Regulation Best Interest Disclosure

REGULATION BEST INTEREST DISCLOSURE

 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 Modern Private Equity Partners 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. All recommendations regarding your brokerage investments will be made in a broker-dealer capacity. 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 is available via website at finra.org.

YOUR BROKERAGE RELATIONSHIP WITH Modern Private Equity Partners.

Modern Private Equity Partners offers limited brokerage services and products to our institutional and retail customers1. In acting as your broker/dealer, Modern Private Equity Partners and its account representatives are acting as your agent. Under applicable laws, rules, and regulations, when making investment recommendations to retail customers, Modern Private Equity Partners has a duty to act in your best interest. Modern Private Equity Partners and its account representatives have conflicts of interest with respect to their investment recommendations and relationship with you and other companies such as investment providers we represent. All recommendations regarding purchases will be made by your Modern Private Equity Partners representative in a broker-dealer agency capacity only.

Modern Private Equity Partners and your representative are paid via sales commissions and payments Modern Private Equity Partners receives from third parties. Based on the nature of your investments, Modern Private Equity Partners receives direct or indirect compensation in connection with the services we provide to you.

1 The term “retail customers” refers to natural persons and the individual legal representatives of such natural persons. This term does not apply to institutional investors (including corporations, partnerships, institutional trust accounts, etc.) and other investors which are not subject to laws, rules, and regulations applicable only to retail customers.  

Please see the materials that follow as well as the additional material referenced in this document for additional information or ask your Modern Private Equity Partners representative to answer any questions you may have concerning our obligation to make investment recommendations in your best interest and/or our conflicts of interest in making such recommendations.

Your brokerage relationship with Modern Private Equity Partners is a transactional relationship and unless all parties expressly agree otherwise in writing:

  1. Modern Private Equity Partners and its Representatives have no discretionary authority to buy, sell, or otherwise transact investments or other assets on your behalf (or otherwise directly with an investment provider; and
  2. After each transaction is made directly with the investment provider or issuer, or by you or any other agent who is authorized to transact business on your behalf, we will not have any continuing or ongoing obligation to review or make recommendations unless agreed upon by you, for the investment of securities.

BROKERAGE RELATIONSHIP

In a brokerage relationship, in addition to acting as your agent to complete securities and other investment transactions at your direction and on your behalf, Modern Private Equity Partners will provide you with the investment recommendations and other services that are tailored to your specific investment goals and circumstances. Moreover, when we act in a brokerage capacity, we do not agree to enter into a fiduciary relationship with you.

It is important for you to understand that when we make a brokerage recommendation to you, we are obligated to ensure the recommendation is 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 recommendation. It is also your responsibility to monitor the investments, and we encourage you to do so regularly. We do not commit to provide on-going monitoring of your investments. We occasionally, and without any formal agreement or obligation, review your investments to determine whether to recommend other investments.

INVESTING IN ALTERNATIVE INVESTMENTS (PRIVATE PLACEMENTS)

Alternative Investments are securities products such as private placements, private equity funds, hedge funds, venture capital, and real estate funds. Alternative Investments are more complex than traditional investment vehicles. They often have higher fees associated with them and are more volatile than traditional investments such as stocks, bonds, and mutual funds. The majority are invested in illiquid investments making them difficult to exit and price on a regular basis. Alternative Investments are a private alternative to issuing, or selling, a publicly offered security as a means of raising capital. In a private placement, both the offering and sale of debt or equity securities are made between a business, or issuer, and a select number of investors. There may be as few as one investor for any issue. The investors are limited in number and must be “accredited” *

Companies, both public and private, issue in the private placement market for a variety of reasons, including a desire to access long-term, fixed-rate capital, diversify financing sources, add additional financing capacity beyond existing investors (banks, private equity, etc.) or, in the case of privately held businesses, to maintain confidentiality. Since private placements are offered only to a limited pool of accredited investors, they are exempt from registering with the Securities and Exchange Commission (SEC). This affords the issuer the opportunity to avoid certain costs associated with a public offering as well as allows for more flexibility regarding structure and terms. Investments in private placements are highly speculative and involve a high degree of risk. Private placement securities should not be purchased by any person who cannot afford the loss of the entire investment.

When a private placement is offered by Modern Private Equity Partners, we do so on a best-efforts basis, meaning we do not agree to raise all the money requested by the issuer. Once you subscribe for a private placement, we will not monitor your investment on a regular basis.

ALTERNATIVE INVESTMENTS FEES & EXPENSES

We perform due diligence for each type of alternative investment in which we and participate. As part of our due diligence, we perform an analysis of each alternative investment to determine if the investment would be suitable for our clients. As each alternative investment is structured differently, the fees and commissions we earn on each sale are disclosed in the offering documents for the specific investment. These fees can range from 0.0% to 7% or more, and are paid by the Sponsor directly to Modern Private Equity Partners. Depending on the product sponsor, sometimes the fee we receive may be deducted from your initial investment. Any ongoing fees or upfront commission paid to us will vary based on the particular interest. You should make sure you talk to your registered representative regarding the fees, expenses and risks prior to investing in an alternative investment.

 

ALTERNATIVE INVESTMENT COMPENSATION, & CONFLICTS OF INTEREST

To the extent alternative investments provide differing levels of compensation to Modern Private Equity Partners this creates a conflict of interest as your representative may be incentivized to favor one alternative investment over another. Modern Private Equity Partners discloses this conflict of interest to you and supervises your representative’s recommendations with respect to alternative investments to ensure one investment is not favored over another unless the favored investment is more suitable based on your investment goals. Additional information is provided in each alternative investment’s prospectus or other offering material regarding the investment’s structure, fees, expenses, and risks. We encourage you to fully read the prospectus or offering material prior to purchasing shares of an alternative investment.

At times, registered persons may buy securities for their own accounts in private placements that Modern Private Equity Partners has also participated in the capital raising activities. This presents a conflict of interest. In any instance where our representatives are purchasing the same securities as we are offering to clients, Modern Private Equity Partners will uphold its fiduciary duty by always transacting on behalf of its clients before transacting for the representative’s own benefit. It is the policy of Modern Private Equity Partners that registered persons must avoid securities transactions and activities for their own accounts that might conflict with or be detrimental to the interest of a client.

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 to achieve your investment goals, the more you may decide to invest in higher-risk investments offering the potential for greater returns. Our recommendations are based in part on your risk tolerance and investment objective. We encourage you to carefully consider your investment objective and risk tolerance before investing.

Private Placements are extremely speculative, illiquid, and includes unique risks. While we will take reasonable care in developing and making recommendations to you, 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 our recommended 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 generally bear the risk of partial or complete loss of capital. There is no guarantee that an investment will be profitable.
  • Private placements have limited transferability and investors may 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 may be required to retain their investment indefinitely. As a result of the foregoing factors, prospective investors must understand that there may never be a market of any kind for the purchase and sale of the interests.

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 recommended private placement.