1123541--3/5/2010--PENSON_WORLDWIDE

related topics

{system, service, information}

{stock, price, operating}

{regulation, government, change}

{operation, international, foreign}

{condition, economic, financial}

{regulation, change, law}

{financial, litigation, operation}

{capital, credit, financial}

{property, intellectual, protect}

{provision, law, control}

{control, financial, internal}

{customer, product, revenue}

{debt, indebtedness, cash}

{product, market, service}

{loan, real, estate}

{acquisition, growth, future}

{personnel, key, retain}

{investment, property, distribution}

{competitive, industry, competition}

Our clearing operations could expose us to legal liability for errors in performing clearing functions and improper activities of our correspondents. Continuing low, short-term interest rates have negatively impacted 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 anticipated transition of certain support services to Ridge and Broadridge may involve unforeseen delays, costs or technological complications. If we are unable to transition our services efficiently to Broadridge, we may experience interruptions or difficulties with respect to the services Broadridge is expected to provide. 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. We may not be able to protect our intellectual property rights against unauthorized use and infringement by third parties, and our failure to do so may weaken our competitive position, and any legal claim we seek to pursue may require us to incur substantial cost and distract management and us from conducting our business. If our clients account information is misappropriated, we may be held liable or suffer harm to our reputation. We may be subject to material litigation proceedings that could cause us significant reputational harm and financial loss. 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. A failure in the operational systems of third parties could significantly disrupt our business and cause losses. 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, in which case we would lose the revenues generated by such correspondents. 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. Our inability to obtain credit on favorable terms could significantly restrict our business activities Covenants in our credit agreement will restrict our business in many ways. Our revenues may decrease due to declines in trading volume, market prices, liquidity of securities markets or proprietary trading activity. Continued market instability could negatively affect our operations and financial condition. Our significant non-U.S. operation exposes us to global exchange rate fluctuations that could impact our profitability. The growth of electronic trading and our increasing provision of direct market access to our correspondents may subject us to additional market exposure. Requirements to close out fails resulting from short sales could increase our costs and adversely affect our securities lending business. 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 or determine not 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 we could suffer significant reputational and financial loss. 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 control over financial reporting may not be effective and our independent registered public accounting firm may not be able to provide an attestation report as to their effectiveness, which could have a significant and adverse effect on our business and reputation.

Full 10-K form ▸

1123541--3/5/2010--PENSON_WORLDWIDE_INC