Client filed a complaint with Lincoln Financial Group alleging the fees associated with the variable annuity contract that he purchased were never disclosed. Our review found the fees were all properly disclosed on the new account documents. The client acknowledged these fees with his signature and date on the account documents.

$10,757.00

STATE OF ILLINOIS

SECTION 130.110 OF RULES AND REGULATION UNDER THE ILLINOIS SECURITIES LAW OF 1953, SECTION 8.E(1)(J) PROVIDES THAT THE ADDITIONAL FEE FOR THE FAILURE TO FILE OR FILE TIMELY ANY REQUIRED POST REGISTRATION OR POST NOTIFICATION DOCUMENT (OTHER THAN STATEMENT OF FINANCIAL CONDITION OR FINANCIAL STATEMENT) IS $50.00. BY MEANS OF THE STIPULATION, RESPONDENT HAS ACKNOWLEDGED AND AGREED THAT HE SHALL BE LEVIED COSTS INCURRED DURING THE INVESTIGATION OF THIS MATTER IN THE AMOUNT OF $750.00, SAID AMOUNT IS TO BE PAID BY CERTIFIED OR CASHIER'S CHECK, MADE PAYABLE TO THE OFFICE OF THE SECRETARY OF STATE, SECURITIES AUDIT AND ENFORCEMENT FUND REGARDING DISCIPLINARY PROCEEDING 2010025367602

Dismissed

FINRA

ARTICLE V, SECTION 2(C) OF THE FINRA BY-LAWS, FINRA RULES 1122 AND 2010, NASD RULE 2110, AND INTERPRETIVE MATERIAL 1000-1: COVINGTON WAS OBLIGATED TO UPDATE HIS FORM U4 TO DISCLOSE THAT HE WAS SUBJECT TO IRS TAX LIENS. COVINGTON FAILED TO ENSURE THAT HIS FORM U4 WAS UPDATED TO DISCLOSE THE TAX LIENS UNTIL WELL AFTER HE WAS REQUIRED TO DO SO UNDER NASD AND FINRA RULES.

Acceptance, Waiver & Consent(AWC)

Civil and Administrative Penalty(ies)/Fine(s)

$5,000.00

Suspension

ANY CAPACITY

30 DAYS

1/22/2013

2/20/2013

WITHOUT ADMITTING OR DENYING THE FINDINGS, COVINGTON CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS, THEREFORE HE IS FINED $5,000 SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR 30 DAYS. THE SUSPENSION IS IN EFFECT FROM JANUARY 22, 2013 THROUGH FEBRUARY 20, 2013. FINE PAID IN FULL ON 1/11/2013.

EDWARD JONES

Permitted to Resign

THE FIRM'S INVESTIGATION REVEALED THERE WERE MULTIPLE UNSATISFIED LIENS GOING BACK SEVERAL YEARS THAT HAD NOT BEEN DISCLOSED BY COVINGTON TO THE FIRM. COVINGTON HAD ALSO ACCEPTED FUNDS FROM A CLIENT INTO AN OUTSIDE BUSINESS VENTURE OWNED BY COVINGTON. AT OR AROUND THE SAME TIME THIS OCCURRED, COVINGTON ARRANGED TO PURCHASE AN AUTOMOBILE FOR THIS CLIENT ON CREDIT DUE TO THE CLIENT'S POOR CREDIT HISTORY PRECLUDING THE CLIENT FROM PURCHASING THE VEHICLE THEMSELVES. THIS ARRANGEMENT WAS NOT ACCURATELY DISCLOSED TO THE FIRM.

IRS REVENUE AGENT FAILED TO NOTIFY WHEN HE WROTE LIENS AS WAS STANDARD OPERATING PROCEDURE

2/08-3/08; CLIENT STATES HE DOES NOT UNDERSTAND WHY HE SHOULD PAY EDWARD JONES AND THE FA WHEN WE HAVE CONTRIBUTED SO LITTLE TO HIS FINANCIAL WELL BEING. CLIENT STATES HIS CORRESPONDENCE SHOULD NOT BE CONFUSED WITH A DISGRUNTLED CLIENT WHO HAS LOST MONEY AS A RESULT OF THE MARKET DOWNTURN, HE JUST CANNOT SEE HOW HE WAS ASSISTED IN GOOD TIMES AND/OR BAD. CLIENT STATES HE REALIZED HE WANTED OUT OF PUTNAM AND QUESTIONS THE FA'S SUGGESTIONS FOR REINVESTMENT. CLIENT STATES HE STARTED WITH $78,000 AND IS DOWN TO $52,000.

$5,000.00

ACCORDING TO OUR RECORDS, VARIOUS AMERICAN FUNDS WERE PURCHASED IN THE ACCOUNT ON MARCH 3, 2008. AT THE TIME OF THE PURCHASES, THE CLIENT WOULD HAVE RECEIVED TRADE CONFIRMATIONS AS WELL AS THE APPROPRIATE PROSPECTUSES. IN REVIEWING THE TRANSACTIONS, IT APPEARS THE APPROPRIATE BREAKPOINTS (I.E. REDUCED SALE CHARGES) WERE APPLIED. IN ADDITION, IT DOES NOT APPEAR THE MUTUAL FUNDS (OR THE STOCKS) PURCHASED IN THE ACCOUNT ARE OUTSIDE THE SCOPE OF THE OBJECTIVES OF THE ACCOUNT. EXPLAINED WHILE WE UNDERSTAND THE CLIENT'S CONCERNS RELATED TO THE DECLINE IN THE VALUE OF THE ACCOUNT, MARKET FLUCTUATION IS ONE OF THE RISKS OF OWNING INVESTMENTS. BASED ON OUR REVIEW, IT IS OUR OPINION THE FA MADE HIS RECOMMENDATIONS IN GOOD FAITH AND THE PURCHASES WERE MADE WITH THE CLIENT'S KNOWLEDGE AND AUTHORIZATION.

CLIENT IS BEING REPRESENTED BY AN ATTORNEY WHO IS ALLEGING THAT THE CLIENT WAS NOT PUT IN INVESTMENTS SUITABLE FOR HER AGE, LIMITED FINANCIAL RESOURCES AND EXPERIENCE. CLIENT'S ATTORNEY CLAIMS CLIENT HAS LOST APPROXIMATELY $41,000 AND IS REQUESTING COPIES OF ALL ACCOUNT STATEMENTS IN ORDER TO BE ABLE TO PROPOSE A MEANINGFUL SETTLEMENT OFFER.********* ARBITRATION DESCRIPTION: ALLEGATIONS OF VIOLATIONS OF THE INDIANA SECURITIES ACT, NEGLIGENCE, AND UNSUITABILITY, IN RECOMMENDING HARTFORD MUTUAL FUNDS WHICH THE CLAIMANT ALLEGES WERE TOO AGGRESSIVE. (AMOUNT CLAIMED: $40,000 PLUS INTEREST AT 8%, PLUS REASONABLE ATTORNEY'S FEES.

$41,000.00

$24,432.41

IN 2000, THE CLIENT CAME TO THE IR TO DISCUSS HER CONCERNS WITH AN ANNUITY SHE HAD ANNUITIZED WHICH WAS ABOUT TO EXPIRE AND HER NEED FOR INCOME. THE IR DISCUSSED WITH THE CLIENT IN DETAIL TO PLACE SOME OF HER MONEY INTO AN ANNUITY AND TO BEGIN TAKING SYSTEMATIC WITHDRAWS AND PLACE THE ADDITIONAL PROCEEDS IN MUTUAL FUNDS WHICH WOULD PROVIDE HER GROWTH AND INCOME AND THE CLIENT ALSO OBTAINED AN ADDITIONAL BREAKPOINT. BASED UPON OUR RESEARCH IT DOES NOT APPEAR AS IF THE INVESTMENTS WERE UNSUITABLE. IT APPEARS THE CLIENT WAS GIVEN THE NECESSARY INFORMATION TO MAKE AN INFORMED DECISION. CLAIM DENIED.*******ARBITRATION RESOLUTION: RESPONDENTS ARE LIABLE FOR A TOTAL OF $24,432.41 IN COMPENSATORY DAMAGES. (EDWARD JONES IS LIABLE FOR $6,108.10 AND IR IS LIABLE FOR $18,324.31.)