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So that we can get to your questions and also ask you the next polling question. Please participate as you have been. It's been great.

Has your firm been examined by any regulator within the last 12 months? Yes, no, or I am not sure. We know that 30% have not been examined, so roughly 70% either don't know or were examined, so has that been in the last 12 months.

According to the results, Colleen, can you see the results again?

About 50% have been examined by a regulator, although I'm not sure if that's the SEC or if it was FINRA, and then 46% have not and 4% are not sure.

 
 
 
 
 
 
 

Colleen or Vicky, would you like to tackle a few questions?

Sure.

I have one question here. Q.What is the broker search tool that you spoke about when talking about recidivist, the check to do in additional standard background checks?

If you go to FINRA broker check  you can Google it, do an Internet search. FINRA broker check, there's an area where you can input a person's name and it will tell if they've ever had any licenses, any FINRA licenses, and also disclose on there any transgressions, any problems that the person had. Do you have anything to add with that, Colleen, for the FINRA broker check?

Basically what FINRA broker check gives you is information that is if the person has ever had a U4 filed, so if they hold any securities licenses, if they're a registered rep as a broker dealer or have been, or if they're registered as a investment advisory representative with a state regulator. You'll find information about the individual on there.

Then also with background checks, actually, they're not all that expensive. A regular background check is advisable in the event that somebody in disclosing a past disciplinary event to you that could come up in the background check as well. I think in order to show that as the CCO that you are implementing a strong compliance program, you are making all disclosures. I think a background check is absolutely necessary, for sure.

[inaudible 01:02:31] a comment come in from somebody who says, "I'm someone who works for a public pension. It's also critical for the investment advisors we hire to be transparent." [inaudible 01:02:42] quite an important issue [inaudible 01:02:43] agree with that particularly with regard to their policies, procedures and processes. Our due diligence for this person public pension plan is greatly influenced by these things. [inaudible 01:02:56] a very fair point. We've also had lots of thank yous as well from people.

There's a question about do you consult with broker dealers?

No. We are familiar with broker dealer regulations, but we primarily ... do you mean our consulting services that NorthPoint provides, are primarily geared specifically to investment advisors. Anybody that's registered with the Investment Advisors Act or with the SEC under the Investment Advisors Act of 1940 that's our expertise and that's what we do almost every day, almost all day. We are familiar with broker regulations, but that is not our specialty.

I have another question here. Do registered investment requires advisors have a requirement to have a third party custodian when storing data electronically? It goes on to say knows that there were recent enforcement cases against the a few DBs and was not sure whether [inaudible 01:04:02] had similar requirement to deliver attestation letter or something similar to SEC. A third party electronic data storage [inaudible 01:04:11].

Did you get the question, Colleen? I didn't quite get the question.

[inaudible 01:04:16] they're required to have third party electronic data storage? There's not a requirement for third party data storage, but you know there is a requirement that you have a disaster recovery plan as a best practice within your disaster recovery you want to make sure that there is backup in place for data and that you can restore data if there were to be some type of an event where you lose some of your data.

In the book there're some reference rules too. If you want to store your required books and records electronically you should be maintaining I believe it says it right in the rule 204-2 people get copies of the electronic document as well, whether it be backup tapes, now in the cloud somewhere, you should be having not just one electronic record it should be somewhere else as well.

There's one just short question here, can you please repeat where that calculator was? Not sure if you know the context of that.

Sure, it's on SEC.gov. If you do an Internet search for SEC.gov mutual fund comparison the calculator will come up. It's pretty neat. You can actually compare up to three mutual funds, and just like putting the ticker in you can do a search as well. I practiced with it yes. I put in Fidelity and it brought up a whole bunch of different Fidelity mutual funds. I selected one of the mutual funds and it told me the different share classes. I chose three of those share classes, and it actually showed me what the expenses would be. I put a 10-year time period, so what would be the most favorable share class. Then, I put what if I was holding the mutual fund for five years, and then it turned out the B share, I think, I would be paying less expenses, and therefore my return would be better. We can't predict these things exactly, but we can do our best to have an idea of how long we might a particular security a mutual fund.

Now obviously, if the advisor has the access to providing you with an institutional type share class those can be cheaper, and so the advisor should be assuming it is cheaper should be recommending that you invest in their investor share class.

Thank you. I think have an additional question in relation to data storage. It is, are you required to have a third party custodian for that data storage I'm guessing is the full question.

For data stores, the records that are required under the Investment Advisors Act you are not required to have a third party maintain that. In fact, you should be maintaining or having access to them the first two years that your principal place of business. No there is no requirement that a third party holds the records that are required under the books and records rule which is 204-2 of the Advisors Act. Colleen, anything to add or do you disagree?

No, I agree.

Great. Colleen, Vicky from NorthPoint Compliance, thank you very much for your time and your expertise today.

 

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