There are five membership categories within the New Business Ecosystem. Those being 1) registered reps that also hold insurance licenses, 2) money managers who utilize registered reps to solicit new business for their funds, 3) investment banks who offer institutional trading and custodial services, 4) corporate customer issuers with goals of raising capital and 5) client participants with retail financial service needs.

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All NBE members will have baseline levels of business they will need to do with other NBE members in order to receive economic benefits from the NBE. The administrative arm of the NBE will continuously survey participating members for feedback with respect to eligibility requirements going forward. Membership requirements will be adjusted by the NBE administrator based on the feedback received from periodic survey responses and or question answer sessions involving NBE participating professionals in the field.

 

For example, the amount of assets and execution business that a mutual fund company will need to place with participating broker dealers will be set based on the surveys and or Q&A responses  given by certain broker dealer and investment banking reps in the field. The mutual fund families will also be surveyed with respect various aspects of registered rep participation, but more specifically as to how much in assets a registered rep/agent will need to have in order to be awarded a participation number in the new business rotation. NBE Registered reps and agents will be surveyed and questioned with respect to the participation requirements of investment banks and broker dealers within the NBE.

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In short, participation parameters and membership quotas will be adjusted by the NBE administrator so that they are an ongoing reflection of the opinions and sentiments of the NBE members themselves. Below is an initial breakdown of the participant qualifications for each of the five membership components of the New Business Ecosystem.

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Registered Rep Qualifications

 

The first basic prerequisite for ecosystem participation is that registered reps also hold a life and health insurance license.

 

Once the basic prerequisite is satisfied there are two methods of qualification.

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Asset Qualification: 

 

As long as a registered rep can show they maintain at least $5.00 million dollars under management with a mutual fund family that is also participating in the New Business Ecosystem then that same registered rep would be awarded a participation slot in the new business rotation and a participation number new business lottery as well.

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Note: Registered reps will be awarded new business participation and lottery numbers for every participating mutual fund family where they maintain the required minimum $5.00 million dollars under management.  

    

 

Joint Asset Qualification

 

Registered reps that do not individually meet the individual Asset Qualification standards can align themselves with up to a maximum of two other registered reps that are also employed by the same broker/dealer to collectively maintain the required $5.00 million under management with a participating mutual fund family. Those three registered reps will then be collectively awarded a new business participation number in the Asset Rotation and then share in any new business generated when their number comes up. Joint rep participants will also be individually assigned new business lottery numbers.

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Referral Qualification

 

Registered reps that are instrumental in the recruiting of new mutual fund families along with their custodial investment banks will also be awarded a participation number in the new business Referral Rotation along with a corresponding new business lottery number.

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Joint Referral Qualification

 

Up to a maximum of three registered reps can collectively lobby for a particular fund family to participate in the New Business Ecosystem. When those three reps succeed in the recruiting of a new fund family along with their supporting investment bank then those three reps will then be collectively rewarded a new business participation number in the Referral Rotation and then share in any business generated.  Joint rep participants will also be individually assigned new business lottery numbers.    

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Money Manager and

Fund Family Qualifications

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There are two basic methods for a money management company to gain access to the New Business Ecosystem.

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          1) Money managers or Fund families can transfer and maintain at least

             300 million in collective assets with NBE participating broker

             dealers/investment banks and or route a reasonable portion ( to be

             determined) of it’s orders through NBE participating investment

             banks.  

 

         2) Money managers can influence at least one of their existing

             investment banking custodians to become active members of the

             New Business Ecosystem.

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Investment Bankers and Broker Dealer Qualifications

 

In order for an investment bank to gain access to the New Business Ecosystem they must satisfy three requirements.

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1) Active FINRA member firm in good standing

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2) The participating investment bank must be ready, willing, and able to (either through direct or corresponding clearing arrangements) adequately service the trading and custodial needs of money managers, fund families, and other affiliate institutions that are ecosystem participants.

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3) The participating investment bank must regularly meet with ecosystem issuers (at least two issuers each month). These issuers will be seeking capital. The participating investment bank will evaluate their offerings for potential funding.

 

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During or soon after the conclusion of these meetings the investment banks will do one of the following three things.

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1) The participating investment will provide clear concise feedback as to what adjustments or changes the issuer would need to make (if any) in order for the offering to get funded.

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2) Accept the offering for funding, start the due diligence process, execute appropriate agreements with issuer, and begin marketing the offering.

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3) Point out inherent flaws in the issuer’s business model (if any) that cannot be overcome to the degree funding is not going to be possible.

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Special Note: If for whatever reason a participating investment bank has not funded any ecosystem offerings in a three month period then that investment bank will align eligible ecosystem registered reps with issuers (at least one issuer) already in line for funding that are clients of the participating investment bank but not ecosystem participants themselves. As part of this alignment the investment bank will open the door for the these ecosystem reps to capture new business from the nonparticipating NBE issuer. This new business can come in many forms, group insurance, key man insurance, buy-sell funding, estate tax funding, retirement benefits, ect. This business is to be provided by ecosystem reps and bought by the non participating issuers in the event no ecosystem issuers obtain funding in a three month period.

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Corporate Issuer Qualifications

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Issuers wishing to receive funding from NBE participating investment banks will be required to do the following:

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1) The issuer must be properly incorporated in an acceptable State jurisdiction.

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2) The issuer must have a detailed business plan with a use of funds statement

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3) The issuer will need to obtain a CIK account number through the SEC EDGAR system.

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4) The issuer will need to perform all applicable filings with the SEC and possibly State regulatory authorities.

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The type of filings will depend on the nature an size of the offering being presented.

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5) Make all applicable, necessary, and required disclosures available to the NBE participating investment banking firms and any other potential affiliated investors.

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These disclosures can include but not be limited to investor term sheets, memorandums, circulars, prospectuses, subscription

agreements, and company financial statements.  

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Special Note

The above items are the basic requirements for funding from a regulatory perspective only. Participating issuers must remember there may be other requirements outlined by the NBE administrator and investment banks themselves ahead of actual funding.

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Client Participant Qualifications

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1) Must be a student, gainfully employed, self employed, or retired.

2)  be an active member of FINRA

3) Must be at least 21 years old

4) Must be a US citizen, resident alien, or be eligible to transact business within the United States