Page 65 - P&P11-05-2020-with-FAQ-JR

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IARs Selling Away and Limits on Their Activities

Policy
CIS, does not allow its IAR reps to sell away. As IAR’s of CIS, they are only allowed to offer money management
(fee-based) services, and are not allowed to offer commission based services.
Background
It is Cornerstone’s responsibility to supervise its IARs activities and products they sell. If they are selling products
and services that Cornerstone cannot supervise, then the action is prohibited.

Responsibility
John Riley has the responsibility for supervising the activities of the IARs. IARs are only permitted to open IA
accounts, unless permission from John Riley is obtained. Even in such rare cases, John Riley will have input and
supervise the activities in that client’s account, to the point where he may be the only rep allowed to place trades
in the account.

Procedure
• CIS does not allow selling away and places limits on the types of accounts the IARs can open. In this way,
Cornerstone can control the activities of the IARs and supervise them better.
• Cornerstone also does not allow IARs to trade in an IA account without special permission from John Riley.
• John Riley does all of the trading in IA accounts, unless permission is given to an IAR. This limits the
number of people making trades and executing the Cornerstone strategy.
• Cornerstone forbids selling any private placements or illiquid investments such as limited partnerships.
• By focusing on mainly IA accounts, the IARs are limited to specializing on IA accounts and are not exposed
to many of the other investment products that can distract a rep and require increased supervision.
• Annual Compliance Reviews verify that the reps are not selling away.