REGULATORY AND LEGAL DISCLOSURES; NOTICES TO INVESTORS
Disclaimer of Warranty and Limitation of Liability
The information on this site is provided 'AS IS'. Wunderlich Securities, Inc. ("Wunderlich") does not warrant the accuracy of the materials provided herein, either expressly or impliedly, for any particular purpose and expressly disclaims any warranties of merchantability or fitness for a particular purpose. This information is for informative purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any product. Wunderlich will not be responsible for any loss or damage that could result from interception by third parties of any information made available to you via this site. Although the information provided to you on this site is obtained or compiled from sources we believe to be reliable, Wunderlich cannot and does not guarantee the accuracy, validity, timeliness or completeness of any information or data made available to you for any particular purpose. Neither Wunderlich, nor any of its affiliates, directors, officers or employees, nor any third party vendor will be liable or have any responsibility of any kind for any loss or damage that you incur in the event of any failure or interruption of this site, or resulting from the act or omission of any other party involved in making this site or the data contained therein available to you, or from any other cause relating to your access to, inability to access, or use of the site or these materials, whether or not the circumstances giving rise to such cause may have been within the control of Wunderlich or of any vendor providing software or services support. In no event will Wunderlich, its affiliates or any such parties be liable to you for any direct, special, indirect, consequential, incidental damages or any other damages of any kind even if Wunderlich or any other party have been advised of the possibility thereof.
USA PATRIOT Act
In response to the terrorist attacks on September 11, 2001, the US Congress passed the USA PATRIOT Act. Parts of this Act apply to the financial services industry and require certain financial institutions to request specific information from clients.
Under the USA PATRIOT Act and other regulations, financial services firms must establish a compliance program, which includes policies and procedures to detect and report suspicious transactions to the government, as well as ensure compliance with the new laws. Firms must also implement specialized employee training programs, designate a special compliance officer and conduct independent audits of the effectiveness of the compliance program.
Wunderlich has named an anti-money-laundering officer. In conjunction with First Clearing Corporation, we are implementing a suspicious activity reporting system that will enable us to better report suspicious activity to the government. All of our employees are being trained in anti-money-laundering practices and procedures, as well as the details of the firm's policies.
The regulations also impose new requirements regarding client information and verification of that information. Financial services firms are required to verify the identity of the clients with whom they do business, where appropriate determine the source of funds in a client's account and obtain the information about a client's wealth.
At Wunderlich we have always known the importance of knowing our clients and that the better we know our clients, the better we can serve their financial needs. As part of our compliance with the new Act and in support of the fight against money laundering around the world, we may ask clients for additional information and documentation about certain accounts and transactions. This information may be used to verify client identity.
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Business Continuity Plan
This document provides a general overview of the Business Continuity Plan ("BCP") for Wunderlich Securities, Inc. ("Wunderlich"). A BCP is a program designed to help ensure that we can continue to do business even if we experience an unplanned business interruption such as a loss of utility service, a building evacuation, or a catastrophic event.
Wunderlich's BCP addresses the action that we will take in the event that a significant business disruption ("SBD") affects a single building, a business district, a citywide area, or an entire region. We have different planned recovery times depending on the severity of the SBD. In the event of a branch outage, the telephones to the branch office experiencing the SBD will be re-routed to the main office or another branch office facility with the ability to service the needs of the clients within a few hours. In the event of a short term SBD at the main office, the telephones would be re-routed to a branch office location within several hours. In the case of a major business disruption at the main office, the firm has a plan to relocate the mission-critical employees and systems to an alternate location, which would result in a disruption of between several hours to several days.
Wunderlich's BCP is subject to annual review and update. In addition, the firm's regulators will periodically review the BCP for compliance. As our BCP is materially updated, the changes will be reflected here on our website. You may also contact us to request a copy of our most recent BCP by calling 1-800-726-0557.
For retail accounts held at First Clearing‡:
In regards to retail client assets carried by First Clearing, we have received and reviewed First Clearing's Business Continuity Plan. We are committed to providing continued service to our clients and to that end during a significant business disruption Wunderlich Securities, Inc. will re-establish telephone service with our clients as soon as possible. Our clients should check here on our website for our latest information.
As a client of Wunderlich Securities, Inc. we recognize you many need access to your account to sell a position or request a check before we re-establish telephone service with our clients. During this time First Clearing will assist you with sell/liquidation orders and provide check disbursements, if needed. If you cannot contact our firm, please call First Clearing for assistance at 877-496-3223.
Institutional Clients – National Financial Services (NFS):
Additionally, the firm conducts its institutional business, for which transactions are done on a DVP/RVP basis, through National Financial Services, LLC ("NFS"). The firm has received and reviewed NFS's Business Continuity Plan. NFS has established a contact number for our clients in the event they are unable to contact Wunderlich. In the case of a Significant Business Disruption affecting NFS, our clients may experience additional delays. If you cannot contact our firm, please call NFS at 800-801-9942 or visit their website at
Institutional Clients – Merrill Lynch, Pierce, Fenner & Smith (Broadcort):
Additionally, the firm conducts its institutional business, for which transactions are done on a DVP/RVP basis, through Merrill Lynch, Pierce, Fenner & Smith (Broadcort). The firm has received and reviewed Broadcort’s Business Continuity Plan. Broadcort has established a contact number for our clients in the event they are unable to contact Wunderlich. In the case of a Significant Business Disruption affecting Broadcort, our clients may experience additional delays. If you cannot contact our firm, please call Broadcort at 646-743-0110 or visit their website to view
privacy information or AML information.
FINRA Investor Brochure
FINRA is the Financial Industry Regulatory Authority, a self-regulatory organization that oversights securities firms and stockbrokers. FINRA offers unbiased information on a full range of issues that affect your money and investments. On FINRA's website,
www.finra.org, you can find unbiased facts and tools as well as background information on both firms and brokers.
In accordance with FINRA Rule 2267, Wunderlich Securities, Inc. is providing the following information in the event you wish to contact FINRA. You may contact them via telephone at 301-590-6500 or by mail at 1735 K Street NW, Washington, DC 20006-1500. In addition to the general contact number you may also call BrokerCheck at 800-289-9999.
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MSRB Information for Municipal Securities Investors
To satisfy the requirements of MSRB rule G-10, an investor brochure describing Board rulemaking authority, the rules protecting the investor, arbitration and communication with the industry and investors is available to you upon request. Please ask your broker for more information or visit the MSRB website for more information at
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SIPC Account Protection
Wunderlich Securities, Inc. has selected First Clearing‡ to hold client brokerage account assets. First Clearing is a trade name used by Wells Fargo Clearing Services, LLC, a registered broker-dealer and non-bank affiliate of Wells Fargo & Company. First Clearing is a leading provider of clearing and custody services to financial institutions. First Clearing’s services include transaction execution, operational support, and the production of account statements and tax reporting documents.
Wunderlich Securities, Inc. and First Clearing are members of the Securities Investor Protection Corporation (SIPC), a nonprofit, congressionally chartered, membership corporation created in 1970. SIPC protects clients against the custodial risk of a member brokerage firm becoming insolvent by replacing missing securities and cash up to $500,000, including up to $250,000 in cash, per client, in accordance with SIPC rules. (Note that SIPC coverage is not the same as, nor is it a substitute for, FDIC deposit insurance. Securities purchased through our brokerage firm are not FDIC-insured; however cash in some account types may be covered by FDIC insurance and not by SIPC coverage.) For more information about SIPC, please visit
www.sipc.org. You may visit www.fdic.gov for additional FDIC insurance information.
Above and beyond SIPC coverage, First Clearing maintains additional insurance coverage provided through Lexington Insurance Company, an AIG Company (referred to here as “Lexington”). For clients who have received the full SIPC payout limit, First Clearing’s policy with Lexington provides additional coverage above the SIPC limits for any missing securities and cash in client brokerage accounts up to a clearing-firm aggregate limit of $1 billion (including up to $1.9 million for cash per client). SIPC and the additional protection from Lexington do not protect against losses from the failure of a security, insure the quality of investments or protect against losses from fluctuating market value. All coverage is subject to the specific policy terms and conditions.
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Investors' Guide to Mortgage Backed Securities (MBS) and Collateralized Mortgage Obligations (CMOs)
To satisfy the requirements of proposed FINRA rule 2216(b)(2), prior to the sale of a CMO to any person other than an institutional investor, the firm must offer to the person educational material that includes a discussion of the characteristics and risks of CMOs including credit quality, prepayment rates and average lives, interest rates (including their effect on value and prepayment rates), tax considerations, minimum investments, transaction costs and liquidity. Additionally, the educational material should discuss the structure of a CMO, including the various types of tranches that may be issued and the rights and risks pertaining to each (including the fact that two CMOs with the same underlying collateral may be prepaid at different rates and may have different price volatility), the relationship between mortgage loans and mortgage securities, questions an investor should ask before investing, and finally a glossary of terms related to CMO's.
You can obtain a copy of the educational material, the Investors Guide: Mortgage-Backed Securities (MBS) and Collateralized Mortgage Obligations (CMOS), from your registered representative or access it online at
www.investinginbonds.com or directly here:
Investors Guide: Mortgage-Backed Securities (MBS) and Collateralized Mortgage Obligations (CMOS)
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Characteristics and Risk of Options
The Chicago Board Options Exchange regularly publishes educational materials for investors regarding options. Prior to buying or selling an option, investors must read a copy of this disclosure document. It explains the characteristics and risks of exchange traded options.
The latest "Characteristics and Risks of Standardized Options" can be viewed at
www.optionsclearing.com or may be requested from your Financial Advisor for physical delivery.
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Mutual Fund Breakpoint Disclosure Statement
Before investing in mutual funds, it is important that you understand the sales charges, expenses, and management fees that you will be charged, as well as the breakpoint discounts to which you may be entitled. Understanding these charges and breakpoint discounts will assist you in identifying the best investment for your particular needs and may help you reduce the cost of your investment. This disclosure will give you general background information about these charges and discounts. However, sales charges, expenses, management fees, and breakpoint discounts vary from mutual fund to mutual fund. Therefore, you should discuss these issues with your financial advisor and review each mutual fund's prospectus and statement of additional information, which are available from your financial advisor, to get the specific information regarding the charges and breakpoint discounts associated with a particular mutual fund.
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Investors that purchase mutual funds must make certain choices, including which funds to purchase and which class share is most advantageous. Each mutual fund has a specified investment strategy. You need to consider whether the mutual fund's investment strategy is compatible with your investment objectives. Additionally, most mutual funds offer different share classes. Although each share class represents a similar interest in the mutual fund's portfolio, the mutual fund will charge you different fees and expenses depending upon your choice of share class. As a general rule, Class A shares carry a "front-end" sales charge or "load" that is deducted from your investment at the time you buy fund shares. This sales charge is a percentage of your total purchase. As explained below, many mutual funds offer volume discounts to the front-end sales charge assessed on Class A shares at certain pre-determined levels of investment, which are called "breakpoint discounts." In contrast, Class B and C shares usually do not carry any front-end sales charges. Instead, investors that purchase Class B or C shares pay asset-based sales charges, which may be higher than the charges associated with Class A shares. Investors that purchase Class B and C shares may also be required to pay a sales charge known as a contingent deferred sales charge when they sell their shares, depending upon the rules of the particular mutual fund.
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Most mutual funds offer investors a variety of ways to qualify for breakpoint discounts on the sales charge associated with the purchase of Class A shares. In general, most mutual funds provide breakpoint discounts to investors who make large purchases at one time. The extent of the discount depends upon the size of the purchase. Generally, as the amount of the purchase increases, the percentage used to determine the sales load decreases. In fact, the entire sales charge may be waived for investors that make very large purchases of Class A shares. Mutual fund prospectuses contain tables that illustrate the available breakpoint discounts and the investment levels at which breakpoint discounts apply. Additionally, most mutual funds allow investors to qualify for breakpoint discounts based upon current holdings from prior purchases through "Rights of Accumulation," and future purchases, based upon "Letters of Intent." This document provides general information regarding Rights of Accumulation and Letters of Intent. However, mutual funds have different rules regarding the availability of Rights of Accumulation and Letters of Intent. Therefore, you should discuss these issues with your financial advisor and review the mutual fund prospectus to determine the specific terms upon which a mutual fund offers Rights of Accumulation or Letters of Intent.
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Rights of Accumulation
Many mutual funds allow investors to count the value of previous purchases of the same fund, or another fund within the same fund family, with the value of the current purchase, to qualify for breakpoint discounts. Moreover, mutual funds allow investors to count existing holdings in multiple accounts, such as IRAs or accounts at other broker-dealers, to qualify for breakpoint discounts. Therefore, if you have accounts at other broker-dealers and wish to take advantage of the balances in these accounts to qualify for a breakpoint discount, you must advise your financial advisor about those balances. You may need to provide documentation establishing the holdings in those other accounts to your financial advisor if you wish to rely upon balances in accounts at another firm.
In addition, many mutual funds allow investors to count the value of holdings in accounts of certain related parties, such as spouses or children, to qualify for breakpoint discounts. Each mutual fund has different rules that govern when relatives may rely upon each other's holdings to qualify for breakpoint discounts. You should consult with your financial advisor or review the mutual fund's prospectus or statement of additional information to determine what these rules are for the fund family in which you are investing. If you wish to rely upon the holdings of related parties to qualify for a breakpoint discount, you should advise your financial advisor about these accounts. You may need to provide documentation to your financial advisor if you wish to rely upon balances in accounts at another firm.
Mutual funds also follow different rules to determine the value of existing holdings. Some funds use the current net asset value (NAV) of existing investments in determining whether an investor qualifies for a breakpoint discount. However, a small number of funds use the historical cost, which is the cost of the initial purchase, to determine eligibility for breakpoint discounts. If the mutual fund uses historical costs, you may need to provide account records, such as confirmation statements or monthly statements, to qualify for a breakpoint discount based upon previous purchases. You should consult with your financial advisor and review the mutual fund's prospectus to determine whether the mutual fund uses either NAV or historical costs to determine breakpoint eligibility.
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Letters of Intent
Most mutual funds allow investors to qualify for breakpoint discounts by signing a Letter of Intent, which commits the investor to purchasing a specified amount of Class A shares within a defined period of time, usually 13 months. For example, if an investor plans to purchase $50,000 worth of Class A shares over a period of 13 months, but each individual purchase would not qualify for a breakpoint discount, the investor could sign a Letter of Intent at the time of the first purchase and receive the breakpoint discount associated with $50,000 investments on the first and all subsequent purchases. Additionally, some funds offer retroactive Letters of Intent that allow investors to rely upon purchases in the recent past to qualify for a breakpoint discount. However, if an investor fails to invest the amount required by the Letter of Intent, the fund is entitled to retroactively deduct the correct sales charges based upon the amount that the investor actually invested. If you intend to make several purchases within a 13 month period, you should consult your financial advisor and the mutual fund prospectus to determine if it would be beneficial for you to sign a Letter of Intent.
As you can see, understanding the availability of breakpoint discounts is important because it may allow you to purchase Class A shares at a lower price. The availability of breakpoint discounts may save you money and may also affect your decision regarding the appropriate share class in which to invest. Therefore, you should discuss the availability of breakpoint discounts with your financial advisor and carefully review the mutual fund prospectus and its statement of additional information, which you can get from your financial advisor, when choosing among the share classes offered by a mutual fund. If you wish to learn more about mutual fund share classes or mutual fund breakpoints, you may wish to review the investor alerts available on the FINRA website. See
www.finra.org or visit the public website of the applicable mutual fund company.
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Margin Disclosure Statement
Wunderlich Securities, Inc. ("WSI") is furnishing this document to you to provide 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 margin agreement provided by WSI. Please contact your broker regarding any questions or concerns you may have with your margin account(s).
When you purchase securities through WSI, you may pay for the securities in full or you may borrow part of the purchase price from WSI's clearing firm, First Clearing‡. If you choose to borrow funds, you will need to open a margin account with WSI. The securities purchased are First Clearing'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, First Clearing or WSI can take action, such as issue a margin call and/or sell securities or other assets in any of your accounts held with the member, 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 First Clearing, the firm that has made the loan, to avoid the forced sale of those securities or other securities or assets in your accounts).
First Clearing or WSI firm 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 First Clearing's higher "house" requirements, First Clearing can sell the securities or other assets in any of your accounts held at the firm to cover the margin deficiency. You also will be responsible for any shortfall in the account after such a sale.
First Clearing or WSI 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 brokerage firm cannot liquidate securities or other assets in their accounts to meet the call unless the brokerage 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 you.
You are not entitled to choose which securities or other assets in your account(s) are liquidated or sold to meet a margin call. Because the securities are collateral for the margin loan, First Clearing or WSI has the right to decide which security to sell in order to protect its interests.
First Clearing or WSI firm can increase its "house" maintenance margin requirements at any time and is not required to provide you advance written notice. These changes in firm policy often take effect immediately and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause First Clearing or WSI 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.
Securities in your margin account may be loaned to or by First Clearing. To the extent First Clearing determines, in accordance with Federal tax regulations, that your securities have been loaned, payments received by you with respect to such securities (including payments in lieu of dividends) may be reclassified as substitute payments. Substitute payments may be reported on different tax reporting forms than payments received on the underlying securities and may be subject to different tax consequences and rates. You are advised to contact your tax advisor to discuss the tax treatment of substitute payments.
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Callable Securities Disclosure
Wunderlich follows the allocation procedures for callable securities established by our clearing firm, First Clearing‡. For an explanation of this allocation process, review the First Clearing Callable Securities Disclosure.
To request a written copy of the Callable Securities Disclosure, please contact your Financial Advisor.
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List of Market Making Stocks - Third Party Research Disclosure
If you are the recipient of Third Party research from a Wunderlich Securities representative and would like to see if the firm makes a market in the stock, please refer to our most recent list of market making stocks provided below in pdf format:
List of Market Making Stocks
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Routing and Execution Disclosures Made Pursuant to Rule 605
Rule 605 of SEC Regulation NMS requires "market centers" to publicly disclose, on a monthly basis, certain statistical information relating to the quality of executions provided to eligible client orders. The information generally depicts how orders of various sizes are executed relative to public quotes existing at the time of order receipt, and also attempts to measure speed of execution. The Rule 605 statistics for Wunderlich are available for public review:
Wunderlich SEC Rule 605 Compliance Notice
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Routing Disclosures Made Pursuant to SEC Rule 606
Rule 606 of SEC Regulation NMS requires broker-dealers receiving non-directed client orders to publicly disclose, on a quarterly basis, the top execution venues to which such orders are routed for execution. Broker-dealers also must disclose material aspects of the relationships they maintain with the identified execution venues. Wunderlich transmits its customer orders to either its internal trading desks or its clearing firm, First Clearing‡. For customer orders transmitted to First Clearing, First Clearing makes the routing decisions concerning these orders without regard to the identity of the introducing broker and routes orders to selected market makers and exchanges for execution. As such, Wunderlich has adopted by reference First Clearing’s Rule 606 disclosure report with respect to customer orders transmitted to First Clearing. Wunderlich has reviewed First Clearing’s 606 disclosure report and believes it accurately represents, in all material respects, the order routing practices for Wunderlich’s customer orders transmitted to First Clearing. Wunderlich does not receive any payment for order flow from First Clearing. First Clearing’s 606 disclosure report is available for public
review online here.
For customer orders transmitted to Wunderlich’s internal trading desks, the Rule 606 disclosure data is prepared based on all qualifying routes to execution venues, including customer orders that were routed to multiple execution venues. Wunderlich is not compensated directly for customer orders handled by its internal trading desks which are routed to market makers or exchanges. However, we may receive standard rebates for providing liquidity to certain exchanges which are credited against the fees charged by those exchanges. The Rule 606 disclosure reports for Wunderlich’s internal trading desks are available for public
review online here.
Prior to January 1, 2016, Wunderlich prepared its Rule 606 disclosure data by consolidating the customer order flow transmitted to First Clearing and to its internal trading desks. Additionally, for orders routed to multiple execution venues, the report was prepared using a single venue, generally the venue that received the largest quantity of shares, and excluded all other venues the order was routed to. Wunderlich did not receive any payment for order flow for customer orders prior to January 1, 2016. Wunderlich’s Rule 606 disclosure reports prior to January 1, 2016 are available for public
review online here.
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Compliance Contact Information
If you have any questions or complaints regarding your account, please call
Chief Compliance Officer
Wunderlich Securities Compliance Department
6000 Poplar Ave, Suite 150
Memphis, TN 38119
Order Execution Disputes Must Be Submitted in Writing
Please note that reports of execution of orders shall be conclusive if you do not object to them in writing within the shorter of (i) the applicable settlement cycle of the subject transactions or (ii) three business days after such documents have been transmitted to you by mail or otherwise. Your statements of account(s) shall be conclusive if you do not object to them in writing within 10 days after transmission to you by mail or otherwise.
Wunderlich Securities, Inc.
Attn: Compliance Department
6000 Poplar Avenue, Suite 150
Memphis, TN 38119
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‡First Clearing is a trade name used by Wells Fargo Clearing Services, LLC, Member SIPC, a registered broker-dealer and non-bank affiliate of Wells Fargo & Company.