This Online Services Agreement (“Agreement”) governs your use of Liberty Associates, Inc. (“Liberty” or the “Firm”) (collectively, the “Service”), which includes Internet order entry and access to real-time/delayed quotes and financial market information. This Agreement is a supplement to the Firm’s Customer Agreement, which applies to all transactions in your account, whether conducted through a licensed broker or through the Service. If there are any inconsistencies between this Agreement and the Customer Agreement, as they relate to the provision of online services, this Agreement controls.
I UNDERSTAND THAT THE FIRM’S AUTOMATED INTERNET SYSTEMS ARE PROVIDEDON A “BEST EFFORTS” AND “AS IS” BASIS, AND THAT NO EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, OROTHER REPRESENTATIONORGUARANTEE, IS MADE WITH RESPECT TO THE SERVICE OR FACILITIES USED TO SUPPORT THE SERVICE. SYSTEM RESPONSE AND ACCOUNT ACCESS TIMES MAY VARY DUE TO A VARIETY OF FACTORS, INCLUDING TRADING VOLUMES, MARKET CONDITIONS, SYSTEM PERFORMANCE, AND OTHER FACTORS. I UNDERSTAND THAT THERE IS THE POSSIBILITY OF DELAYED EXECUTIONS AND MARKET LOSSES DUE TO INTERNET THE POSSIBILITY OF DELAYED EXECUTIONS AND MARKET LOSSES DUE TO INTERNET OVERLOAD AS WELL AS LIMITED SYSTEM CAPACITY DURING PERIODS OF MARKET VOLATILITY. THE ACTUAL PRICES OF MARKET ORDERS MAY BE AT PRICES DIFFERENT FROM PRICES DISPLAYED VIA AN INTERNET CONNECTION.
DELAYS – HIGH VOLUMES OF TRADING AT THE MARKET OPENING OR INTRADAY MAY CAUSE DELAYS IN EXECUTION AND EXECUTIONS AT PRICES SIGNIFIGANTLY AWAY FROM THE MARKET PRICE QUOTEDOR DISPLAYED AT THE TIME THE ORDER WAS ENTERED. MARKET MAKERS EXECUTE ORDERS MANUALLY OR REDUCE THEIR SIZE GUARANTEES DURING PERIODS OF VOLATILITY, RESULTING IN POSSIBLE DELAYS INORDER EXECUTION AND LOSSES.
TYPES OF ORDERS – MARKET ORDERS ARE EXECUTED FULLY AND PROMPTLY WITHOUT REGARD TO PRICE. WHILE A CUSTOMER MAY RECEIVE A PROMPT EXECUTIONOF A MARKET ORDER, THE EXECUTION MAY BE AT A PRICE SIGNIFICANTLY DIFFERENT THAN THE CURRENT QUOTED PRICE OF THAT SECURITY. LIMIT ORDERS ARE EXECUTED AT ONLY A SPECIFIED PRICE OR BETTER; HOWEVER, THERE IS A POSSIBILITY THAT THE ORDER WILL NOT BE EXECUTED. CUSTOMERS WHO PLACE MARKET ORDERS FOR INITIAL PUBLIC OFFERING (IPO) SECURITIES TRADING IN THE SECONDARY MARKET, PARTICULARLY THOSE THAT TRADE AT A MUCH HIGHER PRICE THAN THEIROFFERING PRICE, OR IN “HOT STOCKS” (THOSE THAT HAVE RECENTLY TRADED FOR A PERIODOF TIME UNDER WHAT IS KNOWN AS “FAST MARKET CONDITIONS,” IN WHICH THE PRICE OF THE SECURITY CHANGES SO QUICKLY THAT QUOTES FOR A STOCK DO NOT KEEP PACE WITH THE TRADING PRICE OF THE STOCK), RISK RECEIVING AN EXECUTION SUBSTANTIALLY AWAY FROM THE MARKET PRICE AT THE TIME THE ORDER IS PLACED. THIS RISK MAY BE SIGNIFICANTLY REDUCED BY PLACING A LIMIT ORDER.
MARGIN DISCLOSURE STATEMENT
This disclosure is being provided to you by the Firm in order to provide you with some basic facts about purchasing securities on margin, and to alert you to the risks involved with trading securities in a Margin Account. Before trading stocks in a Margin Account, you should carefully review the section entitled “Margin Accounts” in the Customer Agreement provided to you. Please call the Firm if you have any questions or concerns with your Margin Account. When you purchase securities, you may pay for the securities in full or you may borrow part of the purchase price from the Firm. If you choose to borrow funds from the Firm, the Firm will open a Margin Account for you. The securities purchased are the Firm’s collateral supporting your loan, and, as a result, the Firm can take action, such as issue a margin call and/or sell securities in your Account(s), in order to maintain the required equity in your Account(s). 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 the Firm to avoid the forced sale of those securities or other securities in your Account(s).
Liberty and/or its clearing firm can force the sale of securities in your Account(s). If the equity in your Account(s) falls below the maintenance margin required by law, or by The Firm’s higher “house” requirements, the Firm can sell the securities in your Account(s) to cover the margin deficiency. You also will be responsible for any shortfall in your Account(s) after such a sale.
Liberty and/or its clearing firm can sell your securities without contacting you. Some investors mistakenly believe that a firm must contact them for a margin call to be valid, and that a firm cannot liquidate securities in their Account(s) 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 interest, including immediately selling the securities without notice to the customer.
You are not entitled to choose which security in your Margin Account is liquidated or sold to meet a margin call. Because the securities are collateral for the Margin Loan, the Firm has the right to decide which security to sell in order to protect its interests.
Liberty and/or its clearing firm can increase its “house” maintenance margin requirements at any time and is not required to provide you with advance notice. These changes in the Firm’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 the Firm 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.
Liberty and its clearing firm are both members of SIPC. As a member of the Securities Investor Protection Corporation (SIPC), funds are available to meet customer claims up to a ceiling of $500,000, including a maximum of $100,000 for cash claims. For additional information regarding SIPC coverage, including a brochure, please contact SIPC at (202) 371-8300 or visit www.sipc.org. Our clearing firm has purchased an additional insurance policy through [ ] to supplement SIPC protection. This additional insurance policy becomes available to customers in the event that SIPC limits are exhausted and provides protection for securities and cash up to an aggregate of $600 million. This is provided to pay amounts in addition to those returned in a SIPC liquidation. This additional insurance policy is limited to a combined return to any customer from a Trustee, SIPC and London Underwriters of $150 million, including cash of up to $2 million. Similar to SIPC protection, this additional insurance does not protect against a loss in the market value of securities.