Mercer Consumer is well-known to offer broad, comprehensive and regulatory-compliant coverage to Broker-Dealers. In partnering with our carrier for almost 40 years, Mercer has issued over 100,000 Fidelity Bonds. We are proud to offer the broadest and most innovative Fidelity Bond product to date and it is called Broker-Dealer GuardSM .
Highlights of the Broker-Dealer GuardSM Fidelity Bond*
To get a quote, please complete one of the applications below. Eligible applicants may apply, pay and issue a policy online.
Please review the Overview section for the Broker-Dealer GuardSM and Form 14 Fidelity Bond Eligibility Requirements.
Over Twenty Coverages are included under the standard BDG Fidelity Bond policy, such as:
* Coverage not available in Puerto Rico.
What are the Eligibility Requirements for the Broker-Dealer GuardSM Fidelity Bond?
When may the Online Application be used?
If these eligibility requirements are met, you may apply online via the “Apply Online” button. If paying with credit card and no additional underwriting is necessary, your policy will be issued and provided to you immediately! If paying with a check, you may complete the online application and once we receive your payment, if no additional underwriting is required, we will issue your policy.
Alternatively, you may download the applicable Broker-Dealer GuardSM Fidelity Bond pdf application from the "Download a PDF Application" button. Both options are located above, to the right. Be sure to select the proper application based on the Firm's state of domicile.
When is the Form 14 Broker-Dealer Fidelity Bond Application required?
Based on the above Form 14 instructions, download the applicable Form 14 Fidelity Bond pdf application from the "Download a PDF Application" menu located above, to the right. Be sure to select the proper application based on the Firm’s state of domicile.
If you use a paper application (Broker-Dealer GuardSM or Form 14), please submit your completed application to us either via email at firstname.lastname@example.org or via fax at 515-365-3005.
Features of the Broker-Dealer GuardSM Fidelity Bond
Broker-Dealer GuardSM Fidelity Bond enhancements: subject to underwriting and additional premium where applicable:
To apply for RRAE, CIP and PIC coverage, please call 1-800-978-6273 and speak with a Mercer Consumer Insurance Specialist.
Features of the Form 14 Broker-Dealer Fidelity Bond
Automatically includes the following insuring agreements:
*Fidelity is the protection for your firm against intentional and dishonest acts committed by your employees and registered representatives.
Additional Coverages Included:*
*Additional conditions of coverage apply and are detailed in the applicable riders.
We're here to help! Please contact us in whatever manner is most convenient for you.
| Regular Mailing Address
Attn: Fidelity Bonds
P.O. Box 310293
Des Moines, IA 50331-0293
| Overnight Mailing Address
Attn: Fidelity Bonds
12421 Meredith Drive
Urbandale, IA 50398
|Hours M-F 8a-4:30p CT|
What is a Fidelity Bond and why does my firm need one?
A Fidelity Bond is intended to protect your firm against intentional fraudulent and dishonest acts committed primarily by your employees and registered representatives. In cases of theft of customer funds in a broker-dealer's care, custody or control, a Fidelity Bond generally will indemnify your firm for covered losses sustained in the handling of customers' accounts.
Am I eligible for the Broker-Dealer GuardSM Fidelity Bond or must I apply for a Form 14 Broker-Dealer Fidelity Bond?
If you meet the following eligibility requirements you may apply for the Broker-Dealer GuardSM Fidelity Bond. Otherwise you will apply for a Form 14 Broker-Dealer Fidelity Bond.
What does the Broker-Dealer GuardSM Fidelity Bond cover versus a Form 14 Broker-Dealer Fidelity Bond?
The Broker-Dealer GuardSM Fidelity Bond provides full Limit of Liability for each and every loss during the policy period. Form 14 Broker-Dealer Fidelity Bond has an aggregate limit, which is exhausted after the losses reach the Fidelity Bond's limit of liability. The Broker-Dealer GuardSM Fidelity Bond also provides Defense Costs in addition to the Limit of Liability. Form 14 Broker-Dealer Fidelity Bond provides Defense Costs but are part of, and not in addition to, the limit of liability.
Can I apply for a new Fidelity Bond or renew my existing Fidelity Bond online?
Yes, you may use the online application for the Broker-Dealer GuardSM Fidelity Bond if you meet the eligibility requirements stated above. Click on New Policy Online Application to apply to purchase a new bond and set-up your account. If you have an existing bond, click on Renewal Online Application to log in with your user name and password to renew your bond. In just a few easy steps, you can secure your bond, pay the premium and issue your bond immediately upon successful payment. If assistance is needed with your application or your log in credentials, please contact us at 1-800-978-6273, Monday - Friday, 8am - 4:30pm (CT).
How do I update my contact information or print a copy of my Fidelity Bond online?
You may click here to update your address (if within the U.S.), phone number or email address online and to print a copy of your current Fidelity Bond. Any changes to the name of your firm or to your firm's CRD# must be handled in person by our underwriting team. There will be a log in page requiring you to enter your user name and password, or you may register for access if you have not done so yet. If assistance is needed with your contact information updates or your log in credentials, please contact us at 1-800-978-6273, Monday - Friday, 8am - 4:30pm (CT) or via email at email@example.com.
Can this Fidelity Bond satisfy ERISA Bond requirements for my in-house pension and profit-sharing plans?
If Broker-Dealer fidelity bond limit is sufficient to satisfy ERISA Bond requirements, the in-house pension plans can be added to the bond for no additional cost. If Broker-Dealer fidelity bond limit is insufficient to satisfy ERISA Bond requirement, (a) you can purchase a separate ERISA Bond or (b) increase Broker-Dealer Fidelity Bond limit. For either option, please contact Mercer Consumer so it can help you comply with ERISA Bonding needs.
How do I determine what minimum Limit of Liability I need to purchase?
According to FINRA Rule 4360 that governs Fidelity Bond requirements for broker-dealers, the following chart stipulates the minimum required limits based on net capital requirements.
|Net Capital Requirement||Minimum Required Bond Amount|
|Under $250,000||Greater of A) 120% of firms required net capital or B) $100,000|
|$250,000 - $300,000||$600,000|
|$300,001 - $500,000||$700,000|
|$500,001 - $1,000,000||$800,000|
|$1,000,001 - $2,000,000||$1,000,000|
|$2,000,001 - $3,000,000||$1,500,000|
|$3,000,001 - $4,000,000||$2,000,000|
|$4,000,001 - $6,000,000||$3,000,000|
|$6,000,001 - $12,000,000||$4,000,000|
FINRA Rule 4360 stipulates that a deductible amount exceeding 10% of the limit must be deducted from its net worth. Accordingly, the firm's net capital can be calculated for purposes of Exchange Act Rule 15c3-1.
What other insurance products are available for broker-dealer firms?
Mercer Consumer offers a variety of insurance products including Cyber Security Liability Insurance, Errors and Omissions Liability Insurance, Directors and Officers Liability Insurance, Employment Practices Liability Insurance, Property & Casualty Insurance, Mail Insurance, the Signature Guarantee Medallion Bond, 1st and 3rd Party ERISA Bonds and many more products. Please feel free to browse our site in its entirety for more information, or you may contact us directly at 1-800-978-6273.
How can I learn more about the insurance products offered by Mercer Consumer and how they can best serve my firm?
Fidelity Bond Claims Scenarios
1. Impersonation Fraud Losses
These losses result from fraudulent schemes that involve an imposter pretending to have authority and requesting a payment, often in the form of immediate wire transfers. This type of scam may originate as a phone call, email, fax, text or other form of communication. Please click Impersonation Fraud Claims Scenarios for some examples. Also, view the brief video with some tips to keep in mind about how you can Avoid Impersonation Fraud.
2. Registered Representative Loss
Insured's registered representative separately befriended two widowed elderly women who were existing customers of the insured. He often visited them in their homes, provided them with companionship and gained their trust. Over time, he convinced them to transfer funds from accounts at other financial institutions and deposit them into two new mutual funds set up by the insured. He represented to them that the mutual funds would provide them with higher rates of return than their existing investments. He directed that they write the investment checks payable to him, and that he would deposit them into the mutual fund accounts. Over the course of two years, he received $900,000 in checks from them and provided them with altered statements showing their investment in these mutual funds. In reality, he did not deposit the checks into the mutual fund accounts, but instead endorsed the checks and deposited them into his personal bank account. The loss was discovered when his bank became suspicious about the unusually large deposits into his account, and notified the authorities.
3. Registered Representative Loss
The insured suffered a loss of $600,000 due to the dishonesty of one of its registered representatives. The registered representative transferred funds from five client accounts at the insured to his wholly owned company. He forged signatures on wire authorization letters used to make such withdrawals, used a "cut-and paste" technique (copying genuine signatures and affixing them to faxed wire authorization letters) and embezzled the funds by means of such withdrawals. The insured settled with its customers for a total of $344,000 which was an average of $68,800 per customer. The insured only had policy limits of $120,000, leaving the insured with insufficient limits to cover $224,000 of the ultimate settlement amount with its customers.
4. Computer Hacking
The insured sustained a loss due to unknown perpetrators hacking into the computers of 2 registered representatives of the insured. The hackers obtained access to customer accounts and sold securities in those accounts without the knowledge and authority of the customer and the registered representative. The hackers then purchased penny stock in order to make it appear that the stock was more valuable on the market. The amount of the loss was $170,731 and was covered under the Computer Crime endorsement of the policy.
5. Employee Dishonesty
The insured sustained a loss when its Controller made payment to his personal credit card account using the insured's funds. He had the company authorize payments to his personal credit card. In addition, he made unauthorized payments directly to himself and, in two instances, to his mortgage company. The Controller was involved in all aspects of the accounting processes at the company including the accounts payable, bank reconciliations, accounts receivables, and maintaining the general ledger which allowed him to circumvent internal controls. He would code the payments in the insured's system under another vendor payee's name. The total amount of loss was $749,062.