Disclosures
Auction Rate Securities Brokerage Disclosure Disclosures client Rate Schedule Investor Education Margin Mutual Funds Options Order Routing Information Patriot Act Cash Sweep Program Money Market Funds FDIC InsuranceE.K. Riley Investments clearing agent, First Clearing, LLC offers a Bank Deposit Sweep Option which is insured by the FDIC. The bank deposit sweep is offered in concert with Wachovia Bank, NA, now a wholly owned subsidiary of Wells Fargo & Company. Follows are details:
| Program | APY | Interest Rate |
| Wachovia FDIC Insured Sweep | 0.02% | 0.02% |
Introduction
The Bank Deposit Sweep Option consists of an interest-bearing deposit account at WBNA, a depository institution regulated by the Office of the Comptroller of the Currency under various federal banking laws and regulations, and affiliated with Clearing Agent. If the Bank Deposit Sweep Option is your Cash Sweep Option, available cash balances in your account are automatically deposited into the Bank Deposit Sweep Option.
Deposits
Periodically, the uninvested cash balances in your brokerage account will be deposited at one or more bank deposit accounts maintained at WBNA. No evidence of ownership, such as a passbook or certificate, will be issued to you and deposits in the Bank Deposit Sweep Option may be made in the name of Clearing Agent (or its agents) for the benefit of our clients. However, your brokerage account statement will reflect all deposits, withdrawals, WBNA deposit balance(s) and applicable interest rate. Cash intended for deposit into the Bank Deposit Sweep Option must be deposited through your brokerage account and cannot be placed directly by you into WBNA. Only balances transferred by the Clearing Agent will be eligible for inclusion in the Bank Deposit Sweep Option and deposits by you into WBNA, outside of the Bank Deposit Sweep, may adversely affect the FDIC coverage of your funds.
Withdrawals
Monies on deposit at WBNA will be automatically withdrawn from the bank deposit accounts in the event of a debit in your account or, on settlement date, to pay for securities purchased for or sold to your brokerage account. Debits may also be created by writing a check on your brokerage account, making payments via online bill payment service, withdrawing funds through your debit card, or to pay other liabilities owed to us. Checks, ACH payments, debit cards, ATM withdrawals, direct deposits, credits and other transactions and items for your brokerage account are processed through that account rather than through the bank deposit accounts. The Clearing Agent will debit and credit your bank deposits to accommodate this processing.
FDIC Insurance Coverage
Balances on deposit in the Bank Deposit Sweep Option, together with any other of your deposits at WBNA, are eligible for federal deposit insurance up to $250,000 including principal and interest in accordance with rules of the Federal Deposit Insurance Corporation (“FDIC”). If you have other deposits at WBNA outside of the Sweep Program, you must aggregate all such deposits with your Bank Deposit Sweep Option balance for purposes of determining FDIC coverage. If your total funds on deposit at WBNA exceed the applicable FDIC insurance limit, the FDIC will not insure your funds in excess of the limit. Different ownership categories of accounts are separately insured.
Please note that you are responsible for monitoring the total amount of your deposits at WBNA in order to determine the extent of FDIC insurance coverage available. If you expect to have total deposits at WBNA, including balances through the Sweep Program, that exceed FDIC insurance coverage limits, you should carefully consider whether you should arrange for other investment options for amounts in excess of such coverage in order to reduce your investment risk.
In the event that federal deposit insurance payments become necessary, payments of principal plus unpaid and accrued interest will be made to you by the FDIC. However, there is no specific time period during which the FDIC must make insurance payments available. Furthermore, you may be required to provide certain documentation t o the FDIC before insurance payments are made. If you have additional questions about FDIC insurance, please contact your investment professional. You may wish to seek advice from your own attorney concerning FDIC insurance coverage of deposits held in more than one capacity. You may also obtain publicly available information by contacting the FDIC, Office of Consumer Affairs, by letter (550 17th Street, N.W., Washington, D.C. 20429), by phone (877-275-3342 or 800-925-4618 (TDD)), or by accessing the FDIC website at www.fdic.gov.
Differences between the Bank Deposit Sweep Option and Money Market Funds
The Money Market Funds available as Cash Sweep Options are registered with the SEC pursuant to the Investment Company Act of 1940. The Bank Deposit Sweep Option consists of an interest-bearing deposit account at WBNA, which is regulated by the Office of the Comptroller of the Currency under various federal banking laws and regulations. Deposits in the Bank Deposit Sweep Option are eligible for FDIC insurance as described above. The oney Market Funds purchase high quality, short-term securities in seeking to maintain their net asset value of one dollar per share. There is no guarantee that this net asset value per share will always be maintained, and you may lose money by investing in Money Market Funds. Funds invested in a Money Market Fund are not guaranteed or insured by the FDIC or any other government agency and are not deposits of a bank or bank affiliate, including WBNA.
Changes to Sweep Banks
Our clearing agent may from time to time make changes in the Sweep Program that include making available deposit accounts at banks other than WBNA. In such instances, you will be notified in advance of the change if it affects your account. If WBNA no longer makes the Bank Deposit Sweep Option available, you will be provided the opportunity to establish a direct depository relationship with WBNA, subject to their policies and procedures. If you do not wish to establish a direct relationship with WBNA, your funds will be transferred to another available sweep bank. The consequences of maintaining a direct depository relationship with WBNA are discussed below under Relationship with WBNA. Our clearing agent may notify you of any of these changes by means of a letter, an entry on your brokerage account statement, an entry on a trade confirmation or by other means.
Information about WBNA
WBNA is a wholly-owned subsidiary of Wells Fargo & Company, the fourth largest bank holding company in the United States based on assets (“Wells Fargo”). WBNA is regulated by the Office of the Comptroller of the Currency under various federal banking laws and regulations. Additional information regarding WBNA and Wells Fargo is available at www.wellsfargo.com. WBNA is a corporate affiliate of Clearing Agent. Deposits in the Bank Deposit Sweep Option held at WBNA are obligations of WBNA only and are not obligations of, or guaranteed by, us, Wells Fargo or any of its affiliates. Neither we, Wells Fargo nor the Clearing Agent guarantees in any way the financial condition of WBNA nor are they responsible for any insured or uninsured portion of any deposits with WBNA.
Relationship with WBNA
Our clearing agent will act as your agent in establishing and maintaining the Bank Deposit Sweep Option, including making deposits to and withdrawals from the Bank Deposit Sweep Option. Your first deposit into the Bank Deposit Sweep Option will constitute your appointment of First Clearing as your agent in connection with your Bank Deposit Sweep Option. No evidence of ownership, such as a passbook or certificate, will be issued to you and deposits in the Bank Deposit Sweep Option may be made in the name of Clearing Agent for the benefit of our customers. Accordingly, all transactions involving the Bank Deposit Sweep Option must be made through us. If you decide to remove First Clearing as your agent with respect to the Bank Deposit Sweep Option, you may establish a direct depository relationship with WBNA by requesting to have your deposit relationship established in your name, subject to applicable law and WBNA’s terms and conditions. If First Clearing terminates your use of the Bank Deposit Sweep Option or if you choose to remove First Clearing as your agent with respect to the Bank Deposit Sweep Option, First Clearing will have no further responsibility for automatically crediting your brokerage account with payments made with respect to your accounts with WBNA and will not automatically withdraw funds from your accounts with WBNA to satisfy debits in your brokerage account.