IN LATE 2007, A FORMER FINANCIAL PLANNING CLIENT ("CLIENT") OF THE REGISTRANT'S FIRM, SOLD HIS BUSINESS. GIVEN THAT CHANGE IN HIS FINANCIAL SITUATION, HE SOUGHT THE REGISTRANT ADVICE REGARDING HIS PORTFOLIO. AMONG OTHER INVESTMENT VEHICLES, HE WANTED TO INVEST IN AN APARTMENT COMPLEX. AFTER THE REGISTRANT REVIEWED THE CLIENT FINANCIAL INFORMATION, GOALS AND OBJECTIVES, THE REGISTRANT ADVISED THE CLIENT THAT HIS OVERALL ASSET ALLOCATION WEIGHED AGAINST ADDITIONAL REAL ESTATE INVESTMENT. THE PRIMARY REASON FOR THIS ADVICE WAS RELATED TO THE CONCENTRATION OF REAL ESTATE IN THE CLIENT'S NET WORTH, THE CONCENTRATION WITHIN THE GEOGRAPHIC REGION OF OTHER REAL ESTATE ASSETS THAT THE CLIENT ALREADY OWNED, THE LARGE ADDITIONAL AMOUNT OF INVESTMENT FUNDS THAT HE WAS LOOKING TO ALLOCATE TO REAL ESTATE, THE REGISTRANT'S OPINION REGARDING THE "MACRO" VIEW OF THE ECONOMY AT THE TIME, AS WELL AS OTHER REASONS. THE CLIENT OPTED NOT TO FOLLOWING THE ADVICE OF THE REGISTRANT BUT INSTEAD FOLLOWED THE ADVICE OF HIS REAL ESTATE AGENT, AS WELL AS THE ADVICE OF OTHER REAL ESTATE INVESTORS, AND PURCHASED THE APARTMENT COMPLEX IN EARLY 2008. EXPERIENCING REGRET SOME TIME AFTER THE PURCHASE, THE CLIENT ACKNOWLEDGED IN WRITING THAT THE REGISTRANT'S ADVICE HAD BEEN CORRECT. THE CLIENT SUED HIS REAL ESTATE AGENT IN EARLY OF 2010 ALLEGING FRAUD, NEGLIGENT MISREPRESENTATION, CONSTRUCTIVE FRAUD, BREACH OF FIDUCIARY DUTY, AND FOR AN ACCOUNTING(REAL ESTATE AGENT MANAGE THE PROPERTY AFTER ITS PURCHASE). AFTER LOSING THE ARBITRATION CASE AGAINST HIS REAL ESTATE AGENTS, THE CLIENT FILED A CLAIM AGAINST THE REGISTRANT UNDER A NUMBER OF THEORIES OF PROFESSIONAL LIABILITY. EACH OF THE CLIENT'S CLAIMS AND ALLEGATIONS ARE FALSE AND REFUTABLE WITH DOCUMENTATION AND WITH CLIENT'S OWN WRITTEN ADMISSIONS.

$3,500,000.00

$225,000.00

AT THE END OF 2007 A FORMER FINANCIAL PLANNING CLIENT ("CLIENT") SOUGHT ADVICE CONCERNING THE PURCHASE OF AN APARTMENT COMPLEX. REGISTRANT EVALUATED THE CLIENT'S OVERALL FINANCIAL INFORMATION AND ADVISED CLIENT IN WRITING AGAINST PURCHASING ANY ADDITIONAL REAL ESTATE INVESTMENT GIVEN, AMONG OTHER THINGS, THE CLIENT'S THEN CURRENT ASSET ALLOCATION. CLIENT OPTED NOT TO FOLLOW THE EXPRESS ADVICE OF THE REGISTRANT AND INSTEAD FOLLOWED THE ADVICE OF HIS REAL ESTATE AGENT AND PURCHASED THE APARTMENT COMPLEX ANYWAY. CLIENT THEN ASKED FOR ASSISTANCE IN FINDING AN ALTERNATE SOURCE FOR THE FINANCING OF THE PROJECT SO CLIENT COULD COMPARE THAT WITH THE LENDING SOURCE PROVIDED BY CLIENT'S REAL ESTATE AGENT. REGISTRANT, WHO IS DULY LICENSED, REFERRED AN APARTMENT SPECIALIST MORTGAGE BROKER TO CLIENT AND ADVISED CLIENT IN WRITING THAT REGISTRANT WOULD RECEIVE A FEE IF THE CLIENT CHOSE THE LENDING SOURCE REFERRED BY REGISTRANT. THE CLIENT AGREED TO THIS ARRANGEMENT. THEREAFTER, CLIENT CHOSE THE LENDING SOURCE THAT REGISTRANT HAD REFERRED AND ASKED REGISTRANT TO ASSISTED IN FACILITATING THE GATHERING OF INFORMATION NEEDED BY THE LENDER FOR THE LOAN. CLIENT TOLD REGISTRANT THAT HE INTENDED TO HOLD ON TO THE APARTMENT COMPLEX FOR AT LEAST 10 YEARS. CLIENT EXPERIENCED REGRET SOMETIME AFTER THE PURCHASE OF THE APARTMENT COMPLEX WHEN THE ECONOMIC DOWNTURN IN THIS AREA SEVERELY IMPACTED THE REAL ESTATE MARKET AS A WHOLE. CLIENT SOLD THE APARTMENT COMPLEX FOR A LOSS IN EARLY 2012, WHICH WAS A SUBSTANTIALLY SHORTER INVESTMENT HOLDING PERIOD THAN CLIENT HAD INDICATED TO THE REGISTRANT BEFORE THE CLOSE OF ESCROW IN EARLY 2008. CLIENT MADE CLAIMS AGAINST THE REAL ESTATE BROKER THAT HANDLED THE TRANSACTION AS WELL AS THE REGISTRANT RELATING TO THE APARTMENT COMPLEX PURCHASE. REGISTRANT BELIEVED AND BELIEVES THAT THE CLIENT'S CLAIM HAD NO MERIT AND REGISTRANT WOULD HAVE PREFERRED THAT THE REGISTRANT'S INSURANCE CARRIER DEFEND THE MATTER THROUGH TRIAL. NEVERTHELESS, THE CLAIM AGAINST REGISTRANT WAS SETTLED BY REGISTRANT'S INSURANCE COMPANY AND REGISTRANT'S INSURANCE BROKER FOR LESS THAN 7% OF THE DEMAND AND LESS THAN THE INSURANCE COMPANIES ANTICIPATED PAYING FOR ATTORNEYS' FEES TO DEFEND THE CLAIMS. REGISTRANT REITERATES HIS POSITION THAT THE FORMER CLIENT'S CLAIM AGAINST THE REGISTRANT WAS PATENTLY FALSE AND FULLY DEFENSIBLE AND REGISTRANT DID NOT CONTRIBUTE ANYTHING TO THE SETTLEMENT.