Conflicts and Disclosures | CNL Securities

Conflicts
and Disclosures

Introduction

CNL Securities Corp., (referred to as “we,” “us,” or “CSC”) is a broker dealer that has been registered with the Securities and Exchange Commission (SEC) and a member of the Financial Industry Regulatory Authority (FINRA) since 1981 and 1982, respectively.
Our Accommodation Account holders will be referred to also as (“you” or “your.”)
CSC is also a member of the Securities Investor Protection Corporation (SIPC).
CNL Financial Group, LLC is the sponsor of CNL investment products and an affiliate of CSC.
This disclosure contains information about the business practices, compensation and conflicts of interest related to the limited purpose broker dealer, CSC. As a limited purpose “wholesale” broker dealer, neither CSC nor its associated person solicit retail investors or offer standard broker dealer services such as recommendations, investment advice, or investment strategies. CSC does not act in a fiduciary capacity.
Instead, CSC works with financial firms such as non-affiliated retail broker-dealers and investment advisory firms which collectively make up the selling syndicate for CNL-sponsored investment programs. CSC works with their associated registered representatives or investment advisors, which we generally refer to as “financial professionals.”
On a limited basis, CSC offers accounts (“Accommodation Accounts”) for investment in CNL sponsored products on an unsolicited basis.

CSC Capacity and Lack of Financial Services

CSC holds Accommodation Accounts on its books and records.
As a courtesy to certain CNL “friends and family,” Accommodation Account holders may purchase CNL-sponsored investment programs without the sales commission or dealer manager fees, but also without the brokerage and/or account maintenance services typically provided by full-service broker-dealers or financial firms.
CSC submitted your investment paperwork on your behalf on an unsolicited investment basis. Now and in the future CSC Associated Persons (“APs”) will not make recommendations or provide financial advice to you. CSC and its APs do not monitor accounts periodically or on an ongoing basis on your behalf.
For brokerage or advisory services, speak with your personal financial professional.

Limited to Proprietary Alternative Investments

CSC distributes only proprietary CNL investment programs. These programs are created and advised or managed by the CNL sponsor or its affiliates. At any one time, CSC distributes several offerings or less, which limits your choice of investment options. Given the limited number of investment options through your Accommodation Account you will have few investment programs to choose from when you initiate an Accommodation Account purchase. CSC and its Associated Person do not provide financial advice or recommendations on an investment, account, planning, or ongoing monitoring services to Accommodation Account holders or any other clients.

CNL affiliated investment programs are alternative investments, which are illiquid long-term investments.
A secondary trading market for CNL investments does not exist. For this reason, converting an alternative investment to cash is extremely difficult and may not be possible. Often CNL sponsored programs have a share repurchase or redemption program, however, such programs typically have numerous limitations and redemptions/repurchases are not guaranteed.
If you are able to sell your investment on the secondary market or are able to participate in a share repurchase or redemption program, the shares of the CNL investment program may be worth more or less in value than the original purchase price.
It is difficult to determine the current value of alternative investments that are not traded in the public markets. Please see the applicable Offering Document for important details regarding the valuation policies of your particular CNL investment. Be aware that the net asset value of a particular CNL investment program is not necessarily the amount an investor would expect to receive at that time or any time in the future.
CNL affiliated investment programs are complex, high risk, and not appropriate for everyone. This is one reason alternative investments have heightened investor qualification requirements in the program’s Offering Document or private placement
memorandum (the “Offering Documents”).
There also could be a less expensive or less complicated product available elsewhere that is similarly appropriate for you.

Awareness of the Fees & Expenses You Pay

Our CNL-affiliated investment program managers and sub-managers, advisors, and subadvisors, and ultimately the parent company make money when you purchase shares and on an ongoing basis when you own shares in a CNL investment program.
Additionally, since alternative investments can be considered to be complex and require more active management, alternative investments typically have fees and expenses that are higher than those of more traditional investment types.
Please see your investment Offering Documents for the fees, expense reimbursements, and potential performance-based bonuses paid to the advisor and sub-advisor, or manager and sub-manager, of your specific CNL investment program.
You will pay fees and expenses whether you make or lose money on your investments. Fees and expenses will reduce any amount of money you make on your investments over time.
The CNL investment program’s fees and expenses are disclosed in the Offering Documents. These fees can vary among investment offerings and the different share classes within an offering.
As stated above, CNL sponsored offerings are sold in conjunction with the receipt of Offering Documents, which contain more complete information including risks, costs, and expenses. Investors should read these carefully before investing.

Fees & Expenses of Specific CNL Sponsored Offerings

For the public or private CNL Sponsored offerings, you can find the fees and expenses in the Offering Document under the Estimated Use of Proceeds or Organization and Offering Expenses and Operating Expenses section(s), as applicable.
These sections of the Offering Document should also be thoroughly reviewed: Risk Factors, Compensation and Conflicts of Interest.

Conflicts of Interest in Our Business

The way we make money creates some conflicts with your interests. Some of these conflicts may not be directly applicable to you as an accommodation account holder. These conflicts are related to our overall business with our affiliates. You should understand these conflicts because they could affect your investment. Here are some examples:

CSC provides the financial firms which sell investments that CSC distributes with limited financial contributions, such as appropriate sharing of commissions and certain dealer manager fees, marketing support fees and limited convention support, all within the wholesaling relationship we maintain.
CNL may provide shares of the investment as an incentive compensation or “awards.” These awarded shares may be provided to certain independent board of directors, the portfolio manager, the portfolio sub-manager and/or employees of the manager or the sub-manager. The value of your investment can be reduced and/or your portion of ownership can become smaller due to CNL issuing the incentive or awarded shares.
CNL Securities has established a level compensation grid with which wholesalers are compensated the same amount regardless of the CNL investment program that is promoted. CSC believes by taking this step, we take away the incentive for a CSC Associated Person to promote one offering over any other, based upon compensation.
CSC does not process subscriptions and therefore cannot take additional compensation, or provide preferential treatment, regarding the timing of purchases. CSC does not have influence over this matter.
CSC does not process applications for redemption or repurchase requests (“Redemptions”) and therefore cannot take additional compensation, or provide preferential treatment, regarding the timing of redemptions. Redemptions have numerous limitations, and not all applications received for Redemptions will be honored within the month requested. CSC does not have influence over redemptions. The Offering Document tells you what the limitations are on redemptions of your investment.

Sources of Revenue

CSC earns revenue from our CNL affiliates, and at times, receives favors or beneficial interest from third parties. The third parties can include product vendors, underwriters and investment managers or advisors of the CNL investment program. Favors can be a reduction of fees, improved timing on a service, or other types of good will. These sources of revenue may not directly impact your investment as an accommodation account holder.

Within CNL and CSC there are intercompany profit-sharing and servicing agreements. CSC and our affiliates receive revenues various ways.

CSC operates as a wholesaling broker dealer. Accommodation Account investors do not pay sales commissions or administrative fees on their accounts. Conversely, retail broker dealers and investment advisory firms offer services to their investors, and those retail investors may pay upfront fees to CSC or fees to their financial professionals in different ways.

A CNL investment program will compensate CNL Securities when CSC is acting as a placement agent or broker dealer for CNL investment programs. Please see the program Offering Document.
As an Accommodation Account holder, you will pay ongoing fees for the portfolio’s operational expenses and other asset fees specific to the investment programs costs of managing the portfolio and other services. Please rely on the fully detailed Offering Document provided to you when you submitted your investment facilitation request to CNL Securities and as periodically supplemented.
Marketing Support provided to the firms in our selling syndicate could cause conflicts of interest which CSC guidelines seek to mitigate by not allowing favorable treatment or other gestures which could indicate favoritism or impropriety.

There are ongoing fees you will pay while invested. It is important that you, as an Accommodation Account holder, understand the ongoing fees. Please read your program Offering Document carefully.

Contact Information

If you would like additional assistance or up-to-date information on your account, offering documents,
or an additional copy of this disclosure, please call 866-650-0650.