Broker Check

Disclosure Document For Broker/Dealers

McClurg Capital Corporation is registered as a broker/dealer with the Securities and Exchange Commission as a broker/dealer and is a member of FINRA/SIPC. https://www.sipc.org. Free and simple tools are available to research firms and financial professional at investor.gov/crs, which also provides educational materials about broker/dealers, investment advisers, and investing.  As of broker/dealer, we are subject to Regulation Best Interest, which establishes a standard of conduct for us and our Financial Professionals(“FP”) when we make a recommendation to you of any securities transaction or investment strategy involving securities, including recommendations of types of accounts.

This Disclosure Document provides a summary of important information regarding the scope, terms and fees for the brokerage services we offer, as well as the material conflicts of interest that occur when we provide brokerage services to you.  We encourage you to review this information, along with other disclosure documentation you receive from us, including our Customer Relationship Summary (Form CRS) available at www.mcclurgcapital.com.  Our Form CRS contains important information about the types of services we offer along with general information related to fees, compensation, conflicts of interest, and any disciplinary actions.

Investment advisory and management services are provided through our Registered Investment Advisory division which provides you separately with its Form ADV Part 2A Disclosure Brochure which is available at www.mcclurgcapital.com.

Please carefully review and consider the information in each section below.


Scope and Terms of Your Relationship With Us

When you open a brokerage account through us, you have the ability to buy, sell and hold investments within your account.  For all recommendations we make for your brokerage account, we will  be acting in a broker/dealer capacity and your financial professional (FP) will be acting as an Associated Person of our broker/dealer, unless otherwise explicitly stated at the time of the recommendation.  In a brokerage account we can trade with you from our own account and earn a profit on those trades – these types of transactions are referred to as principal transactions.  We only conduct principal trading in fixed-income securities.  In other transactions, we will act as agent.  The trade capacity in which we act for your brokerage account is disclosed on your trade confirmation, which you will receive after each transaction.


Overview of Brokerage Accounts Offered


Brokerage Account Types

We offer many different brokerage account types for retail clients, including individual and joint tenant accounts, estate and trust accounts, individual retirement accounts and other types of retirement accounts as outlined in our new account agreement.  You should speak to your FP or refer to your new account documentation for a complete list of account types.


Clearing Services

We have entered into a tri-party arrangement with Pershing, LLC (also referred to as our “clearing firm”) and Bernard Herold and Co. to carry your account and provide certain back office functions.  We and the clearing firm share responsibilities with respect to your account as set forth in the new account opening documents provided to you.


Cash Brokerage and Margin Brokerage Accounts

Our brokerage services are provided through a cash brokerage account and/or a margin brokerage account, based on a review of your new account form profile.  In a cash brokerage account, you must pay for your purchases in full at the time of purchase, but no later than settlement date, while in margin brokerage account you can borrow part of the purchase price from our clearing firm, Pershing, LLC.  This is generally referred to as a “margin loan.”  When you borrow to purchase investments, you will pay interest costs as a result of your borrowing.

Before opening a margin account, you must execute a separate margin agreement.  Included with your margin agreement is a copy of the Margin Disclosure Statement and a Truth In Lending Statement.  This Margin Disclosure Statement contains important information you should consider before establishing a margin brokerage relationship with us.  For more information on our margin brokerage services, contact your FP and/or refer to Pershing LLC’s Disclosure Statement provided with your account documentation.


Brokerage Services and Products

We offer brokerage services to retail investors, including buying and selling securities.  This includes soliciting recommendations in certain situations regarding which securities to buy or sell.  This means we provide advice regarding the value and characteristics of securities or advisability of a transaction in securities only in connection with our primary business of buying and selling securities.

You make the ultimate decision regarding the purchase or sale of investments.  We do not monitor your account on a continuous basis or set frequency.  We will, however, review your account for the purpose of making recommendations.  The principal types of investments include equities, ETFs, mutual funds, and bonds, including governments, corporate and municipal bonds.  Additionally, we do offer CDs, options, and unit investment trusts.  As discussed above, we trade securities with clients on a principal basis for fixed income investments.


Understanding Risk

It is important for you to understand that all investment recommendations involve risk, including the risk that you may lose your entire principal.  Further, some investments involve more risk than other investments.  Higher risk investments may have the potential for higher returns, but also for greater losses.  The higher your “risk tolerance,” meaning the amount of risk or loss your 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 align risk tolerances with investment needs to offer you different investment objectives from which to choose.  You should speak with your FP regarding the selection of investment objective and risk tolerances that are best aligned with your brokerage account goals and needs.


Our approach to Making Recommendations

It is important for you to understand that when our FP makes a brokerage recommendation to you, we have to act in your best interest and not put our interest ahead of yours.  When making a recommendation to you, we consider reasonably available product alternatives, and base recommendations upon information captured in your new account profile, including, among other things, your risk tolerance, general investment knowledge, investment time horizon, liquidity needs, financial information, tax status, and the investment goals, which are described below.  We encourage you to carefully consider your information contained in your new account form profile before investing.  We also encourage you to discuss each recommendation with your FP prior to investing.

You may accept or reject any recommendation.  It is also your responsibility to periodically review and monitor the investments in your brokerage account, and we encourage you to do so regularly.  To reiterate, we do not monitor your account on a continuous basis or set frequency.  If you prefer on-going monitoring of your account or investments, you should speak with your FP about whether an advisory services relationship is more appropriate for you.

Investment goals typically have different investment time horizons and different income and growth characteristics.  As discussed in our new account form, we categorize risk tolerance based on a continuum that ranges as follows: “Low”, “Moderate”, Speculation”, and “High Risk”.  We encourage you to discuss your risk tolerance with your FP when you open an account and on an ongoing basis when we make recommendations.

When we make a securities recommendation, investment strategy recommendation, or recommendation to rollover assets from your qualified retirement plan, such as a 401(k) retirement plan, to an Individual Retirement Account (IRA), we will take into account information contained in your new account profile and any other relevant factors, as well as the potential risks, rewards, and costs of the IRA rollover compared to the investor’s existing 401(k) account investments and costs.

Please also consider that from time to time we may provide you with additional information and resources to assist you with managing your brokerage account, such as educational resources or marketing materials.  When we offer these resources and information, we do so as a courtesy to you.  These activities are not designed to monitor specific investment holdings in your brokerage account, they do not contain specific investment recommendations about investment holdings, and you should not consider them a recommendation to trade or hold any particular securities in your brokerage account.  Upon your request, we will review such information with you and may provide you with investment recommendations.

Material Limitations

We do not offer proprietary products, a limited menu of products or types of investments, nor do we require a minimum account size or investment amount to establish a brokerage account.  However, if you fail to fund your account your account will be closed.


Brokerage Fees You Will Pay


Transaction Based Fees

You will pay a commission or sales charge when you buy or sell 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 or your investment over time.  Please make sure you understand what fees and costs you are paying.  You should discuss commission charges with your FP to understand the ranges of fees and costs you will pay.  Commissions are also disclosed in your trade confirmation, which you will receive after each transaction.  For principal trades, we will add a mark-up or mark-down fee on the transaction   We only conduct principal trading in fixed-income securities.  The amount of the mark-up or mark-down will be disclosed on the trade confirmation when they are riskless principal transactions.

We do not maintain a formal fixed retail commission schedule and generally negotiate commission equivalent rates with you.  Please speak to your FP for more information regarding our commissions upon account opening and at the time of a transaction.

Account and Service Fees

You will pay fees for various operational services provided to you through your brokerage account.  These fees are set at least annually and communicated to you through information included in your account statement and other notifications.  These fees do not apply to all account types and may be waived under certain conditions.  To illustrate, you may incur account/service fees and costs related to the investments in your account, such as custodian fees, Reg T extension requests, inactivity and paper statement fees, wire transfer fees, fees related to mutual funds, such as fund management fees, 12b-1 distribution fees, and other product related fees, such as redemption fees.  Please refer to our website, www.mcclurgcapital.comfor more information on ancillary fees.

How We Are Compensated

The sections below describe the compensation that we receive in connection with various investments that may be available to you. In many cases, the descriptions that follow refer to a prospectus, which we encourage you to review prior to investing for information on fees and expenses.

Equity, Options and Fixed Income Securities

When we execute transactions in securities for your account, we are compensated in the form of a commission on equity and options transactions or a markup (or markdown) of up to 3.00% when acting as principal on fixed-income transactions. Generally, we will charge a commission of no greater than 3.00% on the dollar amount of equity transactions with a $49.00 minimum. When acting as principal on a fixed income transaction, we add a markup to any purchase, and subtract a markdown from any sale.    The markup or markdown will be included in the price and yield quoted to you.  Commissions on option transactions are negotiated.

Whether a commission, markup or markdown, or commission equivalent, we are required to charge only fair and reasonable amounts, taking into consideration all relevant circumstances.

You may pay more or less than similar clients for identical transactions depending on your particular circumstances, including the size of your account, the services you have applied for, past changes to our fees, and any separate agreement between us.  We reserve the right not to place any trades or effect any other transactions for your account when such fees are unpaid.

Mutual Funds

We currently offer many mutual funds, varying in share class structure and investment style.  For specifics on particular products, including fees, please refer to the prospectus, which will be delivered to you at or prior to the transaction in accordance with the method of delivery you have selected.

Some mutual funds offer investors different types of shares, known as “classes.”  Each class invests in the same portfolio of securities and has the same investment objectives and policies.  But each class has different shareholder services and/or distribution arrangements with different fees and expenses.  Because of the different fees and expenses, each class will likely have different performance results.  A multi-class structure offers investors the ability to select a fee and expense structure that is most appropriate for their investment goal (including the  time that they expect to remain invested in the fund).

Here are some key characteristics of the most common mutual fund share classed offered to individual investors: Class A shares typically charge a front-end sales load, but they tend to have lower 12b-1 fees and lower annual expenses than other mutual fund share classes.  Some mutual funds reduce the front-end load as the size of the investment increases.  These discounts are called breakpoints.

New Class B share sales are very rare and typically do not have a front-end sales load.  Instead, they may charge a back-end sales load and a 12b-1 fee (along with other annual expenses).  The most common type of back-end sales load is the “contingent deferred sales load,” also referred to as a “CDSC” or “CDSL.”  Typically, the amount of the contingent deferred sales load decreases the longer you hold the shares.  Class B shares also might convert automatically to a class with a lower 12b-1 fee and no contingent deferred sales load if you hold the shares long enough.

Class C shares might have a 12b-1 fee, other annual expenses, and either a front-end or back-end sales load.  But the front-end or back-end load for Class C shares tends to be lower than for Class A or Class B shares, respectively.  Class C shares tend to have higher annual expenses than either Class A or Class B shares unless/until they convert to class A shares.

If a fund offers multiple classes, it may describe them all in a single prospectus, or it may describe them separately in separate prospectuses.  In some cases, you may not be eligible to purchase all classes.

We may receive direct and indirect compensation in connection with such mutual fund investments as described below:

Front-end Sales Charge Fees/Contingent Deferred Sales Charges (CDSC)

Front-end sales charge fees will be paid to us, including to your FP, when you purchase a fund. The front-end sales charge is deducted from the initial investment on certain share classes. This charge can range up to 5.75%. Some purchases may qualify for a reduced front-end sales charge due to breakpoint discounts based on the amount of transaction and rights of accumulation. You should speak with your FP to discuss eligibility for sales charge waivers.

CDSC is a charge you pay upon withdrawal of money from a fund prior to the end of the fund’s CDSC period. CDSC charges range from 0.00% to 5.750%. CDSC time periods can range from zero to seven years. This charge typically exists only on share classes that do not have a front-end sales charge. It is often referred to as the back-end load. CDSCs are not charged at the time you purchase a fund. You can find a description of all fees and expenses charged and paid by the fund in the fund’s prospectus. Fees and expenses disclosed in the fund’s prospectus are charged against the investment values of the fund.

12b-1 Fees

We offer products, including mutual funds, some of which pay to us and our FPs, ongoing distribution fees, also referred to as servicing fees or 12b-1 fees.  These fees differ by share class.  Depending on the share class, the 12b-1 fees can range from 0.00% - 1.00%.  This compensation (commonly known as trails, service fees or Rule 12b-1 fees in the case of mutual funds) is typically paid from the assets of the investment product under a distribution or servicing arrangement and is calculated as an annual percentage of invested assets.  The amount of this compensation varies from product to product.  We have an incentive to recommend that you purchase and hold interests in products that pay us higher trails.

Revenue Sharing

We receive a portion of the revenue that our clearing firm receives from certain product sponsors for investing client assets in their products.

Margin Balances

Interest is charged on margin debit balances in accordance with the margin agreement as provided in your brokerage account documentation.  On your debit balances, our cost of funds will be based on the published broker call rate per our agreement with the clearing firm.  We earn the difference between the interest rate charged to you and our cost of funds.  This creates a conflict of interest in that we receive this revenue in addition to the compensation for other brokerage products and services.  Please refer to the Margin Disclosure Statement provided to you in your brokerage documentation.

Revenue Sharing – Cash Sweep Programs

We share in revenue received relating to client balances swept into money market funds and bank deposits.  These programs may create a financial benefit for us.  Pursuant to the Money Market Funds and FDIC Insured Sweep Deposit Account sweep options and the Broker Distribution assistance provision in our clearing and custody agreement with Pershing, LLC, we will receive fees based upon the assets within each money market fund family and in accordance with the terms of its most recent agreement.  Amount will vary as indicated in the cash sweep program disclosure statement.  This amount may change without notice to you.  As a result of the fees and benefits to us, the cash sweep program may be more profitable to us than other available cash sweep options.  Other cash sweep options may also provide you with a higher rate of return.  Speak to your FP to obtain more information about our Cash Sweep Program, the details of which are provided to you upon account opening in the Pershing Disclosures.


Unit Investments Trusts

We along with your FP,  are compensated in various ways that depend on the type and terms of the UIT portfolio selected, typically a front-end sales charge of no greater than 3%.  The types of fees received by us are disclosed in the prospectus issued by the UIT provider.  Your FP will provide you a copy of the prospectus in connection with the UIT product.  The UIT provider deducts fees as compensation from the proceeds available for investments for marketing and distribution expenses, which will include compensating us as described in each UIT prospectus.  For additional information regarding fees, please refer to the applicable prospectus.

Training and Education

Some mutual fund sponsors provide training and educational meetings as well as promotional items, meals or entertainment, or other forms of non-cash compensation.  McClurg Capital and its FPs do not accept non-cash compensation through entertainment or sales contests.

Trade Errors/Corrections

While we agree to maintain a consistent and accurate level of quality in the processing of your transactions, you have a separate responsibility to ensure that all instructions have been carried out properly. Should you discover an error, omission, exception, or if you fail to receive a confirmation following an anticipated or requested transaction, you must notify us in writing. If an error is immediately reported to us, we will correct the error, but neither we nor your FP can accept responsibility for market fluctuations or other related expenses incurred due to a non-reported error. In rare instances there can be a benefit to a trade error.

Compensation for Termination of Services

Other than any IRA termination fees (when applicable), and account transfer fees, we will not receive any additional compensation in connection with the termination of our services.  If you have any questions, contact your FP.


Conflicts of Interest

This information is not intended to be an all-inclusive list of our conflicts, but generally describes those conflicts that are material to your brokerage relationship.

Conflicts Related to Compensation we Receive from Clients

When we provide you with a recommendation, we must act in your best interest and not put our interest ahead of yours.  At the same time, the way we make money creates some conflicts with your interests. A conflict of interest occurs when we participate in a transaction where our interest might incline us to make a recommendation that benefits us and is not disinterested.  Our regulatory obligations require that we create, maintain, and enforce written policies and procedures reasonably designed to address conflicts of interest associated with our recommendations to you.

We earn compensation when we provide brokerage services to you.  Available products include mutual funds, ETFs, equities and fixed income securities, UITs and variable annuities. The compensation that we and our FPs receive from you varies based upon the type of securities or products your purchase. This can create a financial incentive to recommend investment products or services that generate greater compensation.

As discussed earlier we act as principal in fixed income transactions where you pay a mark-up on purchases or a mark-down on sales.  There may be additional compensation for us when acting as principal.

We earn additional compensation in the form of an interest rate spread on margin debit balances in customer accounts.  A conflict can be created as this compensation is in addition to our compensation for other brokerage services and products.

Conflicts Related to Compensation We Receive from Third Parties

You will pay a commission or sales charge when you buy or sell securities.  Our firm and your FP earn more when there is more trading in your account and may therefore have an incentive to encourage you to trade often.  This includes when we act as agent or principal on the transaction.

For principal trades, we will add a markup or markdown fee on the transaction. We only conduct principal trading in fixed income securities.  This is an additional source of compensation for us.

Interest is charged on margin debit balances in accordance with the margin agreement as provided in your brokerage account documentation.  Our agreement with our clearing firm increased the profitability of margin lending as client margin debit balances increase.  This creates a conflict in that we receive this revenue in addition to the compensation for other brokerage products and services.  Please refer to the Margin Disclosure Statement provided to you in your brokerage documentation.

We strive to maintain a consistent and accurate level of quality in the processing of your transactions. Should you discover an error, omission, exception, or if your fail to receive a confirmation following an anticipated or requested transaction, you must notify us in writing.  It is possible for us, on a limited basis, to profit from a trade error.

Conflicts Related to Compensation We Receive from Third Parties

The total amount of payments we receive from third parties varies from product to product and varies with respect to the third party investment management products we recommend.

Conflicts Regarding the Types of Third-Party Compensation We Receive:

Compensation from product sponsors, including mutual funds , including 12b-1 fees, are paid out of fund assets under a distribution and servicing arrangement to cover distribution expenses and sometimes shareholder service expenses that we may provide on the fund’s behalf. This type of ongoing compensation is received by us and shared with our FPs. The amount of this compensation varies from product to product. These fees range from 0.00 – 1.00%. This means we have fa financial incentive to offer certain investments or products.

Revenue Sharing: We receive a portion of the revenue that the clearing firm receives from certain product sponsors for investing client assets in their products including cash sweep products held in your brokerage account. This means we have an incentive to recommend certain investments to you.

Mutual Fund Share Classes: Some mutual funds offer multiple structures of the same product (e.g. mutual fund share classes) with each option having a unique expense structure, and some having lower costs to you as compared to others. We are incentivized to make available those share classes or other product structures that will generate the highest compensation to us.

We work with some mutual fund sponsors who provide training and education meetings on an infrequent basis to our FPs. While rare, these meetings or events are held to educate FPs on product characteristics, as well as various other topics. These meetings may include meals, entertainment, or promotional items. McClurg Capital does not participate in sales contests or accept non-cash compensation for the sale of any products.

Conflict Related to Compensation Received by Financial Professional

FPs are licensed to provide brokerage services and are compensated based on a percentage of the transaction fees generated from the amount of securities they buy and sell. FPs also have an incentive to provide brokerage recommendations to increase brokerage trading activity and to reduce the amount of discounts available to you. As a result, FPs have an incentive to provide brokerage recommendations that result in selling more investment products.

Ongoing compensation from product sponsors is shared with our FPs, commonly known as trails, service fees, or Rule 1b-1 fees in the case of mutual funds. The amount of this compensation varies from product to product. This means your FP has an incentive to recommend certain products based on the compensation he or she will receive.

Some of our FPs are also licensed with our Investment Adviser division to provide investment advisory services and receive related compensation from that division. Please refer to our Form CRS previously provided to you for further information, or available at mcclurgcapital.com.

Some of our FPs are also licensed with our insurance agency to provide non-investment related insurance products and receive related compensation from insurance activities.

Other Financial Professional Conflicts of Interest

Our FPs may have conflicts of interest beyond those disclosed in this disclosure document. If applicable, your FP will disclose any additional material conflicts of interest not later than the time of a recommendation, and that disclosure will be made orally.


S.E.C. Reg. B.I. 07/22/2020