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You should consider the following points before engaging in a day trading strategy. For purposes of this notice, a “day trading strategy” means an overall trading strategy characterized by the regular transmission by a customer of intra-day orders to effect both purchase and sale transactions in the same security or securities.

Day trading can be extremely risky. Day trading generally is not appropriate for someone of limited resources and limited investment or trading experience and low risk tolerance. You should be prepared to lose all of the funds that you use for day trading. In particular, you should not fund day trading activities with retirement savings, student loans, second mortgages, emergency funds, funds set aside for purposes such as education or home ownership, or funds required to meet your living expenses. Further, certain evidence indicates that an investment of less than $50,000 will significantly impair the ability of a day trader to make a profit. Of course, an investment of $50,000 or more will in no way guarantee success.

Be cautious of claims of large profits from day trading. You should be wary of advertisements or other statements that emphasize the potential for large profits in day trading. Day trading can also lead to large and immediate financial losses.

Day trading requires knowledge of securities markets. Day trading requires in-depth knowledge of the securities markets and trading techniques and strategies. In attempting to profit through day trading, you must compete with professional, licensed traders employed by securities firms. You should have appropriate experience before engaging in day trading.

Day trading requires knowledge of a firm’s operations. You should be familiar with a securities firm’s business practices, including the operation of the firm’s order execution systems and procedures. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a stock suddenly drops, or if trading is halted due to recent news events or unusual trading activity. The more volatile a stock is, the greater the likelihood that problems may be encountered in executing a transaction. In addition to normal market risks, you may experience losses due to systems failures.

Day trading will generate substantial commissions, even if the per trade cost is low. Day trading involves aggressive trading and generally you will pay commission on each trade. The total daily commissions that you pay on your trades will add to your losses or significantly reduce your earnings. For instance, assuming that a trade costs $16 and an average of 29 transactions are conducted per day; an investor would need to generate an annual profit of $111,360 just to cover commission expenses.

Day trading on margin or short selling may result in losses beyond your initial investment. When you day trade with funds borrowed from a firm or someone else, you can lose more than the funds you originally placed at risk. A decline in the value of the securities that are purchased may require you to provide additional funds to the firm to avoid the forced sale of those securities or other securities in your account. Short selling as part of your day trading strategy also may lead to extraordinary losses, because you may have to purchase a stock at a very high price in order to cover a short position.

Potential registration requirements: Persons providing investment advice for others or managing securities accounts for others may need to register as either an “Investment Advisor” under the Investment Advisors Act of 1940 or as a “Broker” or “Dealer” under the Securities Exchange Act of 1934. Such activities may also trigger state registration requirements.

We do not disclose any nonpublic personal information about you to anyone, except as permitted by law and as required by our clearing firm, Penson Financial Services, Inc. Penson will send you a notice regarding its own privacy policy.

If you decide to close your account or become an inactive customer, we will adhere to the privacy policies and practices described in this notice.

Grossman & Co., LLC restricts access to your personal and account information to those employees who need to know that information to provide products or services to you. Grossman & Co., LLC maintains physical, electronic, and procedural safeguards to guard your nonpublic personal information.

Grossman & Co., LLC maintains a business continuity plan. If after a significant business disruption you cannot contact your registered representative, you should contact Dennis Grossman at 631-242-0603 or Robert Conway at 631-792-1902. In the event that you cannot contact us at either number, you should call our clearing firm, Penson Financial Services, Inc. at 800-696-3585 or 214-765-1100 and ask for the compliance department. Penson will provide you with access to your funds or securities, enter and process any securities trades, and almost anything else Grossman & Co., LLC would do, except give you investment advice.

Because of our sophisticated technology, Grossman & Co., LLC can be run from any PC connected to the internet, from any location. In the event that all customer records are destroyed at the firm, most can be recovered via the internet and the rest can be reproduced by our clearing firm. We rely on Penson for many critical systems.

Penson maintains an extensive business recovery plan that includes a disaster recovery site. The site is approximately 15 miles from its downtown Dallas office. Steel mesh reinforced walls on three sides and earth on the fourth side enclose the building. Security measures include biometric card readers, infrared cameras and manned surveillance by ADT. The server room is equipped with dual 10-ton air conditioners that back each other up.

The site has a capacity of 85 Penson employees with fully operational and functional desktop workstations and telephones. In the event of a significant business disruption, telephone numbers will be ported over to the site. The power supply is from a different electricity grid than the downtown office. In addition, Penson has installed a UPS with up to 24 hours of power. Penson tests its systems quarterly.

Grossman & Co., LLC has been in continuous operation since 1981 and expects to be able to respond to any emergency expeditiously. In addition, we are highly confident of Penson’s ability to respond to any emergency it faces due to the quality of its management personnel and its extensive recovery plan.

Links to sites outside of GrossmanTrading.com are provided for convenience of the user only. Grossman Trading and Grossman & Company, LLC DOES NOT guarantee the timeliness and accuracy of this information. Additionally, Grossman does not endorse any product or provider that may be affiliated with a third party provider. Users access third party websites at their own risk.

Grossman Trading / 2 Fox Hollow Court / Dix Hills, NY 11746 / PHONE 1-866-293-4116 / FAX 1-646-349-2902