Hilliard Lyons operates as a fully disclosed SEC-registered broker-dealer and investment advisor with accounts carried and transactions cleared and settled through Wells Fargo Clearing Services, LLC. Wells Fargo Clearing Services, LLC, which does business as “First Clearing,” is a registered broker-dealer, a non-bank affiliate of Wells Fargo & Company, and a leading provider of clearing and custody services to financial institutions.
The Securities Investor Protection Corporation (SIPC), created in 1970, is a non-profit, non- government membership corporation funded by member broker-dealers. The SIPC provides limited coverage to investors on their accounts if their firm becomes insolvent. Hilliard Lyons and First Clearing are both SIPC members.
In the event of firm insolvency, SIPC would cover securities and cash in client accounts as follows:
- SIPC coverage insures each client account, determined and aggregated by ownership capacity, up to $500,000 (including up to $250,000 for claims for cash). For details, visit www.sipc.org.
- First Clearing also maintains additional protection provided through Lexington Insurance Company, (“Lexington”) an AIG Company. For clients who have received the full SIPC payout limit, First Clearing’s policy with Lexington provides additional coverage above the SIPC limits for any missing securities and cash in client brokerage accounts up to a clearing-firm aggregate limit of $1 billion (including up to $1.9 million for cash per client).
Neither SIPC nor the additional protection from Lexington protect against losses from the failure of a security, nor do they insure the quality of investments or protect against losses from fluctuating market value. All coverage is subject to the specific policy terms and conditions. First Clearing’s SIPC and additional coverages apply only in the event of First Clearing’s insolvency, and do not apply in the event of Hilliard Lyons’ insolvency.
Contact your Wealth Advisor for more details.
FDIC Protection For Bank Deposits
For accounts enrolled in First Clearing’s Bank Deposit Sweep program, uninvested cash is automatically deposited, or “swept,” to one or more affiliated banks. Currently, four affiliated banks participate in the Bank Deposit Sweep program, with each providing coverage of the deposit balance up to $250,000. Having four affiliated banks in the program allows for up to $1,000,000 ($2,000,000 for joint ownership accounts) in coverage per account ownership category.
Balances held in the Bank Deposit Sweep program would be aggregated with any deposits or certificates of deposit held at any of the affiliated banks (unrelated to your Hilliard Lyons account) in the application of FDIC coverage.
For example, when deposits are made at all four affiliated banks:
- Individual accounts (one owner): Cash sweep deposits are insured for up to $1 million.
- Joint accounts (multiple owners): Cash sweep deposits are insured for up to $2 million in the case of two owners – plus $250,000 for each additional owner.
- Trust/transfer-on-death (TOD) accounts: Cash sweep deposits are insured for up to $1 million plus $250,000 for each additional beneficiary.
- IRAs and other self-retirement accounts: Cash sweep deposits are insured for up to $1 million.
These deposit insurance limits refer to the total cover-age that an account holder has at each affiliate bank, including any CDs. The examples above show only the most common ownership categories and assume that all FDIC requirements are met. You can get more details on FDIC coverage at www.fdic.gov.
For details on the Bank Deposit Sweep, refer to the Cash Sweep Program Disclosure Statement. You can get a copy from your Wealth Advisor.
Regulatory Oversight And Compliance
Hilliard Lyons is subject to continuing oversight and examination by both the Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA), our primary examining authority. FINRA conducts annual examinations of Hilliard Lyons as part of its member examination program. SEC rules also require that our financial statements and operational systems and procedures be audited annually by our independent accounting firm, Crowe Horwath. Crowe Horwath, which also prepares the annual client security custody report noted above, is subject to oversight by the Public Company Accounting Oversight Board, which oversees the audits of public companies and broker-dealers, including compliance reports filed pursuant to federal securities laws, to promote investor protection.
Hilliard Lyons also maintains internal audit, compliance, market, and credit risk functions that continually monitor regulatory compliance and help the firm in ensuring that it meets SEC and other regulatory requirements.
First Clearing, which maintains online account data and access for Hilliard Lyons clients, uses sophisticated systems that constantly monitor the network to prevent unauthorized individuals and programs from entering its network and computer systems – and from accessing your personal information. For details, go to www.wellsfargoclearingservicesllc.com/disclosures/online-privacy-policy.htm.
At Hilliard Lyons, we are serious about the security of your assets. If you have any other questions about the safety of your funds with Hilliard Lyons, please contact your Wealth Advisor.
J.J.B. Hilliard, W.L. Lyons, LLC (Hilliard Lyons) and Hilliard Lyons Trust Company, LLC are affiliated companies. Neither Hilliard Lyons nor Hilliard Lyons Trust Company provide individualized tax, accounting or legal advice. This piece is intended for general educational purposes. Please consult your accountant or attorney for personal tax, accounting or legal advice.
© 2018 J.J.B. Hilliard, W.L. Lyons, LLC.
J.J.B. Hilliard, W.L. Lyons, LLC | Member NYSE, FINRA, & SIPC