What are the risks?

There are some general considerations associated with securities lending to keep in mind.

• Counterparty risk: If the borrower defaults, Betterment Securities’ clearing firm Apex must return your shares using the pledged collateral. In the rare instance that a borrower defaults, you have rights to access the collateral pledged by the borrower. The collateral is kept in a secure custody account and administered by a trustee. Betterment Securities’ disclosures and Apex’s terms provide more details.
• Variable income: Lending income depends on market demand and may fluctuate monthly. There’s no guarantee your shares will be lent or that you’ll earn income every month.
• Substitute payments taxation: Cash substitute payments are made in place of dividend payments (cash paid in lieu of dividends), and are taxed at ordinary income rates rather than preferential dividend rates—you may wish to consult a tax advisor.