Odeon Capital Group LLC - Customer Disclosure Brochure June 30, 2020
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Odeon Capital Group LLC
Customer Disclosure Brochure
June 30, 2020
Odeon Capital Group LLC (“Odeon” or the “Firm”) is a registered broker-dealer with the United States
Securities and Exchange Commission (“SEC”) and a registered Introducing Broker with the Commodity
Futures Trading Commission (“CFTC”). Odeon is also a member of the Financial Industry Regulatory
Authority (“FINRA”), the National Futures Association (“NFA”), the Securities Investor Protection
Corporation (“SIPC”), and a registrant of the Municipal Securities Rulemaking Board (“MSRB”).
The purpose of this brochure is to provide you with detailed information about our
brokerage services and expand upon the important disclosures in the Odeon Customer
Relationship Summary or “Form CRS.” A copy of the Odeon Form CRS, along with
additional important disclosures, is available at odeoncap.com/legal.
1. Odeon and Your Financial Professional Act as place your interests ahead of our own when
a Broker-Dealer and an Associated Person of a recommending securities, investment strategies,
Broker-Dealer and account types to you. Among other things,
we do this by evaluating the conflicts of interest
Odeon is a full-service broker-dealer that
that impact our relationship and eliminating
provides brokerage services to you and other
them to the extent we can. Because certain
retail customers as well as institutional
conflicts of interest cannot be eliminated, we
customers. Brokerage services include the
have procedures in place to mitigate and
purchase, sale, holding and exchange of
disclose them to you.
securities. In general, our brokerage services are
non-discretionary, which means that you make Brokerage services are separate and distinct
the decision regarding whether or not to buy, from advisory services and are governed by
sell, or otherwise transact in your account. As a different laws and regulations. Odeon, and its
broker-dealer, we will provide execution representatives, operate in the capacity of a
capabilities, and through our 3rd party clearing broker-dealer and not an investment adviser.
firms, clearing and custody services to effect Brokerage services and advisory services have
your instructions. In connection with providing different costs, levels of service, and expenses.
these brokerage services to you, Odeon and its They are designed to address different
financial professionals may make investment needs. Before opening a brokerage
recommendations to you that we believe to be account, you should carefully consider and
in your best interest. These recommendations discuss with your financial advisor, in light of
may include whether to open a certain type of your particular circumstances, the services, risks,
brokerage account with Odeon and whether to and expenses associated with brokerage services
buy, sell, exchange, or hold a security or a series vs advisory services.
of securities (i.e. an “investment strategy”) in
2. Type and Scope of Services Offered to You
your brokerage account.
As discussed above, when we provide brokerage
When we make a recommendation to you as a
services to you, we may make recommendations
retail customer, we must have a reasonable basis
regarding (i) the type of brokerage account to
to believe that the recommendation is in your
open with Odeon; (ii) whether to buy, sell, hold
best interest. This means that we are required to
or exchange certain investments; and (iii)
Page | 1 of 17Odeon Capital Group Customer Disclosure Brochure
whether to implement certain investment brokerage account, based on your eligibility and
strategies available to you. Each of these types selection. In a cash brokerage account, you must
of recommendations are explained in more pay for your purchases in full at the time of
detail below. purchase. In a margin brokerage account, you
must eventually pay for your purchases in full,
Recommendations Regarding Brokerage
but you may borrow part of the purchase price
Accounts:
from our clearing firm. This is generally referred
Odeon offers different types of brokerage to as a “margin loan.” The portion of the
accounts with different features and, in certain purchase price that is loaned you is secured by
cases, different costs. Certain brokerage securities in your account, also referred to as
accounts have tax-advantage features that can “collateral.” You will incur interest costs as a
help you reach specific financial goals such as result of your margin activity. While many
saving for education or health care while others securities are eligible to be used as collateral for
have features that permit specific types of a margin loan, some assets are not available for
investment activity (e.g. Options Accounts). The margin collateral purposes.
following table lists the various brokerage
Given that a margin-enabled brokerage account
accounts offered by Odeon to retail investors:
has specific eligibility requirements, unique
Coverdell Education Savings Accounts costs, and governing regulatory requirements,
Individual Taxable Accounts our default brokerage option is our cash
Margin Accounts brokerage account. You must execute a separate
Option Accounts margin agreement before engaging in margin
Retirement Plan Accounts brokerage activity. Included with your margin
Roth IRAs agreement is a copy of the Margin Disclosure
Statement. This statement contains important
Traditional Individual Retirement
information you should understand and consider
Accounts (IRAs)
before establishing a margin brokerage
Trust Accounts
relationship.
Uniform Gift to Minors Act (UGMA)
Accounts Rollover and Transfers of External Accounts:
Uniform Transfer to Minors Act (UTMA)
Your financial professional may recommend that
Accounts
you sell assets held in an account away from
Account Minimums: You are not required to Odeon and rollover or transfer the proceeds
hold a minimum level of assets in your brokerage from that sale to one or more Odeon accounts.
accounts with Odeon. However, if you either fail For example, your financial professional may
to fund your account or do not return account recommend that you liquidate your employee
opening documents as required, your account retirement plan (e.g., a 401(k) plan) and roll over
will be closed. the cash proceeds into an Odeon account. When
we do so, we are required to have a reasonable
Odeon opens brokerage accounts on your behalf
basis to believe that the rollover or transfer is in
when you complete our Account Forms and
your best interest.
Agreements which contain additional important
information regarding the nature of each type of Recommendations to Buy, Sell, Hold or Exchange
brokerage account we offer. Securities:
Cash Brokerage & Margin: When you establish a brokerage account with us,
you have the ability to buy, sell and hold
Odeon provides brokerage services through
investments within your account. The primary
either a cash brokerage account or margin
service we provide is our trading capability. We
Page | 2 of 17Odeon Capital Group Customer Disclosure Brochure
execute purchases and sales on your behalf, and which may include recommendations to buy,
as directed by you. In a brokerage services sell, or hold assets. When we make a securities
relationship we can trade with you for our own recommendation, investment strategy
account, for an affiliate, or for another client, recommendation, or recommendation to
and we can earn a profit on those trades. The rollover assets from your Qualified Retirement
capacity in which we act is disclosed on your Plan (QRP) to an Individual Retirement Account
trade confirmation. However, we are not (IRA), the recommendation is made in our
required to communicate it in advance, obtain capacity as a broker-dealer unless otherwise
your consent, or inform you of any profit earned stated at the time of the recommendation. Any
on trades. such statement will be made orally to you.
Moreover, when we act in a brokerage capacity,
In general, brokerage accounts are “non-
we do not agree to enter into a fiduciary
discretionary,” which means that you make the
relationship with you.
ultimate decision whether to buy, hold, sell, or
exchange investments in your account. Even Please also consider that from time to time we
when we make recommendations regarding the may provide you with additional information and
securities in your account, we will not act until resources to assist you with managing your
you instruct us to do so. It is important for you to brokerage account. This may include but is not
understand that when our financial limited to educational resources, sales and
professionals make a brokerage marketing materials, performance reports, asset
recommendation to you, we are obligated to allocation guidance, and/or periodic brokerage
ensure the recommendation is in your best account reviews. When we offer these services
interest, considering reasonably available and information, we do so as a courtesy to you.
alternatives, and based on your stated These activities are not designed to monitor
investment objective, risk tolerance, liquidity specific investment holdings in your brokerage
needs, time horizon, financial needs, tax status, account, they do not contain specific investment
and other financial information you provide us. recommendations about investment holdings,
We rely on you to notify us when any of these and you should not consider them a
factors have changed. You may accept or reject recommendation to trade or hold any particular
any recommendation. securities in your brokerage account. Upon your
request, we will review such information and
Account Monitoring: In general, while your
reports with you and may provide you with
financial professionals may voluntarily review
investment recommendations, but we are not
your account holdings and provide you with an
under a specific obligation to do so.
unsolicited recommendation, we will not
monitor your account on a regular basis. It is Agency vs. Principal Trades: When transactions
your responsibility to monitor the investments in occur in your account with us, we act as either
your brokerage account, and we encourage you an agent or as principal. The capacity in which we
to do so regularly. We do not commit to provide are acting will be reflected on your trade
on-going monitoring of your brokerage account. confirmation.
If you prefer on-going monitoring of your
When we engage in an agency trade, we act
account or investments, you should speak with a
as an intermediary between you and the
financial advisor about whether an advisory
buyer of a security when you sell the
services relationship is more appropriate for
security, and between you and a seller of the
you.
security when you buy a security. Odeon
Incidental Brokerage Services: Within your does not own or have some other beneficial
brokerage account, we may also provide other interest in the securities involved in a sale,
incidental services such as research reports, purchase, or exchange transaction done on
Page | 3 of 17Odeon Capital Group Customer Disclosure Brochure
an agency basis. In these circumstances, believe could be in the best interest of retail
Odeon acts as a broker. investors, given our Firm’s investment
When we engage in a principal trade, Odeon philosophy and capabilities.
buys or sells for an account in which Odeon
In addition, certain investments, such as
has a beneficial ownership interest, which in
municipal bonds and commodities, can only be
most cases is a proprietary account. In other
recommended by financial professionals with
words, Odeon sells to you a security that it
specific registration and licensing. Not all of our
holds in its own account or purchases the
financial professionals have the appropriate
security from you for purposes of holding
securities licenses from FINRA to make
the security in its own account. In these
recommendations to buy, sell, or exchange
circumstances, Odeon acts as a principal
securities or recommend strategies involving all
(also called a dealer).
types of securities. Your financial professional
Recommendations of Investment Strategies: will discuss with you and provide you with
information about their ability to recommend
Odeon and your financial professional may
certain types of investments.
recommend to you one or more investment
strategies. An investment strategy is a series of Investment Risks:
transactions in securities that are done for the
Even when we have a reasonable basis to believe
purpose of accomplishing a specific investment
an investment is in your best interest, you can
or economic outcomes such as “income-
still lose some or all of your money when
generating” or “tax-advantaged” or “non-
investing. No investments are “guaranteed” and
correlating.” A strategy would also include
you should only invest assets for which you are
recommendations to you to use a bond
willing to accept some risk of loss. We cannot
investment technique called “laddering,” or a
guarantee that you will meet your investment
lending strategy called “margin.” Your financial
goals, or that our recommended investments or
professional may also recommend the use of a
investment strategies will perform as
3rd party investment manager as part of his or
anticipated. The risks attendant to any
her investment strategy recommendation.
investment or investment strategy vary in both
Bases for Our Recommendations and Limitations nature and scope, and it is important that you
on Our Recommendations: understand the risks of your investments before
making a decision. The following are some basis
Before we recommend a transaction, investment
risks involved in a variety of investment types:
strategy or type of brokerage account, we will
ask you for certain information regarding you, Risk of Principal Loss: The risk that you will
your financial goals, and your investments. We lose some or all of the money you invest.
use this information to form a customer profile Volatility: The risk that your investments will
that we will rely on to form a reasonable basis to fluctuate in value.
believe our recommendations are in your best Interest Rate Risk: The risk that the value of
interest. We rely on you to promptly notify us your investments may decrease with
when any of this provided information has fluctuations in interest rates.
changed. Liquidity: The risk that you may not be able
to access your invested assets for a certain
While we offer a broad range of investments in
period of time, and that if you need those
individual securities (such as common stocks and
assets sooner, you may have to pay a
bonds), we do not offer or recommend every
substantial penalty.
investment that could be available to you in the
Issuer Credit Risk: The risk that the company
global or U.S. marketplace. Rather, we only offer
that created or issued your investment will
investments that we have a reasonable basis to
Page | 4 of 17Odeon Capital Group Customer Disclosure Brochure
not have the ability to pay when your Size and value of transaction
investment is due. Frequency of trade activity
There are other risks associated with investing in In addition, your financial professional may have
securities. You should consult the available the ability to modify the amount of commissions
offering documents for each security we Odeon will charge for a securities transaction
recommend for information on the specific risks within certain parameters. Your financial
associated with the recommendation. Offering professional may charge different commissions
documents include prospectuses, offering for different clients for the same transactions
memorandums, private placement involving identical securities. You should discuss
memorandums, and similar documents. We can with your financial professional the commissions
provide those documents to you upon request, he or she charges. Commission rates are
or help you find them. If offering documents or negotiable.
other written disclosures are not available with
regard to a particular security, your financial Mark-ups and Mark-downs:
professional can help explain any potential There are costs associated with transactions in
investment risks to you. any financial product. When you purchase or sell
3. Fees and Costs that Apply to Your investments in a principal transaction, the cost of
Transactions, Holdings, and Accounts purchasing the investment may include a charge
called a “mark-up.” This means that when Odeon
The following describes the material fees and sells you a security from its inventory, Odeon will
costs that you directly or indirectly will pay for sell the security to you at a price that is higher
brokerage services. These fees and costs are paid than the market price of the security. The
to Odeon. In turn, a portion of these fees and difference between the sales price and the
costs are paid to your financial professional, market price (or “spread”) is the “mark-up” and
which we explain under “Compensation of Your is a form of compensation paid to Odeon. It’s
Financial Professional.” important for you to understand that the higher
the price for your particular investment —
Commissions:
including the mark-up — the lower your yield, or
When Odeon acts as your agent, Odeon charges return on investment.
you a commission when Odeon executes a
On the other hand, if Odeon buys a security from
purchase, sale, or exchange transaction of
you for purposes of taking that security into its
certain types of securities. A commission is
own inventory, Odeon often will buy the security
either a flat dollar amount per trade, or a
from you at a price that is lower than the market
percentage of the total price of the securities
price. The spread between the purchase price
involved in the trade. The commission amount
paid to you and the market price is called a
is deducted from your account. While facts
“mark-down.” The “mark-down” is not direct
dependent and negotiable, typical commission
compensation. However, Odeon may then sell
rates are $0.03 to $0.05 per share for equity
that security to another customer or a third
transactions and 1% to 5% for fixed income
party. If the sales price is higher than the price
products.
that Odeon purchased the security from you, the
Commission amounts can vary depending upon difference or spread is compensation paid to
certain factors such as: Odeon.
Underlying product selection Odeon and your financial professional are
Brokerage service level and account responsible for determining the mark-up for the
type security Odeon will sell or buy from you. In the
case of a sale of a security to you, the mark-up
Page | 5 of 17Odeon Capital Group Customer Disclosure Brochure
and commission, though facts dependent and 4. Conflicts of Interest
negotiable, generally will not be more than 5%.
A “conflict of interest” is an incentive or interest
However, the spread may vary depending on the
that might influence Odeon or your financial
security. Your financial professional may quote a
professional, consciously or unconsciously, to
different price for different clients for the same
make a recommendation that is not
transactions. You should discuss with your
disinterested. At Odeon, we have procedures in
financial professional the price quoted and
place to identify, eliminate, and where
whether the price is negotiable.
elimination is not possible, mitigate and disclose
Distribution Fees and Credit Interest: all material conflicts of interest associated with
the securities we offer and those conflicts that
When you open an account, our financial
create an incentive for your financial
professionals may recommend you “sweep”
professional to place his or her interest ahead of
funds that are not invested into cash products or
yours. In this section, we discuss certain material
money market funds. Certain money market
conflicts that apply to our relationship.
funds may pay us a distribution fee that
increases when more of our clients’ funds are Commissions and Other Transaction-Based
invested in the money market fund. As a result, Compensation:
we have an incentive to recommend only those
Odeon and your financial professional have an
money market funds that pay us distribution
incentive to recommend that you sell, buy, or
fees over those that do not, although our
exchange securities more frequently because
financial professionals do not share in those
doing so increases the transaction-based
fees. In addition, when you select a cash sweep
compensation Odeon receives. Additionally,
option instead of a money market fund, we are
Odeon has an incentive to recommend that you
eligible to receive credit interest on that cash
engage in transactions involving securities for
investment.
which it may charge higher commissions (e.g.,
Other Fees and Costs: options) than what may be charged for other
securities (e.g., domestic stocks).
Clients may incur certain charges imposed by
third parties such as custodial fees, deferred Agency Cross Transactions:
sales charges, odd-lot differentials, transfer
Odeon and your financial professional may
taxes, wire transfer and electronic fund fees, and
engage in agency cross transactions. In these
other fees and taxes on brokerage accounts and
circumstances, Odeon and your financial
securities transactions. These other fees can be
professional may match customers who want to
found described in our Clearing Firm Customer
sell a security with another customer who wants
Brochure at odeoncap.com/legal. This document
to buy that same security (or vice versa). As a
is provided for your reference by our Clearing
result, Odeon will enter into the purchase/sale
Firm and is subject to change without notice.
transaction between the two clients rather than
Compensation of Your Financial Professional: purchasing or selling the security through an
exchange or otherwise engaging in the
Odeon pays compensation to your financial
transaction with a party who does not have an
professional. The amount of that compensation
account with Odeon.
is a percentage of revenue that he or she
generates for Odeon. The revenue includes the Principal Transactions, Mark-ups and Mark-
above-discussed commissions and spreads. downs:
When we act as principal, Odeon and your
financial professional sell you securities that we
hold in a firm account or buy securities from you
Page | 6 of 17Odeon Capital Group Customer Disclosure Brochure
for our own account. As described earlier in this Limitations on Your Financial Professional’s
Brochure, Odeon’s compensation is a mark-up Ability to Make Certain Recommendations:
when it sells you a security in a principal trade.
Your financial professional can only recommend
When Odeon sells you a security, it has an
services and products for which the financial
incentive to recommend that you buy the
professional is properly licensed. For example,
security at a price higher than what Odeon might
our financial professionals are licensed to
receive from a person who is not a client of the
provide brokerage services but not investment
firm or who may have more investment
advisory services. Additionally, if your financial
experience. Additionally, when Odeon holds a
professional is not licensed to recommend
security in its own account, it bears the risk of
certain types of investments for which additional
owning that security. Therefore, it has an
licensing is required (such as municipal bonds,
incentive to recommend that you buy the
commodities futures, or off-exchange foreign
security, even though buying it may not be in
exchange transactions), he or she cannot
your interest. When Odeon purchases a security
recommend those securities or related
from you, it has an incentive to recommend that
strategies even if purchasing such securities or
you sell the security at a price lower than what
taking advantage of such strategies is in your
Odeon might receive from a person who is not a
best interest. Accordingly, you should discuss
client of the firm or who may have more
with your financial professional whether he or
investment experience. Additionally, Odeon may
she is licensed to provide you with the
recommend that you purchase the security
investment advice that is appropriate for your
because it believes that it may sell the security at
financial needs.
a higher price to you rather than another
customer or a person who is not a customer of Rollovers, Account Transfers and Similar
the firm. Transactions:
Underwriting of “New Issues”: Generally, Odeon does not permit your financial
professional to make recommendations
Odeon and your financial professional may
regarding the purchase, sale, or exchange of
recommend that you invest in securities issued
securities or recommendations regarding
in an initial public and/or secondary offerings
investment strategies with regard to securities
(“new issues”) for which Odeon and/or its
not held at Odeon. Such accounts are called
affiliate acts as a manager, underwriter, and/or
“held away” accounts. In order for Odeon and
a member of the selling group. Odeon has a
your financial professional to provide brokerage
conflict of interest in recommending these
services including such recommendations,
securities. Odeon receives all or a portion of the
Odeon and your financial professional have an
“gross spread,” which represents the difference
interest in recommending that you open one or
between the price that you pay for the security
more accounts with Odeon, liquidate your
and the price for which Odeon and/or its affiliate
holdings at another firm, and move your assets
purchases the security. This gross spread may be
to the Odeon account. Odeon and your financial
higher or lower in connection with certain
professional are incentivized to make such a
offerings. In addition, Odeon has a substantial
recommendation even if doing so is contrary to
interest in assuring that the offering is successful
your interest because we only receive
because Odeon and/or its affiliate bears the
compensation for providing brokerage services if
financial and reputational risk of not selling all or
the assets are held by Odeon. For example, if you
most of the securities. Therefore, Odeon has
have an account in your employer’s retirement
incentives to recommend that you purchase
plan, Odeon and your financial professional have
these new issues for these reasons, rather than
an interest in recommending that you take a
based on your needs.
distribution from your retirement plan account
Page | 7 of 17Odeon Capital Group Customer Disclosure Brochure
and rollover the proceeds to an IRA held at Customer Identification Program
Odeon. Odeon and your financial professional
Important Information about Procedures for
also have an incentive to recommend that you
Opening a New Retail Account:
liquidate your brokerage account at another
broker-dealer and transfer the proceeds to one To help the government fight the funding of
or more accounts held at Odeon. terrorism and money laundering activities,
federal law requires all financial institutions to
5. Additional Disclosures
obtain, verify, and record information that
Privacy Statement identifies each person and entity that seeks to
open an account. What this means for you:
We collect nonpublic personal information
When you open an account, we will ask for your
about you from the following sources:
name, address, SSN, date of birth, identifying
information from your application or other
documents, and other information that will
forms; information about your transactions; and,
allow us to identify you.
information we may receive from consumer
reporting agencies. We do not disclose any Important Information about Procedures for
nonpublic personal information about our Opening a New Institutional Account, including
customers or former customers to anyone, DVP/RVP Accounts:
except as permitted or required by law or upon
For our Institutional Accounts we may request
request of a regulatory body. We restrict access
the following: For a corporation, partnership,
to your personal and account information to
trust, limited liability company, or other legal
those staff members who need to know that
entity we will need to know the principal place of
information to provide products and services to
business address, tax identification number,
you. We maintain physical, electronic, and
articles of formation, operating agreement,
procedural safeguards to guard your nonpublic
formation documents, partnership or trust
personal information. When disposing of paper
agreement and any other information that will
documents that contain nonpublic information
allow our firm to identify the organization. U.S.
on our customer our staff members are trained
Department of the Treasury, Securities and
to physically shred them or dispose of them
Exchange Commission and FINRA Rules require
though a contracted disposal company. The full
this information to be provided. Additional
content of our privacy policy on our website at
requirements post May 11, 2018, per FinCEN’s
odeoncap.com/legal.
Customer Due Diligence (“CDD”) Rule, will
Business Continuity require additional documentation around the
beneficial ownership of legal entity customers,
During times of local or national emergencies,
as well as the controlling individuals of legal
the office may be closed and every attempt to
entity customers. These individuals will require a
return to normal business operation will be
level of documentation sufficiently similar to
made. Our Business Continuity Plan addresses
those of retail account individuals as described
varying degrees of business disruption and is
above.
reviewed and tested annually. To access your
account funds or positions, please dial 212-257- FINRA BrokerCheck
6980 or check our website for alternative access
FINRA BrokerCheck allows investors to learn
information. Our Business Continuity Plan is
about the professional background, business
subject to modification, a summary is posted on
practices, and conduct of FINRA member firms or
our website. If a customer would like to receive
their registrants. The telephone number of the
a copy of our plan please send a written request
BrokerCheck is 800-289-9999, the website
to Odeon Capital Group, Information Technology
address is http://www.brokercheck.finra.org. An
Dept., 750 Lexington Ave., New York, NY 10022.
Page | 8 of 17Odeon Capital Group Customer Disclosure Brochure
investor brochure is also available upon request. exemption from Rule 605 (then known as Rule
Per FINRA Rule 2210 a hyperlink to BrokerCheck 11 Ac1-5) for small market centers that do not
is on the first page of our website. focus their business on the most actively traded
securities. This exemption exempts any market
Tax & Legal Advice
center that reported fewer than 200
No one associated with Odeon is authorized to transactions per trading day on average over the
render tax or legal advice and customer may not preceding six month period in securities that are
and should not rely upon such advice, if given. covered by the Rule (that is, national market
system securities that do not qualify for the
Complaints inactively traded security exemption), but only if
Complaints regarding your account may be more than 90% of such transactions were in
directed to the Odeon Capital Group at 750 securities that are not included in the Nasdaq-
Lexington Ave., New York, NY 10022. Attention: 100 Index or the S&P 500 Composite Stock Price
Compliance Department. The telephone number Index. Odeon Capital Group, effects sufficiently
is 212-257-6980. few transactions to fit within this exemption.
Accordingly, the firm is not required to report
Inaccuracies and/or Discrepancies – Questions pursuant to Rule 605.
about Your Account Statement
SEC Rule 606 Disclosure
Your account statement contains important
information about your securities account, In accordance with SEC Rule 606, Odeon is
including recent transactions. All account making available a quarterly report which
statements sent to you shall be deemed identifies the significant market cents to which
complete and accurate if not objected to in customer orders were routed for execution. This
writing within 10 days of receipt. Please report Rule requires Odeon to disclose the top 10
any inaccuracy or discrepancy in your account to market centers in terms of total number of
Odeon’s Operations Department. Odeon orders routed for execution and any other
encourages you to review the details in your market centers to which the firm routes 5% or
statement. more of its customers’ orders. The report is
divided into four sections as mandated by the
Changes of Address SEC: (1) equity securities listed on the NYSE, (2)
Please promptly notify your representative of equity securities listed on the NASDAQ Stock
any changes in your residential address or Market, Inc., (3) equity securities listed on the
contact information. Failure to notify the firm AMEX or any other national securities exchange,
may result in Odeon’s inability to send you and (4) exchange-listed options The report will
important notifications which could result in disclose the material aspects of Odeon’s
restrictions or other issues in your account. relationship with those top market centers
should it receive a significant amount of order
Changes in Your Account Information flow and what percentage of customer orders
are routed to each of the top market centers.
Please promptly notify your representative of
Additionally, this information is also available to
any changes in your investment experience,
customers upon written request as to the venues
investment objectives, or financial information.
to which their individual orders were routed.
SEC Rule 605 Disclosure Rule 606 report links are provided at
odeoncap.com/legal.
By letter dated June 22, 2001, the Securities and
Exchange Commission (the “SEC”) notified
Richard Romano, Chair of the Small Firms
Advisory Board, of the SEC’s decision to grant an
Page | 9 of 17Odeon Capital Group Customer Disclosure Brochure
SEC Rule 607 of the customer limit order, without first
executing the customer limit order.
In accordance with SEC Rule 607 of Regulation
NMS, Odeon is required to disclose upon FINRA Rule 5320 – Order Handling Practices
account opening and on an annual basis
Under rule 5320, if a firm is in possession of a
thereafter (1) its policies regarding payment for
customer order that is eligible for protection, the
order flow, including a statement as to whether
firm may not receive executions for its own
any payment for order flow is received for
account at prices that would satisfy the
routing customer orders and a detailed
customer order without providing the
description of the nature of the compensation
executions to the customer order. Rule 5320
received, and (2) their polices for determining, in
permits firms to accept orders from institutional
the absence of specific customer instructions,
accounts and to trade along or exclusive of such
where to route customer orders that are the
orders without providing them protection as
subject of payment for order flow, including a
long as the firms have provided disclosure of
description of the extent to which orders can be
their order handling practices. Odeon takes this
executed at prices superior to the NBBO. Odeon
opportunity to explain which institutional
does not pay for order flow nor does it receive
customer orders will receive protection under
payment for order flow. However, Odeon
Rule 5320. Orders received from institutional
potentially may profit by trading as principal with
customers that are below 10,000 shares, under
its customers’ orders. Additionally, orders
$100,000 in notional value and entered on a held
routed to public exchanges may be eligible for
basis will be protected by Odeon. Therefore, the
“rebates” under the relevant exchange rules. If
trade desk at Odeon with knowledge of such an
Odeon were to receive a rebate net of fees
order will be required to provide the order with
assessed by such an exchange, such could be
protection. Additionally, an institutional
considered “payment for order flow”. For any
customer may opt into order protection on
execution, customers of Odeon are entitled to
orders over 10,000 shares, under $100,000 in
know the venue of execution, and whether
notional value, provided that these orders are
Odeon netted a rebate from such venue during
entered on a “held” basis. Odeon will consider
the relevant time period.
such requests on a case by case basis and will
Market Orders inform the customer whether it is willing to
accept such a protected order. Because “not
The firm will make all reasonable efforts to
held” orders (including best-efforts, VWAP
obtain the best possible price available at the
orders, “anticipate” orders, percentage of
time the order is received. In the event that a
volume orders, stopped orders, “work” orders
customer market order is placed at the same
and “over-the-day” orders) require that the firm
time as a firm order, the customer order will be
exercise discretion as to the time and price of
completed first.
execution, Odeon does not believe that it is
Limit Orders feasible for these orders to be eligible for
protection. Additionally, orders executed subject
The firm will handle any customer limit orders, to guarantee (including guaranteed close,
whether received from its own customers, or market-on-close, limit-on-close orders,
from another broker-dealer with all due care so guaranteed open orders, market –on-open and
as not to “trade ahead” of limit orders. guaranteed VWAP orders) are ineligible for
Therefore, the firm will not trade on buy orders protection. Lastly, complex orders (basket or
at prices equal to or less than that of the limit program orders, risk arbitrage pairs orders,
order, or conversely the firm will not trade on spread orders, convertible swaps orders and
sell orders at prices equal to or greater than that multi-leg orders) from customers will not be
Page | 10 of 17Odeon Capital Group Customer Disclosure Brochure
eligible for protection because of the difficulties behavior) -- the available sweep money market
in assessing which firm executions are applicable funds typically pay higher 12b-1 fees than other
to a particular complex customer order. Risk money market funds. The Firm may receive up to
orders (including Total Touch Risk orders, Beat- 1.00% annually of client assets in the sweep
the-VWAP orders and Hedging Outperformance money market funds from the money market
Orders) with price improvement will not be fund sponsor in connection with 12b-1 fees.”
eligible for Rule 5320 protection. Rather such
FINRA Rule 2266
customer orders will be priced according to the
price-improvement formula agreed upon You may obtain more information about the
between Odeon and the customer. If any Securities Investor Protection Corporation (SIPC)
customer should have any questions, please coverage on your brokerage account by
contact your sales trader. contacting the firm or requesting a SIPC
brochure. SIPC’s website is www.sipc.org and
Net Basis Orders
the telephone number is 202-371-8300.
At the time an order is placed with Odeon, our
Confirmations
firm may trade the order on a “net” basis, unless
the client affirmatively raises an objection. A net In the case of a transaction in a reported
transaction is a principal transaction in which security, or an equity security quoted on
Odeon may perform either of the following NASDAQ or traded on a national exchange and
actions: (1) after having received an order to buy that is subject to last sale reporting, the name of
an equity security, Odeon then purchases that the party from or to whom the securities were
equity security at one price from another broker- purchased or sold to you, the time the
dealer (or another customer) and then sells it to transaction took place, the difference between
you at a different price; or (2) after having the price to the customer and the dealer's
received an order to sell an equity security purchase price, and the source and amount of
Odeon then sells that equity security at one price any other remuneration received or to be
to another broker-dealer (or another customer) received by the firm in connection with the
and then buys it from you at a different price. In transaction will be furnished upon request.
either case Odeon will not charge you a
commission and will instead be compensated for Payment for Securities
the transaction by retaining the difference In the event that you wish to pay for securities
between the purchase and sale transaction. Net purchased through Odeon Capital Group please
trades must comply with the Order Protection make checks payable to Hilltop Securities our
Rule included in Regulation NMS. The net price, clearing firm for securities transactions. Also
which is reported to the Consolidated Tape, is please note your account number and write
the price of the trade with respect to the Order Odeon Capital Group in the memo section of the
Protection Rule and is the price used when check.
determining whether or not a trade-through has
occurred and whether the firm has availed itself VWAP Orders
of the ISO exception. Before accepting a VWAP order from a customer
Money Market Funds in Brokerage Accounts the firm discloses to its customers in writing that
the firm may engage in hedging or other
Federal Deposit Insurance Corporation (FDIC)- positioning activity that could affect the market
Insured Bank Deposits are not protected by for a security that is involved with any VWAP
Securities Investor Protection Corporation transaction received. This notice must be sent
(SIPC). For accounts that are set up for cash to prior to executing a VWAP transaction and no
sweep to a money market fund (default less than annually to the customer. Under no
Page | 11 of 17Odeon Capital Group Customer Disclosure Brochure
circumstances may the firm trade for its contact Odeon Capital Group, Compliance
proprietary account when in receipt of a Department, 750 Lexington Ave., New York, NY
customer VWAP order. All orders for VWAP short 10022, and a copy will be provided to you. The
orders are to be properly marked and executed telephone number is 212-257-6970.
in accordance with applicable short sell rules and
FINRA Rule 2265 Extended Trading Hours
regulations. The terms of compensation from
Trading Risk Disclosure
the order are provided in writing to the
customer. Odeon offers its customers the opportunity to
trade securities when the major U.S. securities
Rule 144A Securities
markets are not open. The hours for trading
In order to transact 144A securities, you attest to outside of customary market hours are 8AM-
be a Qualified Intuitional Buyer and will obtain 9:30AM and 4PM-8PM EST. There are risks to
access to the issuer’s Rule 144A(d)(4) either trading securities when the major trading
directly from the issuer or from the issuer’s markets are closed. To make sure you are aware
designated informational website and that you of these risks, the FINRA has developed the
will comply with all conditions for obtaining following model disclosure or risks of extended
access to the issuer’s or borrower’s information hours trading.
including if applicable any non-disclosure
Risk of Lower Liquidity: Liquidity refers to the
agreement and any agreement that such
ability of market participants to buy and sell
information is being obtained solely for the
securities. Generally, the more orders that are
purpose of considering a purchase of the
available in a market, the greater the liquidity.
securities. If you are unable to agree to any of
Liquidity is important because with greater
the foregoing, you will not purchase the
liquidity it is easier for investors to buy or sell
securities from Odeon.
securities, and as a result, investors are more
Indications of Interest likely to pay or receive a competitive price for
securities purchased or sold. There may be lower
If you provide Odeon with an order to “work” the
liquidity in extended hours trading as compared
firm may handle the order by issuing an
to regular market hours. As a result, your order
Indication of Interest (“IOI”) to another market
may only be partially executed, or not at all.
participant or trading venue. An IOI is an
expression of trading interest that contains one Risk of Higher Volatility: Volatility refers to the
or more but not all of the following elements: changes in price that securities undergo when
security name, size, side, capacity and price. The trading. Generally, the higher the volatility of a
use of an IOI is intended to solicit contra-side security, the greater its price swings. There may
interest in an attempt to minimize market be greater volatility in extended hours trading
impact. IOUs may be disseminated over than in regular market hours. As a result, your
electronic trading systems, through direct order may only be partially executed, or not at
connections to client order management all, or you may receive an inferior price in
systems. An IOI disseminate on your behalf extended hours trading than you would during
cannot exceed the size of the order you have regular market hours.
submitted unless you indicate that the size of
Risk of Changing Prices: The prices of securities
your interest may grow.
traded in extended hours trading may not reflect
FINRA Rule 2261 the prices either at the end of regular market
hours, or upon the opening the next morning. As
The Statement of Financial Condition is available
result, you may receive an inferior price in
to the firm’s customers. If you would like to
extended hours trading than you would during
request a copy please do so in writing and
regular market hours.
Page | 12 of 17Odeon Capital Group Customer Disclosure Brochure
margin account. Before trading stocks in a
margin account, you should carefully review the
Risk of Unlinked Markets: Depending on the
margin agreement provided by your firm.
extended hours trading system or the time of
Consult your firm regarding any questions or
day, the prices displayed on a particular
concerns you may have with your margin
extended hours trading system may not reflect
accounts.
the prices in other concurrently operating
extended hours trading systems dealing in the When you purchase securities, you may pay for
same securities. Accordingly, you may receive an the securities in full or you may borrow part of
inferior price in one extended hours trading the purchase price from your brokerage firm. If
system than you would in another extended you choose to borrow funds from your firm, you
hours trading system. will open a margin account with the firm. The
securities purchased are the firm's collateral for
Risk of News Announcements: Normally, issuers
the loan to you. If the securities in your account
make news announcements that may affect the
decline in value, so does the value of the
price of their securities after regular market
collateral supporting your loan, and, as a result,
hours. Similarly, important financial information
the firm can take action, such as issue a margin
is frequently announced outside of regular
call and/or sell securities or other assets in any
market hours. In extended hours trading, these
of your accounts held with the member, in order
announcements may occur during trading, and if
to maintain the required equity in the account.
combined with lower liquidity and higher
volatility, may cause an exaggerated and It is important that you fully understand the risks
unsustainable effect on the price of a security. involved in trading securities on margin.
Risk of Wider Spreads: The spread refers to the These risks include the following (a):
difference in price between what you can buy a
You can lose more funds than you deposit in the
security for and what you can sell it for. Lower
margin account. A decline in the value of
liquidity and higher volatility in extended hours
securities that are purchased on margin may
trading may result in wider than normal spreads
require you to provide additional funds to the
for a particular security.
firm that has made the loan to avoid the forced
Risk of Lack of Calculation or Dissemination of sale of those securities or other securities or
Underlying Index Value or Intraday Indicative assets in your account(s).
Value (IIV): If trading in certain derivative
The firm can force the sale of securities or other
securities products, an updated underlying index
assets in your account(s). If the equity in your
value or IIV may not be calculated or publicly
account falls below the maintenance margin
disseminated in extended trading hours. Since
requirements, or the firm's higher "house"
the underlying IIV is not calculated or widely
requirements, the firm can sell the securities or
disseminated during pre-market and post-
other assets in any of your account held at the
market sessions, an investor who is unable to
firm to cover the margin deficiency. You also will
calculate implied values for certain derivative
be responsible for any short fall in the account
securities products in those sessions be placed at
after such a sale.
a disadvantage to other market professionals.
The firm can sell your securities or other assets
Margin Disclosure Statement
without contacting you. Some investors
Your brokerage firm is furnishing this document mistakenly believe that a firm must contact them
to you to provide some basic facts about for a margin call to be valid, and that the firm
purchasing securities on margin, and to alert you cannot liquidate securities or other assets in
to the risks involved with trading securities in a their accounts to meet the call unless the firm
Page | 13 of 17Odeon Capital Group Customer Disclosure Brochure
has contacted them first. This is not the case. You can lose more funds than you deposit in the
Most firms will attempt to notify their customers margin account.
of margin calls, but they are not required to do
The firm can force the sale of securities or other
so. However, even if a firm has contacted a
assets in your account(s).
customer and provided a specific date by which
the customer can meet a margin call, the firm The firm can sell your securities or other assets
can still take necessary steps to protect its without contacting you.
financial interests, including immediately selling
the securities without notice to the customer. You are not entitled to choose which securities
or other assets in your account(s) are liquidated
You are not entitled to choose which securities or sold to meet a margin call.
or other assets in your account(s) are liquidated
or sold to meet a margin call. Because the The firm can increase its "house" maintenance
securities are collateral for the margin loan, the margin requirements at any time and is not
firm has the right to decide which security to sell required to provide you advance written notice.
in order to protect its interests. You are not entitled to an extension of time on a
The firm can increase its "house" maintenance margin call.
margin requirements at any time and is not The annual disclosure statement required
required to provide you advance written notice. pursuant to this paragraph (b) may be delivered
These changes in firm policy often take effect within or as part of other account
immediately and may result in the issuance of a documentation, and is not required to be
maintenance margin call. Your failure to satisfy provided in a separate document.
the call may cause the member to liquidate or
sell securities in your account(s). (c) In lieu of providing the disclosures specified in
paragraphs (a) and (b), a member may provide to
You are not entitled to an extension of time on a the customer and, to the extent required under
margin call. While an extension of time to meet paragraph (a) post on its Web site, an alternative
margin requirements may be available to disclosure statement, provided that the
customers under certain conditions, a customer alternative disclosures shall be substantially
does not have a right to the extension. similar to the disclosures specified in paragraphs
(b) Members shall, with a frequency of not less (a) and (b).
than once a calendar year, deliver individually, in (d) For purposes of this Rule, the term "non-
writing or electronically, the disclosure institutional customer" means a customer that
statement described in paragraph (a) or the does not qualify as an "institutional account"
following bolded disclosures to all non- under Rule 3110(c)(4).
institutional customers with margin accounts:
Special Statement for Uncovered Options Writers
Securities purchased on margin are the firm's
collateral for the loan to you. If the securities in There are special risks associated with
your account decline in value, so does the value uncovered option writing which expose the
of the collateral supporting your loan, and, as a investor to potentially significant loss. Therefore,
result, the firm can take action, such as issue a this type of strategy may not be suitable for all
margin call and/or sell securities or other assets customers approved for options transactions.
in any of your accounts held with the member, in Special Risks:
order to maintain the required equity in the
account. It is important that you fully understand The potential loss of uncovered call writing is
the risks involved in trading securities on margin. unlimited. The writer of an uncovered call is in an
These risks include the following: extremely risky position, and may incur large
Page | 14 of 17Odeon Capital Group Customer Disclosure Brochure
losses if the value of the underlying instrument the chapter entitled Risks of Buying and Writing
increases above the exercise price. Options. This statement is not intended to
enumerate all of the risks entailed in writing
As with writing uncovered calls, the risk of
uncovered options.
writing uncovered put options is substantial.
The writer of an uncovered put option bears a Please review the Options Clearing Corporation
risk of loss if the value of the underlying (OCC) Characteristics and Risks of Standardized
instrument declines below the exercise price. Options documents:
Such loss could be substantial if there is a
https://www.theocc.com/components/
significant decline in the value of the underlying
docs/riskstoc.pdf
instrument.
https://www.theocc.com/components/
Uncovered option writing is thus suitable only docs/about/publications/november_20
for the knowledgeable investor who 12_supplement.pdf
understands the risks, has the financial capacity https://www.theocc.com/components/
and willingness to incur potentially substantial docs/about/publications/october_2018
losses, and has sufficient liquid assets to meet _supplement.pdf
applicable margin requirements. In this regard, if
the value of the underlying instrument moves Municipal Securities Transactions
against an uncovered writer's options position, Odeon is registered with the Municipal
the investor's broker may request significant Securities Rulemaking Board (“MSRB”) and the
additional margin payments. If an investor does SEC as a municipal securities dealer. Odeon is not
not make such margin payments, the broker may a municipal advisor. Information about the rules
liquidate stock or options positions in the governing MSRB transactions can be found
investor's account, with little or no prior notice online at msrb.org which provides Information
in accordance with the investor's margin for Municipal Securities Investors describing the
agreement. protections that may be provided by the MSRB’s
For combination writing, where the investor rules and how to file a complaint with an
writes both a put and a call on the same appropriate regulatory authority.
underlying instrument, the potential for risk is Futures
unlimited.
Transactions in securities futures, commodity
If a secondary market in options were to become and index futures and options on futures carry a
unavailable, investors could not engage in high degree of risk. The amount of initial margin
closing transactions, and an option writer would is small relative to the value of the futures
remain obligated until expiration or assignment. contract, meaning that transactions are heavily
The writer of an American-style option is subject "leveraged" A relatively small market movement
to being assigned an exercise at any time after will have a proportionately larger impact on the
he has written the option until the option funds you have deposited or will have to deposit:
expires. By contrast, the writer of a European- this may work against you as well as for you. You
style option is subject to exercise assignment may sustain a total loss of initial margin funds
only during the exercise period. and any additional funds deposited with the
clearing firm to maintain your position. If the
IMPORTANT NOTE: It is expected that you will market moves against your position or margin
read the booklet entitled Characteristics and levels are increased, you may be called upon to
Risks of Standardized Options (including the pay substantial additional funds on short notice
most recent supplements) available from your to maintain your position. If you fail to comply
broker. In particular, your attention is directed to with a request for additional funds within the
Page | 15 of 17You can also read
