The U.S. Securities and Exchange Commission (SEC) requires your broker to give this statement to you, and to obtain your signature to show that you have received it, before your first trade in a penny stock. This statement contains important information – and you should read it carefully before you sign it, and before you decide to purchase or sell a penny stock.
In addition to obtaining your signature, the SEC requires your broker to wait at least two business days after sending you this statement before executing your first trade to give you time to carefully consider your trade.
Penny stocks can be very risky.
Penny stocks are low-priced shares of small companies. Penny stocks may trade infrequently – which means that it may be difficult to sell penny stock shares once you have them. Because it may also be difficult to find quotations for penny stocks, they may be impossible to accurately price. Investors in penny stock should be prepared for the possibility that they may lose their whole investment.
While penny stocks generally trade over-the-counter, they may also trade on U.S. securities exchanges, facilities of U.S. exchanges, or foreign exchanges. You should learn about the market in which the penny stock trades to determine how much demand there is for this stock and how difficult it will be to sell. Be especially careful if your broker is offering to sell you newly issued penny stock that has no established trading market.
The securities you are considering have not been approved or disapproved by the SEC. Moreover, the SEC has not passed upon the fairness or the merits of this transaction nor upon the accuracy or adequacy of the information contained in any prospectus or any other information provided by an issuer or a broker or dealer.
Information you should get
In addition to this statement, your broker is required to give you a statement of your financial situation and investment goals explaining why his or her firm has determined that penny stocks are a suitable investment for you. In addition, your broker is required to obtain your agreement to the proposed penny stock transaction.
Before you buy penny stock, federal law requires your salesperson to tell you the “offer” and the “bid” on the stock, and the “compensation” the salesperson and the firm receive for the trade. The firm also must send a confirmation of these prices to you after the trade. You will need this price information to determine what profit or loss, if any, you will have when you sell your stock.
The offer price is the wholesale price at which the dealer is willing to sell stock to other dealers. The bid price is the wholesale price at which the dealer is willing to buy the stock from other dealers. In its trade with you, the dealer may add a retail charge to these wholesale prices as compensation (called a “markup” or “markdown”).
The difference between the bid and the offer price is the dealer’s “spread.” A spread that is large compared with the purchase price can make a resale of a stock very costly. To be profitable when you sell, the bid price of your stock must rise above the amount of this spread and the compensation charged by both your selling and purchasing dealers. Remember that if the dealer has no bid price, you may not be able to sell the stock after you buy it, and may lose your whole investment.
After you buy penny stock, your brokerage firm must send you a monthly account statement that gives an estimate of the value of each penny stock in your account, if there is enough information to make an estimate. If the firm has not bought or sold any penny stocks for your account for six months, it can provide these statements every three months.
Additional information about low-priced securities – including penny stocks – is available on the SEC’s Web site at http://www.sec.gov/investor/pubs/microcapstock.htm. In addition, your broker will send you a copy of this information upon request. The SEC encourages you to learn all you can before making this investment.
Brokers’ duties and customer’s rights and remedies
Remember that your salesperson is not an impartial advisor – he or she is being paid to sell you stock. Do not rely only on the salesperson, but seek outside advice before you buy any stock. You can get the disciplinary history of a salesperson or firm from FINRA at 800.289.9999 or contact FINRA via the Internet at www.finra.org. You can also get additional information from your state securities official. The North American Securities Administrators Association, Inc. can give you contact information for your state. You can reach NASAA at 202.737.0900 or via the Internet at www.nasaa.org.
If you have problems with a salesperson, contact the firm’s compliance officer. You can also contact the securities regulators listed above. Finally, if you are a victim of fraud, you may have rights and remedies under state and federal law. In addition to the regulators listed above, you also may contact the SEC with complaints at 800.SEC.0330 or via the Internet at firstname.lastname@example.org.
Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, we will ask for your name, physical address, date of birth and other information that will allow us the ability to identify you. We may also ask for a copy of your driver’s license, passport or other identifying documents.
FINRA Regulation Public Disclosure Program HOTLINE NUMBER: 800.289.9999
FINRA Regulation Web Site Address http://www.finra.org.
You may review/order the investor brochure that includes information describing the Public Disclosure Program from the website or by calling 800.289.9999.
You may obtain information about the SIPC, including the SIPC brochure, by contacting SIPC at 202.371.8300, by going to the SIPC website http://www.sipc.org or by email at email@example.com.
In order to better service your financial needs our firm has engaged an independent member of the New York Stock Exchange and other major exchanges as our Clearing Agent. Accordingly, your account and all regulations governing it may fall within the control of both firms pursuant to a written agreement between the Clearing Agent and us. Under this agreement, the Clearing Agent will: provide cashiering services; monitor compliance of credit according to applicable rules, regulations and policies; prepare or provide information for transaction confirmations and periodic account statements; and provide for the dissemination of proxy, tender offer, and other similar shareholder’s materials. In addition, the Clearing Agent may provide, upon our specific instructions, order execution and/or certificate clearance. However, the Clearing Agent will not be involved with or have responsibility for decisions regarding transactions in your account. While you continue to be a customer of our firm, the opening and approval of accounts and the entry of orders and instructions regarding the deposit or withdrawal of securities or money for your account must be handled by us. We will continue to be responsible for all activities in connection with your account and inquiries regarding your account should be directed to us. Information about our Clearing Agent is available upon request.
Sprott Global Resource Investments, Ltd. has developed a Business Continuity Plan (BCP) setting out how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information on our plan.
Contacting Us – If after a significant business disruption you cannot contact us as you usually do at 800.477.7853 or 760.444.5254, you should call our emergency number 612.597.1908, alternative fax 760.683.6578 or go to our website at sprottusa.com.
Our Business Continuity Plan – We plan to quickly recover and resume business operations after a significant business disruption and respond by safeguarding our employees and property, making a financial and operational assessment, protecting the firm’s books and records, and allowing our customers to transact business. In short, our business continuity plan is designed to permit our firm to resume operations as quickly as possible, given the scope and severity of the significant business disruption.
Our business continuity plan addresses: data back-up and recovery; all mission critical systems; financial and operational assessments; alternative communications with customers, employees, and regulators; alternate physical location of employees; critical supplier, contractor, bank and counter-party impact; regulatory reporting; and assuring our customers prompt access to their funds and securities if we are unable to continue our business.
Our clearing firm, RBC Capital Markets, LLC, backs up our important records in a geographically separate area. While every emergency situation poses unique problems based on external factors, such as time of day and the severity of the disruption, we have been advised by our clearing firm that its objective is to restore its own operations and be able to complete existing transactions and accept new transactions and payments within the same business day. Your orders and requests for funds and securities could be delayed during this period.
Varying Disruptions – Significant business disruptions can vary in their scope, such as only our firm, a single building housing our firm, the business district where our firm is located, the city where we are located, or the whole region. Within each of these areas, the severity of the disruption can also vary from minimal to severe. In a disruption to only our firm or a building housing our firm, we will transfer our operations to a local site when needed and expect to recover and resume business within a few hours (as events dictate). In a disruption affecting our business district, city, or region, we will transfer our operations to a site outside of the affected area, and expect to recover and resume business within two business days. In either situation, we plan to continue in business, transfer critical operations to our parent company Sprott Inc., as necessary, and provide information through our website sprottusa.com, including contract and critical transaction processing information. If the significant business disruption is so severe that it prevents us from returning to business within a reasonable period of time, or ever, we will take all necessary actions to assure our customer’s prompt access to their funds and securities.
As adopted in November 2000, SEC Rule 606 requires all broker-dealers that route orders in equity and option securities to make available quarterly reports that present a general overview of their routing practices. As stated above, SGRIL is an introducing broker-dealer. Transactions effected by SGRIL are executed and settled through our clearing firm, RBC Correspondent Services (RBC CS), a division of RBC Capital Markets LLC., Minneapolis, Minnesota and also through third party broker dealers. Being that RBC CS makes the routing decisions concerning the customer orders routed through them without regard to the identity of GRIL as its introducing broker-dealer, SGRIL feels that RBC CS is in the best position to prepare a quarterly report that reflects the clearing firm’s routing practices on our behalf. Please review RBC CS’ SEC Order Handling Disclosure at:
The following describes how Sprott Global Resource Investments Ltd. (SGRIL) handles your personal information, and what steps we take to protect your privacy. We do not disclose your personal information to any unaffiliated third party for marketing purposes. If you close your account with us or otherwise become a former customer, we will continue to treat your nonpublic, personal financial information as described in this policy.
Who we are: SGRIL is an introducing broker-dealer. Our firm has a contractual agreement with RBC Correspondent Services (RBC), a division of RBC Capital Markets, LLC, member NYSE/FINRA/SIPC, to serve as our clearing firm. This fully disclosed agreement states the responsibilities of each party. Prior to the agreement becoming effective, RBC is responsible for making all disclosures to our firm's designated examining authority as required by NYSE Rule 382. Each client of our firm is notified of the relationship via a disclosure letter. The disclosure letter details the responsibilities that our firm (the introducing broker-dealer) and RBC have to the client. Although client assets are held by RBC, no RBC entity has responsibility for the financial condition or performance of our firm or our Financial Consultants.
Confidentiality and security: SGRIL uses procedural, physical and electronic system safeguards to store and secure information about you in compliance with federal standards. Our systems protect your information from unauthorized access, alteration and destruction. Access is permitted only to those individuals within our organization who need the information to perform their job responsibilities.
Where we get information: The information we collect about you comes primarily from your SGRIL New Account Documentation. This includes such information as your name, address and social security number that you may have provided on these applications, agreements or other forms. In addition, we maintain records of each of your transactions and holdings at our clearing firm.
To whom we disclose the information: We provide information about current or former clients from the sources described above to parties outside SGRIL only as described below:
SGRIL employees use information about you to respond to your needs and to provide you with information about specific products in which you may have an interest. We instruct our employees to use strict standards of care in handling the personal and confidential information of customers. We remind them regularly of their obligations regarding the confidentiality of customer information.
Option to opt out and change notices: If for any reason at any time in the future, we find it necessary to disclose any of your personal information in a way that is inconsistent with this policy, we will give you advance notice of the proposed change and the opportunity to opt out of such disclosure.
Pursuant to US regulations issued under section 311 of the USA PATRIOT Act, 31 CFR 103.192, we are prohibited from opening or maintaining a correspondent account for, or on behalf of, the Latvian bank VEF Banka, its subsidiaries, including Veiksmes Lizings, and Commercial Bank of Syria, its subsidiaries, including Syrian Lebanese Commercial Bank (the “Specified Banks”). The regulations also require us to notify you that your correspondent account with our firm may not be used to provide the Specified Banks with access to our firm. If we become aware that the Specified Banks are indirectly using the correspondent account you hold at our firm, we will be required to take appropriate steps to prevent such access, including terminating your account.
Complaints regarding your account should be directed to:
Chief Compliance Officer
Sprott Global Resource Investments Ltd.
1910 Palomar Point Way, Suite 200
Carlsbad, CA 92008
Telephone: 800.477.7853 or 760.444.5254.
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