Cantella & Co., Inc. is both an independent broker/dealer and Registered Investment Adviser.
- A broker/dealer, as defined by the Financial Industry Regulatory Authority (FINRA), is a "company that is in the business of buying and selling securities—stocks, bonds, mutual funds, and certain other investment products—on behalf of its customers (as broker), for its own account (as dealer), or both."
- A Registered Investment Adviser, as defined by the Securities and Exchange Commission (SEC), is "any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities."
This dual registration allows the financial professionals who work with us to offer both brokerage and investment advisory services. What's right for you depends on your individual financial situation and investment objectives.
Cantella’s role with your Financial Professional is to supervise their activity and process their investment business.
We provide them with the tools to function as independent business owners, and as their back office, give them access to technology platforms, research capabilities, and other support services to help better assist clients. The financial services industry is one of the most highly regulated industries in the world. Cantella is responsible for ensuring your Financial Professional and our firm adhere to all applicable laws and regulations while maintaining the highest degree of ethics, honesty, and fairness in our dealings. These values have been codified in Cantella’s Code of Ethics, and adopted by our Board of Directors. For further information, we encourage every investor to review Cantella & Co., Inc.’s Form CRS, or Customer Relationship Summary, which details important information regarding:
- The types of services the firm offers;
- The fees, costs, conflicts of interest, and required standard of conduct associated with those services;
- Whether the firm and its financial professionals have reportable legal or disciplinary history; and,
- How to get more information about the firm.
A relationship summary also includes questions to help you begin a discussion with an adviser or broker about the relationship, including their services, fees, costs, conflicts, and disciplinary information. You can review the following document for an overview of Cantella's Brokerage Compensation & Conflict Disclosure. For more detailed disclosures, please review the Cantella Client Disclosure Document .
The links below are intended to provide investors with convenient access to a variety of securities industry bulletins and alerts. These communications are not intended to be a form of solicitation or endorsement of Cantella; however, they should provide easy access to this publicly available information.
Municipal Securities Rulemaking Board (MSRB) Education Center Financial Industry Regulatory Authority (FINRA) Investor Alerts Investor Insights Brokercheck Securities and Exchange Commission (SEC) Investor Alerts and Bulletins Customer Relationship Summary (Form CRS) Commonwealth of Massachusetts – Securities Division Investor Education
Securities Investor Protection Corporation (SIPC®) Coverage Pershing, National Financial Services (NFS), and Raymond James are members of SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org. Excess of SIPC Coverage In addition to SIPC protection, Pershing, NFS and Raymond James provide coverage in excess of SIPC limits. SIPC and the excess of SIPC insurance policy do not protect against loss due to market fluctuation. An excess of SIPC claim would only arise if Pershing failed financially and client assets for covered accounts—as defined by SIPC—cannot be located due to theft, misplacement, destruction, burglary, robbery, embezzlement, abstraction, failure to obtain or maintain possession or control of client securities, or to maintain the special reserve bank account required by applicable rules.
- For more information about NFS Excess SIPC coverage, please visit.
- For more information about Raymond James Excess SIPC coverage, please visit.
- For more information about Pershing Excess SIPC coverage, please visit.
Securities Based Line of Credit (SBLOCs) From FINRAs Investor Alert, SBLOCs are loans that are often marketed to investors as an easy and inexpensive way to access extra cash by borrowing against the assets in your investment portfolio without having to liquidate these securities. They do, however, carry a number of risks, among them potential unintended tax consequences and the possibility that you may, in fact, have to sell your holdings, which could have a significant impact on your long-term investment goals. Set up as a revolving line of credit, an SBLOC allows you to borrow money using securities held in your investment accounts as collateral. You can continue to trade and buy and sell securities in your pledged accounts. An SBLOC requires you to make monthly interest-only payments, and the loan remains outstanding until you repay it. You can repay some (or all) of the outstanding principal at any time, then borrow again later. Some investors like the flexibility of an SBLOC as compared to a term loan, which has a stated maturity date and a fixed repayment schedule. In some ways, SBLOCs are reminiscent of home equity lines of credit, except of course that, among other things, they involve the use of your securities rather than your home as collateral. Click here for more information from FINRA regarding SBLOCs. For those clients who wish to take advantage of a Securities Based Line of Credit, they can do so either through Pershing LLC or Raymond James. Please see the applicable rates below, which are subject to change:
At Cantella, our Financial Professionals have the ability to utilize three separate clearing firms: Pershing, LLC, National Financial Services, and Raymond James. Access to these multiple clearing firms allows for a wide array of securities products, including, but not limited to, common and preferred stocks; CDs, municipal, corporate, and government fixed income, mutual funds, exchange-traded products, options and derivatives, unit investment trusts (UITs), alternatives, and variable insurance products. Cantella’s advisory services platform also allows advisors to offer clients a number of managed account investment options through the Cantella Managed Investments® (CMI) platform and unaffiliated third-party asset manager (TPAM) programs. In order to help you better understand the differences between Brokerage Services and Investment Advisory Services, Cantella & Co., Inc has created the Working With a Cantella Financial Professional: The Choice between Advisory Services and Brokerage Services. We encourage you to review the variations between the programs, and discuss what services may be best suited for your individual situation. For more information regarding Cantella & Co., Inc.’s Advisory Program please feel free to review our Form ADV ADV Part 2A - Firm Brochure. Your Financial Professional can also supply you with their ADV 2B Brochures. Additional costs for your account features are provided to you in Cantella’s Brokerage Account Fee Schedule. Please note that fees may change, and it is best to get the most up to date information from your Financial Professional. Financial Planning and Consulting Services Cantella & Co., Inc financial professionals can provide to their clients fee-based consulting and financial planning services. For example, you may engage your advisor to review or provide consulting services on assets or accounts you maintain at other financial institutions, generate a comprehensive financial plan, provide education planning services, work with you on an estate plan, or help address your risk management needs.
To help the government fight the funding of terrorism and money laundering activities, federal laws require that Cantella obtain, verify, and record information that identifies each person who opens an account. Cantella will ask for your name, address, date of birth, and a government-issued identification number, which will allow us to identify you. For certain entities, such as trusts, estates, corporations, partnerships, or other organizations, identifying documentation is also required. We may also ask to see your driver's license or other identifying documents. Cantella will not be responsible for any losses or damages (including, but not limited to, lost opportunities) resulting from any failure to provide this information, or from any restriction placed upon, or closing of, your account. For more on the rules regarding opening a brokerage account, please click here.
Cantella is required to make available quarterly reports that present a general overview of our routing practices. These reports identify the significant venues to which customer orders were routed for execution during the applicable quarter. For these reports, please visit the respective clearing firm site where your account is custodied: Pershing, LLC National Financial Services Raymond James & Associates, Inc. For further information on the regulations regarding Order Routing and Order Execution, please visit the SEC’s website.
A mutual fund is a company that combines investors’ money into portfolios compromised of such investment vehicles as stocks, bonds, and short-term debt. The fund has a stated objective it looks to achieve, but there is no guarantee that it will achieve those objectives and not lose value. Mutual funds are generally derived into different share classes that have differing fees and expenses. Terminology you may hear regarding annual operating expenses of a mutual fund are the following:
- Management fees – these fees are paid to the fund’s managers for management and services to the portfolio.
- 12b-1 fee – an expense charge by certain mutual funds to distributions, marketing expenses, and occasionally commissions to financial professionals.
Comparison of Share Classes and Expenses in Brokerage and Advisory Accounts
Class A Shares – This share class has an up-front sales charge that is typically around 5.75%, and no deferred sales charge unless there is an imposed short-term redemption fee. Its annual operating expenses are lower than most C shares, but generally higher than most advisory share classes. Typically, these funds pay the advisor an annual 12b-1 fee, which is generally 0.25%. This share class may be appropriate for investors that qualify for breakpoints, as per the fund’s prospectus, and those who expect to be longer term investors. Class B Shares – This share class has no up-front sales charge, but assesses a deferred sales charge if sold within a prescribed time period as stated in the fund’s prospectus. Its annual operating expenses are generally higher than most A shares, but often once the prescribed hold time expires an investor’s shares may convert from Class B to Class A for lower ongoing expenses. This share class may be appropriate for investors that do not qualify for breakpoints, want their full sum invested into the fund immediately, and intend to hold their investment longer term. Class C Shares -This share class has an up-front sales charge that is typically around 1%, and generally a 1% deferred load if redeemed within a short time frame (generally 12-18 months). Its annual operating expenses are generally higher than most advisory and A share classes, and can typically pay the Financial Professional a 1% annual 12b-1 fee. This share class may be appropriate for investors that do not qualify for breakpoints, and/or intend to hold their investment for a shorter time period. Advisory Share Classes – This share class has no up-front sales charge or deferred sales charge unless the fund imposes a short-term redemption per the prospectus. Its annual operating expenses are generally lower than A and C shares, and do not pay an advisor 12b-1 fees. This share class may be appropriate for investors who do not want to pay sales charges and prefer to pay advisory fees for ongoing advisor asset management. To potentially reduce the cost of a mutual fund, you may have the ability to take advantage of one of the following, dependent upon your circumstance: Breakpoints: Fund families often offer discounts on the sales charges for Class A shares based on the total amount you have invested with the fund family. Such discounts could significantly reduce, and in some cases eliminate, the sales charge that clients pay. The level at which you qualify for the discount is the “breakpoint.” Rights of Accumulation: These allow you to combine your existing investments in a fund family with your new purchases to reach a breakpoint. You must inform your Financial Professional of any outside holdings they may be unaware of. Letters of Intent: You can take advantage of rights of accumulation from the time you make your initial share purchase by agreeing to invest a certain dollar amount over a specified period of time. However, if the amount stated for investment in the letter of intent is not invested, the mutual fund can retroactively charge you the higher sales charge amount. Net Asset Value (“NAV”) Transfers and Buybacks: After you redeem your fund shares, some fund families will allow you to “buy back” into certain funds within a certain time frame without a sales charge for Class A shares. Exchanges: If you select funds that are part of a family of funds and purchase Class A shares in a commission-based account, then you can switch among the funds in the family without incurring additional sales charges. Other discounts and fee waivers may apply based on certain criteria—please refer to the applicable prospectus or the mutual fund’s statement for additional information. Regulatory Insights and Resources FINRA and the SEC have published information for investors to become aware of the differences amongst mutual fund classes. These communications are not intended to be a form of solicitation or endorsement of Cantella & Co., Inc; however, they should provide easy access to this publicly available information. If you are interested in learning more you can review the following material: Understanding Mutual Fund Classes Mutual Fund Breakpoints: A Break Worth Taking Investor Bulletin: Mutual Fund Classes Fast Answers: Mutual Fund Classes
Mutual funds may lose value based upon market movements in individual securities within the portfolio. Dependent upon investments you may obtain a concentration within a particular asset class, security type, industry sector, or geographic region. There is a possibility for liquidity of underlying investments within a mutual fund. Offshore mutual funds are not registered on any U.S. exchange, so there may be limited information regarding the risks and tax consequences. Underlying investments may carry additional risks. Please see the applicable prospectus and the relevant sections of this document, such as the descriptions of fixed income or equities, for additional risks related to underlying securities.
An option is a contract that provides you with either a right or an obligation related to an underlying security, such as a stock, index, or exchange-traded fund. There are two types of options, calls and puts, and you can buy or sell either one. Options have a strike price, also referred to as the exercise price (the price at which you exercise the option) and an expiration date. A call option gives the holder the right to buy a security at the strike price prior to the expiration date, while a put option gives the holder the right to sell a security at the strike price prior to the expiration date. Buyers of calls believe that the market value of the security will increase substantially before the option expires, and want the right to buy the security at the lower strike price if that happens. Conversely, buyers of puts believe that the market value of the security will decrease substantially before the option expires, and want the right to sell the security at a higher strike price if that happens. Buyers of calls/puts hope to profit by exercising the option at a strike price that is lower/higher than the market value of the security (i.e. when the option is “in the money”). Instead of exercising the option, the holder of the option can also sell it to “close out the contract” and receive the difference between the strike price and the market price. Clients can also sell calls and puts. For example, a seller of puts believes that the market value of the security will not fall before the option expires. Conversely, sellers of calls believe that the market value of the security will not rise before the option expires. Sellers of puts and calls hope to maximize their profit by generating income from the premium paid to them by the buyers and having the options expire unexercised (i.e. “out of the money”). As an investor it is important to utilize your Financial Professional to review your objectives and risk tolerance. In some instances, it may be appropriate to utilize options as part of your investment product mix. Options involve risk and are not suitable for all investors. Prior to buying or selling an option, you must receive a copy of Characteristics and Risks of Standardized Options or the OCC Options Disclosure Supplement. The Options Clearing Corporation, in conjunction with the Options Industry Council, offers a great deal of investor resource and education materials regarding options including, but not limited to, podcasts, videos, seminars, and more. This information is not intended to be a form of solicitation or endorsement of Cantella & Co., Inc; however, they should provide easy access to this publicly available information. If you’d like to take advantage of any of this educational material, please click here!
Options are complex and require a high level of attention to the trading markets. Not all objectives are suitable for options as they can be speculative product that may lead to unlimited losses. Investing involves risk, it is possible you lose the entire amount committed to options in a relatively short period of time. Income generated from covered calls (a call option sold on a security owned), does not provide protection from significant downward price movement. A covered call writer (the person who owns the security and sold the call option on said security) gives up any appreciation above the strike price. The sale of shares due to assignment may result in a taxable gain for the option writer. Margin may be required.
UITs are an SEC-registered investment company that issue redeemable securities created by a UIT Sponsor. These securities are generally “not actively traded” portfolios of either equity and/or fixed income securities with a stated pre-defined investment objective or strategy. Typically, the vast majority of UITs purchased are not traded or redeemed significantly in advance of maturity without a customer-specific need for liquidation or specific changes in the economic environment. Common Types of UITs Equity UITs Strategy portfolios: Seek to outperform a benchmark, such as a specific widely held index, using fundamental screens that reflect the historical behavior of the securities. Income portfolios: Typically seek to provide dividend income and may also provide potential capital appreciation. Asset allocation portfolios: Invest in different asset classes, styles, and capitalizations, and are designed to meet specific investment objectives to help better manage investors’ asset allocation needs. Sector Portfolios: Invest in companies involved in a specific industry such as energy, health care, financial services, or technology. Hybrid Portfolios: Invest in various underlying holdings, including equities, closed-end funds, and Exchange Traded Funds (ETFs). Many UITs will combine multiple securities within the same portfolio to gain exposure to different areas of the market. Fixed Income UITs Tax-Advantaged Fixed Income: Invests in a pool of bonds that provide monthly or semi-annual income exempt from federal income taxes, and in some cases, state income taxes. Taxable Fixed Income: Invests in pool of bonds that may include taxable municipal issues, corporate issues, or agency issues that provide monthly or semiannual income.
Termination Features and Options Upon the termination date of the portfolio, the remaining securities are sold/distributed and the investor has different options for the investment proceeds: Option #1: Rollovers Investors may roll over into a new series of the same trust, if available, or into another UIT available in the primary market. Option #2: Maturity Investors may do nothing and allow the portfolio units to mature. The trust will liquidate and they will receive a cash distribution of the trust's proceeds, if any. Option #3: In-kind distribution Investors may generally request an in-kind distribution of the stocks underlying the units if certain minimum requirements are met. Please see additional provisions set forth in the prospectus. Please refer to the trust prospectus for more complete in-kind distribution information. In-kind distribution is generally available for stocks traded and held in the United States. In-kind distribution may be modified or discontinued at any time without notice. Costs Associated with Investing in UITs All UITs have fees and expenses that your Financial Professional can go over with you. Generally, these fees and expenses can be split into sales charges and operation expenses related to the UIT. It is best to speak with your Financial Professional and review the fund’s prospectus as they may differ between UIT sponsors. Regulatory Insights and Resources These communications are not intended to be a form of solicitation or endorsement of Cantella & Co., Inc; however, they should provide easy access to this publicly available information regarding UITs. SEC – Unit Investment Trusts (UITs)
Upon termination there is no assurance the value of the UIT will be equal to or higher than the original price. There is no assurance that an individual UIT portfolio will meet its objective. UITs are not actively managed and underlying securities will not be sold to take advantage of market conditions. UITs are not bank deposits and are not insured or guaranteed by the FDIC or any other government agency. Before investing in any UIT, we encourage you to read the relevant prospectus, which is available from the issuer and your financial professional.
College education is expensive! Whether you are saving for your family member, or even for yourself, these plans may be a consideration given to you by our Financial Professionals. There are two types of 529 plans, college savings plans and prepaid tuition plans. The correct plan for you, or your family member, would take into consideration multiple criteria such as state residency, tax scenarios, financial aid eligibility, contribution limits, and investment options. Please consult with your financial, tax, or other advisor and legal counsel regarding how such state-based benefits (including limitations) would apply to your specific circumstances prior to investing These plans are designed to cover “qualified education expenses” at eligible post-secondary institutions such as:
- Tuition and Fees
- Books and supplies, including such items as electronic equipment or equipment required by the school
- Room and Board
Investments are subject to standard investment risks including (but not limited to) market and interest rate risks. The value of an account may increase or decrease over time based on the performance of the plan. This may result in the value of the account being more or less than the amount contributed. The carrier, the underlying mutual funds, the Board, the State, nor any instrumentality thereof, makes any guarantee of, nor has any legal obligations to ensure, the ultimate payout of any amount, including a return of contributions made to an account. There is no guarantee that the future account value will be sufficient to cover qualified higher education expenses at the time of withdrawal. In addition, no level of investment return is guaranteed by the carrier, the underlying mutual funds, the Board, the State or any instrumentality thereof.
An ETF is usually a registered investment company, where the shares represent an interest in a portfolio of securities that track an underlying benchmark or index. Unlike most mutual funds, shares of ETFs typically trade on an exchange and price throughout the day. Each ETF varies in risk and objective. Investors should review the prospectus of each fund carefully and discuss concerns/questions with their Financial Professional prior to purchasing. Leveraged ETFs Leveraged ETFs are ETFs that employ financial derivatives and debt to try to achieve a multiple (for example two or three times) of the return or inverse return of a stated index or benchmark over the course of a single day. Due to the use of leveraging this typically increases the risk for an investor. The higher the amount of leveraged employed the greater the potential magnification of gains or losses on those investments. Unlike utilizing margin or shorting securities in your own account, you cannot lose more than your original investment. Inverse ETFs An inverse ETF is generally designed to track, on a daily basis, the inverse of its benchmark. These ETFs utilize short sales, derivatives, and other leveraging techniques to achieve their stated investment objective. Leveraged-Inverse ETFs These securities use swaps, futures contracts, options, and other derivative instruments to seek to achieve a return that is a multiple of the opposite performance of the underlying benchmark or index. Leveraged-inverse ETPs may include a combination of leveraged and inverse terms such as "ultra short" in their security name/description. Due to the active management, and leveraging techniques used, they tend to carry higher fees and have higher liquidity risks. These are not designed to be long term investment vehicles, and volatile markets can increase the risk associated with these investments. Regulatory Insights and Resources These communications are not intended to be a form of solicitation or endorsement of Cantella & Co., Inc; however, they should provide easy access to this publicly available information. FINRA and SEC Investor Alert: Leveraged and Inverse ETFs
The specific risks associated with a particular ETF are detailed in the fund's prospectus. Additional risks may include adverse market condition risks, investment strategy risk, aggressive investment techniques risk, concentration risk, correlation risk, counterparty risk, credit risk and lower-quality debt securities risk, energy securities risk, equity securities risk, financial services companies risks, interest rate risk, inverse correlation risk, leverage risk, market risk, non-diversification risk, shorting risk, small and mid-cap company risk, tracking error risk, and special risks of exchange traded funds, among others. Investors should refer to the ETF's prospectus to obtain a complete discussion of the risks involved in that ETF before investing.
A variable annuity is a contract between you and an insurance company, funded either by a single lump sum payment or multiple purchase payments. Some characteristics of annuities may give you the ability to grow funds on a tax-deferred basis, different payout options such as creating an income stream of periodic payments, different death benefits. or additional insurance features. Additional features added to the contract may incur additional fees, and is important to understand from your Financial Professional the features and risks associated with the product you are purchasing, along with reviewing the product’s prospectus. As with most investment vehicles, there are risks associated with each. Variable annuities are not intended to be short term investment vehicles, and loss of benefits and/or additional charges may be incurred if withdrawn from early. Risk of loss, and other risks associated with the investment options of your contract may occur. Optional features may also place restrictions, and additional contract fees and expenses. With a variable annuity, you may pay a Mortality and Expense (M&E) fees, which helps cover the guarantees they provide. Variable annuity investors also pay underlying fund expenses, and in some cases, an annual contract charge. A surrender charge may apply to withdrawals during the surrender charge period. The SEC has compiled a great list of questions of what you should ask yourself prior to investing in a Variable Annuity which can be found here. Variable Annuity Fees and Charges As an investor it is important to understand the terminology that may be presented to you within the prospectus regarding the fees and charges associated with the contract you are viewing. Below are some examples of what you may come across:
- Mortality and Expense Risk Fee (M & E) – This is typically and annual charge that is equal to a percentage of the account value that can be used by an insurance company for offsetting the costs of distributing the variable annuity, such as commission paid to your Financial Professional. It is also used to compensate the insurance company for certain risks that it assumes under the variable annuity contract.
- Administrative Fees – Can either be a flat fee or a percentage of the account value. The insurer may deduct this charge to cover administrative expenses such as recordkeeping. Some companies may waive this fee when contract values exceed a certain dollar amount.
- Subaccount Expenses - These fees and expenses, charged by the underlying investment managers in the variable annuity, are similar to the fees and expenses charged by mutual funds. These expenses include annual operating expenses such as management fees, distribution fees (referred to as 12b-1 fees) and other expenses.
- Other Fees and Charges - Certain features offered in variable annuities such as additional death benefits, living benefits, and bonus credits often carry additional charges or lead to a higher Mortality and Expense Risk Fee. In addition, there can be a charge for transferring from one investment option in your annuity contract to another.
- Surrender Charges – A contract may impose a surrender charge if you withdraw money from the contract within a specified period of time, typically three to nine years. These charges typically decrease over time, and then may disappear altogether. An investor will want to review the prospectus thoroughly as some contracts will only impose the surrender charge based on the initial premium, some apply new periods based on additional deposits to the contract, and some contracts will allow for a portion of the account to be withdrawn without a surrender period each year.
It is possible to experience a loss on your investment in a variable annuity. As noted above, earnings within a deferred annuity grow on a tax-deferred basis. Income taxes that would have been paid on capital gains, interest, or dividends, are deferred until they are withdrawn from the contract. The value of a variable annuity may grow faster than a taxable investment with a similar rate of return, because money that would have been used to pay these taxes remains invested. It is important to realize, however, that when you withdraw money from a variable annuity, any portion subject to tax will be taxed at ordinary income rates rather than the lower tax rates that are currently applicable to long-term capital gains and certain dividends. Therefore, the benefit of tax deferral may outweigh the costs of a variable annuity only if you use the annuity for goals such as long term retirement planning.
Bonds are securities that obligate the issuer to pay the investor a specified amount of money (coupon), usually at certain intervals, and repay the principal amount at maturity. Zero-coupon will pay both the imputed interest and principal upon maturity. There are several different types of bonds based on the issuer and their ratings: U.S. Treasury Bonds – Direct debt obligations issued by the U.S. government, which uses the revenue from the bonds to raise capital and/or make payments on outstanding debt Agency Bonds - Debt obligations issued by agencies of the U.S. federal government or by private agencies, called government-sponsored enterprises (GSEs), which are federally chartered, but publicly owned by their stockholders Municipal Bonds - Debt obligations issued by states, cities, counties, and other public entities that use the loans to fund public projects, such as the construction of schools, hospitals, highways, sewers, and universities. For more information please visit: MSRB – Electronic Municipal Market Access (EMMA) Corporate Bonds - Fully taxable debt obligations issued by corporations that fund capital improvements, expansions, debt refinancing, or acquisitions that require more capital than would ordinarily be available from a single lender High Yield Bonds - Debt securities rated below investment grade based on the issuer's weaker ability to pay interest and capital, resulting in the issuer paying a higher rate to entice investors to take on the added risk Preferred Securities are comparable to fixed income investments as their coupon/dividend payments are generally fixed over the term of the investment and will react similarly to other debt investments to changes in market conditions. Some preferred securities pay variable payments that fluctuate and may provide the holder with additional income if the underlying rates rise or with reduced income if the rate falls.
Ratings are created by private and independent rating services such as Moody’s Investors Service, Fitch Ratings Inc., and Standard & Poor’s. They use rating methodologies that measure the creditworthiness of a bond; evaluate a bond issuer's financial strength, or its ability to pay a bond's principal and interest, in a timely fashion. These ratings typically assign a letter grade to bonds that indicate their credit quality.
Source: SIFMA, Fitch, Moody’s, Standard & Poor’s
Brokered Certificates of Deposits (CDs)
Brokered Certificates of Deposit (CDs) purchased through a securities broker and held in a brokerage account are considered deposits with the issuing institution and are insured by the Federal Deposit Insurance Corporation (FDIC). FDIC deposits are insured up to $250,000 per issuer (including principal and interest) for deposits held in different ownership categories, including single accounts, joint accounts, trust accounts, IRAs, and certain other retirement accounts. Brokered CDs are redeemable at par upon the death of the beneficial owner. Only the par or face value (not the premium paid) is FDIC-insured. Additional information is available from the following disclosure document or visiting:
Collateralized Mortgage Obligations (CMOs)
Mortgage-backed securities and Collateralized Mortgage Obligations are priced based on an average life, which includes prepayment assumptions that may or may not be met, and changes in prepayments may significantly affect yield and average life. The actual maturity date may be shorter than stated. For more information, please review FINRA’s Investor’s Guide to Mortgage Securities and collateralized mortgage obligations at www.finra.org, or Cantella’s CMO Disclosure Document.
In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk, and credit and default risks for both issuers and counterparties. High-yield/non-investment-grade bonds involve greater price volatility and risk of default than investment-grade bonds. Any fixed income security sold or redeemed prior to maturity may be subject to loss. Diversification and asset allocation do not ensure a profit or guarantee against loss. Preservation of principal and regular income are dependent upon the creditworthiness of the bond’s issuer. In the event of bankruptcy or default by the issuer, income payments will cease and you may lose all or a portion of your initial investment. As rated by ratings agencies Moody’s, Standard & Poor’s Rating Service, and Fitch. Outside resources are not intended to be a form of solicitation or endorsement of Cantella & Co., Inc; however, they should provide easy access to this publicly available information. An obligor’s inability to remain solvent and pay any outstanding debt obligations in a timely manner. Adverse changes in the creditworthiness of the issuer (whether or not reflected in changes to the issuer’s rating) can decrease the current market value and may result in a partial or total loss of an investment. Generally, as interest rates rise, the price of a bond will fall and conversely, as interest rates fall, the price of a bond will rise. The yield offered on bonds is based upon a collective associated-risk evaluation, coupled with a market-determined spread over a similarly traded riskless transaction (historically measured versus a similar maturity U.S. Treasury bond). As interest rates fluctuate, the yield on most bonds will be adjusted accordingly. Timing of reinvestment of returning interest or principal can cause an investor’s return to fluctuate. In a falling interest rate environment, an investor will likely benefit from higher coupons and longer maturities as this prevents the need to reinvest into a lower, less favorable interest rate environment. If interest rates are rising, higher coupon and/or short maturities allow an investor to take advantage of rate increases and put their money to work at improving interest rates. Liquidity is the ability to sell (liquidate) a position. Many fixed income securities trade in an active secondary market and many broker/dealers, including us, may maintain a secondary market in securities; however, there is no assurance that an active market will be maintained. Purchasing Power Risk states that, over time, inflation will lower the value of the returned principal. This means that an investor will be able to purchase fewer goods and services with the proceeds received at maturity. International bonds are subject to additional risks, including, without limitation: liquidity, currency fluctuations, differing accounting standards, political and economic instability, and differing tax laws.
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Cantella & Co., Inc. has developed a Business Continuity Plan to respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information about our Business Continuity Plan. Contacting Us – If, after a significant business disruption, you cannot contact us as you usually do at (800) 333-3502, you should go to our web site at www.cantella.com. If you cannot access us through either of those means, you should contact the clearing firm that carries your account: National Financial Services, LLC: (800) 801-9942 Raymond James & Associates, Inc.: (800) 248-8863 Pershing, LLC: (201) 413-3635 The clearing firms will provide instructions on how you can process orders, withdraw funds or securities, or process other critical transactions related to your account. Our Business Continuity Plan – We plan to quickly recover and resume business operations after a significant business disruption and to ensure the safety of our employees. Our Business Continuity Plan is designed to permit our firm to resume operations as quickly as possible, given the scope and severity of the significant business disruption. While every emergency situation poses unique problems based on external factors, such as the time of day and the severity of the disruption, our clearing firms have advised us that they are able to recover critical operations within 24 hours. Your orders and requests for funds and securities could be delayed during this period. It is possible that recovery could take longer, depending on the nature of the disruption. Varying Disruptions – Significant business disruptions can vary in their scope; for example, a disruption affecting only part of our firm, one affecting our building, or one affecting a more widespread area. In the case of a localized disruption (one with a scope of our building or smaller), we will transfer affected operations to a local site when needed and expect to recover and resume time-critical functions within 60 minutes. In the case of a more widespread disruption, alternate transportation, communications, effects on our clearing firms, and other factors will affect our recovery time. In either situation, we plan to continue in business, transfer operations to our clearing firm if necessary, and notify you through our web site (www.cantella.com) or our main telephone number how to contact us. If the significant business disruption is so severe that it prevents us from remaining in business, we assure you that our clearing firms will grant you prompt access to your funds and securities. For more information – If you have questions about our business continuity planning, you can contact us at (617) 521-8630. This summary of our plan is available at any time upon written request, and is also available on our web site.
Cantella & Co., Inc. is furnishing this document to you to provide some basic facts about purchasing securities on margin, and to alert you to the risks involved with trading securities in a margin account. Before trading stocks in a margin account, you should carefully review the margin agreement provided by your firm. Consult your firm regarding any questions or concerns you may have with your margin accounts. When you purchase securities, you may pay for the securities in full or you may borrow part of the purchase price from your brokerage firm. If you choose to borrow funds from your firm, you will open a margin account with the firm. The securities purchased are the firm's collateral for the loan to you. If the securities in your account decline in value, so does the value of the collateral supporting your loan, and, as a result, the firm can take action, such as issue a margin call and/or sell securities or other assets in any of your accounts held with the member, in order to maintain the required equity in the account. It is important that you fully understand the risks involved in trading securities on margin. These risks include the following:
- You can lose more funds than you deposit in the margin account. A decline in the value of securities that are purchased on margin may require you to provide additional funds to the firm that has made the loan to avoid the forced sale of those securities or other securities or assets in your account(s).
- The firm can force the sale of securities or other assets in your account(s). If the equity in your account falls below the maintenance margin requirements, or the firm's higher "house" requirements, the firm can sell the securities or other assets in any of your accounts held at the firm to cover the margin deficiency. You also will be responsible for any short fall in the account after such a sale.
- The firm can sell your securities or other assets without contacting you. Some investors mistakenly believe that a firm must contact them for a margin call to be valid, and that the firm cannot liquidate securities or other assets in their accounts to meet the call unless the firm has contacted them first. This is not the case. Most firms will attempt to notify their customers of margin calls, but they are not required to do so. However, even if a firm has contacted a customer and provided a specific date by which the customer can meet a margin call, the firm can still take necessary steps to protect its financial interests, including immediately selling the securities without notice to the customer.
- You are not entitled to choose which securities or other assets in your account(s) are liquidated or sold to meet a margin call. Because the securities are collateral for the margin loan, the firm has the right to decide which security to sell in order to protect its interests.
- The firm can increase its "house" maintenance margin requirements at any time and is not required to provide you advance written notice. These changes in firm policy often take effect immediately and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause the member to liquidate or sell securities in your account(s).
- You are not entitled to an extension of time on a margin call. While an extension of time to meet margin requirements may be available to customers under certain conditions, a customer does not have a right to the extension.