EFTA01361694.pdf

M essa r es (continued) 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 clients 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 = 525.000): Client Account Par Value Number of Trading Units $100,000 4 $75.000 3 $150,000 6 $50,000 2 $25,000 $25,000 $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 caned 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 all other client positions at Pershing in such securities have been called. When a partial call is deemed unfavorable to holders of the called security, Pershing will not exclude any accounts from the lottery. Page 4 of 9 Account Number (so paperless SO t•ThERN FINANCIAL LLC ASK A001.1' ocu.t• CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0050919 CONFIDENTIAL SDNY_GM_00197103 EFTA01361694