Regulation Best Interest
& Form CRS

Regulation Best Interest Disclosure

April 3, 2024

ClearList Securities LLC

Reg BI

This guide summarizes important information concerning the scope and terms of the brokerage services we offer and details the material conflicts of interest that arise through our delivery of brokerage services to you. We encourage you to review this information carefully, along with any applicable account agreement(s) and disclosure documentation you may receive from us.

As you review this information, we would like to remind you that ClearList Securities LLC (“ClearList Securities”) is registered with the U.S. Securities and Exchange Commission (“SEC”) as a broker-dealer and is also a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”).

In addition, our Form CRS contains important information about the types of services we offer, along with general information related to compensation, conflicts of interest, disciplinary action, and other reportable legal information. Form CRS information is available via Investor.gov/CRS.

Brokerage services

ClearList Securities offers limited investment products and services. We offer privately placed securities in the form of interests in unregistered private funds and private companies to financially sophisticated investors including: (i) “accredited investors,” as defined in Regulation D of the Securities Act of 1933 (the “Securities Act”), or (ii) “qualified purchasers,” as defined in Section 2(a)(51)(A) of the Investment Company Act of 1940, as amended, or (iii) “institutional accounts,” as defined in Rule 4512(c) of the Financial Industry Regulatory Authority, Inc. (“FINRA”) rules. A privately placed security is a non-public offering of securities exempt from SEC security registration requirements. Such securities are speculative, illiquid and do not constitute a complete investment program. In addition, there is generally no secondary market for such securities and you may be required to hold them indefinitely. Most private placements have a minimum investment amount which can vary by issuer and placement. Investment minimums may be waived and will be listed in the Private Placement Memorandum (“PPM”) or similar offering documents.

When a private placement is offered by ClearList Securities, we do so on a best-efforts basis, meaning we do not commit to raise any money requested by the issuer of the securities. Once you make the investment decision to subscribe for a private placement, we will not monitor your investment on a regular basis. Moreover, we do not agree to enter into a fiduciary relationship with you. It is important for you to understand that when our Registered Representatives make products and services available to you, we are obligated to ensure that they are in your best interest, considering reasonably available alternatives, and based on your stated investment objective, risk tolerance, liquidity needs, time horizon, financial needs, tax status, and other financial information you provide us. You may accept or reject any product or service. It is also your responsibility to monitor your investments, and we encourage you to do so regularly. We do not commit to provide on-going monitoring of any investment. If you prefer on-going monitoring of your investments, you should speak with a financial professional about whether an advisory services relationship is more appropriate for you. From time to time we may (though we are under no obligation to do so) provide you with additional information and resources to assist you with managing your investment. This may include but is not limited to educational resources, financial reports, summaries and/or updates about the issuer. When we offer this information, we do so as a courtesy to you. These activities are not designed to monitor specific investment holdings; they do not contain specific investment recommendations about investment holdings, and you should not consider them a recommendation to trade or hold any particular security. Upon your request, we will review such information and reports with you and may provide you with investment recommendations, but we are not under any specific obligation to do so.

ClearList Securities acts as a placement agent for ClearList Capital LLC (“ClearList Capital”) – an Exempt Reporting Advisor owned and operated by an entity affiliated with ClearList Securities via common ownership and control. ClearList Capital performs the role of Manager and Investment Advisor for private pooled investment vehicles. ClearList Securities assists ClearList Capital, from time to time, to find investors and investment opportunities for ClearList Capital’s pooled investment vehicles.

ClearList Securities also offers access to secondary securities via online and electronic trading means, including via the ClearList LLC SEC-registered alternative trading system (“ATS”) – an ATS owned and operated by an entity affiliated with ClearList Securities via common ownership and control.

We do not offer all types of securities, but limit investment recommendations to private placements and certain other securities. Other security products or brokerage services may be more suitable for you

Investment Risks

It is important for you to understand that all investment recommendations and activities involve risk, including the risk that you may lose your entire principal. Higher-risk investments, including private placements, may have the potential for higher returns but also for greater losses. The higher your “risk tolerance,” meaning the amount of risk or loss you are willing and able to accept in order to achieve your investment goals, the more you may decide to invest in higher-risk investments offering the potential for greater returns. We encourage you to carefully consider your investment objective and risk tolerance before investing. 

Private Placements are extremely speculative, illiquid, and includes unique risks. Private placements involve risk, and you may lose money. There is no guarantee that any private placement will meet the stated investment goals, or that an investment strategy will perform as anticipated. Please consult any available PPM or other offering documents for any security we recommend for a discussion of risks associated with the product.

The PPM contains important information about a particular investment’s business, operations, financial condition, and risks. The risks below include a summary of risk factors and is not meant to be all inclusive. These include the following: 

  • Investments are Generally Risky and Offer No Guarantee of Success. All investments generally bear the risk of partial or complete loss of capital. There is no guarantee that an investment will be profitable. Past performance is not indicative of future results.
  • Illiquidity. Private placements have limited to no transferability and investors will likely not be able to liquidate their interest in an issuer. Because of a variety of restrictions upon the transferability of the issuance, including restrictions imposed by federal securities laws, an investor will likely be required to retain their investment indefinitely. As a result of the foregoing factors, prospective investors must understand that there will likely never be a market of any kind for the purchase and sale of the interests.
  • Forward-Looking Statements. Issuer material will likely contain forward-looking statements. When used in the material, including but not limited to words such as “believe,” “anticipate,” “intend,” “plan,” “seek,” “will be,” “expects,” “estimates,” “projects” and similar expressions identify such forward-looking statements. Such statements regarding future events and/or the future financial performance of an issuer are subject to certain risks and uncertainties which could cause actual events or the actual future results of the issuer to differ materially from such forward looking statements. Certain of these risks include changes in the markets in which the issuer operates, technological advances, changes in applicable regulations and new entries into the market. In light of the significant risks and uncertainties inherent in the forward-looking statements included in issuer material such as PPMs and marketing decks, the inclusion of such statements should not be regard as a representation by the issuer or any other person that the objective and plans of the issuer will be achieved.
  • Changes in Capital Markets and the Economy. Each issuer is materially affected by conditions in the global capital markets and the economy generally. Concerns over inflation, energy costs, geopolitical issues, the availability, and cost of credit may contribute to increased volatility and diminished expectations for the economy the markets or this investment going forward. These factors, among others not listed, may contribute to increased likelihood of issuer failure and loss of investment. In addition, small and new businesses may be particularly susceptible to such factors.

Because the risks of each issuer and private placement are unique, it’s important to review the PPM or other offering material, understand the unique risks of the particular investment under consideration, and ask your Registered Representative additional questions about the business practices and risks associated with any private placement.

Brokerage fees and our compensation

It is important to consider that while private placements or other private transactions may provide an effective way to invest in private companies, they are not for everyone given the risks, fees and costs involved. You will pay transaction-based fees when you subscribe to a private placement or purchase or sell private securities in a secondary transaction. These transaction-based fees are generally referred to as a “commission” or a “sales concession”. When subscribing to a private placement there are typically management fees, organizational and operating expense reimbursement, and profit participation/carried interest fees.

For each placement we receive commission based on the amount of money that you invest or a percentage of management fees that you pay. The amount of compensation is generally 2-6% of your initial investment, but the exact amount varies by issuer. A similar amount may be paid on any management fees that you pay. From time to time we also receive compensation in the form of carried interest, generally 2-6% based on realized and unrealized gains on your investment. Again, exact terms of fees and expenses vary between each private placement offering. The specific fees and expenses associated with a private placement are listed in the PPM or similar offering document.

For other private transactions we receive sales compensation based on the total dollar amount bought or sold. The amount of compensation is generally 2-6% of the total dollar amount bought or sold, but the exact amount varies by transaction. Again, exact terms of fees and expenses vary between each private secondary transaction and will be outlined in the applicable documentation between ClearList Securities and you.

We do not offer all types of securities, but limit investment recommendations to private placements and certain other securities. Other security products or brokerage services may be more suitable for you.

Conflicts of interest

Conflicts of interest exist when we provide investment services to you. Regulation BI defines a conflict of interest associated with a recommendation as ‘an interest that might incline a broker, dealer, or a natural person who is an associated person of a broker or dealer – consciously or unconsciously – to make a recommendation that is not disinterested.’ The mere presence of a conflict of interest does not imply that harm to your interests will occur, but it is important that we acknowledge the presence of such conflicts. Moreover, our regulatory obligations require that we establish, maintain, and enforce written policies and procedures reasonably designed to address conflicts of interest associated with our recommendations to you.

Our conflicts of interest are typically the result of compensation structures and other financial arrangements between us, our Registered Representatives, our customers, and third parties. Securities rules allow for us, our Registered Representatives, and our affiliates to earn compensation when we provide brokerage services to you. However, the compensation that we and our Registered Representatives receive from you varies based upon the product or service you purchase, which creates a financial incentive to offer certain investment products and services. Some of our Registered Representatives are Associated Persons of both ClearList Securities and ClearList Capital. All recommendations regarding your brokerage investments will be made in a broker-dealer capacity, and all recommendations regarding your advisory account will be in an advisory capacity.

We are committed to taking appropriate steps to identify, mitigate and avoid conflicts of interest to ensure we act in your best interest when providing brokerage services to you. The primary procedure utilized by ClearList Securities to mitigate conflicts of interest arising as a result of our compensation arrangements is to only introduce or recommend a private placement of securities to an investor if such private placement meets our suitability standards at the time of such recommendation or introduction; ClearList Securities prohibits consideration of the compensation that may be received by us or our affiliates from factoring into such suitability analysis. Below you will find additional information related to potential conflicts of interest. This information is not intended to be an all-inclusive list of potential conflicts, but generally describes those conflicts that are material to your brokerage relationship. In addition to this disclosure, conflicts of interest are disclosed to you in various agreement(s) and disclosure documents and other information we make available to you.

Compensation We Receive from Clients

Transaction-based conflicts

You will pay certain fees (e.g., commissions and sales concession) in connection with investing in a private placement or other private transaction. Where these fees apply, the more transactions you enter into, the more compensation that we and your financial professional receive. This compensation creates an incentive for us to encourage you to invest in private placements or other private transactions.

Registered Representatives are compensated based on the percentage of revenue generated from sales of products and services to customers. This compensation may vary depending on the product or service associated with a brokerage service. Private transactions typically carry higher fees than other types of securities. Therefore, Registered Representatives may be incentivized to recommend these products over other brokerage products.

We have entered into placement agent and other such agreements with certain sponsors of private placement offerings and other private transactions. By introducing a private placement sponsor to a client, who ends up investing in the offering, we will receive fees or other compensation. ClearList Securities has entered into a placement agent agreement with its affiliate, ClearList Capital and our Registered Representatives are compensated based on money invested. We maintain policies and procedures designed to ensure that we act in your best interest.

Compensation Received by Registered Representatives

Personal Trading Activities

Registered Representatives may invest in the same private placements or other private transactions offered to clients. This may create a conflict of interest in that they may invest without paying a commission. Sometimes, additional fees are earned based on the total amount raised, or a minimum amount raised. Our Written Supervisory Procedures are designed to assure that the personal securities transactions, activities, and interests of the Registered Representatives of ClearList Securities will not interfere with making decisions in the best interests of our customers or implementing such decisions while, at the same time, allowing our Registered Representatives to invest for their own accounts. The Firm has procedures to monitor the personal trading activities and securities holdings of each of the Firm’s Registered Representatives and includes procedures for limitations on personal securities transactions of Associated Persons. These policies are designed to discourage and prohibit personal trading that would disadvantage customers.

Additional Resources

You can visit Investor.gov/CRS for a free and simple search tool to research us and our financial professionals. You can also email compliance@zauxui.com to request up-to-date disclosure information or to ask any questions you have about this brochure or services offered by ClearList Securities.

Customer Relationship Summary

April 3, 2024

ClearList Securities LLC

Form CRS

ClearList Securities LLC (“ClearList Securities”) is registered with the U.S. Securities and Exchange Commission (“SEC”) as a broker-dealer and is also a member of Financial Industry Regulatory Authority, Inc. (“FINRA”) and Securities Investor Protection Corporation (“SIPC”). Brokerage and investment advisory services and fees differ, and it is important for you to understand these differences. Free and simple tools are available to research firms and financial
professionals at Investor.gov/CRS, which also provides educational materials about broker-dealers, investment advisers, and investing.

What investment services and advice can you provide me?

ClearList Securities offers limited investment products and services. We offer privately placed securities in the form of interests in unregistered private funds and private companies as well as access to secondary securities via online and electronic trading means, including via the ClearList LLC SEC-registered alternative trading system (“ATS”) – an ATS owned and operated by an entity affiliated with us via common ownership and control. As part of our private placement services, ClearList Securities acts as a placement agent for ClearList Capital LLC (“ClearList Capital”) – an Exempt Reporting Advisor owned and\ operated by an entity affiliated with ClearList Securities via common ownership and control.

We do not offer all types of securities, but limit investments to private placements and certain other securities. Private placements are highly speculative investments and involve significant risks including total loss of principal. They are illiquid investments which you should plan to hold indefinitely. Privately offered securities are not registered and do not trade on a securities exchange and there is very little verifiable information available which will hinder your and our due diligence efforts. In many instances, we and you may only be able to rely on information supplied by others, and therefore, the possibility of fraud or misleading statements being relied upon is great. You should only invest if you are a sophisticated investor capable of evaluating the risks associated with such investments, and in fact have done so, and you are willing and able to bear the risk of total loss and/or not being
able to liquidate or sell the investments at a time of your choosing. Other security products or brokerage services may be more suitable for you. Most private placements have a minimum investment amount which can vary by issuer and placement. Investment minimums may be waived and will be listed in the Private Placement Memorandum (“PPM”) or similar offering documents. When we make products and services available, you need to make the ultimate decision regarding the purchase or sale of investments. You may accept or reject any product or service that we make available. It is your responsibility to monitor your investments, and we encourage you to do so regularly. We do not commit to provide on-going monitoring of your investments. Additional information about our products and services is available through our Best Interest Disclosure Documents.

When considering our services, ask your financial professional:

  • Given my financial situation, should I choose a brokerage service? Why or why not?
  • How will you choose investments to recommend to me?
  • What is your relevant experience, including your licenses, education and other qualifications? What do these qualifications mean?

What fees will I pay?

You will pay certain fees (commissions and sales concessions) in connection with investing in a private placement or other brokerage services. The applicable fees will vary from offering to offering and product to product. That said, there are typically management fees, organizational and operating expense reimbursement, and profit participation/carried interest fees. In offerings related to real estate, there can be acquisition fees, development fees, asset management fees, financing fees, and property management fees. In venture capital and private equity offerings, there can be stock acquisition costs. Where these fees apply, the more transactions you enter into, the more compensation that we (including our affiliates) and your financial professional may receive. This compensation creates an incentive for us to encourage you to invest in private placements or other private transactions. Commissions and other sales concessions will be charged when a transaction occurs. You will be charged more the more transactions you do with ClearList Securities, and we, therefore, may have an incentive to encourage you to invest in private placements or other private transactions.

Transaction-based fees are based on a host of factors, including, but not limited to: issuer and the type of offering participated in, size of your transaction and/or overall value of your investment, frequency of your private placement investments, and available discounts and/or fee waivers, and commissions if you choose to access liquidity for certain private company securities. You will pay fees and costs whether you make or lose money on your investments. Fees and costs will reduce any amount of money you make on your investments over time. Please make sure you review and understand what fees you are paying.

When considering our services, ask your financial professional:

  • Help me understand how these fees and costs might affect my investments. For example, if I were to give you $10,000 to invest, how much will go to fees and costs, and how much will be invested?

Additional information about our fees is available on our Best Interest Disclosure Document and in the PPM or similar offering document.

We are committed to taking the appropriate steps to either eliminate or at a minimum mitigate conflicts of interest as well as disclose to you the conflicts of interest to ensure we act in your best interest when providing brokerage recommendations to you.

What are your legal obligations to me when providing recommendations as my broker-dealer? How else does the firm make money and what conflicts of interest do you have?

When we provide you with products or services, we must act in your best interest and not put our interest ahead of yours. At the same time, the way we make money will create some potential conflicts with your interests. You should understand and ask us about these conflicts because they can affect the products or services that we provide you.

ClearList Securities will have a potential conflict of interest through financial arrangements between us, our  Registered Representatives, our clients and third parties. For example, we have entered into placement agent and other such agreements with certain sponsors of private placement offerings, including our affiliate ClearList Capital. By introducing a private placement sponsor to a client, who ends up investing in the offering, we will receive fees or other compensation. Some of our Registered Representatives are Associated Persons of both ClearList Securities and ClearList Capital. All recommendations regarding your brokerage investments will be made in a broker-dealer capacity, and all recommendations regarding your advisory account will be in an advisory capacity.

When considering our services, ask your financial professional:

  • How might your conflicts of interest affect me, and how will you address them?

Additional information about potential conflicts of interest is available on our Best Interest Disclosure Document and your Customer Agreement. 

How do your financial professionals make money?

Registered Representatives will earn a portion of the commissions and other transaction fees you pay. As commissions are based on a number of factors, so is the compensation that will be paid to our Registered Representatives. For example, certain products pay higher commission rates than others. Employee bonuses will most likely be paid based on the overall profitability of ClearList Securities.

Do you or your financial professionals have legal or disciplinary history?

No, visit Investor.gov/CRS for a free and simple search tool to research us and our financial professionals.

When considering our services, ask your financial professional:

  • As a financial professional, do you have any disciplinary history? For what type of conduct.

Additional Information

Additional information, including our most recent Customer Relationship Summary, is available by sending an email to compliance@zauxui.com to request up-to-date information and a copy of the Customer Relationship Summary. 

When considering our services, ask your financial professional:

  • Who is my primary contact person? 
  • Is she or he a representative of an investment adviser or a broker dealer? 
  • Who can I talk to if I have concerns about how this person is treating me? 

All securities and securities transactions offered by and through our SEC Registered Broker-Dealers: ClearList Securities LLC, Member FINRA & SIPC and ClearList LLC, Member FINRA & SIPC.

The ClearList group of integrated companies includes: ClearList Holdings LLC, ClearList LLC (the “ClearList ATS”), Member: FINRA & SIPC, and ClearList Securities LLC, Member: FINRA & SIPC.

Check the background of the ClearList Broker-Dealers on FINRA’s BrokerCheck.
www.finra.org

© 2024 ClearList | All Rights Reserved

Contact Us

By selecting submit you agree to the Privacy Policy and Terms of Use

Demo Our Platform

By selecting submit you agree to the Privacy Policy and Terms of Use.