Glacierwealth, Inc.

Allegations: NATURE OF CLAIMS [CUSTOMERS] HAVE ALLEGED FIVE SEPARATE CLAIMS AGAINST [OTHER FIRM EMPLOYEE], EDWARD G. RAINFORD, AND CLEARWEALTH, INC. (F/K/A SADLER CAPITAL MANAGEMENT, INC.) IN THEIR AMENDED COMPLAINT WHICH THEY FILED IN THE DISTRICT COURT OF THE FOURTH JUDICIAL DISTRICT OF THE STATE OF IDAHO IN AND FOR THE COUNTY OF ADA, LOCATED IN BOISE, IDAHO. THEY ARE: (1) A CLAIM AGAINST ALL DEFENDANTS UNDER IDAHO CODE § 30-14-509(F) FOR ALLEGED VIOLATION OF THE IDAHO UNIFORM SECURITIES ACT (THE "ACT") BY USING A SCHEME OR ARTIFICE TO DEFRAUD; (2) A CLAIM FOR VICARIOUS/SUPERVISORY LIABILITY AGAINST [OTHER FIRM EMPLOYEE] UNDER IDAHO CODE §§ 30-14-509(G)(1) AND (2) FOR THE CONDUCT ALLEGED IN THE FIRST CLAIM NOTED ABOVE; (3) A BREACH OF CONTRACT CLAIM AGAINST ALL DEFENDANTS FOR THE ALLEGED VIOLATION OF AN INVESTMENT POLICY STATEMENT PREPARED IN AUGUST, 2006; (4) A CLAIM FOR NEGLIGENCE AGAINST ALL DEFENDANTS; AND (5) A CLAIM AGAINST ALL DEFENDANTS FOR ALLEGED VIOLATION OF THE IDAHO CONSUMER PROTECTION ACT (IDAHO CODE § 48-603(17)). ALL DEFENDANTS HAVE DENIED EACH AND ALL OF THE [CUSTOMERS]' ALLEGATIONS AND CLAIMS AND ARE DEFENDING THE ACTION VIGOROUSLY. BRIEF DESCRIPTION OF FACTS AND DATES RELATING TO THE CLAIMS [CUSTOMERS] BECAME CLIENTS OF CLEARWEALTH (THEN KNOWN AS SADLER CAPITAL MANAGEMENT, INC.) ON OR ABOUT OCTOBER 29, 2004, WHEN THEY COUNTERSIGNED AN ENGAGEMENT LETTER SENT TO THEM BY [OTHER FIRM EMPLOYEE]. THE ENGAGEMENT WAS EXPRESSLY NONDISCRETIONARY IN NATURE AND THAT FACT WAS UNAMBIGUOUSLY CONFIRMED IN THE OCTOBER 29 LETTER. DURING JULY OF 2007 EDWARD G. RAINFORD EXPLAINED AND RECOMMENDED, DURING IN-PERSON MEETINGS, CONFIRMING WRITTEN CORRESPONDENCE, AND FOLLOW-UP TELEPHONE CONVERSATIONS, SPECIFIC TRANSACTIONS THAT THE [CUSTOMERS] COULD MAKE TO MODIFY THEIR INVESTMENT PORTFOLIO. THE [CUSTOMERS] AGREED WITH THE RECOMMENDATIONS BOTH ORALLY AND IN WRITING AND SPECIFICALLY AUTHORIZED THE FIRM TO IMPLEMENT THE RECOMMENDED TRADES TO REBALANCE THE PORTFOLIO. IN JANUARY OF 2008 MESSRS. [CUSTOMERS], RAINFORD, AND [OTHER FIRM EMPLOYEE] MET TO DISCUSS THE [CUSTOMER'S] PORTFOLIO AND [CUSTOMER'S] STATED CONCERNS THAT AROSE DUE TO MARKET LOSSES EXPERIENCED IN DECEMBER 2007 AND EARLY JANUARY 2008. AS A RESULT OF THESE DISCUSSIONS THE [CUSTOMERS] SPECIFICALLY AUTHORIZED ADDITIONAL TRADES AFFECTING THE PORTFOLIO. IN SEPTEMBER, 2008, [CUSTOMER] MET WITH MR. RAINFORD AND CLAIMED FOR THE FIRST TIME THAT THE AUTHORIZED TRADES AND ADJUSTMENTS TO THE PORTFOLIO HOLDINGS AND ASSETS AMOUNTED TO A BREACH OF AN INVESTMENT POLICY STATEMENT PREPARED FOR THE [CUSTOMERS] IN AUGUST, 2006. AFTER SEEKING FURTHER ADVICE AND ASSISTANCE FROM MR. RAINFORD, [CUSTOMER] TERMINATED THE PARTIES' RELATIONSHIP ON OR ABOUT SEPTEMBER 23, 2008, EFFECTIVE SEPTEMBER 30, 2008. SEVEN MONTHS LATER, ON OR ABOUT APRIL 28, 2009, MESSRS. RAINFORD AND [OTHER FIRM EMPLOYEE] RECEIVED A DEMAND LETTER PROPOSING THAT THEY PAY THE [CUSTOMERS] $126,522 IN "FULL SETTLEMENT OF ALL CLAIMS" FOR ALLEGED DAMAGES CAUSED BY THE TRANSACTIONS THAT THE [CUSTOMERS] EXPRESSLY AUTHORIZED IN JULY, 2007. ON MAY 28, 2009, MR. RAINFORD, ON HIS OWN BEHALF AND THAT OF CLEARWEALTH, INC. AND [OTHER FIRM EMPLOYEE], PROVIDED THE [CUSTOMERS] WITH A FORMAL WRITTEN RESPONSE TO THE DEMAND LETTER DEMONSTRATING BY REFERENCE TO INDISPUTABLE WRITTEN DOCUMENTATION (INCLUDING CORRESPONDENCE AMONG THE PARTIES, ACCOUNT STATEMENTS AND INVOICES, TRADE CONFIRMATIONS, AND THE LIKE) THE BASELESS NATURE OF THE CLAIMS ASSERTED. THE [CUSTOMERS] DID NOT REFUTE THE RESPONSE. INSTEAD, THEY FILED THEIR COMPLAINT IN DISTRICT COURT ON JUNE 25, 2009. THEY SUBSEQUENTLY FILED AN AMENDED COMPLAINT ON JUNE 30, 2009. Status: Final Summary: AS NOTED IN PREVIOUS DISCLOSURES, THE [CUSTOMERS] BROUGHT AN ACTION AGAINST CLEARWEALTH, [OTHER FIRM EMPLOYEE], AND EDWARD G. RAINFORD ("DEFENDANTS") IN THE DISTRICT COURT OF THE FOURTH JUDICIAL DISTRICT OF THE STATE OF IDAHO, IN AND FOR THE COUNTY OF ADA, STYLED AS: [CUSTOMERS] V. [OTHER FIRM EMPLOYEE], EDWARD G. RAINFORD, AND CLEARWEALTH, INC., ET AL., CASE NO. CV 09-11997 (THE "LITIGATION"). THE DEFENDANTS DISPUTED THE [CUSTOMERS] ALLEGATIONS MADE IN THE LITIGATION AND DENIED ALL LIABILITY TO [CUSTOMERS] IN THE LITIGATION. IN THE COURSE OF THE LITIGATION, THE PARTIES ENGAGED IN DISCOVERY, MOTIONS PRACTICE (INCLUDING MOTIONS FOR SUMMARY JUDGMENT), AND EXTENSIVE SETTLEMENT DISCUSSIONS TOWARD THE END OF RESOLVING THEIR DISPUTES. AS A RESULT, AND IN LIGHT OF THE MUTUAL WISH AND DESIRE OF ALL OF THE PARTIES TO HAVE A COMPLETE AND FINAL SETTLEMENT AND COMPROMISE OF THE LITIGATION TO AVOID THE EXPENSE AND BURDEN OF THE LITIGATION, ALL CLAIMS HAVE BEEN DISMISSED WITH PREJUDICE PURSUANT TO THE PARTIES' AGREEMENT TO SETTLE. IMPORTANTLY, IN SETTLING AND DISMISSING THE LITIGATION, THE PARTIES EXPRESSLY AGREED THAT THE SETTLEMENT AND COMPROMISE OF THE LITIGATION CONSTITUTES A COMPROMISE OF DISPUTED CLAIMS AND DOES NOT AND SHALL NOT BE CONSTRUED AS AN ADMISSION OF FAULT OF ANY KIND BY DEFENDANTS, NOR IS THE FACT OF THE PARTIES' SETTLEMENT INTENDED TO BE, NOR SHALL IT BE CONSTRUED AS, AN ADMISSION WITH RESPECT TO VIOLATIONS OF ANY STATUTE BY DEFENDANTS REGARDING THEIR ACTIVITIES RELATING TO CUSTOMERS. MOREOVER, DEFENDANTS' AND [CUSTOMERS'] AGREEMENT TO SETTLE, RELEASE, AND COMPROMISE THEIR CLAIMS AND POSITIONS IN THE LITIGATION IN NO WAY CONSTITUTES AN ADMISSION OF ANY CONDUCT ALLEGED IN THE LITIGATION AND CANNOT BE USED AS THE BASIS FOR ANY CLAIM OR ALLEGATION THAT THE CONDUCT ALLEGED IN THE LITIGATION TOOK PLACE OR THAT THEIR SETTLEMENT IN ANY WAY CONSTITUTES ACTION, ADMINISTRATIVE OR OTHERWISE, BASED ON OR IN ANY WAY RELATED TO THE CONDUCT ALLEGED IN THE LITIGATION.