Client verbally alleged unsuitable investments. (7/30/2014-10/8/2016)

$54,694.25

I made the appropriate presentation and disclosed all terms of the investment. I believe the recommendation was suitable and the client was disappointed with the short term investment results.

SUITABILITY. DATE OF ALLEGED ACTIVITIES: 2/27/07-08/12/08.

THE PREFERRED STOCKS IN [CUSTOMER] ACCOUNT WERE RECOMMENDED BASED ON HER RISK TOLERANCE, INVESTMENT OBJECTIVES AND TIME HORIZON THAT SHE PROVIDED TO ME AT THAT TIME. THEY WERE NOT PURCHASED IN LUMP SUM RATHER OVER THE COURSE OF 18 MONTHS. EVERY TIME WE MET TO REVIEW THE ACCOUNT AND MADE ADDITIONAL PURCHASE, HER INVESTMENT OBJECTIVE, TIME HORIZON AND RISK TOLERANCE WERE CONFIRMED. IN ADDITION, WE WOULD ALSO DISCUSS THE PROS AND CONS OF SELLING OR KEEPING HER PREFERRED STOCKS, SHE SEEMED TO ALWAYS AGREE ON KEEPING IT FOR THE LONG TERM. CERTAINLY, I COULD NOT HAVE FORSEEN THE RECESSION WE ARE CURRENTLY IN, I DID WHAT I COULD TO KEEP CLIENT INFORMED AND ASSURED HER THAT I WAS ALWAYS HERE FOR HER BY EMAIL, PHONE OR IN PERSON. I TRULY DID NOT EXPECT [CUSTOMER] TO ACCUSE ME OF NOT CARING FOR HER FINANCIAL WELL BEING.

COMPLAINT ALLEGED MISREPRESENTATION IN CONNECTION WITH A VARIABLE ANNUITY PURCHASED ON MARCH 14, 2007 AND A MUTUAL FUND PURCHASED ON MARCH 21, 2007. THE FIRM HAS MADE A GOOD FAITH DETERMINATION THAT THE DAMAGES FROM THE ALLEGED CONDUCT WOULD NOT BE LESS THAN $5,000.

I FIRST MET WITH THE CLIENT IN JANUARY 2006 AND OVER A COURSE OF SEVERAL MEETINGS, THE CLIENT'S FINANCIAL SITUATION, INVESTMENT OBJECTIVES AND RISK TOLERANCE WERE DOCUMENTED. BASED UPON THESE OBJECTIVES, SEVERAL INVESTMENTS WERE RECOMMENDED AND DISCUSSED, INCLUDING TAX-EXEMPT MUNICIPAL BOND FUNDS. BASED UPON THE CLIENT'S INTEREST, THE PROS AND CONS OF ANNUITIES WERE DISCUSSED. OF PARTICULAR INTEREST WAS THE LIFE-TIME INCOME RIDER WITH THE ABILITY TO PARTICIPATE IN THE UNDERLYING EQUITY SUB ACCOUNTS FOR GROWTH POTENTIAL. AN ANNUITY WAS RECOMMENDED WHICH INCLUDED A GUARANTEED LIFETIME INCOME RIDER. IN ADDITION, THE RIDER ALLOWS THE CLIENT THE OPTION TO IMMEDIATELY START RECEIVING THE INCOME BASED ON THE ORIGINAL AMOUNT INVESTED OR TO WAIT 3 YEARS BEFORE TAKING THE INCOME WITH THE POTENTIAL TO HAVE THE INCOME BE BASED ON THE HIGHEST ANNIVERSARY VALUE WITHIN THE WAITING PERIOD. THE CLIENT WAS ADVISED TO ONLY INVEST A PORTION OF RETIREMENT ASSETS IN THE ANNUITY WITH THE REST IN A REGULAR DIVERSIFIED PORTFOLIO THAT ALLOWS FOR WITHDRAWAL ANYTIME AS NEEDED. THE CLIENT'S ALLEGATIONS WERE MADE 6 MONTHS AFTER THE ACCOUNT WAS OPENED. THE BOND MUTUAL FUND YIELD WAS LOWER BECAUSE THE CLIENT CHOSE TO INVEST IN C SHARES TO AVOID PAYING THE UP-FRONT SALES CHARGE (C SHARES HAVE A HIGHER EXPENSIVE RATIO, WHICH LOWERS THE YIELD). WITH REGARD TO THE ANNUITY, THE CLIENT MISUNDERSTOOD THE 3-YEAR WAITING PERIOD; FEATURE IS AN OPTION, NOT A REQUIREMENT, AS THE CLIENT HAS THE ABILITY TO START THE INCOME WITHDRAWAL IMMEDIATELY. NO INFORMATION WAS EVER MISREPRESENTED. ALL INFORMATION PERTAINING TO THE RECOMMENDED INVESTMENTS, INCLUDING BENEFITS AND LIMITATIONS, WERE PROPERLY DISCLOSED, AND EXPLAINED IN GREAT DETAIL TO ENSURE THE CLIENT'S UNDERSTANDING OF THE RISK, POTENTIAL RETURNS AND THE FEES ASSOCIATED WITH THE INVESTMENTS. THE INVESTMENTS WERE MADE WITH THE CLIENT'S BEST INTEREST IN MIND AND WERE IN LINE WITH HIS STATED GOALS AND OBJECTIVES.