Alert March 10, 2009

SIPC Announces Increase in Annual Member Firm Assessments

On March 2, the Securities Investor Protection Corporation (“SIPC”), which assists customers of member brokerage firms that fail in recovering those customers’ cash and securities (including providing protection up to $500,000 per customer),  announced that it will be increasing member assessments.  Starting April 1, 2009, SIPC member assessments will be based on one-quarter of 1% of the net operating revenues of the member firm.  From 1996 through 2008, SIPC members only paid the minimum $150 annual assessment.  In a letter to SIPC member firm CEOs, the SIPC Chairman indicated that “SIPC has determined that the SIPC fund balance is reasonably likely to aggregate less than $1 billion and will remain less than $1 billion for a period of six months or more.”  As of January 27, 2009, the SIPC fund balance totaled $1.7 billion.  The Securities Investor Protection Act (“SIPA”), under which SIPC operates, caps member assessments at 1% of net operating revenues.  SIPA permits annual assessments in excess of one-half of 1% only if SIPC determines that such a rate of assessment, during any twelve-month period, will not have a material adverse effect on the financial condition of the SIPC member or its customers.