26 - eConnect Direct AgreementITEM NO. 26
Costa Mesa Sanitary District
Memorandum
To: Board of Directors
...an Independent Special District
Via: Scott Carroll, General Manage
From: Marc Davis, Treasurer
Date: July 31, 2013
Subject: eConnectDirect Licensing Agreement
Summary
Attached is a Licensing Agreement with eConnectDirect for the Board of Director's
(Board's) consideration. The Licensing Agreement provides the Treasurer with electronic
access to the markets when making investment decisions.
Staff Recommendation
That the Board of Directors approves the licensing agreement with eConnectDirect and
authorizes the District Treasurer to sign said agreement on behalf of CMSD.
Analysis
Since the District separated from the City, investment decisions have been based upon
calls to and from investment brokers that specialized in government securities. Over time,
the tools available for use in placing investments have grown. The District now has the
opportunity to begin using technology in assisting with its investment decisions and
placement.
Since 1985, Multi -Bank Securities (MBS) has provided funding and investment solutions to
a broad base of institutional clients. In 2011, MBS launched eConnectDirect.com, as an
online service to navigate, transact and leverage the fixed - income market place.
MBS approached the General Manager in early 2013 regarding its eConnectDirect
product. Since then, staff has met with MBS representatives to demo the product and
Protecting our community's health and the environment by providing solid waste and sewer collection services.
www.crosdca.gov
Board of Directors
July 31, 2013
Page 2 of 3
discuss the product. Based upon these meetings and demonstrations, staff is of the
opinion that eConnectDirect will allow for more timely access to the markets, as well as the
ability to further diversify the District's investments. With eConnectDirect, notable changes
will include:
• The elimination of safekeeping fees.
• No charge for the license to use the product.
• The ability to access negotiable certificates of deposit at thousands of banks across
the country, and narrowing selections through the use of filters so that only those
investments that meet the District's criteria will be displayed.
• Enhanced reporting tools.
• Access to knowledge and recommendations from investment brokers with MBS.
In order to move forward with the eConnectDirect product, a Licensing Agreement is
required to be executed. The proposed Licensing Agreement has been reviewed by
District Counsel. A copy of the proposed Licensing Agreement is attached to this staff
report.
The addition of eConnectDirect will not change the District's existing relationship with its
investment brokers. It will simply be an additional tool available for the District's use.
Strategic Plan Element & Goal
This item supports achieving Strategic Element No. 7.0, Finances, by ensuring the short
and long -term fiscal health of the District.
Legal Review
District Counsel has reviewed the proposed Licensing Agreement and was initially
concerned with the limitation of liability for any damages arising out of the use of
eConnectDirect. While the proposed Licensing Agreement does indicate that MBS is not
liable for any damages resulting from the use of the product, these damages would be
mitigated by the fact the District uses a third -party custodian to safeguard its purchased
investments. A risk of damage could occur if eConnectDirect reports one interest rate for
an investment, and the actual interest rate is something different. The District's third -party
custodian reviews the details of all investment purchases prior to releasing funds for the
security. If a security is reported as having one interest rate, and is delivered with a
different interest rate, the third -party custodian would contact the District and inform them.
At that point, the District can disqualify the trade.
Financial Review
There is no out -of- pocket costs to the District of executing the Licensing Agreement. The
District will realize an annual savings of $6,000 in the elimination of custodial fees as
Board of Directors
July 31, 2013
Page 3 of 3
eConnectDirect uses the same custodian as the District currently uses, Bank of New York,
and there is no fee for custodial services if eConnectDirect is used.
Public Notice Process
Copies of this report are on file and will be included with the entire agenda packet for the
July 31, 2013 Board of Directors regular meeting at District Headquarters (631 W. 19"
Street) and on the District's website at www.crosdca.gov.
Alternative Actions
1. Do not approve the Licensing Agreement with eConnectDirect
2. Refer the matter back to staff
Attachments
Attachment A: Licensing Agreement
e - Direct®
econnectdirect.com
Account Documents
Powered by Multi -Bank Securities, Inc.
1000 Town Center, Suite 2300
Southfield, MI 48075
800 - 967 -9052
f MULTI -BANK SECURITIES, INC.® e _ D1 M w tm
F I N R A, S I P C, M S R B ■ V
LICENSING AGREEMENT
This Agreement is between:
Costa Mesa Sanitary District
Multi -Bank Securities, Inc. (MBS)
and ACCOUNT HOLDER
1000 Town Center, Suite 2300
628 W. 19th Street
Southfield, Michigan 48075
STREETADDRESS
Costa Mesa, CA 92627 -2716
CITY, STATE, ZIP
This contract governs your use of services, ability to post deposit rates, and access to inventory offered by
eConnectDirect ®, a registered trademark of Multi -Bank Securities, Inc. and related commerce, products and services
corresponding to your access to eConnectDirect.com. You may need to execute additional agreements or provide MBS
account numbers if you request additional Opt -in Services in conjunction with your unique eConnectDirect ®, user
name and password. "Opt -in Services" refers to additional trading functionality provided through eConnectDirect® that
you can access by completing Exhibit 01 and corresponding agreements.
The terms "MBS," "we, "us" and "our" refer to Multi -Bank Securities, Inc. The terms "Subscriber,"
"you" and "your" refer to the undersigned Account Holder and additional users identified in Schedule A. The term
"eConnectDirect' CD" (also known as "Physical CD ") refers to CDs which are transacted directly between the issuing
institution and investing entity through eConnectDirect�. All funds on eConnectDirect® CD transactions are transferred
from the investor directly to the issuing institution. In connection with Opt -in Services or preexisting MBS accounts,
the term "Securities," generally refers to all other assets purchased or viewed on eConnectDirect® that are NOT
eConnectDirect® CDs. All Securities (ie: Bonds, DTC Eligible CDs) will have a corresponding CUSIP number and
funds will be settled into a Securities account (Cash or Delivery Versus Payment "DVP "), per the instructions provided
and maintained within the user profile.
User Access Start Date
Start Date: 07 / 24 / 2013
Your user access and all other rights under this eConnectDirect® CD Licensing Agreement will commence on
the "Start Date" listed above if we have received from you a signed copy of this agreement and a complete set of all
duly executed settlement documents required to purchase or issue a CD or security.
Modification /Cancellation
MBS reserves the right to:
• modify or cancel any feature of eConnectDirect® at any time.
• discontinue user access at anytime for any reason, without penalty, with 30 days written notice, or
• immediately suspend user access at anytime as provided below.
Costa Mesa Sanitary District reserves the right to:
• discontinue any or all eConnectDirect® services at anytime for any reason, without penalty, by providing
written notice to MBS.
All changes to the terms, conditions, fees, representations and warranties related to this agreement will be distributed in
writing for signature, email consent or online confirmation. If at any time you find these terms unacceptable and do not
agree with them, you can let us know that you would like to discontinue your user access without penalty.
eConnectDirect.com 2 Rev. 121 82012
) Mum-BANK
UT-BANK SECURITIES, INC® MD!rect'
7 F I N R A, S I P C, M S R B
ACCOUNT
ADMINISTRATION:
The Account Administrator is responsible for maintaining the account profile and approving /assigning
additional users and account access. The additional users need to be identified on Schedule A — Authorized User List.
All users will be assigned a unique user name and password and will be required to acknowledge and accept the terms,
conditions and licensing agreement pertaining to the use of eConnectDirect upon initial login.
Account Administrator Name: Marcus D. Davis
Title: Treasurer
Phone: 949 -244 -4751
Email: mddavis @cbiz.com
Secondary Contact Name:
Title:
Phone:
Email:,
Licensing/User Fees:
Any applicable licensing fees will be disclosed per Schedule B - Licensing Fee Schedule of this agreement and
will be billed annually, payable upon execution and are NON - REFUNDABLE. You will not be liable for any increase in
licensing fees or new fees related to your access to eConnectDirect® unless you agree to such change in writing.
MBS is not responsible for any fees incurred or charged in relationship to an eConnectDirect® CD transaction
by the issuing bank, settlement/wire fees, safekeeping charges by your securities' custodian or any other fees related to
the purchase, issuance, settlement, or safekeeping of products offered through eConnectDirect ®. You are responsible
for all such fees. Any applicable fees or selling concessions related to the issuance of DTC eligible CDs are disclosed
at the time of trade and per the terms of an executed terms agreement and related Brokerage Agreement.
Account Types - eConnectDirect® CDs (check the account types you would like to access):
Issuer Account
• Rates: You agree to post all rates in terms of APR, simple interest. All other characteristics or
disclosures shall be captured by completing your account profile, noted on an individual offering or
provided by other means supported on eConnectDirect.
• Account Profile: You agree to maintain up -to -date and accurate disclosures and transactional
characteristics and information within your account profile.
• Deposit Settlements: You agree to settle approved and accepted eConnectDirect® CD transactions
placed through eConnectDirect. Failure to settle on these transactions may result in our suspending
your ability to post future rates. Transactions are considered approved and accepted by your trade -
by -trade acknowledgment or in coordination with order management settings (offer specific).
• Account Documents: You agree to honor account documents (Set -up Documents, as defined in the
Investor Account section below) provided by eConnectDirect that satisfy your profile settings. All
documents are supplied by the investor.
• Attestation: All eConnectDirect® CDs, in coordination with a transaction placed through
eConnectDirect, will include a copy of the investor's attestation that:
1. No fees were paid to a third -parry in conjunction with the transaction;
2. A flat fee was paid to view available offerings from eConnectDirect;
3. The deposit decision was self - directed; and
4. Funds were wired directly from the Subscriber's banking accounts.
eConnectDirect.com 3 Rev. 121 82012
f MULTI -BANK SECURITIES, INC.® e _ D1 M w t•
F I N R A, S I P C, M S R B ■ V
• Transfer of Funds: You agree, in coordination with a valid Fedwire® /ACH Letter of Authorization,
to release funds as instructed by the investor through communication methods offered by
eConnectDirect ®. Any additional documentation or correspondence required to release principal or
interest owed, that would otherwise delay the transfer of funds via Fedwire®, ACH, or check needs to be
promptly communicated to the authorized signer of the account.
® , Investor Account
• You agree that all documents accompanying eConnectDirect® CD transactions are up -to -date and
accurate. The following documents, or self - provided equivalent must be completed and submitted prior
to placing any orders (collectively called "Set -up Documents "):
1. Resolution of Authorized Signers, eConnectDirect® CDs (Attachment 1);
2. W -9 (Attachment 2); and
Fedwire® /ACH Letter of Authorization (Attachment 3)
• Attestation: All transactions of eConnectDirect® CDs will include an attestation from you that:
1. No fees were paid to a third -parry in conjunction with the trade;
2. A flat fee was paid to view available offerings from eConnectDirect�;
3. The deposit decision was self - directed; and
4. Funds were wired directly from your banking accounts.
Transactions:
1. You agree that all persons to whom you grant access, trading and settlement authority are duly
authorized by the Subscriber to perform such responsibilities.
2. You agree to settle approved and accepted eConnectDirect® CD and Security transactions placed
through eConnectDirect�. Failure to settle on acknowledged and approved transactions may result
in the suspension of your access to eConnectDirect ®.
3. You agree and acknowledge that all Set -up Documents will be made readily available to an issuing
bank upon each trade date and archived against all eConnectDirect® CD transactions.
4. You agree that Fedwire® /ACH instructions provided on the eConnectDirece Fedwire® /ACH
Instructions Letter of Authorization are up -to -date, accurate and reflective of the Subscriber's
settlement records. You further acknowledge and agree that such instructions will be used, applied
and offered to each and every financial institution that is safekeeping a deposit account to distribute
principal and interest owed per the terms of a CD account or subsequently requested by the
communication methods offered on eConnectDirect ®, at your discretion.
Proprietary Rights in the Software and Database:
Restrictions on Use: SUBSCRIBER AGREES THAT IT WILL NOT PERMIT ANY OTHER PERSON
INCLUDING, BUT NOT LIMITED TO, ANY INSTITUTION, BROKER OR BUSINESS OF ANY TYPE, ACCESS
TO THE SOFTWARE AND DATABASE.
eConnectDirect.com 4 Rev. 121 82012
f MULTI -BANK SECURITIES, INC.® _ D1 M w tm
F I N R A, S I P C, M S R B ■ V
License Limitations:
This eConnectDirect® Licensing Agreement allows access to eConnectDirect® using a computer and/or
web access by a user from any approved browser. Subscriber agrees not to modify, adapt or translate, disassemble,
decompile, reverse engineer or otherwise attempt to discover the source code of the software. Subscriber further agrees
not to sublicense, assign, transfer, distribute, pledge, lease, rent or share any rights under this license except with prior
written permission from NMS. Users' rights to access the network and use the software shall extend only for the term
of this contract.
Immediate Suspension:
MBS may immediately suspend user access and all rights under this contract if MBS has not received
payment of the applicable License Fee within 30 days of invoice or MBS believes the Subscriber has or may violate
MBS' proprietary rights or has or may breach any other provision of this contract.
Warranty Disclaimer / Liability:
MBS makes no warranty of any kind, express or implied, regarding the timeliness, sequence, accuracy or
completeness of data provided on eConnectDirect ®. MBS will not be liable for any damages whatsoever, whether
direct, indirect, general, special, compensatory, consequential and/or incidental, arising out of or relating to your use of
eConnectDirect ®.
Costa Mesa Sanitary District Multi -Bank Securities, hc.
Account Holder Company
Signature Signature
Marcus D. Davis Tim Peacock
Name Name
Title
SVP
Title
eConnectDirect.com 5 Rev. 121 82012
f) MULTI -BANK SECURITIES, INC.®
�7 FINRA, SIPC, MSRB
• Dre
e - c
SCHEDULES, EXHIBITS & SUPPORTING DOCUMENTS
SCHEDULE A: AUTHORIZED USERS"
Marcus D. Davis
Treasurer
The Administrator must be
949 - 244 -4751 mddavis @cbiz.com
"Permissions, notifications and account access are set and maintained by the administrator upon login. Securities' trading authorization is only
permitted to those that are named signers of the Resolution of Authorized Signer (Attached) or a provided Authorizing Resolution.
SCHEDULE B: LICENSING FEE(S)
Applicable licensing fees will apply
ALL FEES ARE PAYABLE WITHIN 30 DAYS OF INVOICE AND ARE NON REFUNDABLE;
eConnectDirect Licensing Fee:
eConnectDirect CD Listing Services:
Special Notes / Instructions:
$0
per year
per year
eConnectDirect.com 6 Rev. 121 82 012
Form
W -9
Request for Taxpayer
Give Form to the
(Rev. January
2011)
Identification Number and Certification
requester. Do not
Department of the Treasury
TIN on page 3.
send to the IRS.
Internal
Revenue Service
Name (as shown on your income tax return)
Costa Mesa Sanitary District
N
Business name /disregarded entity name, if different from above
am
rn
as
a
Check appropriate box for federal tax
C
O
classification (required): ❑ Individual /sole proprietor ❑ C Corporation ❑ S Corporation ❑ Partnership
❑ Trust/estate
N
Q- O
❑Exempt payee
❑ Limited liability company. Enter the tax classification (C =C corporation, S =S corporation, P= partnership) ►
O y
C N
ac
0
❑■ Other (see instructions) ►
Address (number, street, and apt. or suite no.)
Requester's name
and address (optional)
0
628 W. 19th Stret
to
d
City, state, and ZIP code
W
Costa Mesa, CA 92627
List account number(s) here (optional)
Taxpayer Identification Number (TIN)
Enter your TIN in the appropriate box. The TIN provided must match the name given on the "Name" line
I Social security number
to avoid backup withholding. For individuals, this is your social security number pag However, for a
resident alien, sole proprietor, or disregarded entity, see the Part I instructions on page 3. For other
- m -
entities, it is your employer identification number (EIN). If you do not have a number, see How to get a
TIN on page 3.
Note. If the account is in more than one name, see the chart on page 4 for guidelines on whose I Employer identification number
Under penalties of perjury, I certify that:
1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and
2. 1 am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am
no longer subject to backup withholding, and
3. 1 am a U.S. citizen or other U.S. person (defined below).
Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding
because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage
interest paid, acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement arrangement (IRA), and
generally, payments other than interest and dividends, you are not required to sign the certification, but you must provide your correct TIN. See the
instructions on page 4.
01911 Signature of
Here I U.S. person ► Date ►
General Instructions
Section references are to the Internal Revenue Code unless otherwise
noted.
Purpose of Form
A person who is required to file an information return with the IRS must
obtain your correct taxpayer identification number (TIN) to report, for
example, income paid to you, real estate transactions, mortgage interest
you paid, acquisition or abandonment of secured property, cancellation
of debt, or contributions you made to an IRA.
Use Form W -9 only if you are a U.S. person (including a resident
alien), to provide your correct TIN to the person requesting it (the
requester) and, when applicable, to:
1. Certify that the TIN you are giving is correct (or you are waiting for a
number to be issued),
2. Certify that you are not subject to backup withholding, or
3. Claim exemption from backup withholding if you are a U.S. exempt
payee. If applicable, you are also certifying that as a U.S. person, your
allocable share of any partnership income from a U.S. trade or business
is not subject to the withholding tax on foreign partners' share of
effectively connected income.
Note. If a requester gives you a form other than Form W -9 to request
your TIN, you must use the requester's form if it is substantially similar
to this Form W -9.
Definition of a U.S. person. For federal tax purposes, you are
considered a U.S. person if you are:
• An individual who is a U.S. citizen or U.S. resident alien,
• A partnership, corporation, company, or association created or
organized in the United States or under the laws of the United States,
• An estate (other than a foreign estate), or
• A domestic trust (as defined in Regulations section 301.7701 -7).
Special rules for partnerships. Partnerships that conduct a trade or
business in the United States are generally required to pay a withholding
tax on any foreign partners' share of income from such business.
Further, in certain cases where a Form W -9 has not been received, a
partnership is required to presume that a partner is a foreign person,
and pay the withholding tax. Therefore, if you are a U.S. person that is a
partner in a partnership conducting a trade or business in the United
States, provide Form W -9 to the partnership to establish your U.S.
status and avoid withholding on your share of partnership income.
Cat. No. 10231X Form W -9 (Rev. 1 -2011)
MULTI -BANK SECURITIES, INC."
MBSIF SIPC, MSRB
Institutional Suitability Certificate
FINRA RULE 2111
Affirmative Indication by Institution — Exercising Independent Judgment
In connection with any recommended transaction or investment strategy by a registered broker - dealer, the
undersigned acknowledges on behalf of the Institution named below that:
1. It is an "Institutional Account" as defined in FINRA Rule 4512(c);
PLEASE CHECK THE APPROPRIATE BOX BELOW
❑ (1) a Credit Union with total assets of $50 Million or more (or any other entity with total assets in
excess of $50 Million). If a Credit Union (or any other entity) has total assets LESS THAN $50
Million, check Box 4, and provide your most recent Investment Policy;
❑ (2) a bank, savings and loan association, insurance company or registered investment company;
❑ (3) an investment adviser registered either with the SEC under Section 203 of the Investment
Advisers Act or with a state securities commission (or any agency or office performing like
functions);
❑ (4) MBS will determine suitability (Please provide your most recent Investment Policy)
2. It (1) is capable of evaluating investment risks independently, both in general and with regard to all
transactions and investment strategies involving a security or securities; and (2) will exercise
independent judgment in evaluating the recommendations of any broker- dealer or its associated
persons, unless it has otherwise notified the broker - dealer in writing;
3. MBS will be notified by the Institutional Account if anything in this Certificate ceases to be true;
4. He or she is authorized to sign on behalf of the Institutional Account named below.
By signing this Certificate, the undersigned affirms that the above statements are accurate but does not waive any
rights afforded under U.S. federal or state securities laws, including without limitation, any rights under Section
10(b) of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
This Certificate shall apply with respect to all recommended transactions and investment strategies
involving securities that are entered into by the "Institutional Account" named in this Certificate, whether
for the account(s) of such Institutional Account or for the account of any beneficial owner that has delegated
decision making authority to such Institutional Account.
Costa Mesa_ Sanitary District
Institutional Account Name
Signature ofAuthorized Signatory
628 W. 19th Street Marcus D. Davis
Address Name ofAuthorized Signatory
Costa Mesa, CA 92627 -2716 Treasurer
City, State, ZIP Title ofAuthorized Signatory
95- 6003939
U.S. Tax ID / EIN Ilf applicable)
Date
mddavis @cbiz.com 949 - 244 -4751
Email Address Phone
ADDRESS 1000 Town Center, Suite 2300
Southfield, Michigan 48075
PHONES 800.967.9045
248.291.1100
FAX 248.291 .1 101
2400 East Commercial Boulevard, Suite 812
Ft. Lauderdale, Florida 33308
800.967.9045
954.351 .6930
954.351.9197