ECM Investment Management

Custody Of Client Assets

ECM Investment Management, Inc. provides a high degree of protection for client assets by utilizing custodial or brokerage services, such as Union Bank of California, TD AMERITRADE, or a brokerage firm such as Smith Barney, AG Edwards, or Merrill Lynch.

As an investment advisory firm, ECM is granted a limited power of attorney by the client to effect the purchase and sale of securities for the client's account. Physical custody of these assets is never taken by ECM; and is only accepted by a qualified third-party custodian, such as Union Bank or TD AMERITRADE. This system of checks and balances provides that ECM cannot effect fund transfers out of the client's accounts. With client authorization, ECM has the authority to debit its own investment advisory management fees directly from each client account. ECM has taken steps to ensure that it complies with all applicable laws and regulations regarding this practice, and will not otherwise intentionally take custody of client cash or securities.

Clients may, at any time, contact their custodian directly to obtain information regarding their account, and make payments to or withdrawals from the account.

Custodians maintain records of securities holdings and transactions in client accounts. ECM obtains electronic reports and/or paper statements from each approved custodian and reconciles all client trades and account information to the penny, in most cases each business day.

As required by the Securities & Exchange Commission, ECM maintains a formal Business Continuity Plan (BCP), which specifies ECM's response in case of Significant Business Disruption (SBD). Elements of the Plan include the backup of all pertinent information, offsite storage and recovery of client data, emergency contacts, and the maintenance of mission critical systems; in particular those related to computers and software.

Your custodian serves as a clearinghouse for all your accounts, providing you the convenience of a single, consolidated portfolio. The custodian acts on the client's behalf as the Administrator for all securities, with careful attention to accuracy and timeliness. Their wide range of services include:

  Safekeeping of assets

  Timely settlement of securities transactions

  Collection of dividend and interest payments

  Daily investment of cash balances

  Detailed statements of all your securities, including current market value and important tax information

Some of the other duties of the custodian or brokerage firm include:

  Segregation of client assets from all other bank assets

  Placement of client assets under joint custody of two or more bonded bank officers and employees

  Maintains blanket bond insurance against loss, theft, forgery, and destruction

The Office of the Comptroller of the Currency, independent accounting firms, and internal auditors perform routine audits and examinations.