Award FINRA Dispute Resolution

In the Matter of the Arbitration Between:

Claimants Patrick "Brian" FitzWilliam Betty Lynn FitzWilliam (a/k/a Betty Saleh)

vs.

Respondents Michael Gerald Gardner Richard Anthony Lanni Edward William Wedbush Wedbush Securities Inc.

Counter-Claimant Wedbush Securities Inc.

vs.

Counter-Respondents Patrick "Brian" FitzWilliam Betty Lynn FitzWilliam (a/k/a Betty Saleh)

Case Number: 11-03452

Hearing Site: Los Angeles, California

Nature of the Disputes: Customer and Associated Person vs. Member and

Associated Persons; and

Member vs. Associated Person and Customer

The case proceeded under the Optional All Public Panel Rule/ All Public Panel

REPRESENTATION OF PARTIES

For Claimants/Counter-Respondents Patrick "Brian" FitzWilliam, and Betty Lynn FitzWilliam (a/k/a Betty Saleh) ("Saleh"), hereinafter collectively referred to as "Claimants": Maxwell M. Blecher, Esq., Blecher & Collins, P.C, Los Angeles, California,

For Respondents Michael Gerald Gardner, Richard Anthony Lanni, Edward William Wedbush, and Respondent/Counter-Claimant Wedbush Securities Inc., hereinafter collectively referred to as "Respondents": John Erikson, Esq., Wedbush Securities Inc., Los Angeles, California.

CASE INFORMATION

Statement of Claim filed on or about: September 7, 2011.

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Claimants signed the Submission Agreement: September 1, 2011.

Respondents' Statement of Answer and Counterclaim of Wedbush Securities Inc. filed on or about: November 18, 2011.

Claimants submitted a Statement of Answer to Respondent Wedbush Securities Inc.'s Counterclaim filed on or about: December 12, 2011.

Michael Gerald Gardner signed the Submission Agreement: October 14, 2011.

Wedbush Securities Inc. signed the Submission Agreement: November 10, 2011.

Richard Anthony Lanni signed the Submission Agreement: November 16, 2011.

Edward William Wedbush signed the Submission Agreement: November 16, 2011.

CASE SUMMARY

Claimants asserted the following causes of action: breach of contract, conversion and money had and received. The causes of action relate to Saleh's employment relationship with Wedbush Securities Inc., and allegations of Wedbush Securities Inc. blocking the transfer of Claimants' personal investment accounts consisting of cash, cash equivalents, unspecified mutual funds, equities and municipal bonds to another brokerage firm after Saleh's employment relationship with Wedbush Securities Inc. ended.

Unless specifically admitted in their Answer, Respondents denied the allegations made in the Statement of Claim and asserted various affirmative defenses.

Wedbush Securities Inc. asserted the following causes of action: implied indemnity, comparative indemnity, equitable indemnity, and contribution. The causes of action relate to Wedbush Securities Inc.'s request for reimbursement for damages paid to fonner customers of Saleh, and damages incurred regarding a FINRA regulatory action.

Unless specifically admitted in their Statement of Answer to Wedbush Securities Inc.'s Counterclaim, Claimants denied the allegations made in the Counterclaim and asserted various affirmative defenses.

RELIEF REQUESTED

In the Statement of Claim, Claimants requested: 1. The Panel order the immediate release of Claimants' accounts and immediate

return of Claimants' funds together with pre-judgment interest thereon at the legal rate, and the costs of suit, including reasonable attorneys' fees;

2. Claimants recover compensatory damages in the amount of $487,000.00 and punitive damages in the amount of $1,500,000.00;

3. The Panel recommend appropriate disciplinary action and fines against all Respondents under FINRA Rules; and

4. Such other relief as the Panel may deem just and proper.

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In Respondents' Statement of Answer and Counterclaim of Wedbush Securities Inc., Respondents requested:

1. Dismissal of all Claimants' claims in their entirety with prejudice; 2. An award declaring the percentage of fault between Saleh and Wedbush

Securities Inc. in connection with the $90,000.00 settlement of customer DH's claim;

3. An award declaring the percentage of fault between Saleh and Wedbush Securities Inc. in connection with the settlements of customers SH's and BN's claims;

4. An award declaring the percentage of fault between Saleh and Wedbush Securities Inc. in connection witii any settlement of the FINRA regulatory action;

5. An award in favor of Wedbush Securities Inc. against Claimants for approximately fifty percent of the loss incun-ed by Wedbush Securities Inc. in connection with the $90,000.00 settlement of the DH claim;

6. An award in favor of Wedbush Securities Inc. against Claimants for approximately fifty percent of the loss incun"ed by Wedbush Securities Inc. in connection with the settlement of SH's and BN's claims and the FINRA regulatory action, including legal fees and costs incurred by Wedbush Securities Inc.;

7. An award stating that Wedbush Securities Inc. is entitied to be indemnified by Claimants in connection with the $90,000.00 settlement of DH's claim entered into by Wedbush Securities Inc.;

8. An award stating that Wedbush Securities Inc. is entitied to be indemnified by Claimants in connection with any settlement of SH's and BN's claims and the FINRA regulatory action claim entered into by Wedbush Securities Inc.;

9. An award of compensatory damages in favor of Wedbush Securities Inc. in connection with the matters referenced above for no less than $500,000.00 with the specific amount to be proven at the hearing of this matter;

10. An award of attorneys' fees, forum fees and other expenses incurred in the defense of, and prosecution of this arbitration claim, according to proof; and

11. Such other and further relief as the Panel may deem just and proper.

In the Statement of Answer to Wedbush Securities Inc.'s Counterclaim, Claimants requested:

1. Respondents take nothing and that judgment be entered in favor of Claimants, 2. Claimants be awarded all costs of suit incurred in their defense of this action,

including reasonable attorneys' fees pursuant to the agreement alleged in the Statement of Claim and/or to the extent allowed pursuant under applicable law; and

3. Claimants be granted such other and further relief as the Panel may deem just and proper.

OTHER ISSUES CONSIDERED AND DECIDED

The Arbitrators acknowledge that they have each read the pleadings and other materials filed by the parties.

On May 14, 2012, the Panel held a recorded pre-hearing conference to consider Claimants' Motion to Dismiss the Counterclaim, which was opposed by Wedbush Securities Inc. The Panel denied the Motion to Dismiss without prejudice.

FINRA Dispute Resolution Arbitration No. 11-03452 Award Page 4 of 7

At the start of the evidentiary hearing, Claimants moved to exclude certain evidence. The Panel denied the request.

At the conclusion of the evidentiary hearing. Claimants withdrew two causes of action including breach of contract and money had and received.

The parties have agreed that the Award in this matter may be executed in counterpart copies or that a handwritten, signed Award may be entered.

AWARD

After considering the pleadings, the testimony and evidence presented at the hearing, and the post-hearing submissions, the Panel has decided in full and final resolution of the issues submitted for determination as follows:

1. Claimant Betty Lynn FitzWilliam (a/k/a Betty Saleh) is liable for and shall pay to Wedbush Securities Inc. compensatory damages for its Counterclaim in the sum of $34,200.00 for the DH settlement. Wedbush Securities Inc. and Edward William Wedbush are jointiy and severally liable for and shall pay to Claimants compensatory damages for their Statement of Claim in the sum of $295,383.36. Wedbush Securities Inc.'s award in the amount of $34,200.00 is an offset to Claimants' award. Accordingly, Claimant Betty Lynn FitzWilliam (a/k/a Betty Saleh's) obligation is extinguished by the offset. As such, Wedbush Securities Inc. and Edward William Wedbush are jointly and severally liable for and shall pay to Claimants compensatory damages in the net sum of $261,183.36.

2. Wedbush Securities Inc. and Edward William Wedbush are jointiy and severally liable for and shall pay to Claimants simple interest on the aforementioned award of $261,183.36 at the rate of 10% per annum from June 25, 2009 until the award is paid in full.

3. As punitive damages, Wedbush Securities Inc. and Edward William Wedbush are jointly and severally liable for and shall pay to Claimants $162,755.00 in attorneys' fees pursuant to equitable principles. As to the imposition of punitive damages, the Panel deems such damages warranted by the unjustifiable withholding of all funds in Claimants' accounts, and finds that such withholding by Respondents was oppressively designed to gain an unfair advantage over Claimants with respect to possible future damages assessments against Respondents, which had not yet been determined, and with respect to the FINRA award against Respondents, as to which Respondents presented no evidentiary basis to justify holding Claimants responsible for said award, or legal or equitable basis for withholding Claimants' funds hostage to Respondents' desire that Claimants pay all or a portion of said award.

4. Wedbush Securities Inc. and Edward William Wedbush are jointly and severally liable for and shall pay to Claimants costs in the sum of $6,329.18 and experi: costs in the sum of $5,115.00.

5. Claimants' claims against Respondents Michael Gerald Gardner and Richard Anthony Lanni are denied.

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6. Any and all relief not specifically addressed herein is denied.

FEES

Pursuant to the Code, the following fees are assessed:

Filing Fees FINRA Dispute Resolution assessed a filing fee* for each claim:

Initial Claim Filing Fee =$ 1,800.00 Counterclaim Filing Fee =$ 2,125.00

*The filing fee is made up of a non-refundable and a refundable portion.

Member Fees Member fees are assessed to each member firm tiiat is a party in these proceedings or to the member firm(s) that employed the associated person(s) at tiie time of the event(s) giving rise to the dispute. Accordingly, as a party, Wedbush Securities Inc. is assessed the following:

Member Surcharge =$ 2,800.00 Pre-Hearing Processing Fee =$ 750.00 Hearing Processing Fee =$ 5,000.00

Adjournment Fees Adjournments granted during these proceedings for which fees were waived:

February 4-5, 2013, adjournment by Claimants = waived Febmary 6-8, 2013, adjournment by parties = waived

Hearing Session Fees and Assessments The Panel has assessed hearing session fees for each session conducted. A session is any meeting between the parties and the arbitrator(s), including a pre-hearing conference with the arbitrator(s), that lasts four (4) hours or less. Fees associated with these proceedings are:

Four (4) Pre-hearing sessions with the Panel @ $1,200.00/session = $4,800.00 Pre-hearing conferences: February 16, 2012 1 session

May 14, 2012 1 session August 29, 2012 1 session January 11, 2013 1 session

Six (6) Hearing sessions @ $1,200.00/session = $7,200.00 Hearing Dates: June 11, 2013 2 sessions

June 12, 2013 2 sessions June 13, 2013 2 sessions

Total Hearing Session Fees =$12,000.00

The Panel has assessed $6,000.00 of the hearing session fees jointiy and severally to Claimants.

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The Panel has assessed $6,000.00 of the hearing session fees jointly and severally to Respondents.

All balances are payable to FINRA Dispute Resolution and are due upon receipt.

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Robert A. Lombard! Dennis A. Torres Robert Dean McKinley

ARBITRATION PANEL

Public Arbitrator, Presiding Chairperson Public Arbitrator Public Arbitrator

I, the undersigned Arbitrator, do hereby affirm that I am the individual described herein and who executed this instrument which is my award.

Concurring Arbitrators' Signatures

RdbetiA. Lomhardi Public A>toitrator\Presiding Chairperson

Dennis 7\. Torre Public Artjitrator

Signature Date

Signature Date

Robert Dean McKinley Public Arbitrator

Signature Date

of Service (For FINRA Dispute Res Date Resolution office use only)

FINRA Dispute Resolution Arfattration No. 11-03452 Award Page 7 of 7

Robert A. Lombard! Dennis A. Torres Robert Dean McKinley

ARBITRATION PANEL

Public Arbitrator, Presiding Chairperson Public Arbitrator Public Arbitrator

I, tt\e undersigned Arbitrator, do hereby affimi tiiat I am the individual described herein and who executed this instrument which is my award.

Concurring Artaitrators* Signatures

Robert A. Lombard! Public Arbiti^tor. Presiding Chairperson

Signature Date

Dennis A. Tonpes Public Arbitrator

Robert Dean McKinley Public Arbitrator

Signature Date

signature Date

Date of Service (For FINiRA Dispute Resolution office use only)

FINRA Dispute Resolution Arbitration No. 11-03462 Award Page 7 of 7

Robert: A. Lombard! Dennis A. Tonnes Robert: Dean McKinley

ARBlTRATiO IMPANEL

Public Arbitrator, Presiding Chairperson Public Arbitrator Public Arbitrator

I, the undersigned Arbitrator, do hereby affirm 'hat I am the Individual described herein and who executed this instmment which is my award.

Concun-Inq Arbitrators' Signatures

Robert A. LombardI Public Artjitrator, Presiding Chairperson

Signature Date

Dennis A. Torres Public Artjitrator

Signature Date

Robert Dean McKinley Public Arbitrator

Signature Date

Date of Service (For FINI^ Dispute Resolution office use only)