What does it mean when I purchase securities on margin?
When you use a margin account, you are borrowing money from a brokerage firm. When purchasing securities on margin, you use a combination of your own funds and the funds you borrowed from the brokerage firm. These securities are the firm’s collateral for the loan. When the securities in your account decline in value, so does the value of the collateral supporting your loan. With margin, it is possible to lose more than the amount of your initial investment. If the value of the securities declines substantially, the brokerage firm will take action to shore up the value of the account by issuing a margin call.
Whether or not your firm chooses to issue a margin call, the firm has the right to liquidate securities in your account in order go meet its equity requirements for customer margin accounts. Should your firm actually issue a margin call, it may give you a very limited time to satisfy the call. This time may be decreased from the amount of time that a firm may normally allow, in the event the markets are experiencing unusually volatile conditions. This information pertains to the most common use of a margin account, i.e., purchasing securities on margin. Investors who sell securities short, which is also a margin transaction, should check with their firms to fully understand the impact that changes in market value have on their account.
What can I do to better manage my margin account?
Make sure that you fully understand how a margin account works. If you don’t, limit your investments to cash accounts where you must pay for the securities in full. Cash accounts are not subject to margin calls. Know your firm’s margin policies. Speak with your broker or check the firm’s Web Site for any changes in margin policies. Firms can make changes at their discretion, and are more likely to do so in volatile markets. If you use a margin account, make sure you don’t use all of your available funds to trade securities in the margin account.
Mutual Fund Disclosures
BrokerageSelect has compiled a list of important facts and disclosures relating to mutual funds that should be taken into consideration when investing in mutual funds. BrokerageSelect makes no recommendation to buy or sell any particular fund nor do we advise clients on the suitability or specific aspects of any mutual fund.
• Past performance is not an indication of future performance, and mutual fund values will fluctuate with changes in market conditions. Your investment may be worth more or less than your original cost when you redeem your shares.
• Read the prospectus carefully before you invest in any mutual fund. It contains information on a fund’s investment strategies, risks, expenses, and fees.
• Fund share prices will fluctuate and are priced daily. The value of your principal investment will fluctuate accordingly and may be worth more or less than your original investment.
• As with any investment there are risks associated with investments in mutual funds and the risks will vary for every fund. You should invest in mutual funds that meet your investment objectives.
• Management fees charged by the mutual fund company will vary for every fund and these charges may affect the performance of the fund.
• Fund purchases may be subject to investment minimums, and all fund transactions are subject to acceptance by BrokerageSelect, our clearing firm, and/or the fund company. By entering a mutual fund transaction at BrokerageSelect, you acknowledge that you have received, read and understand the fund prospectus and the risks associated with the investment.
Some mutual funds may impose a sales charge on the purchase of shares of the fund. These charges are known as a “sales load”. You may also be able to purchase mutual fund shares without paying a sales load, although you may be charged a “back-end load” or a “contingent deferred sales charge” upon the sale or redemption of the shares. These charges may or may not be included in the fund’s performance data. BrokerageSelect may receive all or part of a sales load in connection with your investment in the fund’s shares. Please consult the fund’s prospectus for more information.
Some mutual funds impose a marketing distribution fee known as a “12b-1 fee”. This fee is included in the computation of the fund’s overall expense ratio and is reflected in the fund’s performance data. BrokerageSelect may receive all or part of the 12b-1 fees in connection with your investment in the fund’s shares. Please consult the fund’s prospectus for more information.
For mutual funds purchased through the BrokerageSelect and held at the firm’s custodian/clearing firm, a transaction fee may be charged in addition to any sales charges included in the fund’s prospectus.
SHORT-TERM REDEMPTION FEES
Short-term trading of mutual funds by investors can adversely impact investor returns due to sales charges, redemption charges, and other transaction fees. There are strict rules imposed by securities regulators, mutual fund companies, our clearing firm, and BrokerageSelect that prohibit frequent trading in a fund.
SALES IN CERTAIN STATES AND COUNTRIES
Some funds may not be available for sale in all states. The ability to buy a fund through this firm is not a representation that it is available in a particular state. Additionally, some mutual funds may not be available for sale outside of the United States. BrokerageSelect does not make any representation or guarantee regarding any state or country. Please contact the fund for further information.
At BrokerageSelect, we understand that the privacy and security of your personal information are very important. No account or personal information is retrieved from our servers when a visitor browses the non-account areas of the Web site. Clients, in order to access their accounts, are required to provide their User Name and individually selected password. This password is known solely to you, the client, and should never be shared with anyone. This password may be changed as often as you wish by contacting us or through your online account site. It is important to log off your account when you have finished a session to prevent others from accessing your account. Any personal and account data maintained by BrokerageSelect is kept to fulfill our legal and regulatory requirements and to provide you with the products and services you have requested. BrokerageSelect reserves the right to disclose or report personal information, in limited circumstances, where we believe, in good faith, that disclosure is required under law, to cooperate with regulators or law enforcement authorities; to perform necessary credit checks or collect or report debts owed to us, and to protect our rights or property. BrokerageSelect employees will be provided with client or visitor’s information in order to respond to that party’s needs and provide the party with information regarding the specific products in which they may have an interest. BrokerageSelect employees are instructed to use strict standards of care in handling the personal, confidential information of customers. Service providers that, in the normal course of business, assist BrokerageSelect in meeting the needs of its customers may receive personal information collected from a client or visitor. This personal information is treated with the same standards of confidentiality as used internally by BrokerageSelect.
BrokerageSelect wants to provide you with the best possible service. To do so, the accuracy and completeness of your personal information are important to us. We ask that you periodically review your personal information regularly to make sure that it is correct. Please notify us if you need to update your information. We may use your e-mail address to send you communications with information about service and product information that we believe may be of interest to you. If you do not want to receive such unsolicited communications, please contact us at email@example.com.
BrokerageSelect will not sell any personal information collected to any outside source. BrokerageSelect is not responsible for the privacy practices or the content of Web sites that you may visit through links from our site.
If you have any questions, please contact us at firstname.lastname@example.org.
BrokerageSelect’s Business Continuity Notice
BrokerageSelect has developed a Business Continuity Plan on how we will respond to events that significantly disrupt our business. Since the timing and impact of disasters and disruptions is unpredictable, we will have to be flexible in responding to actual events as they occur. With that in mind, we are providing you with this information on our business continuity plan.
Contacting Us – If after a significant business disruption you cannot contact us as you usually do at the home office at (877)301-1550 or (917)837-2287 email@example.com or at Kevin Donnelly’s branch at (212)996-3535 or firstname.lastname@example.org, you should call our alternative number (845)896-6324 or e-mail us at email@example.com. If you cannot access us, you should contact our clearing firm, Wedbush Securities, Inc., at (213)688-4400.
Our Business Continuity Plan – We plan to quickly recover and resume business operations after a significant business disruption and respond by safeguarding our employees and property, making a financial and operational assessment, protecting the firm’s books and records, and allowing our customers to transact business. To this end, we have designed a business continuity plan to help us to resume operations as quickly as possible, given the scope and severity of the significant business disruption.
Our business continuity plan addresses: data backup and recovery; all mission-critical systems; financial and operational assessments; alternative communications with customers, employees, and regulators; alternate physical location of employees; critical supplier, contractor, bank, and counter-party impact; regulatory reporting; and assuring our customers’ prompt access to their funds and securities if we are unable to continue our business.
Our clearing firm, Wedbush Securities, Inc., backs up our important records in a geographically separate area. While every emergency situation poses unique problems based on external factors, such as time of day and the severity of the disruption, our clearing firm has advised us that its objective is to restore its own operations and be able to complete existing transactions and accept new transactions and payments as soon as conditions permit. Your orders and requests for funds and securities could be delayed during this period.
Varying Disruptions – Significant business disruptions can vary in their scope, such as only our firm, a single building housing our firm, the business district where our firm is located, the city where we are located, or the whole region. Within each of these areas, the severity of the disruption can also vary from minimal to severe. In a disruption to only our firm or a building housing our firm, we will transfer our operations to a local site when needed and expect to recover and resume business within 24 to 48 hours. In a disruption affecting our business district, city, or region, we will transfer our operations to a site outside of the affected area, and recover and resume business within three business days. In either situation, we plan to notify you through our website www.brokerageselect.com or our customer emergency number, 845-896-6324 how to contact us. If the significant business disruption is so severe that it prevents us from remaining in business, we will assure our customers’ prompt access to their funds and securities.
Our mission is to protect staff from the impact of a pandemic illness, ensure information system uptime, data integrity and availability, and overall business resilience. To achieve this mission, BrokerageSelect will attempt to minimize the potential for infection and transmission of communicable diseases or diseases that pose a credible threat of transmission in the workplace. Examples of potential risks include swine flu, active TB, SARS, seasonal flu, and Covid-19.
We will generally follow the guidelines set forth by the Centers for Disease Control and Prevention (“CDC”); however, the universal precautions generally include, staying at home when ill, frequent hand washing, ready access to hand sanitizer, wearing a mask to prevent airborne spreading, latex gloves, annual flu vaccinations, and encouraging supervised persons to take regular exercise and maintain a healthy and well-balanced diet.
Key trigger issues that would lead to activation of these pandemic steps include, escalating loss of staff due to illness, inability to adequately handle business operations, and or the orders of Federal, State, or local governmental entities. Based on the facts and circumstances surrounding a pandemic outbreak, the Company will decide when the BCP should be invoked, and to what extent. To this end, we will evaluate the situation to determine the impact on BrokerageSelect operations, determine the level of backup that will be needed, notify appropriate emergency organizations (e.g. hospitals, clinics, etc.) if appropriate, and assign responsibilities and activities to other supervised persons to ensure the Company’s ability to maintain business operations. If the pandemic escalates to the point where a supervised persons’ immediate family may be affected, the Company will notify the family members quickly. If necessary, we will move our unaffected employees to our alternative office location and or have supervised persons work from home in order to restore normal business operations
For more information – If you have questions about our business continuity planning, you can contact us at 877-301-1550 or firstname.lastname@example.org.
BrokerageSelect Investor Protection Information
BrokerageSelect is a member of the Securities Investor Protection Corporation (SIPC). BrokerageSelect customer accounts are carried and held by Wedbush Securities, Inc. (“Wedbush”). SIPC protection insures client accounts for losses due to firm insolvency, fraud, certain natural catastrophes, and other conditions that might force BrokerageSelect to cease its business activities. Accounts are protected for amounts up to $500,000 of which up to $100,000 may be cash. In addition to SIPC coverage, Wedbush purchases additional insurance from a private carrier. With respect to SIPC and private coverage, it is important to realize that these programs do not protect against declines or realized or unrealized losses in market value of the securities in client accounts.
Options involve a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options including, but not limited to, cleared funds. A person must read “The Characteristics and Risk of Standardized Options” before placing any option trade. A copy of this document will be forwarded to any customer who requests an options agreement.
Terms and Conditions of Use
This Web site is provided for your use, conditioned on your acceptance without modification of the terms, conditions, and notices contained herein. Your use of this Web site constitutes your agreement to all such terms, conditions, and notices. BrokerageSelect may at any time change or modify the terms and conditions applicable to your use of this Web site, or any aspect or feature of the Web site itself.
Materials provided on or through this Web site are for general information only and do not constitute investment advice. Under no circumstances do BrokerageSelect, its affiliates, or their employees render advice or recommendations concerning the nature of the potential value or suitability of any security, transaction, or investment strategy. BrokerageSelect suggests that you consult with your tax or financial advisor with respect to your individual situation.
This Web site is for your personal and non-commercial use. You may not modify, copy, distribute, transmit, display, perform, reproduce, publish, license, create derivative works from, transfer, or sell any information, products, or services obtained from this Web site.
Stock quotes and financial market information provided on this Web site have been independently obtained through sources believed to be reliable. However, such information may include inaccuracies, errors, or omissions. Neither BrokerageSelect, its affiliates, information providers, or content providers shall have any liability to you or third parties for the accuracy, completeness, timeliness, or correct sequencing of information available on this Web site, or for any decision made or action taken by you in reliance upon such information, or for the delay or interruption of such information.
BrokerageSelect and its affiliates make no warranties with respect to the accuracy, timeliness, or suitability of the content of other services or sites to which the screens of this Web site link. By providing access to other Web sites, neither BrokerageSelect nor its affiliates are endorsing or recommending the site; services or products offered or described thereon; the accuracy, completeness, suitability, or any other characteristic of the content of the site; the organization sponsoring the site; nor the purchase or sale of securities issued by such sponsor.
BROKERAGESELECT, ITS AFFILIATES, INFORMATION PROVIDERS, AND CONTENT PROVIDERS SHALL HAVE NO LIABILITY FOR INVESTMENT DECISIONS OR OTHER ACTIONS TAKEN OR MADE BY YOU BASED ON THE INFORMATION PROVIDED ON THIS WEBSITE. THE STOCK PRICES, FINANCIAL MARKET INFORMATION, AND OTHER INFORMATION AVAILABLE ON THIS WEBSITE IS PROVIDED ON AN “AS IS” BASIS WITHOUT WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING (BUT NOT LIMITED TO) WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, TITLE OR NON-INFRINGEMENT. IN NO EVENT WILL BROKERAGESELECT, ITS AFFILIATES, INFORMATION PROVIDERS, OR CONTENT PROVIDERS BE LIABLE TO YOU OR ANY THIRD PARTY FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR SPECIAL DAMAGES (INCLUDING BUT NOT LIMITED TO LOST PROFITS) ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE USE OF THIS WEB SITE, OR WITH THE DELAY OR INABILITY TO USE THIS WEB SITE, OR FOR ANY INFORMATION, PRODUCTS OR SERVICES OBTAINED THROUGH THIS WEB SITE, WHETHER BASED IN CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, EVEN IF SOUTHWEST SECURITIES, ITS AFFILIATES, INFORMATION PROVIDERS AND/OR CONTENT PROVIDERS HAS BEEN ADVISED OF THE POSSIBILITIES OF DAMAGES.
Some states do not allow certain limitations on implied warranties, or the exclusion or limitation of incidental, consequential, or other damages, so that these disclaimers and limitations may not apply to you.
Copyright and Trademark Information
The material and content contained on this Web site are owned by BrokerageSelect or its content providers and are protected by copyright laws. “BrokerageSelect” and “the dragon design” are trademarks of BrokerageSelect. All other trademarks, services marks, and trade names displayed on this Website belong to their respective owners.
Investors can find information about securities broker-dealers and registered representatives at brokercheck.finra.org