1123541--3/30/2007--PENSON_WORLDWIDE

related topics

{system, service, information}

{stock, price, operating}

{operation, international, foreign}

{regulation, government, change}

{regulation, change, law}

{acquisition, growth, future}

{customer, product, revenue}

{condition, economic, financial}

{provision, law, control}

{financial, litigation, operation}

{control, financial, internal}

{loan, real, estate}

{debt, indebtedness, cash}

{product, market, service}

{personnel, key, retain}

{property, intellectual, protect}

{competitive, industry, competition}

We depend on a limited number of clients for a significant portion of our clearing revenues. Our clearing operations could expose us to legal liability for errors in performing clearing functions and improper activities of our correspondents. Sharp decreases in short-term interest rates would negatively impact the profitability of our margin lending business. Our margin lending business subjects us to credit risks and if we are unable to liquidate an investor s securities when the margin collateral becomes insufficient, the profitability of our business may suffer. We rely, in part, on third parties to provide and support the software and systems we use to provide our services. Any interruption or cessation of service by these third parties could harm our business. Our products and services, and the products and services provided to us by third parties, may infringe upon intellectual property rights of third parties, and any infringement claims could require us to incur substantial costs, distract our management or prevent us from conducting our business. If our clients account information is misappropriated, we may be held liable or suffer harm to our reputation. Any slowdown or failure of our computer or communications systems could subject us to liability for losses suffered by our clients or their customers. If our operational systems and infrastructure fail to keep pace with our anticipated growth, we may experience operating inefficiencies, client dissatisfaction and lost revenue opportunities. If we are unable to respond to the demands of our existing and new clients, our ability to reach our revenue goals or maintain our profitability could be diminished. Our existing correspondents may choose to perform their own clearing services as their operations grow. Our ability to sell our services and grow our business could be significantly impaired if we lose the services of key personnel. We may face risks associated with potential future acquisitions that could reduce our profitability or hinder our ability to successfully expand our operations. Restrictive covenants in our credit facilities may limit our ability to engage in certain transactions. We recently revised our operational strategy for our U.K. operations, and if it is not successful our financial results or growth prospects may be harmed. Our revenues may decrease due to declines in trading volume, market prices, liquidity of securities markets or proprietary trading activity. Our significant non-U.S. operations expose us to global exchange rate fluctuations that could impact our profitability. General economic and political conditions and broad trends in business and finance that are beyond our control may contribute to reduced levels of activity in the securities markets, which could result in lower revenues from our business operations. Our quarterly revenue and operating results are subject to significant fluctuations. Our involvement in futures and options markets subjects us to risks inherent in conducting business in those markets. We may not be able to hedge our foreign exchange risk. The securities and futures businesses are highly dependent on certain market centers that may be targets of terrorism. Risks related to government regulation All aspects of our business are subject to extensive government regulation. If we fail to comply with these regulations, we may be subject to disciplinary or other action by regulatory organizations, and our business may be harmed. The regulatory environment in which we operate has experienced increasing scrutiny by regulatory authorities in recent years and further changes in legislation or regulations may affect our ability to conduct our business or reduce our profitability. If we do not maintain the capital levels required by regulations, we may be subject to fines, suspension, revocation of registration or expulsion by regulatory authorities. Procedures and requirements of the USA PATRIOT Act may expose us to significant costs or penalties. Risks related to our corporate structure Our discontinued operations expose us to legal and other risks. Provisions in our certificate of incorporation and bylaws and under Delaware law may prevent or frustrate a change in control or a change in management that stockholders believe is desirable. Risks related to our requirements as a public company Our stockholders could be harmed if our management and larger stockholders use their influence in a manner adverse to other stockholders interests. The price of our common stock may be volatile. Our internal controls over financial reporting may not be effective and our independent auditors may not be able to certify as to their effectiveness, which could have a significant and adverse effect on our business and reputation.

Full 10-K form ▸

1123541--3/30/2007--PENSON_WORLDWIDE_INC