1234 Investor St.

Los Angeles, CA 90024

(213) 000-0000

Date

National Association of Securities Dealers, Inc.

Arbitration Department

33 Whitehall Street

New York, New York 10004

Re: Statement of Claim and Request for Simplified Arbitration

John and Mary Smith, Claimants and

William Jones and XYZ Brokerage Firm, Respondents

Dear Sir or Madam:

Please accept this letter as our Statement of Claim and request for arbitration under the Small Claims rules of the Code of Arbitration Procedure. Our Uniform Submission Agreement is also enclosed.

Our names are Mary Smith and John Smith. We are husband and wife and live in Los Angeles County, California. Mary Smith is 33 years old and is a substitute school teacher. John Smith is 35 years old and is the manager of a produce department for a supermarket. Our combined annual income is approximately $45,000.

We are bringing this claim against Respondent William Jones, a registered representative employed by Respondent XYZ Brokerage Company. XYZ Brokerage ("XYZ" ) does business in the State of California as a securities broker-dealer. XYZ maintains a branch office in Los Angeles, California. Its address is [This refers to the address of the branch used by the customer ].

The only investment accounts we have ever had are our IRA accounts. Until we met William Jones, we kept our IRA investments in mutual funds and certificates of deposit. In April, 1996, we received a call from Mr. Jones, although we had never met him. Mr. Jones asked us what kind of investment accounts we had and we told him that we had only our IRA accounts. He asked what kind of investments we had in our accounts and we told him that we had mutual funds and CD's. Mr. Jones told us that the way we were investing, we would never be able to retire. He said that he would like us to transfer our IRA accounts to XYZ and that he would help us to make investments that would make our mutual funds and CD's pale by comparison. He said that he could increase the value of our accounts in "no time". Mr. Jones recommended that we purchase Wonderful, Inc., a New York Stock Exchange stock. We had heard of the company and, based on what Mr. Jones told us, we thought it would be a good investment so each of us bought the Wonderful, Inc. stock for our IRA accounts.

Over the next several weeks, Mr. Jones kept calling us and made other stock recommendations, some of which we approved and others that we did not approve. On June 1, 1996, Mr. Jones called and recommended that we each buy 1,000 shares of Dumb & Dumber, Inc. ("Dumb"). Mr. Jones told us that XYZ was a market maker in the stock, and he kept telling us that the stock was "a rocket," and that all the people at XYZ knew it was going to go way up in price.

We asked Mr. Jones for information on Dumb because we had never heard of it. Mr. Jones told us that there was no time, and that if we didn't buy immediately, we would lose out on a great opportunity.

We told Mr. Jones that we were not comfortable buying a stock in a company we had never heard of, but he told us that he and XYZ knew all about it and he would hate to see us lose out on such a great opportunity. We took Mr. Jones at his word since we thought he had our best interests in mind.

Several days later, we received two confirmation in the mail, each showing a 200 share purchase of Dumb, at a cost of $7,000 (Exhibit A). Mr. Jones sold our mutual funds to pay for the purchases.

When we received our month-end statements from XYZ, we saw that Dumb was worth about 30% less than what we had paid for it (Exhibit B). We immediately called Mr. Jones to find out what had happened.