John Smith

1234 Investor St.

Los Angeles, CA 90024

(213) 000-0000

Date

National Association of Securities Dealers, Inc.

33 Whitehall Street

New York, New York 10004

Re: Statement of Claim and Request for Simplified Arbitration

John Smith, Claimant and

William Jones and XYZ Brokerage Firm, Respondents

Dear Sir or Madam:

Please accept this letter as my Statement of Claim and request for arbitration under the Small Claims rules of the Code of Arbitration Procedure. Also included is my Uniform Submission Agreement.

My name is John Smith and I live in Los Angeles County, California. I am 44 years old and I am employed as an Office equipment technician. I earn $40,000 per year. I am bringing this claim against Respondent William Jones, a registered representative employed by Respondent XYZ Brokerage Company.

XYZ Brokerage Firm (XYZ) does business in the State of California as a securities broker-dealer and maintains a branch office in Los Angeles, California. Its office is located at [This refers to the address of the branch used by the customer ].

Until I met William Jones, I had always invested in conservative mutual funds and blue chip stocks. In April, 1996, I received a call from Mr. Jones, although I had never met him. Mr. Jones told me that he would like to open an account for me because he "could make me a lot of money in not a lot of time." I asked Mr. Jones how he could do this. Mr. Jones told me that by monitoring his clients' accounts on a daily basis, he could buy when stocks were going up and sell when they began to go down. Mr. Jones assured me that his method maximized profits while limiting losses to five percent "in the worst of disasters."

Because I didn't know Mr. Jones and I told him I was unsure of his "system", Mr. Jones suggested a six-month trial period to prove that what he was saying would work. I agreed, and opened an account (#000-0000-000) with Mr. Jones and XYZ with a $10,000 deposit. A copy of my canceled check is marked Exhibit A.

Mr. Jones began by purchasing stocks on the New York Stock Exchange, like the stocks I had previously invested in. Mr. Jones sold each stock within two weeks, mostly with a small profit. At the end of the first month, Mr. Jones requested another deposit of $20,000. Since he had made some small profits already, I agreed and sent the money in. A copy of my canceled check is marked Exhibit B.

After I made the additional deposit Mr. Jones had requested, Mr Jones began buying and selling over-the-counter stocks, in companies I had never heard of before. Instead of the two weeks he waited to sell the NYSE stocks, he was buying and selling stocks before I even received the confirmation slips. Mr. Jones began to buy stocks without consulting with me ahead of time. Each morning he would call me and report on his progress, which, according to him, was always good or great. After three months, Mr. Jones stopped calling me before any trades (buying or selling), and his morning telephone calls had begun to skip days.

I noticed that certain stocks were being bought and sold repeatedly. In addition, stocks that were going up in value were being sold within days, and stocks that were going down in value were held longer. A good example is DEF Corporation ("DEFC"). Mr. Jones bought 500 shares of DEFC for $5000 on May 22 at $10, then sold it May 23 at $10.75. He bought it again on June 6 for $8.50, but when it fell he did not sell it until July 16 for $7.375. A schedule of all purchases and sales in the account is attached as Exhibit C.

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