Clearing Firm / SIPC Coverage
The assets in our clients' accounts are protected in a number of important ways, both by Maxim Group, and our clearing agent, Pershing LLC, a subsidiary of the Bank of New York Mellon Corporation.
Pershing has been a leading provider of financial business solutions for over 70 years and serves many of the world's most respected financial organizations, remaining focused on the segregation, safekeeping, servicing, and reporting of clients' assets in their custody. Pershing is well capitalized with capital ratios exceeding those required by regulators. Please refer to Pershing's Statement of Financial Condition at www.pershing.com for additional information.
Pershing's parent company, The Bank of New York Mellon Corporation, is one of the world's strongest global financial institutions. The Bank of New York Mellon ranks among the top financial services companies with a market capitalization of approximately $36 billion as of December 2010, and holds $24.4 trillion in assets under custody and administration. Please refer to www.bnymellon.com for additional information.
The financial strength of Maxim Group and Pershing provides the first, and perhaps most important, measure of protection for our clients' assets. Maxim group and Pershing are each registered broker-dealers with the Securities Exchange Commission (SEC) and members of the Financial Industry Regulatory Authority (FINRA). Both the SEC and FINRA require us to comply with various rules intended to minimize the chance of financial failure and maximize the protection of our clients' assets.
One of those rules, the SEC Customer Protection Rule requires Pershing to segregate investor assets, which are fully paid-for from its own assets. Therefore, in the unlikely event of the financial failure of Pershing, investor’s fully paid-for assets will remain separate from Pershing’s own assets. Maxim Group and Pershing are also subject to the SEC Net Capital Rule, which requires each of us to maintain enough liquid assets in the event of firm failure and liquidation. Because Pershing has custody of our clients' assets, it must maintain an even higher level of net capital than Maxim Group which further increases the security of our clients' assets.
Maxim Group and Pershing are also members of the Securities Investor Protection Corporation (SIPC), a non-profit organization that provides coverage to investors if their brokerage firm becomes insolvent. It covers the replacement of missing securities and cash up to $500,000 (including a maximum of $250,000 for claims for uninvested cash awaiting reinvestment). In addition to SIPC protection, Pershing provides coverage in excess of SIPC from Lloyds of London in conjunction with other insurers.* The current excess of SIPC policy is scheduled to expire on December 10, 2011. The excess of SIPC coverage provides the following protection for assets held in custody by 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
Neither SIPC nor excess of SIPC coverage protects against loss due to market fluctuation of investments.
For more details on the protection and security of assets held in an account with Maxim Group, please visit SIPC's website at www.sipc.org. You may also visit Lloyd's of London website at www.lloyds.com.
* Pershing's excess of SIPC coverage is provided by Lloyd's of London in conjunction with XL Specialty Insurance Co., Axis Specialty Europe Ltd., Great Lakes Reinsurance (UK) PLC and Ironshore Specialty Insurance Co.