Newly Hired Financial Advisor Prior Acts Errors & Omissions

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1 Newly Hired Financial Advisor Prior Acts Errors & Omissions June, 2010 Updated November 2010 John Niedernhofer Janet Humphrey Guilda Mora Julia Jacoby

2 New Financial Advisor Prior Acts E&O Coverage PRIOR ACTS E&O PAGE 1 COVERAGE: Continental Casualty, through LPL Financial s Errors & Omissions insurance policy, to provide new Financial Advisors Prior Acts or tail" coverage for their prior Broker/Dealer E&O exposure STRUCTURE: OPTION 1 Limit: $2,000,000 Each Claim $50,000,000 in the Aggregate 1 Limit: $1,000,000 Each Claim $1,000,000 in the Aggregate 2 Prior Acts Date: the date the newly contracted advisor became continuously insured without interruption under any security broker dealer professional liability policy (subject to written proof of such coverage at the time the insured gives written notice to the insurer of a claim under this policy) RETENTIONS: OPTION 1 $ 100,000 Per Claim $ 10,000 Per Claim except $ 20,000 Per Claim involving the sale and administration of employee benefit plans, including individual retirement accounts, Keogh retirement plans, and group or ordinary person or profit sharing plans PROCESS: New Advisors wishing to purchase Retention Option 2 must complete and submit an application for approval within 30 days of beginning work with LPL Financial Advisors with prior claims are may not be eligible to participate in Option 2 1 $50,000,000 Aggregate not applicable to New York Financial Advisors 2 $1,000,000 Aggregate not applicable to New York Financial Advisors

3 PRIOR ACTS E&O PAGE 2 COST: OPTION 1 Option 1 is included in the LPL Financial program at no charge to the Advisors $800 flat fee Advisors who are securities or securities & insurance licensed OR $479 flat fee Advisors who are insurance licensed only COST IS FULLY EARNED TO THE POLICY EXPIRATION DATE OF DECEMBER 30, 2011 AND NO REFUND WILL BE GIVEN IF YOU LEAVE LPL BEFORE THAT DATE

4 PRIOR ACTS E&O PAGE 3 Exclusions - per policy form, including but not limited to: Prior Litigation Intentional/Criminal Acts Bodily Injury/Property Damage Contractual Liability/Promises/Guarantees Specified Services - actuary, accountant, attorney, property or casualty agent, real estate agent or third party administrator services Premium/claim/tax monies/fees and commissions Commingling/Illegal Profit Insolvency, however, defense cost coverage is provided subject to a limit of $250,000 per claim/$250,000 Aggregate per Insured/$1,000,000 Total Policy Aggregate. The claim must also arise from placement of coverage with an admitted Insurer with an A.M. Best rating of A- or better at the time of placement Employee Benefit Plans designed or sponsored by the insured or any entity owned or controlled by the insured or in which the insured is a participant or trustee Sale or servicing of any 1. coverage, alleged coverage or plan placed with any form of Multiple Employer Welfare Arrangement as defined by the Employee Retirement Income Security Act of 1974, as amended, or any employee benefits plan involving self funding in whole or in part, by any employer, union, or employment related entity; 2. products or services not approved by LPL Financial Corporation; 3. commodities, commodities futures contracts, or any type of option contract with the exception of covered call options and covered put options and with the exception of alternative investments approved by the Insured Broker/Dealer and for which the Registered Representative is approved to sell; 4. promissory notes; 5. ETS pay phone investments or other similar type investments 6. viatical settlements, viatical insurance benefits, viatical investment pools or any security backed by viatical settlements, viatical products including viatical settlement and viatical contracts; provided,however, this exclusion shall not apply to the purchase or sale of Life Settlement Contracts; 7. Stranger Originated Life Insurance (STOLI) or Speculator Initiated Life Insurance (SPINLIFE) ; Discretionary Authority the exercise of discretionary authority with regard to the management or disposition of assets; however, this exclusion shall not apply to the activities of the Insured when approved for such by LPL Financial Corporation Anti-trust Non-public Information Unlicensed Entity Investment Banking Activities Securities below Minimum Capitalization Levels Trading outside of the USA

5 PRIOR ACTS E&O PAGE 4 Subjectivities: Coverage availability under Option 2 is based upon no prior claim activity New Advisors wishing to purchase Retention Option 2 must complete and submit an application for approval within 30 days of beginning work with LPL Financial Prior Acts coverage under the Continental Casualty policy and the LPL Financial E&O program is subject to the Financial Advisor providing written proof of prior coverage at the time notice is given to Continental Casualty of a claim. If Option 1 is chosen Option 2 will no longer be available at a later date