CUSTOMER VERBALLY COMPLAINED THAT HIS FINANCIAL ADVISORS INCORRECTLY TOLD HIM THAT HE COULDN'T CONTRIBUTE ADDITIONAL FUNDS TO HIS TWO ING ANNUITIES AND THERE WAS A 7% CASH FLOW THAT WAS GUARANTEED. ANNUITIES PURCHASED IN APRIL 2002 AND JANUARY 2004.

$19,593.67

$17,593.00

THIS MATTER WAS REPORTABLE PRIOR TO SETTLEMENT

FLORIDA CLIENT, THROUGH COUNSEL, CLAIMED THAT FA PURCHASED SECURITIES IN HER TRUST ACCOUNTS THAT WERE NOT SUITABLE FOR THE TRUST, INCLUDING HEDGE FUNDS AND SECURITIES ISSUED BY A REAL ESTATE INVESTMENT TRUST (CNL HOSPITALITY PROPERTIES, INC.). THE CLIENT FURTHER CLAIMED THAT THE FA PURCHASED MUTUAL FUNDS (PIMCO FIXED INCOME FUND CLASS C AND M SHARES) THAT APPEAR TO HAVE BEEN DESIGNED SOLELY TO GENERATE REVENUE. THE CLIENT ALSO CLAIMED THAT THE FA MADE MISREPRESENTATIONS TO HER REGARDING HOW THE ACCOUNTS WOULD BE MANAGED, THE COST OF MANAGEMENT AND THE PERFORMANCE AND VALUE OF THE TRUST ACCOUNTS' ASSETS. THE ACCOUNTS WERE OPENED IN OCTOBER 2003 THEN TRANSFERRED-OUT FROM THE FIRM IN NOVEMBER 2004. THE CLIENT SEEKS TO RECOVER:1) RETURN OF HER PRINCIPAL INVESTMENT IN CNL IN EXCHANGE FOR THE CNL SHARES; 2) REIMBURSEMENT FOR ANY NET LOSSES IN THE HEDGE FUND INVESTMENTS; AND 3) RETURN OF FEES AND/OR COMMISSIONS AND OTHER EXPENSES (ESTIMATED TO BE IN EXCESS OF $14,000) CHARGED TO THE TRUST ACCOUNTS.

$14,000.00

THE FA DENIES THE ALLEGATIONS SET-FORTH IN THE COMPLAINT. THE FIRM DENIED THE COMPLAINT. BASED UPON A REVIEW OF THE FIRM'S RECORDS, A REVIEW OF THE CLIENT'S TRUST ACCOUNTS AND INFORMATION PROVIDED BY THE FA, IT WAS DETERMINED THAT THE INVESTMENTS RECOMMENDED FOR THE CLIENT'S TRUST ACCOUNTS WERE CONSISTENT WITH HER INVESTMENT OBJECTIVES AND RISK TOLERANCE. THE CLIENT REALIZED A NET GAIN IN THE HEDGE FUND INVESTMENTS THAT SHE PURCHASED FOR HER ACCOUNT(S). THE CLIENT'S INVESTMENT IN THE REIT (CNL HOSPITALITY PROPERTIES, INC.) WAS NOT RECOMMENDED BY THE FA, BUT RATHER WAS A RECOMMENDATION THAT WAS MADE TO THE CLIENT BY HER OWN C.P.A. AND ,THEREFORE, UNSOLICITED. THE CLIENT'S INVESTMENTS IN THE PIMCO FUNDS OCCURRED IN THE CLIENT'S FEE-BASED MANAGED (BY AN OUTSIDE MONEY MANAGER) TRUST ACCOUNT THE MUTUAL FUNDS WERE PURCHASED ON A NO-LOAD OR LOAD-WAIVED BASIS. THERE WAS NO EVIDENCE TO SUGGEST THAT ANY MISREPRESENTATIONS WERE MADE TO THE CLIENT. DURING THE PERIOD OF TIME THAT THE CLIENT'S TRUST ACCOUNTS WERE MAINTAINED AT THE FIRM, THE ACCOUNTS' PERFORMANCE WAS POSITIVE.

CUSTOMERS VIA THEIR ATTORNEY ALLEGE THAT THEIR VARIBLE ANNUITY CONTRACTS WERE INVESTED IN VARIBLE MARKET ALLOCATIONS CONTRARY TO THEIR RISK TOLERANCE AND INVESTOR PROFILE. WHILE THE CUSTOMER DOES NOT ALLEGE A SPECIFIC AMOUNT, DAMAGES ARE BELIEVED TO BE IN EXCESS OF $5,000.00.

CLIENT HAS INVESTED IN THE STOCK MARKET FOR OVER 10 YEARS WITH NO GUARANTEES. THESE WERE CONVERTED TO REFERENCED ANNUITY WHICH HAS BOTH MINIMUM GAURANTEED DEATH AND INCOME BENEFITS EQUAL TO 7% PER YEAR COMPOUND GROWTH RATE. CLIENT ALSO HAS OWNED SIMILAR VARIABLE ANNUITITES FOR OVER FOUR YEARS INVESTED 100% IN EQUITIES WITH NO GUARANTEES.