Invest Disclosures

Unsettled Proceeds Sales

Please note that the rules for trading in a Cash Account are significantly different than the rules for trading in a Margin Account. There are situations when a sell transaction in a Cash Account using unsettled funds may violate Regulation T of the Federal Reserve Board (FRB).

The Securities and Exchange Commission (SEC) requires that most equity investment (stock) trades settle in one (1) business day. This settlement process is generally known in the brokerage industry as T+1 (trade day plus one business day = T+1). The rule also applies to Option contracts.

The Federal Reserve Board (FRB) Regulation T (Reg T) governs the lending of funds during the T+1 settlement process. In a cash account, selling shares purchased with the funds from another sale not yet settled can cause a Reg T violation.

Under Reg T, Ally Invest Securities LLC (“Ally Invest”) must receive the funds before a purchased security can be resold. If the security is sold prior to Ally Invest receiving the purchase funds, the credit from the sale will not be applied to the account and the account may be placed on a 90-day restriction for a Reg T or good faith violation (GFV). When an account is restricted for a Reg T violation, a broker must assist in placing orders.