ALLEGED BREACH OF FIDUCIARY DUTY, ALLEGED NEGLIEGENCE

$291,600.00

$291,600.00

ERNIE ARNOLD PAID THE SUM OF $3000.00 TO THE CLAIMANTS. ALL OF THE ACTIONS AND CONDUCTS INVOLVED IN PURCHASING THE SECURITIES IN THE ACCOUNT OCCURED PRIOR TO ERNIE ARNOLD JOINING THE FIRM AS COMPLIANCE OFFICER. THE PANEL FOUND ERNIE ARNOLD LIABLE FOR NOT DETECTING CONCENTRATION IN A SINGLE POSITION IN THE ACCOUNTS AS COMPLIANCE OFFICER.

NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

ON OCTOBER 29, 1998, DISTRICT NO. 2 NOTIFIED RESPONDENT ERNEST B. ARNOLD THAT THE LETTER OF ACCEPTANCE, WAIVER AND CONSENT NO. C02980068 WAS ACCEPTED; THEREFORE, HE IS CENSURED AND FINED $5,000 - (NASD RULE 2110 - A MEMBER FIRM, ACTING UNDER THE DIRECTION AND CONTROL OF ARNOLD, FAILED TO HAVE AND MAINTAIN SUFFICIENT NET CAPITAL).

Acceptance, Waiver & Consent(AWC)

Monetary/Fine

$5,000.00

Censure

FINED

I WAS APPOINTED CHEIF FINANCIAL OFFICER AND FINOP OF BSI IN JUNE 1995. BSI HAD AN ACCOUNTING STAFF OF 5 REPORTING TO THE COMPTOLLER, WHO REPORTED TO ME. AS A RESULT OF AN NASD EXAM TWO INVOICES ONE LEGAL BILL THE CORPORATE PARENT AND ONE HELD BY THE LEGAL DEPORTMENT WERE DECLARED BSI EXPENSES AND REBOOKED. NEITHER INVOICE CAME THROUGH ACCOUNTS PAYABLE BUT WERE DELIVERED TO THE CORP SECRETARY. I ACCEPT RESPONSIBILITY FOR THE LAPSE INCONTROL OVER THE ACCOUNT PAYABLE PROCESS.

NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

Decision

Monetary/Fine

$500.00

Censure

NOT PROVIDED