EDWARD JONES

Discharged

MR. SMITH'S EMPLOYMENT WAS TERMINATED AFTER HE ADMITTED TO SUBMITTING A PAINTING INVOICE INFLATED BY $400, FOR WHICH HE RECEIVED $400 FROM THE THIRD-PARTY INVOICER. ADDITIONALLY, MR. SMITH MANIPULATED HIS BUSINESS EXPENSE PLAN, CAUSING HIS ASSISTANT TO RECEIVE AN ADDITIONAL $1,762, AND REQUESTED THAT HIS ASSISTANT REPAY HIM A PORTION OF THESE FUNDS. THE ASSISTANT COMPLIED WITH THIS REQUEST AND REPAID HIM $813.

CLIENT ALLEGES SMITH SUGGESTED SHE SELL MUTUAL FUNDS HELD IN HER ACCOUNT AND PURCHASE ANNUITIES (IN 1997 AND 1998). CLIENT STATES SMITH EARNED A "HUGE" COMMISSION AND SHE WAS NOT INFORMED OF THE "PITFALLS" OF ANNUITIES, SUCH AS, MORTALITY EXPENSES, ANNUAL FEES, SURRENDER CHARGES, WITHDRAWALS ARE SUBJECT TO ORDINARY INCOME TAX AND THE PRODUCT IS NOT FEDERALLY INSURED. CLIENT STATES SHE REALIZES, HAD SHE CONTINUED TO HOLD THE MUTUAL FUNDS, THE VALUES WOULD HAVE DECLINED, BUT BELIEVES SHE WOULD HAVE HAD A GREATER PORTFOLIO VALUE DUE TO THIE HIDDEN COSTS OF ANNUITIES. CLIENT REQUESTS A REIMBURSEMENT OF COMMISSIONS, ALL MORTALITY EXPENSESAND OTHER EXPENSES ASSOCIATED WITH THE ANNUITY, CAPITAL GAINS TAXES PAID IN 1997 AND 1998 AND, IN ADDITION, REQUESTS THE FIRM CONVERT THE PORTFOLIO INTO INVESTMENTS WHICH WOULD BALANCE HER PORTFOLIO.

$5,000.00

SMITH STATES THE CLIENT INFORMED HIM SHE HAD HEARD A RADIO PROGRAM REGARDING ANNUITIES AND MADE THE DETERMINATION ANNUITIES WERE AN APPROPRIATE INVESTMENT FOR HER. SMITH STATES, DURING HIS INITIAL CONVERSATIONS WITH THE CLIENT, SHE STATES HER INTENT TO SELL ALL OF THE MUTUAL FUNDS HELD IN HER ACCOUNT TO PURCHASE ANNUITIES. SMITH FURTHER STATES HE SUGGESTED LIQUIDATING ONLY A PORTION OF THE MUTUAL FUNDS EXPLAINING ALTHOUGH THE ANNUITIES WOULD PROVIDE TAX DEFERRED GROWTH, THERE WERE POTENTIAL TAX CONSEQUENCES ASSOCIATED WITH THE LIQUIDATION OF THE MUTUAL FUNDS. ACCORDING TO OUR RECORDS, A PROTECTIVE ANNUITY WAS PURCHASED IN 5/97 AND A HARFORD ANNUITY WAS PURCHASED IN 1/98. AT THE TIME OF THE PURCHASES, THE CLIENT SIGNED ACKNOWLEDGMENT LETTERS WHICH WOULD INDICATE SHE WAS AWARE OF THE SALES CHARGE, TAX CONSEQUENCES, HIGHER ADMINISTRATIVE AND OPERATING EXPENSES, MORTALITY AND EXPENSE FEES AS WELL AS ACKNOWLEDGING RECEIPT OF A PROSPECTUS. IT IS OUR OPINION SMITH MADE THE APPROPRIATE DISCLOSURES REGARDING THE ANNUITIES AND THEY WERE PURCHASED WITH THE CLIENT'S AUTHORIZATION. CLAIM DENIED.