CLIENT, VIA AN ATTORNEY, ALLEGES THAT MS. DAVDSON MADE "MISREPRESENTATIONS" ABOUT BONDS PURCHASED IN THE ACCOUNT AND THAT THESE BONDS WERE "AN UNSUITABLE VEHICLE." DAMAGES APPEAR TO BE IN EXCESS OF $5,000. THIS MATTER WAS NOT REPORTABLE PRIOR TO RECEIPT OF A WRITTEN COMPLAINT ON OR ABOUT 12/3/01.

$17,887.00

I PROPERLY REPRESENTED THE BONDS TO THE CLIENT AS "A" RATED. I DID NOT CATEGORIZE THE BONDS AS "EXTREMELY LOW RISK" OR "GUARANTEED." THE CIRCUMSTANCES THAT RESULTED IN THE DECLINE OF THE BONDS WERE AN UNFORSEEABLE EVENT THAT COULD NOT HAVE BEEN PREDICTED.

CLIENT ALLEGES UNSUITABILITY IN HIS PURCHASES OF MUTUAL FUNDS. CLIENT IS SEEKING $80,840.36 IN DAMAGES AND RESCISSION OF THE HYPERION VAN CAMPEN AND PUTNAM II INVESTMENTS.

$100,000.00

$41,846.25

ARBITRATION PANEL AWARDED THE CLIAMANT A TOTAL OF $56,545.00. PSI AND THE FA STRONGLY DISAGREE WITH THE AWARD. CLAIMANT WAS A WEALTHY SOPHISTICATED BUSINESSMAN WITH A HISTORY OF BUYING SIMILAR MUTUAL FUNDS AT OTHER FIRMS.

SHERSON LEHMAN

Discharged

VIOLATION OF FIRM'S POLICY

DISCHARGED FOR VIOLATION OF FIRM POLICY. ACCESS AND USE OF PROPRIETARY INFORMATION ( ROLODEX)

THE CLIENT ALLEGED UNAUTHORIZED TRADES IN THE TRUST ACCOUNT. THE TRADES WERE LIQUIDATED EXCEPT THE WESTERN UNION POSITION WHICH, ACCORDING TO THE R.R. WAS HELD PURSUANT TO CLIENT'S INSTRUCTIONS. CLIENT HELD THE WESTERN UNION STOCK FOR OVER SIX MONTHS, DURING WHICH TIME IT DECLINED IN VALUE. ALLEGED DAMAGES IS APPROX. $15,000.

$17,611.00

$3,808.80

$3808.80 WAS PAID BY PAINEWEBBER & F/A DID NOT CONTRIBUTE TOWARDS SETTLEMENT. [TRUSTEE], THE TRUSTEE, IS A SOPHISTICATED INVESTOR WHO AUTHORIZED ALL TRANSACTIONS. HE LIQUIDATED ALL TRANSACTONS EXCEPT ONE WHICH HE CHOSE TO HOLD--THE WESTERN UNION. HAD HE LIQUATED IMMEDIATELY, THERE WOULD HAVE NOT BEEN THE LOSSES.

NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

Consent

Monetary/Fine

$17,500.00

Censure

Not Provided

THE CLIENTS COMPLAINED THAT THEIR FUNDS WERE PLACED IN THE HUTTON INVESTMENT SERIES GOVERNMEN TFUND ("H.I.S.") AND SUBJECTED TO MARKET RISK WITHOUT BEING ADEQUATELY INFORMED AS TO THE COST INVOLVED (DEFERRED SALES CHARGE) OR THE MARKET RISK.

$33,104.78

DAVIDSON PAID BACK TO E.F. HUTTON THE FULL AMOUNT OF THE SETTLEMENTS AFTER DEDUCTING PRORATA SHARE OF LOSSES WHICH WERE THE RESPONSIBILITY OF N.Y. OPERATIONS AND DST (FOR FAILING TO CORRECT ACCOUNTS IN A TIMELY MANNER). THIS AMOUNT WOULD ALSO INCLUDE THE REVERSING OF ANY DEFERRED SALES COMMISSIONS AND SHOULD RESULT IN DAVIDSON BEING CHARGED LESS THAN $5,000 IN EACH ACCOUNT. THE PURCHASEES OF THE H.I.S. FUND WERE RECOMMENDED BASED ON THE PRIOR PERFORMANCE OF THE THE FUND AS COMPARED TO THE INVETMENTS THE CLIENTS WERE PREVIOUSLY IN. ALL TRADES WERE AUTHORIZED BY THE CLIENTS AND [CUSTOMER] IS A SOPHISTICATED INVESTOR AND SHOULD KNOW THAT GOVERNMENT BOND FUNDS DO DLUCTUATE IN VALUE. THIS WAS SETTLED IN ORDER TO PREVENT FURTHER LITIGATION EXPENSES AND DELAYS. I FEEL THAT A "YES" RESPONSE TO QUESTION 22H1 IS INAPPROPRIATE SINCE I WAS NOT PERSONALLY LIABLE FOR THE ENTIRE AMOUNT OF THE CLAIM.

MERRILL LYNCH, PIERCE, FENNER & SMITH

Discharged

Not Provided DAVIDSON DID NOT FOLLOW INSTRUCTIONS IN THE PURCHSAE OF STOCK. UPON INVESTIGATION, FIRM DETERMINED THAT DAVIDSON SOLICITED THE TRANSACTION IN VIOLATION OF FIRM POLICY. FIRM REIMBURSED CUSTOMER AND TWO OTHERS FOR A TOTAL AMOUNT OF $18,092.08. MR. DAVIDSON INFORMED ME THAT THE COMPLIANCE DEPARTMENT HAD RECOMMENDED HER TERMINATION DUE TO THE FACT THAT THREE CLIENTS INVESTED IN NORD RECOURCES, A STOCK IN WHICH MERRILL LYNCH DID NOT

TERMINATION HAVE AN OPINION, BASE DON TAKEOVER RUMORS, DAVIDSON REPORTEDLY SOLICITED ORDERS IN A STOCK WHICH THE FIRM DOES NOT FOLLOW AND MISMARKED HER ORDER TICKETS TO INDICIATE THE TRADES WERE UNSOLICITED. SHE ALSO VIOLATED FIRM PROCEDURES AND POLICIES BY FAILING TO RESPOND IN A FORTHRIGHT FASHION WHEN QUESTIONED BOUT THE SUBJECT TRADES, BETWEEN JUNE AND JULY OF 1982. ADDITIONAL INFORMATION RECEIVED FROM E.F. HUTTON DISCLOSES THAT DUE TO THE COMPLAINTS, DAVIDSON LOST APPROXIMATELY $15,000 IN COMMISSIONS, DUE TO HER, FROM MERRILL LYNCH.

[CUSTOMER] PURCHASED 2000 SHARES OF NORD RESOURCES COMMON STOCK, ALLEGEDLY BASED ON TAKEOVER RUMORS. HE SENT A COMPLAINT LETTER TO RECOUP DAMAGES OF APPROX. $20,000.

$20,000.00

$18,092.08

ANNE DAVIDSON LOST APPROXIMATELY $15,000 IN COMMISSIONS OWED HER BY MERRILL LYNCH TO SETTLE. FIRM SETTLED WITH CUSTOMER AND TWO OTHERS FOR A TOTAL OF $18,092.08. TO DAVIDSON'S KNOWLEDGE, OTHERS DID NOT INITIATE COMPLAINTS FOR 400 SHARES AND 500 SHARES. MERRILL IN THEIR INVESTIGATION, SETTLE WITH THEM. NOT PROVIDED