THE CUSTOMER ALLEGES UNSUITABLE INVESTMENT RECOMMENDATION OF REIT IN JULY 2004, MISREPRESENTATION AND OMISSION OF MATERIAL FACTS.

$500,000.00

PREVIOUSLY DISCLOSED LITIGATION FILED IN SUPERIOR COURT OF THE STATE OF CALIFORNIA, SAN FRANCISCO, CA, DOCKET NO. CGC 09-490006 WAS COMPELLED TO ARBITRATION AND PROCEEDINGS WERE STAYED PENDING THE OUTCOME OF THE ARBITRATION.

CLIENT ALLEGES CLIENT ADVISOR FAILED TO MANAGE CLIENT'S ACCOUNT AND INVESTMENTS FROM JULY, 2008 TO JULY, 2010.

$150,000.00

SUITABILITY

$23,050,000.00

THIS MATTER INVOLVES THE SALE OF AUCTION RATE SECURITIES (ARS). THE TRANSACTION(S) AT ISSUE TOOK PLACE BEFORE MID-FEBRUARY 2008, WHEN THE ARS MARKET SUFFERED WIDESPREAD AUCTION FAILURES AND ILLIQUIDITY. THE FINANCIAL ADVISOR DID NOT CAUSE, CONTRIBUTE OR HAVE ANY CONTROL WHATSOEVER OVER THESE MARKET EVENTS. THE FIRM REACHED AGREEMENT WITH CERTAIN OF ITS REGULATORS, PURSUANT TO WHICH IT REPURCHASED ARS FOR THEIR FULL PAR VALUE FROM CERTAIN CLIENTS, INCLUDING THE INSTANT CLIENT, WHERE THEY COMPLAINED OR NOT. THE FINANCIAL ADVISOR WAS NOT A PARTY TO THAT AGREEMENT, DID NOT MAKE ANY PAYMENT TO THE CLIENT, AND WAS NOT ASKED TO AND DID NOT CONTRIBUTE TO THE REPURCHASE AMOUNT. THE SETTLEMENT AMOUNT IN ITEM 11 ABOVE REFLECTS THE PAR VALUE OF THE REPURCHASED ARS, AS REQUIRED BY FINRA REGULATORY NOTICE 09-12.

MISREPRESENTATION

$500,000.00

THIS MATTER INVOLVES THE SALE OF AUCTION RATE SECURITIES (ARS). THE TRANSACTION(S) AT ISSUE TOOK PLACE BEFORE MID-FEBRUARY 2008, WHEN THE ARS MARKET SUFFERED WIDESPREAD AUCTION FAILURES AND ILLIQUIDITY. THE FINANCIAL ADVISOR DID NOT CAUSE, CONTRIBUTE OR HAVE ANY CONTROL WHATSOEVER OVER THESE MARKET EVENTS. THE FIRM REACHED AGREEMENT WITH CERTAIN OF ITS REGULATORS, PURSUANT TO WHICH IT REPURCHASED ARS FOR THEIR FULL PAR VALUE FROM CERTAIN CLIENTS, INCLUDING THE INSTANT CLIENT, WHERE THEY COMPLAINED OR NOT. THE FINANCIAL ADVISOR WAS NOT A PARTY TO THAT AGREEMENT, DID NOT MAKE ANY PAYMENT TO THE CLIENT, AND WAS NOT ASKED TO AND DID NOT CONTRIBUTE TO THE REPURCHASE AMOUNT. THE SETTLEMENT AMOUNT IN ITEM 11 ABOVE REFLECTS THE PAR VALUE OF THE REPURCHASED ARS, AS REQUIRED BY FINRA REGULATORY NOTICE 09-12.

SUITABILITY

$5,700,000.00

THIS MATTER INVOLVES THE SALE OF AUCTION RATE SECURITIES (ARS). THE TRANSACTION(S) AT ISSUE TOOK PLACE BEFORE MID-FEBRUARY 2008, WHEN THE ARS MARKET SUFFERED WIDESPREAD AUCTION FAILURES AND ILLIQUIDITY. THE FINANCIAL ADVISOR DID NOT CAUSE, CONTRIBUTE OR HAVE ANY CONTROL WHATSOEVER OVER THESE MARKET EVENTS. THE FIRM REACHED AGREEMENT WITH CERTAIN OF ITS REGULATORS, PURSUANT TO WHICH IT REPURCHASED ARS FOR THEIR FULL PAR VALUE FROM CERTAIN CLIENTS, INCLUDING THE INSTANT CLIENT, WHERE THEY COMPLAINED OR NOT. THE FINANCIAL ADVISOR WAS NOT A PARTY TO THAT AGREEMENT, DID NOT MAKE ANY PAYMENT TO THE CLIENT, AND WAS NOT ASKED TO AND DID NOT CONTRIBUTE TO THE REPURCHASE AMOUNT. THE SETTLEMENT AMOUNT IN ITEM 11 ABOVE REFLECTS THE PAR VALUE OF THE REPURCHASED ARS, AS REQUIRED BY FINRA REGULATORY NOTICE 09-12.

MISREPRESENTATION

$1,700,000.00

THIS MATTER INVOLVES THE SALE OF AUCTION RATE SECURITIES (ARS). THE TRANSACTION(S) AT ISSUE TOOK PLACE BEFORE MID-FEBRUARY 2008, WHEN THE ARS MARKET SUFFERED WIDESPREAD AUCTION FAILURES AND ILLIQUIDITY. THE FINANCIAL ADVISOR DID NOT CAUSE, CONTRIBUTE OR HAVE ANY CONTROL WHATSOEVER OVER THESE MARKET EVENTS. THE FIRM REACHED AGREEMENT WITH CERTAIN OF ITS REGULATORS, PURSUANT TO WHICH IT REPURCHASED ARS FOR THEIR FULL PAR VALUE FROM CERTAIN CLIENTS, INCLUDING THE INSTANT CLIENT, WHERE THEY COMPLAINED OR NOT. THE FINANCIAL ADVISOR WAS NOT A PARTY TO THAT AGREEMENT, DID NOT MAKE ANY PAYMENT TO THE CLIENT, AND WAS NOT ASKED TO AND DID NOT CONTRIBUTE TO THE REPURCHASE AMOUNT. THE SETTLEMENT AMOUNT IN ITEM 11 ABOVE REFLECTS THE PAR VALUE OF THE REPURCHASED ARS, AS REQUIRED BY FINRA REGULATORY NOTICE 09-12.

MISREPRESENTATION

$300,000.00

THIS MATTER INVOLVES THE SALE OF AUCTION RATE SECURITIES (ARS). THE TRANSACTION(S) AT ISSUE TOOK PLACE BEFORE MID-FEBRUARY 2008, WHEN THE ARS MARKET SUFFERED WIDESPREAD AUCTION FAILURES AND ILLIQUIDITY. THE FINANCIAL ADVISOR DID NOT CAUSE, CONTRIBUTE OR HAVE ANY CONTROL WHATSOEVER OVER THESE MARKET EVENTS. THE FIRM REACHED AGREEMENT WITH CERTAIN OF ITS REGULATORS, PURSUANT TO WHICH IT REPURCHASED ARS FOR THEIR FULL PAR VALUE FROM CERTAIN CLIENTS, INCLUDING THE INSTANT CLIENT, WHERE THEY COMPLAINED OR NOT. THE FINANCIAL ADVISOR WAS NOT A PARTY TO THAT AGREEMENT, DID NOT MAKE ANY PAYMENT TO THE CLIENT, AND WAS NOT ASKED TO AND DID NOT CONTRIBUTE TO THE REPURCHASE AMOUNT. THE SETTLEMENT AMOUNT IN ITEM 11 ABOVE REFLECTS THE PAR VALUE OF THE REPURCHASED ARS, AS REQUIRED BY FINRA REGULATORY NOTICE 09-12.

CUSTOMER ALLEGES THAT, BETWEEN SEPTEMBER OF 2003 AND NOVEMBER OF 2007, THE FINANCIAL ADVISOR RECOMMENDED INVESTMENTS FOR WHICH THE CUSTOMER WAS UNQUALIFIED AND/OR INELIGIBLE, CAUSING UNSPECIFIED DAMAGES.

CLIENT WAS CONSIDERED A QUAILFIED INVESTOR BY BANK OF AMERICA. THE PRE-QUALIFICATION DOCUMENTS FOR EACH PRODUCT WERE FILLED OUT BY CLIENT AND APPROVED BY THE BANK OF AMERICA QUALIFICATION DESK AND LOCAL SUPERVISORY MANAGEMENT. THE DEBT DEALS WERE BANK OF AMERICA UNDERWRITTEN, APPROVED BY THE BANC AMERICA INVESTMENT PRODUCT COMMITTEE AND WERE SOLD OUT OF BANK INVENTORY. MANY OF THE ORDERS WERE UNSOLICTED AND THE CLIENT HAS CONTACTED ME NUMEROUS TIMES TO INDICATE HE DOES NOT HOLD ME RESPONSIBLE AND I HAVE NOT DONE ANYTHING WRONG.

CLIENT STATES THAT FINANCIAL ADVISOR FAILED TO ENTER STOP LOSS ORDERS IN JANUARY OF 2005 CAUSING A LOSS. CLIENT DOES NOT CLAIM SPECIFIC COMPENSATORY DAMAGES. 2ND COMPLAINT LETTER: CLIENT ALLEGES THAT FINANCIAL ADVISOR MADE UNSUITABLE INVESTMENTS, PROVIDED MISLEADING INFORMATION AND DID NOT PLACE STOP LOSS ORDERS AS INSTRUCTED.

$96,000.00

CUSTOMER ALLEGES UNAUTHORIZED TRADING AND OTHER VIOLATIONS RESULTING IN LOSSES.

$150,000.00

$8,000.00

MR. KERN DENIES THE ALLEGATIONS CONTAINED IN THE STATEMENT OF CLAIM AND HE HAS BEEN REMOVED AS A RESPONDENT IN THIS ARBITRATION IN EXCHANGE FOR THE SETTLEMENT AMOUNT STATED ABOVE. MONIES WERE PAID TO AVOID THE COST OF LITIGATION WHICH WOULD HAVE EXCEEDED THE ABOVE AMOUNT. MR. KERN PAID THE ENTIRE AMOUNT HIMSELF.