Credit Suisse Securities (USA) LLC Private Banking North America 1 408(b)(2) Disclosure Document relating to Advisory Programs

Transcription

1 Credit Suisse Securities (USA) LLC Private Banking North America 1 408(b)(2) Disclosure Document relating to Advisory Programs Introduction This Disclosure Document provides an overview of the investment advisory services provided by Credit Suisse Securities (USA) LLC ( Credit Suisse ), and the fees and other compensation charged for or otherwise related to such services, attributable to your Plan s participation in a Credit Suisse investment advisory program. Credit Suisse is hereby providing to the responsible plan fiduciary or the plan for which it acts the following disclosures relating to Section 408(b)(2) of the Employee Retirement Income Security Act of 1974, as amended ( ERISA ), and Section 4975(d)(2) of the Internal Revenue Code of 1986, as amended (the Code ), and the regulations thereunder (the Services Exemption ). This Disclosure Document is intended to be read in conjunction with Credit Suisse s current Form ADV Part 2A Disclosure and/or Wrap Fee Brochure, as applicable, and if applicable, the Credit Suisse Securities (USA) LLC Managed Accounts Client Services Agreement, which provide detailed information regarding our investment advisory services, our fees, our personnel, our other business activities and financial industry affiliations, and potential conflicts between our interests and your interests. Under ERISA, a plan s sponsor or other responsible fiduciary has a fiduciary responsibility to prudently select and monitor those hired to provide services to the plan, and their related fees and compensation, to ensure, among other things, that the compensation received by the service provider is reasonable in light of the services provided. Your Plan may also receive services from Credit Suisse (or its affiliate) or another service provider, such as a thirdparty administrator or recordkeeper, which are outside the scope of this Disclosure Document. For information on those services and related fees and expenses, please reference the disclosure documents specifically relating to those services or contact that service provider. If you have any questions concerning this Disclosure Document or the information provided to you concerning our services and compensation, or otherwise require any of the documents referenced in this Disclosure Document, please contact Credit Suisse Client Services Group at (866) The Private Banking North America business of Credit Suisse Securities (USA) LLC is a regulated broker-dealer and investment adviser. It is not a chartered bank, trust company or depository institution. It is not authorized to accept deposits or provide corporate trust services and it is not licensed or regulated by any state or federal banking authority. As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein. The disclosures provided herein describe fees and charges relating to products and services that Credit Suisse may make available to your Plan s investment brokerage relationship with Credit Suisse. The products and services referenced herein may not be suitable for all clients or plans, and may be subject to threshold investor requirements or restrictions. The disclosures contained herein are based on the guidance and interpretations of the Services Exemption as of the date of this document. Certain services or transactions referenced or discussed herein or otherwise provided with respect to your account with Credit Suisse may not require an exemption or may be covered by an exemption other than the Services Exemption. Credit Suisse reserves the right to modify this Disclosure Document at any time, including conforming the disclosures herein to any subsequent related guidance or interpretation of the applicable regulations. 1

2 Managed Accounts Programs For clients participating in one of our Managed Accounts Programs, please refer to the Credit Suisse Securities (USA) LLC Managed Accounts Client Service Agreement and related Client Application and Fee Schedule (collectively, the MA Agreement ). Third-Party Portfolio Management Programs (which include the Preferred Advisors Program, the Global Portfolio Strategies Program and the Managed Portfolio Alternatives Program) offer discretionary portfolio management services through third-party portfolio managers. Services For a description of our services under these programs, please refer to the Third-Party Portfolio Management Programs subsection under the MA Agreement for the Preferred Advisors and Global Portfolio Strategies Programs, the Managed Portfolio Alternatives Program Client Services Agreement, and/or the Sponsored Wrap Fee Programs paragraphs in Section I of our Form ADV Part 2A - Wrap Fee Brochure. Capacity In providing our services under these programs, Credit Suisse acts as an investment adviser registered under the Investment Advisers Act of 1940, as amended. In providing our services under the Preferred Advisors and Global Portfolio Strategies Programs, Credit Suisse acts as a fiduciary under ERISA. Third-Party Portfolio Managers As part of these programs, each third-party portfolio manager chosen by the plan enters into the MA Agreement, and has a direct relationship with the plan for the provision of its services and is paid from the program fee collected by Credit Suisse. The fees paid by Credit Suisse to managers under the Preferred Advisors Program range from.10% to.85%, under the Global Portfolio Strategies Program range from.50% to.75%, and under the Managed Portfolio Alternatives Program range from.14% to 1.00%. For more information regarding each portfolio manager s services, capacity and compensation, please see each portfolio manager s Form ADV, which is available on the Securities and Exchange Commission s website at When Credit Suisse select its affiliate Credit Suisse Asset Management LLC ( CSAM ) as a third-party portfolio manager for your account, CSAM is compensated for its services under the program by Credit Suisse and not directly by the account, in the same way that unaffiliated third-party portfolio managers are compensated. As a third-party portfolio manager under the program, CSAM acts as both a fiduciary under ERISA and an investment adviser registered under the Investment Advisers Act of 1940, as amended. Except for the items of indirect compensation discussed herein, CSAM does not receive any other indirect compensation with respect to the services it provides as a portfolio manager under the program. For more information about CSAM and its advisory services, please refer to CSAM s Form ADV. Credit Suisse Managed Programs (which include the Tactical Global Allocations, Tactical Portfolio Solutions and Sub- Advisory Solutions programs) offer discretionary portfolio management services through Credit Suisse as portfolio manager. Services For a description of our services under the Tactical Global Allocations and Tactical Portfolio Solutions Programs, please refer to the The Tactical Global Allocations and the Tactical Portfolio Solutions Programs subsection under the MA Agreement and the Tactical Global Allocations and Tactical Portfolio Solutions Programs paragraphs in Section I of our Form ADV Part 2A - Wrap Fee Brochure. 2

3 For a description of our services under the Sub-Advisory Solutions Program, please refer to the Sub-Advisory Solutions Program subsection under the MA Agreement and the Sub-Advisory Solutions Program sections of our Form ADV Part 2A - Disclosure Brochure. Capacity In providing our services under these programs, Credit Suisse acts as both a fiduciary under ERISA and an investment adviser registered under the Investment Advisers Act of 1940, as amended. Sub-Advisers Under the Sub-Advisory Solutions Program, Credit Suisse may retain one or more third-party investment advisers who will manage your account (or portion thereof) on a discretionary basis. The fees paid by Credit Suisse to subadvisers under this program range from.15% to.425%. These sub-advisers will act as both a fiduciary under ERISA and an investment adviser registered under the Investment Advisers Act of 1940, as amended, or under state law, as the case may be. For more information regarding the use of these sub-advisers, please refer to the CSSU Managed Programs section of the MA Agreement. For more information regarding a sub-adviser, please refer to the sub-adviser s Form ADV or other disclosure document. Under this program, Credit Suisse may select its affiliate Credit Suisse Asset Management LLC ( CSAM ) as a subadviser for your account. Like the unaffiliated sub-advisers, CSAM is compensated for its services under the program by Credit Suisse and not directly by the account. As a sub-adviser under the program, CSAM acts as both a fiduciary under ERISA and an investment adviser registered under the Investment Advisers Act of 1940, as amended. Except for the items of indirect compensation discussed herein, CSAM does not receive any other indirect compensation with respect to the services it provides as a sub-adviser under the program. For more information about CSAM and its advisory services, please refer to CSAM s Form ADV. Relationship Manager Advisory Programs For clients participating in one of our Relationship Manager Advisory Programs, please refer to the Credit Suisse Securities (USA) LLC Relationship Manager Advisory Programs Client Services Agreement and related Client Application and Fee Schedule (collectively, the RMA Agreement ). Relationship Manager Advisory Programs (which include the Discretionary Managed Portfolios Program and Advisory Solutions Program). Services For a description of our services under these programs, please refer to the Relationship Manager Advisory Programs section under the RMA Agreement and the Discretionary Managed Portfolios Program and Advisory Solutions Program sections of our Form ADV Part 2A - Wrap Fee Brochure and Form ADV 2A - Disclosure Brochure, as applicable. Capacity In providing our services under these programs, Credit Suisse acts as both a fiduciary under ERISA and an investment adviser registered under the Investment Advisers Act of 1940, as amended. 3

4 Proprietary Investment Strategies and Model Portfolios Under the Relationship Manager Advisory Programs, in making investment decisions regarding your assets, your Relationship Manager may rely on investment strategies and/or model portfolios developed by portfolio management teams that are employed by Credit Suisse or its affiliate, Credit Suisse Asset Management LLC ( CSAM ). The CSAM resources available to Credit Suisse Relationship Managers include the HOLT Guidance Portfolios (the HOLT Portfolios ) and the Global Risk Allocation Strategy ( GRAS Strategy ). When your Relationship Manager selects the HOLT Portfolios and/or the GRAS Strategy, CSAM is compensated for its services under the program by Credit Suisse and not directly by the account. The fees paid by Credit Suisse to CSAM under this program range from.20% to.40%. As your Relationship Manager retains discretionary authority over client assets, in its limited capacity as service provider to Credit Suisse, CSAM is not deemed to be a fiduciary under ERISA or an investment adviser registered under the Investment Advisers Act of 1940, as amended. Except for the items of indirect compensation discussed herein, CSAM does not receive any other indirect compensation with respect to the services it provides under the program. For more information about CSAM and its advisory services, please refer to CSAM s Form ADV. Investment Consulting Solutions Program For clients participating in our Investment Consulting Solutions Program, please refer to your Investment Consulting Solutions Agreement and related fee schedule (collectively, the ICSA ) Services For a description of our services, please refer to the Consulting Services section under the ICSA and the Investment Consulting Solutions paragraph in Section I of our Form ADV Part 2A Disclosure Brochure. Capacity In providing our services under this program, Credit Suisse acts as both a fiduciary under ERISA and an investment adviser registered under the Investment Advisers Act of 1940, as amended. Compensation For a discussion of our direct fees, please see the Fees section of the ICSA and the fee schedule attached thereto. Termination Fees There is no additional fee charged upon termination of a program account, but certain transfer fees may apply. For disclosure of such transfer fees, please refer to the Credit Suisse Private Banking USA 408(b)(2) Brokerage Disclosure Document. Non-wrap Fee Advisory Programs For clients participating in our Family Wealth Management Services Program, please refer to your Investment Advisory Agreement and related fee schedule (collectively, the IAA ). Services For a description of our services, please refer to the Investment Advisory Services Provided by Adviser section under the IAA and the Family Wealth Management Services paragraphs in Section I of our Form ADV Part 2A Disclosure Brochure. Capacity In providing our services under this program, Credit Suisse acts as both a fiduciary under ERISA and an investment adviser registered under the Investment Advisers Act of 1940, as amended. Compensation For a discussion of our direct fees, please see the Fees section of the IAA and the fee schedule attached thereto. Termination Fees There is no additional fee charged upon termination of a program account, but certain transfer fees may apply. For disclosure of such transfer fees, please refer to the Credit Suisse Private Banking USA 408(b)(2) Brokerage Disclosure Document. 4

5 Payments to Related Parties In Connection with the Foregoing Programs As described above, certain Credit Suisse investment advisory programs offer clients investing options that result in payments to Credit Suisse affiliates. Notwithstanding the specific fee-related information disclosed above, from time to time Credit Suisse may share up to 100% of its fees with its affiliates. Additional Disclosures Subcontractors: Pershing LLC. Credit Suisse has entered into an agreement with Pershing LLC ( Pershing ), a registered broker-dealer, to provide execution, clearing, settlement, and custody for all of its investment advisory programs. Pershing also provides account reporting services to certain of our investment advisory programs. Pershing executes all purchase and sale orders directed to it by Credit Suisse and your portfolio manager, as applicable, and also perform clearance and settlement services. Pershing maintains custody of your account assets, credits interest and dividends on account assets and principal on called or matured securities in the account, and provides such other custodial functions customarily performed with respect to securities brokerage accounts. For services provided to wrap fee program clients, Pershing charges a flat annual fee per client account, which fee is paid by Credit Suisse out of the program fee. Lockwood Advisors Inc. Credit Suisse has entered into an agreement with Lockwood Advisors Inc. ( Lockwood ) to provide administrative and account reporting services for the Preferred Advisors, Global Portfolio Strategies, Managed Portfolio Alternatives, Tactical Global Allocations and Tactical Portfolio Solutions Programs. Lockwood s fees for providing these services are paid by Credit Suisse out of the program fee. Lockwood has indicated to Credit Suisse that it does not receive indirect compensation with respect to providing its services, other than the compensation that it receives from Credit Suisse. NGAM Advisors, L.P. Credit Suisse has entered into an agreement with NGAM Advisors, L.P. (formally known as Natixis Asset Management Advisors, L.P. ) ( Natixis ) to provide portfolio implementation and coordination services for the Tactical Global Allocations and Tactical Portfolio Solutions Programs. For more information regarding the services that Natixis provides, please see the Trading Authorization section of the MA Agreement. Natixis s fees for providing these services are paid by Credit Suisse out of the program fee. Natixis has indicated to Credit Suisse that it does not receive indirect compensation with respect to providing its services, other than the compensation that it receives from Credit Suisse. Order Flow Compensation: Credit Suisse may receive discounts, rebates, reductions of fees or credits (collectively, rebates ) as a result of sending orders to other market centers or electronic communications networks. For options, payment of a rebate is on a per-contract basis, and the rebate that Credit Suisse anticipates receiving with respect to any order is no more than $0.80 per contract. Credit Suisse s eligibility to receive a rebate will depend on whether Credit Suisse sends a customer order which executes against a Market Maker on the contra side of the order on certain US Options Markets. More generally, the size of any rebate that Credit Suisse receives will depend on a variety of factors and is based on the volume routed to such venues by Credit Suisse, including both client and proprietary order flow, the specific rules of the venues to which Credit Suisse routes orders, the ability of a market center to execute the orders at or superior to the National Best Bid and National Best Offer, the ability of a market center to provide price improvement opportunities, the speed of execution, the availability of efficient, automated transaction processing, liquidity enhancement opportunities, the speed of displaying betterpriced limit orders, trading characteristics of the particular securities and the extent to which different markets may be more suitable for different types of orders. Credit Suisse cannot predict whether any particular trade will generate a rebate. Receipt of gifts, gratuities and non-monetary compensation by Credit Suisse and its affiliates: From time to time, third-party vendors (such as mutual fund companies, insurance companies, investment consultants, recordkeepers, third-party plan administrators, etc.) may provide Credit Suisse and its Relationship Managers with non-monetary gifts and gratuities, such as promotional items (i.e., coffee mugs, calendars or gift baskets), meals and access to certain industry-related conferences (collectively, gifts ). Credit Suisse does not expect to receive gifts in excess of the de minimis threshold established under the Department of Labor s regulations and guidance. Recordkeeping Services Required Disclosure: Credit Suisse does not provide recordkeeping services to your Plan that would be the role of a separate service provider, such as a third-party administrator. 5