ADV PART II

 
 

Twelve Two Capital LLC

1611 64th Street

Brooklyn, NY 11204

Form ADV Part 2A – Firm Brochure

(347) 916-6545

Dated September 6th, 2018

This Brochure provides information about the qualifications and business practices of Twelve Two Capital LLC,

“Twelve Two”. If you have any questions about the contents of this Brochure, please contact us at (347)

916-6545. The information in this Brochure has not been approved or verified by the United States Securities and

Exchange Commission or by any state securities authority.

Twelve Two Capital LLC is registered as an Investment Adviser with the State of New York. Registration of

an Investment Adviser does not imply any level of skill or training.

Additional information about Twelve Two is available on the SEC’s website at www.adviserinfo.sec.gov which

can be found using the firm’s identification number CRD #297748.

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Item 2: Material Changes

● Item 1: The firm’s address and phone number has been changed.

Future Changes

From time to time, we may amend this Disclosure Brochure to reflect changes in our business practices, changes

in regulations and routine annual updates as required by the securities regulators. This complete Disclosure

Brochure or a Summary of Material Changes shall be provided to each Client annually and if a material change

occurs in the business practices of Twelve Two Capital LLC.

At any time, you may view the current Disclosure Brochure online at the SEC's Investment Adviser Public

Disclosure website at http://www.adviserinfo.sec.gov by searching for our firm name or by our CRD number

#297748.

You may also request a copy of this Disclosure Brochure at any time, by contacting us at (347) 916-6545.

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Item 3: Table of Contents

Contents

Item 2: Material Changes 2

Item 3: Table of Contents 3

Item 4: Advisory Business 4

Item 5: Fees and Compensation 7

Item 6: Performance-Based Fees and Side-By-Side Management 10

Item 7: Types of Clients 10

Item 8: Methods of Analysis, Investment Strategies and Risk of Loss 10

Item 9: Disciplinary Information 13

Item 10: Other Financial Industry Activities and Affiliations 14

Item 11: Code of Ethics, Participation or Interest in Client Transactions and Personal Trading 14

Item 12: Brokerage Practices 16

Item 13: Review of Accounts 17

Item 14: Client Referrals and Other Compensation 17

Item 15: Custody 18

Item 16: Investment Discretion 18

Item 17: Voting Client Securities 18

Item 18: Financial Information 19

Item 19: Requirements for State-Registered Advisers 19

Form ADV Part 2B – Brochure Supplement 21

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Item 4: Advisory Business

Description of Advisory Firm

Twelve Two Capital LLC was founded in May, 2018. Zhi Min Li is the principal owner of Twelve Two.

Because Twelve Two is a new entity, it currently reports no discretionary or non-discretionary Assets Under

Management. Assets Under Management were calculated as of June, 2018.

Types of Advisory Services

Investment Advisory Services through Sub-Advisors (TAMPs)

We offer the use of Sub-Advisors (TAMPs) for portfolio management services. The Sub-Advisor that we offer is

XY Investment Solutions (“XYIS”). We assist clients in selecting an appropriate allocation model, completing

the Sub-Advisor’s investor profile questionnaire, interacting with the Sub-Advisor and reviewing the

Sub-Advisor. Our review process and analysis of Sub-Advisors is further discussed in Item 8 of this Form ADV

Part 2A. Additionally, we will meet with the client on a periodic basis to discuss changes in their personal or

financial situation, suitability, and any new or revised restrictions to be applied to the account. Fees pertaining to

this service are outlined in Item 5 of this brochure.

● XY Investment Solutions (“XYIS”) XY Investment Solutions ("XYIS") builds investment models

through a technology solution and supports financial planners with investment strategies based on

research, experience, and sound rationale. XYIS primarily allocates client assets among various mutual

funds, exchange-traded funds ("ETFs"). XYIS may also allocate client assets in individual debt and equity

securities, options, and independent investment managers. XYIS's services are based on long-term

investment strategies incorporating the principles of Modern Portfolio Theory. XYIS manages client

investments in model portfolios on a discretionary basis.

Financial Planning

We provide financial planning services on topics such as retirement planning, risk management, college savings,

cash flow, debt management, work benefits, and estate and incapacity planning.

Financial planning is a comprehensive evaluation of a client's current and future financial state by using currently

known variables to predict future cash flows, asset values, and withdrawal plans. The key defining aspect of

financial planning is that through the financial planning process, all questions, information, and analysis will be

considered as they affect and are affected by the entire financial and life situation of the client. Clients purchasing

this service will receive a written or an electronic report, providing the client with a detailed financial plan

designed to achieve his or her stated financial goals and objectives.

In general, the financial plan will address any or all of the following areas of concern. The client and advisor will

work together to select the specific areas to cover. These areas may include, but are not limited to, the following:

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● Business Planning: We provide consulting services for clients who currently operate their own business,

are considering starting a business, or are planning for an exit from their current business. Under this type

of engagement, we work with you to assess your current situation, identify your objectives, and develop a

plan aimed at achieving your goals.

● Cash Flow and Debt Management: We will conduct a review of your income and expenses to determine

your current surplus or deficit along with advice on prioritizing how any surplus should be used or how to

reduce expenses if they exceed your income. Advice may also be provided on which debts to pay off first

based on factors such as the interest rate of the debt and any income tax ramifications. We may also

recommend what we believe to be an appropriate cash reserve that should be considered for emergencies

and other financial goals, along with a review of accounts (such as money market funds) for such

reserves, plus strategies to save desired amounts.

● College Savings: Includes projecting the amount that will be needed to achieve college or other

post-secondary education funding goals, along with advice on ways for you to save the desired amount.

Recommendations as to savings strategies are included, and, if needed, we will review your financial

picture as it relates to eligibility for financial aid or the best way to contribute to grandchildren (if

appropriate).

● Employee Benefits Optimization: We will provide review and analysis as to whether you, as an

employee, are taking the maximum advantage possible of your employee benefits. If you are a business

owner, we will consider and/or recommend the various benefit programs that can be structured to meet

both business and personal retirement goals.

● Estate Planning: This usually includes an analysis of your exposure to estate taxes and your current

estate plan, which may include whether you have a will, powers of attorney, trusts, and other related

documents. Our advice also typically includes ways for you to minimize or avoid future estate taxes by

implementing appropriate estate planning strategies such as the use of applicable trusts. We always

recommend that you consult with a qualified attorney when you initiate, update, or complete estate

planning activities. We may provide you with contact information for attorneys who specialize in estate

planning when you wish to hire an attorney for such purposes. From time-to-time, we will participate in

meetings or phone calls between you and your attorney with your approval or request.

● Financial Goals: We will help clients identify financial goals and develop a plan to reach them. We will

identify what you plan to accomplish, what resources you will need to make it happen, how much time

you will need to reach the goal, and how much you should budget for your goal.

● Insurance: Review of existing policies to ensure proper coverage for life, health, disability, long-term

care, liability, home, and automobile.

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● Investment Analysis: This may involve developing an asset allocation strategy to meet clients’ financial

goals and risk tolerance, providing information on investment vehicles and strategies, reviewing

employee stock options, as well as assisting you in establishing your own investment account at a selected

broker/dealer or custodian. The strategies and types of investments we may recommend are further

discussed in Item 8 of this brochure.

● Retirement Planning: Our retirement planning services typically include projections of your likelihood

of achieving your financial goals, typically focusing on financial independence as the primary objective.

For situations where projections show less than the desired results, we may make recommendations,

including those that may impact the original projections by adjusting certain variables (e.g., working

longer, saving more, spending less, taking more risk with investments).

If you are near retirement or already retired, advice may be given on appropriate distribution strategies to

minimize the likelihood of running out of money or having to adversely alter spending during your

retirement years.

● Risk Management: A risk management review includes an analysis of your exposure to major risks that

could have a significant adverse impact on your financial picture, such as premature death, disability,

property and casualty losses, or the need for long-term care planning. Advice may be provided on ways to

minimize such risks and about weighing the costs of purchasing insurance versus the benefits of doing so

and, likewise, the potential cost of not purchasing insurance (“self-insuring”).

● Tax Planning Strategies: Advice may include ways to minimize current and future income taxes as a

part of your overall financial planning picture. For example, we may make recommendations on which

type of account(s) or specific investments should be owned based in part on their “tax efficiency,” with

consideration that there is always a possibility of future changes to federal, state or local tax laws and

rates that may impact your situation.

We recommend that you consult with a qualified tax professional before initiating any tax planning

strategy, and we may provide you with contact information for accountants or attorneys who specialize in

this area if you wish to hire someone for such purposes. We will participate in meetings or phone calls

between you and your tax professional with your approval.

Comprehensive Financial Planning

This service involves working one-on-one with a planner over an extended period of time. By paying a fixed

monthly/quarterly fee, clients get to work with a planner who will work with them to develop and implement their

plan. The planner will monitor the plan, recommend any changes and ensure the plan is up to date.

Upon desiring a comprehensive plan, a client will be taken through establishing their goals and values around

money. They will be required to provide information to help complete the following areas of analysis: net worth,

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cash flow, insurance, credit scores/reports, employee benefit, retirement planning, insurance, investments, college

planning and estate planning. Once the client's information is reviewed, their plan will be built and analyzed, and

then the findings, analysis and potential changes to their current situation will be reviewed with the client. Clients

subscribing to this service will receive a written or an electronic report, providing the client with a detailed

financial plan designed to achieve his or her stated financial goals and objectives. If a follow-up meeting is

required, we will meet at the client's convenience. The plan and the client's financial situation and goals will be

monitored throughout the year and follow-up phone calls and emails will be made to the client to confirm that any

agreed upon action steps have been carried out. On an annual basis, there will be a full review of this plan to

ensure its accuracy and ongoing appropriateness. Any needed updates will be implemented at that time.

Educational Seminars and Speaking Engagements

We may provide seminars on an “as announced” basis for groups seeking general advice on investments and other

areas of personal finance. The content of these seminars will vary depending upon the needs of the attendees.

These seminars are purely educational in nature and do not involve the sale of any investment products.

Information presented will not be based on any individual’s person’s need, nor does Twelve Two provide

individualized investment advice to attendees during these seminars.

Client Tailored Services and Client Imposed Restrictions

We offer the same suite of services to all of our clients. However, specific client financial plans and their

implementation are dependent upon the client Investment Policy Statement which outlines each client’s current

situation (income, tax levels, and risk tolerance levels) and is used to construct a client specific plan to aid in the

selection of a portfolio that matches restrictions, needs, and targets.

Wrap Fee Programs

We do not participate in wrap fee programs.

Item 5: Fees and Compensation

Please note, unless a client has received the firm’s disclosure brochure at least 48 hours prior to signing the

investment advisory contract, the investment advisory contract may be terminated by the client within five (5)

business days of signing the contract without incurring any advisory fees. How we are paid depends on the type of

advisory service we are performing. Please review the fee and compensation information below.

Investment Advisory Services through Sub-Advisors (TAMPs)

The standard advisory fee is based on the market value of the account and is calculated as follows:

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Account Value Annual Advisory Fee

$0 - $1,000,000 1.10%

$1,000,001 - $2,000,000 0.90%

$2,000,001 and Above 0.70%

The annual fees are negotiable and are pro-rated and paid in arrears on a quarterly basis. The advisory fee is a

tiered fee and is calculated by assessing the percentage rates using the predefined levels of assets as shown in the

above chart and applying the fee to the account value as of the last day of the previous quarter. No increase in the

annual fee shall be effective without agreement from the client by signing a new agreement or amendment to their

current advisory agreement.

Twelve Two will debit the client’s advisory fee for both Twelve Two’s fee, and the Sub-Advisor’s (XYIS) fee,

and will remit the Sub-Advisor’s portion of the fee to the Sub-Advisor. Please note, the above fee schedule does

include the Sub-Advisor’s fee of 0.35% on an annual basis. No increase in the annual fee shall be effective

without agreement from the client by signing a new agreement or amendment to their current advisory agreement.

Advisory fees are directly debited from client accounts, or the client may choose to pay by check. Accounts

initiated or terminated during a calendar quarter will be charged a pro-rated fee based on the amount of time

remaining in the billing period. An account may be terminated with written notice at least 30 calendar days in

advance. Since fees are paid in arrears, no rebate will be needed upon termination of the account.

Comprehensive Financial Planning

Comprehensive Financial Planning consists of an upfront charge of $1,000-$5,000 depending on complexity and

an ongoing fee that is paid monthly, in advance, at the rate of $100-$300 per month. The fee may be negotiable

in certain cases. Fees for this service may be paid by electronic funds transfer or check. This service may be

terminated with 30 days’ notice. Upon termination of any account, the fee will be prorated and any unearned fee

will be refunded to the client.

The upfront portion of the Comprehensive Financial Planning fee is for client onboarding, data gathering, and

setting the basis for the financial plan. This work will commence immediately after the fee is paid, and will be

completed within the first 30 days of the date the fee is paid. Therefore, the upfront portion of the fee will not be

paid more than 6 months in advance.

Financial Planning Fixed Fee

Financial Planning will generally be offered on a fixed fee basis. The fixed fee will be agreed upon before the

start of any work. The fixed fee can range between $400 and $5,000 depending on complexity. The fee is

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negotiable. If a fixed fee program is chosen, half of the fee is due at the beginning of the process and the

remainder is due at completion of work, however, Twelve Two will not bill an amount above $500.00 more than 6

months in advance. Fees for this service may be paid by electronic funds transfer or check. Upon termination, the

half of the fee that is due up front will be non-refundable, and no further fees will be charged.

Financial Planning Hourly Fee

Financial Planning fee is an hourly rate between $250 and $400 per hour, depending on complexity. The fee may

be negotiable in certain cases and is due at the completion of the engagement. In the event of early termination by

the client, any fees for the hours already worked will be due. Fees for this service may be paid by electronic

funds transfer or check.

Educational Seminars/ Speaking engagements

Seminars are offered to organizations and the public on a variety of financial topics. Fees range from free to

$2,500 per seminar. Half of the fees are due prior to the engagement, and the other half are to be paid the day of,

no later than the conclusion of the Seminar. The fee range is based on the content, amount of research conducted,

number of hours of preparation needed, and the number of attendees. In the event of inclement weather or a flight

cancellation, the Speaker shall make all reasonable attempts to make alternative travel arrangements to arrive in

time for the presentation. If travel proves impossible, or the event is otherwise canceled, the Speaker's fee is

waived, but the Client will still be responsible for reimbursement of any non-refundable travel expenses already

incurred.

In the event that the Client decides to cancel or change the date of the event for any reason besides weather or

similar unforeseen causes, the Client will still be responsible for reimbursement of any non-refundable travel

expenses already incurred, and will provide payment for 50% of the Speaker’s fee if the cancellation occurs

within 30 days of the event. In the event that the Speaker must cancel due to health or similar unforeseen

circumstances, the Speaker will make all attempts to find a reasonable alternative engagement date and will

absorb any incremental additional costs for obtaining alternative travel arrangements. If an alternative date cannot

be obtained, the Client will not be responsible for any travel costs already incurred by the Speaker or any portion

of the Speaker’s fee.

Educational Seminars and Speaking Engagements may be provided pro-bono at Twelve Two’s discretion.

Other Types of Fees and Expenses

Our fees are exclusive of brokerage commissions, transaction fees, and other related costs and expenses which

may be incurred by the client. Clients may incur certain charges imposed by custodians, brokers, and other third

parties such as custodial fees, deferred sales charges, odd-lot differentials, transfer taxes, wire transfer and

electronic fund fees, and other fees and taxes on brokerage accounts and securities transactions. Mutual fund and

exchange traded funds also charge internal management fees, which are disclosed in a fund's prospectus. Such

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charges, fees, and commissions are exclusive of and in addition to our fee, and we shall not receive any portion of

these commissions, fees, and costs.

Item 12 further describes the factors that we consider in selecting or recommending broker-dealers for client’s

transactions and determining the reasonableness of their compensation (e.g., commissions).

We do not accept compensation for the sale of securities or other investment products including asset-based sales

charges or service fees from the sale of mutual funds.

Item 6: Performance-Based Fees and

Side-By-Side Management

We do not offer performance-based fees and do not engage in side-by-side management.

Item 7: Types of Clients

We provide financial planning and portfolio management services to individuals, high net-worth individuals.

We do not have a minimum account size requirement.

Item 8: Methods of Analysis, Investment

Strategies and Risk of Loss

Our primary methods of investment analysis are fundamental, and cyclical analysis.

Fundamental analysis involves analyzing individual companies and their industry groups, such as a company’s

financial statements, details regarding the company’s product line, the experience, and expertise of the company’s

management, and the outlook for the company’s industry. The resulting data is used to measure the true value of

the company’s stock compared to the current market value. The risk of fundamental analysis is that information

obtained may be incorrect and the analysis may not provide an accurate estimate of earnings, which may be the

basis for a stock’s value. If securities prices adjust rapidly to new information, utilizing fundamental analysis may

not result in favorable performance.

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Cyclical analysis is a type of technical analysis that involves evaluating recurring price patterns and trends based

upon business cycles. Economic/business cycles may not be predictable and may have many fluctuations between

long-term expansions and contractions. The lengths of economic cycles may be difficult to predict with accuracy

and therefore the risk of cyclical analysis is the difficulty in predicting economic trends and consequently the

changing value of securities that would be affected by these changing trends.

Use of Sub-Advisors: We refer clients to Sub-Advisors (TAMPs). Our analysis of Sub-Advisors involves the

examination of the experience, expertise, investment philosophies, and past performance of the Sub-Advisors in

an attempt to determine if that manager has demonstrated an ability to invest over a period of time and in different

economic conditions. We monitor the manager's underlying holdings, strategies, concentrations, and leverage as

part of our overall periodic risk assessment. Additionally, as part of our due-diligence process, we survey the

manager's compliance and business enterprise risks. A risk of investing with an outside manager who has been

successful in the past is that he/she may not be able to replicate that success in the future. In addition, as we do not

control the underlying investments in an outside manager's portfolio. There is also a risk that a manager may

deviate from the stated investment mandate or strategy of the portfolio, making it a less suitable investment for

our clients. Moreover, as we do not control the manager's daily business and compliance operations, we may be

unaware of the lack of internal controls necessary to prevent business, regulatory or reputational deficiencies.

Passive Investment Management

We primarily practice passive investment management. Passive investing involves building portfolios that are

comprised of various distinct asset classes. The asset classes are weighted in a manner to achieve the desired

relationship between correlation, risk, and return. Funds that passively capture the returns of the desired asset

classes are placed in the portfolio. The funds that are used to build passive portfolios are typically index mutual

funds or exchange traded funds.

Passive investment management is characterized by low portfolio expenses (i.e. the funds inside the portfolio have

low internal costs), minimal trading costs (due to infrequent trading activity), and relative tax efficiency (because

the funds inside the portfolio are tax efficient and turnover inside the portfolio is minimal).

In contrast, active management involves a single manager or managers who employ some method, strategy or

technique to construct a portfolio that is intended to generate returns that are greater than the broader market or a

designated benchmark. Academic research indicates most active managers underperform the market.

Material Risks Involved

All investing strategies we offer involve risk and may result in a loss of your original investment which you

should be prepared to bear. Many of these risks apply equally to stocks, bonds, commodities and any other

investment or security. Material risks associated with our investment strategies are listed below.

Market Risk: Market risk involves the possibility that an investment’s current market value will fall because of a

general market decline, reducing the value of the investment regardless of the operational success of the issuer’s

operations or its financial condition.

Strategy Risk: The Adviser’s investment strategies and/or investment techniques may not work as intended.

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Small and Medium Cap Company Risk: Securities of companies with small and medium market capitalizations

are often more volatile and less liquid than investments in larger companies. Small and medium cap companies

may face a greater risk of business failure, which could increase the volatility of the client’s portfolio.

Turnover Risk: At times, the strategy may have a portfolio turnover rate that is higher than other strategies. A

high portfolio turnover would result in correspondingly greater brokerage commission expenses and may result in

the distribution of additional capital gains for tax purposes. These factors may negatively affect the account’s

performance.

Limited markets: Certain securities may be less liquid (harder to sell or buy) and their prices may at times be

more volatile than at other times. Under certain market conditions we may be unable to sell or liquidate

investments at prices we consider reasonable or favorable or find buyers at any price.

Concentration Risk: Certain investment strategies focus on particular asset-classes, industries, sectors or types of

investment. From time to time these strategies may be subject to greater risks of adverse developments in such

areas of focus than a strategy that is more broadly diversified across a wider variety of investments.

Interest Rate Risk: Bond (fixed income) prices generally fall when interest rates rise, and the value may fall

below par value or the principal investment. The opposite is also generally true: bond prices generally rise when

interest rates fall. In general, fixed income securities with longer maturities are more sensitive to these price

changes. Most other investments are also sensitive to the level and direction of interest rates.

Legal or Legislative Risk: Legislative changes or Court rulings may impact the value of investments, or the

securities’ claim on the issuer’s assets and finances.

Inflation: Inflation may erode the buying power of your investment portfolio, even if the dollar value of your

investments remains the same.

Risks Associated with Securities

Apart from the general risks outlined above which apply to all types of investments, specific securities may have

other risks.

Commercial Paper is, in most cases, an unsecured promissory note that is issued with a maturity of 270 days or

less. Being unsecured the risk to the investor is that the issuer may default.

Common stocks may go up and down in price quite dramatically, and in the event of an issuer’s bankruptcy or

restructuring could lose all value. A slower-growth or recessionary economic environment could have an adverse

effect on the price of all stocks.

Corporate Bonds are debt securities to borrow money. Generally, issuers pay investors periodic interest and

repay the amount borrowed either periodically during the life of the security and/or at maturity. Alternatively,

investors can purchase other debt securities, such as zero coupon bonds, which do not pay current interest, but

rather are priced at a discount from their face values and their values accrete over time to face value at maturity.

The market prices of debt securities fluctuate depending on such factors as interest rates, credit quality, and

maturity. In general, market prices of debt securities decline when interest rates rise and increase when interest

rates fall. The longer the time to a bond’s maturity, the greater its interest rate risk.

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Bank Obligations including bonds and certificates of deposit may be vulnerable to setbacks or panics in the

banking industry. Banks and other financial institutions are greatly affected by interest rates and may be adversely

affected by downturns in the U.S. and foreign economies or changes in banking regulations.

Municipal Bonds are debt obligations generally issued to obtain funds for various public purposes, including the

construction of public facilities. Municipal bonds pay a lower rate of return than most other types of bonds.

However, because of a municipal bond’s tax-favored status, investors should compare the relative after-tax return

to the after-tax return of other bonds, depending on the investor’s tax bracket. Investing in municipal bonds carries

the same general risks as investing in bonds in general. Those risks include interest rate risk, reinvestment risk,

inflation risk, market risk, call or redemption risk, credit risk, and liquidity and valuation risk.

Options and other derivatives carry many unique risks, including time-sensitivity, and can result in the complete

loss of principal. While covered call writing does provide a partial hedge to the stock against which the call is

written, the hedge is limited to the amount of cash flow received when writing the option. When selling covered

calls, there is a risk the underlying position may be called away at a price lower than the current market price.

Exchange Traded Funds prices may vary significantly from the Net Asset Value due to market conditions.

Certain Exchange Traded Funds may not track underlying benchmarks as expected. ETFs are also subject to the

following risks: (i) an ETF’s shares may trade at a market price that is above or below their net asset value; (ii) the

ETF may employ an investment strategy that utilizes high leverage ratios; or (iii) trading of an ETF’s shares may

be halted if the listing exchange’s officials deem such action appropriate, the shares are de-listed from the

exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices)

halts stock trading generally. The Adviser has no control over the risks taken by the underlying funds in which

client’s invest.

Investment Companies Risk. When a client invests in open-end mutual funds or ETFs, the client indirectly bears

its proportionate share of any fees and expenses payable directly by those funds. Therefore, the client will incur

higher expenses, many of which may be duplicative. In addition, the client's overall portfolio may be affected by

losses of an underlying fund and the level of risk arising from the investment practices of an underlying fund

(such as the use of derivatives).

Item 9: Disciplinary Information

Criminal or Civil Actions

Twelve Two and its management have not been involved in any criminal or civil action.

Administrative Enforcement Proceedings

Twelve Two and its management have not been involved in administrative enforcement proceedings.

Self-Regulatory Organization Enforcement Proceedings

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Twelve Two and its management have not been involved in legal or disciplinary events that are material to a

client’s or prospective client’s evaluation of Twelve Two or the integrity of its management.

Item 10: Other Financial Industry Activities and

Affiliations

No Twelve Two employee is registered, or have an application pending to register, as a broker-dealer or a

registered representative of a broker-dealer.

No Twelve Two employee is registered, or have an application pending to register, as a futures commission

merchant, commodity pool operator or a commodity trading advisor.

Twelve Two does not have any related parties. As a result, we do not have a relationship with any related parties.

Twelve Two only receives compensation directly from clients. We do not receive compensation from any outside

source. We do not have any conflicts of interest with any outside party.

Recommendations or Selections of Other Investment Advisers

As referenced in Item 4 of this brochure, Twelve Two recommends clients to Sub-Advisors to manage their

accounts. In the event that we recommend an Sub-Advisor, please note that we do not share in their advisory fee.

Our fee is separate and is inclusive of their compensation (as noted in Item 5) and will be described to you prior to

engagement. You are not obligated, contractually or otherwise, to use the services of any Sub-Advisor we

recommend. Additionally, Twelve Two will only recommend an Sub-Advisor who is properly licensed or

registered as an investment adviser.

Item 11: Code of Ethics, Participation or

Interest in Client Transactions and Personal

Trading

As a fiduciary, our firm and its associates have a duty of utmost good faith to act solely in the best interests of

each client. Our clients entrust us with their funds and personal information, which in turn places a high standard

on our conduct and integrity. Our fiduciary duty is a core aspect of our Code of Ethics and represents the expected

basis of all of our dealings. The firm also adheres to the Code of Ethics and Professional Responsibility adopted

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by the CFP® Board of Standards Inc., and accepts the obligation not only to comply with the mandates and

requirements of all applicable laws and regulations but also to take responsibility to act in an ethical and

professionally responsible manner in all professional services and activities.

Although Twelve Two adheres to the CFP® Board of Standards Inc., Zhi Min Li does not hold the CFP®

designation.

Code of Ethics Description

This code does not attempt to identify all possible conflicts of interest, and literal compliance with each of its

specific provisions will not shield associated persons from liability for personal trading or other conduct that

violates a fiduciary duty to advisory clients. A summary of the Code of Ethics' Principles is outlined below.

• Integrity - Associated persons shall offer and provide professional services with integrity.

• Objectivity - Associated persons shall be objective in providing professional services to clients.

• Competence - Associated persons shall provide services to clients competently and maintain the necessary

knowledge and skill to continue to do so in those areas in which they are engaged.

• Fairness - Associated persons shall perform professional services in a manner that is fair and reasonable

to clients, principals, partners, and employers, and shall disclose conflict(s) of interest in providing such

services.

• Confidentiality - Associated persons shall not disclose confidential client information without the specific

consent of the client unless in response to proper legal process, or as required by law.

• Professionalism - Associated persons' conduct in all matter shall reflect the credit of the profession.

• Diligence - Associated persons shall act diligently in providing professional services.

We periodically review and amend our Code of Ethics to ensure that it remains current, and we require all firm

access persons to attest to their understanding of and adherence to the Code of Ethics at least annually. Our firm

will provide of a copy of its Code of Ethics to any client or prospective client upon request.

Investment Recommendations Involving a Material Financial Interest and Conflicts of Interest

Neither our firm, its associates or any related person is authorized to recommend to a client or effect a transaction

for a client, involving any security in which our firm or a related person has a material financial interest, such as

in the capacity as an underwriter, adviser to the issuer, etc.

Advisory Firm Purchase of Same Securities Recommended to Clients and Conflicts of Interest

Our firm and its “related persons” may buy or sell securities similar to, or different from, those we recommend to

clients for their accounts. In an effort to reduce or eliminate certain conflicts of interest involving the firm or

personal trading, our policy may require that we restrict or prohibit associates’ transactions in specific reportable

securities transactions. Any exceptions or trading pre-clearance must be approved by the firm principal in advance

of the transaction in an account, and we maintain the required personal securities transaction records per

regulation.

Trading Securities At/Around the Same Time as Client’s Securities

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From time to time, our firm or its “related persons” may buy or sell securities for themselves at or around the

same time as clients. We will not trade non-mutual fund securities 5 days prior to the same security for clients.

Item 12: Brokerage Practices

Factors Used to Select Custodians and/or Broker-Dealers

Twelve Two does not have any affiliation with Broker-Dealers. Specific custodian recommendations are made to

the client based on their need for such services. We recommend custodians based on the reputation and services

provided by the firm.

1. Research and Other Soft-Dollar Benefits

We currently receive soft dollar benefits by nature of our relationship with TD Ameritrade Institutional, Division

of TD Ameritrade, Inc., member FINRA/SIPC. Please see the disclosures below “The Custodians and Brokers

We use” for a detailed disclosure of the benefits we receive.

2. Brokerage for Client Referrals

We receive no referrals from a broker-dealer or third party in exchange for using that broker-dealer or third party.

3. Clients Directing Which Broker/Dealer/Custodian to Use

We do recommend a specific custodian for clients to use, however, clients may custody their assets at a custodian

of their choice. Clients may also direct us to use a specific broker-dealer to execute transactions. By allowing

clients to choose a specific custodian, we may be unable to achieve most favorable execution of client transaction

and this may cost clients money over using a lower-cost custodian.

The Custodian and Brokers We Use (TD Ameritrade)

As disclosed above, Twelve Two participates in TD Ameritrade’s institutional customer program and may

recommend TD Ameritrade to clients for custody and brokerage services. There is no direct link between Twelve

Two’s participation in the program and the investment advice it gives to its clients, although Twelve Two receives

economic benefits through its participation in the program that are typically not available to TD Ameritrade retail

investors.

These benefits include the following products and services (provided without cost or at a discount): receipt of

duplicate client statements and confirmations; research related products and tools; consulting services; access to a

trading desk serving Twelve Two participants; access to block trading (which provides the ability to aggregate

securities transactions for execution and then allocate the appropriate shares to client accounts); the ability to have

advisory fees deducted directly from client accounts; access to an electronic communications network for client

order entry and account information; access to mutual funds with no transaction fees and to certain institutional

money managers; and discounts on compliance, marketing, research, technology, and practice management

products or services provided to Twelve Two by third party vendors. TD Ameritrade may also have paid for

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business consulting and professional services received by Twelve Two’s related persons. Some of the products

and services made available by TD Ameritrade through the program may benefit Twelve Two but may not benefit

its client accounts. These products or services may assist Twelve Two in managing and administering client

accounts, including accounts not maintained at TD Ameritrade. Other services made available by TD Ameritrade

are intended to help Twelve Two manage and further develop its business enterprise. The benefits received by

Twelve Two or its personnel through participation in the program do not depend on the amount of brokerage

transactions directed to TD Ameritrade. As part of its fiduciary duties to clients, Twelve Two endeavors at all

times to put the interests of its clients first. Clients should be aware, however, that the receipt of economic

benefits by Twelve Two or its related persons in and of itself creates a potential conflict of interest and may

indirectly influence Twelve Two’s choice of TD Ameritrade for custody and brokerage services.

Aggregating (Block) Trading for Multiple Client Accounts

Generally, we do not combine multiple orders for shares of the same securities purchased for advisory accounts

we manage (this practice is commonly referred to as “block trading”). Not engaging in block trading may cause

clients to lose out on savings that block trading may provide.

Item 13: Review of Accounts

Client accounts with the Investment Advisory Service will be reviewed regularly on a quarterly basis by Zhi Min

Li, Owner and CCO. The account is reviewed with regards to the client’s investment policies and risk tolerance

levels. Events that may trigger a special review would be unusual performance, addition or deletions of client

imposed restrictions, excessive draw-down, volatility in performance, or buy and sell decisions from the firm or

per client's needs.

Clients will receive trade confirmations from the broker(s) for each transaction in their accounts as well as

monthly or quarterly statements and annual tax reporting statements from their custodian showing all activity in

the accounts, such as receipt of dividends and interest.

Twelve Two will not provide written reports to Investment Management clients.

Item 14: Client Referrals and Other

Compensation

We do not receive any economic benefit, directly or indirectly, from any third party for advice rendered to our

clients. Nor do we, directly or indirectly, compensate any person who is not advisory personnel for client referrals.

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Item 15: Custody

Twelve Two does not accept custody of client funds except in the instance of withdrawing client fees.

For client accounts in which Twelve Two directly debits their advisory fee:

i. Twelve Two will send a copy of its invoice to the custodian at the same time that it sends the client a

copy.

ii. The custodian will send at least quarterly statements to the client showing all disbursements for the

account, including the amount of the advisory fee.

iii. The client will provide written authorization to Twelve Two, permitting them to be paid directly for their

accounts held by the custodian.

Clients should receive at least quarterly statements from the broker-dealer, bank or other qualified custodian that

holds and maintains client's investment assets. We urge you to carefully review such statements and compare such

official custodial records to the account statements or reports that we may provide to you. Our statements or

reports may vary from custodial statements based on accounting procedures, reporting dates, or valuation

methodologies of certain securities.

Item 16: Investment Discretion

For those client accounts where we provide Investment Advisory Services, we maintain discretion over client

accounts with respect to securities to be bought and sold and the amount of securities to be bought and sold.

Investment discretion is explained to clients in detail when an advisory relationship has commenced. At the start

of the advisory relationship, the client will execute a Limited Power of Attorney, which will grant our firm

discretion over the account. Additionally, the discretionary relationship will be outlined in the advisory contract

and signed by the client.

Item 17: Voting Client Securities

We do not vote Client proxies. Therefore, Clients maintain exclusive responsibility for: (1) voting proxies, and (2)

acting on corporate actions pertaining to the Client’s investment assets. The Client shall instruct the Client’s

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qualified custodian to forward to the Client copies of all proxies and shareholder communications relating to the

Client’s investment assets. If the client would like our opinion on a particular proxy vote, they may contact us at

the number listed on the cover of this brochure.

In most cases, you will receive proxy materials directly from the account custodian. However, in the event we

were to receive any written or electronic proxy materials, we would forward them directly to you by mail, unless

you have authorized our firm to contact you by electronic mail, in which case, we would forward you any

electronic solicitation to vote proxies.

Item 18: Financial Information

Registered Investment Advisers are required in this Item to provide you with certain financial information or

disclosures about our financial condition. We have no financial commitment that impairs our ability to meet

contractual and fiduciary commitments to clients, and we have not been the subject of a bankruptcy proceeding.

We do not have custody of client funds or securities or require or solicit prepayment of more than $500 in fees per

client six months in advance.

Item 19: Requirements for State-Registered

Advisers

Zhi Min Li

Born: 1982

Educational Background

• 2005 – Bachelors of Science in Account, State University of New York, Buffalo

Business Experience

• 05/2018 – Present, Twelve Two Capital LLC, Owner and CCO

• 12/2017 – 01/2018, National Financial Services LLC, Project Manager

• 06/2013 – 12/2017, National Financial Services LLC, Treasury Analyst

• 09/2006 – 06/2013, National Financial Services LLC, Operations Specialist Level 4

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Professional Designations, Licensing & Exams

Series 65 - This is an examination, and not a license of designation

Other Business Activities

Zhi Min Li is not involved with outside business activities.

Performance-Based Fees

Twelve Two is not compensated by performance-based fees.

Please refer to Item 6 of this brochure.

Material Disciplinary Disclosures

No management person at Twelve Two Capital LLC has ever been involved in an arbitration claim of any kind or

been found liable in a civil, self-regulatory organization, or administrative proceeding.

Material Relationships That Management Persons Have With Issuers of Securities

Twelve Two Capital LLC, nor Zhi Min Li, have any relationship or arrangement with issuers of securities.

Additional Compensation

Zhi Min Li does not receive any economic benefit from any person, company, or organization, in exchange for

providing clients advisory services through Twelve Two.

Supervision

Zhi Min Li, as Owner and Chief Compliance Officer of Twelve Two, is responsible for supervision. He may be

contacted at the phone number on this brochure supplement.

Requirements for State Registered Advisers

Zhi Min Li has NOT been involved in an arbitration, civil proceeding, self-regulatory proceeding, administrative

proceeding, or a bankruptcy petition.

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Twelve Two Capital LLC

1611 64th Street

Brooklyn, NY 11204

(347) 916-6545

Dated September, 6th 2018

Form ADV Part 2B – Brochure Supplement

For

Zhi Min Li, CRD # 6169482

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Owner, and Chief Compliance Officer

This brochure supplement provides information about Zhi Min Li that supplements the Twelve Two Capital LLC

(“Twelve Two”) brochure. A copy of that brochure precedes this supplement. Please contact Zhi Min Li if the

Twelve Two brochure is not included with this supplement or if you have any questions about the contents of this

supplement.

Additional information about Zhi Min Li is available on the SEC’s website at www.adviserinfo.sec.gov which can

be found using the identification number #6169482.

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Item 2: Educational Background and Business

Experience

Zhi Min Li

Born: 1982

Educational Background

• 2005 – Bachelors of Science in Account, State University of New York, Buffalo

Business Experience

• 05/2018 – Present, Twelve Two Capital LLC, Owner and CCO

• 12/2017 – 01/2018, National Financial Services LLC, Project Manager

• 06/2013 – 12/2017, National Financial Services LLC, Treasury Analyst

• 09/2006 – 06/2013, National Financial Services LLC, Operations Specialist Level 4

Professional Designations, Licensing & Exams

Series 65 - This is an examination, and not a license of designation

Item 3: Disciplinary Information

No management person at Twelve Two Capital LLC has ever been involved in an arbitration claim of any kind or

been found liable in a civil, self-regulatory organization, or administrative proceeding.

Item 4: Other Business Activities

Zhi Min Li is not involved with outside business activities.

Item 5: Additional Compensation

Zhi Min Li does not receive any economic benefit from any person, company, or organization, in exchange for

providing clients advisory services through Twelve Two.

Item 6: Supervision

Zhi Min Li, as Owner and Chief Compliance Officer of Twelve Two, is responsible for supervision. He may be

contacted at the phone number on this brochure supplement.

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Item 7: Requirements for State Registered

Advisers

Zhi Min Li has NOT been involved in an arbitration, civil proceeding, self-regulatory proceeding, administrative

proceeding, or a bankruptcy petition.

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