Signal Securities, Inc.

Allegations: SECTION 15(C) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 15C3-3 THEREUNDER, NASD RULES 1014, 2110 - RESPONDENT MEMBER HELD CUSTOMER FUNDS REPRESENTING PAYMENT OF THE PURCHASE PRICE OF DIRECT PARTICIPATION PROGRAM (DPP) UNITS INTO ESTABLISHED ESCROW ACCOUNTS AND AS A RESULT, IT WAS REQUIRED TO PERFORM MONTHLY RESERVE COMPUTATIONS AND TO MAKE DEPOSITS INTO A SPECIAL RESERVE BANK ACCOUNT FOR THE EXCLUSIVE BENEFIT OF THE CUSTOMERS HOWEVER IT FAILED TO MAKE ANY COMPUTATIONS OR DEPOSITS. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, SIGNAL SECURITIES, INC., CONSENTED TO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS, THEREFORE, FIRM WAS CENSURED AND FINED $15,000. Summary: SIGNAL SECURITIES' FACILITATION OF THE SECONDARY MARKET TRANSACTIONS ("DPP") DESCRIBED HEREIN WAS IN PLACE PRIOR TO 2005, DURING WHICH TIMES THE NASD CONDUCTED NUMEROUS ROUTINE EXAMINATIONS. PRIOR TO THE 2005 EXAMINATION, SIGNAL WAS NOT ADVISED THAT THESE PRACTICES WERE PROBLEMATIC. IN ALL INSTANCES WHERE A DPP TRANSACTION WAS NOT COMPLETED, THE CUSTOMER RECEIVED A REFUND, DESPITE THE FACT THE CUSTOMER'S COMMISSION CHECK WAS DEPOSITED IN OUR OPERATING ACCOUNT. ALTHOUGH SEVERAL DPP CHECKS WERE NOT IMMEDIATELY DEPOSITED, IN EACH INSTANCE, ALL FUNDS WERE ACCOUNTED FOR, AND NO CUSTOMER WAS HARMED BY THE DELAY. IN ADDITION, NO CUSTOMER COMPLAINTS HAD BEEN FILED CONCERNING THE PRACTICES DESCRIBED HEREIN.