NASD

ON 8/31 AND 9/29/2000 MEMBER, ACTING THRU KENNEDY,USED THE MAILS OR OTHER MEANS OR INSTRUMENTALITIES OF INTERSTATE COMMERCE TO EFFECT TRANSACTIONS IN SECURITIES WHEN IT FAILED TO MAINTAIN THE MINIMUM REQIRED NET CAPITAL, PREPARED INACCURATE TRIAL BALANCES AND NET CAPITAL COMPUTATIONS FOR AUGUST 31, AND SEPT. 29, 2000, FILED AN INACCURATE FOCUS PART IIA FOR MONTH ENDING 9/29/2000 OVERSTATING MEMBER'S NET CAPITAL, AND FAILED TO ESTABLISH AND MAINTAIN A SUPERVISORY SYSTEM DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS AND REGULATIONS AND NASD RULES AND APPOINT AN APPROPRIATE PRINCIPAL RESPONSIBLE FOR MAINTAINING ACCURATE BOOKS & RECORDS AND FILE ACCURATE FOCUS REPORTS.

Acceptance, Waiver & Consent(AWC)

Monetary/Fine

$15,000.00

Censure

MONETARY FINE OF $15,000 AND CENSURE

09/30/2000 THRU 06/28/2002.[THIRD PARTY](RR WITH CHICAGO CAPITAL,NEVER WITH WUNDERLICH SEC. INC.,ALLEGED UNSUITABLE INVESTEMENT RECOMMENDATIONS AND FAILURE TO SUPERVISE BY MGTM.

$89,845.00

$92,150.00

[THIRD PARTY],A FORMER BROKER WITH CHICAGO CAPITAL WAS NEVER AN EMPLOYEE OF WUNDERLICH SECURITIES. [THIRD PARTY] WAS THE BROKER FOR THE [CUSTOMERS] ACCOUNTS BUT HE WAS DISMISSED FROM THE CLAIM ONE WEEK BEFORE THE HEARING BECAUSE IT WAS PERCEIVED BY THE CLAIMANTS THAT HE WAS UNABLE TO PAY. KENNEDY WAS NAMED AS A RESPONDENT BECAUSE HE WAS A PRINCIPAL OF THE FIRM.

CLAIM ALLEGES UNAUTHORIZED TRADING, UNSUITABLE AND EXCESSIVE TRANSACTIONS AND BREACH OF FIDUCIARY DUTY WITH RESPECT TO EQUITY TRADING FROM JANUARY 2000 TO MARCH 2001. APPLICANT INTENDS TO VIGOROUSLY CONTEST CLAIM.

$1,070,946.00

$250,000.00

MR. KENNEDY WAS NOT THE SALESMAN OF RECORD ON THIS COMPLAINT. HE WAS CEO AND PRES. OF CHICAGO CAPITAL AND NAMED BECAUSE OF HIS POSITION WITH THE FIRM.HE HAS NEVER MET OR SPOKEN THE COMPLAINENTS.

THE NATIONAL ASSOCIATION OF SECURITIES DEALERS

NASD RULES 2110, IM-2110-1, 4632(A), 4730, 6130(B), 6130(D), 3010(B) AND SEC RULES 11AC-1, AND 17A-3(A) - RESPONDENT MEMBER ACTING THROUGH RESPONDENT KENNEDY, EFFECTED FOR THE JOINT ACCOUNT OF PUBLIC CUSTOMERS THE PURCHASE OF SECURITIES AT THE INITIAL PUBLIC OFFERING PRICE IN CONTRAVENTION OF THE NASD'S FREE-RIDING AND WITHHOLDING INTERPRETATION; RESPONDENT MEMBER, REPORTED TRANSACTIONS LATE WITHOUT THE ".SLD" MODIFIER; FAILED TO DECLINE OR ACCEPT TRANSACTIONS IN WHICH THE FIRM WAS THE NON-REPORTING MEMBER WITHIN 20 MINUTES AFTER EXECUTION; INACCURATELY REPORTED TRANSACTIONS TO ACT BY FAILING TO INCLUDE THE ".S" SHORT SALES INDICATOR; EXECUTED TRANSACTIONS IS SOES FOR THE ACCOUNTS OF PERSONS ASSOCIATED WITH THE FIRM WHEN SUCH PERSONS HAD PHYSICAL ACCESS TO A TERMINAL CAPABLE OF ENTERING ORDERS INTO SOES; FAILED TO COMMUNICATE TO THE NASD ITS BEST BIDS AND OFFERS IN TRANSACTIONS; FAILED TO PREPARE OR ACCURATELY PREPARE ORDER TICKETS; AND FAILED TO ESTABLISH, MAINTAIN AND ENFORCE WRITTEN SUPERVISORY PROCEDURES REASONABLY DESIGNED TO ACHIEVE COMPLIANCE WITH APPLICABLE SECURITIES LAWS AND REGULATIONS AND WITH APPLICABLE RULES OF THE NASD WITH RESPECT TO THE FIRM'S TRADING AND MARKET MAKING ACTIVITIES.

Acceptance, Waiver & Consent(AWC)

Monetary/Fine

$3,500.00

RESPONDENT MEMBER AND KENNEDY ARE CENSURED AND FINED $3,500, JOINTLY AND SEVERALLY, AND RESPONDENT MEMBER IS FINED $9,500.

FRAUD, MISREPRESENTATION, NEGLIGENCE, UNSUITABILITY, BREACH OF FIDUCIARY DUTY AND CONTRACT; ALLEGED DAMAGES IN AMOUNT OF $126,874.86.

$126,874.86

$37,500.00

WITHOUT ADMITTING LIABILITY, SETTLEMENT REACHED IN THE AMOUNT OF $37,500 [CUSTOMER] OPENED MANAGED ACCOUNT IN OUR ASSET MANAGEMENT GROUP AND SIMULTANEOUSLY OPENED MARGIN AND OPTION ACCOUNTS WITH ME BECAUSE HE WAS INTERESTED IN TRADING OPTIONS. CONTINUED TRADING WITH ME, LARGELY INITIATING OWN TRADES, UNTIL 12/85. DURING THAT PERIOD, [CUSTOMER] SUSTAINED LOSSES AND BLAMED ME AND THE CHICAGO CORPORATION, BRINGING SUIT OVER TWO YEARS LATER.

FRAUD, MISREPRESENTATION, NEGLIGENCE, UNSUITABILITY, BREACH OF FIDUCIARY DUTY, BREACH OF CONTRACT; ALLEGED DAMAGES IN THE AMOUNT OF $163,000

$163,000.00

$67,500.00

WITHOUT ADMITTING LIABILITY, SETTLEMENT REACHED IN THE AMOUNT OF $67,500 [CUSTOMER] OPENED MANAGED ACCOUNT IN OUR ASSET MANAGEMENT GROUP BUT THEN CLOSED THIS ACCOUNT BECAUSE SHE WAS INTERESTED IN OPTIONS TRADING. OPENED OPTIONS ACCOUNT WITH ME AND BECAME ACTIVE OPTIONS TRADER RELYING UPON INDEPENDENT NEWS SOURCES AND HER ASSOCIATION WITH [THIRD PARTY], ANOTHER CLIENT OF MINE, FOR MARKET INFORMATION CONTINUED TRADING WITH ME UNTIL JULY, 1985. DURING THAT PERIOD, SHE SUSTAINED LOSSES AND BLAMED ME AND THE CHICAGO CORPORATION, BRINGING SUIT OVER TWO YEARS LATER