SMITH HAYES FINANCIAL SERVICES CORPORATION

Voluntary Resignation

MCKEE VOLUNTARILY RESIGNED FROM SMITH HAYES ON MARCH 21, 2012, WITHOUT PRIOR NOTICE. IN THE 30 DAYS PRIOR TO HIS RESIGNATION, MCKEE WAS ASKED ON SEVERAL OCCASIONS TO CONFIRM HIS COMPLIANCE WITH SMITH HAYES POLICIES RELATING TO HIS USE OF A THIRD PARTY SOFTWARE PRODUCT THAT WAS USED TO CREATE FINANCIAL PLANS FOR CLIENTS. ON MARCH 2, 2012, MCKEE ACKNOWLEDGED THAT HE HAD SOME SERIOUS IMPROVEMENTS TO MAKE IN COMPLYING WITH SMITH HAYES POLICIES AND PROCEDURES. ON MARCH 7, 2012, MCKEE INDICATED THAT HE WOULD COMPLY BY THE END OF MARCH. MCKEE HAD NOT CONFIRMED HIS COMPLIANCE PRIOR TO HIS RESIGNATION. AFTER MCKEE'S RESIGNATION, SMITH HAYES DETERMINED THAT MCKEE HAD FAILED TO FOLLOW SMITH HAYES WRITTEN POLICIES AND PROCEDURES FOR SEVERAL MONTHS PRIOR TO HIS RESIGNATION. THESE FAILURES RELATED TO MAINTAINING AND PROVIDING TO SMITH HAYES COPIES OF COMMUNICATIONS AND AGREEMENTS WITH SOME CUSTOMERS IN THE CREATION AND DELIVERY OF FINANCIAL PLANS. FURTHER, SUBSEQUENT TO MCKEE'S RESIGNATION, SMITH HAYES HAS OBTAINED COPIES OF CUSTOMER FORMS THAT SUGGEST THAT MCKEE HAD TAKEN LISTS OF CUSTOMERS THAT HOLD MUTUAL FUNDS DIRECT WITH THE FUND COMPANIES, WITHOUT PROVIDING SMITH HAYES WITH A LIST OF SUCH ACCOUNTS. IT ALSO APPEARS THAT MCKEE MAY BE ASKING AND/OR PERMITTING CUSTOMERS TO SIGN AND SUBMIT BLANK FORMS TO TRANSFER MUTUAL FUND CUSTOMER ACCOUNTS TO HIS NEW BROKER/DEALER. THIS IS IN VIOLATION OF SMITH HAYES POLICIES AND PROCEDURES AND A VIOLATION OF THE PROTOCOL REQUIREMENTS.