ERISA 408(b)(2) Notice
ERISA 408(b)(2) Notice
This notice describes the compensation received by First Republic Securities Co., LLC (“FRSC”) with respect to the services provided by FRSC to your ERISA-governed retirement plan (“Plan”).
Description of First Republic Securities Co., LLC and How to Contact Us
Your Plan maintains or may maintain a securities brokerage account or accounts with FRSC, which is a broker-dealer registered with the U.S. Securities and Exchange Commission. Headquarters are located at 111 Pine Street, San Francisco, California 94111. If you have questions regarding the services and/or compensation related to your Plan after reviewing this supplement, please send an inquiry to the attention of “FRSC Compliance” at address listed above or contact your Wealth Manager.
Description of Services Provided by FRSC to Your Plan
Pursuant to our agreement with you, and upon your direction, FRSC has opened or will open an account on behalf of your Plan and/or a separate brokerage account for each Plan participant.
Brokerage services for your Plan that are provided by FRSC include but are not limited to the following:
• Brokerage trading services, including stocks, bonds, mutual funds, and exchange-traded funds
• Wire transfers
• Check deposits and ACH transactions
• Issuance of checks
In providing these services, FRSC does not expect to be acting as fiduciary under ERISA.
Description of Compensation Paid to FRSC
FRSC may receive various forms of compensation related to the services it provides to your Plan and depending upon the investments selected by your Plan and/or its participants.
A. Direct Compensation Paid to FRSC from Your Plan
FRSC brokerage accounts are subject to applicable fees as detailed on the FRSC Schedule of Fees .
The following is a list of securities that may be traded in your brokerage account for which FRSC may receive direct compensation.
1. Exchanged Traded Securities
FRSC is compensated for exchange traded securities on a commission basis, depending upon the quantity of shares or units purchased or sold and their respective prices. Detailed information on commissions paid to FRSC is included on the specific trade confirmations you receive.
2. Fixed Income Securities
FRSC is compensated for fixed income securities purchased or sold on a principal basis by either “marking up” (upon your Plan’s purchase) or “marking down” (upon your Plan’s sale) the price of the security paid or received by your Plan. Fixed income securities sold on an initial offering are typically sold at “par” (i.e., face value), with FRSC receiving compensation as described in the official statement or disclosure materials from the issuer. Fixed income securities may be sold on an agency basis, under which FRSC is compensated on a commission basis. Detailed information on commissions paid to FRSC is included on the specific trade confirmations you receive.
B. Indirect Compensation Payable to FRSC From Sources Other Than Your Plan
The following is a list of securities that may be traded in your Plan’s brokerage account for which FRSC receive indirect compensation (meaning compensation in connection with services to your Plan but paid to FSRC by a party other than your Plan).
1. Alternative Investments
Alternative investments include private equity funds, partnership interests, hedge funds, “funds-of-funds,” and other forms of investment vehicles that may not be registered with the U.S. Securities and Exchange Commission (collectively, “Funds”). FRSC may receive compensation from the Fund when FRSC acts as placement agent. FRSC’s compensation from the Fund manager or general partner generally is set forth in the Disclosure Statement provided to your Plan and acknowledged by your Plan prior to investing in the Fund.
2. Payment for Order Flow
FRSC, in furtherance of its obligation to ensure best execution for its client orders, may route non-directed equity or option orders to certain exchanges, electronic communication networks, or broker-dealers during normal business hours and during extended trading sessions. FRSC routes orders for execution to unaffiliated broker-dealers, who may act as market maker or manage execution of the orders in other market venues. FRSC may have access to those venues' electronic execution or algorithm tools. FRSC may receive payment for order flow, or discounts, rebates, reductions of fees or credits from the venues to which FRSC routes client orders, including orders for your Plan, for execution. See the Rule 606 disclosure page for more details.
FRSC, acting through Grand Eagle Insurance Services, may receive compensation from your Plan’s investments in variable, indexed, fixed and income annuities as well as life insurance policies. This compensation may include:
Sales Charges or Sales Commissions: FRSC may be paid a sales charge or commission by the carrier. The commission amount for the initial purchase and subsequent payments to existing annuity contracts vary based on the product. Please refer to the prospectus for the sales charge or commissions.
Service Fees (commonly known as “12b-1 Fees”): FRSC may be compensated by the carrier for providing distribution-related, administrative and informational services. Service fees are included in the “annual operating expenses” or “expense ratio”. Please refer to the prospectus for the fees and expenses.
For more information, please refer to the contract issued by the life insurance company.
4. Cash Sweep Program
Eagle Sweep is an FDIC-insured deposit account opened and maintained by FRSC’s Clearing Agent, Pershing, LLC, at FRSC’s affiliated bank First Republic Bank. See the Eagle Sweep Disclosure brochure for additional details.
5. Mutual Funds
Sales Charges are paid by the investor and are typically expressed as a percentage of the fund’s offering price. Some mutual funds are characterized by having a “front-end” sales charge or “load.” A portion of the sales charge will generally be paid to FRSC.
For more information, please refer to the “fees and expenses” or similar section of the mutual fund prospectuses previously provided to you.
Service Fees (commonly known as “12b-1 Fees”) may be paid by mutual fund companies to compensate FRSC for providing distribution-related, administrative, and informational services, as applicable, associated with the funds owned by your Plan. Service Fees are included in the “annual operating expenses” or “expense ratio” charged and reported by each fund, and such amounts are automatically deducted directly from the funds.
For more information about 12b-1 fees attributable to your Plan, please refer to the mutual fund prospectuses previously provided to you.
Commissions may be paid to FRSC for mutual funds sold without a sales charge (no-load funds).
Detailed information on commissions paid to FRSC is included on the specific trade confirmations you receive.
6. Unit Investment Trusts
Sales Charges are paid by the investor and are typically expressed as a percentage of the Unit Investment Trust’s (“UIT”) offering price. UITs have a “front-end” sales charge and FRSC is typically paid a portion of this charge to compensate FRSC.
For more information, please refer to the investment prospectus for a specific UIT.
Scope of Disclosure
The information provided herein is a supplement intended to address the disclosure requirements under Section 408(b)(2) of ERISA. Your Plan may incur other service charges that are not payable to FRSC. Such charges may include any expenses, fees, and other costs payable to your Plan’s administrative service providers, the cost for auditing your Plan’s financial statements, and other related expenses. Information regarding these other service charges must be obtained from the applicable service provider. The information included herein provides important information for fiduciaries of your Plan; however, is not intended to create, replace, or modify any existing or prospective agreement with FRSC that may exist now or in the future.