Employee Pricing Policy

Transcription

1 Employee Pricing Policy For Internal Use Only Securities products and services are offered through Prudential Securities Incorporated, a Prudential company.

2 We are extremely pleased to announce that we re implementing a new pricing policy specifically for Prudential Securities employee accounts. Effective July 2, this new policy will provide you with significant savings on the vast array of investment products and services that the Firm offers. As you re well aware, Prudential Securities current mission is to be the industry leader in client satisfaction, but achieving the highest level of employee satisfaction is of equal importance to Prudential. Our new Employee Discounting Policies were born of the opinions and comments you expressed through various forums (such as the Opinion Tracking Survey), and they re our way of saying, We hear you and thanks! You re central to Prudential s success. Now the Company would like to reciprocate by helping you to establish and pursue your own financial goals. Who Is Eligible to Receive the Discount? All Prudential employees and retirees are eligible for these discounts. Employees of PREA are not eligible for the discounts, as outlined in this policy. If you currently have a Prudential Securities account, it will automatically be updated to reflect the new rates. To open an account, please contact one of our branch managers, and he or she will assist you in the account opening process. Securities products and services are offered through Prudential Securities a Prudential company. To familiarize yourself with the products and services that are available, visit us at PruFN.com under the investment tab. This site contains valuable information, such as how to locate a PSI branch to open an account, news and quotes, opinions and analysis, and investment strategies. Employees with accounts at Prudential Securities have access to a dedicated Financial Advisor and free online account information access. Online services include: Complete account activity, including executed trades, dividends and interest distributions and current value of all positions. Advance electronic copy of monthly account statement. Access to Prudential Securities research and such other information providers as Standard & Poor s and Lipper Analytical Services. Online trading when enrolled in PruTrade.. Orders are transacted during normal market hours. These online services are available 24 hours a day, 7 days a week. Outlined below are the major benefits: Account Fees and Investment Minimums: COMMAND SM Account: 1 The COMMAND Account is our premier investment account that combines a traditional securities account with superior financial tools. You can take advantage of the COMMAND Account with the added benefits of having: The $100 annual fee for the COMMAND Account waived. The annual fee for COMMAND Rewards waived. The annual fee waived for all related COMMAND Accounts, such as IRAs, included as part of your immediate packaged household. The minimum initial investment (cash and/or securities) reduced from $10,000 to $2,500. The Billpay feature reduced from $6.00 to $4.95 per month for online requests and $3.00 per month for telephone requests. 1. Please call for a free COMMAND Funds prospectus that contains more complete information, including all charges and expenses. Read the prospectus carefully before you invest or send money. 1

3 Among the many features available to you with your COMMAND Account, you will receive: Automatic Investment Sweeps 2 Unlimited Checkwriting Visa Gold Debit Card (free ATM withdrawals) Direct Deposit/Direct Debit Cash Transfer Services Bill Payment and Presentment Dividend Reinvestment 2. An investment in any of the money market funds is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at one dollar per share. It is possible to lose money by investing in Basic Securities Account: A basic securities account is available to employees. Although there is no initial investment requirement, there is a $50 annual fee per account. IRAs have a $35 annual fee, which will be waived if a $2,000 contribution is made during the year. Online account information access, including electronic trading capabilities, is provided free (versus $65 for non-employees at the same asset level). Equity trades Old Policy: Based on household assets or activity level $500,000 in assets or $20,000 in annual commissions 60% discount $250,000 in assets or $10,000 in annual commissions 50% discount Other Prudential Securities employees 40% minimum discount New Policy: All equity trades will be priced on a cents-per-share basis. The commission will vary according to the household assets and number of shares in the transaction. As outlined in the following table, additional discounts can be generated, based on annual commissions per household: Table 1. Equity Trades Cents per Share Table Annual Commissions per Household $0-$9,999 $10,000 or greater (non-retroactive) Number of Shares Number of Shares Assets per Household ,000 or greater ,000 or greater $0-$249,999 $0.20 $0.19 $0.18 $0.18 $0.17 $0.16 $250,000-$499,999 $0.17 $0.16 $0.15 $0.15 $0.14 $0.13 $500,000-$999,999 $0.14 $0.13 $0.12 $0.12 $0.11 $0.10 $1,000,000-$2,499,999 $0.11 $0.10 $0.09 $0.09 $0.08 $0.07 $2,500,000 or greater $0.06 $0.06 $0.06 $0.06 $0.06 $0.06 Asset levels are determined by viewing the three prior months asset balances. When an employee reaches a higher asset or commission threshold, the employee will receive the lower cents-per-share trading commission rate in the following month. In the event that the employee fails to maintain that level for three consecutive months, the employee will be reset to the higher cents-per-share commission in the following month. New employee levels will initially be determined by assets only. 2

4 Low-Priced Agency Stocks: For stocks priced between $0.01 and $4.99, employees will be charged the lesser of the above cents-per-share schedule (Table 1) or 1.0% of the principal amount of the trade. For stocks priced between $5.00 and $9.99, employees will be charged the lesser of the above cents-per share schedule (Table 1) or 1.5% of the principal amount of the trade. Principal Equity Transactions: Based on issue price: Employee principal trades are priced on a market price per share formula or the above cents-per-share schedule (Table 1), whichever is lower: Stock Price Cents per Share $0.01 to $10.00 $0.0625/share $10.01 to $25.00 $0.125/share $25.01 & up $0.25/share NASD guidelines state that commissions on agency and principal trades cannot exceed 5% for equities, except to the extent that they fall within our Minimum Ticket Policy (please see Exceptions for Equity Trade). Exceptions for Equity Trades: Transactions of $1,100 or less (gift transactions ) may be discounted below the above-stated minimums, but no less than 5% of the principal amount. For equity transactions, closing transactions calculated below the minimums will not be raised. Managed Accounts All managed accounts (MACS, Quantum, PSPM, and PIIMA) will be priced at a 50% discount to the stated fee for each program. All current pricing above the stated discount will be brought down to the new stated fee. All current pricing below the standard fee will be permitted to remain at their current pricing under a grandfather clause. However, these accounts are subject to review by the Branch Manager and the field financial analysts for adherence to the policy. Here is an example (Table 2) of the pricing for an equity account in the MACS program: Table 2. Managed Accounts Table MACS Stated Employee Asset Level Fee Fee* $0-$500, % 1.50% Next $500, % 1.25% Next $1,500, % 1.00% Next $2,500, % 0.75% Above $5,000, % 0.50% *Represents blended annualized fee for an Equity/Balanced account. Professional money management might not be suitable for all investors. 3

5 PruChoice 3 and Target PruChoice and Target accounts are eligible to be priced from 0 basis points up to a 50% discount on the stated program fee, except for the Target Income retirement portfolios which will be priced at 10 basis points above the equity retirement portfolios to conform with regulatory requirements. The fee, negotiated between the employee and the Financial Advisor, will be based on the level of advice and service provided. Any change to current pricing can be requested using the fee-change form signed by the Branch Manager and Financial Advisor and must be accompanied by a letter of authorization by the client. The table below (Table 3) details the MAXIMUM fee that can be charged: Table 3. PruChoice and Target Table Employee Fee* PruChoice: 0.625% Target: Equity - non-retirement 0.750% Equity - retirement 0.625% Income - non-retirement 0.500% Income - retirement 0.725% *Represents maximum fee charged. Prudential Advisor Prudential Advisor I pricing will be based on eligible assets, as defined by Group A and Group B assets listed below (Table 4), in the household. The fee is equivalent to a 50% discount from the original Prudential Advisor pricing introduced in May All transactions will be charged a $24.95 transaction fee. An additional charge of $0.01 per share will apply to all stop, limit, and stop-limit orders of more than 2,000 shares that are exchange-traded securities. An additional $1.00 per option contract will be charged for all orders of more than 10 contracts. Additional transaction charges may apply see the Prudential Advisor program guide or Web site for more information. Table 4. Prudential Advisor I Table (Group A & B) Asset Level Group A Group B Employee Fee Employee Fee $50,000-$249, % 0.375% $250,000-$499, % 0.300% $500,000-$999, % 0.250% $1,000,000-$1,999, % 0.250% $2,000,000-$4,999, % 0.250% $5,000,000-$24,999, % 0.250% $25,000,000 and up Customized Customized 3. An annual effective program fee up to 1.25% is charged for PruChoice. Annual operating fund expenses may also apply. Please call for a free prospectus on Target or any of the Funds in PruChoice containing complete information, including all charges and expenses for all funds. You should read the prospectus carefully before you invest or send money. 4

6 Prudential Advisor II pricing will be based on the MINIMUM fee for Prudential Advisor II accounts. All accounts are subject to the standard 200% threshold for asset turnover see the Prudential Advisor program guide or Web site for additional information. Table 5. Prudential Advisor II Table (Group A & B) Asset Level Group A Group B Employee Fee Employee Fee $50,000-$249, % 0.750% $250,000-$499, % 0.625% $500,000-$999, % 0.500% $1,000,000-$1,999, % 0.450% $2,000,000-$4,999, % 0.375% $5,000,000-$24,999, % 0.300% $25,000,000 and up Customized Customized Group A assets include equity securities, including but not limited to common stock, master (publicly traded) limited partnership interests, shares or units, shares of certain mutual funds, closed-end funds, foreign shares, American Depository Receipts, any rights or warrants on equity securities, equity options (excluding naked call options), and equity index options. Group B assets include, but are not limited to, cash and cash equivalents, convertible preferred stock, convertible bonds, U.S. Treasury and federal agency securities, corporate bonds, municipal bonds, preferred stock, and mortgage-backed securities. Naked call options are not eligible for the program. Options Transactions Policy: Based on household assets or activity level $500,000 in assets or $20,000 in annual commissions 60% discount $250,000 in assets or $10,000 in annual commissions 50% discount Other Prudential Securities employees 40% minimum discount NASD guidelines state that commissions on agency and principal trades cannot exceed 9.9% for equities, except to the extent that they fall within our Minimum Ticket Policy (please see Exceptions for Options). Exceptions for Options: Closing transactions calculated below the minimums will not be raised. Mutual funds Prudential Securities employees continue to be entitled to purchase mutual funds at net asset value. Prudential employees are eligible to purchase proprietary mutual funds at net asset value and many non-proprietary funds at net asset value. Unit Investment Trusts (UIT) Discounts are offered on Prudential UITs, and vary based upon the maturity of the UIT. Your Financial Advisor must indicate that you are an employee on the order ticket to receive the discount. Margin rate no change Employees will be charged the Prudential Securities base rate plus 50 basis points on all margin debits. 5

7 Additional Policy Highlights: Financial Advisors will now receive grid payout on FA or FA-related Prudential Advisor accounts. FAs will continue to receive 50% payout (less retention) on employee accounts in Prudential Advisor I and grid payout, plus five percentage points on employee accounts in Prudential Advisor II. Financial Advisors will continue to receive grid payout, plus five percentage points on employee transactions and on FA and FA-related transactions in managed programs (MACS, PIIMA, PSPM, Quantum, PruChoice, and Target). As per Firm policy, there will be no payout on FA or FA-related equity trades. The minimum ticket charge remains in effect. For equities, the minimum ticket is the greater of $55, $0.06/share, or 0.25% of the principal amount of the trade to a maximum of $250. Neither the $0.06/share nor the 0.25% of the principal amount of the trade may total more than 5% of the principal value. Gift transactions, defined as less than $1,100 of principal value, are exempt from the Minimum Ticket Policy. For options, the minimum ticket is the greater of $40 or $0.05/share. The latter may not exceed 9.9% of principal value. For IRAs, the minimum ticket is $20. Discount sharing and small ticket policies do not apply to employee transactions. 6

8 Prudential Financial is a service mark of Prudential, Newark, NJ, and its affiliates. June