MY ACCOUNT

What are the commission rates at Kensington Capital?
At Kensington Capital, We offer our dedicated broker services whereby you speak to your broker for a straight forward and clear fee structure of $50 minimum plus 0.015 cents a share.


What is included in calculation of my balance?
Your account balance includes all cash, money market funds, stocks, exchange traded funds (ETFs), mutual funds and options in your account. Margin loans, if any, do not count toward your balance. Balances from separate accounts are not combined in determining the qualification.


Does Kensington Capital pay interest on credit balances?
Yes. By default, cash balances of $500 or more earn an annual interest rate of 0.025% (as of 8/01/2010). If your cash balances are swept into a money market portfolio, you will earn the current interest rate for that portfolio. Money market rates are updated regularly on our pricing details.


Can I trade futures?
Yes, you may trade futures at Kensington Capital. Please visit our Futures page for information on futures access, platforms, service, pricing, and deposits.


How do I make my initial deposit?
Choose the method that works best for you:
By Check
If you're applying by mail, include a personal, cashier's, or bank check made payable to First Southwest Company Securities with your account application and send it to the appropriate address.

By Wire Transfer
Call us at 718 436-2111 x 13 for wire instructions or click on the link . A new account must be approved before a wire can be sent. Upon approval, you will be given an account number and receive the wire instructions.


Is it easy to withdraw money from my account?
Yes, via check, wire or write your own check.


Can I write checks from my account at Kensington Capital?
Kensington Capital offers unlimited check writing. There is no per-check minimum amount. You can download the checking application online from our forms library once your account has been opened. Please note: your account at Kensington Capital is not FDIC-insured or bank guaranteed.


Do you offer investment advice?
Yes, please speak to your account executive for details.


FUNDING AND TRANSFERS

How do I deposit funds into my account at Kensington Capital?
You can fund your account in any of the following ways:

• Deposit a Check
• Deposit via Wire Transfer
• Transfer a Brokerage Account to Kensington Capital


How do I transfer my brokerage account to Kensington Capital from another broker?
1. First, open an account with Kensington Capital.
2. Once your account is opened, you will be able to transfer an account from another brokerage through our ACAT system. Please see our forms library.


Are there any restrictions on funds deposited into my account with Kensington Capital?
Yes. You may trade most marginable securities immediately after funds are deposited into your account, however, funds cannot be withdrawn or used to purchase non-marginable securities, initial public offering (IPO) stocks or options until 3 business days after check deposit settlement and three business days for electronic funding deposit settlement. All electronic deposits are subject to review and may be restricted for 5 business days. Read Funding Restrictions for more information.


STOCK DEPOSIT

Can I deposit a physical stock certificate into my account at Kensington Capital?
Yes, complete a stock certificate deposit form and send both the form and certificates directly to:

4910 13th Avenue
Brooklyn, NY 11219


Does the Kensington Capital accept Pink Sheets listed stock certificates and OTC Bulletin Board listed stock certificates?
Yes. Kensington Capital will accept these certificates when your account has been established with our Dedicated Broker Department.


Are there any fees?
Yes. Please call Your dedicated broker to review this process.


How do I endorse stock certificates over to Kensington Capital to open an account?
On the back of the certificate designate First Southwest Company as the attorney to transfer the stock. This means the securities are negotiable only by First Southwest Company, and can be mailed safely. Then all you need to do is sign and date the certificate; you can leave all the other areas blank. Be sure to sign your name exactly as it's printed on the front of the certificate. Requirements may differ for entity and corporate accounts. Additionally, there may be additional paperwork needed when the account registration does not match the name(s) on the certificate. Please contact an account executive at Kensington Capital for more information.


On the front of the stock certificate, my name is printed "A.L. Smith"; should I sign the certificate exactly like that or should I sign my full name?
You must sign the certificate exactly as your name is printed on the front, including initials, Jr., Sr., III, etc.


I have other questions regarding certificates in my company name, custodial certificates and gifting of certificates. What should I do?
Simply contact a specialist at 800-123-4567, during regular business hours. We can help you with these or any other issues you may have regarding opening your account with stock certificates.


ACCOUNT INFORMATION

Can I earn interest in my account with Kensington Capital?
When legally authorized, Kensington Capital pays interest on eligible free credit balances in your account. Simple interest is calculated on the entire daily balance and is credited to your account monthly. This is a convenience service only and is subject to the current rates and policies at Kensington Capital, which are subject to change without notice.


Can I download account information directly to Quicken and Microsoft Money?
Yes, users of Quicken and Microsoft Money can download their account with Kensington Capital information into their Quicken or Money personal finance software.


Can I get duplicates of my trade confirmations and monthly statements?
If you would like a third party (such as your accountant or tax advisor) to receive a duplicate copy of your statements and confirmations, simply send us the interested party's name and complete address. The person you have designated will receive a duplicate copy of confirmations and statements by mail. Please see our fee schedule.


TRADING

With Kensington Capital, you can invest in any stock or ETFs (Exchange Trade Funds). Any stock or ETF that trades on the NASDAQ, NYSE (New York Stock Exchange), or AMEX (American Stock Exchange). Some examples are MSFT (NASDAQ), LU (NYSE) and AVD (AMEX).


Do you allow day trading?
Yes. However If you are classified as a pattern day trader (PDT), you are required to maintain a minimum account balance of $25,000 at all times. According to securities regulation, you are considered a pattern day trader if you make more than 3 day trades (see definition below) within a period of 5 business days.


What is a Day Trade?
A day trade is defined as opening and closing (buying and then selling, or short selling and then buying to cover) the same security on the same day.


What are some examples of day trades?

Example 1

9:40 am ET Buy 100 XYZ

2:00 pm ET Sell 100 XYZ = 1 day trade

The XYZ position was opened and closed on the same trading day.

Example 2

9:40 am ET Buy 100 ABC

10:15 am ET Buy 100 MSFT

10:30 am ET Buy 100 ABC

2:00 pm ET Sell 200 ABC = 2 day trades

Two ABC positions were opened and closed on the same trading day. Since the MSFT purchase interrupted the ABC purchases, ABC is separated into two separate positions (for the purpose of counting day trades) thus causing 2 day trades when the client closed all ABC shares purchased that day.

Example 3

9:40 am ET Buy 100 ABC

10:30 am ET Buy 100 ABC

2:00 pm ET Sell 200 ABC = 1 day trade

ABC was purchased twice with no other opening transactions interrupting the purchases. In this scenario, the ABC purchases will count as only one position (for the purpose of counting day trades) and therefore when the client sells, it will only count as 1 day trade.

Example 4 (Options)

9:40 am ET BTO 10 2012Jan21 XYZ C 25 (BTO=Buy To Open)

10:30 am ET BTO 10 2012Jan21 XYZ C 25 (BTO=Buy To Open)

2:00 pm ET STC 20 2012Jan21 XYZ C 25 (STC=Sell To Close) = 1 day trade

Can I buy foreign ordinary shares?
Yes, with our Assisted Broker trading. If you are interested please call 800-123-4567.


Do you offer extended hours trading?
Yes, Kensington Capital does offer extended hours trading. Please speak to your account executive about this.


Can I trade OTC bulletin boards, pink sheets or penny stocks?
Yes. Over-the-counter bulletin board (OTCBB), pink sheets and penny stocks (hereafter OTCBB) can be bought and sold, through you dedicated broker. OTCBB securities usually represent shares of new or small companies which are traded by dealers via manual procedures. Investing in OTCBB securities can be very risky, and investors may lose all or part of their investment in a relatively short period of time. Accordingly, the trading rules for OTCBB securities differ significantly from listed or NASDAQ securities. For example, only limit orders to buy and limit or market orders to sell will be accepted for the regular market sessions. Quotes for OTCBB securities may not be accurate as the securities may trade on a manual basis, and frequently "real-time" quote information, or even firm quotes, may not be available. Investors should also be aware that frequent symbol changes, additions and delistings occur in the OTCBB market. Before placing an order for an OTCBB security, please review the OTCBB Securities Trading Rules. You should also take the time to carefully research the company and examine your investment objectives.

Note: Kensington Capital can not guarantee the accuracy of any quotation information on our site for these securities. You can usually place bulletin board trades on your own using our online system. However, sometimes the information you need may not be available for some thinly traded stocks. You may find it easier to get a current quote or place an order through one of our brokers over the phone call at 800-123-4567. You may not sell short, buy or sell mutual funds, or trade stocks with a market value of less than $10 per share until seven business days after your account application is approved.

To avoid this situation you may want to consider adding margin privileges to your account. With a margin account, the proceeds of a sell order will update your buying power immediately.


Can I trade mutual funds?
Yes. At Kensington Capital you'll have access to many mutual funds.
Before investing in a mutual fund, carefully consider the investment objectives, risks, charges and expenses. For a prospectus containing this and other important information, contact the fund or n Account Executive. Please read the prospectus carefully before investing.


MARGIN

How does margin work?
Buying stocks on margin involves borrowing funds through Kensington Capital’s clearing firm, First Southwest Company and using these funds to buy margin-eligible securities.


What is the minimum account balance necessary to have a margin account?
The account must have a minimum account balance of $2,000 to maintain margin privileges.


Who sets margin requirements?
The Federal Reserve and FINRA both set minimum initial and maintenance margin requirements. Although the NYSE and FINRA require a minimum equity maintenance of 25%, broker dealers are allowed to impose higher equity maintenance requirements. Kensington Capital requires a minimum equity maintenance requirement of 30%.


What are the initial and maintenance margin requirements for purchasing listed securities at Kensington Capital?
The following requirements apply only to securities listed on the NYSE, AMEX, and NASDAQ. OTC Bulletin Board and Pink Sheets stocks are NOT margin eligible.

Add in table

Maintenance requirements may be higher if our clearing firm deems it necessary.


What are the initial and maintenance margin requirements for shorting listed securities at Kensington Capital?

Add in table

Securities valued less than $3 per share are not margin-eligible and therefore may not be sold short.


What happens if my equity is not sufficient to meet the margin maintenance requirements?

Your account will be subject to a margin call if your equity does not meet margin maintenance requirements, and Kensington Capital Trading Margin Department will generally attempt to notify you as a courtesy.

Margin calls are due upon creation of the call. Kensington Capital, along with our clearing firm First Southwest Company, establishes a future due date as a courtesy notice. Kensington Capital in observation of regulatory policy, may sell your securities at any time without consulting you in order to meet the call. Typically, if you do not meet a call by the due date, your account will be considered "In Default" and Kensington Capital may liquidate positions in order to cover all outstanding calls prior to their individual due dates. Depending on market fluctuations, positions may be liquidated for a greater amount than the calls. If Kensington Capital liquidates any of your positions, you will be charged the broker-assisted commission rate.


I just sold some stocks or options in my account. Why is my buying power the same?
This is common in a cash account when a sell order has been placed but has yet to settle. In a cash account, the proceeds of a sell order do not increase your buying power until the trade settles, which is 3 business days after the trade date for stocks (T+3) and 1 business day for options (T+1).


Why did I receive a margin call when I have a cash account?
Cash accounts can receive a type of non-margin call called a "money due" call. This can happen if you make a purchase without sufficient funds in your account, perhaps due to price fluctuations after entering a market order, or due to fees assessed to your account.


Am I always buying on margin in a margin-enabled account?
No. When you purchase securities with a value less than or equal to that of your cash balance, you are not buying on margin, even in a margin-enabled account.


What is a Good Faith Violation?
A Good Faith (GF) Violation is generated in cash accounts when a client purchases a security with unsettled funds and then sells the security prior to settlement of those funds. Three (3) unmet GF Violations in any 12-month rolling period will result in your account being restricted to trading only with settled funds for a period of 90 days. If another GF Violation occurs during the 90-day period, the account may be restricted to all but closing transactions.


Example:
On Monday, customer sells XYZ for $5,000 and holds no additional cash in his account. Sales proceeds do not settle until Thursday.

On Monday, customer buys LMN for $5,000.

On Monday, Tuesday or Wednesday customer sells LMN, prior to the settlement date of XYZ. This results in a Good Faith Violation.

To avoid GF Violations in cash accounts, do not buy a security using unsettled proceeds and sell that same security before the proceeds settle.


OPTIONS

What is a call option?
A call option is an option contract that gives the buyer the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period.


What is a put option?
A put option is an option contract that gives the buyer the right (but not the obligation) to sell a stock, bond, commodity, or other instrument at a specified price within a specific time period.


What happens if I am long a call or put option?
If you are long a call option that is in the money at expiration by at least $0.01, you should expect to purchase the underlying shares at the strike price. If you have insufficient funds to cover the purchase, a margin call will be generated on your account and Kensington Capital may force a liquidation of the position at prevailing market prices.

If you are long a put option that is in the money at expiration by at least $0.01, you should expect to have the underlying shares sold short (unless you are long sufficient shares of the underlying stock) in your account at the strike price. You will be required to cover this position before the end of the trading day following expiration. For instance, if shares are sold in your account Friday, you will be required to cover that position the following Monday before 4 PM EST.


What happens if I am short a call or put option?
If you are short a call (stock option) that is in the money, you may be assigned on any given trading day leading up and to the last trading day prior to expiration day. Assignment to a call writer means you will have to sell the specified amount of underlying shares at the strike price. If this is an uncovered call, you will have to buy the underlying stock in the open market at the current market price so you may sell it to a call buyer at the strike price. If you do not have sufficient buying power to afford such a position, you may receive a margin call which can put you at risk of being sold out of that position.

If you are short a put (stock option) that is in the money, you may be assigned on any given trading day leading up and to the last trading day prior to expiration day. Assignment to a put writer means you will have to buy the specified amount of underlying shares at the strike price. If you do not have sufficient buying power to afford such a position, you may receive a margin call which can put you at risk of being sold out of that position.


How do I know if my options will expire, be exercised or assigned?
Check your option holdings frequently: options are considered in the money if the stock price is equal to or greater than $0.01 above or below the strike price depending on whether it is a call or a put. Under the current procedures, if the stock price is greater than or equal to $0.01 at expiration, it may be exercised automatically unless we receive "NOT to exercise" instructions from you by the close of trading on the third Friday of the expiration month. If you are short options, you may be assigned the underlying shares whether or not you want the resulting position(s).


What if I do not have enough buying power to afford the resulting stock position of an exercise or assignment?
Kensington Capital, pursuant to our User Agreement, cannot be exposed to market risk due to positions created in customer accounts and reserves the right to act accordingly. It remains the customer's responsibility to ensure there is sufficient buying power to afford any resulting stock position. If you cannot meet a resulting call, please close your open positions prior to expiration. Kensington Capital reserves the right to liquidate stock or option positions if it deems that sufficient risk to the firm exists. In addition closing a position may result in a loss to the investor, and multi-leg strategies may result in additional commissions, fees and charges.


How do I give exercise or NOT to exercise instructions for my options?
The majority of long equity options positions that expire in the money by $.01 or more will automatically be exercised on the Saturday following the 3rd Friday of that month unless we receive "NOT to exercise" instructions from you by the close of trading on the last trading day before expiration. To instruct us to exercise, please call your dedicated broker detailing which option you would like to exercise. You may give these instructions at any time, except for the last trading day of that particular option contract. These instructions must be received no later than 4:15 pm ET (1:15 pm PT) on the last trading day before expiration.


Will Kensington Capital close my long option positions if I submit "NOT to exercise" instructions?
No. "NOT to exercise" instructions will not be considered as standing instructions to close long option positions. It is the customer's responsibility to address open positions in his account.

For example, if you are long a call or put that is in the money and you send "NOT to exercise" instructions, it is your responsibility to close that option position before it expires. If you do not close the position, it may expire worthless and you may lose the premium you paid for the option.


Where can I find more information about options?
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options.

For more information on option contract terms and more, please check out

www.theocc.com
www.cboe.com
www.optionseducation.org


RETIREMENT

What type of IRA accounts do you offer?

IRA Retirement Plans

An IRA, or Individual Retirement Account, is a tax-advantaged retirement savings vehicle. Holders of an IRA retirement account may contribute a set amount of money to it each year -- the maximum yearly contribution in recent years has been the lesser of 100% of earned income or $5000 for individuals under the age of 50. For individuals over the age of 50, the maximum contribution to an IRA is the lesser of 100% of earned income or $6000. These amounts may change so make sure to reconfirm this information with your tax advisor.


What Types of IRA Accounts Exist?
Many types of IRAs exist, and the type that best suits an individual is dependent on that individual's age and how much money is needed to retire.

Traditional IRA - contributions to a Traditional IRA are often tax-deductible, meaning that the money that is contributed is done so before tax is deducted. Earnings and transactions on assets held within a Traditional IRA are not taxed, and the money that is withdrawn from a Traditional IRA at retirement is taxed as income.

Roth IRA - contributions to a Roth IRA are done so after tax has been deducted, which is the principal difference between a Roth IRA and a Traditional IRA. Earnings and transaction on assets within a Roth IRA are not taxed. Money that is withdrawn from a Roth IRA at retirement is not taxed (since it was taxed when it was contributed).

Self-Directed IRA - the owners of these IRAs are permitted to make investments on behalf of the plan. A Self-Directed IRA allows the holder to make investments, using money in the IRA account, in a broad selection of investment vehicles, whereas most other IRA types are restricted to a few mainstream investments.

We offer all types of IRA accounts .


Can I rollover my employer sponsored plan (example: 401k, 403b, TSA, etc.) to my IRA account?
Yes – just use our Rollover IRA Checklist. We recommend that you speak with a qualified tax advisor regarding any tax implications and your new contribution limits.


How do I fund my Individual Retirement Account (IRA)?
You can fund your IRA in any of the following ways:
• Link a Bank Account (Establish ACH)
• Deposit a Check
• Deposit via Wire Transfer
• Transfer a Brokerage Account to Kensington Capital

When you deposit funds via Check or Wire, please indicate one of the following deposit reasons:

Contribution – with applicable year
OR
Rollover – either from an employer sponsored plan or a 60-day rollover from a distribution of an identical IRA account
OR
Fees – annual trustee fee ($30)


Can I transfer funds from my individual account at Kensington Capital to my IRA?
Yes. You can conveniently transfer money from your Individual account to your IRA account. Please note that you can only transfer cash – security transfers are not permitted.


Can I have margin and options privileges for my IRA account?
Margin is not allowed for IRA accounts, but you may request options privileges up to Level 2. Since higher options levels require margin privileges, higher options levels are not possible.


How do I change the beneficiaries on my IRA?
To update the beneficiaries on your IRA, please go to our forms library and fill out and submit the IRA beneficiary form.


When does the annual IRA fee occur and how is it assessed?
A $25 annual maintenance fee applies to all IRA accounts. New accounts are charged the $30 annual fee at the time they are funded. Existing accounts are charged every year within 30 days of the anniversary of the account opening date. Kensington Capital will send you a reminder when the fee is due, and you will have the opportunity to either send in payment, or have us withdraw the fee directly from your account.


Are there any closing fees for an IRA?
Yes, there is a $60 fee to close an IRA.


How Much Do I Need to Save For Retirement?
This depends on your age and lifestyle demands. Retirement savings are a personal decision, and how much money you need to save for retirement is dependent on your personal preferences. Using a retirement calculator can help you determine how much money you should invest in your IRA each year to hit your financial benchmarks for retirement. Remember that saving for retirement is not limited to IRA accounts.


SECURITY CENTER

Is my account protected?
Yes. Kensington Capital and our clearing agent First Southwest Company are members of SIPC, which protects securities customers of its members up to $500,000 (including $100,000 for claims for cash). Our clearing agent has additional independent insurance on your account. An explanatory brochure available upon request or at www.sipc.org. or from First Southwest Company our clearing agent at http://www.firstsw.com/regulatory-disclosures/

Your privacy is paramount to us protecting your information is of great importance. But we also want to provide you with the best products and services we can so that you can accomplish your investing goals. Kensington Capital acts as an introducing broker to its clearing firm, First Southwest Company, which processes the transactions and acts as the account custodian. Employees and third-party service providers are only given access to the limited information that they need to perform the given service or task. Additionally, our service providers are contractually obligated to keep the information confidential.


How can I protect myself?

How can I monitor my account?
It is your responsibility to monitor your account and statements regularly and often to verify all transaction activity. Also make sure to check your emails from Kensington Capital, If you get a confirmation for something you didn't do, contact us immediately and change your password. Report any suspicious activity to us immediately by calling us at 800-123-4567 or by emailing us at info@Kenscap.com.