Margin Disclosure Statement
Before trading stocks in a margin account, you should carefully review the margin
agreement provided by Penson Financial Services (PFS). You may, at any time consult
your broker with any questions or concerns you may have with your margin accounts.
When you purchase securities, you may pay for the securities in full or you may
borrow part of the purchase price from PFS. If you choose to borrow funds from
PFS, you will need to open a margin account with PFS. The securities purchased are
PFS's collateral for the loan to you. If the securities in your account decline in
value, so does the value of the collateral supporting your loan, and, as a
result, PFS can take action, such as issue a margin call and/or sell securities
or other assets in any of your accounts that it holds, in order to maintain the
required equity in the account.
It is important that you fully understand the risks involved in trading securities
on margin. These risks include the following:
You can lose more funds than you deposit in the margin account. A decline in
the value of securities that are purchased on margin may require you to provide
additional funds to PFS (a "margin call") to avoid the forced sale of those
securities or other securities or assets in your account(s).
PFS can force the sale of securities or other assets in your account(s) if
the equity in your account falls below the maintenance margin requirements or
any higher house requirements that PFS may impose. In this event, PFS can sell
the securities or other assets in any of your accounts held at PFS to cover the margin
deficiency. You will also be responsible for any short fall in the account after
such a sale.
PFS can sell your securities or other assets without contacting you. Some investors
mistakenly believe that a firm must contact them for a margin call to be valid,
and that the firm cannot liquidate securities or other assets in their accounts to
meet the call unless the firm has contacted them first. This is not the case. Most
firms will attempt to notify their customers of margin calls, but they are not
required to do so.
However, even if a firm has contacted a customer and provided a specific date by
which the customer can meet a margin call, the firm can still take necessary steps
to protect its financial interests, including immediately selling the securities
without notice to the customer.
You are not entitled to choose which securities or other assets in your account(s)
are liquidated or sold by the broker to meet a margin call.
Because the securities are collateral for the margin loan, PFS has the right
to decide which security to sell in order to protect its interests.
PFS can increase its "house" maintenance margin requirements at any time and
is not required to provide you advance written notice. These changes in PFS'S
policy often take effect immediately and may result in the issuance of a
maintenance margin call. Your failure to satisfy the call may cause PFS to
liquidate or sell securities in your account(s).
You are not entitled to an extension of time on a margin call. While an extension
of time to meet margin requirements may be available to customers under certain
conditions, a customer does not have a right to the extension.
The customer acknowledges that it has read, it understands, and it agrees to
be bound by the terms and conditions of the Margin Agreement.
Person(s) signing on behalf of others must indicate title or capacity.
If a joint account, both parties must sign.