Evercore Group Additional Disclosures
Customer Identification and Privacy Disclosure
Evercore Group L.L.C. (“Evercore Group”, “we”, “us”, or “our”) collects nonpublic, and in some instances, personal information about our customers from account applications and other forms that are provided or submitted by you. Evercore Group will not disclose any nonpublic personal information about its customers or former customers to anyone, except as permitted or required by law. We will verify any identification information provided by you through various sources, as required by regulation.
We restrict access to nonpublic personal information about customers to those employees and agents who require the information to service your account. We maintain physical, electronic and procedural safeguards that comply with federal standards to guard your nonpublic personal information.
USA Patriot Act
In order to comply with the USA Patriot Act, we are required to obtain, verify, and record information that identifies each customer who opens a new account with us. When you open a new account with us, we will ask for copies of identifying documents, such as articles of incorporation.
Securities Investor Protection Corporation Statement
Evercore Group is a member of the Securities Investor Protection Corporation (“SIPC”), which currently protects securities customers of its members up to $500,000, including $100,000 for claims for cash. Evercore Group, as a member of SIPC, hereby notifies you that you may obtain information about SIPC, including a brochure describing such things as the role of the SIPC and how it operates if a brokerage firm fails, by contacting SIPC at 202.371.8300 or through its website at www.sipc.org.
Business Continuity Disclosure
Evercore Group has developed and implemented a Business Continuity Plan (BCP) designed to address and mitigate the potential consequences of a significant business disruption with a goal of recovering the key aspects of our business within twenty four hours or less. Our BCP also is designed to safeguard employees and protect our books and records. We further believe that we have implemented reasonable and prudent measures to overcome or at least mitigate the consequences of an event that would otherwise interfere with the normal course of our business. However, because it is not possible to anticipate the nature, scope, impact and consequence of every possible business disruption, Evercore Group does not represent or guarantee that it will be able to continue or resume business operations within any specified period or time under all circumstances. Our BCP is subject to periodic modification. A copy of the summary of our BCP is available upon request by writing Evercore Group L.L.C., 55 East 52nd Street, New York, NY 10055.
Transparency in Coverage Rules
The federal Transparency in Coverage Rules require certain group health plans to publicly disclose price and cost-sharing information. This information includes in-network provider rates as well as historical out-of-network allowed amounts and billed charges for covered items and services, which is to be shared via machine-readable files (MRFs). The machine-readable files are formatted to allow researchers, regulators, and application developers to more easily access and analyze data. The MRFs for each of Evercore’s medical plans can be found on Aetna’s website.
Customer Complaint Notice Disclosure Statement
Evercore Group, in accordance with SEC Rule 17a-3(a)(18)(ii), is furnishing this statement to provide you with a name, telephone number and address, if you ever need to report or notify us of a possible complaint. If, for any reason, you feel you have a complaint, please contact our Chief Compliance Officer immediately by telephone at (212) 857-3100 or by mail at:
Evercore Group L.L.C.
55 East 52nd Street, 38th Floor
New York, NY 10055
Attn: Compliance Department
Order Handling Policies and Disclosures
Evercore Group’s Institutional Equities business operates under the name Evercore ISI. At Evercore ISI, our highest priority is seeking the best quality execution of your orders. The following disclosures are intended to clarify certain terms and conditions governing the execution of your orders in exchange-listed and over-the-counter equity securities that are handled by us, and should be read carefully. Please contact your sales representative promptly in writing if you have questions regarding these disclosures or if these disclosures do not accurately reflect your understanding of the manner in which you authorize us to execute your orders.
When Evercore ISI receives an order from you, we may fill the order on a securities exchange or execute the order in a transaction with another broker-dealer directly or an ECN, an ATS or other market, or as principal for our own account. These markets or broker-dealers through which we execute customer orders are referred to in this statement as “market centers”. To avoid potential conflicts of interest, Evercore ISI does not have an ownership or other proprietary interest in any exchange, ECN, ATS or other market center to which it may route your order.
In determining the market center to which we will route a particular order, we give absolute priority to specific instructions from you. In the absence of such instructions, we will route your order to a market center or market centers that we believe will provide best execution. The determination of the most appropriate market center(s) will be based upon a number of factors, including the percentage of orders executed at or better than the national best bid or offer, the quality and speed of execution, and any specialized capabilities of the market center. These factors may differ for particular orders based upon the size of the order and the trading characteristics that may be unique to the security involved. Evercore ISI may also use a smart router to access liquidity in the marketplace. The router will attempt to access liquidity based upon a variety of factors, including availability, price improvement, connectivity, cost and depth of liquidity.
When handling orders on an agency basis, we may be presented with multiple orders in the same security from different clients or for our own . We will apply a fair and equitable method of allocating executions among those orders in accordance with all applicable regulatory requirements. Our allocation methodology may, however, differ from time to time and may be conducted on the basis of time priority, even split, proportional split, or other methodology that we determine to be fair and equitable among those multiple orders.
A “not held” order is one in which you give us discretion as to the time and the price at which to execute your orders. Orders accepted from institutional clients will be handled as “not held”. “Not held” orders afford us greater latitude to utilize the professional judgment of our traders in seeking the best possible overall quality of execution under the circumstances. This approach provides us with the necessary trading discretion to manage your order, taking into consideration the size and potential market impact of the order and the depth and liquidity of the current market, as well as other relevant factors. When communicating with you regarding orders, we will attempt to use the term “not held” whenever possible. However, should we fail to use the term “not held” in the acceptance of any order, this omission will not alter our mutual understanding of the general terms and conditions upon which your orders have been placed and accepted as described herein.
Unless you instruct us otherwise, Evercore ISI may choose to “internalize” your order by executing the order or part of the order from our own principal book. We will treat our principal book as an execution venue and, as with other execution venues, it is subject to this policy. We will internalize transactions only where we have concluded that the internalization of the order is consistent with fulfilling our best execution obligations.
If an SRO or other applicable regulatory body determines that an executed trade is clearly erroneous or must otherwise be canceled, Evercore ISI will be required to cancel the trade and will not be able to honor the executed price or other terms associated with such trade.
An algorithmic order is an order executed by an automated strategy according to specific parameters and/or conditions. Evercore ISI’s Electronic Trading Desk provides direct access to our suite of algorithmic trading strategies and tools for the trading of cash equities and options. In addition, orders received other Evercore ISI trading desks may be routed for execution using our algorithmic trading strategies. Our algorithms are designed to intelligently seek the best prices and liquidity across a wide range of venues. The primary goal of our algorithms is quality and certainty of execution. When executing on a venue, the algorithms are designed to only take the best price; venue costs never take precedence and venues are visited dynamically based on available prices for taking liquidity. In general, the decision to execute or not on a certain venue is driven by the algorithm that has been chosen and its specific goals. Best execution obligations apply to the execution of algorithmic orders.
Prior to trading options at Evercore ISI, investors must sign a copy of the Characteristics & Risks of Standardized Options, also known as the options disclosure document (ODD). It explains the characteristics and risks of exchange listed options, which are much more complex than equity securities.
Regulation NMS Order Protection Rule
Rule 611 of Regulation NMS (commonly known as the Order Protection Rule) requires that every stock trading center establish and enforce a policy to ensure no transaction will be traded-through, or executed, at a price that is worse than a “protected” quotation in that security displayed at another trading center. Rule 611 contains a number of exceptions, which are designed to make the rule’s intermarket price protection as efficient as possible. One of those exceptions is referred to as the Intermarket Sweep Order, or ISO exception. An ISO is a limit order for an NMS stock that is identified with an ISO designation when routed to an automated trading center and, simultaneously with the routing of that limit order, is accompanied by one or more additional limit orders (also marked as ISOs) that will execute against the protected quotations on those automated trading centers. The ISO designation alerts the receiving automated trading center that the order sender itself is executing against any better priced protected quotations at other automated trading centers.
A broker-dealer is obligated to send ISOs when the price of a transaction between the broker-dealer and a customer, or a transaction between two or more customers, is outside of the current NBBO for the NMS stock. If, after sending ISOs to other automated trading centers and receiving fills/partial fills back (or receiving no response after a reasonable period of time, e.g., within 5 seconds), there are still shares of the order left to be executed, the broker-dealer can then execute the remainder at the original order price.
FINRA Rule 5350
Rule 5350 of the Financial Industry Regulatory Authority (FINRA) provides that any order labeled as a “stop order” or “stop limit order” must be triggered based upon a transaction at the stop price, but permits firms to offer alternative order types with different triggers (e.g., a stop order triggered by a quotation) as long as the order type is clearly distinguished from a stop order. We offer our clients the ability to designate the manner in which their stop and stop limit orders are triggered. When a stop order is triggered, it will be treated as a market order and executed at the current market price. When a stop limit order is triggered, it will be treated as a limit order and handled in accordance with its terms. In either case, during fast-moving or volatile market conditions, it is possible for these orders, once triggered, to be executed at a price significantly away from the stop price, or not get executed at all.
FINRA Rule 5320
FINRA Rule 5320 generally provides that a broker-dealer handling a customer order in an equity security is prohibited from trading that security on the same side of the market for its own account at a price that would satisfy the customer order, unless it immediately thereafter executes the customer order up to the size and at the same or better price at which it traded for its own account. When you place a “not held” order with us we may trade in the security for our own account prior to completion of your order.
With respect to orders from an institutional account or orders in excess of 10,000 shares and $100,000, Rule 5320 permits us, in a principal capacity, to trade along with or ahead of such orders without the consent of the customer. Under Rule 5320, a customer may “opt-in” to the Rule 5320 protections with respect to all orders or on an order-by-order basis by notifying Evercore ISI in writing. Once such “opt-in” notice is received from a customer, we will not trade along with, or ahead of, orders from that customer without the express consent of the customer on an order-by-order basis.
FINRA Rule 5270
The traditional prohibition against front running customer block transactions was recently expanded by FINRA to include non-equity securities, options, derivatives, and other financial instruments that overlay a security that is the subject of an imminent block transaction.
Rule 5270 prohibits a broker-dealer from executing a buy or sell order for a security or related financial instrument when the broker-dealer has material, non-public market information concerning an imminent block transaction in that security, a related financial instrument, or a security underlying the related financial instrument prior to the time information concerning the block transaction has been made publicly available, or has become stale or obsolete. Rule 5270 provides certain exceptions to the general prohibition, one of which allows us to undertake principal transactions to fulfill or facilitate the execution of a customer block order. While we will endeavor to minimize the market impact of any principal activity related to a block order placed by you, please understand the underlying price of the security you are buying or selling may be affected by our principal trading.
Rule 204 of Regulation SHO
The SEC adopted Rule 204 of Regulation SHO as part of its efforts to curtail “naked” short selling abuses and reduce fails to deliver. Rule 204 requires that self-clearing broker dealers deliver securities by settlement date, or if the participants have not delivered shares by settlement date, immediately purchase or borrow securities to close out the fail to deliver position by no later than the beginning of regular trading hours on the settlement day following the day the participant incurred the fail to deliver position. A participant that does not comply with this close-out requirement will not be able to short sell the security either for itself or for the account of any customer, unless it has previously arranged to borrow or borrowed the security, until the fail to deliver position is closed out.
FINRA Rule 6190
FINRA Rule 6190 (Limit Up / Limit Down (LULD)) is a market-wide rule adopted by each of the equities exchanges that is intended to prevent trades in NMS stocks from occurring outside of specified boundaries, known as “price bands”. Rule 6190 became effective in April 2013 and replaced the single stock circuit breakers. Under the LULD rule all trading centers must establish policies and procedures reasonably designed to prohibit the execution of trades in NMS stocks outside of the published price bands. During a trading pause, we will continue to accept orders and will send them to a market center for participation in the-re-opening process.
SEC Rule 15c3-5 (the “Market Access Rule”)
SEC Rule 15c3-5 (the “Market Access Rule”) requires, among other risk controls, that Evercore ISI assign daily notional value trading limits to each of our clients, including clients of our Electronic Trading Desk. These limits are based on each client’s particular profile, such as assets under management (AUM), trading style and other factors. If you exceed these limits, your order may be refused.
Good ’til Canceled (GTC) Orders
A Good ’til Canceled (“GTC”) order will be treated as a day order by Evercore ISI or be rejected. If accepted it will remain open until executed, cancelled by the client or expire after the close on the date the order was entered. GTC orders are not eligible for aftermarket trading.
Extended Hours Trading Risks
Evercore ISI may execute a client’s trades outside of regular trading hours (generally, 9:30 a.m. to 4:00 p.m. Eastern Standard Time) if specifically requested by the client. Clients should consider the following risks before engaging in extended hours trading:
- Risk of Lower Liquidity: Liquidity refers to the ability of market participants to buy and sell securities. Generally, the more orders that are available in a market, the greater the liquidity. Liquidity is important because with greater liquidity it is easier for investors to buy or sell securities, and as a result, investors are more likely to pay or receive a competitive price for securities purchased or sold. There may be lower liquidity in extended hours trading as compared to regular trading hours. As a result, your order may only be partially executed, or not at all.
- Risk of Higher Volatility: Volatility refers to the changes in price that securities undergo when trading. Generally, the higher the volatility of a security, the greater its price swings. There may be greater volatility in extended hours trading than in regular trading hours. As a result, your order may only be partially executed, or not at all, or you may receive an inferior price when engaging in extended hours trading than you would during regular trading hours.
- Risk of Changing Prices: The prices of securities traded in extended hours trading may not reflect the prices either at the end of regular trading hours, or upon the opening the next morning. As a result, you may receive an inferior price when engaging in extended hours trading than you would during regular trading hours.
- Risk of Unlinked Markets: Depending on the extended hours trading system or the time of day, the prices displayed on a particular extended hours trading system may not reflect the prices in other concurrently operating extended hours trading systems dealing in the same securities. Accordingly, you may receive an inferior price in one extended hours trading system than you would in another extended hours trading system.
- Risk of News Announcements: Normally, issuers make news announcements that may affect the price of their securities after regular trading hours. Similarly, important financial information is frequently announced outside of regular trading hours. In extended hours trading, these announcements may occur during trading, and if combined with lower liquidity and higher volatility, may cause an exaggerated and unsustainable effect on the price of a security.
- Risk of Wider Spreads: The spread refers to the difference in price between what you can buy a security for and what you can sell it for. Lower liquidity and higher volatility in extended hours trading may result in wider than normal spreads for a particular security.
- Risk of Lack of Calculation or Dissemination of Underlying Index Value or Intraday Indicative Value (“IIV”): For certain Derivative Securities Products, an updated underlying index value or IIV may not be calculated or publicly disseminated in extended trading hours. Since the underlying index value and IIV are not calculated or widely disseminated during the pre-market and post-market sessions an investor who is unable to calculate implied values for certain Derivative Securities Products in those sessions may be at a disadvantage to market professionals.
Order Routing Disclosure
Under Securities Exchange Act Rule 606, Evercore ISI is required to publish quarterly statistics regarding its customer agency order routing practices. The purpose of this report is to provide the public with information on how broker-dealers route their customers’ orders, to enable customers (and others) to evaluate order routing practices. The rule was adopted by the SEC to enhance market transparency and foster greater competition among market participants.
This information is available on the internet at https://www.abelnoser.com/606-evercore.html and in hard copy for those who do not have access to the internet. The Rule 606 statistics are published by the end of the month following the calendar quarter reported. In addition to the quarterly statistics, information concerning the routing of individual customer orders, such as the venue and the time of the transaction, if any, is available to customers upon written request for the prior six months of trading activity.
Between November 1, 2014 and December 31, 2015, Evercore ISI’s trading activities were conducted through International Strategy & Investment Group LLC.
Payment for Order Flow
Evercore ISI may receive various forms of remuneration for directing order flow in listed and over-the-counter securities to certain market centers. Such remuneration may be in the form of direct payments or in the form of rebates for providing orders to those market centers. Any remuneration is generally offset by fees paid by Evercore ISI to the market center for accessing orders or for other services provided by the market center, but, due to variations among the market centers, Evercore ISI may receive a net payment from a particular market center. Any net payments are retained by Evercore ISI and reduce our overall expenses in providing services to you.
Clearing and Settlement of your Transactions
Evercore ISI, acting on your behalf introduces your account(s) to National Financial Services LLC (“NFS”), which, in turn, carries and clears (i.e., processes), on a fully disclosed basis, your securities transactions as directed by Evercore ISI. Evercore ISI is neither an affiliate nor an agent of NFS. Evercore ISI is solely responsible for opening and approving new accounts, including securing accurate information regarding customer suitability and other “Know-Your-Customer” rules. NFS prepares confirmations and summary periodic statements and will, to the extent required by applicable rules, send them to you. NFS also performs various cashiering functions for your account, including receipt and delivery of securities, receipt and payment of funds owed by, or to, you, and the provision of custody for securities and funds.
Canada Users
National Instrument 31-103 (Registration Requirements and Exemptions)
In accordance with the above regulation, Evercore Group makes the following representations:
If Evercore Group is trading with you in reliance upon the international dealer exemption from the dealer registration requirement under NI 31-103, Evercore Group is subject to trading restrictions, including, among other things, that Evercore Group is only permitted to trade “foreign securities” with “permitted clients” resident in Canada. A foreign security is a security issued by an issuer incorporated, formed or created under the laws of a foreign (i.e., non-Canadian) jurisdiction or a security issued by a government of a foreign jurisdiction. This serves to put you on notice that you should only place orders with Evercore Group for foreign securities in accordance with NI 31-103.
Evercore Group’s main office is located in New York, NY.
The below list contains Evercore Group’s agent for service of process for each province in Canada:
| Alberta 152928 Canada Inc. c/o Stikeman Elliott LLP 4300 Bankers Hall 888 3rd Street S.W. Calgary, Alberta T2P 5C5 Attention: President T:(403) 266-9000 F:(403) 266-9034 | British Columbia 152928 Canada Inc. c/o Stikeman Elliott LLP 666 Burrard Street Suite 1700, Park Place Vancouver, British Columbia V6C 2X8 Attention: President T:(604) 631-1300 F:(604) 681-1825 |
| Manitoba Taylor McCaffrey LLP 9th Floor, 400 St. Mary Avenue Winnipeg, Manitoba R3C 4K5 Attention: Kristen Wittman T: (204) 949-1312 F: (204) 957-0945 | New Brunswick McInnes Cooper 1 Germain St., Suite 1700 Brunswick Square Saint John, NB E2L 4V1 Attention: Jeffrey Hoyt T: 506.643.6500 F: 506.643.6505 |
| Newfoundland McInnes Cooper 10 Fort William Pl., 5th Floor Baine Johnston Centre St. John’s, NL A1C 1K4 Attention: Jeffrey Hoyt T: 709.722.8735 F: 709.722.1763 | Nova Scotia McInnes Cooper 141 Kent St., Suite 300 McInnes Cooper Building Charlottetown, PE C1A 1N3 Attention: Jeffrey Hoyt T: 902.368.8473 F: 902.368.8346 |
| Ontario 152928 Canada Inc. c/o Stikeman Elliott LLP 5300 Commerce Court West, 199 Bay Street Toronto, Ontario M5L 1B9 Attention: President T:(416) 869-5500 F:(416) 947-0866 | Prince Edward Island McInnes Cooper 141 Kent St., Suite 300 McInnes Cooper Building Charlottetown, PE C1A 1N3 Attention: Jeffrey Hoyt T: 902.368.8473 F: 902.368.8346 |
| Quebec 152928 Canada Inc. c/o Stikeman Elliott LLP 1155 René-Lévesque Ouest, 40e étage Montréal, Quebec H3B 3V2 Attention: Président T:(514) 397-3000 F:(514) 397-3222 | Saskatchewan McDougall Gauley LLP 1500 – 1881 Scarth Street Regina, Saskatchewan S4P 4K9 Attention: Michael W. Milani, Q.C. T:(306) 565-5117 F:(306) 359-0785 |
There may be difficulty enforcing legal rights against Evercore Group because it resides outside of Canada and all of its assets are situated outside of Canada.
Wrapper Exemption
Evercore Group is delivering this notice to inform you that we are relying on the exemption in section 3A.3 or 3A.4, as applicable, of National Instrument 33-105 Underwriting Conflicts (NI 33-105) from the underwriter conflicts of interest disclosure requirements of NI 33-105 for any distribution to you in the future of an eligible foreign security, as defined in NI 33-105.
If, in connection with a distribution of an eligible foreign security, as defined in Ontario Securities Commission Rule 45-501 Ontario Prospectus and Registration Exemptions or Multilateral Instrument 45-107 Listing Representation and Statutory Rights of Action Disclosure Exemptions, we deliver to you an offering document that constitutes an offering memorandum under applicable securities laws in Canada, you may have, depending on the province or territory of Canada in which the trade was made to you, remedies for rescission or damages if the offering memorandum (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by you within the time limit prescribed by the securities legislation of your province or territory. You should refer to any applicable provisions of the securities legislation of your province or territory for the particulars of these rights or consult with a legal advisor.
Canada’s Anti-Spam Legislation (“CASL”)
CASL sets forth the requirements for sending any commercial electronic message (“CEMs”) to the electronic address of a person within Canada. Pursuant to CASL, any CEMs sent to you by Evercore Group or Evercore Partners Canada Ltd. are exempt from CASL under the exemption provided for inter-business CEMs.