CLIENT STATES AT 81 HE INVESTED $150,000 WITH THE IR AND THE IR PLACED THE MONIES IN TWO FEDERAL HOME LOAN MORTGAGE NOTES. CLIENT STATES HE WOULD NEVER HAVE AGREED TO PURCHASE THE BONDS IF HE HAD KNOWN THEY WOULD NOT MATURE UNTIL HE WAS 97 AND 103 YEARS OF AGE. CLIENT STATES IR DID NOT MENTION THAT IF THE MARKET VALUE CHANGED, THE LIQUID VALUE OF THE NOTES WOULD DROP. CLIENT STATES HE SOLD THESE BONDS FOR A LOSS OF $15,000 AND IS REQUESTING REIMBURSEMENT FOR LOSSES.

$15,000.00

IR HAS INDICATED THAT THE CLIENT WAS A REFERRAL FROM AN EXISTING CLIENT AND OPENED AN ACCOUNT WITH HIM IN JULY 2004 AND AT THAT TIME DISCUSSED AGENCY BONDS AND CDS. IT IS OUR UNDERSTANDING THE IR AND THE CLIENT MET AGAIN IN OCTOBER 2004 AND AGAIN DISCUSSED THESE INVESTMENTS. IR HAS INDICATED THAT THE CLIENT WAS NOT SATISFIED WITH CD RATES AT THAT TIME AND WANTED HIGHER INCOME. IT IS OUR UNDERSTANDING AT THAT TIME THE IR DISCUSSED THE DETAILS/FEATURES OF THE FEDERAL HOME LOAN BONDS AND THE DECISION WAS MADE TO INVEST $100,000 IN THIS BOND. IR HAS INDICATED THE CLIENT CONTACTED HIS OFFICE IN NOVEMBER 2004 AND INDICATED THAT HE WAS PLEASED WITH HIS PRIOR PURCHASE AND WANTED TO MAKE ANOTHER PURCHASE OF A SIMILAR INVESTMENT. OUR RECORDS REFLECT AN ADDITIONAL $50,000 WAS INVESTED IN A FEDERAL NATIONAL MORTGAGE ASSOCIATION BOND. IT IS OUR UNDERSTANDING IN MAY 2006, THE IR RECEIVED NOTICE THAT THE CLIENT'S DAUGHTER WAS ACTING AS POA ON THE ACCOUNT. AT THAT TIME, THE IR HAS INDICATED THAT HE AND THE CLIENT'S DAUGHTER DISCUSSED THE PORTFOLIO PORTFOLIO AND THE FEATURES OF THE BONDS. IT IS OUR UNDERSTANDING THE DAUGHTER INSTRUCTED THE IR TO SELL THE SECURITIES. IN CLOSING, IT DOES NOT APPEAR THE INVESTMENTS THAT WERE HELD IN THE ACCOUNT ARE OUTSIDE OF THE INVESTMENT OBJECTIVES AS LISTED ON THE ACCOUNT. BASED ON THIS AND THE INSTRUCTIONS FROM THE DAUGHTER TO SELL THE BONDS, THE REQUEST FOR REIMBURSEMENT WAS DENIED.