Central States Capital Markets, Llc

Allegations: THE ACCOUNT IS A TRUST ACCOUNT WHEREBY THE CLIENT RECEIVES INCOME FROM THE INVESTMENTS WITHIN THE ACCOUNT. HOWEVER, THE TRUSTEE MAKES ALL INVESTMENT DECISIONS ON BEHALF OF THE ACCOUNT PURSUANT TO THE TRUST DOCUMENTS. THE CLIENT IS A RESIDENT OF KANSAS AND THE TRUSTEE IS A RESIDENT OF MARYLAND. THE APPLICANT RECEIVED INSTRUCTIONS FROM THE TRUSTEE TO PURCHASE A SECURITY ON BEHALF OF THE ACCOUNT. THE APPLICANT COMPLIED WITH SAID REQUEST. DUE TO THE AFOREMENTIONED CIRCUMSTANCES, THE STATE OF MARYLAND INDICATED THAT THE APPLICANT EFFECTED SECURITIES TRANSACTIONS PRIOR TO BEING REGISTERED IN THE STATE. Status: Final Sanction Detail: AS ORDERED BY THE STATE OF MARYLAND OF PART OF THE STIPULATION, THE APPLICANT REIMBURSED THE CLIENT $200 IN COMMISSIONS. NO FINES OR OTHER DISGORGEMENTS WERE REQUIRED. Summary: THE MATTER INVOLVED A TRUST ACCOUNT; THE TRUSTEE FOR THE ACCOUNT WAS A RESIDENT OF THE STATE OF MARYLAND. THE ACCOUNT OWNER WAS A RESIDENT OF THE STATE OF KANSAS. ON 01/27/2012 THE TRUSTEE PROVIDED INSTRUCTION TO THE APPLICANT TO PURCHASE A CORPORATE DEBT SECURITY IN THE AMOUNT OF $10,000 WITH A SETTLEMENT DATE OF 02/01/2012. THE APPLICANT SUBSEQUENTLY EXECUTED THE TRANSACTION. THE STATE OF MARYLAND INDICATED THAT SINCE THE TRUSTEE WAS A RESIDENT OF THE STATE OF MARYLAND AND THE INDIVIDUAL RESPONSIBLE FOR PROVIDING ACCOUNT INTSTRUCTIONS, THE APPLICANT WAS REQUIRED TO BE REGISTERED IN THE STATE OF MARYLAND. THE APPLICANT STIPULATED WITH THE STATE TO REFUND THE COMMISSIONS TO THE CLIENT. COMMISSIONS IN THE AMOUNT OF $200 WERE REFUNDED TO THE CUSTOMER AND THE STATE OF MARYLAND APPROVED THE APPLICANT'S REGISTRATION.

Allegations: THE SEC ALLEGES THAT CENTRAL STATES CAPITAL MARKET VIOLATED SECTIONS 15(C)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 AND MSRB RULE G-17. IN ADDITION, ASSOCIATED PERSONS OF CSCM VIOLATED SECTION 15B(C)(1) OF THE EXCHANGE ACT AND MSRB RULE G-17 AND G-23. THE SEC FOUND THAT THERE WAS A BREACH OF FIDUCIARY DUTY BY CSCM, A MUNICIPAL ADVISER AND IT'S ASSOCIATED PERSONS. IN APRIL 2011, A MUNICIPAL ENTITY HIRED CSCM TO SERVE AS ITS MUNICIPAL ADVISOR. THROUGHOUT THE REMAINDER OF 2011, CSCM PROVIDED ADVICE TO THE CITY ON THREE SEPARATE MUNICIPAL DEBT OFFERINGS. THE CITY RELIED ON CSCM TO ADVISE IT ON THE TERMS OF THE OFFERINGS, INCLUDING INTEREST RATES, THE SELECTION OF UNDERWRITERS, & UNDERWRITING FEES. CSCM ASSIGNED TWO OF IT'S ASSOCIATED PERSONS TO WORK WITH THE CITY ON BEHALF OF THE FIRM. THE TWO ASSOCIATED PERSONS, IN CONSULTATION WITH ANOTHER ASSOCIATED PERSON, ARRANGED TO HAVE THE CITY'S OFFERING UNDERWRITTEN BY A BROKER-DEALER WITH WHICH THESE ASSOCIATED PERSONS WERE STILL WORKING AS REGISTERED REPRESENTATIVES. THROUGHOUT THE CITY'S 2011 MUNICIPAL DEBT OFFERINGS, EMPLOYEES OF CSCM, INCLUDING THE ASSOCIATED PERSONS PROVIDED BOTH UNDERWRITING SERVICES & MUNICIPAL ADVISOR SERVICES FOR THE OFFERINGS. IN CONNECTION WITH THE OFFERINGS, CSCM PAID COMMISSIONS TO THE TWO ASSIGNED ASSOCIATED PERSONS BASED ON BOTH THE MUNICIPAL ADVISOR SERVICES & THE UNDERWRITING SERVICES THEY PERFORMED. HOWEVER, CSCM FAILED TO DISCLOSE TO THE CITY IN WRITING: (1) THE FACT THAT CERTAIN CSCM EMPLOYEES ALSO WORKED FOR THE BROKER-DEALER; (2) THE FACT THAT CERTAIN CSCM EMPLOYEES WERE PERFORMING BOTH MUNICIPAL ADVISOR SERVICES & UNDERWRITING SERVICES FOR THE OFFERINGS; AND (3) THE FACT THAT CERTAIN CSCM EMPLOYEES HAD A POTENTIAL CONFLICT OF INTEREST BECAUSE THEY WERE RECEIVING A DIRECT FINANCIAL BENEFIT FROM THE UNDERWRITING SERVICES. AS A RESULT, THE SEC ALLEGES CSCM BREACHED IT'S FIDUCIARY DUTY TO THE CITY. CENTRAL STATES NEITHER ADMITS NOR DENIES THE ALLEGATIONS. Status: Final Sanction Detail: THE FIRM SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION 15 B(C)(1) OF THE EXCHANGE ACT AND MSRB RULE G-17 THEREUNDER; IS CENSURED; SHALL PAY DISGORGEMENT OF $251,650, AND PREJUDGEMENT INTEREST OF $38,177.80; AND SHALL PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $85,000.00 Summary: THE FIRM HAS SUBMITTED AN OFFER OF SETTLEMENT WHICH THE COMMISSION HAS ACCEPTED

Allegations: THE SECURITIES & EXCHANGE COMMISSION ALLEGES THAT CENTRAL STATES CAPITAL MARKETS, LLC VIOLATED SECTION 17(A)(2) OF THE SECURITIES ACT OF 1933. THIS MATTER INVOLVES VIOLATIONS OF AN ANTI-FRAUD PROVISION OF THE FEDERAL SECURITIES LAWS IN CONNECTION WITH THE FIRM'S UNDERWRITING OF CERTAIN MUNICIPALS SECURITIES OFFERINGS. Status: Final Sanction Detail: THE FIRM SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING ANY VIOLATIONS AND ANY FUTURE VIOLATIONS OF SECTION 17 (A)(2) OF THE SECURITIES ACT, PAY A CIVIL MONETARY PENALTY IN THE AMOUNT OF $60,000.00 AND COMPLY WITH THE UNDERTAKINGS ENUMERATED IN THE OFFER OF SETTLEMENT. Summary: IN CONNECTION WITH THE SEC'S MUNICIPALITIES CONTINUING DISCLOSURE COOPERATIVE (MCDC) INITIATIVE, THE FIRM VOLUNTARILY SELF-REPORTED CERTAIN MATTERS RELATED TO IT'S UNDERWRITING OF CERTAIN MUNICIPAL SECURITIES OFFERINGS. THE FIRM PARTICIPATED IN THE SEC'S INDUSTRY-WIDE MCDC INITIATIVE PERTAINING TO COMPLIANCE WITH THE SEC RULE 15C2-12.