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Safety of Customer Assets

Safety of Customer Assets

Financial Strength and Stability of J.P. Morgan Securities LLC and JPMorgan Chase

J.P. Morgan Securities is a division of J.P. Morgan Securities LLC (JPMS), a wholly-owned subsidiary of JPMorgan Chase & Co. (NYSE: JPM). JPMorgan Chase & Co. is a leading global financial services firm with operations in more than 60 countries; through its subsidiaries, it is a leader in investment banking, financial services for consumers, small business and commercial banking, financial transaction processing, asset management, and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of consumers in the United States and many of the world's most prominent corporate, institutional and governmental clients under its JPMorgan and Chase brands.
Information about the combined firm is available at www.jpmorganchase.com.

Protection of Assets Held at J.P. Morgan Securities LLC1
  • SEC Rules and Regulations Provide Customer Protection

JPMS is a broker dealer registered with, and regulated by, the SEC. In compliance with the SEC rules and regulations for the protection of customers, JPMS maintains all customers' Fully Paid and Excess Margin securities as required under Rule 15c3-3(b) of the Securities Exchange Act of 1934. JPMS maintains such securities in its possession or in a location that has the controls required by the SEC to protect such securities from claims of third parties, in conformity with the SEC rules. Based upon a formula prescribed in the SEC's rules, net Customer Free Credit Balances (if any), or the equivalent thereof in Qualified Securities, not required to be used for the settlement of Customer transactions or the financing of Customer margin debt are held by JPMS in an account segregated for, in the words of the SEC rules, "the exclusive benefit of Customers". As a result, such funds and Qualified Securities are not available for JPMS's proprietary use. Compliance with SEC and similar rules is regularly reviewed by the regulatory agencies that are charged with their enforcement.

  • Membership in SIPC

JPMS is a member of SIPC, which was created by Congress to protect Customers of securities brokers and dealers and to promote public confidence in the securities markets in the United States. Customers of a member of SIPC that fails financially are afforded special benefits under SIPA. These special benefits provided under SIPA are relevant only if the broker-dealer that carries a Customer's account fails and is liquidated under SIPA.

Although there can be no assurance of what would occur in any specific situation if a member of SIPC were to fail, in a liquidation under SIPA, Customer accounts of a failed firm are intended to be transferred to another SIPC member firm. If that were to occur, the transfer would usually occur within a week of the failure. If their accounts are transferred, Customers may deal with their accounts after their transfer in the same manner as if their original broker-dealer had not failed.

If a Customer's accounts are not transferred to another SIPC member firm, such Customer is entitled to receive the cash and securities in its accounts, minus any obligations the Customer owes to the failed broker-dealer. If there were not enough cash and securities to make distributions in full to all Customers, each Customer would receive a distribution, on a pro rata basis, of Customer Property held by the failed broker-dealer to the extent of the Net Equity that was in such Customer's accounts, determined as of the date of the filing of the petition with respect to the SIPC member. Customers are not considered general creditors of a failed broker-dealer, and receive distributions from Customer Property ahead of general creditors. General creditors of the failed broker-dealer do not receive any Customer Property unless all Customers are first satisfied in full.

If the distributions from Customer Property are not sufficient to satisfy Customers' claims for the Net Equity in their accounts, SIPC protection would be available to satisfy Customer claims for any remaining shortfall in their Net Equity, up to $500,000 per Customer (of which up to $250,000 may be for cash claims).

Limitations of SIPC
The coverage described above covers losses of cash or Securities from Customer accounts at JPMS if it were to fail and be unable to meet its obligations to its Customers. The coverage does not cover any losses from changes in the market value of investments after a liquidation commences, from delays in the liquidation process, losses of assets not eligible for SIPC protection (such as futures, options on futures, foreign exchange transactions, commodity contracts, precious metals contracts, or any investment contracts that are not Securities) or losses incurred by persons that are not "Customers" under SIPA. Although created by Congress, SIPC is not a government agency. It is a non-profit membership corporation which receives its revenue from those brokers and dealers that are required by law to be SIPC members and from its own investments.

A bank or brokerage firm that is a Customer and that is acting for its own trading account is entitled to participate in the preferential distribution of Customer Property in a SIPA liquidation, but it is not eligible for SIPC advances if there is a shortfall in such a liquidation.

These matters are complex and it is not possible to address all issues in a very general summary such as this one. Should you have any questions regarding SIPC coverage, please consult your own legal counsel, or visit the SIPC web-site at www.sipc.org.

1Capitalized terms have the meanings assigned to them under SIPA and SEC rules and regulations.

Learn more about our firm and investment professionals through FINRA BrokerCheck.

The views and strategies described may not be suitable for all investors. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction. Securities are offered by J.P. Morgan Securities LLC. ("JPMS"), member FINRA and SIPC. When JPMS acts as a broker-dealer, a client's relationship with us and our duties to the client will be different in some important ways than a client's relationship with us and our duties to the client when we are acting as an investment advisor. A client should carefully read the agreements and disclosures received (including our Form ADV disclosure brochure, if and when applicable) in connection with our provision of services for important information about the capacity in which we will be acting.

This document provides information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC ("JPMS"). The agreements entered into by and disclosures provided to clients with respect to the different products and services provided by JPMS should be carefully read (including our Form ADV disclosure brochure, if and when applicable), which contain important information, including our provision of services for important information about the capacity in which we will be acting. We encourage clients to speak to their JPMS representative regarding the nature of the products and services and to ask any questions they may have about the difference between brokerage and investment advisory services, including the obligation to disclose conflicts of interests and to act in the best interests of our clients.

“J.P. Morgan Securities” is a brand name for a wealth management business conducted by JPMorgan Chase & Co. and certain subsidiaries. J.P. Morgan Securities offers investment products, services, Clearing and Custody through J.P. Morgan Securities LLC, a member of FINRA and SIPC. Bank products and services are offered by JPMorgan Chase Bank, N.A. and its bank affiliates.

Investment products: Not FDIC insured • No bank guarantee • May lose value

 
 

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