How Frec strives to keep your money safe
How Frec strives to keep your money safe
When you’re investing your hard-earned money, you want to be sure it’s in good hands. At Frec, we understand that the safety and security of your assets are your top priority. That’s why we’ve built a robust system of safeguards to protect your investments and give you peace of mind.
We’ll walk you through how Frec works to ensure the security of your funds. From our regulatory oversight to our advanced security practices, you’ll see how we go above and beyond to safeguard your assets.
Frec is a registered broker-dealer and investment advisor
Let’s start with the foundation of our security measures: our regulatory framework. Frec has two subsidiaries, Frec Securities LLC and Frec Advisers LLC. Frec Securities LLC is a registered broker-dealer with the Securities and Exchange Commission (SEC) and a member of the Financial Industry Regulatory Authority (FINRA). Separately, Frec Advisers LLC is a Registered Investment Advisor (RIA) with the SEC.
These registrations mean that Frec is subject to strict rules designed to protect investors. It’s important to note that these rules are applicable to all companies registered as broker-dealers or RIAs, not just Frec.
The Customer Protection Rule
As a customer of Frec, you open a brokerage account with our broker-dealer Frec Securities LLC, which is required to follow the Customer Protection Rule.
This rule mandates that we keep customer assets separate from our own business assets. In other words, your money is never mixed with Frec’s operating funds. We take this responsibility seriously. Every day, we confirm that all client assets are held safely at our clearing firm. This segregation of funds is a critical safeguard for your money.
Our fiduciary duty as an RIA
Frec’s subsidiary, Frec Advisers LLC, serves as an RIA for direct index and treasury strategies. This registration as an RIA imposes a fiduciary duty when trading on behalf of clients for these specific strategies.
This registration as an RIA means we have a fiduciary duty when trading on your behalf to always act in your best interests. We’re legally obligated to put your financial well-being first and to avoid any conflicts of interest. You can trust that every recommendation we make and every action we take is driven by what’s best for you.
It’s important to clarify that this fiduciary duty applies specifically to the investment advice and management provided for direct index and treasury strategies, and does not extend to other services or products offered by Frec.
How your assets are held
In addition to our regulatory obligations, we’ve taken the extra step of partnering with a leading third-party custodian to hold your assets. Frec never takes possession of your funds. When you open an account with Frec, your cash and securities are held by our custodian partner, Apex Clearing.
What is Apex Clearing?
Apex Clearing is a large clearing firm in the U.S., providing clearing and custody services for many fintech companies with over $150 billion in assets under custody.
Apex is the custodian for several well-known financial services providers, including Betterment, SoFi, and Ally Invest. They have also previously provided custodial services for companies like Robinhood and Wealthfront. We note this impressive client list to demonstrate Apex’s capability to handle a wide range of investment services and its trustworthiness in the industry and not an indication of Frec’s potential success in the industry.
Apex is registered with the SEC, and a member of FINRA and the New York Stock Exchange (NYSE). They’re owned by Peak6, a leading financial technology and investment firm. With Apex’s scale and Peak6’s backing, you can have confidence in its financial stability and ability to safeguard your assets.
How does it work?
When you make a deposit, withdrawal, or trade through the Frec platform, those instructions are sent directly to Apex. Apex then executes the transactions, moving money between their custodial accounts and yours.
As Frec never takes possession of your funds, your money moves directly between your bank and Apex, avoiding the risks of involving a third party.
Apex also has its own rigorous risk controls and transaction validations. These include real-time monitoring of all transactions, automated fraud detection systems, and multi-level approvals for large or unusual transactions. Apex also conducts regular audits and stress tests to ensure the integrity of its systems and the safety of client assets.
For added transparency, you have the option to open your own “read-only” account directly with Apex Clearing. This allows you to independently verify your balances and holdings. Here’s how you can set this up:
- Use this link to create a view-only account with Apex Clearing.
- On the site, select ‘Create User ID’.
- Enter your Frec account number when prompted.
- Once the account is created, select ‘Apex Clearing’ and use your Apex login credentials to connect to the Personal Financial Management (PFM) system.
This direct access to Apex provides an additional layer of verification and control over your investments.
And because your assets are held separately from Frec’s balance sheet, they’re protected even in the unlikely event that something were to happen to Frec. You would retain full ownership and control of your investments, and could either transfer them to another broker-dealer or liquidate them as you see fit. This separation helps to ensure that your assets are insulated from many financial issues that might affect Frec as a company.
Frec Securities is a member of SIPC
Frec Securities is a member of SIPC, which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at http://www.sipc.org.
Frec’s advanced security measures
In addition to the protections provided by our custodian, Frec has implemented advanced security practices to safeguard your information and assets.
Two-factor authentication
We offer two-factor authentication on all Frec accounts. This means that in addition to your password, you’ll need a second form of identification, like a code sent to your phone, to access your account.
This added layer of security makes it much harder for anyone else to gain unauthorized access to your account, even if they somehow obtain your password.
Encryption and data security
We use industry-standard encryption to protect your personal and financial data. This means that your information is converted into a code that can only be read by authorized parties.
We also employ strict data security measures and regular security audits to protect against unauthorized access to our systems.
Employee access controls
At Frec, we follow the principle of least privilege when it comes to employee access to customer data. This means that employees are only given access to the specific information they need to do their jobs.
We regularly review and update these access controls to ensure that your data is only accessible to those who absolutely need it.
Our commitment to you
At Frec, safeguarding your assets isn’t just a responsibility — it’s our highest priority. We’ve built multiple layers of protection to help ensure that your money is always safe with us.
We’re committed to transparency about our security measures. We want you to have complete peace of mind when you invest with Frec, knowing that we’re doing everything possible to protect your assets.
