Customer Relationship Summary
(Effective June 30, 2020)
Item 1: INTRODUCTION
Ackrell Capital, LLC (“Ackrell”) is a broker-dealer registered with the Securities and Exchange Commission and member of FINRA and SIPC. The fees and services broker-dealers offer differ across the industry and it is important for you to understand such differences.
Free and simple tools to research firms and financial professionals are available at Investor.gov/CRS, which also provides educational materials about broker-dealers, investment advisers, and investing.
You will find certain pertinent questions you may ask us when first establishing a relationship listed as “conversation starters” below. There are different ways you can get help with your investments. You should carefully consider which types of accounts and services are right for you.
This document gives you a summary of the types of services we provide and how our firm in compensated. Please feel free to ask us for more information.
ITEM 2: RELATIONSHIP AND SERVICES
Ackrell offers brokerage services to accredited investors, exclusively through the sale of private placements. A private placement is an offering of securities that is exempt from registration with the Securities and Exchange Commission and carries significant risks, which may result in the loss of some or all of your investment. Such risks include, but are not limited to, the inability to sell your investment for cash, the lack of publicly available information on the company issuing the security, and no guarantees of returns or periodic payments.
We carefully select the offerings we bring to market, and any potential investment you may receive from us will be limited to these offerings. Therefore, we may be unable to adequately compare the risks and benefits of the offerings we bring to offerings presented by other financial firms or professionals. While our firm will present an investment’s potential risks and benefits to you, the ultimate authority to make such investment rests solely with you. We also do not give any legal or tax advice and you will need to rely on your own legal, tax, and other business advisors before making any investment decision.
Our firm does not hold any investor cash or securities. Securities purchased in private placements often have no easily assessable market value, so our firm will not monitor the market value of your investment on an ongoing basis. The investments we present often require a minimum investment amount.
Private placements are only suitable for people who are familiar with and willing to accept the illiquidity and high risk of loss associated with private placement investments. Securities purchased in private placements are not publicly traded and are intended for investors who do not have a need for a liquid investment. There can be no assurance that the price of any security purchased in a private placement is reflective of market or industry valuations and may not reflect the value of the security to another third-party investor. In addition, you will likely receive restricted securities that may require a holding period before resale is permitted. Companies seeking private placement investments tend to be in earlier stages of development. A private placement investment requires high-risk tolerance, low need for liquidity, and long-term capital commitment. You must be able to afford to lose your entire investment. Investments in private placements are not FDIC insured.
ITEM 3: STANDARD OF CONDUCT
Our Obligations to You
We must abide by certain laws and regulations in our interactions with you. We must act in your best interest and not place our interests ahead of yours when we recommend an investment involving securities. When we provide any service to you, we must treat you fairly and comply with a number of specific obligations. Unless we agree otherwise, we are not required to monitor your investments on an ongoing basis. Our interests can conflict with your interests. When we provide recommendations, we must eliminate these conflicts or tell you about them and, in some cases, reduce them.
ITEM 4: SUMMARY OF FEES AND COSTS
Our firm is mostly compensated through placement fees, which are payable by the issuer of the securities. This means that our firm is compensated by receiving a cash fee calculated as a percentage of the funds raised in an offering, regardless of the performance of the investment. A cash placement fee for our firm is typically between 2% and 10%. In addition to a cash placement fee, we also may receive a warrant (the right to purchase an equity security in the future for a defined price) or some other type of equity security from the issuer as compensation for our services. Given that different offerings have different placement fees, we may have a conflict of interest when presenting investments to you.
Given that our placement fees are payable by the issuer, the full amount of your investment will be used to purchase securities, even though a certain amount of the proceeds may be immediately redirected by the issuer to us as placement fees.
Please make sure you understand what fees and costs you are paying.
Item 5: HOW DO OUR PROFESSIONALS GET PAID
Our financial professionals are generally commission-based, and typically receive a percentage of the placement fees received by our firm.
Compare with Typical Advisory Accounts
We are a broker-dealer and not an investment adviser. You could also open an advisory account with an investment adviser, where you may pay an ongoing asset‐based fee that is based on the value of the cash and investments in your advisory account or you may pay a transaction-based fee based on the transactions traded in your advisory account. Features of a typical advisory account include:
· Advisers provide advice on a regular basis. They discuss your investment goals, work with you to design a strategy to achieve your investment goals, and regularly monitor your account. You can choose an account that allows the adviser to buy and sell investments in your account without asking you in advance (“discretionary”) or the adviser may give you advice and you decide what investments to buy and sell (“non‐discretionary”).
· Advisers are held to a fiduciary standard that covers the entire investment advisory relationship. For example, advisers are required to monitor your portfolio, investment strategy, and investments on an ongoing basis. If you were to pay an asset‐based fee in an advisory account, you would pay the fee periodically even if you do not buy or sell. You may also choose to work with an investment adviser who provides investment advice for an hourly fee or provides a financial plan for a one‐time fee.
· For an adviser that charges an asset‐based fee, the more assets you have in an advisory account, including cash, the more you will pay the adviser. So, the adviser has an incentive to increase the assets in your account in order to increase its fees.
You can receive advice in either type of account, but you may prefer paying:
an asset‐based fee if you want continuing advice or want someone to make investment decisions for you, even though it may cost more than a transaction‐based fee.
a transaction‐based fee, from a cost perspective, if you do not trade often or if you plan to buy and hold investments for longer periods of time.
Item 6. CONFLICTS OF INTEREST
When we present you with an offering, we must act in your best interest and not put our interest ahead of yours. At the same time, the way we make money creates some conflicts with your interests. You should understand and ask us about these conflicts. Here are some examples to help you understand what this means:
Proprietary Products: Our firm will often present investments that are only available through us, which may result in a higher placement fee than may be charged by other financial firms.
Warrants: As stated previously, our firm may receive a warrant or some other type of equity security from the issuer as compensation for our services. The terms of any security our firm may receive may be different than the terms of any security purchased in the private placement, which may create a conflict of interest.
Item 7. DO YOU OR YOUR FINANCIAL PROFESSIONALS HAVE AN DISCIPLINARY ACTIONS?
We do not have any disciplinary history. For additional information about our firm and registered representatives, visit Investor.gov and BrokerCheck (BrokerCheck.Finra.org). To report a problem to the SEC, visit Investor.gov or call the SEC’s toll‐free investor assistance line at (800) 732‐0330. To report a problem to FINRA, visit https://www.finra.org/investors/file-complaint. If you have a problem with your investments or financial professional, contact us through our website at www.ackrell.com.
Item 8. KEY QUESTIONS TO ASK
Ask our financial professionals these key questions about our investment services and accounts.
Key Questions to Ask
1. Given my financial situation, why should I choose a brokerage account?
2. Do the math for me. How much would I pay per year for a typical brokerage account? What would make those fees more or less? What services will I receive for those fees?
3. What additional costs should I expect in connection with my account?
4. Tell me how you and your firm make money in connection with my account. Do you or your firm receive any payments from anyone besides me in connection with my investments?
5. What are the most common conflicts of interest in your brokerage accounts? Explain how you will address those conflicts when providing services to my account.
6. How will you choose investments to recommend for my account?
7. How often will you monitor my account’s performance and offer investment advice?
8. Do you or your firm have a disciplinary history? For what type of conduct?
9. What is your relevant experience, including your licenses, education, and other qualifications? Please explain what the abbreviations in your licenses are and what they mean.
10. Who is the primary contact person for my account? What can you tell me about his or her legal obligations to me? If I have concerns about how this person is treating me, who can I talk to?