The Securities and Exchange Commission Truth in Lending Rule requires specific disclosure be made to a public customer at the time a margin account is established. The following represents a summary of the required disclosures:

1) An annual rate of interest is charged on the net debt balance in a margin account.

2) The applicable interest rate is based upon (but not equal to) the prevailing broker call money rate.

3) Adjustment and allowance in the percentage rate are frequently made depending upon the size of the debit balance and the activity in the account.

4) As the call money rate changes so will the interest rate charge, without notice to the customer.

5) Interest is computed by taking the average daily balance, multiplying it by a rate over 100 and by the number of days the debit balance existed and dividing it by 360.

6) The customer must keep the prior period statement in order to compute the interest.

7) The firm has a lien on all securities in the account for any debit balance present in the account.

8) If the market value of the securities decline, the firm can request additional funds or collateral from the client. If not received, the firm can exercise its lien to sell securities in the account.