NASD

NASD CONDUCT RULES 2110, 2711(I) AND 3010 - RESPONDENT PHILIP ZANONE, JR. ACTING ON BEHALF OF HIS MEMBER FIRM, FAILED TO ESTABLISH, MAINTAIN AND ENFORCE ADEQUATE WRITTEN SUPERVISORY PROCEDURES AND SYSTEMS.

Acceptance, Waiver & Consent(AWC)

Monetary/Fine

$30,000.00

Suspension

RE-QUALIFY AS SERIES 24 (PRINCIPAL)

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE RESPONDENT PHILIP ZANONE, JR. CONSENTED TO THE FINDING OF THE ALLEGATIONS AND TO THE FOLLOWING SANCTIONS: FINED $30,000.00 JOINTLY AND SEVERALLY, SUSPENDED FROM ASSOCIATION WITH ANY NASD MEMBER IN ANY PRINCIPAL CAPACITY FOR 15 BUSINESS DAYS AND REQUALIFY AS SERIES 24 PRINCIPAL PRIOR TO ACTING AS A PRINCIPAL WITH AN NASD MEMBER FIRM AFTER THE SUSPENSION. SUSPENSION EFFECTIVE DATE JULY 13, 2004 THROUGH AUGUST 2, 2004.

I AM PRESIDENT OF WUNDERLICH SECURITIES AND RELIED ON THE OSJ MANAGER WHO WAS DESIGNATED WITH THE SUPERVISORY RESPONSIBILITES OF THE OSJ. HE WAS NOT NAMED IN THIS ACTION ALTHOUGH HE DID NOT FULFILL HIS SUPERVISORY OBLIGATIONS. ALL OF THE THESE ACTIONS OCCURED IN THE OSJ OF THE FIRM WHERE REGISTERED PRINCIPALS WERE DESIGNATED THE RESPONSIBILITY TO SUPERVISE THE AREAS OUTLINED IN THIS NASD ACTION. FOR THE RECORD, THERE WAS NO EVIDENCE OF ANY DELIBERATE ATTEMPT TO OBTAIN ANY MARKET ADVANTAGE IN THE AREAS OF MARKET MAKING AND ISSUANCE OF RESEARCH REPORTS. THE DOLLAR AMOUNT OF THE TRANSACTION, APPX $6000 AND THE SUBSEQUENT PROFIT OF $400 CORROBORATE THIS POINT. THE TRANSACTION PRICE FOR THE SALES IN QUESTION $2.7662/SH AND CLOSING PRICE FOR THE STOCK $2.70/SH SUGGEST THAT THE RESEARCH REPORT HAD ALMOST NO EFFECT ON THE MARKET AND WAS NOT CONSIDERED SIGNIFICANT. THE TRANSACTION IN QUESTION ALSO ONLY ACCOUNTED FOR APPX 1/10 OF 1 % OF MARKET VOLUME FOR THE DAY.