Annual Disclosure Statement 2018

Westport Capital Markets LLC is a FINRA registered broker dealer and an SEC Registered Investment advisor.We are also a member of SIPC and are registered with MSRB.

There are many important disclosures that you should review on an annual basis. 


For Westport Capital Markets, LLC SEC Required Report on Routing of Customer Orders, please refer to the page at the following link: SEC Rule 606 Reports. For information concerning our privacy policy, please refer to the following link: Privacy Policy For information concerning our business continuity plan, please refer to the page at the following link: Business Continuity Plan

The information on this website does not constitute an offer to sell or a solicitation to buy any type of security and is for informational purposes only.

Member SIPC

Westport Capital Markets, LLC is a member of the Securities Investor Protection Corporation ("SIPC"), which protects the customer assets of its members up to $500,000 (including a maximum of $250,000 for claims for cash). An explanatory brochure is available upon request or by visiting http://www.sipc.org. This protection does not safeguard against a decline or loss in market value of the securities in your account.

Money Market Disclosure

Money Market Fund Investments -An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other U.S. government agency. Although a money market fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in a money market fund.  You may view current money market fund rates by visiting www.fidelity.com/funddocuments or by calling 1-800-FIDELITY.    Please note that we may not offer all of the money market funds listed on the Fidelity website.

Exchange Traded Funds Risk Disclosure

Investors should consider an Exchange Traded Fund’s (ETF’s) investment objective, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other important information, should be read carefully before investing. ETFs may trade for less than their net asset value. ETFs may have underlying investment strategy risks similar to investing in commodities, bonds, real estate, international markets or currencies, emerging growth companies, or specific sectors.

Non-traditional ETFs (leveraged, inverse, or leveraged-inverse) employ sophisticated financial strategies and instruments, such as leverage, futures, and derivatives, in pursuit of their investment objectives. Leveraged and inverse ETFs are considered risky. The use of leverage and inverse strategies by a fund increases the risk to the fund and magnifies gains or losses on the investment. You could incur significant losses even if the long-term performance of the underlying index shows a gain. 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.

SIPC Disclosure Notification

As a member of the Securities Investor Protection Corporation (SIPC) funds are available to meet customer claims up to a maximum of $500,000 in cash and securities with a $250,000 cash maximum. Note SIPC provides coverage against loss of securities and cash, not against market depreciation, fluctuation in market value of your securities or a trading loss. Information regarding SIPC, including a SIPC brochure, may be obtained by contacting SIPC via its web site at www.sipc.org or by telephone at (202) 371-8300.

FINRA BrokerCheck

FINRA BrokerCheck, allows investors to learn about the professional background, business practices, and conduct of FINRA member firms or their brokers. The telephone number of the BrokerCheck is 800-289-9999, the website address is http://www.brokercheck.finra.org. An investor brochure is also available upon request.

Order Routing Disclosure Statement

Westport Capital Markets routes all of its directed and non-directed orders to National Financial Services. For Westport Capital Markets, LLC SEC Required Report on Routing of Customer Orders, please refer to the page at the following link:  SEC Rule 606 Reports.

Payment for Order Flow

The SEC’s payment for order flow rules require disclosure of payment for order flow practices on confirmations, upon the opening of new accounts, and annually thereafter. The firm does not receive any payment for order flow.

Cyber Security

Cyber Security is the process of applying security measures to ensure confidentiality, integrity, and availability of data and prevent identity theft as well. Westport Capital Markets takes cyber security & identity theft to be serious matters and has implemented policies and procedures to control the dissemination of any personally identifiable information.

Municipal Bond Disclosure

Westport Capital Markets LLC is registered with the SEC and with MSRB.  Information regarding municipal bonds can be found on the MSRB website: http://www.msrb.org/. That there is a brochure available on the MSRB website that describes the protections available under MSRB rules and how to file a complaint with an appropriate regulatory authority.

FINRA Rule 2261The Statement of Financial Condition

This is available to the firm’s customers. If you would like to request a copy please do so in writing and contact: Westport Capital Markets, Attention: Compliance, 257 Riverside Ave., Westport, CT 06880, and a copy will be provided to you. The telephone number is 203-222-8933.

Questions and Complaints

Any questions or complaints on your account should be directed to Westport Capital Markets, Attention: Compliance, 257 Riverside Ave., Westport, CT 06880. The telephone number is 203-222-8933.

Day Trading Risk Disclosure

You should consider the following points before engaging in a day-trading strategy. For purpose of this notice, a “day trading strategy” means an overall trading strategy characterized by the regular transmission by a customer of intra-day orders to effect both purchase and sale transactions in the same security or securities.

Day trading can be extremely risky. Day trading, generally, is not appropriate for someone of limited resources and limited investment or trading experience and low risk tolerance. You should be prepared to lose all of the funds that you use for day trading. In particular, you should not fund day-trading activities with retirement savings, student loans, second mortgages, emergency funds, funds set aside for purposes such as education or home ownership or funds required to meet your living expenses. Further, certain evidence indicates that an investment of less than $50,000 will significantly impair the ability of a day trader to make a profit. Of course, an investment of $50,000 or more in no way guarantees success.

Be cautious of claims of large profits from day trading. You should be wary of advertisements or other statements that emphasize the potential for large profits as a result of day trading. Day trading can lead to large and immediate financial losses.

Day trading requires knowledge of securities markets. Day trading requires in-depth knowledge of the securities markets and trading techniques and strategies. In attempting to profit through day trading, you must compete with professional, licensed traders employed by securities firms. You should have appropriate experience before engaging in day trading. Day trading requires knowledge of a firm’s operations. You should be familiar with a securities firm’s business practices, including the operation of the firm’s order execution systems and procedures. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price.

This can occur, for example, when the market for a stock suddenly drops, or if trading is halted due to recent news events or unusual trading activity. The more volatile a stock is, the greater the likelihood that problems may be encountered in executing a transaction. In addition to normal market risks, you may experience losses due to system failures.

Day trading will generate substantial commissions, even if the per trade cost is low. Day trading involves aggressive trading, and generally you  will pay commissions on each trade. The total daily commissions that you pay on your trades will add to your losses or significantly reduce your earnings.

Day trading on margin or short selling may result in losses beyond your initial investment. When you day trade with funds borrowed from a firm or someone else, you can lose more than the funds you originally placed at risk. A decline in the value of the securities that are purchased may require you to provide additional funds to the firm to avoid the forced sale of those securities or other securities in your account. Short selling as part of your day trading strategy also may lead to extraordinary losses, because you may have to purchase a stock at a very high price in order to cover a short position.

Potential Registration Requirements. Persons providing investment advice for others or managing securities accounts for others may need to register as either an “Investment Advisor” under the Investment Advisors Act of 1940 or as a “Broker” or “Dealer” under the Securities Exchange Act of 1934. Such activities may also trigger state registration requirements.

Penny Stock Disclosure

This statement is required by the U.S. Securities and Exchange Commission (SEC) and contains important information on penny stocks. You are urged to read it before making a purchase or sale.

Penny stocks can be very risky.
Penny stocks are low-priced shares of small companies not traded on an exchange or quoted on NASDAQ. Prices often are not available. Investors in penny stocks often are unable to sell stock back to the dealer that sold them the stock. Thus, you may lose your investment. Be cautious of newly issued penny stock.
Your salesperson is not an impartial advisor but is paid to sell you the stock. Do not rely only on the salesperson but seek outside advice before you buy any stock. If you have problems with a salesperson, contact the firm’s compliance officer or the regulators listed below.
Information you should get.

Before you buy penny stock, federal law requires your salesperson to tell you the “offer” and the “bid” on the stock, and the “compensation” the salesperson and the firm receive for the trade. The firm also must mail a confirmation of these prices to you after the trade.

You will need this price information to determine what profit, if any, you will have when you sell your stock. The offer price is the wholesale price at which the dealer is willing to sell stock to other dealers. The bid price is the wholesale price at which the dealer is willing to buy the stock from other dealers. In its trade with you, the dealer may add a retail charge to these wholesale prices as compensation (called a “markup” or “mark-down”).

The difference between the bid and the offer price is the dealer’s “spread.” A spread that is large compared with the purchase price can make a resale of a stock very costly. To be profitable when you sell, the bid price of your stock must rise above the amount of this spread and the compensation charged by both your selling and purchasing dealers. If the dealer has no bid price, you may not be able to sell the stock after you buy it and may lose your whole investment.

Brokers’ duties and customer’s rights and remedies.

If you are a victim of fraud, you may have rights and remedies under state and federal law. You can get the disciplinary history of a salesperson or firm from the Financial Industry Regulatory Authority (FINRA) at 1-800-289-9999, and additional information from your state securities official, at the North American Securities Administrators Association’s central number: (202) 737-0900. You also may contact the SEC with complaints at (202) 272-7440.

FURTHER INFORMATION

THE SECURITIES BEING SOLD TO YOU HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION. MOREOVER, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT PASSED UPON THE FAIRNESS OR THE MERITS OF THIS TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN ANY PROSPECTUS OR ANY OTHER INFORMATION PROVIDED BY AN ISSUER OR A BROKER OR DEALER.

Extended Trading Hours Trading Risk Disclosure

WCM offers its customers the opportunity to trade securities when the major U.S. securities markets are not open. The hours for trading outside of customary market hours are 7AM-9:28AM and 4PM-8:00PM EST. There are risks to trading securities when the major trading markets are closed. To make sure you are aware of these risks, FINRA has developed the following model disclosure or risks of 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 market 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 market hours. As a result, your order may only be partially executed, or not at all, or you may receive an inferior price in extended hours trading than you would during regular market 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 market hours, or upon the opening the next morning. As a result, you may receive an inferior price in extended hours trading than you would during regular market 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 market hours.  Similarly, important financial information is frequently announced outside of regular market 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.

Special Statement for Uncovered Options Writers

There are special risks associated with uncovered option writing which expose the investor to potentially significant loss. Therefore, this type of strategy may not be suitable for all customers approved for options transactions.

  •  The potential loss of uncovered call writing is unlimited. The writer of an uncovered call is in an extremely risky position and may incur large losses if the value of the underlying instrument increases above the exercise price.
  • As with writing uncovered calls, the risk of writing uncovered put options is substantial. The writer of an uncovered put option bears a risk of loss if the value of the underlying instrument declines below the exercise price. Such loss could be substantial if there is a significant decline in the value of the underlying instrument.
  • Uncovered option writing is thus suitable only for the knowledgeable investor who understands the risks, has the financial capacity and willingness to incur potentially substantial losses, and has sufficient liquid assets to meet applicable margin requirements. In this regard, if the value of the underlying instrument moves against an uncovered writer's options position, the investor's broker may request significant additional margin payments. If an investor does not make such margin payments, the broker may liquidate stock or options positions in the investor's account, with little or no prior notice in accordance with the investor's margin agreement.
  • For combination writing, where the investor writes both a put and a call on the same underlying instrument, the potential for risk is unlimited.
  •  If a secondary market in options were to become unavailable, investors could not engage in closing transactions, and an option writer would remain obligated until expiration or assignment.
  • The writer of an American-style option is subject to being assigned an exercise at any time after he has written the option until the option expires. By contrast, the writer of a European- style option is subject to exercise assignment only during the exercise period. NOTE: It is expected that you will read the booklet entitled Characteristics and Risks of Standardized Options available from your broker. In particular, your attention is directed to the chapter entitled Risks of Buying and Writing Options. This statement is not intended to enumerate all of the risks entailed in writing uncovered options. https://www.theocc.com/about/publications/character-risks.jsp

Margin Disclosure Statement

Your brokerage firm 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.
  • (b) Members shall, with a frequency of not less than once a calendar year, deliver individually, in writing or electronically, the disclosure statement described in paragraph (a) or the following bolded disclosures to all non-institutional customers with margin accounts:
  • Securities purchased on margin 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.
    •    The firm can force the sale of securities or other assets in your account(s).
    •    The firm can sell your securities or other assets without contacting you.
    •    You are not entitled to choose which securities or other assets in your account(s) are liquidated or sold to meet a margin call.
    •    The firm can increase its "house" maintenance margin requirements at any time and is not required to provide you advance written notice.
    •    You are not entitled to an extension of time on a margin call.

The annual disclosure statement required pursuant to this paragraph (b) may be delivered within or as part of other account documentation and is not required to be provided in a separate document.

Mutual Funds

Charges, Breakpoints, Fees and Revenue Sharing Relating to Mutual Funds, Money Funds, FDIC-Insured Bank Products and Annuities.

Before investing in mutual funds, it is important that you understand the sales charges, expenses, and management fees that you will be charged, as well as the breakpoint discounts to which you may be entitled.  Understanding these charges and breakpoint discounts will assist you in identifying the best investment for your particular needs and may help you to reduce the cost of your investment.  Information about charges, discounts, sales charges, expenses, management fees and breakpoint discounts vary from mutual fund to mutual fund.

Therefore, you should discuss these matters with your investment professional and review each mutual fund’s prospectus and statement of additional information to obtain the specific information regarding the charges and breakpoint discounts associated with a mutual fund.

Customer Identification Program

Important Information About Procedures for Opening a New Account: To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We will also ask to see your driver’s license or other identifying documents.

Limit Orders

The firm will handle any customer limit orders, whether received from its own customers, or from another broker-dealer with all due care so as not to “trade ahead” of limit orders. Therefore, the firm will not trade on buy orders at prices equal to or less than that of the limit order, or conversely the firm will not trade on sell orders at prices equal to or greater than that of the customer limit order, without first executing the customer limit order.

Held or Not Held Orders

Absent specific instructions to the contrary, we understand that when you place an order with the firm, you are directing that we handle your order on a “not held” basis, which means you are giving the firm discretion to exercise our brokerage judgment to seek to obtain the best execution of your order. “Held” orders do not permit discretion in handling your order. Depending on whether your order is a market or limit, “held” orders obligate a firm to execute your market order immediately at the then prevailing market price or your limit order at your limit price or better, which may not necessarily be the best price that can ultimately be obtained. Further, under the current limit order rules, “held” limit orders may often require the firm to sell shares at the same price at which we bought them, and therefore may cause us to charge a fee or commission on “held” limit orders. “Not held” orders, on the other hand, give the firm the flexibility and discretion to act in your best interest by working your order to seek to obtain the best execution possible.

We believe that by exercising appropriate judgment and discretion (i.e., on a not held basis) with respect to your order, it can achieve the best execution possible under the surrounding facts and circumstances. Therefore, unless you give specific instructions to treat such an order differently at the time you place the order, we will treat the order as “not held.” We will try to use the term “not held” in taking your orders, but our omission to do so will not alter our understanding as to your order handling instructions. Please be advised that under FINRA Rules, a “not held” order is not a priced order. Consequently, the firm is permitted to trade for its own account at prices equal to, or better than, those of “not held” orders (that is, there are no Manning obligations), and the firm is not required to match incoming market orders with unexecuted better priced limit orders. Nonetheless, any purchases or sales by the firm must be consistent with our efforts to provide best execution of such orders. Should you wish us to treat your orders other than as “not held,” please contact your registered representative.

Market Orders

The firm will make all reasonable efforts to obtain the best possible price available at the time the order is received.  In the event that a customer market order is placed at the same time as a firm order, the customer order will be completed first.

Confirmations

In the case of a transaction in a reported security, or an equity security quoted on NASDAQ or traded on a national exchange and that is subject to last sale reporting, the name of the party from or to whom the securities were purchased or sold to you, the time the transaction took place, the difference between the price to the customer and the dealer's purchase price, and the source and amount of any other remuneration received or to be received by the firm in connection with the transaction will be furnished upon request.
 

Payment for Securities

In the event that you wish to pay for securities purchased through Westport Capital Markets please make checks payable to National Financial Services our clearing firm for securities transactions. Also, please note your account number and Westport Capital Markets in the memo section of the check.
 

VWAP Orders

Before accepting a VWAP order from a customer the firm discloses to its customers in writing that the firm may engage in hedging or other positioning activity that could affect the market for a security that is involved with any VWAP transaction received.  This notice must be sent prior to executing a VWAP transaction and no less than annually to the customer.  Under no circumstances may the firm trade for its proprietary account when in receipt of a customer VWAP order.  All orders for VWAP short orders are to be properly marked and executed in accordance with applicable short sell rules and regulations.  The terms of compensation from the order are provided in writing to the customer.

Anti-Money Laundering Policy

Westport Capital Markets has established and implemented anti-money laundering (“AML”) policies and procedures that are reasonably designed to comply with applicable AML requirements.

Our AML policies, procedures and internal controls are designed to ensure compliance with all applicable BSA regulations and FINRA rules and will be reviewed and updated on a regular basis to ensure appropriate policies, procedures and internal controls are in place to account for both changes in regulations and changes in our business.The AML program includes, among other things, independent testing of the AML program pursuant to Section 352 of the USA PATRIOT Act and related regulations, and the establishment and operation of any customer identification program (“CIP”) required pursuant to Section 326 of the USA PATRIOT Act and related regulations.Westport Capital Markets has established and implemented policies and procedures reasonably designed to comply with sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“U.S. Sanctions”).  Westport Capital Markets will comply with all trade and economic sanctions imposed by the U.S. Office of Foreign Assets Control against targeted foreign countries and shall cooperate fully with government agencies, self-regulatory organizations and law enforcement officials.  As provided by the Act, Westport Capital Markets may supply information about former, current or prospective customers to such bodies.  Westport Capital Markets may refuse to open accounts for clients whose identity cannot be verified or who appear on the sanctions list.

 


 

Questions and Contact

If you have any questions please contact us at:

Westport Capital Markets, LLC
257 Riverside Avenue
Westport, CT   06880
203-222-8933
marisa@westportcapitalmarkets.com

If you have any complaints, please contact us at the above address or email: chris@westportcapitalmarkets.com.