Wells Fargo Bank Priority Credit Line is backed by the value of eligible account assets at Wells Fargo Advisors.
Fixed Rate Advances may be subject to a prepayment penalty. For details about Fixed Rate Advances, refer to the Wells Fargo Bank Priority Credit Line Agreement and Account Terms and Conditions delivered with your loan documents, or ask your financial advisor for a copy of the Agreement.
Credit Line proceeds may not be used to purchase or carry margin stock or pay down a margin account debit. Please refer to the Wells Fargo Bank Priority Credit Line Agreement and Account Terms and Conditions for additional restrictions on the use of proceeds.
Wells Fargo Advisors and its affiliates are not tax or legal advisors.
Certain restrictions apply to entity borrowers including sole proprietorships and irrevocable trust borrowers. For details, refer to the Wells Fargo Bank Priority Credit Line Agreement and Account Terms and Conditions delivered with your loan documents, or ask your financial advisor for a copy of the Agreement.
“Check” means a payable through draft that is similar in appearance and function to a traditional check but is written against and processed from your Wells Fargo Bank Priority Credit Line.
Securities-based lending has special risks and is not appropriate for everyone. If the market value of a client’s pledged securities declines below required levels, the client may be required to pay down the line of credit or pledge additional eligible securities in order to maintain it, or the lender may require the sale of some or all of the client’s securities. Wells Fargo Advisors, on behalf of Wells Fargo Bank, N.A., will attempt to notify clients of maintenance calls but is not required to do so. Clients are not entitled to choose which securities in their accounts are sold. The sale of their securities may cause clients to suffer adverse tax consequences. Clients should discuss the tax implications of pledging securities as collateral with their tax advisors. An increase in interest rates will affect the overall cost of borrowing. All securities and accounts are subject to eligibility requirements. Clients should read all Wells Fargo Bank Priority Credit Line documents carefully. The proceeds from the Wells Fargo Bank Priority Credit Line may not be used to purchase or carry margin stock or pay down a margin account debit. Margin stock is defined in Regulation U and includes, principally: (1) stocks that are registered on a national securities exchange or any over-the-counter security designated for trading in the National Market System; (2) debt securities (bonds) that are convertible into a margin stock; and (3) shares of most mutual funds. Securities held in a retirement account cannot be used as collateral to obtain a securities-based loan. Securities in a Wells Fargo Bank Priority Credit Line collateral account must meet collateral eligibility requirements.
There are conflicts of interest when Wells Fargo Advisors recommends that you use a loan secured by your Wells Fargo Advisors account assets as collateral. Wells Fargo Advisors and its financial advisors have a financial incentive to recommend the use of securities-based lending products rather than selling securities to meet client liquidity needs. Financial advisors will receive compensation on the outstanding loan balance in your Wells Fargo Bank Priority Credit Line account. In addition, your financial advisor’s compensation will be reduced if your interest rate is discounted below a certain level. This creates an incentive for financial advisors to recommend Wells Fargo Bank Priority Credit Lines and other securities-based lending products, such as Margin, as well as an incentive to encourage you to maintain a larger loan balance and to discourage interest rate discounts below a certain level. The interest you pay for the loan is separate from, and in addition to, other fees you may pay related to the investments used to secure the loan; such as ongoing investment advisory fees (wrap fees) and fees for investments such as mutual funds and exchange traded funds for which Wells Fargo Advisors and/or our affiliates receive administrative or management fees or other compensation. Specifically, Wells Fargo Advisors benefits if you draw down on your loan to meet liquidity needs rather than sell securities or other investments, which would reduce our compensation. When assets are liquidated pursuant to a maintenance call or demands for repayment, Wells Fargo Advisors and your financial advisor also will benefit if assets that do not have ongoing fees (such as securities in brokerage accounts) are liquidated prior to, or instead of, assets that provide additional fees or revenues to us (such as assets in an investment advisory account). Further, different types of securities have higher release rates than others, which can create a financial incentive for your financial advisor to recommend products, or manage the account, in order to maximize the amount of the loan.
Wells Fargo Bank, N.A. has a lien on the account assets that are used as collateral for Wells Fargo Bank Priority Credit Line accounts. We will act to protect ourselves as the lender in connection with the loan and this may be contrary to your interests and/or investment objectives. This lien also creates a conflict of interest with respect to the recommendations your financial advisor makes to you. For example, your financial advisor may recommend that you allocate your investments to your collateral account pledged for the loan rather than to another account that is not pledged. Also, your financial advisor may recommend an investment solely to minimize the risk of loss with respect to the collateral.
Wells Fargo Bank Priority Credit Lines are offered by Wells Fargo Bank. N.A. as the lender, in partnership with Wells Fargo Clearing Services, LLC as agent, servicer and intermediary holding the collateral accounts. Wells Fargo Bank, N.A. is a banking affiliate of Wells Fargo & Company. Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC, and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliate of Wells Fargo & Company.
