REGULATORY DISCLOSURE STATEMENT

Following is some important information concerning your account with LaBranche Financial Services, LLC. Please take some time to review this information that concerns the following topics.

Order Routing – SEC Rule 11Ac1-6

Industry regulations require that LFSI disclose, on a quarterly basis, the identity of the market centers to which we route orders for most equity securities – as well as the nature of relationships to those market centers.

If you would like a written copy of this information, or information about where your individual orders have been routed for execution, please contact LFSI at 212-482-3500. Our order routing information is also available at http://www.tta.thomson.com/msi/reports/index.html?clientid=lfsj.

NASD Public Disclosure Program

The National Association of Securities Dealers (NASD) Public Disclosure Program allows the public to obtain current regulatory information about NASD member firms and registered representatives. An investor brochure containing information about the program is available from the NASD. You can get more information by calling its Public Disclosure toll-free line at (800) 289-9999 or by visiting www.nasdr.com.

Privacy Policy – Gramm-Leach-Bliley Act of 1999– SEC Regulation S-P

LFSI is committed to safeguarding customer information. Since your privacy is a priority to us, we will not share nonpublic information about you or about former customers with third parties – except as explained in our Privacy Policy.

We collect personal information to open your account(s) in order to service your account and to process your transactions. We do not disclose nor sell your personal information to anyone, except as explained in our privacy policy, as follows:

  • We disclose personal information to companies that help us process or service your transactions or account(s), including companies that may print and mail your account statements and confirmations or process proxy distribution.
  • We may disclose or report personal information in certain circumstances where we believe, in good faith, that disclosure is required or permitted under law; for
  • example, to cooperate with regulators or law enforcement authorities, resolve customer disputes, and to perform credit, risk control or authentication checks.

The personal information that is collected in the normal course of business includes the following:

  • Any personal information that is disclosed on new account applications and other forms completed by you that is necessary or required to maintain and service your account. This information includes, but is not limited to, your name, address, tax identification, bank reference, assets and income.
  • To administer your account, we collect and maintain personal information about your transactions – including account balances and positions.

We protect the confidentiality and security of your personal information:

  • Companies we utilize to provide support services are not allowed to use your personal information for their own purposes and are contractually obligated to maintain strict confidentiality.
  • We restrict access to personal information to our employees and agents for business purposes only. All employees and agents are required to safeguard such information
  • We maintain physical, electronic and procedural safeguards to guard your nonpublic personal information

We will provide notices of changes in our privacy policy and information-sharing practices. If, at any time in the future, it is necessary to disclose any of your personal information in a way that is inconsistent with this policy as described above, we will give you notice of the proposed change so that you will have the opportunity to opt out of such disclosure.

Opening a New Account – Verifying Your Identity

To help the government fight the funding of terrorism and prevent money laundering activities, Federal law requires all financial institutions, such as LaBranche Financial Services, LLC, to obtain, verify and record information that identifies each person who opens an account.

When you open an account, we are required to ask for certain personal information including your name, address, date of birth, and other necessary identification. This identification information will be used to verify your identity. As appropriate, we may, at our discretion, ask for supporting documentation to evidence your identity or that of your account.

As required by Federal law, if we are unable to verify your identity, we may be unable to open an account or establish a relationship with you.

Practices of Order Execution Routing and Order Flow Disclosure

This disclosure statement is being provided as required by Rules 10b-10 and 11Ac1-3 under the Securities and Exchange Act of 1934 concerning payment for order flow and order routing practices. “Payment for Order Flow” is a securities industry practice whereby many brokerage firms receive monetary or other forms of remuneration in return for the routing of customer orders to designated execution destinations.

LFSI does not receive payment or remuneration of any kind for directing order flow on any transaction.

We route orders in over-the-counter (OTC) securities electronically to select market-makers or ECNs (electronic communication networks). We also verbally route OTC securities to market-makers based upon price improvement opportunities and/or attaining execution prices at the displayed national best bid or offer (NBBO).

Exchange traded securities (listed securities) are routed to the New York Stock Exchange, Inc. (NYSE) or the American Stock Exchange (AMEX) according to where the security is listed. Certain specialists on the NYSE or AMEX to whom listed orders are routed may be LFSI affiliated (including affiliated subsidiary LaBranche & Co. LLC). The exchange to where orders are routed matches or improves upon the displayed NBBO for the particular security at the time the order is processed.

Margin Risks Disclosure Statement

If you borrow funds from LFSI to purchase securities, LFSI’s collateral for the loan will be the securities purchased, other assets in your margin account and your assets in any other accounts at LFSI.

If the securities in your margin account decline in value, so does the value of the collateral supporting your loan, and, as a result, LFSI can take actions such as issue a margin call and/or sell securities or other assets in any of your accounts held with us, in order to maintain the required equity in the account.

It is important that you fully understand the risks involved in trading securities on margin, which include the following:

  • You can lose more funds than you deposit in the margin account.
  • We can force the sale of securities or other assets in your account(s).
  • We can sell your securities or other assets without contacting you.
  • You are not entitled to choose which securities or other assets in your account(s) are liquidated or sold to meet a margin call.
  • We can increase our “house” maintenance margin requirement at any time and we are not required to provide you advance written notice. You are not entitled to an extension of time on a margin call.

Call Us with Your Regulatory Questions

Thank you for the opportunity to continue to serve your business. If you have any questions concerning this disclosure statement or regarding other regulatory issues with LaBranche Financial Services, LLC, please contact our Compliance Department at 212-482-3500.
 

rev 10/2006