Written Supervisory Procedures

1 Written Supervisory Procedures Issue Date: 12/19/2016 ii Introduction Feltl and Company, ( F&C ) is subject to the rules and guidelines issued by FINRA, due to the membership maintained in order to service customers in the Securities industry. Each member shall establish and maintain a system to supervise the activities of each registered representative, employee, and 5%+ Member/Owner ( associated person ) of F&C that is reasonably designed to achieve compliance with applicable securities laws and regulations, and with the rules of FINRA. Final responsibility for proper supervision shall rest with the member. FINRA Rule 3110 requires members to establish, maintain and enforce Written Procedures that will enable it to supervise its associated persons. In general, there should be sufficient detail to enable those with Supervisory responsibilities to understand their obligations. The Procedures should describe the Supervisory system and not just be a compliance checklist for associated persons.

2 They must contain the titles, registration status and locations of the individuals responsible for specific types of business engaged in by F&C. Firms are required to maintain on an internal record the names of all persons designated as Supervisory personnel and the dates for which such designation was effective. To protect against insider trading abuse, every registered broker-dealer (and investment advisor) is required to establish and enforce Written Supervisory Procedures covering this topic pursuant to Section 15(f) of the 1934 Securities Act. The member is required to amend its Written Supervisory Procedures within a reasonable time after changes occur in applicable securities rules and regulations and changes in its Supervisory system. A copy of a member's Written Supervisory Procedures , or the relevant portions thereof, is required to be maintained, electronic or hard copy, in each OSJ and at each location where Supervisory activities are conducted.

3 Although FINRA is F&C s primary regulator, the SEC also carries out oversight responsibilities. With respect to supervision pursuant to the Securities Exchange Act of 1934, the SEC has held that a violation of the Federal Securities Laws committed by officers or employees, is a violation by F&C itself, and that the degree of fault of F&C is a factor to be considered in determining the sanction to be imposed. The SEC is also authorized to proceed separately against the broker-dealer, its officers F&C AND COMPANY Written Supervisory Procedures iii iii and Supervisory employees, for failure to supervise adequately the actual wrongdoers. iv In this connection "no person shall be deemed to have failed reasonably to supervise any person, if - (i) there have been established Procedures , and a system for applying such Procedures , which would reasonably be expected to prevent and detect, in-so-far as practicable, any such violation by such other persons, and (ii) such persons reasonably discharged the duties and obligations incumbent upon him by reason of such Procedures and systems without reasonable cause to believe that such Procedures and systems were not being complied with.

4 " Thus, a broker-dealer, its officers and Supervisory employees must maintain reasonable supervision over F&C, with a view to preventing any violation of Federal Securities Laws. F&C will conduct its business consistent with high standards of commercial honor and just and equitable principles of trade. F&C recognizes that F&C s success will be predicated upon maintaining trust and confidence with both its client companies and investors in F&C s client transactions and upholding F&C s reputation in the marketplace. Effective supervision is an integral part of achieving F&C s goals and servicing F&C s client companies and investors in F&C client transactions. Compliance is not a static event; it is a process that evolves in tandem with regulations that govern F&C s industry and the circumstances of each particular interaction. This manual includes the Supervisory policies and Procedures that designated supervisors will use as guidance in their oversight of F&C s business.

5 It is a working document and will be amended from time to time to reflect changes in industry s regulations, updates to supervisors or principals, and any other revisions the principals of F&C deem necessary. Supervision may be delegated to others, where appropriate; however, the designated supervisors are responsible for ultimate supervision of assigned areas. The term employee as used in this manual includes associated persons (and others as identified by F&C) who may be employees or independent contractors for tax and compensation purposes. This manual is divided into two parts Operations & Supervision and Products & Sales which allows the appropriate portion from time to time to be updated and directed to the intended audience, , back office operations and compliance staff or sales and marketing staff. Although this manual is very thorough, it does not and cannot cover every conceivable issue that might arise in the course of one s career.

6 When questions come up that are not directly covered in this manual, an employee is expected to exercise common sense, good judgment, and a high sense of moral integrity. If an employee is ever unsure of how to respond appropriately to a particular situation, the employee should contact his or her department supervisor or branch manager, or F&C s legal or compliance departments. v Many of the policies and Procedures contained in this manual are based directly on state and federal securities laws, FINRA rules and regulations, and reported court decisions. Those rules spell out the standards to which F&C must adhere. However, because of the significant litigation risks that brokerage firms face in today s society, many of the policies and Procedures that F&C has adopted in this manual go beyond the literal legal requirements. In those cases, the policies and Procedures are designed to protect F&C and its employees from the very real risk of customer lawsuits and arbitrations.

7 Such policies and Procedures do not and should not impose upon F&C duties to customers that are higher than the duties generally required in the securities industry. The policies and Procedures described in this manual apply only to activities and events occurring after the dissemination of this manual. Activities and events occurring before dissemination of this manual are governed by F&C s prior compliance manual. This manual may be modified at any time. All employees will receive Written notice of any modifications, and are expected to keep current with such changes. This manual is F&C s property and may not be provided to anyone outside F&C without the express permission of F&C s legal or compliance departments. All employees should read this manual thoroughly and make sure they understand it. If any employee has questions about this manual, he or she should discuss such questions with the appropriate department supervisor or branch manager, or with F&C s legal or compliance departments.

8 NOTICE OF CONFIDENTIALITY Some of the information contained herein may have been extracted or excerpted from federal and/or state securities rules and regulations. All other information provided herein including format and design is confidential, proprietary information, is the property of Compliance Advisers, Inc., and has been intended for use solely by F&C. F&C individually and together with its officers, directors, employees, agents, contractors, consultants, affiliates, heirs and assigns, is prohibited from copying, reprinting, or otherwise distributing or providing all or any part of this information to any other party without the express Written consent of Compliance Advisers, Inc., except as required by law. 1 Table of Contents Table of Contents .. 1 General .. 7 Office of Supervisory Jurisdiction .. 8 Branch Office .. 8 Basic Supervisory Procedures .. 9 Assignment of Associated persons .. 9 Determining Qualifications of Supervisory Personnel .. 10 Reviewing and Monitoring of Business.

9 10 Annual Compliance Meeting or Interview .. 11 Rule 3120 Supervisory Control System .. 11 Internal Controls Procedures .. 12 Supervision of Supervisory Personnel .. 13 Office Inspections .. 13 Supervision of Producing Managers .. 14 CEO s Annual Certification .. 15 Supervisory Personnel .. 16 Outsourced Business Functions .. 17 Distribution of Procedures and Amendments .. 18 Written Approval .. 18 Submission of Membership Agreement .. 20 Form BD, BR, and Contact System/ Designation of Executive Representative .. 21 2. FINANCIAL AND OPERATIONAL ACTIVITIES .. 23 Supervisory Responsibility .. 23 Books and Records .. 24 Net Capital Rule .. 24 Customer Protection Rule .. 28 Safekeeping and Segregation of Securities .. 30 Reconciliation of Books and Records .. 30 Extension of Credit to Customers .. 30 Margin Accounts and Short Accounts .. 31 Fees Charged to Customers .. 33 Financial Reporting .. 34 Annual Audit .. 35 Rule 17a-5(f)(4) Replacement of 36 Fully-Disclosed Arrangements.

10 37 3. ANTI-MONEY LAUNDERING .. 39 AML Compliance Officer Designation and Duties .. 40 Giving AML Information to Federal Law Enforcement Agencies and Other Financial Institutions .. 41 Checking the Office of Foreign Assets Control ( OFAC ) List .. 45 Customer Identification and Verification .. 46 2 General Customer Due Diligence .. 54 Correspondent Accounts for Foreign Shell Banks .. 55 Due Diligence and Enhanced Due Diligence Requirements for Correspondent Accounts of Foreign Financial Institutions .. 58 Due Diligence and Enhanced Due Diligence Requirements for Private Banking Accounts/Senior Foreign Political Figures .. 62 Compliance with FinCEN s Issuance of Special Measures Against Foreign Jurisdictions, Financial Institutions or International Transactions of Primary Money Laundering Concern .. 64 Monitoring Accounts for Suspicious Activity .. 66 Suspicious Transactions and BSA Reporting .. 70 AML Record Keeping .. 77 Clearing/Introducing Firm Relationships.