FINRA

SECTION 17(A) OF THE SECURITIES ACT OF 1933, SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5 THEREUNDER, NASD RULES 2110, 2120, 2210 AND 3010: RESPONDENT RAYMOND LEE NORAGON KNEW, OR RECKLESSLY DISREGARDED, THAT THE PRIVATE PLACEMENT OFFERING DOCUMENTS AND MARKETING MATERIALS SUPPLIED BY A HEDGE FUND MANAGER, AND USED BY HIS MEMBER FIRM'S SALESMEN TO SOLICIT CUSTOMERS TO PURCHASE THE HEDGE FUND AND ITS GENERAL PARTNER, CONTAINED MATERIALLY FALSE AND MISLEADING INFORMATION AND OMISSIONS OF MATERIAL FACT. WITHOUT FURTHER INVESTIGATION, NORAGON RELIED ON THE HEDGE FUND'S MANAGER'S CLAIMS THAT TEST RESULTS CONTAINED IN SALES MATERIAL WERE BASED ON MORE THAN HYPOTHETICAL RETURNS, AND PERMITTED SALESMEN TO MAKE THE SAME REPRESENTATIONS TO THEIR CUSTOMERS. NORAGON DID NOT QUESTION THE USE OF AN OUTDATED PRIVATE PLACEMENT MEMORANDUM (PPM) AND DID NOT TAKE REASONABLE STEPS TO INVESTIGATE DISPARITIES BETWEEN INFORMATION PROVIDED BY THE HEDGE FUND MANAGER, THE PPM AND SALES MATERIAL; DID NOT DETERMINE WHETHER OTHER PARTNERS WERE INVOLVED IN THE MANAGEMENT OF THE HEDGE FUND; PERMITTED SALESMEN TO INCLUDE OUTDATED INFORMATION ABOUT THE HEDGE FUND'S MANAGEMENT IN THEIR SALES PITCHES TO CUSTOMERS; AND DID NOT REQUEST COPIES OF THE HEDGE FUND'S AUDITED FINANCIAL STATEMENTS, EVEN THOUGH THE HEDGE FUND'S LIMITED PARTNERSHIP AGREEMENT REQUIRED THE HEDGE FUND TO PREPARE AND DISTRIBUTE ANNUAL AUDITED FINANCIAL STATEMENTS FOR INVESTORS. NORAGON KNEW OF FRAUD ACTIONS AGAINST THE HEDGE FUND'S MANAGER, BUT DID NOT DISCLOSE THE ACTIONS TO HIS SALESMEN AND DID NOT REQUIRE THEM TO DISCLOSE THE ACTIONS TO THEIR CUSTOMERS, EVEN AFTER THE SALESMEN LEARNED OF THE FRAUD ACTIONS. NORAGON, WITHOUT TESTING THE VALIDITY OF THE MANAGER'S CLAIM THAT REGULATION D COULD BE BYPASSED BY INVESTING IN THE GENERAL PARTNERSHIP, PERMITTED SALESMEN TO REPRESENT THE GENERAL PARTNERSHIP AS AN INVESTMENT THAT WOULD PERMIT NON-ACCREDITED INVESTORS TO PARTICIPATE IN THE HEDGE FUND'S TRADING STRATEGY. NORAGON PERMITTED SALESMEN TO USE THE HEDGE FUND'S MISLEADING MARKETING MATERIALS TO SOLICIT CUSTOMERS TO PURCHASE LIMITED PARTNERSHIP INTERESTS IN THE GENERAL PARTNERSHIP. NORAGON AUTHORIZED THE SALE OF THE HEDGE FUND AND THE GENERAL PARTNERSHIP TO NON-ACCREDITED INVESTORS, CONTRARY TO HIS FIRM'S WRITTEN SUPERVISORY PROCEDURES THAT LIMITED THE SALE OF PRIVATE PLACEMENTS TO ACCREDITED INVESTORS AND INSTITUTIONAL CLIENTS. IN ADDITION, CONTRARY TO HIS FIRM'S WRITTEN SUPERVISORY PROCEDURES, NORAGON FAILED TO CONDUCT A REASONABLE DUE DILIGENCE REVIEW AND FAILED TO ENSURE THE DISCLOSURE OF ALL MATERIAL INFORMATION RELATING TO THE HEDGE FUND AND THE GENERAL PARTNERSHIP.

Acceptance, Waiver & Consent(AWC)

Bar (Permanent)

All Capacities

Indefinite

10/7/2009

WITHOUT ADMITTING OR DENYING THE FINDINGS, NORAGON CONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS; THEREFORE, HE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY. THE SETTLEMENT INCLUDES A FINDING THAT NORAGON WILLFULLY VIOLATED SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5 THEREUNDER, AND THAT UNDER ARTICLE III, SECTION 4 OF THE FINRA BY-LAWS, THIS OMISSION MAKES HIM SUBJECT TO A STATUTORY DISQUALIFICATION WITH RESPECT TO ASSOCIATION WITH A MEMBER.

FINRA

NASD RULES 2110, 3010, 3010(A), 3010(C): NORAGON FAILED TO ENFORCE HIS MEMBER FIRM'S SUPERVISORY PROCEDURES, IN THAT HE FAILED TO CONDUCT AN ANNUAL COMPLIANCE MEETING, FAILED TO CAUSE THE INSPECTION OF OFFICES OF SUPERVISORY JURISDICTION (OSJ) AND NON-OSJ BRANCH OFFICES AND FAILED TO ENSURE THAT OSJ AND NON-OSJ BRANCH OFFICES WERE EXAMINED AND THE EXAMINATION DOCUMENTED. NORAGAN APPROVED HIS MEMBER FIRM'S PARTICIPATION IN SECURITIES OFFERINGS WITHOUT ENSURING THAT THE PROSPECTUSES USED IN CONNECTION WITH THE OFFERINGS CONTAINED ADEQUATE DISCLOSURES AND WERE NOT MATERIALLY MISLEADING.

Decision & Order of Offer of Settlement

Monetary/Fine

$25,000.00

Suspension

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, NORAGON CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE HE IS FINED $25000 AND SUSPENDED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY PRINCIPAL CAPACITY FOR SIX MONTHS. THE SUSPENSION IS IN EFFECT FROM APRIL 6, 2009, THROUGH OCTOBER 5, 2009.

CHARGED WITH ONE COUNT OF CRIMINAL CONVERSION, A CLASS "A" MISDEMEANOR IN INDIANA. FOR WRONGFULLY TAKING $100.00 IN CASH FROM MY EMPLOYER, L.S. AYRES. I PLED GUILTY AS CHARGED AND AGREED TO MAKE RESTITUTION.

MISDEMEANOR

UPON PLEADING GUILTY, I WAS CONVICTED AND ORDERED TO MAKE RESTITUTION, PLUS PAY $100.00 FINE AND COURT COSTS. I WAS ALSO SENTENCED TO SERVE 90 DAYS IN ALLEN COUNTY JAIL, WITH ALL BUT 10 DAYS OF THE SENTENCE SUSPENDED IN CONSIDERATION OF IT BEING A FIRST OFFENSE. SENTENCE BEGAN AND FINES WERE PAID IMMEDIATELY AFTER JUDGEMENT.