YOUR ADDRESS, SUITE NO.

CITY, STATE, ZIP

TEL. NO. FAX. NO.

NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.

In the Matter of the Arbitration between

John Dough,
Claimants

v.

Joe Broker & XYZ Brokerage Company,
Respondents.

STATEMENT OF CLAIM AND REQUEST FOR ARBITRATION

PARTIES

1. Claimant, John Dough is a resident of New Hanover County, North Carolina.

2. Respondent XYZ Brokerage Company ("XYZ" ) is licensed and qualified to do business as a securities broker-dealer in the State of North Carolina. XYZ maintains a branch office in Atlanta, Georgia.

3. Joe Broker ("XYZ") was at all times employed by, and under the supervision and control of, XYZ , in his capacity as a registered representative.

4. At all times described herein, Broker was acting within the course and scope of his authority and employment with "XYZ" , which knew or should have known that he committed the acts alleged herein.

5. Each of the Respondents is responsible for the acts of the other Respondents as set forth herein.

BACKGROUND

6. Claimant, John Dough, resides in Wilmington, North Carolina. Claimant requests that this matter be decided upon the pleadings only, in accordance with Section 14(a) of the Code of Arbitration Procedure.

7. In or about March, 1996, Claimant spoke to Respondent Broker about purchasing the stock of Longhorn Steaks, Inc. (NASDAQ listing "LOHO") in its initial public offering. Broker informed Claimant that the offering had been fully subscribed, but that XYZ was planning to buy a "retail block" in the secondary market of approximately 100,000 shares, which XYZ would then be able to resell at a maximum price of $20.50 per share, if not less.

8. When Claimant requested more information about LOHO, Broker told him the company owned 21 stores, and had 11 franchised locations. He also stated that "XYZ" was estimating LOHO's 1996 earnings at $0.72 per share, up from $0.48 for 1995. (At no time before the purchase, however, did Broker provide Claimant with a prospectus, and when he did, it bore Broker's personal sticker on the cover, in violation of the Securities Act of 1933 (Exhibit B).

9. On the basis of this information, Claimant entered a buy order for 2000 shares. At this time, Claimant did not expect to pay, nor did he have any reason to suspect that he might pay, more than $20.50 per share.

10. On the day of the public offering, Broker called Claimant and told him that the stock had opened higher than expected and that Claimant's order had been executed at $23.00 per share. Claimant was quite surprised by this news, because Broker had been so emphatic in his predictions, and had indicated previously that he was in contact with XYZ 's trading department, which had given him his information. In light of the fact that XYZ was a co-manager of the IPO, and a market maker in the stock, Claimant had relied completely upon Broker's information and representations in making his investment decision. However, based on the estimated earnings information he had previously received, Claimant decided not to rescind his purchase.