ATTORNEY STATES IN MARCH 2003, THE FA SUGGESTED THAT THE CLIENT PURCHASE THE INVESTMENT IN QUESTION. ATTORNEY ALLEGES, PRIOR TO THE PURCHASE, THE FA HAD CONVERSATIONS WITH THE TRUSTEE REGARDING HIS MOTHER'S AGE, HEALTH AND NEED FOR LIQUIDITY. ATTORNEY FURTHER ALLEGES THE FA ASSURED THE CLIENT THAT THE INVESTMENT HAD AN ESTATE FEATURE THAT WOULD PAY FULL CASH VALUE UPON THE DEATH OF HIS MOTHER. AFTER THE MOTHER'S DEATH (IN OCTOBER 2009) THE INVESTMENT WAS SUBMITTED FOR ESTATE REDEMPTION AND THE TRUSTEE BELIEVED HE WOULD RECEIVE THE REDEMPTION PROCEEDS IMMEDIATELY. HOWEVER, HE HAS SINCE DISCOVERED THAT THE INVESTMENT WAS SUBJECT TO A LOTTERY PROCESS AND DID NOT HAVE A PAYMENT ON DEATH FEATURE. ATTORNEY ALLEGES THAT THE FA MISREPRESENTED THE PAYMENT TERMS OF THE BOND. ATTORNEY REQUESTS THAT THE FIRM PAY THE ESTATE THE FULL CASH VALUE OF THE BOND WITH NO COURT INVOLVEMENT. LOSSES ARE APPROXIMATELY $7,076 - FILING REQUIRED.

$7,076.00

OUR RECORDS REFLECT THE ACCOUNT WAS CREDITED FOR THE REDEMPTION PROCEEDS OF $20,000.00 ON OCTOBER 9, 2010. THIS ACTIVITY WILL BE REFLECTED ON THE OCTOBER 2010 ACCOUNT STATEMENT. ADVISED THE ATTORNEY THAT WE HAVE FOUND NO EVIDENCE OF ANY WRONG-DOING BY THE FA DURING OUR REVIEW OF THIS MATTER. IT IS OUR OPINION THE PURCHASER OF THE BOND AS WELL AS THE CURRENT TRUSTEE WERE PROPERLY INFORMED WITH REGARD TO THE ESTATE FEATURE AS WELL AS THE TIMEFRAME FOR PROCESSING THE ESTATE REDEMPTION. IN CONSIDERATION OF THE FIRM TAKING THIS ACTION, WE EXPECT THAT THE TRUSTEE WILL NEITHER VISIT THE BRANCH OFFICE NOR HAVE ANY ADDITIONAL CONTACT WITH THE FA AND/OR HIS BRANCH OFFICE STAFF.

CLIENT CLAIMS HE LOST $15,000 DUE TO POOR PERFORMANCE AND WAS CHARGED EXCESSIVE FEES TO CLOSE THE ACCOUNTS. CLIENT CLAIMS HE WAS A CONSERVATIVE INVESTOR AND WANTS AN ANSWER AS TO WHY HIS PORTFOLIO ENDED UP INVESTED 80% IN HIGH-RISK STOCKS.

$15,000.00

IR STATED HE ORIGINALLY MET WITH CLIENT IN APRIL 1998, AT WHICH TIME CLIENT INDICATED HE WAS CONCERNED WITH HOW MUCH MONEY CLIEN COULD MAKE THROUGH INVESTING. IR STATED HE EXPLAINED THE FIRM'S CONSERVATIVE INVESTMENT PHILOSOPHY AND DISCUSSED THE PURCHASE OF PUTNAM FUNDS. IR STATED CLIENT CONTACTED HIM FREQUENTLY ASKING WHY HIS MONEY WAS NOT INCREASING AS FAST AS THE MARKET AND IR WOULD REEMPHASIZE THE ORIGINAL BALANCED PLAN. IR STATED HE WAS CONTACTED BY CLIENT IN OCTOBER 1999, WHO STATED HE WAS CONCERNED THE REGULAR ACCOUNT WAS NOT PERFORMING AS WELL AS THE IRA. IR STATED HE DISCUSSED THE RISKS ASSOCIATED WITH MOVING CLIENT'S MONEY TO A GROWTH PORTFOLIO; HOWEVER, AT CLIENT'S REQUEST CHANGES WERE MADE. SUBSEQUENTLY, IR STATED THAT HE WAS CONTACTED BY CLIENT IN JANUARY 2001, TO INFORM IR HE HAD MONEY AVAILABLE TO INVEST AND CLIENT REQUESTED GROWTH STOCKS. IR SUGGESTED PURCHASING TWO STOCKS AND DISCLOSED THE RISKS ASSOCIATED WITH PURCHASING STOCK. IN REGARD TO CLIENT'S IRA, IR STATED THAT IN APRIL 2000, CLIENT'S ACCOUNTS WERE CONSOLIDATED (PUTNAM, VAN ECK AND OPPENHEIMER) TO AN ACCOUNT AT EJ. IR INDICATED THE VAN ECK AND OPPENHEIMER FUNDS HAD BEEN PURCHASED ELSEWHERE AND CLIENT WAS NOT INTERESTED IN SELLING THESE INVESTMENTS. IR STATED THAT IN FEBRUARY 2003, CLIENT WANTED COMPLETELY OUT OF THE MARKET AND INSTRUCTED IR TO LIQUIDATE THE ACCOUNTS. THE FEES ASSOCIATED WITH CLOSING THE IRA WERE CHARGED CORRECTLY. ACCORDING TO IR, HE HAD NUMEROUS CONVERSATIONS WITH CLIENT REGARDING THE ACCOUNTS. IR STATED CLIENT HAD CONTINUOUSLY BEEN LOOKING FOR THE HIGHEST RETURNS, WHILE IR WOULD EMPHASIZE A BUY AND HOLD STRATEGY. CLAIM DENIED.