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Allegations: THE SECURITIES AND EXCHANGE COMMISSION ("SEC") ALLEGED IN ITS COMPLAINT THAT MR. FRIEDMAN, WHILE HE WAS SERVING AS CO-CHAIRMAN AND CO-CHIEF EXECUTIVE OFFICER OF FRIEDMAN, BILLINGS, RAMSEY & CO., INC. ("FBR"), MADE UNREGISTERED SALES OF SECURITIES IN 2001 IN VIOLATION OF SECTION 5 OF THE SECURITIES ACT OF 1933 AND IS LIABLE AS A CONTROLLING PERSON, PURSUANT TO SECTION 20(A) OF THE SECURITIES EXCHANGE ACT OF 1934, FOR VIOLATIONS BY FBR IN 2001 OF EXCHANGE ACT SECTIONS 10(B) AND 15(F) AND RULE 10B-5 THEREUNDER. Status: Final Summary: AFTER AN INVESTIGATION CONDUCTED BY THE ENFORCEMENT STAFF OF THE SEC AND AFTER SETTLEMENT NEGOTIATIONS WITH THE STAFF, FRIEDMAN SUBMITTED TO THE COMMISSION A SIGNED CONSENT OF DEFENDANT EMANUEL J. FRIEDMAN ON DECEMBER 14, 2006, WHICH CONSENTED TO THE ENTRY OF THE FINAL JUDGMENT DESCRIBED ABOVE. THE COMMISSION APPROVED THE PROPOSED SETTLEMENT ON DECEMBER 19, 2006, AND THE COMPLAINT AND PROPOSED FINAL JUDGMENT WERE FILED WITH THE COURT ON DECEMBER 20, 2006. THE COURT SIGNED AND ENTERED THE FINAL JUDGMENT ON DECEMBER 22, 2006.

Allegations: MR. FRIEDMAN ACCEPTED AND CONSENTED, WITHOUT ADMITTING OR DENYING THE FINDINGS, TO THE ENTRY OF FINDINGS BY THE NATIONAL ASSOCIATION OF SECURITIES DEALERS ("NASD") THAT MR. FRIEDMAN, WHILE HE WAS SERVING AS CO-CHAIRMAN AND CO-CHIEF EXECUTIVE OFFICER OF FRIEDMAN, BILLINGS, RAMSEY & CO. INC., ("FBR"), VIOLATED NASD RULE 2110 AND IS LIABLE AS A CONTROLLING PERSON, PURSUANT TO SECTION 20(A) OF THE SECURITIES EXCHANGE ACT OF 1934, FOR VIOLATIONS BY FBR IN 2001 OF EXCHANGE ACT SECTIONS 10(B) AND 15(F) AND RULE 10B-5 THEREUNDER. Status: Final Sanction Detail: FRIEDMAN WAS SUSPENDED FROM ASSOCIATING WITH ANY NASD MEMBER IN A SUPERVISORY CAPACITY FOR TWO YEARS. FRIEDMAN WAS FINED $500,000, WHICH WAS PAYABLE TO NASD, AND HE WAS REQUIRED TO PAY A CIVIL PENALTY OF $754,046 IN ACCORDANCE WITH THE TERMS OF THE FINAL JUDGMENT ENTERED IN SEC V. FRIEDMAN, BILLINGS, RAMSEY & CO., INC., ET AL. THE FINE WAS PAID ON DECEMBER 29, 2006, AND THE CIVIL PENALTY ON JANUARY 4, 2007. Summary: ON DECEMBER 14, 2006, FRIEDMAN SUBMITTED THE EXECUTED AWC TO COUNSEL IN NASD'S MARKET REGULATION DEPARTMENT, WHICH WAS ACCEPTED BY NASD ON DECEMBER 19, 2006. IN THE AWC, SOLELY FOR THE PURPOSE OF THE PROCEEDING AND ANY OTHER PROCEEDING BROUGHT BY OR ON BEHALF OF NASD OR TO WHICH NASD IS A PARTY AND WITHOUT ADMITTING OR DENYING THE FINDINGS CONTAINED IN THE AWC, FRIEDMAN CONSENTED TO THE FINDINGS DESCRIBED IN ITEM 7, ABOVE. AS A RESULT OF THE FINDINGS, FRIEDMAN CONSENTED TO THE IMPOSITION OF THE SANCTIONS DESCRIBED IN ITEM 12, ABOVE.

Allegations: PURSUANT TO FRIEDMAN'S CONSENT, THE SEC ORDER FINDS THAT HE WAS A REGISTERED REPRESENTATIVE OF REGISTERED BROKER-DEALER FBR AND EITHER CHAIRMAN OR CO-CHAIRMAN AND EITHER THE CEO OR CO-CEO OF THAT FIRM DURING HIS ENTIRE TENURE THERE. THE ORDER FURTHER FINDS THAT A FINAL JUDGMENT WAS ENTERED BY CONSENT AGAINST FRIEDMAN ENJOINING HIM FROM VIOLATING SECURITIES ACT SECTION 5 AND, AS A CONTROLLING PERSON PURSUANT TO EXCHANGE ACT SECTION 20(A), FROM VIOLATING EXCHANGE ACT SECTIONS 10(B) AND 15(F) AND RULE 10B-5 IN THE CIVIL ACTION SEC V. FRIEDMAN, BILLLINGS, RAMSEY & CO., INC., ET AL., CIVIL ACTION NO. 06-CV-02160 (D.D.C.). THE ORDER ALSO FINDS THAT: THE SEC'S COMPLAINT ALLEGED THAT IN SEPTEMBER/OCTOBER 2001, FRIEDMAN, WITH OTHERS, DIRECTED OR CONTROLLED THE DAY-TO-DAY MANAGEMENT OF FBR; IN CONNECTION WITH A PIPE OFFERING BY COMPUDYNE CORP., FBR FAILED TO ESTABLISH, MAINTAIN, AND ENFORCE POLICIES AND PROCEDURES REASONABLY DESIGNED TO PREVENT THE MISUSE OF MATERIAL, NON-PUBLIC INFORMATION, AND IT IMPROPERLY TRADED COMPUDYNE STOCK IN ITS MARKET-MAKING ACCOUNT WHILE AWARE OF MATERIAL, NON-PUBLIC INFORMATION CONCERNING THE PIPE OFFERING; FRIEDMAN, AS A CONTROLLING PERSON, IS LIABLE FOR THE FOREGOING FBR CONDUCT; AND FRIEDMAN ENGAGED IN UNREGISTERED SALES OF COMPUDYNE SECURITIES. Status: Final Sanction Detail: FRIEDMAN WAS BARRED FROM ASSOCIATING IN A SUPERVISORY CAPACITY WITH ANY BROKER OR DEALER, WITH THE RIGHT TO REAPPLY FOR SUCH ASSOCIATION AFTER TWO YEARS TO THE APPROPRIATE SELF REGULATORY ORGANIZATION, OR IF THERE IS NONE, TO THE COMMISSION. SUCH RIGHT TO REAPPLY BECAME AVAILABLE TO FRIEDMAN ON JANUARY 12, 2009. Summary: ON NOVEMBER 17, 2006, FRIEDMAN SUBMITTED AN OFFER OF SETTLEMENT TO THE SEC, WHICH WAS ACCEPTED BY THE SEC ON DECEMBER 19, 2006. IN THE OFFER OF SETTLEMENT, SOLELY FOR THE PURPOSE OF THE PROCEEDINGS AND ANY OTHER PROCEEDINGS BROUGHT BY OR ON BEHALF OF THE COMMISSION OR IN WHICH THE COMMISSION IS A PARTY AND WITHOUT ADMITTING OR DENYING THE FINDINGS CONTAINED IN THE ORDER, EXCEPT AS TO THE ENTRY OF THE FINAL JUDGMENT, FRIEDMAN ADMITTED TO THE JURISDICTION OF THE COMMISSION AND CONSENTED TO THE ENTRY OF AN ORDER BY THE COMMISSION CONTAINING THE FINDINGS DESCRIBED IN ITEM 7, ABOVE. FRIEDMAN ALSO CONSENTED TO THE IMPOSITION OF THE BAR DESCRIBED IN ITEM 12, ABOVE.