IN LATE 2000 THE CUSTOMERS ESTABLISHED AN INVESTMENT ADVISORY ACCOUNT THROUGH AN AFFILIATED REGISTERED INVESTMENT ADVISOR WHERE MS. MEIDELL MANAGED THE ACCOUNT AND CHARGED A QUARTERLY MANAGEMENT FEE. CLAIMANT WAS SEEKING TO GROW HIS ASSETS IN ORDER TO FUND HIS LIFESTYLE DURING RETIREMENT. THE CONSTRUCTED PORTFOLIO CONSISTED OF INVESTMENTS PRIMARILY IN EQUITY MUTUAL FUNDS. AS A RESULT OF THE SUBSEQUENT SIGNIFICANT MARKET DECLINE IN 2000-2002, THE MARKET VALUE OF HIS ACCOUNT ALSO DECLINED AND HE IS NOW CLAIMING THAT THE INVESTMENTS WERE UNSUITABLE AND HAD MS. MEIDELL PLACED HIM IN MORE CONSERVATIVE ASSETS SUCH AS BONDS, HE WOULD HAVE MADE MONEY. PAT MEIDELL WAS ADDED AS AN INDIVIDUAL RESPONDENT TO THIS CLAIM 9 MONTHS AFTER THE CLAIM WAS INITIALLY FILED.

$560,980.00

$345,000.00

THIS IS ANOTHER CLAIM IN A SERIES OF CLAIMS THAT HAS BEEN BROUGHT BY THE SAME CLAIMANT'S ATTORNEY OVER THE COURSE OF THE LAST YEAR AS THE RESULT OF A SOLICITATION CAMPAIGN WHERE COUNSEL IMPROPERLY USED THE REPRESENTATIVE'S CLIENT LIST AND OTHER DOCUMENTATION CONTAINING UNRELATED CUSTOMER INFORMATION OBTAINED DURING DISCOVERY IN ANOTHER MATTER TO CONTACT MS. MEIDELL'S CLIENTS AND INDUCE THEM TO FILE CLAIMS. DOCUMENTATION COMPLETED BY THIS CLAIMANT AT THE TIME THE INVESTMENTS WERE MADE DO NOT SUPPORT THE ALLEGATIONS THAT HIS WAS A CONSERVATIVE INVESTOR OR ANY OF THE ALLEGED CAUSES OF ACTION (E.G. UNSUITABLITY, NEGLIGENCE,ETC.). DOCUMENTED DISCLOSURE WAS PROVIDED TO THE CLIENTS AT THE TIME THE INVESTMENTS WERE MADE. AS THE BASIS FOR THE ALLEGED DAMAGES, THE CLAIM SEEKS TO RECOVER MARKET LOSSES THAT WERE THE RESULT OF THE 2000-2002 MARKET DOWNTURN BY CHERRY PICKING BOTH THE TIME PERIOD AND INVESTMENTS WHERE MARKET LOSSES OCCURRED AND BY CLAIMING (IN HINDSIGHT) THAT HAD THE ACCOUNT BEEN INVESTED IN BONDS, HE WOULD HAVE MADE MORE MONEY. AS THE CLAIM IS WITHOUT MERIT, IT WILL BE VIGOROUSLY DEFENDED. ON NOVEMBER 16, 2007 THE ARBITRATION PANEL ISSUED THE FOLLOWING AWARD: $345,000 IN COMPENSATORY DAMAGES; ACCRUED INTEREST ON THAT AMOUNT OF $234,093.75 AND REIMBURSEMENT OF EXPERT FEES OF $26,000

IN THEIR STATEMENT OF CLAIM, THE [CUSTOMERS] ARE SEEKING TO RECOVER MARKET LOSSES FROM INVESTMENTS THAT WERE MADE OVER THE COURSE OF A 13 YEAR RELATIONSHIP WITH ASC AND THE MEIDELLS. CLAIMANTS BEGAN THEIR RELATIONSHIP WITH MS. MEIDELL IN OR ABOUT 1994 WHERE THEY WERE INVESTED IN EQUITY BASED MUTUAL FUNDS TO MEET THEIR STATED INVESTMENT OBJECTIVES OF GROWTH. IN OR ABOUT 1999, MS. MEIDELL BEGAN MANAGING THESE SAME INVESTMENTS ON AN INVESTMENT ADVISORY BASIS, WHERE SHE CHARGED A QUARTERLY MANAGEMENT FEE. THE CLAIMANTS ACCOUNTS ENJOYED SIGNIFICANT GAINS IN MARKET APPRECIATION UNTIL THE PRECIPITOUS MARKET DECLINE IN 2000-2002 TIME PERIOD AND ARE NOW CONTENDING THAT THEIR INVESTMENTS WERE UNSUITABLE AND WERE NOT DIVERSIFIED AND HAD THEY BEEN INVESTED IN BONDS THEY WOULD HAVE MADE MORE MONEY. PAT AND HER SON WERE ADDED AS INDIVIDUAL RESPONDENTS TO THE ARBITRATION CLAIM 8 MONTHS AFTER THE CLAIM WAS INITIALLY FILED

$219,799.58

$55,000.00

DURING THE LIFESPAN OF THESE CLAIMANTS' ACCOUNTS WITH ASC, THEY MADE A COMBINED OVERALL PROFIT OF APPROXIMATELY $77,000. THIS IS YET ANOTHER CLAIM IN A SERIES OF CLAIMS THAT HAS BEEN BROUGHT BY THE SAME PLAINTIFF'S ATTORNEY OVER THE COURSE OF THE LAST YEAR AS THE RESULT OF HIS SOLICITATION CAMPAIGN WHERE COUNSEL IMPROPERLY USED THE REPRESENTATIVE'S CLIENT LIST AND OTHER DOCUMENTATION CONTAINING UNRELATED CUSTOMER INFORMATION OBTAINED DURING DISCOVERY IN ANOTHER MATTER TO CONTACT MS. MEIDELL'S CLIENTS TO INDUCE THEM TO FILE CLAIMS. DOCUMENTATION COMPLETED BY THESE CLAIMANTS AT THE TIME THE INVESTMENTS WERE MADE DO NOT SUPPORT THE ALLEGATIONS THAT THEY WERE CONSERVATIVE INVESTORS OR ANY OF THE ALLEGED CAUSES OF ACTION (E.G. UNSUITABLITY, NEGLIGENCE,ETC.). DOCUMENTED DISCLOSURE WAS PROVIDED TO THESE CLIENTS AT THE TIME THE INVESTMENTS WERE MADE. AS THE BASIS FOR THE ALLEGED DAMAGES, THE CLAIM SEEKS TO RECOVER MARKET LOSSES THAT WERE RESULT OF THE 2000-2002 MARKET DOWNTURN BY CHERRY PICKING BOTH THE TIME PERIOD AND INVESTMENTS WHERE MARKET LOSSES OCCURRED AND BY CLAIMING (IN HINDSIGHT) THAT HAD THEIR ACCOUNTS BEEN INVESTED IN BONDS, THEY WOULD HAVE MADE MORE MONEY. THE CLAIM IS WITHOUT MERIT AND WILL BE VIGOROUSLY DEFENDED. TO AVOID THE COST OF PROTRACTED LITIGATION, THIS MATTER WAS SETTLED FOR 55,000.00 ON 10/10/07 WITH NO ADMISSION OF LIABILITY OR WRONGDOING ON THE PART OF THE FIRM OR THE ADVISORS.

THE CLAIMANTS BEGAN THEIR RELATIONSHIP WITH ASC 13 YEARS AGO IN 1994 WHEN THEY WERE IN THEIR MID TO LATE 40S INVESTING IN EQUITY BASED MUTUAL FUNDS. THEY WANTED TO ACHIEIVE THEIR OBJECTIVE OF RETIRING WELL BEFORE THEY REACHED AGE 65 AND NEEDED AND WANTED TO GROW THEIR RETIREMENT ASSETS TO ACHIEVE THAT GOAL. IN OR ABOUT 1998 THE CLAIMANTS ASKED MS. MEIDELL'S SON TO TAKE OVER THE HANDLING OF THEIR ACCOUNTS. THE ACCOUNTS EXPERIENCED SIGNIFICANT GROWTH IN VALUE OVER THE YEARS UNTIL THE US MARKET DECLINE IN 2000-2002. THE ACCOUNTS WERE MANAGED ON AN INVESTMENT ADVISORY BASIS WHERE A MANAGEMENT FEE WAS CHARGED. THE CLAIMANTS ALSO OWNED WORLDCOMM WHICH THEY OBTAINED THROUGH THEIR EMPLOYMENT IN THE TELECOMMUNICATIONS INDUSTRY WHICH ALSO LOST SIGNIFICANT VALUE DURING THE WORLDCOMM DEBACLE. CLAIMANTS INCURRED MARKET LOSSES IN THEIR INVESTMENTS DURING THE PRECIPITOUS MARKET DECLINE IN 2000-2002 TIME PERIOD AND ARE NOW CONTENDING THAT THE INVESTMENTS WERE UNSUITABLE, WERE NOT DIVERSIFIED AND THAT HAD THEY BEEN EN INVESTED IN BONDS DURING THIS TIME PERIOD, THEY WOULD HAVE MADE MORE MONEY. PAT MEIDELL AND HER SON WERE ADDED AS INDIVIDUAL RESPONDENTS TO THIS CLAIM 9 MONTHS AFTER THE CLAIM WAS INITIALLY FILED.

$315,344.00

$75,000.00

DURING THE LIFESPAN OF ALL OF THE CLAIMANTS' ACCOUNTS WITH ASC, THEY MADE A COMBINED OVERALL PROFIT OF APPROXIMATELY $46,000.00. MUTUAL FUNDS INVESTMENTS THEY CLAIMED WERE UNSUITABLE IN THEIR ASC ACCOUNT WERE ALSO OWNED AT THE SAME TIME IN AN ACCOUNT AT ANOTHER BROKER DEALER. THIS IS ANOTHER CLAIM IN A SERIES OF CLAIMS THAT HAS BEEN BROUGHT BY THE SAME PLAINTIFF'S ATTORNEY OVER THE COURSE OF THE LAST YEAR AS THE RESULT OF HIS SOLICITATION CAMPAIGN WHERE COUNSEL IMPROPERLY USED THE REPRESENTATIVE'S CLIENT LIST AND OTHER DOCUMENTATION CONTAINING UNRELATED CUSTOMER INFORMATION OBTAINED DURING DISCOVERY IN ANOTHER MATTER TO CONTACT THE ADVISORS' CLIENTS TO INDUCE THEM TO FILE CLAIMS. DOCUMENTATION COMPLETED BY THE CLAIMAINTS AT THE TIME THE INVESTMENTS WERE MADE DO NOT SUPPORT THE ALLEGATIONS THAT THEY WERE CONSERVATIVE INVESTORS OR ANY OF THE ALLEGED CAUSES OF ACTION (E.G. UNSUITABLITY, NEGLIGENCE,ETC.). DOCUMENTED DISCLOSURE WAS PROVIDED TO THESE CLIENTS AT THE TIME THE INVESTMENTS WERE MADE. AS THE BASIS FOR THE ALLEGED DAMAGES, THE CLAIM SEEKS TO RECOVER MARKET LOSSES THAT WERE RESULT OF THE 2000-2002 MARKET DOWNTURN BY CHERRY PICKING BOTH THE TIME PERIOD AND INVESTMENTS WHERE MARKET LOSSES OCCURRED AND BY CLAIMING (IN HINDSIGHT) THAT HAD THEIR ACCOUNTS BEEN INVESTED IN BONDS, THEY WOULD HAVE MADE MORE MONEY. UNDER THIS THEORY, CLAIMANTS SOUGHT DAMAGES OF APPROXIMATELY 315,000.00. ON 09/10/07 TO AVOID THE COST OF PROTRACTED LITIGATION, THIS MATTER WAS SETTLED FOR $75,000 WITH NO ADMISSION OF LIABILITY ON THE PART OF THE FIRM OR THE ADVISORS.

CLAIMANT BEGAN HIS RELATIONSHIP WITH ASC IN 1996, SEEKING TO GROW HIS ASSETS TO FUND HIS RETIREMENT. PRIOR TO OPENING AN ACCOUNT WITH ASC, HE HAD 17 PRIOR YEARS OF INVESTMENT EXPERIENCE IN MUTUAL FUNDS, STOCKS AND BONDS. AT THE TIME HE HELD ACCOUNTS AT ASC, HE ALSO HELD AN ACCOUNT AT ANOTHER BROKER DEALER THAT HELD THE SAME KINDS OF MUTUAL FUNDS AS HIS ASC ACCOUNT HELD. IN OR ABOUT 1998, MS. MEIDELL'S SON BEGAN HANDLING THE CUSTOMER'S ASC ACCOUNTS. THE ASC ACCOUNTS EXPERIENCED SIGNIFICANT GROWTH IN VALUE OVER THE YEARS. SO MUCH SO, THAT IN 2000, THE CUSTOMER TRANSFERRED HIS ACCOUNT FROM THE OTHER BROKER DEALER TO ASC FOR MS. MEIDELL'S SON TO ALSO MANAGE. THE ACCOUNTS WERE MANAGED ON AN INVESTMENT ADVISORY BASIS WHERE A MANAGEMENT FEE WAS CHARGED. CLAIMANTS INCURRED MARKET LOSSES IN THEIR INVESTMENTS DURING THE PRECIPITOUS MARKET DECLINE IN 2000-2002 TIME PERIOD AND ARE NOW CONTENDING THAT THE INVESTMENTS WERE UNSUITABLE, WERE NOT DIVERSIFIED AND THAT HAD THEY BEEN INVESTED IN BONDS DURING THIS TIME PERIOD, THEY WOULD HAVE MADE MORE MONEY. PAT MEIDELL AND HER SON WERE ADDED AS INDIVIDUAL RESPONDENTS TO THIS CLAIM 9 MONTHS AFTER THE CLAIM WAS INITIALLY FILED.

$381,915.00

$95,000.00

THE CLAIMANT OWNED SIMILAR MUTUAL FUNDS IN AN ACCOUNT WITH ANOTHER BROKER DEALER DURING THE RELEVANT TIME PERIOD. HE BECAME UNHAPPY WITH THE PERFORMANCE OF HIS OTHER BROKER DEALER ACCOUNT AND TRANSFERRED THAT ACCOUNT TO ASC IN EARLY 2000 BECAUSE HIS ACCOUNTS AT ASC HAD APPRECIATED IN VALUE AT THE SAME TIME. THIS IS ANOTHER CLAIM IN A SERIES OF CLAIMS THAT HAS BEEN BROUGHT BY THE SAME PLAINTIFF'S ATTORNEY OVER THE COURSE OF THE LAST YEAR AS THE RESULT OF HIS SOLICITATION CAMPAIGN WHERE COUNSEL IMPROPERLY USED THE REPRESENTATIVE'S CLIENT LIST AND OTHER DOCUMENTATION CONTAINING UNRELATED CUSTOMER INFORMATION OBTAINED DURING DISCOVERY IN ANOTHER MATTER TO CONTACT THE ADVISORS' CLIENTS TO INDUCE THEM TO FILE CLAIMS. DOCUMENTATION COMPLETED BY THE CLAIMAINTS AT THE TIME THE INVESTMENTS WERE MADE DO NOT SUPPORT THE ALLEGATIONS THAT THEY WERE CONSERVATIVE INVESTORS OR ANY OF THE ALLEGED CAUSES OF ACTION (E.G. UNSUITABLITY, NEGLIGENCE,ETC.). DOCUMENTED DISCLOSURE WAS PROVIDED TO THESE CLIENTS AT THE TIME THE INVESTMENTS WERE MADE. AS THE BASIS FOR THE ALLEGED DAMAGES, THE CLAIM SEEKS TO RECOVER MARKET LOSSES THAT WERE RESULT OF THE 2000-2002 MARKET DOWNTURN BY CHERRY PICKING BOTH THE TIME PERIOD AND INVESTMENTS WHERE MARKET LOSSES OCCURRED AND BY CLAIMING (IN HINDSIGHT) THAT HAD THEIR ACCOUNTS BEEN INVESTED IN BONDS, THEY WOULD HAVE MADE MORE MONEY. UNDER THIS THEORY, CLAIMANTS SOUGHT DAMAGES OF APPROXIMATELY 381,915.00. TO AVOID THE COST OF PROTRACTED LITIGATION, THIS MATTER WAS SETTLED FOR $95,000 WITH NO ADMISSION OF LIABILITY ON THE PART OF THE FIRM OR THE ADVISORS.

CLAIMANT, INDIVIDUALLY AND IN HER CAPACITY AS TRUSTEE FOR THE PROFIT SHARING PLAN BEGAN HER RELATIONSHIP WITH ASC 17 YEARS AGO IN 1990 WITH ASC REP [OTHER FIRM EMPLOYEE] INVESTING IN MUTUAL FUNDS, LIMITED PARTNERSHIPS, ANNUITIES. CLAIMANTS' INVESTMENTS IN BONDS WERE NOT APPRECIATING SUFFICIENTLY IN VALUE AND SHE DIRECTED THOSE MONIES INTO EQUITY MUTUAL FUNDS. IN 1993, MS. MEIDELL BEGAN HANDLING CLAIMANTS' ACCOUNTS WITH [OTHER FIRM EMPLOYEE] AND CONTINUED THE INVESTMENT STRATEGY OF INVESTING IN MUTUAL FUNDS. IN 1996, [OTHER FIRM EMPLOYEE] RETIRED AND MS. MEIDELL CONTINUED HANDLING THE ACCOUNTS. THE ACCOUNTS EXPERIENCED SIGNIFICANT GROWTH IN VALUE OVER THE YEARS UNTIL THE US MARKET DECLINE IN 2000-2002. IN OR ABOUT 1998, MS. MEIDELL BEGAN MANAGING A PORTION OF EACH OF THE ACCOUNTS AS INVESTMENT ADVISORY ACCOUNTS AND CHARGED A MANAGEMENT FEE. CLAIMANTS INCURRED MARKET LOSSES IN THEIR INVESTMENTS DURING THE PRECIPITOUS MARKET DECLINE IN 2000-2002 TIME PERIOD AND ARE NOW CONTENDING THAT THE INVESTMENTS WERE UNSUITABLE, WERE NOT DIVERSIFIED AND THAT THEY SHOULD HAVE BEEN INVESTED IN BONDS DURING THIS TIME PERIOD AND THEREFORE WOULD HAVE MADE MORE MONEY. PAT MEIDELL WAS ADDED AS AN INDIVIDUAL RESPONDENT TO THIS CLAIM 9 MONTHS AFTER THE CLAIM WAS INITIALLY FILED.

$731,456.00

$455,000.00

ON AUGUST 3, 2007, RESPONDENTS FILED A MOTION TO VACATE THE ARBITRATION AWARD ISSUED ON 07/03/2007 IN NEVADA STATE COURT. THE AWARD DENIED [CUSTOMER'S] INDIVIDUAL CLAIMS, AWARDED $25,000 TO THE CLAIMANT'S IRA ACCOUNTS AND $425,000 TO THE PROFIT SHARING PLAN ACCOUNTS. DURING THE LIFESPAN OF ALL OF HER INVESTMENTS WITH ASC, CLAIMANT MADE A COMBINED OVERALL PROFIT OF APPROXIMATELY $253,000.00. THIS IS ANOTHER CLAIM IN A SERIES OF CLAIMS THAT HAS BEEN BROUGHT BY THE SAME PLAINTIFF'S ATTORNEY OVER THE COURSE OF THE LAST YEAR AS THE RESULT OF HIS SOLICITATION CAMPAIGN WHERE COUNSEL IMPROPERLY USED THE REPRESENTATIVE'S CLIENT LIST AND OTHER DOCUMENTATION CONTAINING UNRELATED CUSTOMER INFORMATION OBTAINED DURING DISCOVERY IN ANOTHER MATTER TO CONTACT MS. MEIDELL'S CLIENTS TO INDUCE THEM TO FILE CLAIMS. DOCUMENTATION COMPLETED BY [CUSTOMER] AT THE TIME THE INVESTMENTS WERE MADE DO NOT SUPPORT THE ALLEGATIONS THAT SHE WAS A CONSERVATIVE INVESTOR OR ANY OF THE ALLEGED CAUSES OF ACTION (E.G. UNSUITABLITY, NEGLIGENCE,ETC.). AS THE BASIS FOR THE ALLEGED DAMAGES, THE CLAIM SEEKS TO RECOVER MARKET LOSSES THAT WERE RESULT OF THE 2000-2002 MARKET DOWNTURN BY CHERRY PICKING BOTH THE TIME PERIOD AND INVESTMENTS WHERE MARKET LOSSES OCCURRED AND BY CLAIMING (IN HINDSIGHT) THAT HAD HER ACCOUNTS BEEN INVESTED IN BONDS SHE WOULD HAVE MADE MORE MONEY.

IN 1996, MS. MEIDELL BEGAN MANAGING CLAIMANT'S ASSETS FOR A MANAGEMENT FEE. CLAIMANT SUFFERED MARKET LOSSES DURING THE 1999-2002 DOWNTURN IN THE MARKET AND IS NOW CLAIMING THAT HER INVESTMENTS WERE UNSUITABLE.

$254,691.29

$20,000.00

THIS MATTER WILL BE VIGOROUSLY DEFENDED AS THERE IS NO EVIDENCE TO SUPPORT A CLAIM OF UNSUITABILITY OR THAT CLAIMANT WAS A CONSERVATIVE INVESTOR. ON 3/29/07 TO AVOID THE COSTS OF PROTRACTED LITIGATION, THIS MATTER WAS SETTLED FOR NUISANCE VALUE IN THE AMOUNT OF $20,000 WITH NO ADMISSION OF LIABILITY ON THE PART OF THE FIRM AND THE ADVISOR. THE CLAIMANT ALLEGED DAMAGES OF $254,691.29 PLUS INTEREST BY CHERRY PICKING ONE POINT IN TIME (1999-2002 SIGNIFICANT MARKET DOWNTURN IN US MARKETS) DURING THE LIFESPAN OF HER INVESTMENT ADVISORY ACCOUNT WHEN IN FACT HER ACCOUNT WAS ESTABLISHED IN 1994 AND MADE AN OVERALL PROFIT OF $189,425.25 UNTIL SHE CLOSED THE ACCOUNT IN 2002. CLAIMANT ALSO NEGLECTED TO INCLUDE AS PART OF HER DAMAGE ANALYSIS, THE $374,470.00 SHE TOOK IN CASH WITHDRAWALS FROM THE ACCOUNT AND SPENT DURING THIS 8 YEAR TIME PERIOD TO SUPPORT HER LIFESTYLE.

CLAIMANTS ALLEGE THAT MUTUAL FUNDS PURCHASED IN 1999 IN AN ADVISORY ACCOUNT ARE NOW UNSUITABLE AS RESULT OF THE MARKET LOSSES THEY SUSTAINED DURING THE SIGNIFICANT MARKET DECLINE BETWEEN 2000 AND 2002.

$203,059.00

$70,000.00

CLAIMANTS ARE SEEKING TO NOW CHARACTERIZE THEIR MUTUAL FUND PURCHASES IN 1999 AS UNSUITABLE TO RECOVER MARKET LOSSES THEY SUSTAINED DURING THE MARKET DECLINE IN 2000-2002. WE BELIEVE THERE ARE NO MERIT TO ALLEGATIONS AND THIS MATTER WILL BE VIGOROUSLY DEFENDED. TO AVOID THE COST OF PROTRACTED LITIGATION, THIS MATTER WAS SETTLED WITH NO ADMISSION OF LIABILITY BY RESPONDENTS.

ALLEGATIONS OF MARKET LOSSES IN A REIT INVESTMENT PURCHASED IN 1994

$5,900.00

$5,000.00

THIS MATTER WILL BE VIGOROUSLY DEFENDED AS THE CLAIM IS WITHOUT MERIT. THE CUSTOMER INITIALLY COMPLAINED ABOUT A REIT INVESTMENT PURCHASED IN 1994 THAT WAS DENIED. AN ARBITRATION CLAIM WAS SUBSEQUENTLY FILED TO INCLUDE ALLEGATIONS ABOUT MUTUAL FUND PURCHASES IN AN INVESTMENT ADVISORY ACCOUNT. THE ECONOMIC DAMAGES ANALYSIS SHOWED NO NET LOSS TO THE CLIENT, BUT RATHER AN OVERALL PROFIT OF APPROXIMATELY $4,000 FOR THE LIFE SPAN OF THE MANAGED ACCOUNT (10/1998 TO 10/2004). THE PARTIES SETTLED THIS MATTER FOR THE NUISANCE VALUE OF $5,000.00 WITH NO ADMISSION OF LIABILITY OR WRONGDOING ON THE PART OF THE ADVISOR OR THE FIRM.

IN FEB. 2000, THE CUSTOMERS OPENED A MANAGED ACCOUNT WITH A STATED INVESTMENT OBJECTIVE OF CAPITAL APPRECIATION AND HIGH RISK-TOLERANCE, SEEKING INVESTMENTS PRIMARILY IN EQUITY MUTUAL FUNDS. AS A RESULT OF THE SIGNIFICANT MARKET DECLINE IN 2001 AND 2002, THE MARKET VALUE OF THEIR PORTFOLIO ALSO DECLINED AND THEY ARE NOW CLAIMING THAT THEIR PORTFOLIO WAS NOT PRUDENTLY MANAGED BY MS. MEIDELL AND IT SHOULD HAVE BEEN MANAGED IN A MORE CONVERSATIVE FASHION.

$179,569.00

$65,000.00

THE ARBITRATION CLAIM WILL BE VIGOROUSLY DEFENDED.CUSTOMER'S INITAL COMPLAINT WAS DENIED IN MAY 2004 AS THERE WAS NO MERIT TO THE COMPLAINT. THE SUBSEQUENT ARBITRATION CLAIM FILED CONTAINS THE IDENTICAL ALLEGATIONS AS NOTED IN THE PRIOR CUSTOMER COMPLAINT.

THE CUSTOMER CONTENDS THAT ACCOUNT ACTUALLY MADE MONEY IN THE FIVE YEARS IT WAS MANAGED BY MS. MEIDELL BETWEEN 1996 AND 2001. HOWEVER, HE FURTHER CONTENDS THAT IF MS. MEIDELL HAD "PRUDENTLY" INVESTED HIS FUNDS DURING DOWNTURN IN THE MARKET, HIS ACCOUNT WOULD HAVE MADE EVEN MORE MONEY THAN IT DID. THE $176,000 CLAIMED AS DAMAGES IS THE ADDITIONAL AMOUNT THE CUSTOMER CONTENDS HIS ACCOUNT WOULD HAVE MADE HAD THE ACCOUNT BEEN "PRUDENTLY" MANAGED.

$176,653.00

$27,256.07

CLIENT SIGNED FORMS THAT TRANSFERED WASHINGTON MUTUAL FUND INTO THE CLIENT'S FEE BASED ACCOUNT. THE FUND WAS SOLD, TRIGGERING CAPITAL GAINS AND LOST DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS IN DECEMBER 2000. ALTERNATE NO-LOAD FUNDS PURCHASED DECLINED IN VALUE DUE TO RECESSION, 3/2000. THE CLIENT THEN CLAIMED THAT HE NEVER INSTRUCTED THE BROKER TO SELL.

$80,000.00

$64,469.12

THE [CUSTOMERS] AGREED TO TRANSFER A MUTUAL FUND INTO THEIR MANAGED ACCOUNT SO THAT IT COULD BE SOLD TO PURCHASE NO LOAD FUNDS TO DIVERSIFY THEIR PORTFOLIO.ONCE THE ASSET TRANSFERRED IN, IT WAS SOLD AND THE PROCEEDS USED TO PURCHASE NO LOAD FUNDS AS WE DISCUSSED. THE SALE OF THE FUND TRIGGERED CAPITAL GAINS AND ADDITIONALLY, AS A RESULT OF THE MARKET DECLINE IN 2000, THE NO LOAD FUNDS THAT WERE PURCHASED ALSO DECLINED IN MARKET VALUE. DESPITE THE FACT THAT THE [CUSTOMERS] RECEIVED CONFIRMATIONS OF THE SALE AND THE PURCHASE OF THE NO LOAD FUNDS, AFTER THE MARKET BEGAN ITS PRECIPITOUS DECLINE, HE CLAIMED THAT HE HAD NEVER INSTRUCTED ME TO SELL THE ASSET IN ORDER TO DIVERSIFY HIS PORTFOLIO. RATHER, HE CLAIMS THAT OUR DISCUSSIONS WERE THAT I WAS TO HOLD THE ASSET ONCE IT TRANSFERRED IN. IF THAT HAD BEEN THE DISCUSSION, THERE WOULD HAVE BEEN NO NEED TO TRANSFER THE ASSET AS IT COULD HAVE CONTINUED TO BE HELD AT THE FUND COMPANY. TO AVOID PROTRACTED LITIGATION, WE MADE A GOOD FAITH SETTLEMENT TO RESOLVE THIS MATTER WITH NO ADMISSION OF LIABILITY.