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Account Agreements & Disclosures
WELCOME TO CITY NATIONAL SECURITIES
This document contains our Account Agreements and Disclosures required to open an Investment Account with City National Securities, Inc. ("CNS"). Before completing and signing the application or any forms or agreements, please be sure to read carefully and understand the applicable sections of this booklet.
We have tried to write the Account Agreements and Disclosures in a way that is easy to understand. If you have questions concerning the information we have presented or the application to open an Investment Account, please contact your investment officer.
In order to provide you with a full array of brokerage services, City National Securities has entered into an agreement with National Financial Services LLC ("NFS"), to perform certain execution, settlement and clearing functions for CNS. Thus, you will see references to NFS, as well as CNS in your documents, on your monthly account statements and on transaction confirmations.
Before you may open an Investment Account, you must furnish CNS with the information called for on the Account Application. If you wish to participate in Option Trading and/or Margin Trading, you must execute additional and separate agreements.
As one of the services available through your Investment Account with City National Securities, you can purchase shares in a variety of mutual funds. City National Securities and its affiliates receive a variety of fees from certain of these mutual funds. These fees include, but are not limited to, concession fees and fees for shareholder servicing, administrative services and investment management. Fees and other matters are covered in the applicable fund prospectuses and any accompanying materials for the mutual funds offered to you. It is important for you to read such prospectuses carefully before investing in them. If you have any questions about any aspect of City National Securities or its affiliates relationship with the mutual funds it offers or their distributors, please call your investment officer.
City National Securities, Inc. is a member of NASD and SIPC. It is a wholly owned subsidiary of City National Bank. Brokerage services and investment accounts are provided by City National Securities, not City National Bank.
Mutual fund shares and other securities are not bank deposits, nor are they obligations of, or guaranteed by City National Bank. Mutual fund shares and other securities are not FDIC insured. Investing in mutual funds and other securities involves risks, including possible loss of principal.
CITY NATIONAL SECURITIES, INC. INVESTMENT ACCOUNT TERMS & CONDITIONS
This Investment Account Terms & Conditions ("terms and conditions") contains important information regarding your brokerage account with City National Securities, Inc. ("CNS"). Your acceptance of the terms and conditions contained herein is a condition to your having an account with CNS. Please read it carefully and retain a copy for your records. Please be aware that the information contained in these terms and conditions is subject to change without notice.
GENERAL BROKERAGE SERVICES
| 1-1. |
Opening an Account - You request that CNS open a brokerage Account in the name(s) or registration listed as Account holder(s) on the CNS Account Application. You warrant and represent that the information you provided on your Account Application is accurate, truthful and reliable. You understand CNS has the right to deny or accept your Application. Any deliberate omission or falsification of these forms is grounds for termination of the Account.
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| 1-2. |
Required Information - You certify that all Account holders are of legal age and have the authority to enter into this Agreement and no one except the undersigned has any interest in this Account unless revealed in the title stated on the Account Application. You agree to provide complete and updated information necessary to your account such as your legal name, residence, telephone number(s), Social Security number or Tax ID number as changes occur.
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| 1-3. |
Multiple Account Holders - You agree if there is more than one Account holder, all Account holders' obligations under this Agreement shall be joint and several. Each Account holder, jointly and severally, agrees that each of them shall have authority on behalf of the joint account to buy, sell and otherwise in the Account.
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| 1-4. |
Recording Conversations - You acknowledge and agree that CNS may record telephone conversations between you and any of CNS's employees for quality assurance and to verify securities transaction information.
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| 1-5. |
Investor Responsibility - You agree that securities traded in your Account are your sole responsibility. You are responsible for knowing the rights and terms of all securities held in your Account. You understand that certain securities may grant valuable rights that may expire unless the holder takes action. Such securities may be as follows: warrants, bonds and securities subject to tender or exchange offer.
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| 1-6. |
Investment Opportunities - CNS may, from time to time, endorse or identify investment opportunities by bringing them to the general attention of its customers, or recommend particular bonds, unit trust and mutual funds to certain customers. [However, except for such recommendations, CNS neither provides research nor maintains discretionary accounts.] Accordingly, you must make an independent investigation concerning the merit and suitability of the securities you purchase or sell and the degree of risk they represent. You assume full responsibility with respect to transactions in or for your Account and your investment decisions. Except as provided above, CNS does not make market predictions or recommendations on securities of any type. Your execution of the Application constitutes acknowledgement of the foregoing and CNS and NFS will rely on this acknowledgement in opening and rendering services to you on your Account.
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| 1-7. |
Clearing & Custodial Services - CNS has an arrangement with NFS, a New York Stock Exchange Member, to provide clearing and custodial services. By signing the Application you understand and agree to comply with this arrangement. You authorize NFS to act as custodian for the assets in your account(s) with CNS. NFS is carrying your Account as clearing broker under a clearing agreement with CNS. Please understand that CNS is not acting as an agent of NFS and you agree that you will in no way hold, or seek to hold, CNS, NFS or any division, officer, director, employee and/or agent thereof liable of any trading losses or other losses incurred by you. You understand and agree that any rights either NFS or CNS has under this Agreement may be exercised by either NFS or CNS, including but not limited to, the right to collect any debt balance or other obligation owing in your Account and that NFS and CNS may collect from you or enforce any other rights under this Agreement independently or jointly.
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| 1-8. |
Sufficient Funds - You will not buy any security through your Account unless there are, or by the "Settlement Date," will be, sufficient funds in the Account to make full cash payment. The Settlement Date is presently three business days following the transaction for equities, corporate and municipal bonds, and one business day for government securities and options, Federal Reserve Board Regulation T and certain stock exchange rules require settlement of the purchase or sale of securities on Settlement Date. Regulation T requires us to liquidate securities for which prompt payment is not received. In that event, you will be responsible for any resulting loss and will not be entitled to any gain. In addition, your Account will be restricted from trading for 90 days.
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| 1-9. |
Securities Sales & Ownership - You agree not to sell any security through your Account unless you then own the security and it is either on deposit with CNS or NFS and in good deliverable form (this excludes margin account short sales). The proceeds of a sale will be either retained in your Account or, if you so request, the funds will be mailed to you. You may also request that sale proceeds, dividends and interest be automatically deposited to your bank account by electronic funds transfer or reinvested in a money market fund at your direction.
When you open an Account, all securities will be held by NFS for your Account in "street name." If you wish to take possession of your securities, you must inform CNS when you open your Account. It usually takes a minimum of three weeks for stocks to be registered in your name, but occasionally there are longer delays in delivering certificates.
If your securities are registered in street name, NFS receives your dividends or interest and credits your Account on or shortly after the payment date. Corporations pay for the distribution of their proxy materials and other information to street name accounts. NFS contracts with an outside source to forward these materials to you, including annual reports, quarterly reports, and meeting notices. NFS's contractor also makes every effort to notify you of any subscription rights received for your Account. However, NFS and our outside contractor are not obligated to forward any material to you unless the corporation furnishing it reimburses the expenses incurred in mailing. Allowing NFS to hold securities for your Account in street name offers the advantage of simplicity because it is not necessary for you to deliver a certificate when you sell. See section on "SAFEGUARDING YOUR SECURITIES."
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| 1-10. |
Settlement Account - You may elect, in writing, to settle all transactions through your Account or through your bank account, as designated on the Application ("Settlement Account"). If you so elect, you agree that on Settlement Date, CNS and NFS may debit your Settlement Account for payment of securities purchased. CNS will also credit your Settlement Account with proceeds from the sales of securities. You agree to have sufficient funds available in your Settlement Account at the time of purchase for payment of all securities purchased for your Account. You agree that a debit to your Settlement Account, for the purpose of purchasing securities, will not result in the accessing of any overdraft credit line or other credit feature.
If you elect to settle all transactions through your Account, transactions will settle through your money market mutual fund or other available funds, as designated on the Application. If you so elect, you agree that CNS or NFS may liquidate money market mutual funds it deems necessary to pay for securities purchased by settlement date or other debits, and purchase money market mutual fund shares with proceeds from sales of securities or other credits, in the amount allowed by the terms of the fund's prospectus.
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| 1-11. |
Forms of Payment - CNS will accept funds by personal check, cashier's check or wire transfer. You agree CNS has the right to hold any check or proceeds for as long as it takes for the funds to be deemed as good funds. You agree that once a trade is placed, securities are held in street name in your Account. You understand there will be no other form of registration using any of CNS accounts for 30 days.
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| 1-12. |
Written Confirmations - You will be mailed a written confirmation of your transaction within one business day after your order is executed. This confirmation contains information concerning your transaction such as the quantity and name of the security, net costs or proceeds, commission, plus any taxes and fees, and whether the trade is a principal or agency transaction. It is important that you read all confirmations completely and to familiarize yourself with the symbols on your confirmation. Should you have any questions concerning any of the details of your trade, do not hesitate to contact CNS. The confirmation contains the complete terms of the trade, and the terms are considered conclusive and final unless written objection to them is made within 10 days after receipt of the confirmation. The confirmation terms cannot be changed orally.
Should the confirmation be delayed for any reason, you are still obligated to meet your commitment to pay or deliver the security by the settlement date of the transaction. Confirmations should not be considered as invoices.
While every effort is made to transmit reports of transactions accurately, errors do occasionally occur, especially during periods of heavy volume. If you find an error on your confirmation, you should notify CNS immediately so that corrective action can be taken. CNS and NFS cannot be held responsible for the price as reported to you if your order was executed at another price. Furthermore, CNS and NFS cannot be held responsible for reports of transactions that have not, in fact, occurred. As soon as the error is discovered, you can be sure that the correct information will be reported to you as expeditiously as possible. Your sale confirmation should be retained for tax purposes, along with the corresponding purchase confirmation, as evidence of the gain or loss on that particular transaction. Finally, your confirmations should be retained for all bearer securities in the event that they are needed as proof of ownership at some later date.
In addition to your confirmations, NFS will periodically furnish a statement showing the securities and cash held for your Account and any activity that has taken place since the preceding statement. Your statement also reflects any dividends or interest payments that NFS has credited from the securities in your Account. If you have a Margin Account in which there is a debit balance, the interest charged to that Account also appears on your statement. NFS is required by law to report sales proceeds, dividends and interest credited to you to the Internal Revenue Service. Therefore, you should retain these statements for tax purposes. You will, of course, receive a 1099 from NFS confirming the income and sales proceeds reported to the Internal Revenue Service. Included with your confirmations and statements are additional items and conditions which affect your relationship with NFS as a customer of CNS.
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| 1-13. |
Commissions & Fees - CNS may charge commissions or other fees for execution of transactions to purchase and/or sell securities and/or other property and you agree to pay such commissions or fees. You also acknowledge that such commission and fee rates may be changed from time to time, without notice to you, and you agree to be bound thereby.
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| 1-14. |
Automatic Investment Option - If you selected the Automatic Investment option with respect to your Account, the following provisions apply:
- You hereby appoint CNS and NFS as your agents for the purpose of buying, selling and holding shares of the money market mutual fund (the "Fund") you selected on the Application for your Account. You acknowledge that you have received and reviewed a current prospectus for the Fund. You hereby direct CNS and NFS to place orders to purchase or redeem Fund shares and to debit and credit your Account. CNS and NFS are authorized to place and withdraw orders in accordance with this Agreement, combine your orders with orders of other customers and to take any other steps CNS and NFS consider reasonable to carry out your directions or to protect themselves in the event you breach any of your obligations under this Agreement. CNS and NFS may register your Fund shares in the name of CNS or NFS or their nominee as shareholder of record for your sole benefit. CNS and NFS will hold your Fund shares in an account separate from any other account at CNS or NFS and will maintain appropriate records of Fund shares purchased or redeemed for you, as well as earnings on your Fund shares.
- CNS and NFS will place orders for Fund shares only on days when CNS, NFS and the New York Stock Exchange are open for business. CNS and NFS reserve the right to refuse orders for any reason.
- Although Fund dividends accrue daily, such dividends are paid monthly. Dividends on your Fund shares will be reinvested in additional Fund shares or, at your request, paid in cash when received by CNS and NFS. The methods used by the Funds to calculate dividends are disclosed in the prospectus and statement of additional information for the Funds.
- This authorization will remain in effect until (a) CNS or the Fund you selected receives written notification of termination from you in such time and manner as affords CNS or the Fund a reasonable opportunity to act on it, (b) CNS or the Fund you selected has sent you 10 days' prior notice of termination, or (c) your Account is closed for any reason. Upon termination of this Agreement, CNS and/or NFS will liquidate all Fund shares held for you as promptly as reasonably possible, pay the proceeds to you and close your Fund account. Dividends accrued before termination will be forwarded to you following the end of the month in which termination occurs.
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| 1-15. |
Order Routing - In some cases, NFS will receive remuneration for equity order flow. The NFS order delivery system routes the orders to the exchange or dealer where the best execution can occur, as determined by the national best bids and offers. CNS does not receive remuneration for order flow.
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| 1-16. |
Legal Transfer - You agree to advise CNS as to the status of any restricted securities that fall under Rule 144 or 145 of the Securities Act of 1933 and you agree to deliver the appropriate paperwork to ensure clear legal transfer and good delivery of such securities. You agree and understand that neither CNS nor NFS will allow the sale of such securities until they clear legal transfer. You agree to hold harmless CNS and/or NFS from any losses incurred by such delays regarding the legal transfer process.
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| 1-17. |
Insurance - CNS and NFS are members of the Securities Investor Protection Corporation (SIPC), a federal corporation which is authorized to borrow monies from the U.S. Treasury. Securities in accounts carried by National Financial Services LLC are protected by SIPC up to $500,000 (including cash claims limited to $100,000). NFS has arranged for additional unlimited insurance protection for cash and securities to supplement its SIPC coverage. Neither coverage protects against a decline in the market value of securities. An explanatory brochure on our SIPC insurance and a disclosure statement on the supplemental coverage are available upon request. Cash balances created and maintained solely for the purpose of earning interest are not protected by SIPC or the excess SIPC coverage.
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| 1-18. |
Information Disclosure - You acknowledge and agree that, in order to perform its services under this Agreement, CNS must have access to your account information maintained by City National Bank. In addition, CNS and NFS may disclose information about you, your Account or your Account transactions to others and receive information from others, including credit bureaus or other agencies, (a) if the purpose is to establish or maintain your Account or to complete transactions; (b) to comply with court orders or government agency or exchange regulations or inquiries; or,(c) if you give CNS or NFS permission
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| 1-19. |
Your Obligation - You agree that all debts and obligations owed in your Account will remain your sole obligation and will be secured by a lien against all securities and property now or hereafter held, carried or maintained in any present or future CNS Account(s). All of your securities and other property in any account in which you have an interest shall be subject to a lien for the discharge of any and all indebtedness or any other obligation you owe to CNS. All of your securities and other property shall be held by CNS as security for the payment of any such obligations or indebtedness to CNS in any account(s) that you may have an interest, and CNS, subject to applicable law may, at any time and without prior notice to you, use and/or transfer any or all securities and other property interchangeably in any account(s) in which you have an interest.
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| 1-20. |
Transfers - CNS and NFS have the right to transfer securities and other property from or to any of your Accounts whenever they, in their sole and absolute discretion, consider such transfer necessary for their protection.
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| 1-21. |
Called Securities Lottery - If CNS holds on your behalf bonds or preferred stock in street name or bearer form, which are callable in part, you agree to participate in the impartial lottery system of the called securities in accordance with the rules of the New York Stock Exchange or applicable depositories.
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| 1-22. |
Joint Accounts - In consideration of CNS and NFS carrying a joint account for you, the joint Account holders listed on the Application, jointly and severally, agree that each of them shall have authority on behalf of the joint Account to buy, sell (including short sales) and otherwise deal in, through CNS, stocks, bonds and other securities, on margin or otherwise; to receive on behalf of the joint Account demands, notices, confirmations, reports, statements of Account and communications of every kind; to receive on behalf of the joint Account agreements relating to any of the foregoing matters and to terminate or modify the same or waive any of the provisions thereof, and generally to deal with CNS and NFS on behalf of the joint account as fully and completely as if he or she alone were interested in said account, all without notice to the other or others interested in the Account. CNS and NFS are authorized to follow the instructions of any of the undersigned in every respect concerning the said joint Account and to make deliveries to any of the undersigned, or upon his or her instructions, of any and all securities in the said joint Account, and to make payments of monies to any of the undersigned as aforesaid, CNS and NFS shall be under no duty or obligation to inquire into the purpose or propriety of any such demand for delivery of securities or payment of monies, and shall not be bound to see to the application or disposition of the said securities and/or monies so delivered or paid to any of the undersigned or upon his or her order. The authority hereby conferred shall remain in force until written notice of revocation is delivered to CNS. The liability of the undersigned, with respect to the Account, shall be joint and several. The undersigned further agrees jointly and severally that all property CNS and NFS at any time may be holding or carrying for any one or more of the undersigned, shall be subject to a lien in their joint favor for the discharge of the obligations of the joint Account to CNS and NFS; such lien to be in addition to, and not in substitution of, the rights and remedies CNS and NFS otherwise would have. It is further agreed that, in the event of the death of either or any of the undersigned, the survivor or survivors shall immediately give written notice thereof, and CNS or NFS may, before or after receiving such notice, take such proceeding, require such papers and inheritance or estate tax waivers, retain such portion of and/or restrict under any present or future laws or otherwise. The estate of any of the undersigned who shall have died shall be liable and each survivor shall continue liable jointly and severally, to CNS and NFS for any net debit balance or loss in the Account in any way resulting from the completion of transactions initiated prior to the receipt by CNS and NFS of the written notice of the death of the decedent or incurred in the liquidation of the Account or the adjustment of the interests of the respective parties.
There are two types of joint accounts. You may elect one of the following on your New Account Application:
- JOINT TENANTS WITH RIGHTS OF SURVIVORSHIP - It is the express intention of the undersigned to create an estate or account as joint tenant with rights of survivorship and not as tenants in common. In the event of the death of either of the undersigned, the entire interest in the joint Account shall be vested in the survivor or survivors on the same terms and conditions as therefore held, without in any manner releasing the decedent's estate from the liability provided for in previous paragraphs.
- TENANTS IN COMMON - In the event of the death of either or any of the undersigned, the interests in the Account as of the close of business on the date of the death of the decedent (or on the next following business day, if the date of death is not a business day), shall be as indicated on the Account Application, but any taxes, cost, expenses or other charges becoming a lien against or being payable out of the Account as the result of the death of the descendent, or through the exercise by his or her estate or representative of any rights in the Account shall, so far as possible, be deducted from the interest of the estate of such descendent. This provision shall not release the decedent's estate from the liability provided for above.
If you do not designate one of the above, the default will be Joint Tenants with Rights of Survivorship
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| 1-23. |
Your Financial Responsibility - You will pay all of CNS's and NFS's costs, including but not limited to attorneys' fees (which may be the cost of in-house counsel), arbitration fees, and court costs, incurred in connection with (a) your failure to pay when due the monies owed on your Account, (b) the failure to deliver securities due in your Account, (c) the collection of any deficiency in your Account, or (d) CNS's and NFS's defense of any claims by you or on your behalf in which CNS or NFS prevail. You will pay interest on all such sums, including any deficiency in your Account, at the margin rate of interest calculated in accordance with NFS's usual custom.
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| 1-24. |
Rules & Regulations - All transactions for your Accounts will be subject to the transaction and settlement rules, regulations and customs of the market or exchange (selected by NFS in its discretion) where an order is entered, the clearing house, if any, the Securities and Exchange Commission, the Federal Reserve Board, the NASD and/or any other regulatory agency, as and where applicable.
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| 1-25. |
Indemnity - You acknowledge and agree that neither CNS nor NFS will be liable on your Account for any loss caused directly or indirectly by government restrictions; exchange or market rulings; suspensions of trading; war; strike; interruption of transportation, communication or data processing services; earthquake, fire or act of God; or any other condition beyond their reasonable control. Further, in acting hereunder, you acknowledge and agree that neither CNS nor NFS will be liable for any act or omission with respect to your Account, except for their gross negligence or willful misconduct, and in no event will CNS or NFS be liable for special or consequential damages.
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| 1-26. |
Length of Agreement - Your Agreements and their terms will be binding on your heirs, executors, successors, administrators, assigns, committee and conservator ("successors"). In the event of your death, incompetence or disability, whether or not any successors of your estate and property have qualified or been appointed, until CNS and NFS have written notice of your death or incompetence, CNS and NFS may continue to operate as though you were alive and competent and may liquidate your Account WITHOUT PRIOR NOTICE TO OR DEMAND upon your successors. Your Agreements will inure to the benefit of CNS's and NFS's successors and assigns, whether by merger, consolidation or otherwise, and CNS or NFS may transfer your Account to any such successors and assigns WITHOUT NOTICE.
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| 1-27. |
Agreement Compliance/Waivers - CNS's or NFS's failure to insist at any time upon strict compliance with any terms of any of your Agreements, or any continued course of such conduct on their part will not constitute their waiver of any of their rights thereunder. Except as otherwise provided herein, no provision of any of your Agreements will in any respect be waived, modified or amended unless such waiver, modification or amendment is in writing, signed by a duly authorized officer of either CNS or NFS.
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| 1-28. |
Governing Laws - This Agreement shall be governed by and construed in accordance with the laws of the State of California, without giving effect to the conflict of law provisions thereof.
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| 1-29. |
Continuing Agreement - If any provision of any of your Agreements is held invalid or unenforceable by any court, regulatory or self-regulatory agency or body, or arbitration tribunal, such invalidity or unenforceability will attach only to that provision. The validity of the remaining provisions will not be affected thereby, and your Agreements will be carried out as if such invalid or unenforceable provision were not contained therein.
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| 1-30. |
IPOs - The prices for Initial Public Offerings ("IPOs") are often volatile during the period of time when they have opened for secondary market trading, particularly the IPOs of Internet issuers. Some IPOs trading on an exchange or on The NASDAQ Stock Market, Inc. have traded at a much higher price than their IPO offering price. The prices of some of these "hot" IPOs may double or more in initial trading, only to fall sharply in subsequent trading. Price volatility may be accompanied by significant trading volume. Certain non-IPO stocks may also not be subject to similar fast market conditions.
Extraordinary volumes of orders and cancellations entered online and otherwise may cause queues and backlogs for many order entry and market maker firms. As a result of the level of market volatility and volume of orders, a number of market makers discontinue their normal automatic execution of orders and begin handling orders manually. Firms may reduce their size guarantees on individual stocks or groups of stocks. This may lead to delays in order executions, executions at prices significantly away from the market quoted at the time the order was entered, and delays in execution confirmations and cancellation reports.
Trading in such issues carries additional risks not associated with most trading parameters.
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| 1-31. |
Trading Volume Delays - Trading methods and interest in specific stocks may affect price volatility and cause increased trading volume. This price volatility and increased volume present hazards to investors, regardless of whether trading occurs online or otherwise. While, CNS procedures for handling customer orders are fair, consistent, and reasonable, during volatile market conditions, high volumes of trading at the market opening or intra-day may cause delays in execution and executions at prices significantly away from the market price quoted or displayed at the time the order was entered. During such times, market makers may execute orders manually or reduce their size guarantees, resulting in possible delays in order execution and losses. This is particularly important with respect to online investors (who have come to expect quick executions at prices at or near the quotes displayed on their computer screens).
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ONLINE BROKERAGE SERVICES
| 2-1. |
Type of Usage - You acknowledge that CNS will not provide you with any investment, legal or tax advice regarding suitability or profitability of a security or investment. You will be the only authorized user of the online service (with exception to persons with joint accounts in which only those listed on the Account are authorized).
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| 2-2. |
Sufficient Funds and Securities - Unlike the standard account requirements (as described in 1-8 and 1-9), sufficient funds must be in an Account at the time an order is placed. In addition, securities to be sold must be in the Account prior to placing an order to sell.
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| 2-3. |
Password/PIN - You understand that an online trading account is not opened until you receive a personal identification code and password. You will be responsible for the confidentiality and use of your username (the screen name you will be using for online trading), login password, and trading password. You understand that you will be solely responsible for all orders entered through the service using your username, login password, and trading password.
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| 2-4. |
Notifying CNS - You further agree that, as a condition of using the service to place orders and/or send information, you will immediately notify CNS if:
- An order has been placed through the service and you have not received an order number or an accurate acknowledgment of the order or of its execution (whether through mail, electronically, or verbally);
- You have received acknowledgment (whether through mail, electronically. or verbally) of an execution for an order which you did not place; and/or
- You become aware of any unauthorized use of your username, login password, or trading password.
In the event CNS is not notified as soon as possible when any of the above circumstances occur, you agree and consent to hold harmless CNS, NFS and their officers, employees, agents, affiliates and subsidiaries against any negligent responsibility or liability to you or to any person whose claim may originate through you for any claim regarding any such order.
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| 2-5. |
Discrepancies - You agree to promptly notify CNS if there is a discrepancy with your Account balance or security positions.
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| 2-6. |
Timeliness - You agree that not all trades will be executed concurrently with the orders placed. CNS will be allowed a reasonable period of time in which to execute your trade requests. Furthermore, you accept, without liability to CNS, its affiliates or NFS, that there will be times when a quoted price will change prior to the trade's execution due to market circumstances.
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| 2-7. |
Liability Disclaimer - You agree that CNS and NFS and their affiliates will not be liable for any damages of any type or kind (including lost profits, trading losses and damages) that result from inconvenience, delay or loss of the use of the service even if CNS has been advised of the possibility of such damages.
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| 2-8. |
Service Problems - You agree that CNS and its affiliates will not be liable for any losses resulting from a cause over which CNS or NFS and their affiliates does not have direct control, including but not limited to the failure of electronic or mechanical equipment or communication lines, telephone, or Internet related problems (for example, if you are unable to access your online service provider), unauthorized access, theft, errors by the operator, serious weather, earthquakes, floods, and strikes or other labor problems. You agree that CNS may modify the service or change the terms of this agreement, in whole or part, without notice.
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| 2-9. |
Market Information - You understand that each participating securities exchange states an exclusive interest in all of the market information it provides to the parties that distribute the information and is protected by copyright. Stock quote and financial market information provided through this online service (or Web site) has been independently obtained through sources believed to be reliable. You also understand that neither any participating securities exchange nor any supplier of the market information, including CNS, guarantees the timeliness, accuracy, or completeness of the market information or any other market data or messages dispersed by any party, including CNS. Although CNS reasonably believes the source to be reliable, CNS, or any of its agents, shall not be liable in any way for:
- An inaccuracy, error or delay in, or omission of any such information or message or the transmission or delivery of any such information or message.
- Any loss or damages occurring from or occasioned by any such inaccuracy, error or delay or omission, non-performance, or interruption of any information or message, due either to any negligent act or omission by any disseminating party, including CNS, or to any force of nature (i.e. flood, extraordinary weather conditions, earthquake or other act of God, fire, war, insurrection, riot, labor dispute, accident, action of government, communications, power or equipment failure, or software failure or malfunction) or any cause beyond the reasonable control of any disseminating party, including CNS.
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| 2-10. |
Warranty - By use of this service you agree there is no merchantable warranty, no warranty of suitability for a particular purpose, and no other warranty of any kind, expressed or implied, regarding the information or any aspect of this service, including, but not limited to, the information accessed and the order execution.
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| 2-11. |
Non-endorsement - CNS and its affiliates make no warranties with respect to the accuracy, timeliness or suitability of the content of other services or sites to which the online service links. By providing access to other Web sites, neither CNS nor its affiliates is endorsing or recommending the site; services or products offered or described thereon; the accuracy, completeness, suitability or any other characteristic of the content of the site; the organization sponsoring the site; nor the purchase or sale of securities issued by such sponsor.
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| 2-12. |
Investment Decision Liability - CNS, its affiliates, information providers and content providers shall have no liability for investment decisions or other actions taken or made by you based on the information provided on this Web site. The stock prices, financial market information and other information available on this Web site is provided on an "as is" basis without warranties of any kind, either expressed or implied, including (but not limited to) warranties of merchantability or fitness for a particular purpose, title or non-infringement. In no event will CNS, its affiliates, information providers or content providers be liable to you or any third party for any direct, indirect, consequential, incidental, punitive or special damages (including but not limited to lost profits) arising out of or in any way connected with the use of this Web site, or with the delay or inability to use this Web site, or for any information, products or services obtained through this Web site, whether based in contract, tort, strict liability, or otherwise, even if CNS, its affiliates, information providers and/or content providers has been advised of the possibilities of damages. Some states do not allow certain limitations on implied warranties, or the exclusion or limitation of incidental, consequential or other damages, so that these disclaimers and limitations may not apply to you.
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| 2-13. |
Periods of Online Volatility - During periods of high volume or volatility on the Internet, online trading customers may have difficulty accessing their accounts due to high Internet traffic or because of systems capacity limitations. The potential for market loss will exist during periods of volatility in the price and volume of a particular stock when systems problems result in the inability to place orders. You must call in orders when Online Trading is unavailable due to such conditions. You agree that CNS and NFS are not responsible for any and all additional expenses, losses or charges as a result of volatile conditions.
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ARBITRATION
| 3-1. |
Arbitration Disclosure - This agreement contains a predispute arbitration clause. By signing a new account application, the parties agree to the arbitration agreement as follows:
- All parties to this agreement are giving up the right to sue each other in court, including the right to a trial by jury, except as provided by the rules of the arbitration forum in which a claim is filed.
- Arbitration awards are generally final and binding; a party's ability to have a court reverse or modify an arbitration award is very limited.
- The ability of the parties to obtain documents, witness statements and other discovery is generally more limited in arbitration than in court proceedings.
- The arbitrators do not have to explain the reason(s) for their award.
- The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry.
- The rules of some arbitration forums may impose time limits for bringing a claim in arbitration. In some cases, a claim that is ineligible for arbitration may be brought in court.
- The rules of the arbitration forum in which the claim is filed, and any amendments thereto, shall be incorporated into this agreement.
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| 3-2. |
PREDISPUTE ARBITRATION AGREEMENT - Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any rights under this Agreement except to the extent stated herein.
You agree that the rules of the NASD, Inc., who administers the arbitration, furnishes the designated place where arbitration is to take place. By carrying an account with CNS, you agree that all disputes which may arise between you and CNS, be determined by arbitration conducted by the NASD, Inc. You shall be responsible for all expenses incurred by CNS, including reasonable fees for attorneys' costs, in enforcing any provision of or collecting any amounts due us under this Agreement, and further that the agreement will be governed and interpreted by the laws of the State of California.
No person shall bring a putative or certified class action to arbitration, nor seek to enforce any pre-dispute arbitration agreement against any person who has initiated in court a putative class action; or who is a member of a putative class who has not opted out of the class with respect to any claims encompassed by the putative class action until:
- the class certification is denied; or
- the class is decertified; or
- or, the customer is excluded from the class by the court
Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any rights under this agreement except to the extent stated herein.
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TRANSACTIONS
| 4-1. |
Agency and Principal Transactions - Many stocks and bonds are not traded on a securities exchange but in what is known as the over-the-counter market (O.T.C.). When you buy or sell a security in this market, CNS may act as an agent or as a principal. The confirmation, which you receive, will designate the capacity in which CNS acted. When CNS acts as a principal, CNS is selling securities to you which it either owns or expects to buy shortly, or is buying securities from you for its own account. When CNS acts in an agency capacity for you in purchasing or selling securities in the O.T.C. market, CNS is dealing on your behalf with another broker-dealer, which could be NFS, or a customer of CNS. In such a case, the commission will be reflected on your confirmation. |
| 4-2. |
Execution of Orders/Erroneous Reports - CNS can execute your orders to buy or sell securities or forward them to NFS for execution. Stock and options exchanges have rules governing erroneous reports of executions. The price at which an order is executed shall be binding notwithstanding that an erroneous report may have been rendered, or no report received from the exchange. Also, a report shall not be binding if an order was not actually executed but was reported in error to have been executed. |
| 4-3. |
Odd Lots - An odd lot is a quantity of stock traded in less than a round lot (less than 100 shares). Odd lots of securities purchased or sold on the NYSE or ASE require the payment of a commission and may have an odd-lot differential applied. This means you may pay more per share when you buy an odd lot and may receive less when you sell. |
| 4-4. |
Market Order - A market order is an order to buy or sell a stated amount of a security at the best current price obtainable. There is no guarantee, however, of a particular price. |
| 4-5. |
Limit Order - A limit order is an order to buy or sell a stated amount of a security at a specified price or a better price, if obtainable. If your specified price is not close to the current market price, your order is normally placed with an exchange specialist or on the electronic bank of NASDAQ. Even if the security trades at your price after your order has been placed you should not assume that your order was executed at that time. This is because other orders may have been placed at the same price at an earlier point in time and will receive priority over your order. Limit orders may be entered for a single trading day, or left in force until either executed or canceled by you.
By accepting your limit order for transactions in securities in the NASDAQ or over-the-counter market, NFS undertakes to monitor the inter-dealer market and seeks to execute your order only if the inside bid (in the case of a limit order to sell, the highest price at which a dealer is being quoted as willing to buy securities) or the inside asked (in the case of a limit order to buy, the lowest price at which a dealer is being quoted as willing to sell securities) reaches your limit price. |
| 4-6. |
Stop Order - If you want to try to sell your stock after it reaches a certain price level below the current market price, you can place a stop order to sell. After you decide the price at which you would like to sell your stock, the order is transmitted to the place on the floor or other market where the stock is traded. It becomes a market order when the price of the stock reaches or trades below the price you specified when you placed the order.
A stop order to buy becomes a market order when the stock trades at or above stop price after the order reaches the place on the floor or other market where the stock is traded.
A stop order may be used in an effort to protect a gain or to try to limit a loss. The stop order must be used wisely, and you should appreciate its limitations as well as its advantages before employing it.
Since your stop order will be executed at the best price obtainable after it becomes a market order, the execution price may not be the stop price. Usually, the order will be executed at a price close to the last price reported on the ticker tape. Remember that a lot can happen to the price of a fast moving or volatile stock within a few minutes, and your market order, whether to buy or sell, may have to compete with other orders. Consequently, the price you pay or receive may not always be what you expect.
When a relatively large number of stop orders have been entered for a particular security, the execution of these orders can cause a chain reaction of buying or selling which could result in a sharp rise or fall in the price of the stock. To reduce the number of such situations, the Exchange at times prohibits stop orders in particular stocks when it appears that such orders might severely aggravate price fluctuations in those stocks. When this occurs, all pending stop orders in those stocks usually are automatically canceled. CNS WILL ATTEMPT TO NOTIFY YOU IF AND/OR WHEN STOP ORDERS ARE DECLARED PROHIBITED and CNS has already entered one on your behalf. A stop order can be entered for any specific number of days or may be good until canceled. There are no stop orders for over-the-counter transactions.
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| 4-7. |
Stop Limit Order - A variation of the stop order is the stop limit order, which should also be handled with extreme care. This type of order stipulates the stop price, and, if it is a sell, specifies a price below which the order must not be executed; and, if it is a buy order, it stipulates a price above which it must not be executed. In other words, when the stock sells through the stop price, your order becomes a limit order, not a market order. The main danger in this type of order is its rigidity. In a fast-moving market it may be impossible to have your order executed at the limit price. The options exchanges impose restrictions on stop and stop limit orders under certain market conditions. There are no stop limit orders for over-the-counter or NASDAQ transactions.
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| 4-8. |
Day Order - When you place an order without saying how long the order is to remain in effect, it will be good only for the trading day on which it was entered. If you want it to remain in effect longer, it is necessary for you to so advise CNS.
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| 4-9. |
Good 'Til Cancelled Order (Open Order) - A "GTC" order stays in effect until it is executed or canceled. If you decide to change your GTC order before its execution, be sure to cancel the existing order when you place a new one. Failure to cancel a previous order may result in execution of both orders for which you would be responsible.
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| 4-10. |
Bulk Segregation and Callable Securities - Securities are maintained in NFS custody for your benefit under a method known as "Bulk Segregation." Under this method, certificates are not specifically assigned to each security account, but are held in bulk for all customer positions. You enjoy all the rights and privileges of beneficial ownership under the bulk system, and you may request and obtain possession of specific certificates from those entities which have their securities in certificate form anytime you wish.
NFS is a member of various depository facilities, such as the Depository Trust Company ("DTC"), and portions of the securities held in safekeeping by us are on deposit in bulk segregation form with such depositories.
Certain bonds and preferred stocks are callable by the issuer for redemption on or after a certain date. According to the terms of the issue, the issuer may at times call only a portion of a certain issue. In the event of a partial early redemption of callable bonds or stocks, NFS will choose the securities to be redeemed on a random selection basis. Therefore, it is possible that a client owning such an issue may have all, part of or none of his holdings redeemed.
A debt security redeemed (called) in whole or in part before maturity could affect the yield represented.
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| 4-11. |
Safeguarding Your Securities - Your assets that remain in NFS's custody are insured against loss from fire, theft and forgery under mandated insurance programs and protected against business failure under the federally backed Securities Investor Protection Corporation (SIPC) and the additional insurance coverage previously discussed.
If you decide to accept delivery of your certificates, it is suggested that you safeguard them as follows:
- Keep certificates in a safe deposit box.
- Do not endorse certificates until you are ready to deliver them.
- Use registered or certified mail when mailing endorsed certificates.
- Note your certificate numbers on a separate sheet of paper and keep this record in a secure place separate from the securities.
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Non-Deposit Investment Products...
ARE NOT FDIC INSURED
ARE NOT BANK GUARANTEED
MAY LOSE VALUE |
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