PAYMENT FAQ

1. Why did I receive this check?

You are entitled to receive a payment from the 1st Global Settlement Distribution arising out of In the Matter of 1st Global Advisors, Inc., now known as Avantax Advisory Services, Inc. (“1st Global” or “Respondent”), United States Securities and Exchange Commission (“SEC”) Administrative Proceeding File No. 3-20685. In resolution of this matter, 1st Global agreed to undertake a distribution to investors (“Affected Investors”) in connection with its mutual fund share class selection practices with regard to its receipt of compensation pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“12b-1 fees”) and its receipt of cash sweep and no-transaction fees revenue sharing (collectively, “Revenue Sharing”), as well as its duty to seek best execution.

2. What does the SEC Order mean, without having to read all the paperwork?

Simply put, you held an account with 1st Global (now Avantax) that was impacted by the conduct addressed in the SEC Order and are receiving a settlement refund. The affected investments were held in advisory accounts from approximately 2014 through 2019.

3. Why did I receive this amount?

Payments to Affected Investors have been calculated based on information contained in the records of Respondent and third-party intermediaries. As described in the SEC’s Order Instituting Proceedings (“Order”), your payment represents: (a) the 12b-1 fees and Revenue Sharing payments attributable to you during the relevant periods (approximately 2014 through 2019); and (b) reasonable interest paid on such fees. Consequently, your payment is comprised of a “Fee” component and an “Interest” component. The payments are being made pursuant to a disbursement calculation that was submitted to, reviewed, and approved by the staff of the SEC.

4. Which of my investments was included in the SEC settlement? What funds was I invested in?

Investments included in the SEC Order include (i) mutual fund share chasses that paid fees to 1st Global’s affiliated broker pursuant to Rule 12b-1 under the Investment Company Act of 1940, (ii) certain mutual funds that generated “no-transaction fee revenue” for 1st Global’s affiliated broker, and (iii) cash sweep products that likewise resulted in 1st Global’s affiliated broker receiving revenue-sharing payments. These affected investments were those held in advisory accounts from approximately 2014 through 2019. If the client investor asks about the specific mutual fund or product, please recommend they contact their Financial Professional.

5. What happens if I do not cash the distribution check?

Once the distribution is closed, the funds no longer are available, and checks cannot be cashed. Checks WILL NOT be honored after the check stale date. All uncashed check proceeds will be returned to the SEC pursuant to the settlement Order.

6. If I want to deposit the payment back into the same account, how do I do that?

Current Avantax client accounts will receive a credit to their open account.

Former 1st Global clients (closed accounts) will be mailed a check made out to the original account registration and, if necessary, they may request to have the original check reissued.

7. What are the tax ramifications of this distribution?

Due to the complexities involved, we have included additional information about the tax consequences of this distribution in a Statement to Affected Investors (“SAI”), which is available on the Tax Information page of this website. The SAI is not intended as tax advice but describes the tax-reporting positions taken and points out some issues eligible investors should consider, including the capital and interest components of the payment in addition to the type of account involved. You should review the information in the SAI with your tax advisor.

8. How long do I have to cash the check?

The check must be negotiated within 90 days of the check date. It is important you cash your check(s) as soon as possible to ensure you receive all money allocated to you from the distribution. Checks WILL NOT be honored after the stale date.

9. What if I don't receive a check but I believe I should? What do I need to do if I disagree with the amount of the distribution check I received?

The payment amount was reviewed and approved by the SEC and includes an interest calculation. Payment amounts of less than $10.00 will not be distributed to those who are not current clients of Avantax, as agreed with the SEC due to the cost of processing small dollar amounts. Please see the website www.1stglobalsettlementdistribution.com for additional information or contact your Financial Professional to better understand your account holdings in 2014 through 2019, upon which the payments are based.

10. I have more than one account. Will I receive one check or multiple checks?

Depending on the account registration, address of record and eligibility, shareholders owning more than one account may receive one or more checks.

11. How can I contact 1st Global/Avantax?

For questions about current accounts held with Avantax, contact your Financial Professional. You also can reach out to Avantax Client Services at 866-218-8206, Option 2.

12. I work for a brokerage firm and 1st Global mailed one (or more) checks to us, and I don’t know what to do with them. What should I do?

Proceeds should be distributed to the Affected Investors. If you no longer have a relationship with the Affected Investor who received the check, you may return the check to 1st Global/Avantax with a letter explaining your decision to not accept the payment(s). Please mail to the address listed on the check.

13. My check(s) has been lost/destroyed. What should I do?

You can request a replacement check over the phone or by sending a signed letter of instruction (LOI) requesting a replacement check via email, fax or by using the following address.

Please forward your replacement request to:

1st Global Settlement Distribution
C/o DST Asset Manager Solutions, Inc. an SS&C Company
PO Box 219243
Kansas City, MO 64121-9243

Upon receipt, we will reissue a replacement check exactly as it was originally issued. Please allow 15 days from the date we receive your original request to receive the replacement check. Note you will have 30 days to negotiate the new check; otherwise, you may no longer be entitled to the proceeds.

14. I have an IRA/retirement account. What are the tax consequences for me?

You should consult with your financial advisor or tax professional to determine the appropriate tax treatment for your situation.

Due to the complexities involved, we have included additional information about the tax consequences of this distribution in a Statement to Affected Investors available on the Tax Information page of this website.

15. I am over 70½ and received this payment because of my IRA. Is this counted as part of my Required Minimum Distribution (RMD)?

You should consult with your financial advisor or tax professional prior to cashing this check to determine the potential tax consequences and appropriate tax treatment for your particular situation.

Due to the complexities involved, we have included additional information about the tax consequences of this distribution in a Statement to Affected Investors available on the Tax Information page of this website.

16. I received a check made payable to my custodian. What do I do with this check?

If your account is still with the custodian listed on the check, forward this check with a letter of instruction (LOI) to your current custodian to have them deposit the check into your account. Be sure to include your current account number with the correspondence.

What if my custodian has changed?

If your retirement account is with a different custodian send a letter of instruction (LOI) indicating your new custodian. Send the information to the address found on the face of your check. We will mail a new check to you so you can forward it to your current custodian. Remember to include a letter of instruction (LOI) explaining you want the check deposited into your account. Be sure to include your current account number with the correspondence. NOTE: You will have 30 days to negotiate the new check.

17. What is a custodian?

A custodian is an agent, bank, trust company or other organization that holds and safeguards an individual’s mutual funds or investment company’s assets for them.

18. What are the consequences of cashing this check (IRA only)?

You will not be able to cash this check as it is currently written because it is made payable to your custodian for you.

If your retirement account is still with the custodian listed on the check, forward this check with a letter of instruction (LOI) to your current custodian, and the money will be deposited into your retirement account. Be sure to include your current account number with the correspondence.

You should consult with your financial advisor or tax professional prior to cashing the check to determine the potential tax consequences and appropriate tax treatment for your situation.

Due to the complexities involved, we have included additional information about the tax consequences of this distribution in a Statement to Affected Investors available on the Tax Information page of this website.

19. Can I request my IRA check be made payable to myself?

If you wish to have this check made payable to yourself, you will need to do the following:

1. Send a letter of instruction (LOI) requesting it be made payable to you. In your letter of instruction, please include:

  1. Your date of birth.
  2. If the check is worth $600 or more, a completed Reissue IRA to Individual Distribution Form (the form is located on the distribution website),
2. Mail this information to the address found on the face of your check.

Please allow 30 days from the date we receive your original request to receive the replacement check. NOTE: You will have 30 days to negotiate the new check.

As always, you should consult with your financial advisor or tax professional prior to cashing this check to determine the potential tax consequences and appropriate tax treatment for your particular situation.

Due to the complexities involved, we have included additional information about the tax consequences of this distribution in a Statement to Affected Investors available on the Tax Information page of this website.

20. I received an IRA check made payable to a deceased family member. How can I have it made payable to myself?

If you wish to have this check made payable to yourself, you will need to do the following:

  1. Send a letter of instruction (LOI) requesting it be made payable to you (Note: if the check is for $1,000 or more, the letter must have a Medallion Signature Guarantee). It is important you include your date of birth.
  2. If the check is worth $600 or more, a completed Reissue IRA to Beneficiary Distribution Form (the form is located on the distribution website),
  3. In addition, if you are not the spouse of the deceased or the beneficiary of the IRA, we will require “Evidence of Appointment” which is legal documentation that indicated you are the authorized party to handle the decedent’s estate. Such documents are Letters Testamentary, Court Order, Letter of Administration, Letter of Appointment or copy of Last Will and Testament appointing beneficiaries or a copy of the designated IRA beneficiary form.
  4. You also must include a copy of the deceased’s death certificate. If the check amount is greater than $1,000, the death certificate must be certified.
  5. Send this information to the address located on the face of the check.
Please allow 30 days from the date we receive your original request to receive the replacement check. Note: You will have 30 days to negotiate the check; otherwise, you may no longer be entitled to the proceeds.

You should consult with your financial advisor or tax professional prior to cashing this check to determine the potential tax consequences and appropriate tax treatment for your particular situation.

Due to the complexities involved, we have included additional information about the tax consequences of this distribution in a Statement to Affected Investors available on the Tax Information page of the website.

21. I received an IRA check made payable to my deceased wife/husband/family member. How can I deposit it into my IRA?

If you wish to have this check made payable to your IRA, you will need to do the following:

  1. Send a letter of instruction (LOI) (if the check is for $1,000 or more, the letter must have a Medallion Signature Guarantee) listing your current custodian, requesting it be made payable to your IRA.
  2. If you are not the spouse of the deceased, we require a Letter of Testamentary, a copy of the will or a copy of the designated IRA beneficiary form.
  3. You also must include a copy of the deceased’s death certificate. (If the check is more than $1,000 it must be a certified copy of the death certificate.)
  4. Send this information to the address found on the face of the check.
  5. We will return the new check to you so you can forward it to your new Custodian. You should send the check to your Custodian with a letter of instruction (LOI) and what funds you want the check deposited into in your retirement account.
Please allow 30 days from the date we receive your original request to receive the replacement check. NOTE: you will have 30 days to negotiate the check; otherwise, you may no longer be entitled to the proceeds.

You should consult with your financial advisor or tax professional prior to cashing this check to determine the potential tax consequences and appropriate tax treatment for your particular situation.

Due to the complexities involved, we have included additional information about the tax consequences of this distribution in a Statement to Affected Investors available on the Tax Information page of this website.

22. My investment was in a tax-qualified plan. What should I do with this check?

If the check was made payable to the plan administrator and mailed to you and you are:

  1. Still a participant in the tax-qualified retirement plan, contact your Retirement plan administrator to coordinate the deposit of the check to your retirement plan.
  2. No longer are a participant in the tax-qualified plan but you are a Participant in another tax-qualified retirement plan, then you may affect a “direct rollover” to another eligible plan. The distribution must be rolled over within 60 days after receipt to be tax-free. Contact your plan trustee or administrator to coordinate the rollover.
  3. No longer a participant in the tax-qualified plan and you no longer are a participant in another tax-qualified retirement plan and you wish to have this check made payable to yourself, you will need to contact the Retirement Plan Trustee or Service Provider to negotiate the check you received. We are unable to reissue this check to you as it is considered Plan assets.
  4. If your plan no longer is active or has been abandoned, we will require the following documentation to comply with your request:
    • A copy of the Final Form 5500 for your former Retirement Plan (may be found on www.freeerisa.com),
    • A signed Abandoned Plan Affidavit Form, which can be found on the Tax Information page of this website, or it can be mailed to you,
    • If the check is worth $600 or more, a completed Reissue Non-IRA to Individual Distribution Form or Reissue Non-IRA to Beneficiary Distribution Form, which can be found on the Tax Information page of this website, or it can be mailed to you
Before you negotiate this check, you should consult with your financial advisor or tax professional to determine the potential tax consequences and appropriate tax treatment for your particular situation.

Due to the complexities involved, we have included additional information about the tax consequences of this distribution in a Statement to Affected Investors available on the Tax Information page of this website.

23. What is a Medallion Signature Guarantee (MSG) and where can I get one?

A Medallion Signature Guarantee (MSG) is a widely accepted way to protect you and the Funds by verifying the signatures on your request. Eligible participating members of the following programs may execute a Medallion Signature Guarantee: Securities Transfer Agents Medallion Program (STAMP); Stock Exchange Medallion Program (SEMP); and New York Stock Exchange, Inc., Medallion Signature Program (MSP). Many commercial banks, trust companies, credit unions, savings associations, brokerage firms, and registered broker-dealers can provide you with a Medallion Signature Guarantee. You should verify with the institution it is an acceptable (eligible) guarantor for the Stamp2000 Medallion Program prior to signing the request.

NOTICE FAQ

1. Why did I get this letter?

You received this letter and copy of the Order Instituting Administrative Proceedings (OIP) based on the settlement agreement reached with the Securities and Exchange Commission (the “SEC”). Notifying affected clients is a requirement of the settlement agreement and specified remedial actions with the SEC.

2. What does the notice and SEC settlement order mean, without having to read all of the paperwork?

The notice means you have been identified as an eligible investor based on the books and records maintained by 1st Global (now Avantax). In other words: there is record that you held an account through 1st Global that was impacted by conduct addressed in the SEC order.

3. Will I get a payment?

You may or may not receive a settlement payment in this matter based on a calculation method that was reviewed and approved by the SEC. Specifically, any calculation that would result in a $10 or less payment will not be issued per the settlement agreement with the SEC. Avantax is working to identify how payments will be made to current clients. Former clients of 1st Global will receive a check sent via US Mail sent to the same address as the notice and the OIP.

4. Do I need to submit a claim or “opt in” to be eligible to receive a payment?

No. You do not need to submit a claim. You have received this notice because you have already been identified as an impacted investor.

5. Can I opt out of this settlement?

You cannot opt in or out of the settlement. You were identified as an eligible investor based on the books and records maintained by 1st Global and, if the amount exceeds $10, you will receive a payment. What you elect to do with the payment is your choice.

6. Is this for real? How do I know this is not an attempted fraud?

This notice and settlement is real. To read more about the settlement and remediation efforts you can access the SEC website at sec.gov and search for Administrative Proceeding File No. 3-20685 or alternatively you may use the link found in the customer care website Links & Documents page at www.1stglobalsettlementdistribution.com

7. When will the payments be issued?

We anticipate that payments will be made in the 2nd or 3rd quarter 2022. Updates on the payment timing will be posed to the customer care website.

8. How much is my payment?

Payments are determined through a formula approved by the SEC. Avantax will make payment information available to financial professionals shortly before payments are made, likely in the summer 2022.

9. If I want to deposit the payment back into the same account, how do I do that?

10. Are there tax implications to receiving this payment?

Due to the complexities involved, we have included additional information about the tax consequences of this distribution in a Statement to Affected Investors (“SAI”), which is available on the “tax information” page of the www.1stglobalsettlementdistribution.com website. The SAI is not intended as tax advice but describes the tax reporting positions taken and points out some issues eligible investors should consider, including the capital and interest components of the payment in addition to the type of account involved. You should review the information in the SAI with your tax advisor.

11. Which of my investments was included in the SEC settlement? What funds was I invested in?

Investments included in the SEC order include (i) mutual fund share chasses that paid fees to 1st Global’s affiliated broker pursuant to Rule 12b-1 under the Investment Company Act of 1940, (ii) certain mutual funds that generated “no-transaction fee revenue” for 1st Global’s affiliated broker, and (iii) cash sweep products that likewise resulted in 1st Global’s affiliated broker receiving revenue sharing payments. These affected investments were those held in advisory accounts from approximately 2014 through 2019.

12. What can I do if I do not agree with the restitution amount?

Payment amounts will not be known until 1) the SEC approves the way payments will be calculated and 2) the SEC approves the payment amounts for each investor. The payment amount reviewed and approved by the SEC will include an interest calculation. This is not a settlement of a lawsuit and the approved payment amounts are not subject to change.

13. What can I do if I do not get a payment but think I should?

Payment amounts of less than $10.00 will not be distributed, as agreed with the SEC due to the cost of processing small dollar amounts. Please see question 12 for additional information or contact your Financial Professional to better understand your account holdings in 2014 through 2019 upon which the payments are based.

14. How can I contact 1st Global/Avantax?

15. How can I contact the SEC?