CLIENT ALLEGED THAT MR. GREGORY FAILED TO FOLLOW INSTRUCTIONS WHEN SETTING UP AN ANNUITY BY ERRONEOUSLY REGISTERING [FAMILY MEMBER] AS THE OWNER OF THE ANNUITY ON OCTOBER 21, 2001. DUE TO THIS FAILURE, [CUSTOMER] INCURRED A TAX LIABILITY IN THE AMOUNT OF $16,500.00.

$16,750.00

$250,000.00

REGISTERED REP WAS NOT MADE AWARE OF THE $250,000 CLAIM MADE AGAINST MORGAN STANLEY UNTIL AFTER IT HAD BEEN SETTLED. CLIENT HAD PURCHASED 2 VAR. ANNUITIES AND CLIAMED THAT WHEN REQUESTING A CHANGE OF OWNERSHIP FOR 1 VAR.ANNUITY THAT IT TRIGGERRED A TAX CONSEQUENCE OF $16,000. REP DENIES THAT BOTH ANNUITIES WERE MIS-TITLED INITIALLY AND ADMITS NO WRONGDOING. CLIENT CHANGED OWNERSHIP TITLE OF ONLY 1 VAR. ANNUITY DIRECTLY W/INSURANCE COMPANY.

ALLEGED UNAUTHORIZED TRADING AND MISREPRESENTATION

$114,000.00

$62,000.00

SETTLEMENT AMOUNT $62,000 BY SHEARSON THE CLIENT [CUSTOMER] AND I HAD A PERFECTLY NORMAL AND SATISFACTORY RELATIONSHIP UNTIL AFTER THE CRASH OF 1987 WHEN CLIENT COMPLAINED OF UNSATISFACTORY PERFORMANCE. I NOTIFIED MANAGEMENT AND HANDED OVER CLIENT FILE. I HEARD NOTHING FURTHER AND LEFT FIRM IN JAN 1988. PRIOR TO JOINING MERRILL LYNCH, I CHECKED MY LICENSE WITH THE SEC/NASD AND WAS ADVISED ALL WAS CLEAR. INCIDENT CAME TO LIGHT WHEN JOINING MERRILL. I WAS NOT NOTIFIED OF PROCEDING AT ANY TIME AND WAS NOT AFFORDED OPPORTUNITY TO REPRESENT MYSELF. UNDERSTAND RECORDS WERE ADJUSTED IN 1993 TO REFLECT SETTLEMENT.