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July 1, 2012

Penson Sells Assets

By John D'Antona Jr.

Bad trades, illquid assets and clearing industry woes have sunk Penson Financial Services.

As a result, Penson has sold its clearing operations to PEAK6 Investments, which is forming a new entity, Apex Clearing, as a result of the acquisition. Days earlier, Penson sold its futures business to Knight Capital Group to raise cash.

Under the terms, Apex Clearing has agreed to acquire the correspondents, customer accounts and contracts of the securities division of Penson's U.S. broker-dealer subsidiary Penson Financial Services.

Apex Clearing is expected to begin operations following the completion of certain closing conditions and regulatory approval.

Lower equity trading volumes and interest rates have hurt the clearing business, according to one executive.

"Clearing firms are really suffering out here," the trader said. "There is no trading volume to support clearing, plus interest rates are so low that there isn't much money to be made on balances borrowed for margin account funding."

PEAK6 will provide the capital, management team, day-to-day operational oversight and risk management discipline necessary to run the Apex business. Danny Rosenthal, a senior partner at PEAK6, will be chief executive officer of Apex Clearing.

Penson will initially provide transitional services and retain a majority economic interest in Apex Clearing.

Additional details will be provided in subsequent Penson and Broadridge filings with the SEC.

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