H. Beck, Inc.

Discharged

Failure to follow firm policies regarding altering customer documents.

Unsuitable investments

Client claims account value loss due to Registered Representative's unauthorized trades, negligence on certain stocks, unauthorized increase in Net Worth and Liquid Net worth; Forgery; unauthorized trading/discretion.

$114,000.00

Payout

$5,000.00

GARY C. SMITH'S PORTION OF THE MATTER WAS SETTLED VIA PAYMENT OF $5000 ON 02/09/2009. MR. SMITH IS CURRENTLY COVERED FOR E & O INSURANCE WITH MERCER, WHICH IS A REQUIREMENT FOR MY INSURANCE COMPANY, WHOSE NAME IS MERCER AND COVERS INSURANCE AGENTS WITH OHIO NATIONAL INSURANCE CO.

DPP PRODUCTS UNSUITABLE AND SPECULATIVE BASED ON THEIR INVESTMENT OBJECTIVES AND RISK TOLERANCE.

$210,000.00

$50,000.00

IN 2010 MY FRIENDS AND CLIENTS, RESIDENTS OF HEMET, CA, RECEIVED SUGGESTIONS, I BELIEVE, FROM A NEW CPA AND INVESTMENT ADVISER THAT THEY SHOULD TRY TO RECOVER SOME PAPER LOSSES SUFFERED IN THEIR CHARITABLE REMAINDER TRUST RESULTING FROM THE GREAT RECESSION AND THE FINANCIAL CRISIS. IT WAS SUGGESTED THAT THEY COULD USE SECURITIES' ARBITRATION TO TRY TO RECOUP SOME OF THESE PAPER LOSSES. AS THE RESULT OF ONGOING AND REGULAR CONSULTATIONS I HAD BEEN HOLDING WITH THEM, I JUDGED THAT THEY WERE OVERSPENDING THEIR RESOURCES WHICH INCLUDED INCOME FROM THE ASSETS THAT HAD BEEN PLACED INTO THE CHARITABLE TRUST DUE TO BOTH THEIR PURCHASE OF A VERY EXPENSIVE RECREATIONAL VEHICLE WHICH WAS COSTING THEM OVER $1,200.00 PER MONTH, NOT INCLUDING REPAIRS, INSURANCE, MAINTENANCE AND COSTS OF OPERATION AND THEIR INTENDED POST-RETIREMENT LIFESTYLE. WHEN THEY SOLD THEIR AUTO REPAIR BUSINESS AND A TRIPLEX EXACTLY AT THE TOP OF THE CALIFORNIA REAL ESTATE MARKET THEY FELT THAT THEY WERE FINANCIALLY WELL ENOUGH OFF TO AFFORD SOME LUXURIES, SUCH AS THE RV AND PLANS TO USE IT TO SEE THE USA AS PART OF THEIR RETIREMENT LIFESTYLE. PRIOR TO THE SALE OF THESE ASSETS, I HAD BEEN REFERRED TO THEM BY A COMMON FRIEND AND BEGAN TO CONSULT WITH THEM REGARDING THE BEST WAY TO ESTABLISH THEMSELVES TO TRY TO ACCOMPLISH THEIR RETIREMENT GOALS. IT BECAME CLEAR TO ME THAT THEY WOULD BENEFIT GREATLY FROM THE USE OF A CHARITABLE REMAINDER TRUST TO LEGITIMATELY AVOID THE PAYMENT OF CAPITAL GAIN AND INCOME TAXES FROM THE SALE OF THESE ASSETS. THEY WERE NOT AWARE OF THIS STRATEGY, NOR WERE THEIR CPA/TAX PREPARER, THEIR REAL ESTATE AGENT, OR THEIR PERSONAL ATTORNEY. AFTER CONSIDERING THE ALTERNATIVES RELATIVE TO THE SALE OF THESE PROPERTIES AND PAYMENT OF TAXES, THESE ADVISERS UNANIMOUSLY CONCURRED THAT THE SAVINGS OF THE ATTENDANT TAXES FROM THE SALE OF THESE PROPERTIES WOULD BE A MAJOR BENEFIT TO THEM. THEIR TAX PREPARER INFORMED THEM THAT THEY SAVED APPROXIMATELY $300,000 IN TAXES BY FOLLOWING MY ADVICE. INSTEAD OF PAYING TAXES THESE DOLLARS WERE ABLE TO BE INVESTED TO ADD TO THEIR RETIREMENT INCOME IN THE AMOUNT OF APPROXIMATELY $21,000 PER YEAR JUST FROM THE TAX SAVINGS. IN OUR CONSULTATIONS DEALING WITH THE SALE OF THESE ASSETS WE DISCUSSED HOW THE USE OF THE RV WAS GOING TO BE PART OF THEIR NEW LIFESTYLE. BOTH THEIR CPA/TAX PREPARER AND I WARNED THEM THAT THE EXPENDITURES RELATED TO THE RV WERE NOT IN THEIR BEST INTERESTS. THEY ALSO WERE PLANNING TO VISIT [CUSTOMER'S] HOMELAND IN CROATIA IN AN EXTENDED TRIP, WHICH THEY DID. WE CAREFULLY CONSIDERED ALL OF THESE EXPECTATIONS, BUT DID NOT HAVE THE FOREKNOWLEDGE OF HOW DEVASTATING THE FINANCIAL CRISIS WOULD BE TO THEIR PLANS. WE DID ALLOW FOR APPROXIMATELY $300,000 IN CASH WHICH WOULD BE PLACED UNDER THEIR CONTROL OUTSIDE OF THE ASSETS INSIDE THE CHARITABLE REMAINDER TRUST, WHICH AMOUNTED TO APPROXIMATELY $900,000. IN THE ARBITRATION WHICH THEY PURSUED ONE OF THE ALLEGATIONS THEY RAISED WAS THAT THEY DID NOT HAVE ANY LIQUIDITY IN THE FINANCIAL PICTURE, NOTWITHSTANDING THE $300,000 THAT I ALLOWED FOR TO IMPLEMENT THEIR RETIREMENT AND TRAVEL OBJECTIVES. I NEVER COULD UNDERSTAND HOW A CLAIM COULD BE MADE THAT NO LIQUIDITY WAS PROVIDED, WHEN $300,000 WAS DEPOSITED INTO THE PERSONAL BANK ACCOUNTS AT THE TIME OF THE SALE OF THEIR AUTO REPAIR BUSINESS AND ALSO THEIR TRIPLEX. THIS AMOUNT ALSO ESCAPED TAX, DUE TO MY SUGGESTION TO UTILIZE THE CHARITABLE TRUST AS THE VEHICLE TO SELL THEIR HIGHLY-APPRECIATED ASSETS. AS PART OF THE INVESTMENT PLAN TO PUT THE MONEY TO WORK FROM THE SALE OF THEIR ASSETS, THE CREATION OF INCOME WAS HIGH ON OUR LIST. TO ACCOMPLISH THIS INCOME CREATION, I EXPLAINED TO THEM (CLIENTS) HOW REAL ESTATE INVESTMENT TRUSTS (REITS) WERE AN ASSET CLASS THAT WAS BECOMING MORE POPULAR SINCE THE OBJECTIVES OF THESE REITS WERE: 1. PRESERVATION OF PRINCIPAL AND 2. THE CREATION OF INCOME. SINCE THESE ASSETS APPEARED TO MEET THEIR OBJECTIVES, WE PROCEEDED WITH THE PLACEMENT OF $30,000 INTO SEVEN DIFFE

Payout

$5,000.00

GARY C. SMITH'S PORTION OF THE MATTER WAS SETTLED VIA PAYMENT OF $5000 ON 02/09/2009. MR. SMITH IS CURRENTLY COVERED FOR E & O INSURANCE WITH MERCER, WHICH IS A REQUIREMENT FOR MY INSURANCE COMPANY, WHOSE NAME IS MERCER AND COVERS INSURANCE AGENTS WITH OHIO NATIONAL INSURANCE CO.

ALLEGES UNDISCLOSED SOLICITOR FEES WERE CHARGED TO HIS ACCOUNT, AND AN EXCESSIVE COMMISSION CHARGE FOR PURCHASE OF A VARIABLE ANNUITY.

$25,000.00

$9,950.00

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC NEWS DIGEST, ISSUE 92-113, DATED JUNE 11, 1992 ADMINISTRATIVE PROCEEDINGS DISCLOSES; "PROCEEDINGS INSTITUTED AGAINST GARY SMITH"; THE COMMISSION INSTITUTED CEASE AND DESIST PROCEEDINGS AGAINST GARY C. SMITH (SMITH) OF NORTH CAROLINA. SMITH, WITHOUT ADMITTING OR DENYING THE FINDINGS IN THE ORDER, AGREED TO THE ENTRY OF A COMMISSION ORDER MAKING FINDINGS AND ORDERING SMITH TO PERMANENTLY CEASE AND DESIST FROM COMMITTING OR CAUSING FUTURE VIOLATIONS OF THE RECORDKEEPING AND REPORTING PROVISIONS OF THE INVESTMENT ADVISERS ACT.

Order

Cease and Desist/Injunction

THE ORDER MAKES FINDINGS THAT SMITH VIOLATED THE RECORDKEEPING PROVISIONS OF THE ADVISERS ACT BY FAILING TO KEEP REQUIRED BOOKS AND RECORDS AND VIOLATED THE REPORTING PROVISIONS OF THE ADVISERS ACT BY FAILING TO STATE IN A FORM ADV IT FILED WITH THE COMMISSION IN 1989 THAT IT HAD DISCRETIONARY AUTHORITY REGARDING CLIENT SECURITIES TRANSACTIONS. SMITH ALSO VIOLATED THE REPORTING PROVISIONS OF THE ADVISERS ACT BY FAILING TO FILE AN AMENDED FORM ADV WHEN IT BECAME INACCURATE TO REPORT: HIS FIRM'S OBTAINING DISCRETIONARY AUTHORITY IN 1987; SMITH'S SUSPENSION BY THE STATE OF UTAH FROM BEING ASSOCIATED WITH ANY BROKER-DEALER IN 1989; IN ADDITION, SMITH VIOLATED THE REPORTING PROVISIONS OF THE ADVISERS ACT BY NOT FILING ANNUAL REPORTS ON FORMS ADV-S AS REQUIRED.

I WAS THE PRESIDENT OF SUMMIT FINANCIAL ADVISORY AN RIA. IN LATE 1988 MY RECORDS ON MY COMPUTER WERE DESTROYED IN A STORM. IN 1989 THE SEC CHARGED SUMMIT FINANCIAL WITH FAILURE TO MAKE AND KEEP CURRENT ACCOUNTING RECORDS. ALSO THE SEC CHARGED SUMMIT FINANCIAL WITH NOT DISCLOSING THAT FACT THAT IT HAD DISCRETIONARY AUTHORITY TO MOVE CLIENTS MONEY BETWEEN A MUTUAL FUND AND A MONEY MARKET ACCOUNT, AND FAILED TO FILE ANNUAL REPORTS ON OUR FORM ADV.

FAILED TO DISCLOSE IMPORTANT MATERIAL INFORMATION AND CONFLICT OF INTEREST.

$30,000.00

$30,000.00

[CUSTOMERS] WERE CLIENTS OF ANOTHER BROKER IN MY OFFICE. HE AND I SUGGESTED THIS PRIVATE INVESTMENT WHICH HAD BEEN PREVIOUS APPROVED BY MY B/D - HIBBARD BROWN. THE COMPANY WENT OUT OF BUSINESS - IRS SEIZED ITS ASSETS. [CUSTOMERS] CAME AFTER ME ALONE. DID NOT FILE COMPLAINT AGAINST THEIR AGENT. HAVE TRIED TO NEGOIATE TERMS OF SELLTEMENT, BUT NOTHING HAS YET BEEN SETTLED.

NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

ARTICLE III, SECTION 1 OF THE RULES OF FAIR PRACTICE -RESPONDENT SMITH FAILED TO HONOR A $71,274.22 ARBITRATION AWARD AND PAY FORUM FEES IN THE AMOUNT OF $3,750 TO THE NASD.

Decision

Monetary/Fine

$5,000.00

Censure

Bar

DBCC COSTS OF $542.75

NBCC DECISION RENDERED MARCH 4, 1993, WHEREIN THE FINDINGS MADE ARE AFFIRMED AND THE SANCTIONS IMPOSED ARE MODIFIED; THEREFORE, RESPONDENT SMITH IS CENSURED, FINED $5,000, WITH THE PROVISO THAT THE NASD WILL REFRAIN FROM COLLECTING THE FINE UNTIL THE ARBITRATION AWARD IS SATISFIED IN FULL PURSUANT TO THE SETTLEMENT AGREEMENT, UNLESS SMITH DEVIATES FROM THE PAYMENT SCHEDULE IN WHICH CASE THE NASD IMMEDIATELY WILL ENFORCE THE FINE; BARRED FROM ASSOCIATION WITH ANY MEMBER OF THE NASD IN ANY CAPACITY EXCEPT SERIES SIX REGISTRATION, WITH THE PROVISO THAT HE MAY APPLY TO REMOVE THE PARTIAL BAR UPON PAYMENT OF THE AWARD IN FULL, AND THAT HIS DEFAULT IN THE PAYMENT SCHEDULE WILL RESULT IN A BAR IN ALL CAPACITIES; REQUIRED TO FUNCTION ONLY UNDER THE DAILY ONE-TO-ONE SUPERVISION OUTLINED; AND ASSESSED DBCC COSTS OF $542.75. IF NO FURTHER ACTION, DECISION IS FINAL APRIL 5, 1993. APRIL 5, 1993 - DECISION IS FINAL. AUGUST 3, 1993 - NOTIFICATION RECEIVED FROM DISTRICT NO. 7 THAT RESPONDENT SMITH DEFAULTED ON THE SETTLEMENT AGREEMENT CONCERNING THE ARBITRATION AWARD, THEREFORE, HE IS BARRED FROM ASSOCIATION WITH ANY MEMBER OF THE NASD IN ANY CAPACITY AND COLLECTION OF THE FINE IS IN EFFECT. APRIL 4, 2002 - BAR IS LIFTED. THE FINE, ASSESSED COSTS, AND ARBITRATION AWARD WERE DISCHARGED IN BANKRUPTCY OCTOBER 11, 1994, CASE #B-93-13906 C-7D IN THE U.S. BANKRUPTCY COURT FOR THE MIDDLE DISTRICT OF NORTH CAROLINA. THE FORUM FEES ($3,750)HAVE BEEN PAID BY RESPONDENT.

PURSUANT TO ARBITRATION PROCEEDING IN JULY 1991 AN AWARD OF $71,000 WAS GRANTED TO A FORMER CLIENT. A SETTLEMENT AGREEMENT TO SATISFY THE AWARD WAS ENTERED INTO COVERING THE PERIOD FROM 1991-1993. EVEN THOUGH PAYMENTS OF $27,000 HAD BEEN MADE AND MONTHLY PAYMENTS WERE BEING MADE. THE FAILURE TO MAKE A BALLOON PAYMENT OF THE BALANCE RESULTED IN THE CLIENT'S REQUEST FOR THE NASD TO DECLARE THAT THE AWARD WAS DEFAULTED AND TO HAVE MY LICENSE WITHDRAWN. THE BAR WAS PLACED IN CONSEQUENCE. IN 2002 I PLEADED THAT LEGAL SATISFACTION WAS MADE ON THE AWARD AND THE NASD STAFF ACCEPTED THAT OPINION AND INDICATED I COULD AGAIN OBTAIN MY SEC. LICENSE.

DIVISION OF SECURITIES, DEPARTMENT OF COMMERCCE

THE PETITION ALLEGES THAT MR. SMITH FAILED TO INFORM HIS BROKER-DEALER IN WRITING OF PRIVATE SECURITIES TRANSACTIONS AND FAILED TO OBTAIN WRITTEN PERMISSION FOR SAID TRANSACTIONS AND THAT MR. SMITH FAILED TO INFORM PURCHASERS OF SECURITIES THROUGH HIM OF HIS AFFILIATION WITH THE ISSUER OF SAID SECURITIES. PETITION ALSO ALLEGED THAT APPROXIMATELY 40 PEOPLE INVESTED APPROXIMATELY $1000.000 THROUGH MR. SMITH BUT DID NOT ALLEGE ANY MONEY DAMAGES.

Stipulation and Consent

Suspension

STATE OF UTAH SECURITIES REGISTRATION

60 DAYS

8/1/1989

10/31/1989

MR. SMITH CONSENTED TO THE IMPOSITION OF THE SANCTION WITHOUT ADMITTING OR DENYING THE ALLEGATIONS OF THE PETITION.