Disclosure of SEC Required Order Execution and Routing Information

SMH Capital (“SMH”) is a NASDAQ market maker. SEC Rule 605 (formerly SEC Rule 11Ac1-5) requires OTC market makers, exchange market makers, national securities exchanges, and others to make available monthly reports of statistical data regarding order execution for "covered orders" as defined under the Rule.

SEC Regulation NMS, Rule 605 Reports

August, 2008 SMHI had no covered orders under SEC Reg. NMS, Rule 605 for this month.
July, 2008 SMHI had no covered orders under SEC Reg. NMS, Rule 605 for this month.
June, 2008 SMHI had no covered orders under SEC Reg. NMS, Rule 605 for this month.

Pursuant to Rule 606 adopted by the Securities and Exchange Commission, SMH is presenting certain information with respect to orders executed during the preceding quarter. You can obtain this information by accessing the link below.

Please refer to: Pershing Order Routing Disclosure | Goldman Sachs Order Routing Disclosure

Please note that the vast majority of SMH's customer trading activity is institutional in nature. Due to the size and trading strategies employed by these customers, most institutional orders are not subject to or relevant for Rule 605 or 606 reporting.

The SEC requires that the disclosure of a market center's order execution information be made available free and readily accessible to the public via a web site.

Historical performance results for investment indexes and/or categories generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have [the] effect of decreasing historical performance results.

 

Reimbursements for Training, Education, and Marketing

As representatives of SMH Capital, our financial advisors have the ability to build investment portfolios based on the specific needs and goals of each individual client. SMH Capital offers a wide variety of approved products and programs including stocks, bonds, options, mutual funds, annuities, life insurance, alternative investments, college savings plans, and asset management programs. Because there are hundreds of investment choices within this universe of approved products, SMH Capital may focus on a select group of companies that meet SMH Capital's due diligence criteria and assist SMH Capital in training, education and marketing. These product sponsors may have greater access to our advisors, if they are invited to market to, train and educate them on their products and industry related topics with the intent to better serve their mutual clients.

It is important to know that although the product sponsors pay some additional compensation to SMH Capital and/or its affiliates, clients do not pay more to purchase these products through SMH Capital than they would normally pay to purchase them through another broker/dealer. The payment of this additional compensation to SMH Capital by these product sponsors may pose a financial incentive for us to promote certain products over other products, although we believe that these arrangements do not compromise the advice your advisor provides to you.

SMH Capital is providing the following information to help you better understand the potential conflicts of interests regarding compensation that SMH Capital receives from the product sponsors whose investments we offer to you.

The additional amounts that these product sponsors pay SMH Capital vary from one sponsor to another and from one product to another.

Companies may at times send SMH Capital payments in recognition of our sales and marketing efforts, and may have additional opportunities to provide marketing services to our advisors. In addition, companies may pay marketing allowances to SMH Capital in connection with the sale of certain products and for training and educational meetings for our advisors. Product sponsors and other companies may reimburse up to 100 percent of the cost of due diligence, training and education/joint marketing meetings for our advisors, as permitted by industry rules. Sales of any products by SMH Capital advisors may qualify them for additional cash and non-cash compensation that may include support for their business activities, attendance at seminars, conferences and entertainment. Additionally, some investments, whether they are issued by a product sponsor or not, may pay higher rates of compensation than others (for example, commissions on equities are usually greater than those on bonds, and private placement offerings generally carry higher commissions than investments in publicly traded securities).


SMH Capital has in the past received compensation from:

KBS Real Estate
Inland Real Estate
Jackson National Insurance
Kensington Real Estate
Mewbourne Oil
Pacific Life
Salient Partners
Behringer Harvard Real Estate
Hines Real Estate
Dunham Funds
Pershing
Man Investments
Dempsey & Associates
Oppenheimer
American Funds
Prudential
Dividend Capital
Inland Investments
DBSI Group
John Hancock
DWS Scudder
Fidelity
Argus Realty
AIG SunAmerica