WEBVTT

00:00.000 --> 00:04.100
Narrator: Chris, a tax manager, is completing his quarterly independence 

00:04.100 --> 00:07.855
confirmation when he notices that one of his spouse’s brokerage accounts 

00:07.855 --> 00:12.428
was not activated for KICS Broker Import timely. He reaches out to Risk 

00:12.428 --> 00:16.288
Management - Independence for assistance. During the conversation,

00:16.288 --> 00:19.871
they discover he also has some accounts held through investing apps.

00:19.871 --> 00:20.987
Let’s listen in.

00:20.987 --> 00:24.206
Independence: Thank you for letting us know that your spouse’s brokerage

00:24.206 --> 00:26.706
account wasn’t activated for KICS Broker Import.

00:26.706 --> 00:29.825
You’ve confirmed that all of your other brokerage accounts are 

00:29.825 --> 00:33.889
enrolled and activated for KICS Broker Import, so that’s good to know.

00:33.889 --> 00:37.954
Have you also considered whether you or your immediate family members

00:37.954 --> 00:40.537
have any brokerage accounts through an investing app? 

00:40.537 --> 00:43.166
Chris: What do you mean by ‘investing app’?

00:43.166 --> 00:47.495
Independence: Robinhood, Acorns, Wealthfront and Stash are 

00:47.495 --> 00:51.105
a few of the common ones. These apps often allow you to make

00:51.105 --> 00:54.048
commission-free trades online, but they’re considered brokerage 

00:54.048 --> 00:57.515
accounts and are subject to the independence rules and KICS Broker

00:57.515 --> 01:00.530
Import requirements. There are many independence risks 

01:00.530 --> 01:02.237
associated with these accounts. 

01:02.237 --> 01:06.069
Chris:  I do have a Robinhood account that I opened a month ago and 

01:06.069 --> 01:09.591
have been actively trading through it. They even gifted me an investment 

01:09.591 --> 01:13.528
just for opening the account. My wife also told me that she opened an account.

01:13.528 --> 01:16.795
Independence: Robinhood, as well as many other investing app brokerage

01:16.795 --> 01:20.450
accounts are not brokers that participate in KICS Broker Import, 

01:20.450 --> 01:24.633
so you and your immediate family members are not permitted to have 

01:24.633 --> 01:25.628
Robinhood accounts. 

01:25.628 --> 01:29.562
Chris: Oh, I didn’t realize that. I didn’t think of it as a brokerage account. 

01:29.562 --> 01:33.141
I was manually updating KICS with the investments held through 

01:33.141 --> 01:34.813
our accounts and none of them are restricted. 

01:34.813 --> 01:37.637
Independence: Because the accounts were opened with a broker 

01:37.637 --> 01:41.450
that doesn’t participate in KICS Broker Import, you’ll need to close the 

01:41.450 --> 01:45.094
account right away. You could transfer your unrestricted investments

01:45.094 --> 01:48.385
to an account with a participating broker that is enrolled in 

01:48.385 --> 01:49.510
KICS Broker Import. 

01:49.510 --> 01:52.375
Narrator: This call helped Chris recognize that

01:52.375 --> 01:55.580
that the brokerage accounts he holds through investing apps are in violation

01:55.580 --> 01:59.366
of the independence policies because they are not held with brokers that 

01:59.366 --> 02:04.272
participate in KICS Broker Import. During the consultation, Chris evaluated 

02:04.272 --> 02:08.267
his options and he now has to make a decision. He can leave the  

02:08.267 --> 02:11.922
accounts open a little longer to make more money… Who would know  

02:11.922 --> 02:16.179
if it’s just a few more days? Alternatively, he can close the accounts now,

02:16.179 --> 02:19.747
as instructed, and make sure that all future trades are made through

02:19.747 --> 02:23.053
his accounts that are enrolled and activated for KICS Broker Import. 

02:23.053 --> 02:26.871
Chris: I didn’t realize that investing through these types of accounts was 

02:26.871 --> 02:30.161
an issue, especially if I was checking KICS before making any trades.

02:30.161 --> 02:33.496
But I don’t want this to come up during an independence compliance 

02:33.496 --> 02:35.650
audit, so I will close these accounts right away. 

02:35.650 --> 02:39.419
Thank you for bringing this to my attention. It’s important to me 

02:39.419 --> 02:41.705
personally and professionally that I get this right.

02:41.705 --> 02:45.363
Independence: Make sure your wife and any other immediate family 

02:45.363 --> 02:47.944
members understand the independence rules as well.

02:47.944 --> 02:50.903
Your wife will also need to close her investing app account. 

02:50.903 --> 02:54.370
And if you’re transferring the permitted investments, make sure 

02:54.370 --> 02:57.469
they’re transferred to an account with a participating broker that’s 

02:57.469 --> 02:59.182
activated for KICS Broker Import. 

02:59.182 --> 03:02.772
Narrator: Chris decided that the right thing to do was close the accounts 

03:02.772 --> 03:06.402
right away. After this discussion, he liquidated the accounts

03:06.402 --> 03:08.954
and ensured that his wife closed hers as well.

03:08.954 --> 03:14.347