Common use of Check Writing Authority Clause in Contracts

Check Writing Authority. (a) First Clearing may, but is not required to, authorize certain of Broker’s employees to sign checks to Broker’s customers for amounts due to, and requested by them, with respect to their accounts. Broker shall designate, in writing, the names of any employees it wishes to receive the authorization described in this Paragraph. All checks must be signed by two employees who have received written authorization from First Clearing. All expenses incurred in connection with the issuance of checks under the authority described in this Paragraph shall be charged to Broker. Broker remains responsible for the disbursement and delivery of such checks to its customers. Any lien on the customer’s property granted by the customer to Broker or First Clearing shall extend to any funds which may be segregated in a separate account in connection with the exercise of the authority described in this Paragraph. Broker has established, and will maintain and enforce, supervisory procedures with respect to the issuance of such instruments that are satisfactory to First Clearing, including the following minimum standards: (i) all check stock is maintained in a secure location; (ii) the cashiering staff is adequately trained and that each person is responsible and accountable for their specific duties relative to the distributions of assets from customer accounts; (iii) ensures that a written letter of authorization will be requested and obtained from the customer prior to the disbursement of customer funds to a third-party, mailed to an address other than the address on record, and/or released to a third-party for further delivery to the customer; (iv) that all voided checks will be recorded as such and returned to First Clearing; (v) will immediately place stop payments on any check that cannot be accounted for by customer notification or self-audit of check stock; (vi) management shall conduct unannounced self-audits of the entire cashiering process and check stock to ensure that these procedures are being adhered to and that the check stock is accounted for. (b) In addition, if First Clearing has granted such checkwriting authority to Broker , it is understood and agreed by the parties that with respect to Broker writing checks to Broker’s customers, Broker may do so only as agent of First Clearing, on a bank account established in the name of First Clearing. Further, this agency relationship is for the sole purpose expressed in this Paragraph 8.1.6(b) and Broker is not the agent of First Clearing for any other purpose.