Account Information and Account Protection
Your Greatest Protection
Pershing’s Strength, Stability, and Focus
Pershing LLC has been a leading global provider of financial business
solutions for 70 years and serves many of the world’s most
respected financial organizations, remaining focused on the
safekeeping, servicing, segregation, and reporting of assets held in
our custody. Pershing’s parent company, The Bank of New York
Mellon Corporation, is one of the world’s strongest global financial
institutions, holding $20.2 trillion in assets under custody and
administration.1 The Bank of New York Mellon remains highly liquid,
as it is funded primarily by deposits from institutional businesses.
Summary of SIPC Account Protection
Pershing is a member of the Securities Investor Protection
Corporation (SIPC®). As a result, investor-owned assets held in
custody by Pershing are protected by SIPC, up to $500,000 in value,
including $100,000 in cash awaiting reinvestment. SIPC provides
protection for eligible client assets held in custody by a SIPC
member brokerage firm should the SIPC member firm fail financially
and become unable to meet the obligations to its clients. SIPC does
not protect assets that are not held in custody by Pershing. SIPC
does not protect against losses due to market fluctuation or for
client assets not held by a SIPC member. For more information about
investor asset protection, visit SIPC’s web site at www.sipc.org. In
addition to SIPC protection, Pershing also provides coverage in
excess of SIPC limits through Lloyd’s of London.
Excess Account Protection through
Lloyd’s of London
The excess insurance policy purchased through Lloyd’s of London
provides the following excess account protection for assets held in
custody with Pershing and its London-based affiliate, Pershing
Securities Limited:
• An aggregate loss limit of $1 billion for eligible securities—over
all client accounts
• A per client loss limit of $1.9 million for cash awaiting
reinvestment—within the aggregate loss limit of $1 billion
This excess account protection offers the highest level of coverage
available in the industry today. Excess account protection claims
would only arise where Pershing failed financially and eligible
client assets for covered accounts, as defined by SIPC and Lloyd’s
of London, cannot be located due to theft, misplacement,
destruction, burglary, robbery, embezzlement, abstraction, failure
to obtain or maintain possession or control of customers’ clients’
securities or to maintain the special reserve bank account required
by applicable rules (SEC 15c-3).
Lloyd’s currently has an A (“Excellent”) rating with “Stable
Outlook” from A.M. Best and an A+ (“Strong”) rating with “Stable
Outlook” from Fitch Ratings and Standard & Poor’s (S&P). These
ratings are subject to change by the rating agencies at any time.
The current Lloyd’s of London excess insurance policy is scheduled
to expire on December 10, 2009. For more information about
Lloyd’s of London, please visit their web site at www.lloyds.com.
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Federal Deposit Insurance Corporation
(FDIC) Insurance
The FDIC is an independent agency of the U.S. government that
provides protection for insured deposits at a failed FDIC-insured
bank. FDIC-insured investments are insured by the FDIC up to
applicable limits, generally $100,000 ($250,000 most recently in
certain instances, through December 31, 2009). In the case of
Pershing’s FDIC-Insured Deposits Program and the Certificate of
Deposit Account Registry Service® (CDARS®), investors can access
FDIC insurance for deposits in multiple FDIC insured institutions
with a single investment.3, 4 Pershing also offers investors access to
Brokered CD’s and FDIC-insured bonds.5
Brokered CD’s are certificates of deposit of a commercial bank or
savings and loan association that are sold through an intermediary
instead of the savings and loan institution itself. Brokered CD’s are
covered by FDIC insurance up to applicable limits and are available
in both the new-issue and secondary markets in maturities as short
as one month to as long as ten or more years.
FDIC-insured bonds were created by the FDIC’s new Temporary
Liquidity Guarantee Program. The program guarantees newly issued
senior unsecured debt of eligible institutions—issued on or after
October 14, 2008, and before June 30, 2009. It also provides
full deposit insurance coverage for non-interest-bearing deposit
transaction accounts in FDIC-insured institutions, regardless of
the dollar amount.
For additional information about the financial strength of Pershing
and the protection of investors’ assets held in custody, answers to
frequently asked questions are available within The Source via
NetExchange Pro® or visit the safety and soundness section on
www.pershing.com.
1 As of December 31, 2008.
2 Adjusted for deferred tax liabilities associated with non-tax deductible identifiable
intangible assets and tax deductible goodwill. In addition, at 12/31/08, total and
average assets were adjusted to exclude certain deposits and other short-term
investment assigned a zero risk-weighting by regulators.
3 Investments in the FDIC-Insured Deposits Program are not considered securities and
are therefore not protected by SIPC or excess account protection coverage.
4 CDARS is service provided by Promontory Interfinancial Network, LLC. Pershing,
Promontory, and The Bank of New York Mellon are affiliated through common
ownership. The Bank of New York Mellon Corporation is the ultimate parent company
of Pershing and The Bank of New York Mellon. The Bank of New York Mellon
Corporation holds a minority interest in Promontory.
5 Brokered CDs of any one issuer are FDIC-insured up to a maximum of $100,000
aggregate principal and accrued interest in nonretirement accounts. The maximum
coverage for CDs of any one issuer held through an individual retirement account
(IRA), self-directed 401(k) plan, Keogh plan, and Section 457 plan is $250,000.
On October 3, 2008, FDIC deposit insurance temporarily increased from $100,000
to $250,000 per depositor (through December 31, 2009) for certain retirement
accounts. Expanded FDIC coverage may be obtained by purchasing CDs from multiple
issuing institutions.
Pershing LLC, a subsidiary of The Bank of New York Mellon Corporation. Member
FINRA, NYSE, SIPC. Trademark(s) belong to their respective owners.
OVR-PER-POCA-3-09
funds
•mit of $1.9 million for cash awaiting
reinvestment—within the aggregate loss limit of $1 billion—
through Lloyd’s of London
Not Covered
Among ineligible investments are assets that are not registered
with the SEC under the Securities Act of 1933:
• Commodity futures contracts
• Precious metals
• Bank deposits
• Investment contracts (such as limited partnerships)
• Fixed and variable annuity contracts
• Antiques and collectibles