WEBVTT

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Narrator: Sarah, an advisory senior manager, is meeting with her PML

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for her performance review. They start the conversation

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covering personal independence, let’s listen in.

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PML: So why don’t we start with personal independence.

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Have you been good about continually confirming that the

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investments in your KICS account are up to date?

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Sarah: I decided to make my life easier and opened a managed account

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so that I don’t have to do that.

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PML: What do you mean?

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Sarah: There’s a broker who makes the trades on my behalf. He manages

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everything so I don’t have to check the restriction status or update

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KICS, because the account is enrolled and activated for KICS Broker Import.

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PML: Hmm, let me see if I can provide some clarification.

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This topic can get to be a little confusing.

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So, even if you have someone making decisions on your behalf,

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you’re still responsible for complying with the independence requirements.

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KICS Broker Import doesn’t block trades in restricted entities and if you

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do acquire a restricted entity, it could result in financial sanctions.

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Narrator: Sarah’s PML has helped her recognize that she

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misunderstood the independence rules related to managed accounts.

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By outsourcing her personal independence responsibility to her broker,

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she has put herself in a position where she may have

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potential independence violations.

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Sarah: But I thought a managed account was different. I’m not

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making the investment decisions, so I’m not responsible.

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PML: Unfortunately, that doesn’t matter. You actually are

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responsible and must ensure that all

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investments are permitted before acquiring them in your account.

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In fact, the firm actually discourages managed accounts unless it’s

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a firm-supported option, like the Marcus Invest Program.

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Sarah: I didn’t know about that. I guess I should think

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about switching to that program.

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Narrator: With the help of her PML, Sarah was able to evaluate the

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independence implications of keeping the managed account open.

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She now has to decide how to act. She can either leave the account open

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with the potential for an independence violation if she gets selected

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for a compliance audit, or she can close the account and be more proactive

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in preventing any personal independence issues.

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PML: Always remember, independence is not a responsibility you can

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outsource to anyone – only you are accountable for maintaining

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compliance with independence rules. So, whenever you have someone

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trading on your behalf, you’ve got to make sure that you set up a protocol

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with them to, number one, always check the restriction status of potential

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investments, and number two, obtain your approval before

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any investments are made.

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Narrator: Sarah was lucky this time because her broker didn’t acquire

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any restricted investments. But upon becoming aware that she

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could be putting herself in a potential violation situation, she decided to act

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timely and close the managed account. The next day,

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she opened an account in the Marcus Invest Program

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to ensure her compliance in the future.

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