FINRA

NASD RULES 2110, 2310, 3110: NAEFKE FALSIFIED CUSTOMERS' NET WORTH ON HIS FIRM'S ILLIQUID INVESTMENT LETTERS AND ACCOUNT INFORMATION FORMS TO CIRCUMVENT HIS FIRM'S POLICIES, WHICH IN TURN PERMITTED INVESTMENTS IN AMOUNTS THAT THE FIRM WOULD HAVE OTHERWISE PROHIBITED AND MADE UNSUITABLE INVESTMENT RECOMMENDATIONS. THE FIRM HAD INTERNAL GUIDELINES THAT LIMITED THE AMOUNTS CUSTOMERS WERE PERMITTED TO INVEST IN ILLIQUID INVESTMENTS; AND THE INTERNAL POLICY FURTHER STATED THAT ILLIQUID INVESTMENTS FOR OLDER INVESTORS REQUIRED ADDITIONAL REVIEW AND CONSIDERATION PERTAINING TO THEIR NEEDS FOR LIQUIDITY AND INCOME. A CUSTOMER WAS 50 YEARS OLD AND HAD A NET WORTH OF APPROXIMATELY $375,000; HER ADJUSTED NET WORTH WAS ABOUT $150,000. NAEFKE RECOMMENDED THAT THE CUSTOMER INVEST IN HER INDIVIDUAL RETIREMENT ACCOUNT, A TOTAL OF $100,000 IN FOUR PUBLICLY REGISTERED, NON-TRADED REITS; AND IN CONJUNCTION WITH THOSE INVESTMENTS, NAEFKE SUBMITTED TO HIS FIRM, THREE ILLIQUID INVESTMENT LETTERS, FOR WHICH ON EACH LETTER, NAEFKE FALSELY STATED THAT THE CUSTOMER'S ADJUSTED NET WORTH WAS $2 MILLION. ANOTHER CUSTOMER WAS 87 YEARS OLD AND HAD A NET WORTH OF ABOUT $250,000. NAEFKE RECOMMENDED THAT THE CUSTOMER INVEST ABOUT $199,000 IN TWO REITS, ONE LIMITED PARTNERSHIP AND ONE DIRECT PARTICIPATION PROGRAM; AND IN CONNECTION WITH THESE INVESTMENTS, NAEFKE SUBMITTED TO HIS FIRM AT LEAST TWO ACCOUNT INFORMATION FORMS ON WHICH HE FALSELY STATED THAT THE CUSTOMER'S NET WORTH WAS BETWEEN $1,000,000 AND $2,999,999 AND FOUR ILLIQUID INVESTMENT LETTERS IN WHICH HE FALSELY STATED THAT THE CUSTOMER'S ADJUSTED NET WORTH WAS $1,000,100. NAEFKE SUBMITTED DOCUMENTS THAT KNOWINGLY FALSIFIED CUSTOMERS' NET WORTH, AND THEREBY ACTED UNETHICALLY; NAEFKE KNOWINGLY CAUSED HIS FIRM'S BOOKS AND RECORD TO BE INACCURATE AND CUSTOMERS TO INVEST IN ILLIQUID INVESTMENTS IN AMOUNTS THAT HIS FIRM WOULD HAVE OTHERWISE PROHIBITED; AND NAEFKE IMPEDED HIS FIRM'S ABILITY TO SUPERVISE ADEQUATELY THE SUITABILITY OF HIS RECOMMENDATIONS. NAEFKE RECOMMENDED AND SOLD ILLIQUID INVESTMENT INTERESTS IN PUBLICLY REGISTERED NON-TRADED REITS, DIRECT PARTICIPATION PROGRAMS, AND A LIMITED PARTNERSHIP TO TWO CUSTOMERS TOTALING ABOUT $299,000. WHEN NAEFKE MADE THE RECOMMENDATIONS AND SALES, HE DID NOT HAVE REASONABLE GROUNDS FOR BELIEVING THAT THE RECOMMENDATIONS WERE SUITABLE BASED ON EACH CUSTOMER'S OTHER SECURITY HOLDINGS, FINANCIAL SITUATION AND NEEDS.

Acceptance, Waiver & Consent(AWC)

Bar (Permanent)

All Capacities

5/18/2011

WITHOUT ADMITTING OR DENYING THE FINDINGS, NAEFKE CONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS; THEREFORE, HE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY.