
following will be undertaken.
- Each Registered Representative with Merrill Goldman
Corporation will be physically assigned a principal
supervisor. Within this capacity, the supervisor will
maintain communication regarding compliance procedures
and company information, as well as answering specific
questions from the salespeople they supervise. Ticket,
and Account Information will still be processed by the
Branch Wire Operator and assistant manager. The branch
manager, will still be held responsible for the overall
supervision and compliance by the registered personnel
at any branch office.
- Due to the liquid nature of many of Merrill Goldman
brokers, and the fluctuation as to the number of brokers
at a specific branch, some supervisors may have more
than 10 brokers while others at other branches may have
less than 10 to supervise. Although these fluctuations
will vary month to month Merrill Goldman will strive to
maintain on average a ratio of 10 brokers to 1
- New procedures to aid in the expansion of the firm
certain requirements for supervisors (Series 24).
- All Branch Managers will continue to be supervisors.
- All Assistant Branch Manager will be supervisors.
- All school instructors will be supervisors.
- Any brokers participating in the New Mentor Program
is believed that implementing these new procedures will
create a strong communication and supervision link
between the supervisors of Cheatem's and Fleecem's sales
force. Continued expansion will include these new
procedures as well as the maintenance of the 10 to I
ratio. Expansion will not be undertaken until such
communication and managerial structures are in place.
- A physical list of which sales people are supervised
by which principals will be required and kept in the
home office, by the registered compliance officer, as
well as at each branch off ice.
- Any misbehavior or problems will be referred by the
direct supervisor to the branch manager. The branch
manager will then report to the registered compliance
officer, who will in turn issue instructions.
OPTION STRATEGIES AND CUSTOMER POLICIES
- FIRM POLICIES -
This section is designed to inform brokers that plan on
conducting Option transactions with customers on firm
policies and well as suggest guidelines in dealing with
customers.It should be noted that although their are
various option strategies are available, Merrill Goldman
Corporation does not intend to transact in risky or
speculative option strategies
- CLIENT TRADING ACCOUNTS:
conduct option transactions with Merrill Goldman
Corporation the client must have trading account with
Fleecem and Howe.
- CLIENT RECOMMENDATIONS:
is the responsibility of the Registered Representative
to introduce option strategy only that is compatible
with the clients stated objectives. Discussion should
be conducted with each client to be sure he/she
understands both the potential risk and reward.
- PERCENTAGE OF TOTAL INVESTMENTS IN OPTIONS
is the responsibility of the Registered Representative
to set a conservative maximum percentage of any clients
trading funds to be used for option speculation.
- OPTION DISCLOSURE DOCUMENT
is the responsibility of the broker to confirm and/or
send option agreement and OCC disclosure document
together and to have a signed option agreement on file
before any option trades take place.
STOCK TRANSACTIONS VERSUS OPTION POSITIONS
Each broker is required to cross check stock
transactions with the clients open option positions.
- SUGGESTED TRANSACTIONS
Merrill Goldman Corporation limits option transactions
to:Short Covered calls and short covered spreads.
Alternatively, on the long side the client may purchase
calls and/or puts.
- NAKED OPTIONS
Naked options are not available at Merrill Goldman
Corporation.These outlines and suggestions are subject
to periodic review by the firms Compliance Registered
Options Principal (CROP) and failure to comply with
these policies may result in discipline and or
termination.For more information or specific questions
regarding firm option policies and particular
circumstances contact either your branch manager or the
BASIC OPTION STRATEGIES
Hedge Position - (Bear Position)
Long Calls, Short Stock (Assume short stock sale &
strike price identical)
Purpose: Protection from an upward movement of the
100% of premium Short sales-price minus premium
Speculative Position - (Bull Position)
Purpose: Strictly Speculation
100% of premium Unlimited
Short Calls, Long Stock
Purpose: Generate Revenue
Opportunity Loss Premium Only
Naked or Uncovered - NOT AVAILABLE
Use Long Puts as alternative
Hedge Position - (Bull Position)
Long Puts, Long Stock (assume stock cost & strike price
Purpose: Protection an downward movement of stock
100% of premium Unlimited
Speculative Position - (Bear Position)
Purpose: Strictly Speculative
100% of premium Strike minus Premium -
Short Puts, Short Stock (assume short stock sale &
strike price identical
Purpose: Generate Revenue
100% of premium = Strike minus Premium
Speculative Position - (Bull Position)
Naked or Uncovered - NOT AVAILABLE
Use Long Calls as alternative
FLEECEM AND HOWE SECURITIES CORPORATION
339 Wall Street, Suite 948
New York, New York 10294
Telephone: (212) 997-8343
Dated: November 2, 1998
This manual is to illustrate and give guidelines as to
how branch offices are to run, what minimum requirements
and criteria are, as well as general descriptions for
office personnel.These guidelines are just that. Branch
managers hold the right to alter or adjust these
policies or guidelines as long as they do not interfere
with the firm's compliance and written supervisory
BRANCH OFFICE RESPONSIBILITIES
BRANCH OFFICE HOURS
Merrill Goldman Corporation requires that branch offices
be open for business from 9:30 a.m. Eastern Standard
Time to 4:00 p.m. Eastern Standard Time. In general,
branch offices should be open later in the evening to
allow both full-time and part-time brokers access to
branch resources and well as for client meetings.During
market hours, a Series 24, dully appointed by the branch
manager must be present.
- SUPERVISION OF REGISTERED PERSONNEL
branch office is a designated OSJ (Office of Supervisory
Jurisdiction) therefore a procedure must be established
to maintain a system of supervision. These policies
should be designed to monitor the activities of each
registered representative and associated person and
therefore try to achieve compliance to applicable
securities laws, and firm procedures and policies.
- NASD MANUAL
Each OSJ must maintain at least two (2) copies of the
NASD Manual, and make them readily accessible to
associated personnel of Merrill Goldman Corporation.
MERRILL GOLDMAN SECURITIES CORPORATION -WRITTEN
Each OSJ will be required to maintain at least one
edition of the most recent version of the firm's written
supervisory procedures. These WSP's must be accessible
to all registered personnel.
- TRADE TICKETS
trade tickets must be reviewed by the branch manager at
the end of business each day. A binder should be kept
with tickets for each production month.Tickets must be
reviewed with at least an initial on the first and last
ticket for each trade period.
Mail must be opened by a designated person appointed by
the branch manager. Mail must be opened in a secure
area and reviewed for any monies, securities, and or
letters of complaint. The mail should then be
disseminated to the appropriate personnel.
- NEW ACCOUNTS
accounts must be reviewed and approved by the branch
manager and/or designated person. Upon approval, the
accounts would be opened in the SIS System. A new
account number will be assigned and the account would
then be officially opened.The application must be
completed and signed by the branch manager and then
forwarded to the corporate offices. The back (cardboard
like) copy should be torn and given to the broker . It
is suggested that copies be made of all customer
accounts, W-9's and Margin Agreements before being
forwarded to corporate.If the application is not
completed correctly, it will be returned to the branch
office for correction.
- PLACING ORDERS
orders will be placed by the appointed personnel by the
branch managers directly to trading.The ticket should be
stamped numerically and time stamped. Upon giving the
order it will be read back to confirm. If this is
correct the order will be placed (a drop copy will be
printed in the branch office). A comparison to the order
and the drop copy should be conducted immediately to
confirm that no mistakes have been made.Execution will
automatically print in the branch office, at which time
the tickets should be appropriately checked and a copy
distributed to the broker of record.Foreign stocks,
Mutual Funds and Bond orders will receive a telephone
- REGULATION T EXTENSIONS
an extension is required for a customer account, a wire
will be received explaining the amount due, the customer
account, broker number and date of expiration. A wire
must be received back to trading by 4:00 p.m. Eastern
Standard Time giving the information to proceed. (i.e.
Please Grant an Extension, or Extension is not
needed.)If a wire is not received, an extension will
automatically be sought and charged to the broker of
- CANCEL & REBILLS
for some reason an error took, place in a trade a Cancel
& Rebill form would be completed and faxed to Trading.
If in 3 days the correction had not been made, daily
wires to trading should be done until completed.
Section 1.1 1
Account instructions should be completed by each broker
and forwarded to the appropriate person in each branch
office. These instructions should then either be wired
or faxed to corporate. If the instructions have not
been completed in 3 days, daily wires to trading should
be done until completed.
- SELECTNET TRADES
place a SELECTNET trade each broker should call their
assigned trader (by branch office) to instruct and place
the trade. To place the order, a limit, branch and
broker number must be received. If execution occurs, a
wire would be sent to the wire operator "stating the
shares were bought at the execution price and waiting
for ticket".If the execution report does not occur in 10
minutes, it should be assumed that the order did not
execute. It is not the responsibility of the trader to
inform the broker that the order did not execute.An
order should then be placed by the wire operator to
execute a trade "from inventory" indicating that this
trade is now completed. An execution report to the
customer account would then follow.
- MUTUAL FUND TRANSACTIONS
mutual fund transaction called into trading will be
executed on the next business day. Telephone execution
will be received by the branch office.After execution a
mutual fund letter must be completed by the broker of
record and either faxed or pouched to corporate.It is
suggested that a copy be maintained for branch records.
- MARGIN AGREEMENTS
Margin Agreements must be completed in full. Upon
completion the document would be forwarded to corporate
for correspondent approval. In general it should take 3
to 4 days for margin approval. To expedite this process
the margin agreement may be faxed for approval.
However, this should be an exception.It is suggested
that a copy be maintained for branch records.
- OPTION AGREEMENTS
Option Agreements must be completed in full. Upon
completion and signed by the broker it should be
forwarded to corporate for ROP approval. In general it
should take 7 to 10 days for option approval. To
expedite this process the option agreement may be faxed
for approval. However, this should be an exception.It
is possible to utilize the same agreement for Margin &
Section 1. 1 6
Completed IRA Application should be forwarded to
corporate. Any checks for application fees should also
be included.It is suggested that a copy be maintained
for branch records.
- TRANSMITTALS AND REPORTS
Merrill Goldman requires full documentation on the
transmittal of all paperwork, securities, and monies.
In addition, Merrill Goldman Corporation will provide
both the branch and brokers with various reports for
their benefit.If for any reason, paperwork, checks, or
securities are not reflected in the account in 3 days an
immediate call should be made to cashiering to confirm
the receipt of the documents and the current status. All
documents sent to corporate should be stamped with the
branch number in a strong color (such as Red or Green)
to ease the processing of paperwork.
- CASH TRANSMITTALS
document the sending of checks, a cash transmittal must
be completed in full. This would include, the branch,
prepares the customer account number, name and the
amount for the check. Upon completion the pink copy
would be kept for branch records, while the original and
checks would be pouched to corporate.It is suggested
that copies of all checks transmitted be kept until
deposited in the customer's account.
- SECURITIES TRANSMITTALS
To document the sending of securities, a securities
transmittal must be completed in full. This would
include branch, prepares the customers name, account
number the security description, CUSIP number, and
certificate number. Upon completion the pink copy would
be kept for branch records, while the original and
securities would be pouched to corporate.It is suggested
that copies of all securities transmitted be kept until
deposited in the customer's account.
- DOCUMENT TRANSMITTALS
To document the sending of documents, a document
transmittal must be completed in full. This would
include branch, prepares the customer name, account
number and the document being sent. Upon completion the
pink copy would be kept for branch records, while
originals and documents would be pouched to corporate.It
is suggested that copies of all paperwork be kept and
maintained in a branch account file.
Section 2.4 - MONEYLINE REPORTS
Moneyline reports, per broker are printed every Monday,
Wednesday and Friday and pouched out to the branch
office. These reports give a report to the broker on
each account with a current position, such as current
market value, debits and free cash.Upon receipt of the
Moneyline reports, they should be distributed to the
There is no need to copy or maintain a record on behalf
of the branch.
- A/E BLOTTERS
Blotters by branch and broker number will be received
for brokers with activity. These reports show the
customer and transaction as well as the gross commission
generated.These reports upon receipt should be
distributed to each broker. It is suggested that a
copy be maintained by the branch manager as an overview
for broker activity and business production.
- WEEKLY REPORTS
Each branch office will receive weekly reports from
corporate. These reports are designed to keep managers
informed of brokers and customer accounts.
- BROKER REPORT
Each week a report will be generated showing brokers at
each branch office. This will include work status,
(i.e. full-time or part-time) and broker number.
- PART-TIME MAILING
Brokers that desire to have their information mailed to
them bi-weekly will code their file as "part-time". The
branch will receive a weekly report of those brokers
coded part-time. Unless informed otherwise all brokers
will be coded part-time,
- CONFIRM LIST
list will be generated for all brokers that require a
confirmation call upon execution of an order. This list
will reflect those brokers that desire a call as well as
the designated phone number for contact.Broker files
should be coded Y for "Yes on Confirmation", N for "No
Confirmation" and D for "Don't Know". All broker files
are D (Don't Know) until notified otherwise.
- DON'T KNOW LIST
This report is generated to reflect those broker files
that reflect a D for Don't Know. This generally
indicates that the broker information form has never
been received by corporate.
- CUSTOMER ACCOUNTS
This report shows all customer accounts opened in the
Merrill Goldman customer account database. Sorted by
broker number, this report indicates accounts opened.
Should a customer account not reflect on this report, it
indicates one of two things.
The account has been opened in the branch in SIS, but
the paperwork has not yet been received and entered into
the Nosegrabber Account database.
There is a problem. The account has not been input, or
the account was opened under the wrong branch number, or
was not transferred properly. A follow up call or wire
should be placed to follow up.It is suggested that
before action is taken, the branch should wait for
another Customer Account Report to see if the problems
have been resolved or if the account has since been
- MONTHLY REPORTS
Each branch will also receive reports once a month,
informing the branch of various information.
- BROKER STATE REGISTRATION
Once a month reports for all brokers will be Generated
reflecting all states that Merrill Goldman currently
shows them to be registered in. Should their be a
conflict or problem a call should be placed to trading.
These reports upon receipt should be given to each
- NO NEW BROKER ORIENTATION ATTENDANCE
Merrill Goldman Corporation requires all registered
personnel to attend a New Broker Orientation. On a
monthly basis a report will be sent showing all brokers
by branch that have not attended a NBO.
- NO ICA AGREEMENT
Merrill Goldman Corporation requires a completed
Independent Contractors Agreement. On a monthly basis a
report will be sent showing all brokers by branch that
have not completed an ICA.
- DISSEMINATION OF INFORMATION AND BRANCH MEETINGS
Although each branch may differ, the dissemination of
information to brokers is vital. Given the many
part-time brokers at Merrill Goldman Corporation this
becomes even more crucial. It is mandatory that branch
offices offer certain meetings and information while
others are just suggestions.
- WEEKLY BRANCH MEETING
Each branch should hold a weekly broker meeting to
explain firm and branch procedures as well as current
projects and business development programs.
- MONTHLY PART-TIME MEETING
Each branch will be required to hold a part-time broker
meeting at least once a month. This meeting should be
held in the evening to allow working brokers to attend.
Again branch information procedures and projects should
- PART-TIME BROKER MAILINGS
those brokers files coded part-time a bi-weekly mailing
of information will take place. This takes place every
second Friday. On Thursday, before the mailing, labels
for each part-time broker will be sent to the branch
office to facilitate this mailing.
- CONFIRMATION CALLS
is vital that part-time brokers receive calls upon order
execution if they so desire. To this end, broker files
must be coded "Y" for confirmation calls. Should an
order execute for such a broker a call should
immediately be made to the confirmation number.If that
number is not answered, it is NOT the responsibility of
the branch to track down the broker. That number can be
changed by the broker should they so desire.
- BRANCH NEWSLETTERS
is suggested that a monthly branch newsletter explaining
current projects, procedures and meetings be sent out to
all part-time brokers.
- STATE REGISTRATIONS
branch should inform brokers of all states that Merrill
Goldman Corporation is registered and how each broker
can register in a state.A monthly report will be
received by each branch reflecting states that Merrill
Goldman Corporation is registered in.
- MAINTENANCE OF RECORDS
Each branch is required to maintain certain information
relating to customer accounts and brokers. To this end,
the following procedures have been implemented.
- BROKER INFORMATION SHEETS
Upon a new broker joining a branch, a broker information
sheet should be completed giving pertinent information.
A copy of this sheet should be forwarded to corporate to
update the computer file on the broker. The original
should be held by the branch and kept current.It should
be noted that upon update of the computer file,
corporate will discard the information sheet. Thus, it
is important that the original be kept at the office.
separate file of all advertisements should be kept by
the branch. Each advertisement should be initialed and
dated by the branch manager.
separate file of all complaints should be kept by the
branch. In the event of a complaint being received
please consult the firms Written Supervisory Procedures.
- CUSTOMER ACCOUNTS
Although all original and official files for customer
accounts are kept at corporate, it is strongly suggested
that each branch maintain its own files. These files
would hold copies of new account applications, W-9's,
margin agreements, etc.,Duplicate 3 x 5 cards will also
be sent to the branch. One should be given to the
broker of record. The other should be held by the
branch.As new cards are received, the existing card
should be discarded.
- BRANCH MANAGEMENT & PERSONNEL
Although the staffing of branches may differ, certain
procedures and responsibilities will always be present.
The below descriptions explain job function and
- BRANCH MANAGER
manager's first responsibility is the overall
supervision of all aspects and functions of the office
by ensuring that branch operations are in full
compliance with all regulatory bodies and MSC Corporate
- REVIEW OF TRANSACTIONS AND NEW ACCOUNTS
branch manager is responsible to review all transactions
and new accounts. In the event that the manager does
not conduct these functions, an appointed person must be
- ASSISTANT MANGER
Assistant Manager is, in essence, the Manager's right
hand person. He/She should at any given time,be able to
take over the functions of an office without there being
a gap to bridge. Therefore, the requirements for an
Assistant Manager are as rigid as for the Manager.
is the Assistant Manager's job to be available to do
whatever is necessary for the Manager to be sure his
office is in total compliance.
- WIRE OPERATOR
wire operator is designed to disseminate information to
brokers, as well as place and execute orders on behalf
of the branch. To this end, the wire operator must be
in the office no later than 9:15 Eastern Standard
Time.The wire operator will also be responsible for
logging paperwork, checks and securities and pouching
them to corporate. In essence, the wire operator will
be the main communication point between the branch and
trading. All telephone conversations and wire
communications should be kept private and/or
confidential.The wire operator must have a fingerprint
card on file at the corporate offices of Merrill Goldman
-DISSEMINATION OF INFORMATION
wire operator will be responsible for disbursing broker
reports and information coming from corporate.
Upon execution the trade ticket should be noted and
given to the broker of record. If a part-time broker, a
confirmation call should be placed depending on the
broker file code.
wire operator will also be responsible to open new
accounts directly into the SIS system. Thus they must
be familiar with SIS, as well as the necessary paperwork
to open a customer account.
- ORDER DESK
order desk will be kept in a clean and orderly fashion.
The number stamp will be reset every day, as well as
accurate date and time on the time stamp. Tickets
shall be kept well stocked as well as a rack for open
day and good till cancel orders.
- BRANCH RECORDS AND FILES
will also be the responsibility of the wire operator to
maintain the branch files on brokers and customers.
main responsibility of the receptionist is to answer
incoming telephone calls. However, the receptionist may
be utilized as a support person for the office.All
telephone calls must be answered, "Merrill Goldman
Corporation". All messages shall be filed or processed
according to branch procedures,
For your convenience we have included a list of State
Securities Offices. I you feel that you have a problem
with your broker, these may be the people to call.
State Securities Regulators
Alabama Securities Commission
770 Washington Ave., Suite 570
Montgomery, AL 36130-4700
FedEx Zip: 36104
(334) 242-2984 or (800) 222-1253
Division of Banking & Securities
State Office Building
333 Willoughby Avenue
Juneau, AK 99801
P.O. Box 110807
Juneau, AK 99811-0807
Arizona Corporation Commission
1300 West Washington St., 3rd Floor
Phoenix, AZ 85007
Arkansas Securities Department
Heritage West Building
201 East Markham, 3rd Floor
Little Rock, AR 72201
Department of Corporations
980 9th Street, Suite 500
Sacramento, CA 95814
Division of Securities
1580 Lincoln St., Suite 420
Denver, CO 80203-1506
Department of Banking
260 Constitution Plaza
Hartford, CT 06103-1800
Delaware Division of Securities
Carvel State Office Building
820 North French St., 8th Floor
Wilmington, DE 19801
DISTRICT OF COLUMBIA
Securities Bureau of the District of Columbia
441 - 4th Street, Suite 870 North
Washington, D.C. 20001
P.O. Box 37378
Washington, DC 20001
(202) 727-8000 x 30721
Division of Securities
101 East Gaines Street
Tallahassee, FL 32399-0350
Securities and Business Regulation Division
802 West Tower, Suite 802
2 Martin Luther King Jr. Dr., SE
Atlanta, GA 30334
Hawaii Corporate & Securities Commission
1010 Richards St., 2nd Floor
Honolulu, HI 96813
P.O. Box 40
Honolulu, HI 96810
Idaho Securities Bureau
700 West State St., 2nd Floor
Boise, ID 83720
P.O. Box 83720
Boise, ID 83720-0031
Illinois Securities Department
520 South Second St.
Springfield, IL 62701
302 West Washington St.
Indianapolis, IN 46204
340 East Maple Street
Des Moines, IA 50319
Kansas Securities Commission
618 S. Kansas Ave., 2nd Floor
Topeka, KS 66603-3804
Kentucky Department of Financial Institutions
477 Versailles Rd.
Frankfort, KY 40601
Louisiana Securities Commission
3445 N. Causeway, Suite 509
Metairie, LA 70002
Maine Securities Division
121 State House Station
Augusta, ME 04333-0121
Maryland Division of Securities
200 St. Paul Place, 20th Floor
Baltimore, MD 21202-2020
Massachusetts Securities Division
John W. McCormack Building
One Ashburton Place, Room 1719
Boston, MA 02108
Michigan Corporation & Securities Bureau
6546 Mercantile Way
Lansing, Ml 48910
P.O. Box 30222
Lansing, MI 48909
Department of Commerce
133 East Seventh St., 2nd Floor
St. Paul, MN 55101
202 N. Congress St.
Jackson, MS 39205
P.O. Box 136
Jackson, MS 39205
Missouri State Information Center
600 West Main St., 2nd Floor
P.O. Box 1276
Jefferson City, MO 65101
Montana Securities Department
126 North Sanders St., Room 270
Helena, MT 59620
P. O. Box 4009
Helena, MT 59604-4009
Nebraska Securities Bureau
Department of Banking & Finance
1200 North St., Suite 311
Lincoln, NE 68508
P.O. Box 95006
Lincoln, NE 68509-5006
555 E. Washington Ave., Suite 5200
Las Vegas, NV 89101
Bureau of Securities Regulation
State House, Room 204
107 North Main St.
Concord, NH 03301-4989
Bureau of Securities
153 Halsey St., 6th Floor
Newark, NJ 07102
P.O. Box 47029
Newark, NJ 07101
New Mexico Securities Division
725 St. Michaels Dr.
Sante Fe, NM 87505-7605
P.O. Box 25101
Santa Fe, NM 87501
New York Bureau of Investment
Protection and Securities
New York, NY 10271
North Carolina Securities Division
300 North Salisbury St., Room 302
Raleigh, NC 27603-5909
North Dakota Securities Commissioners' Office
State Capitol Building, 5th Floor
600 East Boulevard Ave.
Bismarck, ND 58505-0510
Ohio Division of Securities
77 South High St., 22nd Floor
Columbus, OH 43215
Oklahoma Department of Securities
First National Center
120 North Robinson, Suite 860
Oklahoma City, OK 73102
Oregon Securities Commission
Department of Insurance & Finance
21 Labor & Industries Building
Salem, OR 93710
Pennsylvania Securities Commission
Eastgate Office Building
1010 N. 7th St., 2nd Floor
Harrisburg, PA 17102-1410
Commissioner of Financial Institutions
Centro Europa Building
1492 Ponce De Leon Ave., Suite 600
San Juan, PR 00907-4127
Department of Business Regulation
233 Richmond St., Suite 232
Providence, Rl 02903-4232
Office of the Attorney General
Rembert C. Dennis Office Building
1000 Assembly St.
Columbia, SC 29202
P.O Box 11549
Columbia, SC 29211-1549
Division of Securities
118 W. Capitol Ave.
Pierre, SD 57501-2017
Tennessee Securities Division
Volunteer Plaza, Suite 680
500 James Robertson Parkway, Suite 680
Nashville, TN 37243-0583
State Securities Board
200 East 10th St., 5th Floor
Austin, TX 78701
P.O. Box 13167
Austin, TX 78711-3167
Herber M. Wells Building
160 East 300 South, 2nd Floor
Salt Lake City, UT 84111
P.O. Box 146760
Salt Lake City, UT 84114-6760
Department of Banking, Insurance, Securities &
Health Care Administration
89 Main St., Drawer 20
Montpelier, VT 05620-3101
89 Main Street, 2nd Floor
Montpelier, VT 05620
Virginia Division of Securities
1300 E. Main Street
Richmond, VA 23209
P.O. Box 1197
Richmond, VA 23218
Department of Financial Institutions
General Administration Building
210 11th Avenue, SW
3rd Floor West, Room 300
Olympia, WA 98504
P.O. Box 9033
Olympia, WA 98507-9033
West Virginia Securities Division
State Capitol Building
1900 Kanawha Blvd., East
Room 118 West
Charleston, WV 25305
Division of Securities
345 W. Washington Ave.
Madison, Wl 53703
P.O. Box 1768
Madison, WI 53701-1768
Secretary of State
24th Street & State Capitol Avenue
Cheyenne, WY 82002-0020
are available for a consultation at your convenience.
If you have read all of the above you are now not only
the smartest person on your block but you are also ready
to take the registered-rep exam. Welcome to Wall Street!
Well, it turns out that your broker lost all of your
money but didn't violate any of the "Blue Sky
Regulations" (State Securities Laws)and you are still
burning mad. There must be something that you can do.
Well this might just be it!
SECURITIES AND EXCHANGE COMMISSION
you have a complaint or question about your investments)
This mailbox may be used to contact the SEC's Office of
Investor Education and Assistance. While we encourage
inquiries from the public via Internet e-mail, remember
that your e-mail is not confidential, and others may
intercept and read your e-mail. If you are comfortable
in doing so, we ask that you provide your name, postal
address, e-mail address, and a daytime telephone number
where you can be reached easily. We will make every
effort to respond to your inquiry quickly and completely
by e-mail, telephone, or letter.
you have a complaint about your broker or an unfair
sales practice, you may want to preserve the
confidentiality of your communication by sending us a
written letter. We discourage sending your account
numbers and account statements to us via e- mail.
Please address your letter to:
Office of Investor Education and Assistance,
Securities and Exchange Commission,
450 Fifth Street,
N.W., Washington, D.C. 20549.
Office of Investor Education and Assistance
U.S. Securities and Exchange Commission
Mail Stop 2-13
450 Fifth Street, N.W.
Washington, DC 20549
are available for a consultation at your convenience.
If you have read all of the above you are now not only
the smartest person on your block but you are also ready
to take the registered rep exam. Welcome to Wall Street!
Chapman Spira and Carson
is pleased to announce the formation of our office in
Memphis Tennessee, headed by Donald R. Lafferty. Don
makes a welcome addition to the Chapman Staff and brings
to the table much sought after talents.
office is located at:
6898 HICKORY LAKE COVE
MEMPHIS, TENNESSEE 38119
has a diversified background and has managed problems in
almost every arena in business including but not limited
to acquisitions mergers and reorganizations. His
outstanding reputation and knowledge give the Chapman
firm an outstanding presence in the Southern United
States where so many of our transactions imitate. We
have enclosed a short sketch of Don's background for
your perusal and know that has extraordinary talents
would be extremely valuable to our entire client base.
upon graduation from Kent State University in March of
1964 and began his business career with Arthur Andersen
& Co. in Cleveland, Ohio where he soon became a tax
partner. Don transferred to the Newark, NJ/ New York
office in 1970, to the Dayton/Cincinnati, Ohio office in
1978 and to the Memphis, Tennessee office in 1980. Don
resigned from Arthur Andersen & Co. in 1986 to start his
own financial consulting business. Don on occasion has
accepted full or part time employment with his
consulting clients and took on the responsibilities of
Chief Executive Office, Chief Financial Officer,
Treasurer, and Board member of at various times.
Business experience during his twenty-two-year career
with Arthur Andersen & Co., and twelve years of
Exposure to practically every type of business
enterprise that has provided either a basic or in-depth
understanding of many industries and their problems.
Clients ranged from international New York Stock
Exchange companies to small closely held local
businesses and their owners and executives.
Industries where he has substantial experience include
banking, hospital supply companies, light and heavy
manufacturing, real estate development, chemical
companies, retail stores and catalogs, extractive
industries including oil, gas, precious metals and coal,
hotel companies, franchise owners, leasing companies,
wholesale businesses, insurance companies, publishers,
real estate brokerage, automobile dealerships,
restaurants, and service businesses.
Familiar with financial, tax and accounting
peculiarities of most businesses.
Worked with every form of business organization
including "C" corporations, "S" corporations, limited
and general partnerships, limited liability companies,
tax exempt organizations, sole proprietorships, and
Personal Computer experience including Excel, Word,
Lotus, Peachtree, and Quick Books.
Preparation of detailed and abbreviated business plans
Preparation of Small Business Administration and
Farmers Home Loan Bank loan applications
Bank loan application packages
Preparation of Private Placement Memorandums
Preparation of Securities and Exchange Commission
Preparation of projections of income, cash flow, break
even analysis, and balance sheets.
Preparation of excel spread sheets to analyze complex
accounting and financial transactions
Working with a business through Chapter 11 bankruptcy
Meetings with bankers, investment advisors, venture
capitalists, investment bankers, attorneys to present
Significant training and experience in being able to
quickly identify business problem, planning
opportunities, and if something does not pass the "smell
Donâ€™s business experience and career have provided him
with the ability to come into almost any business
situation and not have to learn about the business. He
can walk into a business and deal with the funding issue
and not have to waste a lot of time trying to understand
the economics and dynamics of the business.
also has substantial experience working for business as
an officer or consultant in raising equity capital
and/or borrowing. He is familiar with the trials and
tribulations associated with trying to obtain the
capital necessary to make a business and a dream