EFTA01361738.pdf

M essa r es (continued) When Pershing is notified that it received an allocation of called securities, Pershing conducts a similar, computer-generated random lottery. The lottery determines the accounts that will be selected and the number of securities in the account that will be redeemed. Allocations are based on the number of trading units held in the account The probability of any trading unit held by an account being selected as called in a partial call is proportional to the total number of trading units held through Pershing. Once the lottery is complete. Pershing notifies introducing broker-dealers whose introduced accounts have received an allocation. Securities registered in the client's name, either in transit or held in custody, are excluded from the Pershing lottery process. Pershing initiates the lottery process by identifying the accounts holding the called security, the total par value of the called securities held, and the trading unit of the security. Example (unit of trade = $25.000): Client Account Par Value Number of Trading Units ABC-123234 $100,000 4 DEF-325465 $75,000 3 EOR567433 $150,000 6 EGT-876574 $50,000 2 EGT-888345 $25,000 1 FRT-435234 $25,000 1 FRT-658797 $75,000 3 u In brief, the allocation process involves the following steps: • The number of trading units held in each account is identified. • A sequential number is assigned to each trading unit (e.g., account EDR-567433 would be assigned six numbers). • A random number is generated that will result in one of these trading units being the first unit in the selection process. • Thereafter, the trading units participating in the allocation are based on an incremental random number technique until the number of trading units allocated to Pershing is exhausted. Additional Information • The allocation of called securities is not made on a pro-rata basis. Therefore, it is possible that a client may receive a full or partial redemption of shares held. Conversely, it is also possible that a client may not have any securities selected for redemption at all. ' When a partial call is deemed favorable to the holders of the called security, Pershing will exclude certain accounts from the lottery. Excluded accounts will include Pershing's proprietary and employee accounts, as well as proprietary and employee accounts of introducing broker-dealers (if Pershing carries and clears those accounts). No allocation will be made to these proprietary and employee accounts until Page 4 of 1, X411 INY: Account Number: N46-024968 .EFFREY EPSTEIN Go paperless 041{ ADOU• C OCIMPr 4 ....rt a re.0 " . I I lya W.trviOn•aln %Yaw.. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0050966 CONFIDENTIAL SDNY_GM_00197150 EFTA01361738