northwestern mutual investment services, llc · northwestern mutual investment services, llc crd#...

BrokerCheck Report

NORTHWESTERN MUTUAL INVESTMENT SERVICES, LLC

Section Title

Report Summary

Firm History

CRD# 2881

1

8

Firm Profile 2 - 7

Page(s)

Firm Operations 9 - 19

Disclosure Events 20

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NORTHWESTERN MUTUALINVESTMENT SERVICES, LLC

CRD# 2881

SEC# 8-14088

Main Office Location

720 EAST WISCONSIN AVENUEMILWAUKEE, WI 53202-4797Regulated by FINRA Chicago Office

Mailing Address

720 EAST WISCONSIN AVENUEMILWAUKEE, WI 53202-4797

This firm is a brokerage firm and an investmentadviser firm. For more information aboutinvestment adviser firms, visit the SEC'sInvestment Adviser Public Disclosure website at:

Business Telephone Number

414-271-1444

https://www.adviserinfo.sec.gov

Report Summary for this Firm

This report summary provides an overview of the brokerage firm. Additional information for this firm can be foundin the detailed report.

Disclosure Events

Brokerage firms are required to disclose certaincriminal matters, regulatory actions, civil judicialproceedings and financial matters in which the firm orone of its control affiliates has been involved.

Are there events disclosed about this firm? Yes

The following types of disclosures have beenreported:

Type Count

Regulatory Event 7

Firm Profile

This firm is classified as a limited liability company.

This firm was formed in Wisconsin on 06/10/1998.

Its fiscal year ends in December.

Firm History

Information relating to the brokerage firm's historysuch as other business names and successions(e.g., mergers, acquisitions) can be found in thedetailed report.

Firm Operations

Is this brokerage firm currently suspended with anyregulator? No

This firm conducts 4 types of businesses.

This firm is affiliated with financial or investmentinstitutions.

This firm has referral or financial arrangements withother brokers or dealers.

This firm is registered with:

• the SEC• 1 Self-Regulatory Organization• 51 U.S. states and territories

www.finra.org/brokercheck User Guidance

1©2019 FINRA. All rights reserved. Report about NORTHWESTERN MUTUAL INVESTMENT SERVICES, LLC

https://adviserinfo.sec.gov/IAPD/IAPDSummaryRouter.aspx?IndividualID=-1&FirmID=2881&Source=Report


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This firm is classified as a limited liability company.

This firm was formed in Wisconsin on 06/10/1998.

CRD#

This section provides the brokerage firm's full legal name, "Doing Business As" name, business and mailingaddresses, telephone number, and any alternate name by which the firm conducts business and where such name isused.

Firm Profile

Firm Names and Locations

Its fiscal year ends in December.

NORTHWESTERN MUTUAL INVESTMENT SERVICES, LLC

SEC#

2881

8-14088

Main Office Location

Mailing Address

Business Telephone Number

Doing business as NORTHWESTERN MUTUAL INVESTMENT SERVICES, LLC

414-271-1444

Regulated by FINRA Chicago Office








This section provides information relating to all direct owners and executive officers of the brokerage firm.

Direct Owners and Executive Officers

Firm Profile

Position

Percentage of Ownership

Is this a public reportingcompany?

Position Start Date

Does this owner direct themanagement or policies ofthe firm?

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

SOLE MEMBER

75% or more

No

Domestic Entity

04/1968

Yes

Is this a domestic or foreignentity or an individual?

Legal Name & CRD# (if any):

Position



Position Start Date


EULL, BRADLEY LEAHY

NMIS SECRETARY

Less than 5%

No

Individual

12/2018

No

2969269



Position


Position Start Date

GEHRKE, DON P

CHIEF OPERATIONS OFFICER

Less than 5%

Individual

10/2018

4045483








Direct Owners and Executive Officers (continued)

Firm Profile




Less than 5%

No

Yes

Position



Position Start Date


GEREND, TIMOTHY JOHN

DIRECTOR AND SENIOR VICE PRESIDENT

Less than 5%

No

Individual

09/2014

Yes

5576244



Position



Position Start Date


MITCHELL, CHRISTIAN WINFIELD

DIRECTOR AND VICE PRESIDENT

Less than 5%

No

Individual

08/2017

Yes

6766944



O'LEARY, JENNIFER L

4593134








Firm Profile

Position



Position Start Date


TREASURER/FINOP

Less than 5%

No

Individual

11/2012

Yes

4593134


Position



Position Start Date


SCHOENBORN, EVA MARIE

PRESIDENT AND CEO AND DIRECTOR

Less than 5%

No

Individual

01/2018

Yes

2813984



Position


Position Start Date


SIMBRO, DAVID WILLIAM

SENIOR VICE PRESIDENT

Less than 5%

Individual

08/2018

Yes

3157411









Firm Profile



Yes

Yes

Position



Position Start Date


WILLIAMS, JEFFREY B

VICE PRESIDENT AND CHIEF COMPLIANCE OFFICER

Less than 5%

No

Individual

02/2006

Yes

4076724








This section provides information relating to any indirect owners of the brokerage firm.

Indirect Owners

Firm Profile

No information reported.






Firm History

This section provides information relating to any successions (e.g., mergers, acquisitions) involving the firm.

No information reported.






Firm Operations

RegistrationsThis section provides information about the regulators (Securities and Exchange Commission (SEC), self-regulatoryorganizations (SROs), and U.S. states and territories) with which the brokerage firm is currently registered andlicensed, the date the license became effective, and certain information about the firm's SEC registration.

This firm is currently registered with the SEC, 1 SRO and 51 U.S. states and territories.

SEC Registration Questions

This firm is registered with the SEC as:

A broker-dealer:

A broker-dealer and government securities broker or dealer:

A government securities broker or dealer only:

This firm has ceased activity as a government securities broker or dealer:

Yes

No

No

No

Federal Regulator Status Date Effective

SEC Approved 09/14/1968

Self-Regulatory Organization Status Date Effective

FINRA Approved 10/01/1968






Firm Operations

Registrations (continued)

U.S. States &Territories

Status Date Effective

Alabama Approved 10/10/2001

Alaska Approved 10/26/2000

Arizona Approved 09/04/2001

Arkansas Approved 10/25/2000

California Approved 10/20/2000

Colorado Approved 11/27/2000

Connecticut Approved 05/01/2001

Delaware Approved 11/02/2000

District of Columbia Approved 09/27/2000

Florida Approved 10/19/2001

Georgia Approved 03/20/2001

Hawaii Approved 11/01/2000

Idaho Approved 09/14/2001

Illinois Approved 12/03/2001

Indiana Approved 08/15/2001

Iowa Approved 11/30/1999

Kansas Approved 11/22/2000

Kentucky Approved 08/29/2000

Louisiana Approved 12/07/2000

Maine Approved 12/18/2000

Maryland Approved 10/25/2000

Massachusetts Approved 12/15/2000

Michigan Approved 11/17/2000

Minnesota Approved 11/30/1999

Mississippi Approved 11/10/2000

Missouri Approved 10/30/2000

Montana Approved 12/12/1991

Nebraska Approved 11/09/2000

Nevada Approved 09/14/2001

New Hampshire Approved 03/13/2001

New Jersey Approved 11/06/2000

New Mexico Approved 10/04/2001

New York Approved 08/06/2001

U.S. States &Territories

Status Date Effective

North Carolina Approved 10/31/2000

North Dakota Approved 05/04/1972

Ohio Approved 11/08/2000

Oklahoma Approved 03/05/2001

Oregon Approved 08/31/2000

Pennsylvania Approved 05/22/2000

Rhode Island Approved 11/13/2001

South Carolina Approved 10/31/2000

South Dakota Approved 06/02/1987

Tennessee Approved 11/01/2000

Texas Approved 11/21/2001

Utah Approved 09/15/1999

Vermont Approved 10/25/2001

Virginia Approved 11/14/2000

Washington Approved 04/20/1983

West Virginia Approved 11/03/2000

Wisconsin Approved 04/26/1971

Wyoming Approved 09/06/2000






Firm Operations

Types of BusinessThis section provides the types of business, including non-securities business, the brokerage firm is engaged in orexpects to be engaged in.

Other Types of Business

This firm does not effect transactions in commodities, commodity futures, or commodity options.This firm does not engage in other non-securities business.

Non-Securities Business Description:

This firm currently conducts 4 types of businesses.

Types of Business

Mutual fund retailer

Municipal securities broker

Broker or dealer selling variable life insurance or annuities

Other - OTHER PRIMARILY CONSISTS OF FIELD MANAGEMENT AND SUPERVISION REVENUE, BROKERAGESERVICES REVENUE, MONEY MARKET CASH SWEEP PROGRAM, BROKER-DEALER ACCESS FEE ANDCUSTODIAL TRUST SERVICE REVENUE






Firm Operations

Clearing Arrangements

This firm does not hold or maintain funds or securities or provide clearing services for other broker-dealer(s).

Introducing Arrangements

This firm does refer or introduce customers to other brokers and dealers.

Name: NEWPORT GROUP SECURITIES, INC.

Business Address: 300 INTERNATIONAL PARKWAYSUITE 270HEATHROW, FL 32746

CRD #: 29722

Effective Date: 06/20/2008

Description: NORTHWESTERN MUTUAL INVESTMENT SERVICES, LLC ("NMIS") ISPARTY TO AN AGREEMENT WITH NEWPORT GROUP SECURITIES, INC.("NGS"), WHEREBY NMIS MAY REFER CERTAIN INSTITUTIONAL CLIENTSTO NGS FOR SUCH CLIENTS' PURCHASE OF MUTUAL FUNDS FOR THEPURPOSE OF INFORMALLY FINANCING LIABILITIES RELATED TO SUCHCLIENTS' NONQUALIFIED BENEFIT PLANS.

Name: PERSHING LLC

Business Address: ONE PERSHING PLAZAJERSEY CITY, NJ 07399

CRD #: 7560


Description: PERSHING LLC CARRIES THE CASH, MARGIN AND OPTION ACCOUNTSOF NORTHWESTERN MUTUAL INVESTMENT SERVICES, LLCCUSTOMERS AND EXECUTES, CLEARS AND SETTLES SECURITIESTRANSACTIONS ON A FULLY DISCLOSED BASIS FOR SUCH ACCOUNTS.






Firm Operations

Industry Arrangements

This firm does have books or records maintained by a third party.

Name: BUSINESS INFORMATION GROUP, INCORPORATED

Business Address: 1105 INDUSTRIAL BOULEVARDSOUTHAMPTON, PA 18966


Description: THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY IS PARTYTO AN AGREEMENT WITH BUSINESS INFORMATION GROUP,INCORPORATED ("BIG"), WHEREBY BIG MAINTAINS FINGERPRINTRECORDS ON BEHALF OF NORTHWESTERN MUTUAL INVESTMENTSERVICES, LLC.

Name: HYLAND SOFTWARE, INC.

Business Address: 28500 CLEMENS ROADWESTLAKE, OH 44145


Description: MATERIALS OF CURRENT, PROSPECTIVE OR FORMER APPLICANTS,CLIENTS,EMPLOYEES,AGENTS,CONTRACTORS,FIELD OFFICEPERSONNEL & REPRESENTATIVES OF THE NORTHWESTERN MUTUALLIFE INSURANCE COMPANY & NORTHWESTERN MUTUAL INVESTMENTSERVICES, LLC. BLOTTERS,LEDGERS,LEDGER ACCOUNTS,BILLSRECEIVABLE OR PAYABLE,FINGERPRINT RECORDS,EMPLOYMENTAPPLICATIONS,BANK STATEMENTS,CASH RECONCILIATIONS,SALESLITERATURE & CONFIRMS OF ALL PURCHASES AND SALES & MEMOSOF BROKERAGE ORDER AND PURCHASE.

Name: PERSHING LLC


CRD #: 7560


Description: THE SERVICES TO BE PROVIDED SHALL INCLUDE: DOCUMENTCAPTURE AND IDENTIFICATION SERVICES; DOCUMENT INDEXINGSERVICES, AND DOCUMENT STORAGE SERVICES.

Name: THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

Business Address: 720 EAST WISCONSIN AVENUEMILWAUKEE, WI 53202






Firm Operations

Industry Arrangements (continued)

This firm does have accounts, funds, or securities maintained by a third party.

This firm does have customer accounts, funds, or securities maintained by a third party.

This firm does not have individuals who control its management or policies through agreement.

This firm does not have individuals who wholly or partly finance the firm's business.

Control Persons/Financing


Description: PURSUANT TO AN AGREEMENT BETWEEN APPLICANT AND THENORHTWESTERN MUTUAL LIFE INSURANCE COMPANY ("NML"),CERTAIN BOOKS AND RECORDS OF APPLICANT ARE PREPARED ANDMAINTAINED BY NML AS AGENT OF THE APPLICANT.

Name: PERSHING LLC


CRD #: 7560


Description: PERSHING LLC CARRIES SECURITIES HOLDINGS OF THE APPLICANT,WHICH WERE PURCHASED FROM CUSTOMERS OF APPLICANT.

Name: PERSHING LLC


CRD #: 7560


Description: PERSHING LLC CARRIES THE CASH, MARGIN AND OPTION ACCOUNTSOF NORTHWESTERN MUTUAL INVESTMENT SERVICES, LLCCUSTOMERS AND EXECUTES, CLEARS AND SETTLES SECURITIESTRANSACTIONS ON A FULLY DISCLOSED BASIS FOR SUCH ACCOUNTS.






Firm Operations

Organization AffiliatesThis section provides information on control relationships the firm has with other firms in the securities, investmentadvisory, or banking business.

This firm is, directly or indirectly:

· in control of· controlled by· or under common control withthe following partnerships, corporations, or other organizations engaged in the securities or investmentadvisory business.

No

No

No

01/11/2018

720 E. WISCONSIN AVENUEMILWAUKEE, WI 53202

WVB INSURANCE SERVICES, LLC is under common control with the firm.

WVB IS A SINGLE MEMBER LLC AND IS OWNED BY LEARNVEST INC. IT ISAN INSURANCE AGENCY LICENSED IN NEW YORK AND ARIZONA.

Description:

Investment AdvisoryActivities:

Securities Activities:

Country:

Foreign Entity:

Effective Date:

Business Address:

Yes

No

No

11/16/2015


NORTHWESTERN MUTUAL CAPITAL GP IV, LLC is under common control with the firm.

NORTHWESTERN MUTUAL CAPITAL GP IV, IS A WHOLLY OWNEDSUBSIDIARY OF THE NORTHWESTERN MUTUAL LIFE INSURANCECOMPANY.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

162453

LEARNVEST PLANNING SERVICES, LLC is under common control with the firm.

CRD #: 15©2019 FINRA. All rights reserved. Report about NORTHWESTERN MUTUAL INVESTMENT SERVICES, LLC





Firm Operations

Organization Affiliates (continued)

Yes

No

No

05/11/2015

113 UNIVERSITY PLACE5TH FLOORNEW YORK, NY 10003

162453

LEARNVEST PLANNING SERVICES, LLC (LVPS) IS WHOLLY OWNED BYLEARNVEST, INC. WHICH IS WHOLLY OWNED BY NM PLANNING, LLC. NMPLANNING LLC IS WHOLLY OWNED BY THE NORTHWESTERN MUTUAL LIFEINSURANCE COMPANY. THEREFORE, LVPS IS UNDER COMMON CONTROLWITH THE APPLICANT.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

No

08/14/2012


NORTHWESTERN MUTUAL CAPITAL GP III, LLC is under common control with the firm.

NORTHWESTERN MUTUAL CAPITAL GP III, IS A WHOLLY OWNEDSUBSIDIARY OF THE NORTHWESTERN MUTUAL LIFE INSURANCECOMPANY.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

No

12/31/2008


NORTHWESTERN MUTUAL CAPITAL GP II, LLC is under common control with the firm.

Country:

Foreign Entity:

Effective Date:

Business Address:






Firm Operations


Yes

No

NORTHWESTERN MUTUAL CAPITAL GP II, LLC IS A WHOLLY OWNEDSUBSIDIARY OF THE NORTHWESTERN MUTUAL LIFE INSURANCECOMPANY.

Description:



Country:

Yes

No

No

04/18/2008


NORTHWESTERN MUTUAL CAPITAL GP, LLC is under common control with the firm.

NORTHWESTERN MUTUAL CAPITAL GP, LLC IS A WHOLLY OWNEDSUBSIDIARY OF THE NORTHWESTERN MUTUAL LIFE INSURANCECOMPANY.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

Yes

No

ENGLAND

Yes

04/10/2007

FIRST FLOOR, 17-19 MADDOX STREETLONDON, ENGLAND W1S 2QH

NORTHWESTERN MUTUAL CAPITAL LIMITED is under common control with the firm.

NORTHWESTERN MUTUAL CAPITAL LIMITED IS A WHOLLY-OWNEDSUBSIDIARY OF THE NORTHWESTERN MUTUAL LIFE INSURANCECOMPANY.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

NORTHWESTERN MUTUAL CAPITAL, LLC is under common control with the firm.






Firm Operations


Yes

No

No

10/02/1997


160955

NORTHWESTERN MUTUAL CAPITAL, LLC is under common control with the firm.

NORTHWESTERN MUTUAL CAPITAL, LLC IS A WHOLLY OWNED SUBSIDIARYOF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

CRD #:

Yes

No

No

04/06/2001

611 EAST WISCONSIN AVENUEMILWAUKEE, WI 53202

NORTHWESTERN MUTUAL WEALTH MANAGEMENT COMPANY is under common control with the firm.

NORTHWESTERN MUTUAL WEALTH MANAGEMENT COMPANY IS A DIRECT,WHOLLY-OWNED SUBSIDIARY OF THE NORTHWESTERN MUTUAL LIFEINSURANCE COMPANY.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

Yes

No

No

01/01/2002


MASON STREET ADVISORS, LLC is under common control with the firm.



Country:

Foreign Entity:

Effective Date:

Business Address:






Firm Operations


Yes

MASON STREET ADVISORS, LLC IS A DIRECT, WHOLLY-OWNED SUBSIDIARYOF THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY.

Description:


Yes

Yes

No

02/13/1984


THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY controls the firm.

NORTHWESTERN MUTUAL INVESTMENT SERVICES, LLC IS A DIRECT,WHOLLY-OWNED SUBSIDIARY OF THE NORTHWESTERN MUTUAL LIFEINSURANCE COMPANY.

Description:



Country:

Foreign Entity:

Effective Date:

Business Address:

This firm is not directly or indirectly, controlled by the following:

· bank holding company· national bank· state member bank of the Federal Reserve System· state non-member bank· savings bank or association· credit union· or foreign bank






Disclosure Events

All firms registered to sell securities or provide investment advice are required to disclose regulatory actions, criminal orcivil judicial proceedings, and certain financial matters in which the firm or one of its control affiliates has been involved.For your convenience, below is a matrix of the number and status of disclosure events involving this brokerage firm orone of its control affiliates. Further information regarding these events can be found in the subsequent pages of thisreport.

Final On AppealPending

Regulatory Event 0 7 0






Disclosure Event Details

What you should know about reported disclosure events:

1. BrokerCheck provides details for any disclosure event that was reported in CRD. It also includessummary information regarding FINRA arbitration awards in cases where the brokerage firm wasnamed as a respondent.

2. Certain thresholds must be met before an event is reported to CRD, for example: o A law enforcement agency must file formal charges before a brokerage firm is required to disclose a

particular criminal event.3. Disclosure events in BrokerCheck reports come from different sources:

o Disclosure events for this brokerage firm were reported by the firm and/or regulators. When the firmand a regulator report information for the same event, both versions of the event will appear in theBrokerCheck report. The different versions will be separated by a solid line with the reporting sourcelabeled.

4. There are different statuses and dispositions for disclosure events: o A disclosure event may have a status of pending, on appeal, or final.

§ A "pending" event involves allegations that have not been proven or formally adjudicated.§ An event that is "on appeal" involves allegations that have been adjudicated but are currently

being appealed.§ A "final" event has been concluded and its resolution is not subject to change.

o A final event generally has a disposition of adjudicated, settled or otherwise resolved.§ An "adjudicated" matter includes a disposition by (1) a court of law in a criminal or civil matter,

or (2) an administrative panel in an action brought by a regulator that is contested by the partycharged with some alleged wrongdoing.

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§ A "resolved" matter usually involves no payment to the customer and no finding ofwrongdoing on the part of the individual broker. Such matters generally involve customerdisputes.

5. You may wish to contact the brokerage firm to obtain further information regarding any of thedisclosure events contained in this BrokerCheck report.

Regulatory - Final

This type of disclosure event involves (1) a final, formal proceeding initiated by a regulatory authority (e.g., a statesecurities agency, self-regulatory organization, federal regulator such as the U.S. Securities and Exchange Commission,foreign financial regulatory body) for a violation of investment-related rules or regulations; or (2) a revocation orsuspension of the authority of a brokerage firm or its control affiliate to act as an attorney, accountant or federalcontractor.

Disclosure 1 of 7

Reporting Source: Regulator

Allegations: NASD RULES 2110, 2211 AND 3010 AND MSRB RULE G-27: RESPONDENTNORTHWESTERN MUTUAL INVESTMENT SERVICES, LLC("NORTHWESTERN") USED INTERNAL MARKETING MATERIALS THAT WERENOT FAIR AND BALANCED AND DID NOT PROVIDE A SOUND BASIS FOREVALUATING THE FACTS IN REGARDS TO PURCHASE OF AUCTION RATESECURITIES (ARS). THE MATERIALS DID NOT CONTAIN ADEQUATEDISCLOSURE OF THE RISKS OF INVESTING IN ARS, INCLUDING THE RISKTHAT THE ARS AUCTIONS COULD FAIL, THAT INSTRUMENTS IN ARS COULDBECOME ILLIQUID, AND THAT CUSTOMERS MIGHT BE UNABLE TO OBTAINACCESS TO FUNDS INVESTED IN ARS FOR SUBSTANTIAL PERIODS OFTIME. NORTHWESTERN FAILED TO ESTABLISH AND MAINTAIN ASUPERVISORY SYSTEM, INCLUDING WRITTEN SUPERVISORYPROCEDURES, THAT WAS REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH NASD AND MSRB RULES IN THE MARKETING AND SALEOF ARS. NORTHWESTERN FAILED TO MAINTAIN POLICIES ANDPROCEDURES THAT WERE REASONABLY DESIGNED TO ENSURE THAT ITSREGISTERED REPRESENTATIVES ACCURATELY DESCRIBED ARS TOCUSTOMERS AND REPRESENTATIVES PROVIDED CUSTOMERS WITH FULLDISCLOSURE OF THE RISKS OF ARS. NORTHWESTERN ALSO FAILED TOPROVIDE ADEQUATE TRAINING TO ITS REGISTERED REPRESENTATIVESREGARDING THE FEATURES AND CHARACTERISTICS OF ARS, ESPECIALLYTHOSE AFFECTING LIQUIDITY.

Current Status: Final






Initiated By: FINRA

Principal Sanction(s)/ReliefSought:

Other Sanction(s)/ReliefSought:

Date Initiated: 09/02/2009

Docket/Case Number: 2008014902501

Principal Product Type: Other

Other Product Type(s): AUCTION RATE SECURITIES (ARS)

Allegations: NASD RULES 2110, 2211 AND 3010 AND MSRB RULE G-27: RESPONDENTNORTHWESTERN MUTUAL INVESTMENT SERVICES, LLC("NORTHWESTERN") USED INTERNAL MARKETING MATERIALS THAT WERENOT FAIR AND BALANCED AND DID NOT PROVIDE A SOUND BASIS FOREVALUATING THE FACTS IN REGARDS TO PURCHASE OF AUCTION RATESECURITIES (ARS). THE MATERIALS DID NOT CONTAIN ADEQUATEDISCLOSURE OF THE RISKS OF INVESTING IN ARS, INCLUDING THE RISKTHAT THE ARS AUCTIONS COULD FAIL, THAT INSTRUMENTS IN ARS COULDBECOME ILLIQUID, AND THAT CUSTOMERS MIGHT BE UNABLE TO OBTAINACCESS TO FUNDS INVESTED IN ARS FOR SUBSTANTIAL PERIODS OFTIME. NORTHWESTERN FAILED TO ESTABLISH AND MAINTAIN ASUPERVISORY SYSTEM, INCLUDING WRITTEN SUPERVISORYPROCEDURES, THAT WAS REASONABLY DESIGNED TO ACHIEVECOMPLIANCE WITH NASD AND MSRB RULES IN THE MARKETING AND SALEOF ARS. NORTHWESTERN FAILED TO MAINTAIN POLICIES ANDPROCEDURES THAT WERE REASONABLY DESIGNED TO ENSURE THAT ITSREGISTERED REPRESENTATIVES ACCURATELY DESCRIBED ARS TOCUSTOMERS AND REPRESENTATIVES PROVIDED CUSTOMERS WITH FULLDISCLOSURE OF THE RISKS OF ARS. NORTHWESTERN ALSO FAILED TOPROVIDE ADEQUATE TRAINING TO ITS REGISTERED REPRESENTATIVESREGARDING THE FEATURES AND CHARACTERISTICS OF ARS, ESPECIALLYTHOSE AFFECTING LIQUIDITY.

Resolution Date: 09/02/2009

Resolution:

Does the order constitute afinal order based onviolations of any laws orregulations that prohibitfraudulent, manipulative, ordeceptive conduct?

No

Sanctions Ordered: CensureMonetary/Fine $200,000.00

Acceptance, Waiver & Consent(AWC)





https://www.finra.org/industry/disciplinary-actions/finra-disciplinary-actions-online?search=2008014902501


Other Sanctions Ordered: UNDERTAKING

Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, NORTHWESTERNMUTUAL INVESTMENT SERVICES CONSENTED TO THE DESCRIBEDSANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE, THE FIRM ISCENSURED, FINED $200,000 AND REQUIRED TO SUBMIT TO A BUYBACKOFFER. NORTHWESTERN HAS COMPLETED, CONSISTENT WITH TERMSAGREEABLE TO FINRA, ITS VOLUNTARY PURCHASE AT PAR OF ARS THATARE SUBJECT TO ACTIONS THAT HAVE NOT BEEN SUCCESSFUL AND ARENOT SUBJECT TO CURRENT CALLS OR REDEMPTIONS FROM ALLINVESTORS IN THE RELEVANT CLASS. THE RELEVANT CLASS ISCOMPRISED OF OF ALL INDIVIDUAL INVESTORS WHO PURCHASEDELIGIBLE ARS FROM NORTHWESTERN AT ANY TIME BETWEEN MAY 31,2006 AND FEBRUARY 28, 2008 INTO ACCOUNTS MAINTAINED ATNORTHWESTERN. IN ADDITION TO NATURAL PERSONS, THE FOLLOWINGENTITIES WILL ALSO BE TREATED AS INDIVIDUAL INVESTORS: ANYACCOUNT WITH THE FOLLOWING BENEFICIAL OWNER: NON-PROFITCHARITABLE ORGANIZATIONS AND RELIGIOUS CORPORATIONS ORENTITIES; ANY ACCOUNT WITH THE FOLLOWING BENEFICIAL OWNER THEVALUE OF WHICH AT THE TIME OF AN ARS PURCHASE MADE THROUGHRESPONDENT DID NOT EXCEED $10 MILLION: TRUSTS; CORPORATETRUSTS; EMPLOYEE PENSION PLANS/ERISA AND TAFT HARTLEY ACTPLANS; EDUCATIONAL INSTITUTIONS; INCORPORATED NON-PROFITORGANIZATIONS; LIMITED LIABILITY COMPANIES; LIMITED PARTNERSHIPS;NON-PUBLIC COMPANIES; PARTNERSHIPS; PERSONAL HOLDINGCOMPANIES; AND UNINCORPORATED ASSOCIATIONS. [CONTINUED INCOMMENTS]

Regulator Statement [CONTINUED] COMMENCING NO LATER THAN SIX MONTHS FROM THEDATE OF THE AWC, NORTHWESTERN SHALL CONTINUE TO MAKE ITS BESTEFFORTS TO PROVIDE LIQUIDITY TO ALL OTHER INVESTORS NOT IN THERELEVANT CLASS BUT WHO PURCHASED ARS FROM NORTHWESTERN.NO LATER THAN THE COMPLETION OF THE BUYBACK, ANY INVESTOR INTHE RELEVANT CLASS THAT NORTHWESTERN CAN REASONABLYIDENTIFY WHO SOLD ELIGIBLE ARS BELOW PAR BETWEEN FEBRUARY 28,2008 AND FEBRUARY 27, 2009 WILL BE PAID THE DIFFERENCE BETWEENPAR AND THE PRICE AT WHICH THE INVESTOR SOLD THE ARS.NORTHWESTERN ALSO AGREES TO ARBITRATE CLAIMS FORCONSEQUENTIAL DAMAGES THROUGH A SPECIAL ARBITRATIONPROGRAM IN ACCORDANCE WITH THE RULES SET FORTH BY FINRADISPUTE RESOLUTION. ANY INVESTORS WHO PURSUE SUCH CLAIMSSHALL BEAR THE BURDEN OR PROVING THAT THEY SUFFEREDCONSEQUENTIAL DAMAGES AND THAT SUCH DAMAGES WERE CAUSED BYINVESTORS' INABILITY TO ACCESS FUNDS CONSISTING OF INVESTORS'ARS PURCHASES THROUGH NORTHWESTERN. NORTHWESTERN SHALLPROVIDE FINRA WITH A REPORT SETTING FORTH: (A) THE NAMES ANDACCOUNT NUMBERS OF EACH ARS CUSTOMER TO WHOM THE BUYBACKOFFER WAS MADE; (B) AN ACCOUNTING OF EACH INSTANCE IN WHICHSUCH ARS CUSTOMERS ACCEPTED THE BUYBACK OFFER AND SOLD ARSHOLDINGS TO NORTHWESTERN, AND (C) THE NAMES, ACCOUNTNUMBERS, AND AN ACCOUNTING OF THOSE CUSTOMERS PAID THROUGHTHE SPECIAL ARBITRATION PROGRAM. NORTHWESTERN SHALL ALSONOTIFY FINRA WITHIN 30 DAYS OF THE COMPLETION OF THE BESTEFFORTS UNDERTAKING TO PROVIDE RELIEF FOR INVESTORS WHO SOLDARS BELOW PAR THE NATURE AND RESULTS OF SUCH EFFORTS. THEACCURACY OF SUCH REPORTS SHALL BE CERTIFIED BY THE CHIEFCOMPLIANCE OFFICER OF NORTHWESTERN.







[CONTINUED] COMMENCING NO LATER THAN SIX MONTHS FROM THEDATE OF THE AWC, NORTHWESTERN SHALL CONTINUE TO MAKE ITS BESTEFFORTS TO PROVIDE LIQUIDITY TO ALL OTHER INVESTORS NOT IN THERELEVANT CLASS BUT WHO PURCHASED ARS FROM NORTHWESTERN.NO LATER THAN THE COMPLETION OF THE BUYBACK, ANY INVESTOR INTHE RELEVANT CLASS THAT NORTHWESTERN CAN REASONABLYIDENTIFY WHO SOLD ELIGIBLE ARS BELOW PAR BETWEEN FEBRUARY 28,2008 AND FEBRUARY 27, 2009 WILL BE PAID THE DIFFERENCE BETWEENPAR AND THE PRICE AT WHICH THE INVESTOR SOLD THE ARS.NORTHWESTERN ALSO AGREES TO ARBITRATE CLAIMS FORCONSEQUENTIAL DAMAGES THROUGH A SPECIAL ARBITRATIONPROGRAM IN ACCORDANCE WITH THE RULES SET FORTH BY FINRADISPUTE RESOLUTION. ANY INVESTORS WHO PURSUE SUCH CLAIMSSHALL BEAR THE BURDEN OR PROVING THAT THEY SUFFEREDCONSEQUENTIAL DAMAGES AND THAT SUCH DAMAGES WERE CAUSED BYINVESTORS' INABILITY TO ACCESS FUNDS CONSISTING OF INVESTORS'ARS PURCHASES THROUGH NORTHWESTERN. NORTHWESTERN SHALLPROVIDE FINRA WITH A REPORT SETTING FORTH: (A) THE NAMES ANDACCOUNT NUMBERS OF EACH ARS CUSTOMER TO WHOM THE BUYBACKOFFER WAS MADE; (B) AN ACCOUNTING OF EACH INSTANCE IN WHICHSUCH ARS CUSTOMERS ACCEPTED THE BUYBACK OFFER AND SOLD ARSHOLDINGS TO NORTHWESTERN, AND (C) THE NAMES, ACCOUNTNUMBERS, AND AN ACCOUNTING OF THOSE CUSTOMERS PAID THROUGHTHE SPECIAL ARBITRATION PROGRAM. NORTHWESTERN SHALL ALSONOTIFY FINRA WITHIN 30 DAYS OF THE COMPLETION OF THE BESTEFFORTS UNDERTAKING TO PROVIDE RELIEF FOR INVESTORS WHO SOLDARS BELOW PAR THE NATURE AND RESULTS OF SUCH EFFORTS. THEACCURACY OF SUCH REPORTS SHALL BE CERTIFIED BY THE CHIEFCOMPLIANCE OFFICER OF NORTHWESTERN.

iReporting Source: Firm

Initiated By: FINRA


Censure


FINE IN THE AMOUNT OF $200,000.



Principal Product Type: Other

Other Product Type(s): AUCTION RATE SECURITIES

Allegations: DURING THE PERIOD FROM MAY 31, 2006 THROUGH FEBRUARY 28, 2008,NMIS VIOLATED NASD RULES RELATING TO COMMUNICATIONS IN ITSMARKETING AND SALE OF AUCTION RATE SECURITIES ("ARS")AND FAILEDTO MAINTAIN ADEQUATE SUPERVISORY PROCEDURES CONCERNING ITSSALES AND MARKETING ACTIVITIES REGARDING ARS, AS REQUIRED BYNASD RULES 2211, 3010, AND 2110 AND MSRB RULE G-27.



Resolution:

Other Sanctions Ordered: BUYBACK OFFER, RELIEF FOR INVESTORS WHO SOLD BELOW PAR,ARBITRATE ANY CONSEQUENTIAL DAMAGES CLAIMS THROUGH FINRASPECIAL ARBITRATION PROGRAM, AND PROVIDE REPORTS TO FINRACONCERNING COMPLIANCE WITH SETTLEMENT.








BUYBACK OFFER, RELIEF FOR INVESTORS WHO SOLD BELOW PAR,ARBITRATE ANY CONSEQUENTIAL DAMAGES CLAIMS THROUGH FINRASPECIAL ARBITRATION PROGRAM, AND PROVIDE REPORTS TO FINRACONCERNING COMPLIANCE WITH SETTLEMENT.

Sanction Details: FIRM CONSENTED TO THE ENTRY OF FINDINGS AND THE IMPOSITION OFSANCTIONS DESCRIBED ABOVE WITHOUT ADMITTING OR DENYING THEALLEGATIONS AND AGREED TO PAY A FINE IN THE AMOUNT OF $200,000.

Firm Statement MATTER IS CLOSED.

Disclosure 2 of 7

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Initiated By: NASD




Principal Product Type: Mutual Fund(s)

Other Product Type(s):

Allegations: NASD RULES 2110 AND 3010: FROM JANUARY 1, 2002 THROUGH MARCH 18,2004, NORTHWESTERN MUTUAL INVESTMENT SERVICES, LLC (THE "FIRM")FAILED TO PROVIDE CERTAIN INVESTORS THE OPPORTUNITY TOPURCHASE CLASS A SHARES OF CERTAIN MUTUAL FUNDS AT NET ASSETVALUE ("NAV"). CERTAIN MUTUAL FUNDS OFFERED NAV "TRANSFERPROGRAMS" THAT ALLOWED INVESTORS TO PURCHASE CLASS A SHARESAT NAV AND NOT PAY ANY SALES CHARGES, UNDER CERTAINCONDITIONS. THE FIRM FAILED TO EXERCISE REASONABLE DUEDILIGENCE TO IDENTIFY ESSENTIAL TERMS AND CONDITIONS OF NAVTRANSFER PROGRAMS OF CERTAIN MUTUAL FUNDS AND FAILED TOESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORY SYSTEM ANDPROCEDURES REASONABLY DESIGNED TO IDENTIFY OPPORTUNITIESFOR INVESTORS TO PURCHASE MUTUAL FUNDS AT NAV AND ENSUREINVESTORS RECEIVED THE BENEFIT OF AVAILABLE NAV TRANSFERPROGRAMS. AS A RESULT, CERTAIN INVESTORS WHO WERE ELIGIBLE TOPURCHASE CLASS A SHARES UNDER NAV TRANSFER PROGRAMS (1)PURCHASED CLASS A SHARES AND INCURRED FRONT-END SALESCHARGES THAT THEY SHOULD NOT HAVE PAID, AND/OR (2) PURCHASEDOTHER SHARE CLASSES OF THESE MUTUAL FUNDS AND THEREBYBECAME SUBJECT TO BACK-END SALES CHARGES, ALSO KNOW ASCONTINGENT DEFERRED SALES CHARGES ("CDSCS") AS WELL AS HIGHERONGOING DISTRIBUTION AS SERVICE FEES, TYPICALLY ASSOCIATED WITHSHARE CLASSES OTHER THAN CLASS A.











Resolution:

Other Sanctions Ordered: UNDERTAKINGS

Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE THE FIRM IS CENSURED, FINED $100,000 AND AGREES TOTHE FOLLOWING UNDERTAKINGS: THE FIRM WILL PROVIDE REMEDIATIONCLIENTS WHO PURCHASED SHARES OF MUTUAL FUNDS DURING THEPERIOD JANUARY 1, 2002 THROUGH JUNE 28, 2007, AND QUALIFIED FOR,BUT DID NOT RECEIVE, THE BENEFIT OF AN NAV TRANSFER PROGRAM.THE FIRM WILL PROVIDE REMEDIATION IN ACCORDANCE WITH AMETHODOLOGY NOT UNACCEPTABLE TO NASD. THE FIRM MUST: WITHIN60 DAYS FROM THE NOTICE OF ACCEPTANCE OF THIS AWC, RETAIN ATHIRD PARTY EXAMINER, NOT UNACCEPTABLE TO NASD, TO ASSESS THEFIRM'S REMEDIATION AND PROVIDE A REPORT TO NASD. WITHIN 60 DAYSFROM THE NOTICE OF ACCEPTANCE OF THIS AWC, THE FIRM MUSTSUBMIT TO NASD FOR REVIEW A SAMPLE LETTER NOTIFYING CLIENTS OFREMEDIATION PAYMENTS. THE LETTER MUST NOT BE UNACCEPTABLE TONASD. WITHIN 90 DAYS FROM THE NOTICE OF ACCEPTANCE OF THIS AWC,THE FIRM MUST DESIGNATE AND TRAIN STAFF (THE "RESPONSE TEAM")TO FIELD AND RESPOND TO CLIENT INQUIRES IN CONNECTION WITH THISAWC AND THE REMEDIATION PROCESS PURSUANT TO THIS AWC. WITHIN210 DAYS FROM THE NOTICE OF ACCEPTANCE OF THIS AWC, THE FIRMMUST COMPLETE THE REMEDIATION PROCESS. WITH 240 DAYSFOLLOWING THE NOTICE OF ACCEPTANCE OF THIS AWC, THE FIRM MUSTFILE A REPORT WITH NASD, AND SIMULTANEOUSLY PROVIDE A COPY TOTHE THIRD PARTY EXAMINER, CERTIFIED TO, AND SIGNED BY, AN OFFICEOF THE FIRM WHO IS REGISTERED WITH NASD AT THE TIME OF THECERTIFICATION. THE THIRD PARTY EXAMINER WILL UTILIZE THEREMEDIATION METHODOLOGY TO ASSESS THE FIRM'S IMPLEMENTATIONOF THE REMEDIATION PROCESS. WITHIN 300 DAYS AFTER THE DATE OFNOTICE OF ACCEPTANCE OF THIS AWC, THE FIRM SHALL REQUIRE THETHIRD PARTY EXAMINER TO SUBMIT TO THE FIRM AND NASD A FINALREPORT.


No








WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE THE FIRM IS CENSURED, FINED $100,000 AND AGREES TOTHE FOLLOWING UNDERTAKINGS: THE FIRM WILL PROVIDE REMEDIATIONCLIENTS WHO PURCHASED SHARES OF MUTUAL FUNDS DURING THEPERIOD JANUARY 1, 2002 THROUGH JUNE 28, 2007, AND QUALIFIED FOR,BUT DID NOT RECEIVE, THE BENEFIT OF AN NAV TRANSFER PROGRAM.THE FIRM WILL PROVIDE REMEDIATION IN ACCORDANCE WITH AMETHODOLOGY NOT UNACCEPTABLE TO NASD. THE FIRM MUST: WITHIN60 DAYS FROM THE NOTICE OF ACCEPTANCE OF THIS AWC, RETAIN ATHIRD PARTY EXAMINER, NOT UNACCEPTABLE TO NASD, TO ASSESS THEFIRM'S REMEDIATION AND PROVIDE A REPORT TO NASD. WITHIN 60 DAYSFROM THE NOTICE OF ACCEPTANCE OF THIS AWC, THE FIRM MUSTSUBMIT TO NASD FOR REVIEW A SAMPLE LETTER NOTIFYING CLIENTS OFREMEDIATION PAYMENTS. THE LETTER MUST NOT BE UNACCEPTABLE TONASD. WITHIN 90 DAYS FROM THE NOTICE OF ACCEPTANCE OF THIS AWC,THE FIRM MUST DESIGNATE AND TRAIN STAFF (THE "RESPONSE TEAM")TO FIELD AND RESPOND TO CLIENT INQUIRES IN CONNECTION WITH THISAWC AND THE REMEDIATION PROCESS PURSUANT TO THIS AWC. WITHIN210 DAYS FROM THE NOTICE OF ACCEPTANCE OF THIS AWC, THE FIRMMUST COMPLETE THE REMEDIATION PROCESS. WITH 240 DAYSFOLLOWING THE NOTICE OF ACCEPTANCE OF THIS AWC, THE FIRM MUSTFILE A REPORT WITH NASD, AND SIMULTANEOUSLY PROVIDE A COPY TOTHE THIRD PARTY EXAMINER, CERTIFIED TO, AND SIGNED BY, AN OFFICEOF THE FIRM WHO IS REGISTERED WITH NASD AT THE TIME OF THECERTIFICATION. THE THIRD PARTY EXAMINER WILL UTILIZE THEREMEDIATION METHODOLOGY TO ASSESS THE FIRM'S IMPLEMENTATIONOF THE REMEDIATION PROCESS. WITHIN 300 DAYS AFTER THE DATE OFNOTICE OF ACCEPTANCE OF THIS AWC, THE FIRM SHALL REQUIRE THETHIRD PARTY EXAMINER TO SUBMIT TO THE FIRM AND NASD A FINALREPORT.


Initiated By: NASD


Censure


FINE



Principal Product Type: Mutual Fund(s)


Allegations: IT IS ALLEGED THAT FROM JANUARY 1, 2002 THROUGH MARCH 18, 2004,NMIS FAILED TO ESTABLISH, MAINTAIN AND ENFORCE A SUPERVISORYSYSTEM AND PROCEDURES REASONABLY DESIGNED TO IDENTIFYOPPORTUNTIES FOR CERTAIN INVESTORS TO PURCHASE CERTAINMUTUAL FUNDS AT NAV, AND ENSURE THAT THOSE INVESTORS RECEIVEDTHE BENEFIT OF AVAILABLE NAV TRANSFER PROGRAMS. BY REASON OFTHE FOREGOING, NMIS VIOLATED NASD CONDUCT RULES 3010 AND 2110.SUBSEQUENT TO AN NASD EXAMINATION, NMIS PROMPTLY ENGAGED INREMEDIAL ACTION TO (1) IDENTIFY ALL FUNDS WITH NAV TRANSFERPROGRAMS THAT IT SOLD, (2) ASSESS THE EXTENT TO WHICHCUSTOMERS WERE HARMED, AND (3) PROVIDE REMEDIATION TO ELIGIBLECUSTOMERS.



Resolution:

Other Sanctions Ordered: NMIS WILL PROVIDE REMEDIATION PER THE NASD AGREEMENT ANDAPPROVED METHODOLOGY TO CERTAIN CLIENTS WHO PURCHASEDSHARES OF CERTAIN MUTUAL FUNDS DURING THE TIME PERIOD JANUARY1, 2002 THROUGH THE NOTICE OF ACCEPTANCE OF THE AWC, ANDQUALIFIED FOR, BUT DID NOT RECEIVE THE BENEFIT OF AN NAVTRANSFER PROGRAM. NMIS ALSO WILL RETAIN A THRID PARTY EXAMINERTO ASSESS THE FIRM'S REMEDIATION.









NMIS WILL PROVIDE REMEDIATION PER THE NASD AGREEMENT ANDAPPROVED METHODOLOGY TO CERTAIN CLIENTS WHO PURCHASEDSHARES OF CERTAIN MUTUAL FUNDS DURING THE TIME PERIOD JANUARY1, 2002 THROUGH THE NOTICE OF ACCEPTANCE OF THE AWC, ANDQUALIFIED FOR, BUT DID NOT RECEIVE THE BENEFIT OF AN NAVTRANSFER PROGRAM. NMIS ALSO WILL RETAIN A THRID PARTY EXAMINERTO ASSESS THE FIRM'S REMEDIATION.

Sanction Details: APPLICANT CONSENTED TO A CENSURE, A FINE OF $100,000 ANDUNDERTAKINGS AS OUTLINED IN THE AWC.

Firm Statement NMIS SHALL COMPLY WITH THE UNDERTAKINGS OF THE AWC. AT SUCHTIME OF COMPLETION, MATTER WILL BE RESOLVED.

Disclosure 3 of 7

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Reporting Source: Firm

Initiated By: PENNSYLVANIA DEPARTMENT OF INSURANCE


Civil and Administrative Penalt(ies) /Fine(s)



Docket/Case Number: CO06-10-001

Principal Product Type: Insurance


Allegations: AS A RESULT OF NASD CASE NUMBER CAF040075 (SEE REGULATORYACTION DISCLOSURE PAGE OF THIS FORM BD FOR FURTHERINFORMATION), THE COMMONWEALTH OF PENNSYLVANIA ALLEGED THATAPPLICANT HAD VIOLATED SECTION 611-A(20) OF ACT 147 OF 2002 AND 31PENNSYLVANIA CODE, SECTION 82.15.



Resolution:

Other Sanctions Ordered:

Sanction Details: NMIS (IN ITS CAPACITY AS A LICENSED NON RESIDENT INSURANCEPRODUCER), ENTERED INTO A CONSENT ORDER WITH THEPENNSYLVANIA DEPARTMENT OF INSURANCE AGREEING TO PAYMENT OFA CIVIL PENALTY OF $10,000.00. THE ORDER ARISES SOLELY OUT OFNMIS' REPORT, PURSUANT TO STATE INSURANCE LAW, TO THEPENNSYLVANIA DEPARTMENT OF INSURANCE OF NMIS' OCTOBER 2004ACCEPTANCE WAIVER AND CONSENT WITH THE NASD (CASE NUMBERCAF040075).

Sanctions Ordered: Monetary/Fine $10,000.00Cease and Desist/Injunction

Consent






NMIS (IN ITS CAPACITY AS A LICENSED NON RESIDENT INSURANCEPRODUCER), ENTERED INTO A CONSENT ORDER WITH THEPENNSYLVANIA DEPARTMENT OF INSURANCE AGREEING TO PAYMENT OFA CIVIL PENALTY OF $10,000.00. THE ORDER ARISES SOLELY OUT OFNMIS' REPORT, PURSUANT TO STATE INSURANCE LAW, TO THEPENNSYLVANIA DEPARTMENT OF INSURANCE OF NMIS' OCTOBER 2004ACCEPTANCE WAIVER AND CONSENT WITH THE NASD (CASE NUMBERCAF040075).

Firm Statement MATTER RESOLVED.

Disclosure 4 of 7

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Initiated By: NASD




Docket/Case Number: E8A2005015001

Principal Product Type: Debt - Municipal


Allegations: NASD RULES 2110, 3070(A), MSRB RULES G-14, G-15 - NORTHWESTERNMUTUAL INVESTMENT SERVICES, LLC FAILED TO TIMELY REPORTCUSTOMER COMPLAINTS REGARDING MISAPPROPRIATION OF FUNDS ORFORGERY; DISCIPLINARY ACTIONS AGAINST ITS REGISTEREDREPRESENTATIVES THAT RESULTED IN TERMINATIONS OR SUSPENSIONS;AND FELONY CHARGES AGAINST AN ASSOCIATED PERSON. THE FIRMFAILED TO PRE-FILE SALES MATERIAL REGARDING VARIABLE LIFEINSURANCE PRODUCTS WITH NASD AS AGREED UPON IN AN EARLIERAWC; FAILED TO ACCURATELY REPORT MUNICIPAL SECURITIESTRANSACTIONS AND FAILED TO ACCURATELY PREPARE MUNICIPALCUSTOMER CONFIRMATIONS.



Resolution:



No







https://www.finra.org/industry/disciplinary-actions/finra-disciplinary-actions-online?search=e8a2005015001



Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $115,OOO.


Initiated By: NASD


Censure


MONETARY FINE


Docket/Case Number: E8A2005015001

Principal Product Type: Debt - Municipal


Allegations: NASD RULES 2110, 3070(A), MSRB RULES G-14, G-15 - NORTHWESTERNMUTUAL INVESTMENT SERVICES, LLC FAILED TO TIMELY REPORTCUSTOMER COMPLAINTS REGARDING MISAPPROPRIATION OF FUNDS ORFORGERY; DISCIPLINARY ACTIONS AGAINST ITS REGISTEREDREPRESENTATIVES THAT RESULTED IN TERMINATIONS OR SUSPENSIONS;AND FELONY CHARGES AGAINST AN ASSOCIATED PERSON. THE FIRMFAILED TO PRE-FILE SALES MATERIAL REGARDING VARIABLE LIFEINSURANCE PRODUCTS WITH NASD AS AGREED UPON IN AN EARLIERAWC; FAILED TO ACCURATELY REPORT MUNICIPAL SECURITIESTRANSACTIONS AND FAILED TO ACCURATELY PREPARE MUNICIPALCUSTOMER CONFIRMATIONS.



Resolution:


Sanction Details: WITHOUT ADMITTING OR DENYING THE FINDINGS, THE FIRM CONSENTEDTO THE DESCRIBED SANCTIONS AND TO THE ENTRY OF FINDINGS;THEREFORE, THE FIRM IS CENSURED AND FINED $115,OOO.








https://www.finra.org/industry/disciplinary-actions/finra-disciplinary-actions-online?search=e8a2005015001



Disclosure 5 of 7

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Initiated By: NASD




Docket/Case Number: CAF040075

Principal Product Type: Annuity(ies) - Variable


Allegations: NASD CONDUCT RULES 2110, 3010, 3010(A) AND SECTION 17(A) OF THEEXCHANGE ACT, RULE 17A-4 THEREUNDER - NORTHWESTERN MUTUALINVESTMENT SERVICES, LLC WAS AWARE, OVER AN EXTENDED PERIODOF TIME, OF CONCERNS WITH A REGISTERED REPRESENTATIVE'SSEMINARS. THE FIRM FAILED TO TAKE ADEQUATE ACTION TO ADDRESSTHOSE CONCERNS. AS A RESULT, THE REPRESENTATIVE CONTINUED TOCONDUCT TRAINING SEMINARS IN WHICH HE PRESENTED A TYPE OFVARIABLE LIFE INSURANCE TO OTHER REGISTERED REPRESENTATIVES INAN UNBALANCED AND INAPPROPRIATE WAY. FURTHERMORE, THE FIRMDID NOT DISCIPLINE THE REPRESENTATIVE FOR FAILING TO MAKE THEREQUESTED CHANGES TO HIS SEMINARS. IN ADDITION, THE FIRMCAUTIONED ANOTHER REPRESENTATIVE FOR USING INAPPROPRIATETERMS TO DESCRIBE VARIABLE LIFE INSURANCE POLICIES. DESPITEKNOW THE REPRESENTATIVE HAD PREVIOUSLY USED INAPPROPRIATETERMS IN COMMUNICATIONS WITH HIS CUSTOMERS, THE FIRM FAILED TOTAKE ADEQUATE ACTION TO MONITOR AND SUPERVISE HIS WRITTENCORRESPONDENCE WITH HIS CUSTOMERS. MOREOVER,NORTHWESTERN MUTUAL INVESTMENT SERVICES, LLC FAILED TO RETAINE-MAILS FOR THREE YEARS, OR FOR THE FIRST TWO YEARS IN ANACCESSIBLE PLACE.



Resolution:


No

Consent






Other Sanctions Ordered: AN UNDERTAKING TO FILE WITH NASD'S ADVERTISING REGULATIONDEPARTMENT ALL INSTITUTIONAL SALES MATERIALS USED FOREDUCATIONAL PURPOSES RELATING TO INTERNAL SEMINARS ANDTRAINING SESSIONS CONCERNING VARIABLE LIFE INSURANCEPRODUCTS PRIOR TO THEIR FIRST USE FOR ONE YEAR FROM THIS AWC.AT ANY TIME, UPON RECEIPT OF COMMENTS FROM NASD ON THEMATERIALS FILED PRIOR TO USE, UNLESS NOTIFIED OTHERWISE BYNASD, THE FIRM SHALL TAKE ALL REASONABLE STEPS TO WITHHOLD ORCAUSE TO BE WITHHELD THE MATERIALS FROM FURTHER USE UNTIL THECHANGES SPECIFIED BY NASD HAVE BEEN MADE, AND SUCH MATERIALSWILL BE REVISED AND RE-FILED PRIOR TO ANY USE, UNLESS OTHERWISEAGREED TO BY NASD AT ITS SOLE DISCRETION.

Sanction Details: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, NORTHWESTERNMUTUAL INVESTMENT SERVICES, LLC CONSENTED TO THE DESCRIBEDSANCTIONS AND TO THE ENTRY OF FINDINGS; THEREFORE, THE FIRM ISCENSURED AND FINED IN THE AMOUNT $1,000,000.


No

Sanctions Ordered: CensureMonetary/Fine $1,000,000.00


Initiated By: NASD


Allegations: FIRM DID NOT COMPLY WITH NASD CONDUCT RULE 2110, 3010, 3110. ONEFIRM REPRESENTATIVE PRESENTED VARIABLE LIFE SALES TRAININGSEMINARS DURING 1998 THROUGH 2001 THAT DID NOT COMPLY WITHRULE 2110 IN THAT THE VARIABLE LIFE PRODUCT WAS PRESENTED TOOTHER REGISTERED REPRESENTATIVES IN AN UNBALANCED ANDINAPPROPRIATE WAY. A SECOND FIRM REPRESENTATIVE SENT FOURLETTERS TO CUSTOMERS DURING 1998 THROUGH 2000 THAT DID NOTCOMPLY WITH RULES 2110 AND 2210 IN THAT INAPPROPRIATE TERMSWERE USED TO DESCRIBE VARIABLE LIFE INSURANCE POLICIES. FIRMDID NOT ADEQUATELY SUPERVISE THESE TWO REGISTEREDREPRESENTATIVES IN ACCORDANCE WITH RULE 3010. FIRM DID NOTMAINTAIN INTERNAL E-MAIL COMMUNICATIONS IN ACCORDANCE WITHRULE 3110.










CENSURE, UNDERTAKING


Docket/Case Number: CAF040075

Principal Product Type: Insurance



Resolution:

Other Sanctions Ordered: AN UNDERTAKING TO FILE WITH NASD'S ADVERTISING REGULATIONDEPARTMENT ALL INSTITUTIONAL SALES MATERIALS USED FOREDUCATIONAL PURPOSES RELATING TO INTERNAL SEMINARS ANDTRAINING SESSIONS CONCERNING VARIABLE LIFE INSURANCE PRIOR TOFIRST USE FOR A PERIOD OF ONE YEAR.AN UNDERTAKING TO PROVIDE NOTICE, ACCEPTABLE TO NASD, TO ALLCURRENT REGISTERED REPRESENTATIVES WHO ATTENDED THESEMINARS AT ISSUE THAT EXPLAINS THE DEFICIENCIES OUTLINED IN THEACCEPTANCE, WAIVER AND CONSENT.

Sanction Details: FIRM CONSENTED TO THE ENTRY OF FINDINGS AND THE IMPOSITION OFSANCTIONS DESCRIBED ABOVE WITHOUT ADMITTING OR DENYING THEALLEGATIONS. FINE IN THE AMOUNT OF $1,000,000 WAS PAID IN FULL ONOCTOBER 15, 2004.

Firm Statement MATTER IS CLOSED.

Sanctions Ordered: CensureMonetary/Fine $1,000,000.00

Consent

Disclosure 6 of 7

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Allegations: NASD CONDUCT RULES 2110, 3010, AND 3070, AND ARTICLE V, SECTION3(B) OF NASD BY-LAWS - THE RESPONDENT MEMBER ("FIRM") FAILED TOTIMELY REPORT CUSTOMER COMPLAINTS TO NASD AS STATISTICAL ANDSUMMARY INFORMATION BY THE 15TH DAY OF THE MONTH FOLLOWINGTHE CALENDAR QUARTER IN WHICH THE COMPLAINTS WERE RECEIVED.THE FIRM ALSO FAILED TO ADEQUATELY AND PROPERLY SUPERVISEUNREGISTERED ASSOCIATED PERSONS WHO WERE ASSIGNED THERESPONSIBILITY TO OPEN AND INITIALLY REVIEW AND DIRECT THE MAILTHAT WAS RECEIVED BY THE FIRM AND ITS PARENT, IN THAT THE FIRMFAILED TO PROVIDE THESE INDIVIDUALS SUFFICIENT TRAINING TOENABLE THEM TO PROPERLY; IDENTIFY CUSTOMER COMPLAINTS WHICHRELATED TO SECURITIES ACTIVITIES AND REQUIRED TO BE REPORTED;AND, FORWARD THEM TO FIRM'S COMPLIANCE DEPARTMENT SO THATTHEY COULD BE TIMELY REPORTED AS REQUIRED BY NASD CONDUCTRULE 3070. IN ADDITION, THE FIRM FAILED TO REPORT SETTLEMENT OFARBITRATION WITHIN 10 BUSINESS DAYS AFTER COMPLETION OF THESETTLEMENTS. FURTHERMORE, THE FIRM FAILED TO REPORTSETTLEMENT OF AN INVESTMENT-RELATED CUSTOMER COMPLAINTWITHIN 10 BUSINESS DAYS AFTER COMPLETION OF THE SETTLEMENTS. INCONNECTION WITH THE SETTLEMENT OF THE INVESTMENT RELATEDCUSTOMER COMPLAINT, THE FIRM FAILED TO TIMELY FILE ANAMENDMENT TO THE REGISTERED REPRESENTATIVE'S FORM U5UNIFORM TERMINATION NOTICE FOR SECURITIES INDUSTRYREGISTRATION, DISCLOSING THE SETTLEMENT. THE AMENDMENT WASREQUIRED TO FILE WITHIN 30 DAYS FROM WHEN THE FIRM KNEW ORSHOULD HAVE KNOWN ABOUT THE SETTLEMENT, BUT WAS FILED LATE.







Initiated By: NASD




Docket/Case Number: C8A030071

Principal Product Type: No Product


NASD CONDUCT RULES 2110, 3010, AND 3070, AND ARTICLE V, SECTION3(B) OF NASD BY-LAWS - THE RESPONDENT MEMBER ("FIRM") FAILED TOTIMELY REPORT CUSTOMER COMPLAINTS TO NASD AS STATISTICAL ANDSUMMARY INFORMATION BY THE 15TH DAY OF THE MONTH FOLLOWINGTHE CALENDAR QUARTER IN WHICH THE COMPLAINTS WERE RECEIVED.THE FIRM ALSO FAILED TO ADEQUATELY AND PROPERLY SUPERVISEUNREGISTERED ASSOCIATED PERSONS WHO WERE ASSIGNED THERESPONSIBILITY TO OPEN AND INITIALLY REVIEW AND DIRECT THE MAILTHAT WAS RECEIVED BY THE FIRM AND ITS PARENT, IN THAT THE FIRMFAILED TO PROVIDE THESE INDIVIDUALS SUFFICIENT TRAINING TOENABLE THEM TO PROPERLY; IDENTIFY CUSTOMER COMPLAINTS WHICHRELATED TO SECURITIES ACTIVITIES AND REQUIRED TO BE REPORTED;AND, FORWARD THEM TO FIRM'S COMPLIANCE DEPARTMENT SO THATTHEY COULD BE TIMELY REPORTED AS REQUIRED BY NASD CONDUCTRULE 3070. IN ADDITION, THE FIRM FAILED TO REPORT SETTLEMENT OFARBITRATION WITHIN 10 BUSINESS DAYS AFTER COMPLETION OF THESETTLEMENTS. FURTHERMORE, THE FIRM FAILED TO REPORTSETTLEMENT OF AN INVESTMENT-RELATED CUSTOMER COMPLAINTWITHIN 10 BUSINESS DAYS AFTER COMPLETION OF THE SETTLEMENTS. INCONNECTION WITH THE SETTLEMENT OF THE INVESTMENT RELATEDCUSTOMER COMPLAINT, THE FIRM FAILED TO TIMELY FILE ANAMENDMENT TO THE REGISTERED REPRESENTATIVE'S FORM U5UNIFORM TERMINATION NOTICE FOR SECURITIES INDUSTRYREGISTRATION, DISCLOSING THE SETTLEMENT. THE AMENDMENT WASREQUIRED TO FILE WITHIN 30 DAYS FROM WHEN THE FIRM KNEW ORSHOULD HAVE KNOWN ABOUT THE SETTLEMENT, BUT WAS FILED LATE.


Resolution:



No


Decision





https://www.finra.org/industry/disciplinary-actions/finra-disciplinary-actions-online?search=c8a030071


Sanction Details: HEARING PANEL DECISION RENDERED JULY 29, 2005 WHEREINNORTHWESTERN MUTUAL INVESTMENT SERVICES, LLC IS CENSUREDAND FINED $50,000. IN ADDITION, NORTHWESTERN IS CENSURED ANDFINED $50,000 FOR THE FAILURE TO SUPERVISE, CENSURED AND FINED$5,000 FOR THE FAILURE TO TIMELY REPORT SETTLEMENTS, ANDCENSURED AND FINED $5,000 FOR THE FAILURE TO TIMELY AMEND AFORM U-5. FINALLY, NORTHWESTERN IS ORDERED, JOINTLY ANDSEVERALLY, TO PAY COSTS IN THE AMOUNT OF $5,625.50, WHICHINCLUDES AN ADMINISTRATIVE FEE OF $750 PLUS THE COST OF THEHEARING TRANSCRIPT. THE DECISION BECAME FINAL SEPTEMBER 15,2005.


Initiated By: NASD




FINE AND COSTS.



Principal Product Type: No Product


Allegations: NASD CONDUCT RULES 2110, 3010 AND 3070, AND ARTICLE V, SECTION3(B) OF NASD BY-LAWS IT IS ALLEGED THAT THE APPLICANT DID NOTTIMELY REPORT CERTAIN CUSTOMER COMPLAINTS AS STATISTICAL ORSUMMARY INFORMATION PURSUANT TO CR 3070(C); DID NOTREASONABLY SUPERVISE COMPLAINT REPORTING PURSUANT TO CR3010; DID NOT TIMELY REPORT TWO SETTLEMENTS PURSUANT TO CR3070(A); AND DID NOT TIMELY MAKE REQUIRED AMENDMENTS TO AREGISTERED REPRESENTATIVE'S FORM U-5.



Resolution:


Sanction Details: APPLICANT FINED $110,000 AND ASSESSED COSTS OF $5,625.50.HEARING PANEL DECISION RENDERED JULY 29, 2005. THE DECISIONBECAME FINAL SEPTEMBER 15, 2005.


Decision





https://www.finra.org/industry/disciplinary-actions/finra-disciplinary-actions-online?search=c8a030071


Sanction Details: APPLICANT FINED $110,000 AND ASSESSED COSTS OF $5,625.50.HEARING PANEL DECISION RENDERED JULY 29, 2005. THE DECISIONBECAME FINAL SEPTEMBER 15, 2005.

Firm Statement THIS MATTER WAS BROUGHT ON SEPTEMBER 26, 2003, BY THE NASDDEPARTMENT OF ENFORCEMENT. AN NASD HEARING PANEL CONCLUDEDTHAT ALTHOUGH NMIS PROMPTLY RESOLVED THE INDIVIDUALCOMPLAINTS, IT DID NOT FILE CERTAIN STATISTICAL AND SUMMARYREPORTS WITH THE NASD WITHIN THE TIMEFRAME REQUIRED BY RULE3070(C) FOR SOME COMPLAINTS IT RECEIVED FROM 1999 TO EARLY 2001,AS WELL AS FAILED TO TIMELY REPORT TWO SETTLEMENTS AND FILE AFORM U-5 AMENDMENT, AND FAILED TO SUPERVISE. NMISACKNOWLEDGED THE ERRORS TO THE NASD, AND PROMPTLYIMPLEMENTED PROCEDURES TO ENHANCE THE FIRM'S COMPLAINTREPORTING PROCESS. THE NASD FINED NMIS $110,000, PLUS $5,625.50 INCOSTS. THE HEARING PANEL'S DECISION BECAME FINAL ON 9/15/05.

Disclosure 7 of 7

i


Initiated By: NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.





Principal Product Type:


Allegations:



Resolution:


Sanction Details:

Regulator Statement ON JULY 1, 1998, DISTRICT NO. 8 NOTIFIED RESPONDENTSNORTHWESTERN INVESTMENT SERVICES, INC. AND JAMES M. KRUTSCHTHAT THE LETTER OF ACCEPTANCE, WAIVER AND CONSENT NO.C8A980043WAS ACCEPTED; THEREFORE, RESPONDENT MEMBER IS CENSURED ANDFINED $1,000 AND RESPONDENT KRUTSCH IS CENSURED AND FINED$1,000 - (NASD RULES 1120(a) AND 2110 - RESPONDENT MEMBER PAID$265 IN COMMISSIONS TO RESPONDENT KRUTSCH IN CONNECTION WITHTHE PURCHASE OF VARIABLE ANNUITY PRODUCTS ISSUED BY THE FIRMWHEN HIS REGISTRATION AS AN INVESTMENT COMPANY AND VARIABLECONTRACTS PRODUCTS REPRESENTATIVE WAS INACTIVE DUE TO HISFAILURE TO COMPLETE THE REGULATORY ELEMENT OF THE CONTINUINGEDUCATION PROGRAM).








Regulator Statement ON JULY 1, 1998, DISTRICT NO. 8 NOTIFIED RESPONDENTSNORTHWESTERN INVESTMENT SERVICES, INC. AND JAMES M. KRUTSCHTHAT THE LETTER OF ACCEPTANCE, WAIVER AND CONSENT NO.C8A980043WAS ACCEPTED; THEREFORE, RESPONDENT MEMBER IS CENSURED ANDFINED $1,000 AND RESPONDENT KRUTSCH IS CENSURED AND FINED$1,000 - (NASD RULES 1120(a) AND 2110 - RESPONDENT MEMBER PAID$265 IN COMMISSIONS TO RESPONDENT KRUTSCH IN CONNECTION WITHTHE PURCHASE OF VARIABLE ANNUITY PRODUCTS ISSUED BY THE FIRMWHEN HIS REGISTRATION AS AN INVESTMENT COMPANY AND VARIABLECONTRACTS PRODUCTS REPRESENTATIVE WAS INACTIVE DUE TO HISFAILURE TO COMPLETE THE REGULATORY ELEMENT OF THE CONTINUINGEDUCATION PROGRAM).


Initiated By: NASDR, INC.


Other


CIVIL AND ADMINISTRATIVE PENALTY(IES)/FINE(S)


Docket/Case Number: C8A980043-AWC

Principal Product Type: Annuity(ies) - Variable


Allegations: PERMITTED COMMISSIONS TOTALLING $265 TO BE PAID TO ASSOCIATEDPERSON JAMES MICHAEL KRUTSCH DURING PERIOD MR. KRUTSCH'SREGISTRATION AS A REPRESENTATIVE OF NORTHWESTERN MUTUALINVESTMENT SERVICES, LLC WAS INACTIVE.



Resolution:


Sanction Details: CLOSED ON JULY 1, 1998. NASDR, INC ACCEPTED A LETTER OFACCEPTANCE, WAIVER OF CONSENT; FINE OF $1,000.

Firm Statement MATTER CLOSED ON JULY 1, 1998.

Sanctions Ordered: Monetary/Fine $1,000.00







Firm Statement MATTER CLOSED ON JULY 1, 1998.






End of Report

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