Information Regarding Our Handling of Short Positions in Subscription Rights

In the event an account is short the target security the day prior to the effective date of a subscription rights offering, the account will be allocated a short position in the subscription right security at a rate determined by the terms of the offer.

In the event the subscription rights are not listed for trading

Clients who are short the subscription rights may be held liable in the event the long holder submits a request to subscribe to the rights offer. Clients should be aware of the potential liability to the account based on all or a portion of the short rights position being subscribed to plus any over-subscription allocation. Clients should monitor their accounts in order to ensure they will be able to properly deliver any required shares if they are held liable.

We will not know the liability for a given account until shortly after the close of the subscription rights offer.

In the event the subscription rights are listed for trading

Clients who are short the subscription rights may attempt to close their position by submitting an order through Trader Workstation or WebTrader. In the event a client is unable to close the position through the placement of an order, the client may contact the Trade Desk by telephone in order to request a closing transaction be placed on their behalf.

We will set a close out deadline for the subscription rights offer. This close out date will typically, though not definitively, be set as follows:

(External processing deadline) - (Settlement period of the market + 1) business days

For example:

For a subscription rights offering with an external processing deadline of Thursday in the United States the close out date would typically be:

Thursday - (3 business days + 1) = the prior Friday

We will attempt, on a best efforts basis, to close out any remaining short positions on the close out date (standard commission rates apply). We do not guarantee the date, time, price, or ability to execute such a closing trade. In the event we are unable to close out the remaining short positions, clients will be responsible for any associated liability in the event the long holder requests to subscribe to the rights offer.

Once we execute a closing trade for the remaining short positions, a notification will be sent to the account holder indicating that a close out has been processed. We will post the closing transaction to the account as soon as practical. We may not be held liable in the event the notification is not delivered in a timely fashion. In the event a client elects to close out a short rights position after our close out date without first confirming with us regarding the status of the close out, such action may result in the account being long the rights position.