Ria Disclosure

Document Sample
Ria Disclosure Powered By Docstoc
					CERVINO CAPITAL MANAGEMENT LLC

REGISTERED INVESTMENT ADVISER
     DISCLOSURE BROCHURE

                          November 5, 2009


                         MAILING ADDRESS:
                           P.O. BOX 2366
                      SANTA BARBARA, CA 93120
                         TEL: (310) 849-5818
                         FAX: (818) 874-9897




   Cervino Capital Management LLC
   Registered Investment Adviser
   Form ADV Part II (CRD No. 140047)

   Please retain a copy of Cervino Capital Management’s Disclosure Brochure for your records.
                                                                Managed Securities
                                                                Disclosure Brochure
                                                                 5-November-2009




Table of contents
1.      Introduction                                        3
1.1     Description of Services                             3
1.2     Advisory Representatives                            5
1.3     Business Background                                 5
2.      Investment Philosophy                               7
2.1     Consultative Investment Process                     7
2.2     Methodology and Diversification                     7
2.3     Active Portfolio Management                         8
2.4     Investment Analysis and Strategies                  9
2.5     Portfolio Construction and Administration          10
2.6     Account Size, Custody and Broker                   11
3. Advisory Fees                                           11
3.1 Fees Charged to the Account                            11
4. Investment Considerations                               12
4.1 Education and Business Standards                       12
4.2 Privacy Statement and Client Data                      12
4.3 Code of Ethics/Client Transactions                     13
4.4 Risks Regarding Asset Modeling                         14
4.5 Risks Associated with Options Trading                  14
4.6 Custody of Assets and Statements                       14
4.7 Solicitation and Third Party Compensation              15
4.8 Risks Regarding Electronic Trading                     15
4.9 Risk-Reducing Orders and Liquidity                     15
4.10 Insolvency Losses and Counterparty Risk               15
4.11 Taxation Matters: Consult Tax Adviser                 15
5. Conflicts of Interest                                   15
5.1 Other Business Activities and Affiliations             15
5.2 Proprietary Account Activities                         16
6.      Litigation                                         16
Appendix A - Part II Filing                                17




C er v i no Ca p it al M an a g em en t L L C
Th e ne xt ste p in t r ad it i ona l inve stm ents . ..               2 of 22
                                                                                                              Managed Securities
                                                                                                              Disclosure Brochure
                                                                                                               5-November-2009




1.      Introduction
        Cervino Capital Management LLC is a California limited liability company formed in August
        2005, and is a Registered Investment Adviser (RIA) offering discretionary and non-discretionary
        investment supervisory services to clients. This Disclosure Brochure provides prospective clients
        with information about Cervino Capital Management LLC (herein after referred to as the “Adviser”)
        that should be considered before or at the time of obtaining advisory services from the Adviser.
        This information has not been approved or verified by any governmental authority. Prospective
        investors should review this information and acknowledge receipt of this Disclosure Brochure
        prior to making an investment. Clients should retain a copy of this Brochure for their records.
        The Adviser’s administrative services office address, trading operations office address, telephone
        numbers, website and email address are below. All the records are kept and made available for
        inspection at the administrative services office, which is also the main business office.
        ADMINISTRATIVE SERVICES:                                   TRADING OPERATIONS:
        929 Santa Barbara Street                                   9811 Easton Drive
        Santa Barbara, CA 93101                                    Beverly Hills, CA 90210
        Tel: (310) 849-5818                                        Tel: (310) 874-5871
        Website: www.cervinocapital.com                            Email: info@cervinocapital.com
        The Adviser is also registered with the Commodity Futures Trading Commission (“CFTC”) as a
        Commodity Trading Advisor and is a member of the National Futures Association (“NFA”).

1.1     Description of Services
        The Adviser provides discretionary and non-discretionary investment supervisory services on a
        continuous and regular basis to its clients. For discretionary accounts, the Adviser has the
        authority, based upon the needs of each client, to determine, without obtaining explicit client
        consent, the specific securities or other investments to be bought or sold (including short sales),
        the amount of securities or other investments, and the timing and price of the transaction. For
        non-discretionary accounts, the Adviser has the ongoing responsibility to make recommendations,
        based upon the needs of each client, as to specific securities or other investments the account
        may purchase or sell (including short sales) and, if such recommendations are accepted by the
        client, is responsible for arranging or effecting the purchase or sale of such securities or other
        investments, with discretion as to the timing and price of the transaction.
        The Adviser provides advice to various types of clients, which includes, but is not limited to,
        individuals, retirement accounts, pension plans, profit sharing plans, trusts, estates, charitable
        organizations, corporations or other type of business entities, hedge funds, and non-U.S. persons.
        The type of investment supervisory service which the Adviser will provide to the account is
        initially determined by the Adviser and the client upon engagement for services.

1.1.1   Discretionary Services
        The Adviser offers two kinds of discretionary investment supervisory services: (i) structured
        portfolio management; and (ii) customized portfolio management.
        Structured Portfolio Management
        When providing structured portfolio management, the Adviser will manage client accounts
        similarly within the selected portfolios’ design parameters and long term investment objectives.
        Regular rebalancing of structured portfolios as well as tactical adjustments due to short or
        intermediate term market expectations will be based solely upon changes in the Adviser’s
        economic outlook and market opinion. The Adviser does not generally customize structured




        C er v i no Ca p it al M an a g em en t L L C
        Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                     3 of 22
                                                                                                                      Managed Securities
                                                                                                                      Disclosure Brochure
                                                                                                                       5-November-2009




        portfolios for specific clients; however, the Adviser will work with each client to identify
        his/her/its investment goals and timeframe as well as risk tolerance in order to determine if one or
        a combination of the Adviser’s structured portfolio(s) is appropriate in meeting the client’s long-
        term investment objectives.
        The Adviser offers the following two structured portfolio strategies:
               1.       Energy Income Advantage—This investment strategy utilizes Master Limited Partnerships
                        (MLPs) and oil tanker stocks in order to construct a portfolio which combines the
                        potential for appreciation plus high current yield and low correlation with other asset
                        classes. See Section 2.5 Portfolio Construction and Administration for further description.
               2.       Enhanced Yield Opportunities—This strategy utilizes both leveraged and non-
                        leveraged Closed-End Funds (CEFs) in order to construct a portfolio which combines
                        attractive investment income plus potential for capital appreciation. See Section 2.5
                        Portfolio Construction and Administration for further description.

        Customized Portfolio Management
        When providing customized portfolio management, the Adviser has the authority, based upon the
        needs of each client, to determine, without obtaining explicit client consent, the specific
        securities or other investments to be bought or sold (including short sales), the amount of
        securities or other investments, and the timing and price of the transaction. The Adviser will
        work with each client to identify his/her/its investment goals and timeframe as well as risk
        tolerance in order to develop a portfolio allocation strategy designed to complement the client’s
        financial priorities and objectives, including goals such as education funding, major purchases,
        starting a business, retirement planning and wealth transfer, etc. When implementing such
        portfolio allocation strategy, the Adviser may invest in various kinds of securities as described in
        Section 2.5 Portfolio Construction and Administration. Clients may place reasonable restrictions
        on the types of investments to be held in the portfolio.

1.1.2   Non-Discretionary Services
        When providing non-discretionary services, the Adviser will make recommendations as to specific
        securities or other investments the account may purchase or sell (including short sales) and, if
        such recommendations are accepted by the client, will be responsible for arranging or effecting
        the purchase or sale of such securities or other investments, with discretion as to the timing and
        price of the transaction. The Adviser will work with each client to identify his/her/its investment
        goals and timeframe as well as risk tolerance in order to develop a portfolio allocation strategy
        designed to complement the client’s financial priorities and objectives, including goals such as
        education funding, major purchases, starting a business, retirement planning and wealth transfer,
        etc. When implementing such portfolio allocation strategy, the Adviser may recommend various
        kinds of securities as described in Section 2.5 Portfolio Construction and Administration. Clients
        may place reasonable restrictions on the types of investments to be held in the portfolio.

1.1.3   Commodity Trading Advisor
        The Adviser, in combination with its Commodity Trading Advisor (CTA) registration, provides
        advice on hedging and/or speculative strategies using futures and options on futures in relation to
        the construction of the client’s securities portfolio, as well as the client’s unique risk profile and
        return objective. However, in order to participate in this advisory service, in addition to entering
        into the Adviser’s RIA advisory agreement, prospective clients will be required to receive the
        Adviser’s CTA Disclosure Document and agree to the CTA advisory services described therein.




        C er v i no Ca p it al M an a g em en t L L C
        Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                             4 of 22
                                                                                                             Managed Securities
                                                                                                             Disclosure Brochure
                                                                                                              5-November-2009




1.2   Advisory Representatives
      The Adviser’s investment advisory representatives (IARs) are Davide Accomazzo, Managing
      Director and Chief Investment Officer; Michael “Mack” Frankfurter, Managing Director, Chief
      of Operations, and Chief Compliance Officer; and Ernest Back, Associate Director and Portfolio
      Manager. As IARs, they may do some or all of the following: make recommendations regarding
      securities; manage accounts or portfolios of clients; determine what advice should be given; solicit
      the sale of investment advisory services; and supervise employees who perform any of the foregoing.

1.3   Business Background
      DAVIDE ACCOMAZZO—MANAGING DIRECTOR, CHIEF INVESTMENT OFFICER.
      Davide Accomazzo has been trading professionally since 1996. From July 1996 through
      December 1997 he was employed as a Euro-convertible bond/international equities sales trader
      for Jefferies and Company, Inc. in their New York office. In this position, he covered many
      international funds, including: Arca, La Generali, Hansberger, New Africa Fund/NCM,
      Cranberry Rock, Pontaray, The Weston Group, and Oppenheimer retail international desk. In
      January 1998 he left to trade his own capital and in November 1999 he started Kensington
      Offshore Limited, a speculative hedge fund which outperformed the S&P 500 market benchmark
      during the 1999 through 2002 equity markets’ boom and bust cycles. In February 2001 he
      launched Kensington Capital Management LLC, a commodity trading advisor that focused on
      trading options on futures and currency futures. Mr. Accomazzo was signed on by UBS Wealth
      Management USA in October 2004 to manage the portfolios of high net worth investors, and
      withdrew as principal and associated person of Kensington Capital Management LLC in
      November 2004. In October 2005, Mr. Accomazzo resigned from UBS having co-founded
      Cervino Capital Management LLC with Michael Frankfurter.
      Mr. Accomazzo was born in 1967 and received a Laurea in Political Sciences and International
      Relations at Universita' degli Studi Genova in 1990, a Masters in Arts in Mass Communication
      from California State University Northridge in 1992, and his MBA in Finance at the School of
      Business and Management at Pepperdine University in June 1996. During his academic career he
      worked in collaboration with Investment Technology Group (“ITG”) on projects that focused on
      automated portfolio management through Quantex, ITG’s electronic execution system. Since
      August 2007 Mr. Accomazzo has also served as an adjunct professor at Pepperdine University,
      Graziadio School of Business and Management, where he teaches courses on global capital
      markets and portfolio investment management.
      MICHAEL FRANKFURTER—MANAGING DIRECTOR, CHIEF OF OPERATIONS. Michael
      “Mack” Frankfurter started his career in the financial services industry in 1989 with Bank of
      America’s Business Services Division. In July 1991 he was recruited by private equity boutique
      The Echelon Group, Inc. as vice president in charge of operations of Echelon’s managed futures
      business. As an associated person, Mr. Frankfurter was involved with the startup, accounting,
      client services, compliance, backoffice and marketing of multiple Echelon-related joint venture
      CTAs including Dreiss Research Corporation, Jackson Grain Management, Longview Capital
      Management, Range Wise and Royal Petroleum Group. Mr. Frankfurter was also involved in
      activities related to the establishment of other Echelon-related ventures including Dignity
      Partners, Inc., a viatical settlement business. Dignity Partners institutionalized the viatical
      settlement industry by successfully completing a private placement of $50 million in securitized
      notes (voted “1995 Private Deal of the Year” by Investment Dealers Digest), and a subsequent
      initial public offering in 1996. Later renamed Point West Capital Corporation, the company
      launched a venture capital subsidiary, a correspondent broker subsidiary and a specialty business-
      lender subsidiary. During this time Mr. Frankfurter was responsible for implementing and
      maintaining both Echelon’s and Point West’s information systems while continuing to administer
      to Echelon’s managed futures business.




      C er v i no Ca p it al M an a g em en t L L C
      Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                      5 of 22
                                                                                                   Managed Securities
                                                                                                   Disclosure Brochure
                                                                                                    5-November-2009




Mr. Frankfurter left Echelon and Point West in January 1999. After spending some time off
sailing and traveling, he worked as a consultant on projects for FleetBoston Robertson Stephens
from May 1999 to April 2000. In January 2000 he briefly became an associated person of The
Pixley Group, an introducing broker, prior to being recruited in July 2000 by The Capital
Markets Company (Capco) as senior consultant to work as project manager for a private banking
startup and joint venture between Scudder Kemper and Thomas Weisel Partners. That long-term
project was followed by an international inter-company trading systems implementation for
Commerzbank involving Royalblue fidessa, and a T+1/STP readiness assessment for Bank of
Montreal. He left Capco in April 2002 and in May 2002 founded NextStep Strategies, LLC
which focused on consulting and headhunting for financial services companies. NextStep
Strategies was also registered as a CTA and commodity pool operator from March 2003 to July
2004. Mr. Frankfurter joined UBS Financial Services, Inc. in May 2004 in their Beverly Hills
office and provided financial advisory services to clients until June 2005. He rejoined NextStep
Strategies, LLC in July 2005 and co-founded Cervino Capital Management LLC with Davide
Accomazzo in August 2005. In September 2007 Mr. Frankfurter became an associated person of
Managed Account Research, Inc. (“MARI”), an introducing broker, where he functions as chief
investment strategist and provides strategic business advice. Mr. Frankfurter was born in 1964
and graduated in 1985 from Moorpark College with an Associate in Arts degree and attended
California State University Northridge from 1986 to 1988.
ERNEST M. BACK—ASSOCIATE DIRECTOR, PORTFOLIO MANAGER. Ernest M. Back
began his financial services career in 1976 as a trainee in the Treasury Division at Citibank.
While at Citibank, he worked as a Fed Funds trader, the USD/Yen trader and later as a
Eurocurrency trader/arbitrageur. During this time, Citibank established the first international
treasury management program in Athens, Greece—managed by Shakut Assiz who later became
Prime Minister of Pakistan—where Mr. Back participated as one of the first two home office
representatives. In 1979, Mr. Back co-founded Fineback Commodities, Ltd., which held
memberships on all New York commodity exchanges, and where he operated as a floor trader in
oil and cotton at the New York Mercantile Exchange and New York Cotton Exchange. In 1981,
Mr. Back became assistant vice president and Manager of the Corporate FX Advisory Desk at
Deutsche Bank before being recruited by Merrill Lynch in 1982 where he created and
implemented the world’s first global 24 hour margined interbank trading product. As a result of
the success of Forex, Mr. Back was promoted to Head of New York Foreign Exchange Trading
and Sales. It was also during his tenure at Merrill Lynch that currency options were introduced
and Mr. Back had the responsibility of supervising currency options trading. Mr. Back was asked
by his former Merrill Lynch boss to join Manufactures Hanover in June 1987—which is now part
of JP Morgan Chase—as Head of Global Marketing for the FX and Swaps Division. Mr. Back
left Manufacturers Hanover in November 1989 to work as an independent consultant.
In June 1991 he joined ISYS Technology, a software development company, as their Chief
Operating Officer. He returned to his trading roots at Credit Suisse New York in May 1994 as a
forward rate agreement trader. Mr. Back moved from New York to California, and in June 1997
joined Salomon Smith Barney in Beverly Hills as a financial consultant. While at Salomon Smith
Barney he joined what subsequently became known as the Schirripa Group upon the retirement
of founder and legendary advisor, Alan Minter. The group moved to UBS Financial Services in
March 2001 where Mr. Back was account vice president. Mr. Back left UBS Financial Services,
and joined Cervino Capital Management in October 2009. Mr. Back was born in 1953 and has a
Bachelor of Arts degree in Economics from Tulane University in New Orleans (1975) and an
MBA from its Graduate School of Business (1976) with a concentration in finance and
accounting. Mr. Back’s interests include photography, ski mountaineering and cycling.




C er v i no Ca p it al M an a g em en t L L C
Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                  6 of 22
                                                                                                                  Managed Securities
                                                                                                                  Disclosure Brochure
                                                                                                                   5-November-2009




2.    Investment Philosophy
2.1   Consultative Investment Process
      The Adviser’s investment process comprises of four steps: (i) identifying and assessing the client’s
      financial needs, investment objectives and risk tolerance; (ii) developing an investment strategy
      and proposing long-term asset allocation guidelines; (iii) agreeing upon and implementing
      investment recommendations; and (iv) periodic portfolio reviews and rebalancing of investments
      including tactical adjustments in response to shorter-term market expectations for different asset
      classes. The Adviser views this investment process as a continuum, with each step revisited as
      the client’s financial needs and investment objectives evolve during his or her lifetime.
      The type of investment supervisory service which the Adviser will provide to the account is
      initially determined by the Adviser, vis-à-vis the IAR primarily assigned to the account, and the
      client. After engagement, the Adviser will review each client’s account at least quarterly and will
      initiate or recommend changes based upon the Adviser’s economic outlook and market opinion
      as well as changes that may have occurred in the client’s stated priorities, goals and objectives.
      Generally, the Adviser will endeavor to help the client meet his/her/its investment objectives
      through regular interaction, in addition to a formal annual review as prescribed by regulations.
      When working with individual clients, the Adviser will endeavor to consider each client’s
      circumstances as it relates to the various stages of an investor’s life cycle: wealth accumulation,
      preservation and transfer. During the wealth accumulation stage, investors seek financial security
      and manage liabilities, save for major expenditures, begin to fund retirement, provide for children’s
      education and begin creating a legacy. Wealth preservation emphasizes conserving income and assets,
      management of cash flow, income taxes and retirement plan distributions as well as protection of
      assets in the event of disability, long-term care or death. Wealth transfer encompasses
      distribution of the investor’s estate to designated beneficiaries at the appropriate time and in the
      appropriate manner, and may include the transfer of wealth during the investor’s lifetime.

2.2   Methodology and Diversification
      The Adviser believes that adopting the proper asset allocation suited to each client’s needs is a
      key determinant of success in reaching the client’s financial goals. Portfolio recommendations
      are designed around four investor profiles: current income, income and growth, moderate growth,
      aggressive growth. Generally, these investor profiles are described as follows:
                     The primary objective of the ‘current income’ profile is to secure a stable income stream
                      from reliable investments with an emphasis on principal protection. Current income
                      investors are usually conservative in terms of risk.
                     The ‘income and growth’ investor primarily seeks a balance between fixed income for
                      current income and equities for growth of capital and dividends. In terms of risk
                      tolerance, an income and growth investor tends to be conservative-to-moderate.
                     ‘Moderate growth’ investors target wealth accumulation, rather than current income
                      over a long time horizon. Moderate growth investors tend to be willing to tolerate a
                      moderate-to-high amount of principal risk.
                     The ‘aggressive growth’ client seeks above average capital growth over a long time
                      horizon with little or no concern for income. Aggressive growth investors are more
                      speculative and willing to accept a high degree of risk or volatility of returns.
      Portfolio diversification is a widely embraced investment strategy that helps counteract the
      unpredictability of the markets. A diversified portfolio helps reduce investment risk because the
      portfolios overall return is not limited to the performance of one specific security but is open to




      C er v i no Ca p it al M an a g em en t L L C
      Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                           7 of 22
                                                                                                                        Managed Securities
                                                                                                                        Disclosure Brochure
                                                                                                                         5-November-2009




      the performance represented by a collection of securities. In this way a single poorly performing
      investment is unlikely to compromise the entire portfolio. Additionally, investing in a selection
      of securities with differing investment characteristics and degrees of market sensitivity can help
      limit volatility in turbulent markets. A well-diversified portfolio can provide investors with the
      opportunity for growth with less overall portfolio volatility.
      Asset allocation is the strategic combination of securities from different asset classes, such as
      cash equivalents, fixed income, and equities to create a diversified investment portfolio. The term
      “asset class” describes a group of securities or type of investment that share similar risk and
      return characteristics. Blending different categories of securities within each asset class adds
      another layer of diversification to a portfolio. It is possible to diversify a portfolio beyond the
      traditional cash, fixed income and equity investments to include more focused sources of risk and
      return, such as market capitalization (e.g., small-capitalization stocks), credit quality (e.g., high-
      yield bonds), economic sectors (e.g., transportation, technology, healthcare), geographic regions
      (e.g., Europe, Asia, South America), and investment styles (e.g., growth versus value). Since all
      these asset classes have different risk and return characteristics, they are less correlated with each
      other, and there are potential benefits to be derived from combining such assets in a portfolio.

2.3   Active Portfolio Management
      There are several approaches to asset allocation, which differ in their required levels of active
      management and assumptions about investors’ risk tolerances, and about changes in economic
      and market expectations. Below are descriptions of some of the most popular forms:
                     Buy and hold – The most basic approach to asset allocation is a buy-and-hold strategy, in
                      which an investor determines an initial allocation—for example 40% cash equivalents and
                      60% stocks—and then holds this portfolio throughout market fluctuations, without making
                      adjustments. In the buy-and-hold approach, an investor will hold a greater percentage of
                      stocks as stocks appreciate and a smaller percentage of stocks as stocks depreciate. Thus,
                      the buy-and-hold approach to asset allocation implicitly assumes that the investor’s risk
                      tolerance, defined as the willingness to hold stocks, changes with the level of wealth.
                     Strategic – Another approach is strategic asset allocation or constant-mix allocation. In
                      strategic asset allocation, the investor establishes target portfolio percentages for each
                      asset class, based on long-term capital market assumptions and the investor’s long-term
                      attitude toward risk. Periodic adjustments are made to restore this targeted portfolio mix
                      as the relative values of the asset classes change with respect to each other. Accordingly,
                      asset classes that have grown at a faster rate are sold and those that have grown at a
                      slower rate are purchased. Implicitly, strategic asset allocation assumes that the
                      investor’s risk tolerance does not change with short-term fluctuations in the level of
                      wealth. Nevertheless, in practice a constant mix target allocation can be reviewed
                      periodically and revised to reflect changes in the investor’s circumstances.
                     Tactical – In tactical asset allocation, the portfolio’s target asset allocation is adjusted to
                      reflect changes in the investor’s own shorter-term market expectations for the different
                      asset classes. Often, such adjustments reflect views about future market developments
                      that are contrary to mainstream thinking. Exposure to asset classes that have appreciated
                      beyond estimated fair value are reduced and the proceeds are reinvested in asset classes
                      that are undervalued. Like strategic asset allocation tactical asset allocation implicitly
                      assumes that an investor’s risk tolerance is stable over the investment horizon,
                      regardless of the level of wealth. Unlike strategic asset allocation, tactical asset
                      allocation anticipates changes in the relative value of different asset classes and seeks to
                      benefit from adjusting the portfolio mix before these changes occur.




      C er v i no Ca p it al M an a g em en t L L C
      Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                                 8 of 22
                                                                                                                     Managed Securities
                                                                                                                     Disclosure Brochure
                                                                                                                      5-November-2009




      Rebalancing portfolios is an important part of the process and involves the periodic review of the
      current asset allocation to identify and correct any deviation from the original asset allocation
      strategy and investor’s longer-term risk tolerance. Rebalancing potentially helps realize profits in an
      outperforming asset class before it begins to underperform, and increase the weight to an
      underperforming asset class before it begins to improve. Thus, within strategic asset allocation,
      rebalancing can increase an investor’s chances of selling high and buying low.

2.4   Investment Analysis and Strategies
      The Advisor generally relies on fundamental, technical or quantitative analysis, or a combination
      of each, in making trading decisions and attempting to anticipate price movements.
      Fundamental analysis looks at the factors that affect the supply and demand of a particular financial
      asset or commodity in order to predict the expected market price for that asset. Such factors include,
      but are not limited to, government actions (e.g., monetary policy, fiscal policy, regulation, price
      controls, etc.), the release of information concerning weather conditions (e.g., reports of frost in certain
      growing areas), or the release of economic statistics (e.g., Consumer Price Index, Housing Starts,
      Unemployment Rate, etc.) resulting in actual or probable significant price movements.
      Technical analysis is not based on the anticipated supply and demand of the spot or cash
      commodity or financial asset; instead, it is based on the theory that a study of the movement of
      markets themselves will provide a means of anticipating future prices. Technical analysis often
      includes the study of intra-day, daily, weekly, and monthly prices, volume and open interest data,
      and utilizes charts and/or computers for analysis of these items. Another type of technical analysis
      is market sentiment which is based on the theory of contrary opinion and assumes that when
      investors swing to emotional extremes they are likely to be overreacting. Sentiment indicators such
      as short sales or put and call activity is used to highlight junctures of bullish excess (overbought)
      and bearish excess (oversold), which are useful leading indicators of trend exhaustion.
      In addition to fundamental and technical analysis, trading decisions may be based on quantitative
      analysis, a technique that seeks to understand price behavior by using complex mathematical and
      statistical modeling, measurement and research. For example, since an option’s price is a
      function of its strike price, time to expiration, underlying asset’s price and volatility, and short-
      term interest rates, it is logical that a formula can calculate option prices from these variables.
      Therefore, utilizing statistical analysis, a model of price variation on a particular security may be
      used to theoretically determine the fair value of an option on such security.
      In developing its market opinion and evaluating potential trades, the Advisor generally uses a
      blended combination of mechanical signals and subjective interpretation of fundamental studies,
      technical and sentiment indicators, as well as statistical probability analysis. This research
      includes, but is not limited to, continuous analysis of short- and long-term price series, the impact
      of seasonal and cyclical price movements upon the underlying price trend, fundamental factors
      affecting supply and demand influences, and application of statistical models in order to consider
      risk factors associated with various trading opportunities. The intent is to identify and arbitrage
      price discrepancies that reflect under- and over-valuations as well as directional trend bias or
      trend-reversal/mean reversion opportunities, and to produce a replicable trade execution process
      consisting of positions with statistically high probabilities of positive outcomes. To accomplish
      this goal, the Advisor utilizes options to structure complex positions that within one or across
      several underlying asset exposures can tactically reflect one or more trading perspectives, such as
      hedged relative value, fundamentally-based, or volatility/opportunistic investment strategies.




      C er v i no Ca p it al M an a g em en t L L C
      Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                              9 of 22
                                                                                                                     Managed Securities
                                                                                                                     Disclosure Brochure
                                                                                                                      5-November-2009




2.5   Portfolio Construction and Administration
      When providing customized portfolio management or non-discretionary services, the Adviser
      will construct investment portfolios consisting of, but not limited to: individual domestic and
      foreign equities both exchange listed and over-the-counter; warrants; fixed income instruments
      including, but not limited to, United States and foreign government securities, domestic and
      foreign corporate debt securities, commercial paper, certificates of deposit and municipal
      securities; investment company securities such as variable life insurance, variable annuities and
      mutual fund shares; exchange traded funds (ETFs); closed-end funds; master limited partnerships
      (MLPs); no-load mutual funds; load-waived mutual funds (front-end and back-end commissions
      will not be charged); money market instruments; interests in partnerships including investment in
      real estate and oil and gas interests; and other securities, including, but not limited to, convertibles,
      currencies or forex, option contracts on securities, and over-the-counter derivatives.
      When providing structured portfolio management, the Adviser will implement either of the
      following two standardized portfolios:
             1.       Energy Income Advantage—This investment portfolio is constructed primarily of
                      Master Limited Partnerships (MLPs) and oil tanker stocks. MLPs are publicly traded
                      interests in businesses organized as limited partnerships but traded like stocks. Most
                      MLPs are involved in some form of energy distribution or transportation. MLPs
                      typically distribute cash generated by the business and report taxable income annually
                      on Form K-1. The Adviser conducts fundamental analysis of individual MLPs and oil
                      tankers and then compares the mixture of expected growth and income in order to
                      determine portfolio selection. After the portfolio has been established in the client’s
                      account, the Adviser closely monitors each MLP and oil tanker stocks for company
                      specific risks and reduces or removes such positions when prudent.
             2.       Enhanced Yield Opportunities—This investment portfolio is constructed primarily of
                      leveraged and non-leveraged Closed-End Funds (CEFs). Closed-end funds are
                      professionally managed investment companies that offer an array of benefits unique in
                      the investment world. While often compared to open-end mutual funds, CEF shares are
                      listed on exchanges and bought and sold in the open market. Accordingly, they trade in
                      relation to, but independent of, their underlying net asset values (NAVs). The Adviser
                      conducts fundamental analysis of individual CEFs, and then compares historical
                      discount/premium pricing, as well as dividends and distributions for prospective total
                      return potential in order to determine relative value and the portfolio selection. After the
                      portfolio has been established in the client’s account, the Adviser closely monitors each
                      CEF for specific risks and reduces or removes such positions when it deems prudent.
      When providing advisory services under its CTA registration, the Adviser will implement
      hedging and/or speculative strategies using futures and options on futures in relation to the
      construction of the client’s securities portfolio, as well as the client’s unique risk profile and
      return objective. Such strategies will include exchange-traded futures and options on futures
      contracts, including, but not limited to: stock indices, fixed income, currencies, energies, metals,
      and agriculturals such as grains, livestock and softs. As stated previously in Section 1.1.3
      Commodity Trading Advisor, participation in this advisory service requires receipt of the
      Adviser’s CTA Disclosure Document and agreement to the CTA advisory services described
      therein. Futures accounts must be maintained with a Futures Commission Merchant.
      The Adviser does not vote proxies for clients, and as a matter of practice will not take any action
      or render any service with respect to the voting of proxies. Further, the Adviser cannot provide
      legal advice, and therefore is not obligated to render any advice or take any action on behalf of a
      client with respect to the voting of proxies of any securities or other investments held in the
      account, which becomes subject to any legal proceedings, including bankruptcies.




      C er v i no Ca p it al M an a g em en t L L C
      Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                              10 of 22
                                                                                                                Managed Securities
                                                                                                                Disclosure Brochure
                                                                                                                 5-November-2009




2.6   Account Size, Custody and Broker
      The minimum account size is $100,000, provided however, that under certain circumstances the
      Adviser may in its sole discretion accept smaller accounts.
      The Adviser does not maintain custody of client assets, which shall be held by an independent
      custodian selected by the client. Clients will receive transaction confirmations and monthly or
      quarterly statements from their account custodians. Custodial fees charged by the custodian are
      exclusive of, and in addition to, management fees paid to the Adviser. It is important to note that the
      client, not the Adviser, is responsible for fulfilling any margin requirements with the custodian.
      The Adviser typically places trades through the custodian selected by the client, who shall likewise
      act as broker-dealer for the account. Accordingly, transactions for each client account will be
      effected independently. It should be noted that placing trades through the custodian may not result
      in the “best execution” for each trade. Brokerage commissions, and/or other fees charged by the
      broker-dealer are exclusive of, and in addition to, management fees paid to the Adviser.
      Neither the Adviser nor any of its affiliated persons receive any portion of the custodial fees,
      brokerage commissions or other fees charged by the custodian and/or broker-dealer. Furthermore,
      the Adviser will not receive front-end or back-end sales load from any investment product(s) it
      may purchase on behalf of the client’s account(s). In addition, the Adviser does not participate in
      “soft dollar commission” programs with any custodian and/or broker-dealer in order to offset the
      purchase costs of research-related products and services.
      The Adviser may recommend that prospective clients custody their account(s) with a specific
      custodian including, but not limited to, broker-dealers such as Interactive Brokers LLC (“IAB”)
      or Fidelity Brokerage Services LLC (“Fidelity”). It is important to note that IAB and Fidelity do
      not maintain supervisory relationships with respect to the Adviser or its representatives.

3.    Advisory Fees
3.1   Fees Charged to the Account
      The client shall pay the Adviser a management fee in arrears for its services. The management fee
      will be based on a percentage of the account’s asset value (i.e., fair market value of the portfolio
      under management as reflected on the client’s brokerage statements) as of the last business day
      of each calendar month or quarter, in accordance with the advisory agreement signed by the
      client. For new accounts the management fee shall be calculated on a pro rata basis as of the date
      of the advisory agreement. To the extent that there are any additions or withdrawals during the
      month or quarter, the management fee shall be adjusted on a pro rata basis for such additions or
      withdrawals as of the date such additions or withdrawals are made. Management fees will become
      due the day following the last business day of each calendar period in which the management fee
      was calculated. All management fees that have not been paid shall accrue to the benefit of the
      Adviser. The management fee will be paid whether or not the account has earned a profit for the
      calendar period. Although management fees may vary depending on individual circumstances,
      the following annualized negotiable fee schedule will apply unless otherwise agreed to:
                  Account Asset Value                            Management Fee
                                                                 1.50% Annually (0.001250% Monthly)
                  On the first $500,000
                                                                 or 1.50% Annually (0.3750% Quarterly)
                  On amounts between $500,001                    1.25% Annually (0.001042% Monthly)
                  and $1,000,000                                 or 1.25% Annually (0.3125% Quarterly)
                                                                 1.00% Annually (0.000833% Monthly)
                  For amounts over $1,000,000
                                                                 or 1.00% Annually (0.2500% Quarterly)




      C er v i no Ca p it al M an a g em en t L L C
      Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                         11 of 22
                                                                                                            Managed Securities
                                                                                                            Disclosure Brochure
                                                                                                             5-November-2009




      The Adviser's management fee will be debited from the client's account upon the custodian’s
      receipt of an invoice from the Adviser. If there is not adequate cash in the account to pay the
      Adviser its fees, then it may be necessary to liquidate account assets to cover those expenses,
      which may result in a loss to client. In the event the advisory agreement is terminated by either
      party, the management fee shall be calculated on a pro rata basis as of the date termination
      occurred. If the custodian does not permit fees to be debited from the client’s account, the client
      will pay management fees to the Adviser directly. Clients shall remain responsible for the
      payment of all accrued management fees that have not been paid to the Adviser.
      In addition to the Adviser’s management fee, the client may also incur certain charges imposed
      by unaffiliated third parties. Such charges include, but are not limited to, custodial fees,
      brokerage commissions, transaction fees, and/or other charges imposed directly by a mutual
      fund, index fund, or exchange traded fund purchased for the account which shall be disclosed in
      the funds prospectus (i.e., fund management fees and other fund expenses), wire transfer fees and
      other fees and taxes on brokerage accounts and securities transactions.
      Client acknowledges and agrees that the Adviser may charge the custodian for certain additional
      assets managed by the Adviser on behalf of the client but not held by the custodian (e.g., futures
      accounts, variable annuities, mutual funds, 401-K, etc.).
      No portion of the Adviser’s compensation shall be based on capital gains or capital appreciation
      of the assets except as provided for under the Investment Advisers Act of 1940.

4.    Investment Considerations
      This section does not disclose all of the risks and other significant aspects of the Adviser’s
      investment program. Investors should carefully consider all of the risk factors described in this
      section and elsewhere in this Disclosure Brochure before engaging the Adviser’s advisory services.

4.1   Education and Business Standards
      The Adviser requires that IARs involved in determining or providing investment advice to clients
      meet certain general standards of education and experience in the financial services industry.
      Specifically, persons providing investment advice should be registered as an IAR with the
      equivalent of a Series 65 or Series 66 license, or the equivalent professional designation (e.g.,
      CFP, CFA or equivalent), or have at least ten (10) years of financial industry experience. The
      education and business background of each IAR who provides general investment advice to
      clients is described in Section 1.3 Business Background.

4.2   Privacy Statement and Client Data
      The Adviser is committed to safeguarding the confidential information of its clients and holds all
      personal information provided to it in the strictest confidence. These records include all personal
      information that the Adviser collects from its clients or receives from other firms in connection
      with any of the financial services they provide. The Adviser also requires other firms with whom
      they deal to restrict the use of clients’ information. The Adviser’s Privacy Policy is available
      upon request and upon client’s engagement of the firm’s services. For existing clients, the
      Adviser will provide its Privacy Policy on an annual basis. The Adviser will continue to follow
      its Privacy Policy for clients who have terminated his/her/its relationship, but he/she/it will not
      receive future notices from the Adviser.




      C er v i no Ca p it al M an a g em en t L L C
      Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                     12 of 22
                                                                                                                        Managed Securities
                                                                                                                        Disclosure Brochure
                                                                                                                         5-November-2009




4.3   Code of Ethics/Client Transactions
      The Adviser and/or its IARs may buy or sell for proprietary and/or personal account(s) securities
      or investment products identical to those recommended to clients. It is the expressed policy of
      the Adviser that neither the Adviser, nor its IARs, may purchase or sell any individual security
      for proprietary and/or personal account(s) immediately prior to a transaction(s) being
      implemented for an advisory account in which the client’s order will predictably affect the price
      of the security. This policy is meant to prevent the Adviser and/or its IARs from benefiting as a
      result of transactions placed on behalf of client accounts. The Adviser has established the
      following procedures in order to ensure its fiduciary responsibilities to clients are met:
             1) The Advisers’ IARs shall not buy or sell securities for their personal portfolio(s) where their
                decision is substantially derived, in whole or in part, by their role as an IAR of the Adviser,
                unless the information is also available to the investing public upon reasonable inquiry. In no
                case, shall the Adviser’s IARs prefer their own interest to that of their advisory clients.1 2
             2) The Adviser recognizes it must act in accordance with all applicable Federal and State
                regulations governing registered investment advisory practices, including, but not limited
                to legal prohibitions against “insider trading.” Accordingly, the Adviser has adopted
                policies reasonably designed to prevent the misuse of material non-public information.
      Additionally, the Adviser understands that “best execution” and its relation to “soft dollars” is
      important to supervise and to regulate within the company. Because clients select the custodian
      and broker-dealer for their account, they will typically forego any benefit from savings on
      execution costs that might be available through negotiated volume discounts or batched orders.
      Nevertheless, the Adviser will seek the best terms reasonably available under the circumstances,
      and does not collect any “commission” for execution of trades beyond the management fee
      collected for its investment supervisory services. It is important to note that the Adviser typically
      does not purchase “hot issues” for clients. To the extent that hot issues are purchased for clients,
      the Adviser will ensure that trade allocation procedures are fair and equitable.
      As a fiduciary under the Investment Advisers Act of 1940, the Adviser recognizes:
                     it has an affirmative duty of utmost good faith to act solely in the best interests of the
                      client and to make full and fair disclosure of all material facts, particularly where our
                      interest may conflict with the clients;
                     the duty to render disinterested and impartial advice;
                     the duty to make suitable recommendations to clients in light of their needs, financial
                      circumstances and investment objectives;
                     the duty to exercise a high degree of care to insure that adequate and accurate
                      representations and other information about securities are presented to clients; and
                     the duty to have an adequate basis in fact for its recommendations, representations and
                      projections.


      1
        This investment policy has been established recognizing that the majority of securities being considered for
      purchase and sale on behalf of the Adviser’s clients trade in sufficiently broad markets to permit transactions
      by clients to be completed without an appreciable impact on the markets of the securities. Under certain
      circumstances, exceptions may be made to the policies stated above. Records of these trades, including the
      reasons for the exceptions, will be maintained with Adviser’s records in the manner set forth above.
      2
        Open-end mutual funds and/or the investment sub-accounts which may comprise a variable insurance
      product are purchased or redeemed at a fixed net asset value price per share specific to the date of purchase
      of redemption. As such, transactions in mutual funds and/or variable insurance products by the Adviser are
      not likely to have an impact on the prices of the fund shares in which clients invest, and are therefore not
      prohibited by the Adviser’s Compliance Manual and Written Supervisory Procedures.




      C er v i no Ca p it al M an a g em en t L L C
      Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                                 13 of 22
                                                                                                                       Managed Securities
                                                                                                                       Disclosure Brochure
                                                                                                                        5-November-2009




4.4   Risks Regarding Asset Modeling
      The Adviser’s investment supervisory services and asset allocation recommendations have been
      developed based on historical performance of the standard asset classes (stocks, bonds and cash)
      and of representative index fund products, including ETFs and index funds, as well as concepts
      of modern portfolio theory. Performance from such investment models are hypothetical and do
      not reflect actual investment results nor do they guarantee future results. The Adviser’s analysis
      primarily focuses on index ETFs and index funds that track to broad indexes, including foreign
      equity, domestic equity and bond indexes. Equity-based ETFs and index funds are subject to
      risks similar to those of stocks, and fixed income-based ETFs and index funds are subject to risks
      similar to those of bonds. Investment returns will fluctuate and are subject to market volatility,
      including the risk that an investor’s shares, when redeemed or sold, may be worth more or less
      than their original cost. Foreign-based ETFs have unique and greater risks than domestic-based
      ETFs. Past performance is no guarantee of future results.

4.5   Risks Associated with Options Trading
      The client may authorize the Advisor to trade options contracts on securities. Transactions in
      options carry a high degree of risk. Purchasers and sellers of options need to be familiar with the
      type of option (i.e., put or call) being traded and the associated risks, including the extent to
      which the value of the option must increase before the position becomes profitable, taking into
      account the premium and all transaction costs.
      The purchaser of options may offset or exercise the options or allow the options to expire. The
      exercise of an option results in either a long or short position in the underlying asset depending if the
      option is a call or put. If the option is on a security, the purchaser will acquire a long or short securities
      position with associated liabilities for settlement. If the purchased options expire worthless, the
      investor will suffer a total loss of their investment. When purchasing deep out-of-the-money options,
      investors should be aware that the chance of such options becoming profitable is ordinarily remote.
      Selling ("writing" or "granting") an option generally entails considerably greater risk than
      purchasing options. Although the premium received by the seller is fixed, the seller may sustain a
      loss well in excess of that amount. The seller will also be exposed to the risk of the purchaser
      exercising the option and the seller being obligated to either settle the option in cash, or to deliver or
      acquire the underlying asset depending if the option is a call or a put. If the option is on a security,
      the seller will acquire a securities position with associated liabilities for settlement. If the option is
      "covered" by the seller holding a corresponding position in the underlying asset or another option,
      the risk may be reduced. If the option is not covered, the risk of loss can be unlimited.
      The writer of an American-style option is subject to being assigned an exercise notice at any time
      after the writer has written the option until the option expires. By contrast, the writer of a
      European-style option is subject to exercise assignment only during the exercise period.
4.6   Custody of Assets and Statements
      Clients must open and maintain a securities brokerage account with a broker-dealer with whom
      the client’s assets will be custodied and maintained. Clients will receive trade confirmations and
      monthly or quarterly account statements from their brokerage firm reflecting all transactions
      entered into by the Adviser on the client’s behalf. These records should be reviewed immediately
      upon receipt in order to monitor the status of the account and should be retained by the client for
      future reference. Over the term of the Adviser-Client relationship, total fees paid to the Adviser
      may result in amounts in excess of trading and execution costs that might have been incurred on
      a per transaction commission only basis.




      C er v i no Ca p it al M an a g em en t L L C
      Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                                14 of 22
                                                                                                              Managed Securities
                                                                                                              Disclosure Brochure
                                                                                                               5-November-2009




4.7    Solicitation and Third Party Compensation
       The Adviser plans to directly or indirectly compensate persons for client referrals, but currently
       does not have any such arrangements. If the Adviser enters into such agreements, the client will
       be informed in writing about the terms of compensation paid by the Adviser to solicitors and will
       be provided with a solicitation disclosure statement and Part II of Advisers Form ADV.

4.8    Risks Regarding Electronic Trading
       The Adviser will undertake on behalf of clients transactions on electronic trading systems and
       clients will be exposed to risks associated with such system(s) including the failure of hardware
       and software. The result of any system failure may be that the Adviser’s order is either not
       executed according to instructions or is not executed at all.

4.9    Risk-Reducing Orders and Liquidity
       The placing of certain contingent orders such as “stop-loss” or “stop-limit” orders which are
       intended to limit losses to certain amounts may not be effective because market conditions may
       make it impossible to execute such orders. Another instance of difficult or impossible execution
       occurs in markets which lack sufficient trading liquidity. Liquidity in markets changes over time
       and may impact the price at which a transaction may be executed.

4.10   Insolvency Losses and Counterparty Risk
       The client should familiarize themselves with the protections accorded money or other property
       they deposit with their custodian for domestic and foreign securities transactions, particularly in
       the event of a firm insolvency or bankruptcy. The extent to which the client may recover their
       money or property may be governed by specific legislation or local regulations. In some
       jurisdictions, property which had been specifically identifiable as the clients will be pro-rated in
       the same manner as cash for purposes of distribution in the event of a shortfall.

4.11   Taxation Matters: Consult Tax Adviser
       The relevant tax laws related to investment in the securities markets are complex. Furthermore,
       different considerations apply to each investor depending on his or her particular circumstances.
       The Adviser does not provide or purport to provide tax advice to any prospective investor or
       existing client. Each prospective investor or existing client should consult his or her tax adviser
       as to the tax consequences of an investment in the Adviser’s investment program.

5.     Conflicts of Interest
5.1    Other Business Activities and Affiliations
       The Adviser is also registered with the Commodity Futures Trading Commission and is a
       member of the National Futures Association. Futures and options on futures trading account for
       about sixty (60%) percent of the Adviser’s time, which is currently conducted primarily through
       MF Global, Inc., PFG, Inc., Rosenthal Collins Group LLC, Penson GHCO, and optionsXpress, Inc.

       Mr. Frankfurter is a member and manager of NextStep Strategies, LLC which is located at 747
       Arrowood Lane, Suite 198, Oak Park, CA 91377. The main business of NextStep Strategies,
       LLC is to provide permanent and temporary employee recruitment services for companies in the
       financial services industry. On occasion NextStep Strategies, LLC also provides strategy
       consulting services to non-affiliated businesses including financial services-related companies.
       Mr. Frankfurter devotes approximately twenty (20%) percent of his time to the business activities




       C er v i no Ca p it al M an a g em en t L L C
       Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                      15 of 22
                                                                                                             Managed Securities
                                                                                                             Disclosure Brochure
                                                                                                              5-November-2009




      of NextStep Strategies, LLC, which includes consulting services to Managed Account Research,
      Inc., a futures broker of which Mr. Frankfurter is registered as an Associated Person. In addition,
      Mr. Accomazzo, as adjunct professor of Pepperdine University, Graziadio School of Business
      and Management, devotes approximately twenty percent (20%) of his time to teaching. Finally,
      Messrs. Frankfurter and Accomazzo may act as finders for private equity investments. This
      activity would be conducted separately from the Adviser and would account for less than one-
      percent (1%) of their time.

5.2   Proprietary Account Activities
      The principals of the Adviser as well as the Adviser’s IARs have in the past and will continue in
      the future to trade securities for their own accounts, and that the trading activity in their
      individual accounts may differ from the investment activity in any client account managed by the
      Adviser. In fact, it is possible that the positions taken by the Adviser’s representatives for their
      individual accounts may not be held for the same period of time as, and may even be opposite to,
      those positions taken by the Adviser on behalf of its client accounts. No assurance may be given
      that the investment results in the accounts of the Adviser’s principals, Adviser’s IARs, or the
      Adviser’s proprietary account(s) will be the same as the performance in any client account
      managed by the Adviser. Inspection by prospective and existing clients of the principals’ or IARs’
      personal accounts, or the Adviser’s proprietary account(s) will be reviewed on a case by case basis.

6.    Litigation
      THERE HAVE BEEN NO MATERIAL ADMINISTRATIVE, CIVIL OR CRIMINAL ACTIONS
      AGAINST THE ADVISER OR ANY OF ITS PRINCIPALS.




      C er v i no Ca p it al M an a g em en t L L C
      Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                      16 of 22
                                                                                                                                                                                          Managed Securities
                                                                                                                                                                                          Disclosure Brochure
                                                                                                                                                                                           5-November-2009




Appendix A - Part II Filing


FORM ADV                                Uniform Application for Investment Adviser Registration

Part II - Page 1

Name of Investment Adviser:
Cervino Capital Management LLC
Address:             (Number and Street)                                             (City)                               (State)       (Zip Code)                 Area Code:      Telephone Number:
929 Santa Barbara Street                                                               Santa Barbara                         CA          93101                     (310) 849-5818


                           This part of Form ADV gives information about the investment adviser and its business for the use of clients.
                                         The information has not been approved or verified by any government authority.




                                                                                              Table of Contents


        Item Number                                        Item                                                                                                                               Page
                     1                                     Advisory Services and Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            2
                     2                                     Types of Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                    2
                     3                                     Types of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        3
                     4                                     Methods of Analysis, Sources of Information and Investment Strategies . . . . . .                                                       3
                     5                                     Education and Business Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                4
                     6                                     Education and Business Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                   4
                     7                                     Other Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         4
                     8                                     Other Financial Industry Activities or Affiliations . . . . . . . . . . . . . . . . . . . . . . . .                                     4
                     9                                     Participation or Interest in Client Transactions . . . . . . . . . . . . . . . . . . . . . . . . . .                                    5
                    10                                     Conditions for Managing Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                  5
                    11                                     Review of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        5
                    12                                     Investment or Brokerage Discretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                6
                    13                                     Additional Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           6
                    14                                     Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                   6
                                                           Continuation Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           Schedule F
                                                           Balance Sheet, if required. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . .. .              Schedule G




C er v i no Ca p it al M an a g em en t L L C
Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                                                                                     17 of 22
                                                                                                                                                                                    Managed Securities
                                                                                                                                                                                    Disclosure Brochure
                                                                                                                                                                                     5-November-2009




FORM ADV                                    Applicant:                                                                            SEC File Number:                  Date:

Part II - Page 2                             Cervino Capital Management LLC                                                       801-                              11/5/2009
                                                                                        Definitions for Part II
Related person - Any officer, director or partner of applicant or any person directly or indirectly controlling, controlled by, or under common control with
the applicant, including any non-clerical, non-ministerial employee.
Investment Supervisory Services - Giving continuous investment advice to a client (or making investments for the client) based on the individual needs of
the client. Individual needs include, for example, the nature of other client assets and the client’s personal and family obligations.

1.        A.          Advisory Services and Fees. (check the applicable boxes)                                           For each type of service provided, state the approximate % of
                                                                                                                         total advisory billings from that service.           Approx.
                      Applicant:                                                                                       (See instruction below.)
                      (1) Provides investment supervisory services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . .                   100%
                      (2) Manages investment advisory accounts not involving investment supervisory services . . . . . . . . . . . . . . . . . . .                                            0%
                      (3) Furnishes investment advice through consultations not included in either service described above . . . . . . . . . .                                                0%
                      (4) Issues periodicals about securities by subscription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         0%
                      (5) Issues special reports about securities not included in any service described above . . . . . . . . . . . . . . . . . . . . .                                       0%
                      (6) Issues, not as part of any service described above, any charts, graphs, formulas, or other devices which clients
                            may use to evaluate securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . .              0%
                      (7) On more than an occasional basis, furnishes advice to clients on matters not involving securities . . . . . . . . . . .                                              0%
                      (8) Provides a timing service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .              0%
                      (9) Furnishes advice about securities in any manner not described above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                      0%

                                    (Percentages should be based on applicant’s last fiscal year. If applicant has not completed its first fiscal year, provide
                                                   estimates of advisory billings for that year and state that the percentages are estimates.)

                                                                                                                                                                                      Yes     No
          B.          Does the applicant call any of the services it checked above financial planning or some similar term? . . . . . . . . . . .

          C.          Applicant offers investment advisory services for: (check all that apply):

                                  (1)         A percentage of assets under management                             (4)      Subscription fees
                                  (2)         Hourly charges                                                      (5)      Commissions
                                  (3)         Fixed fees (not including subscription fees)                        (6)      Other

          D.          For each checked box in A above, describe on Schedule F:
                      
                                 the services provided, including the name of any publication or report issued by the adviser on a
                                  subscription basis or for a fee
                      
                                applicant’s basic fee schedule, how fees are charged and whether its fees are negotiable
                      
                                when compensation is payable, and if compensation is payable before service is provided, how a client
                                  may get a refund or may terminate an investment advisory contract before its expiration date

2.        Types of Clients - Applicant generally provides investment advice to: (check those that apply)
                      A.          Individuals                                                             E.      Trusts, estates, or charitable organizations
                      B.          Banks or thrift institutions                                            F.      Corporations or business entities other than those
                                                                                                                  listed above
                      C.          Investment companies
                                                                                                          G.      Other (describe on Schedule F)
                      D.          Pension and profit sharing plans




C er v i no Ca p it al M an a g em en t L L C
Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                                                                              18 of 22
                                                                                                                                                  Managed Securities
                                                                                                                                                  Disclosure Brochure
                                                                                                                                                   5-November-2009




FORM ADV                                    Applicant:                                                   SEC File Number:          Date:

Part II - Page 3                             Cervino Capital Management LLC                              801-                      11/5/2009

3.        Types of Investments. Applicant offers advice on the following: (check those that apply)
                      A.          Equity Securities                                         H.      United States government securities
                                  (1) exchange-listed securities
                                  (2) securities traded over-the-counter                    I.      Options contracts on:
                                  (3) foreign issues                                                (1) securities
                                                                                                    (2) commodities
                      B.          Warrants
                                                                                            J.      Futures contracts on:
                      C.          Corporate debt securities                                         (1) tangibles
                                  (other than commercial paper)                                     (2) intangibles

                      D.          Commercial paper                                          K.      Interests in partnerships investing in:
                                                                                                    (1) real estate
                      E.          Certificates of deposit                                           (2) oil and gas interests
                                                                                                    (3) other (explain on Schedule F)
                      F.          Municipal securities
                                                                                            L.      Other (explain on Schedule F)
                      G.          Investment company securities
                                  (1) variable life insurance
                                  (2) variable annuities
                                  (3) mutual fund shares

4.        Methods of Analysis, Sources of Information, and Investment Strategies.
          A.          Applicant’s security analysis methods include: (check those that apply)
                      (1)                Charting                                   (4)          Cyclical

                      (2)                Fundamental                                (5)          Other (explain on Schedule F)

                      (3)                Technical

          B.          The main sources of information applicant uses include: (check those that apply)
                      (1)                Financial newspapers and magazines         (5)          Timing services

                      (2)                Inspections of corporate activities        (6)          Annual reports, prospectuses, filings with the
                                                                                                 Securities and Exchange Commission
                      (3)                Research materials prepared by others      (7)          Company press releases

                      (4)                Corporate rating services                  (8)          Other (explain on Schedule F)

          C.          The investment strategies used to implement any investment advice given to clients include: (check those that apply)
                      (1)                Long term purchases                        (5)          Margin transactions
                                         (securities held at least a year)
                      (2)                Short term purchases                       (6)          Option writing, including covered options,
                                         (securities sold within a year)                         uncovered options or spreading strategies
                      (3)                Trading (securities sold within 30 days)
                                                                                    (7)          Other (explain on Schedule F)
                      (4)                Short sales




C er v i no Ca p it al M an a g em en t L L C
Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                                            19 of 22
                                                                                                                                                                                                             Managed Securities
                                                                                                                                                                                                             Disclosure Brochure
                                                                                                                                                                                                              5-November-2009




FORM ADV                                    Applicant:                                                                                                 SEC File Number:                      Date:

Part II - Page 4                             Cervino Capital Management LLC                                                                            801-                                  11/5/2009
5.        Education and Business Standards.
                      Are there any general standards of education or business experience that applicant requires of those involved in                                                                         Yes     No
                      determining or giving investment advice to clients? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                                                                                   (If yes, describe these standards on Schedule F.)

6.        Education and Business Background.
          For:
                     each member of the investment committee or group that determines general investment advice to be given to clients, or
          
                    if the applicant has no investment committee or group, each individual who determines general investment advice given
                      to clients (if more than five, respond only for their supervisors)
          
                    each principal executive officer of applicant or each person with similar status or performing similar functions.
          
          On Schedule F, give the:
          
                    name                                                                                                   formal education after high school
                                                                                                                    
                    year of birth                                                                                          business background for the preceding five years
                                                                                                                    
7.        Other Business Activities. (check those that apply)
                      A.          Applicant is actively engaged in a business other than giving investment advice.

                      B.          Applicant sells products or services other than investment advice to clients.

                      C.          The principal business of applicant or its principal executive officers involves something other than
                                  providing investment advice.
                            (For each checked box describe the other activities, including the time spent on them, on Schedule F.)
8.        Other Financial Industry Activities or Affiliations. (check those that apply)
                      A.          Applicant is registered (or has an application pending) as a securities broker-dealer.

                      B.          Applicant is registered (or has an application pending) as a futures commission merchant, commodity
                                  pool operator or commodity trading adviser.

                      C.          Applicant has arrangements that are material to its advisory business or its clients with a related person who is a:
                                  (1) broker-dealer                                                                                         (7) accounting firm

                                  (2) investment company                                                                                    (8) law firm

                                  (3) other investment adviser                                                                              (9) insurance company or agency

                                  (4) financial planning firm                                                                               (10) pension consultant

                                  (5) commodity pool operator, commodity trading                                                            (11) real estate broker or dealer
                                      adviser or futures commission merchant
                                                                                                                                            (12) entity that creates or packages limited partnerships
                                  (6) banking or thrift institution
                                 (For each checked box in C, on Schedule F identify the related person and describe the relationship and the arrangements.)
                      D.          Is applicant or a related person a general partner in any partnership in which clients are solicited to                                                                      Yes     No
                                  invest? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                                                                   (If yes, describe on Schedule F the partnerships and what they invest in.)




C er v i no Ca p it al M an a g em en t L L C
Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                                                                                                          20 of 22
                                                                                                                                                                                         Managed Securities
                                                                                                                                                                                         Disclosure Brochure
                                                                                                                                                                                          5-November-2009




FORM ADV                                    Applicant:                                                                              SEC File Number:                  Date:

Part II - Page 5                             Cervino Capital Management LLC                                                         801-                              11/5/2009

9.        Participation or Interest in Client Transactions.
          Applicant or a related person: (check those that apply)
                      A.          As principal, buys securities for itself from or sells securities it owns to any client.
                      B.          As broker or agent effects securities transactions for compensation for any client.
                      C.          As broker or agent for any person other than a client effects transactions in which client securities are sold to
                                  or bought from a brokerage customer.
                      D.          Recommends to clients that they buy or sell securities or investment products in which the applicant or a related
                                  person has some financial interest.
                      E.          Buys or sells for itself securities that it also recommends to clients.

                        (For each box checked, describe on Schedule F when the applicant or a related person engages in these transactions and what
                                   restrictions, internal procedures, or disclosures are used for conflicts of interest in those transactions.)

10.       Conditions for Managing Accounts. Does the applicant provide investment supervisory services, manage investment advisory
          accounts or hold itself out as providing financial planning or some similarly termed services and impose a minimum dollar value of                                               Yes     No
          assets or other conditions for starting or maintaining an account? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                                                                                 (If yes, describe on Schedule F.)

11.       Review of Accounts. If applicant provides investment supervisory services, manages investment advisory accounts, or holds
          itself out as providing financial planning or some similarly termed services:

          A.          Describe below the reviews and reviewers of the accounts. For reviews, include their frequency, different levels, and
                      triggering factors. For reviewers, include the number of reviewers, their titles and functions, instructions they receive
                      from applicant on performing reviews, and number of accounts assigned each.

                      Michael "Mack" Frankfurter, Managing Director, Chief of Operations and Chief Compliance Officer and Davide
                      Accomazzo, Managing Director and Chief Investment Officer, and Ernest M. Back, Associate Director and Portfolio
                      Manager review all accounts on at least a quarterly basis. More frequent reviews may be necessary due to the client's
                      individual circumstances, and/or economic conditions, general factors affecting the stock market, etc.



          B.          Describe below the nature and frequency of regular reports to clients on their accounts.

                      Clients will receive transaction confirmations and monthly or quarterly statements from their account custodians.




C er v i no Ca p it al M an a g em en t L L C
Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                                                                                 21 of 22
                                                                                                                                                                                             Managed Securities
                                                                                                                                                                                             Disclosure Brochure
                                                                                                                                                                                              5-November-2009




FORM ADV                                    Applicant:                                                                                    SEC File Number:                       Date:

Part II - Page 6                             Cervino Capital Management LLC                                                               801-                                   11/5/2009

12.       Investment or Brokerage Discretion.
          A.          Does applicant or any related person have authority to determine, without obtaining specific client consent, the:
                                                                                                                                                                                               Yes     No
                      (1) securities to be bought or sold? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                                                                                                                                                                                               Yes     No
                      (2) amount of the securities to be bought or sold ? . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                                                                                                                                                                                               Yes     No
                      (3) broker or dealer to be used ? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                                                                                                                                                                                               Yes     No
                      (4) commission rates paid? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

                                                                                                                                                                                               Yes     No
          B.          Does applicant or a related person suggest brokers to clients? . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . .

                      For each yes answer to A describe on Schedule F any limitations on the authority. For each yes to A(3), A(4) or B,
                      describe on Schedule F the factors considered in selecting brokers and determining the reasonableness of their commissions.
                      If the value of products, research and services given to the applicant or a related person is a factor, describe:
                                 the products, research and services
                      
                                whether clients may pay commissions higher than those obtainable from other brokers in return for those products
                                  and services
                      
                                whether research is used to service all of applicant’s accounts or just those accounts paying for it; and
                      
                                any procedures the applicant used during the last fiscal year to direct client transactions to a particular broker in
                                  return for products and research services received.
                      
                      
13.       Additional Compensation.
          Does the applicant or a related person have any arrangements, oral or in writing, where it:
          A.          Is paid cash by or receives some economic benefit (including commissions, equipment or non-research services) from a                                                     Yes     No
                      non-client in connection with giving advice to clients? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                                                                                                                                                                                               Yes     No
          B.          Directly or indirectly compensates any person for client referrals? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                                                                   (For each yes, describe the arrangements on Schedule F.)

14.       Balance Sheet. Applicant must provide a balance sheet for the most recent fiscal year on Schedule G if applicant:
                                 has custody of client funds or securities; or
                      
                                requires prepayment of more than $500 in fees per client and 6 or more months in advance
                                                                                                                                                                                              Yes     No
                                  Has applicant provided a Schedule G balance sheet? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
                      




C er v i no Ca p it al M an a g em en t L L C
Th e ne xt ste p in t r ad it i ona l inve stm ents . ..                                                                                                                          22 of 22

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:30
posted:7/26/2011
language:English
pages:22
Description: Ria Disclosure document sample