Insight Presentation To Email (Converted)

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Insight Presentation To Email (Converted)

  1. 1. IINNSSIIGGHHTT CCOONNSSUULLTTAANNTTSS AANNDD AADDVVIISSOORRSS,, LLLLCC To: Mr. XXXX XXXXXX Re: Investigative Reporting – Bank of America Investment Account Dear Mr. XXXXXXXX, Insight Consultants and Advisors, LLC has completed reviewing your account documentation that you have provided and have performed the accounting and research to come up with the following: • Your account has suffered a cumulative loss since inception of $219,542 equal to a 36% loss on a starting balance of $609,801 • Your annualized loss is 16.61% (unrealized) derived from February 28, 2007 through April 30, 2009 • To reach your original invested amount of $609,801 your account will need to generate the following returns over the corresponding periods of time: o 8.50 years at 6% compounded return o 6.50 years at 8% compounded return o 5.40 years at 10% compounded return o 4.70 years at 12% compounded return o 3.80 years at 15% compounded return o 2.80 years at 20% compounded return o 2.40 years at 25% compounded return Based on our interviews with you and your preference for conservative no risk investments, and taking into account the current interest rate environment, a number of approximately 3.25% (pre-tax) would be the comparative number using the current yield on the 10 year Treasury Note. After reviewing the emails between yourself and your representative, the actual purchases, amounts and types of products purchased, there are several points of concern that we would like to point your attention to.
  2. 2. IINNSSIIGGHHTT CCOONNSSUULLTTAANNTTSS AANNDD AADDVVIISSOORRSS,, LLLLCC Background Summary and Narrative All assumptions contained within this summary are based upon information provided by Mr. XXXXXX during interviews with Insight Consultants and Advisors, LLC during the months of April 2009 and May 2009. All figures are based on account statements, correspondence and other documentation provided by Mr. XXXXXXX. In 2007, Mr. XXXXXXX was solicited by Premier Banking Services at Bank of America to begin an all encompassing banking relationship with money that he had recently come into from the operation of his business. Mr. XXXXXXX was solicited to transfer his money from his current FDIC Insured checking and savings accounts into a brokerage account held at Banc of America Investment Services, Inc. This was done in January of 2007 when Mr. XXXXXXX began a relationship with Mr. XXXXXXXX, Vice President of Investments. Up to this point, Mr. XXXXXXX has stated that he had never invested in equity or bond markets at any time and has never owned stocks, bonds, mutual funds or any other type of investments outside of his employer retirement plan. Mr. XXXXXX has stated in interviews with Insight that he specifically told his representative that he wanted a “no-risk, interest bearing account, such as a CD or Money Market account.” He further stated that he could have placed his money in a Lebanese Bank and received between 7% and 8% APY on his funds but was willing to take less to have the money in the United States with a large banking institution. Beginning in February 28, 2007 and ending May 8th , 2007 the following purchases occurred in Mr. XXXXXXX’ account: Citigroup Capital Trust XVII Preferred e $ 209,800 First Trust Closed End Municipal Unit Investment Trust $ 200,001 First Trust Dividend Income Unit Investment Trust $ 100,000 Eaton Vance Large Cap Growth, Class B share $ 25,000 Goldman Sachs Equity Growth Portfolio, Class A share $ 75,000
  3. 3. IINNSSIIGGHHTT CCOONNSSUULLTTAANNTTSS AANNDD AADDVVIISSOORRSS,, LLLLCC During the period of January 2007 and April 2009, Mr. XXXXXXX’ accounts suffered principal losses, inclusive of dividends earned and reinvested, in the amount of $219,542. During the same period, Mr. XXXXXXX’ presumed interest, not earned, (using Banc of America Investment Services Money Market average effective 7 day yield throughout) was equal to $43,193. This brings the total losses inclusive of opportunity costs $262,734. It is important to note that these numbers are also net of the market recovery that has occurred since the lows set on March 9th , 2009. In fact Mr. XXXXXXX’ account’s low point based on statements provided by Banc of America Invest Services, Inc. and not inclusive of opportunity costs was $274,720 or a cumulative stated loss of 45.05%.
  4. 4. IINNSSIIGGHHTT CCOONNSSUULLTTAANNTTSS AANNDD AADDVVIISSOORRSS,, LLLLCC Sampled Supporting Documentation The investment vehicles that were placed into Mr. XXXXXXX’ account; were subsequently questioned by Mr. XXXXXXX in email form, addressed to Mr. XXXXXXX commencing on May 18, 2007. Sent: Friday, May 18, 2007 4:47 AM To: XXXXXXX@bankofamerica.com Attachments: Hi XXXXXX, I noticed that the value of the account is decreasing. I thought the money is placed in a 6% or so earning mode. If it loses value, what is the meaning of the 6% number here? XXXXX. Based on the email documentation provided by Mr. XXXXXXX, there was neither a verbal or written response provided with an answer to his questions about his holdings at this time. Subsequent emails sent by Mr. XXXXXXX follow a similar theme with even more fearful and specific questions to Mr. XXXXX regarding his account: Sent: Friday, June 08, 2007 10:41 AM To: XXXXXX@bankofamerica.com Attachments: Hi XXXXX, I have sent you a couple of email asking for clarifications about the account and still have not heard back. The account is quickly losing money and I would like to understand how the whole thing works. Specifically, I would like to understand how the quoted 6% interest comes into play, and what the chance are that the account loses money over a year's period. If I don't hear back from you soon, I would be inclined to withdraw the money and place it in a more secure place. Please answer as soon as possible.Thanks,
  5. 5. IINNSSIIGGHHTT CCOONNSSUULLTTAANNTTSS AANNDD AADDVVIISSOORRSS,, LLLLCC Furthermore, Mr. XXXXXXX goes on to state to Mr. Dowd that he is gravely concerned about fluctuation, loss of principal and the guarantees he was presented with by his Mr. XXXX: “….however, the size of these fluctuations has reached 3.5% in the downturn in less than 3 days and there is no guarantee that it would turn around. I have a couple of specific questions that I would like answered: 1- If the account pays 6%, when should I expect these payments to occur? 2- What happens if I decide to withdraw the money before the payment is due? Do I still get any interest payment? 3- Is it possible for the account to lose money over a year's time counting fluctuation and interest payment together. As you know, I am interested in the least amount of risk for this first batch of money. If there is a likelyhood that a significant amount of it gets lost, I would be inclined to remove it from the brokerage account.” (June 8 th , 2007, 11:26a.m.) see attached
  6. 6. IINNSSIIGGHHTT CCOONNSSUULLTTAANNTTSS AANNDD AADDVVIISSOORRSS,, LLLLCC Areas of Concern and Statements of Fact: • Account Opening Profile and any subsequent changes are imperative to determine Investment Suitability, Risk Level, Time Horizon and Investment Experience o Request Copies of all Account Opening Documentation and any profile updates for comparison • Money was transferred from FDIC Insured accounts into Non-FDIC Insured, non-guaranteed brokerage account under the assumption of a fixed 6% APY return. o It is important to note that Mr. XXXXXXX’ account did not even contain an FDIC option, which is available for his cash reserves. • Correspondence between Mr. XXXXXXX and Mr. XXXXX went unanswered numerous times and specific investment related questions were not answered for periods up to three weeks. Market volatility at that time dictates prompt, immediate response to clients. Representative also appears to have sent unapproved correspondence to Mr. XXXXXXX. o Possible negligence on representative’s behalf in not forwarding what could be construed as written client complaint to immediate OSJ o Representative provided unapproved email correspondence that contained unapproved market commentary and a representation that “The federal reserve meets next week, and I am expecting some relief from this sell off then. There is no guarantee we will get it, but I do expect to see prices rally back after their meeting. (June13, 209:46 a.m.) see attached • Possible Faliure to Supervise by OSJ should be looked into o Request Copies of Incoming and Outgoing Correspondence logs from Representative and compare to OSJ files o Request Verbal and Written Complaint files for same • Income style investments were presented as bonds (see email) when in fact no bonds exist in portfolio
  7. 7. IINNSSIIGGHHTT CCOONNSSUULLTTAANNTTSS AANNDD AADDVVIISSOORRSS,, LLLLCC • Role of Principal transactions, markups, commissions, fees, loads and Deferred Sales Charges, never disclosed to client, even when multiple, specific requests are made by client. Commissions in excess of $20,000 believed to have occurred. o Possible misrepresentation and non use of proper disclosures • Questionable Mutual fund buys by representative o Growth-oriented, non income producing investments purchased o Did not utilize letter of intent, Rights of Accumulation, or maximize breakpoints available to client o $75,000 Goldman Sachs A share purchased with load – not disclosed o $25,000 Same Day purchase of B share mutual fund – surrender charges not disclosed o Different Fund Families utilized to increase commission for representative • Expenses on Unit Investment Trusts not explained or disclosed, approximate expenses of 5% including load per share and deferred sales charges (see attached) • Longer term, illiquid, higher commissioned products chosen versus alternatives available • Client specifically demands instruction on how to close account, no further orders to be placed without specific direction of Mr. XXXXXXX suggests discretionary abuse in past purchases • Even after wanting to close account, demanding explanations, client never received a Supervisory call • Failure to disclose that Citigroup Capital Trust XVII is not a bond, nor a direct preferred of Citigroup, thus leaving Mr. Kyriakos unprotected as a bond holder would be, should company default or declare bankruptcy • Mr. XXXXXXX has never before invested in stock markets of any kind prior to account opening • Representative shows client dispute on U4 in past
  8. 8. IINNSSIIGGHHTT CCOONNSSUULLTTAANNTTSS AANNDD AADDVVIISSOORRSS,, LLLLCC Conclusion It is the opinion formed from this information, of Insight Consultants and Advisors, LLC that multiple instances of product misrepresentation occurred in Mr. XXXXXXX’ account held at Banc of America Investment Services, Inc. It is also our opinion that a Failure to Supervise by the OSJ occurred throughout the duration of the account and should be investigated further. It is also our opinion that numerous incidents regarding expenses, commissions, mark-ups and general product purchases occurred at a severe disservice to Mr. XXXXXXX and should be investigated further. It is also our opinion that transactions occurred in an unauthorized manner on behalf of the client without proper discretionary agreements in place and should be investigated as well. Lastly, the disregard for a client’s written, multiple and specific questions during a time of severe market volatility presents a possible negligent breach of fiduciary responsibility and should be included in any future action pursued on behalf of Mr. XXXXXXX. Adam J. Allison, Managing Member Insight Consultants and Advisors, LLC Todd M. Lawrence, Managing Member, Insight Consultants and Advisors, LLC Enclosures Attached
  9. 9. Exhibit 1 Sample Summary ACCOUNT ACTIVITY AND HOLDINGS PURCHASE SHARE TOTAL SALE SHARE TOTAL SECURITY ACTION DATE SHARES PRICE INVESTMENT DATE PRICE SHARES PROCEEDS GAIN/LOSS DEVLOPERS DIVERSIFIED REALTY 7.375% TFR 09/30/03 8000 $24.90 $199,200 01/22/04 $26.03 8,000 $208,240 $9,040 FEDERAL HOME LOAN MORTGAGE SERIES 1384-C TFR 09/30/03 6 $100.99 $645 05/17/04 $0.00 6 $0 ($645) CS FIRST BOSTON MORTGAGE 2003-17 TFR 09/30/03 2750 $99.56 $273,779 05/26/04 $100.00 2,750 $275,000 $1,221 FEDERAL HOME LOAN MORTGAGE SERIES 2115-JA TFR 09/30/03 1500 $102.72 $154,083 12/15/04 $0.00 1,500 $0 ($154,083) CIT GROUP 6.50% MATURITY 12/15/2012 TFR 09/30/03 860 $103.11 $88,674 12/15/04 $100.00 860 $86,000 ($2,674) INDIANA MICHIGAN POWER 6.00% TFR 09/30/03 6600 $26.15 $172,590 01/05/05 $25.43 6,600 $167,812 ($4,778) MBNA CAPITAL TRUST SERIES D 8.125% TFR 09/30/03 5000 $26.50 $132,500 07/20/05 $26.64 5,000 $133,200 $700 GENERAL MOTORS 8.375% TFR 09/30/03 1430 $104.56 $149,521 04/10/06 $70.25 1,430 $100,458 ($49,063) GENERAL MOTORS ACDEPTANCE CORP. 7.00% 05/15/2016TFR 09/30/03 1200 $98.84 $118,603 11/02/06 $100.00 1,200 $120,000 $1,397 BS TRUST CERTIFICATES 2001-4 7.00% TFR 09/30/03 2000 $26.38 $52,760 02/23/07 $25.00 2,000 $50,000 ($2,760) ROCHESTER GAS & ELECTRIC 6.65% TFR 09/30/03 3000 $26.90 $80,700 07/23/07 $25.00 3,000 $75,000 ($5,700) ROYAL BANK OF SCOTLAND 7.25% TFR 09/30/03 1600 $25.55 $40,880 12/24/07 $23.11 1,600 $36,976 ($3,904) ABN AMRO CAPITAL TRUST V 5.90% TFR 09/30/03 7000 $24.33 $170,310 09/30/08 $8.96 7,000 $62,720 ($107,590) ABN AMRO CAPITAL TRUST VI 6.25% TFR 09/30/03 3500 $25.00 $87,500 09/30/08 $8.40 3,500 $29,400 ($58,100) ABN AMRO MORTGAGE SERIES 2002 TFR 09/30/03 1080 $103.46 $111,732 09/30/08 $34.42 1,080 $37,173 ($74,560) AMBAC FINANCIAL GROUP 5.95% DEBENTURE TFR 09/30/03 8000 $24.94 $199,520 09/30/08 $5.09 8,000 $40,720 ($158,800) AMERICAN STRATEGIC INCOME III TFR 09/30/03 20000 $12.42 $248,400 09/30/08 $8.48 20,000 $169,600 ($78,800) CIT GROUP 6.25% MATURITY 03/15/2013 TFR 09/30/03 1100 $101.82 $112,004 09/30/08 $40.38 1,100 $44,414 ($67,591) CITIGROUP CAPITAL TRUST IX 6.00% TFR 09/30/03 5000 $25.00 $125,000 09/30/08 $13.88 5,000 $69,400 ($55,600) GE CAPITAL CORP CORTS 6.00% TFR 09/30/03 8000 $25.29 $202,320 09/30/08 $20.25 8,000 $162,000 ($40,320) FORD MOTOR COMOPNAY 7.50% TFR 09/30/03 4000 $24.85 $99,400 09/30/08 $0.08 4,000 $330 ($99,070) FORD MOTOR CREDIT 7.375% TFR 09/30/03 500 $105.18 $52,592 09/30/08 $66.45 500 $33,224 ($19,368) GENERAL MOTORS 7.375% TFR 09/30/03 8000 $25.19 $201,520 09/30/08 $7.00 8,000 $56,000 ($145,520) GENERAL MOTORS ACCEPTANCE CORP 7.00% 08/15/2018 TFR 09/30/03 620 $98.61 $61,136 09/30/08 $28.49 620 $17,661 ($43,476) GENERAL MOTORS ACCEPTANCE CORP. 7.10% 01/15/2015TFR 09/30/03 1000 $103.74 $103,742 09/30/08 $37.75 1,000 $37,754 ($65,988) LINCOLN NATIONAL CAPITAL VI 6.75% TFR 09/30/03 5600 $25.35 $141,960 09/30/08 $15.90 5,600 $89,040 ($52,920) MORGAN STANLEY CAPITAL TRUST IV 6.25% TFR 09/30/03 9300 $24.95 $232,035 09/30/08 $11.51 9,300 $107,043 ($124,992) GOLDMAN SACHS PREFERRED PLUS 6.00% TFR 09/30/03 4300 $24.80 $106,640 09/30/08 $15.06 4,300 $64,758 ($41,882) JP MORGAN CHASECAPITAL XI 5.875% BUY 10/03/03 756 $24.20 $18,295 04/09/08 $22.30 756 $16,859 ($1,436) JP MORGAN CHASE CAPITAL XI 5.875 SALE 10/03/03 7244 $24.20 $175,305 09/03/08 $18.08 7,244 $130,972 ($44,333) LEHMAN BROTHERS TRUST IV 6.375% BUY 10/09/03 5500 $25.00 $137,500 09/30/08 $0.08 5,500 $440 ($137,060) VEIRZON CAPITAL SATURNS 2004-1 8.125% BUY 12/17/03 7000 $25.00 $175,000 05/08/08 $24.50 7,000 $171,500 ($3,500) FEDERAL HOME LOAN MORTGAGE SEREIS 2719 6.00% BUY 01/05/04 760 $100.00 $76,000 04/15/05 $0.00 100 $0 ($76,000) GILMCHER REALTY TRUST 8.125% BUY 01/22/04 2285 $25.00 $57,125 03/28/05 $25.90 2,285 $59,182 $2,057 GILMCHER REALTY TRUST 8.125% SALE 01/22/04 6035 $25.00 $150,875 09/30/08 $10.58 6,035 $63,850 ($87,025) FORD MOTOR CREDIT 6.00% 03/20/2014 BUY 03/05/04 320 $100.00 $32,000 09/30/08 $45.85 320 $14,673 ($17,327) WELLS FARGO CAPITAL IX 5.625% BUY 04/02/04 3080 $25.00 $77,000 09/30/08 $18.95 3,080 $58,366 ($18,634) FORD MOTOR CREDIT 6.85% 05/20/2014 BUY 05/21/04 2750 $100.00 $275,000 09/30/08 $47.15 2,750 $129,663 ($145,338) FORD MOTOR CREIDT 6.75% 06/20/2014 BUY 06/04/04 650 $100.00 $65,000 09/30/08 $46.50 650 $30,224 ($34,776)
  10. 10. Exhibit 1 Sample Summary ACCOUNT ACTIVITY AND HOLDINGS PURCHASE SHARE TOTAL SALE SHARE TOTAL SECURITY ACTION DATE SHARES PRICE INVESTMENT DATE PRICE SHARES PROCEEDS GAIN/LOSS FOREST CITY ENTERPRSES 7.375% PREFERRED BUY 07/16/04 3900 $24.37 $95,043 09/30/08 $17.00 3,900 $66,300 ($28,743) ROYAL BANK OF SCOTLAND SERIES M 6.40% BUY 08/19/04 1600 $25.00 $40,000 09/30/08 $9.26 1,600 $14,816 ($25,184) JP MORGAN CHASE CAPITAL XIV 6.20% BUY 09/28/04 1760 $25.00 $44,000 09/30/08 $19.71 1,760 $34,690 ($9,310) PARTNER REAL ESTATE LIMITED SERIES D 6.50% BUY 11/10/04 1900 $25.00 $47,500 09/30/08 $16.88 1,900 $32,072 ($15,428) GENERAL MOTORS ACCEPTANCE CORP. 7.375% BUY 12/17/04 5450 $25.00 $136,250 09/30/08 $8.20 5,450 $44,690 ($91,560) LEHMAN BROTHERS TRUST VI 6.24% BUY 01/05/05 7700 $25.00 $192,500 09/30/08 $0.11 7,700 $847 ($191,653) ROYAL BANK OF SCOTLAND SERIES N 6.35% BUY 05/12/05 3000 $25.00 $75,000 09/30/08 $0.10 3,000 $290 ($74,711) DIGITAL REALITY SERIES B 7.875% BUY 07/20/05 5300 $25.00 $132,500 09/30/08 $19.20 5,300 $101,760 ($30,740) METLIFE SERIES B 6.50% BUY 07/27/05 1500 $25.38 $38,070 12/29/05 $26.00 1,500 $39,000 $930 METLIFE SERIES B 6.50% SALE 07/27/05 1700 $25.38 $43,146 10/26/07 $24.98 1,700 $42,466 ($680) UBS CAPITAL X 6.50% BUY 04/12/06 4100 $25.00 $102,500 09/30/08 $18.57 4,100 $76,137 ($26,363) ROYAL BANK OF SCOTLAND SERIES Q 6.75% BUY 05/25/06 2200 $25.00 $55,000 12/21/06 $26.35 2,200 $57,970 $2,970 ROYAL BANK OF SCOTLAND SERIES Q 6.75% SALE 05/25/06 1800 $25.00 $45,000 12/24/07 $20.92 1,800 $37,656 ($7,344) AEGON NV 6.875 PREFERRED BUY 06/26/06 2000 $25.00 $50,000 09/30/08 $8.85 2,000 $17,698 ($32,302) JP MORGAN CHASE CAPITAL XIX 6.625% BUY 09/28/06 900 $25.00 $22,500 03/27/08 $25.00 900 $22,500 $0 JP MORGAN CHASE CAPITAL XIX 6.625% SALE 09/28/06 2100 $25.00 $52,500 09/30/08 $20.80 2,100 $43,680 ($8,820) COUNTRYWIDE CAPITAL V 7.00% BUY 11/08/06 4800 $25.00 $120,000 09/30/08 $7.95 4,800 $38,160 ($81,840) UBS CAPITAL XII 6.30% BUY 01/26/07 1800 $25.00 $45,000 09/30/08 $18.78 1,800 $33,804 ($11,196) CITIGROUP 6.35% PREFERRED BUY 03/06/07 2200 $25.00 $55,000 09/30/08 $13.92 2,200 $30,624 ($24,376) GE CAPITAL TRUST 6.00% BUY 04/24/07 2600 $25.00 $65,000 09/30/08 $20.32 2,600 $52,832 ($12,168) PARTNER REAL ESTATE LIMITED SERIES D 6.50% BUY 05/31/07 1216 $24.56 $29,865 09/30/08 $16.88 1,216 $20,526 ($9,339) ROYAL BANK OF SCOTLAND SERIES S 6.60% BUY 06/28/07 850 $25.00 $21,250 12/24/07 $20.70 350 $7,245 ($14,005) DEUTSCHE BANK CAPITAL TRUST IX 6.625% BUY 07/20/07 1000 $25.00 $25,000 09/30/08 $15.30 1,000 $15,300 ($9,700) ROYAL BANK OF SCOTLAND SERIES S 6.60% BUY 08/02/07 3739 $24.43 $91,344 09/30/08 $8.65 4,239 $36,667 ($54,676) ING GROUP NV 7.375% BUY 10/04/07 1400 $25.00 $35,000 09/30/08 $19.71 1,400 $27,594 ($7,406) FIFTH THIRD CAPITAL TRUST VI 7.25% BUY 10/30/07 1700 $25.00 $42,500 09/30/08 $9.15 1,700 $15,555 ($26,945) BANK OF AMERICA PREFERRED 7.25% BUY 11/20/07 1200 $25.00 $30,000 09/30/08 $21.35 1,200 $25,620 ($4,380) LEHMAN BROTHERS 7.95% BUY 02/12/08 1722 $25.00 $43,050 09/30/08 $0.06 1,722 $103 ($42,947) CREDIT SUISSE PREFERRED 7.90% BUY 03/28/08 4000 $25.00 $100,000 09/30/08 $20.40 4,000 $81,600 ($18,400) BARCLAYS BANK 8.125% BUY 04/11/08 567 $25.00 $14,175 09/30/08 $17.10 567 $9,696 ($4,479) DEUTSCHE BANK CAPITAL TRUST II 6.55% BUY 04/28/08 348 $22.59 $7,861 09/30/08 $14.50 348 $5,046 ($2,815) CITIGROUP 8.50% PREFERRED BUY 05/13/08 8346 $25.00 $208,650 09/30/08 $17.35 8,348 $144,838 ($63,812) ALLIANZ SE 8.375% BUY 06/10/08 929 $25.00 $23,225 09/30/08 $20.15 929 $18,719 ($4,506) BB&T CAPITAL TRUST V 8.95% BUY 09/10/08 1135 $25.00 $28,375 09/30/08 $24.50 1,135 $27,808 ($568) TOTAL ($2,950,088) INTEREST, DISTRIBUTIONS AND DIVIDENDS RECEIVED $1,824,597 NET PROFIT/LOSS ($1,125,491)
  11. 11. Exhibit 2 Sample Summary TRANSACTION HISTORY INTIAL SALE SALE SECURITY SECURITY ACTION DATE VALUE DATE PROCEEDS GAIN/LOSS CLASSIFICATION SECTOR JP MORGAN CHASECAPITAL XI 5.875% BUY 10/03/03 $18,295 04/09/08 $16,859 ($1,436) PREFERRED FINANCIAL LEHMAN BROTHERS TRUST IV 6.375% BUY 10/09/03 $137,500 09/30/08 $440 ($137,060) PREFERRED FINANCIAL VEIRZON CAPITAL SATURNS 2004-1 8.125% BUY 12/17/03 $175,000 05/08/08 $171,500 ($3,500) PREFERRED FINANCIAL FEDERAL HOME LOAN MORTGAGE SEREIS 2719 6.00% BUY 01/05/04 $76,000 04/15/05 $0 ($76,000) DEBENTURE FINANCIAL GILMCHER REALTY TRUST 8.125% BUY 01/22/04 $57,125 03/28/05 $59,182 $2,057 PREFERRED REAL ESTATE FORD MOTOR CREDIT 6.00% 03/20/2014 BUY 03/05/04 $32,000 09/30/08 $14,673 ($17,327) DEBENTURE FINANCIAL WELLS FARGO CAPITAL IX 5.625% BUY 04/02/04 $77,000 09/30/08 $58,366 ($18,634) PREFERRED FINANCIAL FORD MOTOR CREDIT 6.85% 05/20/2014 BUY 05/21/04 $275,000 09/30/08 $129,663 ($145,338) DEBENTURE FINANCIAL FORD MOTOR CREIDT 6.75% 06/20/2014 BUY 06/04/04 $65,000 09/30/08 $30,224 ($34,776) DEBENTURE FINANCIAL FOREST CITY ENTERPRSES 7.375% PREFERRED BUY 07/16/04 $95,043 09/30/08 $66,300 ($28,743) PREFERRED REAL ESTATE ROYAL BANK OF SCOTLAND SERIES M 6.40% BUY 08/19/04 $40,000 09/30/08 $14,816 ($25,184) PREFERRED FINANCIAL JP MORGAN CHASE CAPITAL XIV 6.20% BUY 09/28/04 $44,000 09/30/08 $34,690 ($9,310) PREFERRED FINANCIAL PARTNER REAL ESTATE LIMITED SERIES D 6.50% BUY 11/10/04 $47,500 09/30/08 $32,072 ($15,428) PREFERRED REAL ESTATE GENERAL MOTORS ACCEPTANCE CORP. 7.375% BUY 12/17/04 $136,250 09/30/08 $44,690 ($91,560) PREFERRED FINANCIAL LEHMAN BROTHERS TRUST VI 6.24% BUY 01/05/05 $192,500 09/30/08 $847 ($191,653) PREFERRED FINANCIAL ROYAL BANK OF SCOTLAND SERIES N 6.35% BUY 05/12/05 $75,000 09/30/08 $290 ($74,711) PREFERRED FINANCIAL DIGITAL REALITY SERIES B 7.875% BUY 07/20/05 $132,500 09/30/08 $101,760 ($30,740) PREFERRED REAL ESTATE METLIFE SERIES B 6.50% BUY 07/27/05 $38,070 12/29/05 $39,000 $930 PREFERRED FINANCIAL UBS CAPITAL X 6.50% BUY 04/12/06 $102,500 09/30/08 $76,137 ($26,363) PREFERRED FINANCIAL ROYAL BANK OF SCOTLAND SERIES Q 6.75% BUY 05/25/06 $55,000 12/21/06 $57,970 $2,970 PREFERRED FINANCIAL AEGON NV 6.875 PREFERRED BUY 06/26/06 $50,000 09/30/08 $17,698 ($32,302) PREFERRED FINANCIAL JP MORGAN CHASE CAPITAL XIX 6.625% BUY 09/28/06 $22,500 03/27/08 $22,500 $0 PREFERRED FINANCIAL COUNTRYWIDE CAPITAL V 7.00% BUY 11/08/06 $120,000 09/30/08 $38,160 ($81,840) PREFERRED FINANCIAL UBS CAPITAL XII 6.30% BUY 01/26/07 $45,000 09/30/08 $33,804 ($11,196) PREFERRED FINANCIAL CITIGROUP 6.35% PREFERRED BUY 03/06/07 $55,000 09/30/08 $30,624 ($24,376) PREFERRED FINANCIAL GE CAPITAL TRUST 6.00% BUY 04/24/07 $65,000 09/30/08 $52,832 ($12,168) PREFERRED FINANCIAL PARTNER REAL ESTATE LIMITED SERIES D 6.50% BUY 05/31/07 $29,865 09/30/08 $20,526 ($9,339) PREFERRED REAL ESTATE ROYAL BANK OF SCOTLAND SERIES S 6.60% BUY 06/28/07 $21,250 12/24/07 $7,245 ($14,005) PREFERRED FINANCIAL DEUTSCHE BANK CAPITAL TRUST IX 6.625% BUY 07/20/07 $25,000 09/30/08 $15,300 ($9,700) PREFERRED FINANCIAL ROYAL BANK OF SCOTLAND SERIES S 6.60% BUY 08/02/07 $91,344 09/30/08 $36,667 ($54,676) PREFERRED FINANCIAL ING GROUP NV 7.375% BUY 10/04/07 $35,000 09/30/08 $27,594 ($7,406) PREFERRED FINANCIAL FIFTH THIRD CAPITAL TRUST VI 7.25% BUY 10/30/07 $42,500 09/30/08 $15,555 ($26,945) PREFERRED FINANCIAL BANK OF AMERICA PREFERRED 7.25% BUY 11/20/07 $30,000 09/30/08 $25,620 ($4,380) PREFERRED FINANCIAL LEHMAN BROTHERS 7.95% BUY 02/12/08 $43,050 09/30/08 $103 ($42,947) PREFERRED FINANCIAL CREDIT SUISSE PREFERRED 7.90% BUY 03/28/08 $100,000 09/30/08 $81,600 ($18,400) PREFERRED FINANCIAL BARCLAYS BANK 8.125% BUY 04/11/08 $14,175 09/30/08 $9,696 ($4,479) PREFERRED FINANCIAL DEUTSCHE BANK CAPITAL TRUST II 6.55% BUY 04/28/08 $7,861 09/30/08 $5,046 ($2,815) PREFERRED FINANCIAL CITIGROUP 8.50% PREFERRED BUY 05/13/08 $208,650 09/30/08 $144,838 ($63,812) PREFERRED FINANCIAL INTIAL SALE SALE SECURITY SECURITY ACTION DATE VALUE DATE PROCEEDS GAIN/LOSS CLASSIFICATION SECTOR
  12. 12. Exhibit 2 Sample Summary TRANSACTION HISTORY ALLIANZ SE 8.375% BUY 06/10/08 $23,225 09/30/08 $18,719 ($4,506) PREFERRED FINANCIAL BB&T CAPITAL TRUST V 8.95% BUY 09/10/08 $28,375 09/30/08 $27,808 ($568) PREFERRED FINANCIAL JP MORGAN CHASE CAPITAL XI 5.875 SALE 10/03/03 $175,305 09/03/08 $130,972 ($44,333) PREFERRED FINANCIAL GILMCHER REALTY TRUST 8.125% SALE 01/22/04 $150,875 09/30/08 $63,850 ($87,025) PREFERRED REAL ESTATE METLIFE SERIES B 6.50% SALE 07/27/05 $43,146 10/26/07 $42,466 ($680) PREFERRED FINANCIAL ROYAL BANK OF SCOTLAND SERIES Q 6.75% SALE 05/25/06 $45,000 12/24/07 $37,656 ($7,344) PREFERRED FINANCIAL JP MORGAN CHASE CAPITAL XIX 6.625% SALE 09/28/06 $52,500 09/30/08 $43,680 ($8,820) PREFERRED FINANCIAL 36 4 0 0 0 10 20 30 40 BUYSIDETRANSACTIONSBYCLASSIFICATION Sept. 2003-Sept. 2008 Exhibit 2.A PREFERREDS BONDS MUNI BONDS MBS 35 5 0 0 10 20 30 40 BUYSIDETRANSACTION BYSECTOR Sept. 2003- Sept. 2008 Exhibit 2.B FINANCIALS REALESTATE AUTOMOTIVE
  13. 13. Exhibit 3 Sample Summary PORTFOLIO ALLOCATION September 2008 INTIAL ENDING SECURITY % OF SECURITY VALUE VALUE CLASSIFICATION SECTOR PORTFOLIO ABN AMRO CAPITAL TRUST V 5.90% $170,310 $62,720 PREFERRED FINANCIAL 2.81% ABN AMRO CAPITAL TRUST VI 6.25% $87,500 $29,400 PREFERRED FINANCIAL 1.32% ABN AMRO MORTGAGE SERIES 2002 $111,732 $37,173 DEBENTURE FINANCIAL 1.67% AMBAC FINANCIAL GROUP 5.95% DEBENTURE $199,520 $40,720 DEBENTURE FINANCIAL 1.83% AMERICAN STRATEGIC INCOME III $248,400 $169,600 CLOSED END FUND MBS 7.61% CIT GROUP 6.25% MATURITY 03/15/2013 $112,004 $44,414 DEBENTURE FINANCIAL 1.99% CITIGROUP CAPITAL TRUST IX 6.00% $125,000 $69,400 PREFERRED FINANCIAL 3.11% GE CAPITAL CORP CORTS 6.00% $202,320 $162,000 PREFERRED FINANCIAL 7.27% FORD MOTOR COMOPNAY 7.50% $99,400 $330 PREFERRED AUTOMOTIVE 0.01% FORD MOTOR CREDIT 7.375% $52,592 $33,224 DEBENTURE FINANCIAL 1.49% GENERAL MOTORS 7.375% $201,520 $56,000 PREFERRED AUTOMOTIVE 2.51% GENERAL MOTORS ACCEPTANCE CORP 7.00% 08/15/2018 $61,136 $17,661 DEBENTURE FINANCIAL 0.79% GENERAL MOTORS ACCEPTANCE CORP. 7.10% 01/15/2015 $103,742 $37,754 DEBENTURE FINANCIAL 1.69% LINCOLN NATIONAL CAPITAL VI 6.75% $141,960 $89,040 PREFERRED FINANCIAL 4.00% MORGAN STANLEY CAPITAL TRUST IV 6.25% $232,035 $107,043 PREFERRED FINANCIAL 4.80% GOLDMAN SACHS PREFERRED PLUS 6.00% $106,640 $64,758 PREFERRED FINANCIAL 2.91% LEHMAN BROTHERS TRUST IV 6.375% $137,500 $440 PREFERRED FINANCIAL 0.02% FORD MOTOR CREDIT 6.00% 03/20/2014 $32,000 $14,673 DEBENTURE FINANCIAL 0.66% WELLS FARGO CAPITAL IX 5.625% $77,000 $58,366 PREFERRED FINANCIAL 2.62% FORD MOTOR CREDIT 6.85% 05/20/2014 $275,000 $129,663 DEBENTURE FINANCIAL 5.82% FORD MOTOR CREIDT 6.75% 06/20/2014 $65,000 $30,224 DEBENTURE FINANCIAL 1.36% FOREST CITY ENTERPRSES 7.375% PREFERRED $95,043 $66,300 PREFERRED REAL ESTATE 2.98% ROYAL BANK OF SCOTLAND SERIES M 6.40% $40,000 $14,816 PREFERRED FINANCIAL 0.66% JP MORGAN CHASE CAPITAL XIV 6.20% $44,000 $34,690 PREFERRED FINANCIAL 1.56% PARTNER REAL ESTATE LIMITED SERIES D 6.50% $47,500 $32,072 PREFERRED REAL ESTATE 1.44% GENERAL MOTORS ACCEPTANCE CORP. 7.375% $136,250 $44,690 PREFERRED FINANCIAL 2.01% LEHMAN BROTHERS TRUST VI 6.24% $192,500 $847 PREFERRED FINANCIAL 0.04% ROYAL BANK OF SCOTLAND SERIES N 6.35% $75,000 $290 PREFERRED FINANCIAL 0.01% DIGITAL REALITY SERIES B 7.875% $132,500 $101,760 PREFERRED REAL ESTATE 4.57% UBS CAPITAL X 6.50% $102,500 $76,137 PREFERRED FINANCIAL 3.42% AEGON NV 6.875 PREFERRED $50,000 $17,698 PREFERRED FINANCIAL 0.79% COUNTRYWIDE CAPITAL V 7.00% $120,000 $38,160 PREFERRED FINANCIAL 1.71% UBS CAPITAL XII 6.30% $45,000 $33,804 PREFERRED FINANCIAL 1.52% CITIGROUP 6.35% PREFERRED $55,000 $30,624 PREFERRED FINANCIAL 1.37%
  14. 14. Exhibit 3 Sample Summary PORTFOLIO ALLOCATION September 2008 INTIAL ENDING SECURITY % OF SECURITY VALUE VALUE CLASSIFICATION SECTOR PORTFOLIO GE CAPITAL TRUST 6.00% $65,000 $52,832 PREFERRED FINANCIAL 2.37% PARTNER REAL ESTATE LIMITED SERIES D 6.50% $29,865 $20,526 PREFERRED REAL ESTATE 0.92% DEUTSCHE BANK CAPITAL TRUST IX 6.625% $25,000 $15,300 PREFERRED FINANCIAL 0.69% ROYAL BANK OF SCOTLAND SERIES S 6.60% $91,344 $36,667 PREFERRED FINANCIAL 1.65% ING GROUP NV 7.375% $35,000 $27,594 PREFERRED FINANCIAL 1.24% FIFTH THIRD CAPITAL TRUST VI 7.25% $42,500 $15,555 PREFERRED FINANCIAL 0.70% BANK OF AMERICA PREFERRED 7.25% $30,000 $25,620 PREFERRED FINANCIAL 1.15% LEHMAN BROTHERS 7.95% $43,050 $103 PREFERRED FINANCIAL 0.00% CREDIT SUISSE PREFERRED 7.90% $100,000 $81,600 PREFERRED FINANCIAL 3.66% BARCLAYS BANK 8.125% $14,175 $9,696 PREFERRED FINANCIAL 0.44% DEUTSCHE BANK CAPITAL TRUST II 6.55% $7,861 $5,046 PREFERRED FINANCIAL 0.23% CITIGROUP 8.50% PREFERRED $208,650 $144,838 PREFERRED FINANCIAL 6.50% ALLIANZ SE 8.375% $23,225 $18,719 PREFERRED FINANCIAL 0.84% BB&T CAPITAL TRUST V 8.95% $28,375 $27,808 PREFERRED FINANCIAL 1.25% TOTALS $2,228,393
  15. 15. Exhibit 4 Sample Summary PORTFOLIO ALLOCATION September 2003 INTIAL ENDING SECURITY % OF SECURITY VALUE VALUE CLASSIFICATION SECTOR PORTFOLIO ABN AMRO CAPITAL TRUST V 5.90% $170,310 $62,720 PREFERRED FINANCIAL 4.58% ABN AMRO CAPITAL TRUST VI 6.25% $87,500 $29,400 PREFERRED FINANCIAL 2.35% ABN AMRO MORTGAGE SERIES 2002 $111,732 $37,173 DEBENTURE FINANCIAL 3.00% AMBAC FINANCIAL GROUP 5.95% DEBENTURE $199,520 $40,720 DEBENTURE FINANCIAL 5.36% INDIANA MICHIGAN POWER 6.00% $172,590 $167,812 DEBENTURE-TAX EXEMPT MUNICIPAL 4.64% AMERICAN STRATEGIC INCOME III $248,400 $169,600 CLOSED END FUND MBS 6.68% CIT GROUP 6.25% MATURITY 03/15/2013 $112,004 $44,414 DEBENTURE FINANCIAL 3.01% CITIGROUP CAPITAL TRUST IX 6.00% $125,000 $69,400 PREFERRED FINANCIAL 3.36% GE CAPITAL CORP CORTS 6.00% $202,320 $162,000 PREFERRED FINANCIAL 5.44% CS FIRST BOSTON MORTGAGE 2003-17 $273,779 $275,000 DEBENTURE FINANCIAL 7.36% DEVLOPERS DIVERSIFIED REALTY 7.375% $199,200 $208,240 PREFERRED REAL ESTATE 5.36% FEDERAL HOME LOAN MORTGAGE SERIES 1384-C $645 $0 DEBENTURE FINANCIAL 0.02% FEDERAL HOME LOAN MORTGAGE SERIES 2115-JA $154,083 $0 DEBENTURE FINANCIAL 4.14% FORD MOTOR COMOPNAY 7.50% $99,400 $330 PREFERRED AUTOMOTIVE 2.67% FORD MOTOR CREDIT 7.375% $52,592 $33,224 DEBENTURE FINANCIAL 1.41% GENERAL MOTORS 7.375% $201,520 $56,000 PREFERRED AUTOMOTIVE 5.42% GENERAL MOTORS 8.375% $149,521 $100,458 DEBENTURE AUTOMOTIVE 4.02% GENERAL MOTORS ACCEPTANCE CORP 7.00% 08/15/2018 $61,136 $17,661 DEBENTURE FINANCIAL 1.64% GENERAL MOTORS ACCEPTANCE CORP. 7.10% 01/15/2015 $103,742 $37,754 DEBENTURE FINANCIAL 2.79% GENERAL MOTORS ACDEPTANCE CORP. 7.00% 05/15/2016 $118,603 $120,000 DEBENTURE FINANCIAL 3.19% LINCOLN NATIONAL CAPITAL VI 6.75% $141,960 $89,040 PREFERRED FINANCIAL 3.82% MBNA CAPITAL TRUST SERIES D 8.125% $132,500 $133,200 PREFERRED FINANCIAL 3.56% MORGAN STANLEY CAPITAL TRUST IV 6.25% $232,035 $107,043 PREFERRED FINANCIAL 6.24% GOLDMAN SACHS PREFERRED PLUS 6.00% $106,640 $64,758 PREFERRED FINANCIAL 2.87% ROCHESTER GAS & ELECTRIC 6.65% $80,700 $75,000 DEBENTURE-TAX EXEMPT MUNICIPAL 2.17% ROYAL BANK OF SCOTLAND 7.25% $40,880 $36,976 PREFERRED FINANCIAL 1.10% BS TRUST CERTIFICATES 2001-4 7.00% $52,760 $50,000 PREFERRED FINANCIAL 1.42% CIT GROUP 6.50% MATURITY 12/15/2012 $88,674 $86,000 DEBENTURE FINANCIAL 2.38% TOTALS $3,719,747
  16. 16. Exhibit 5 Sample Summary ALLOCATION AND CONCENTRATION COMPARISON SECURITY CLASSIFICATION BEGINNING ALLOCATION ENDING ALLOCATION % CHANGE IN ALLOCATION PREFERREDS 48.18% 75.09% 55.86% BONDS 38.34% 17.30% -54.87% MUNICIPAL BONDS 6.81% 0.00% -100.00% MORTGAGE BACKED SECURITIES (MBS) 6.68% 7.61% 13.97% SECTOR BEGINNING WHEIGHTING ENDING WHEIGHTING S&P 500 INDEX WHEIGHTING* DIFFERENCE FINANCIALS 69.05% 79.96% 13.33% 66.63 REAL ESTATE 5.36% 9.90% 2.62% 7.28 AUTOMOTIVE 12.11% 2.53% 3.51% -0.98 48.18% 38.34% 6.81% 6.68% 75.09% 17.30% 0.00% 7.61% SEPT. 2003 SEPT. 2008 PORTFOLIO ALLOCATION Exhibit 5.A PREFERREDS BONDS MUNICIPALBONDS MBS 69.05% 5.36% 12.11% 79.96% 9.90% 2.53% 13.33% 2.62%3.51% SEPT. 2003 SEPT. 2008 S&P 500 SECTOR WHEIGHTING Exhibit 5.B FINANCIALS REALESTATE AUTOMOTIVE

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