Equity Services, Inc.

Allegations: THE STATE OF DELAWARE DEPARTMENT OF INSURANCE ALLEGED THAT LIFE INSURANCE COMPANY OF THE SOUTHWEST FAILED TO PROVIDE A REFERENCE OF THE STATISTICS USED IN MARKETING FORMS AND THAT IT FAILED TO PROVIDE NOTICE OF A REPLACEMENT TO INSURERS BEING REPLACED. Status: Final Sanction Detail: $6,000 LEVIED AGAINST LIFE INSURANCE COMPANY OF THE SOUTHWEST, WHICH WAS DATED 02/02/2014.

Allegations: THE STATE OF WASHINGTON INSURANCE COMMISSION DEPARTMENT ALLEGED THAT BY ACCEPTING THE SALE OF THE LSW ANNUITY TO A WASHINGTON RESIDENT WITHOUT THE WASHINGTON REQUIRED REPLACEMENT FORM. Status: Final Sanction Detail: $17,500 LEVIED AGAINST LIFE INSURANCE COMPANY OF THE SOUTHWEST, WHICH WAS DATED 07/23/2014.

Allegations: THE INQUIRY ALLEGED 1) ONE ADVERTISEMENT USED "LOW COST" AND "AFFORDABLE" IN VIOLATION OF THE STATUTORY REQUIREMENTS FOR USING SUCH TERMS IN ADVERTISING; 2) LSW ACCEPTED BUSINESS FROM ONE AGENT WHO WAS NOT LICENSED IN VIRGINIA; AND 3) 13 INSTANCES OF FAILURE TO PROVIDE ADVERSE UNDERWRITING DECISION NOTICES. Status: Final Sanction Detail: LSW WAS FINED $6,600.00 AND CONSENTED TO: (1) REVIEW ALL ADVERTISEMENTS IN USE IN VIRGINIA TO VERIFY COMPLIANCE WITH APPLICABLE STATUTES, (2) ESTABLISH PROCEDURES AND A SYSTEM OF CONTROLS TO ENSURE THAT ALL ADVERTISEMENTS USED TO MARKET LSW PRODUCTS IN VA COMPLY WITH VA STATUTES, (3) REVIEW AND REVISE ITS PROCEDURES TO ENSURE THAT ALL AGENTS REPRESENTING LSW ARE PROPERLY LICENSED IN VA, (4) CREATE AUD NOTICES FOR USE IN VA AND ENSURE THAT THEY COMPLY WITH APPLICABLE STATUTES.

Allegations: FINDINGS ALLEGED ONE PRODUCER ACTING AS AN AGENT WITHOUT THE REQUIRED APPOINTMENT. Status: Final Sanction Detail: LSW WAS FINED $1,500.00 AND AGREED TO: (1) REVIEW ITS PRACTICES AND PROCEDURES TO ENHANCE COMPLIANCE WITH CT STATUTES, AND (2) PROVIDE THE INSURANCE COMMISSIONER WITH A SUMMARY OF ACTIONS TAKEN TO COMPLY WITH THE REPORT RECOMMENDATIONS WITH 90 DAYS OF THE STIPULATION AND CONSENT ORDER.

Allegations: THE SECURITIES AND EXCHANGE COMMISSION ("SEC") CHARGED THE FIRM WITH WILLFUL VIOLATIONS OF SECTION 206(2) OF THE INVESTMENT ADVISERS ACT OF 1940 ("ADVISERS ACT"), ALLEGING THAT, AT TIMES, FROM JANUARY 1, 2014 THROUGH JULY 7, 2017, THE FIRM PURCHASED, RECOMMENDED OR HELD FOR ADVISORY CLIENTS MUTUAL FUND SHARE CLASSES THAT CHARGED 12B-1 FEES INSTEAD OF LOWER-COST SHARE CLASSES OF THE SAME FUNDS FOR WHICH THE CLIENTS WERE ELIGIBLE, AND FAILED TO ADEQUATELY DISCLOSE THE CONFLICTS OF INTEREST RELATED TO (A) ITS RECEIPT OF 12B-1 FEES, AND/OR (B) ITS SELECTION OF MUTUAL FUND SHARE CLASSES THAT PAY SUCH FEES. Status: Final Sanction Detail: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE IMPOSITION OF A CEASE AND DESIST ORDER, CENSURE, UNDERTAKINGS AND PAYMENT OF DISGORGEMENT AND PREJUDGMENT INTEREST TO AFFECTED INVESTORS IN THE AMOUNT OF APPROXIMATELY $587,017.72. THE SEC NOTED THE FIRM'S SELF-REPORTING OF THIS MATTER IN CONNECTION WITH THE SHARE CLASS SELECTION DISCLOSURE INITIATIVE. THE SEC DID NOT IMPOSE A CIVIL MONETARY PENALTY. Summary: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTED TO THE IMPOSITION OF A CEASE AND DESIST ORDER, CENSURE, UNDERTAKINGS AND PAYMENT OF DISGORGEMENT AND PREJUDGMENT INTEREST TO AFFECTED INVESTORS IN THE AMOUNT OF APPROXIMATELY $587,017.72. THE SEC NOTED THE FIRM'S SELF-REPORTING OF THIS MATTER IN CONNECTION WITH THE SHARE CLASS SELECTION DISCLOSURE INITIATIVE. THE SEC DID NOT IMPOSE A CIVIL MONETARY PENALTY.