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									                                                                                        Filed
                                                                                        11 September 21 P4:20
                                                                                        John Warren
                                                                                        County Clerk
                                                                                        Dallas County
                                         CAUSE NO. CC-11-06610-C

CHADWICK McHUGH, individually and on )
behalf of nominal defendant PENSON   )
WORLDWIDE, INC.,                     )
                                     )
Plaintiff,                           )
                                     )
vs.                                  )
                                     ) IN THE COUNTY COURT
ROGER J. ENGEMOEN, JR., DAVID M.     )
KELLY, JAMES S. DYER, DAVID                     3
                                     ) AT LAW _______ OF
JOHNSON, PHIL PENDERGRAFT,           )
DAVID A. REED, THOMAS R. JOHNSON, ) DALLAS COUNTY, TEXAS
and DANIEL P. SON,                   )
                                     )
Defendants,                          )
                                     )
and                                  )
                                     )
PENSON WORLDWIDE, INC.,              )
                                     )
Nominal Defendant.                   )


                 VERIFIED SHAREHOLDER DERIVATIVE PETITION

          1.   Plaintiff Chadwick McHugh (“McHugh” or “Plaintiff”) by his attorneys hereby

submits this Verified Shareholder Derivative Petition (the “Petition”) against Defendants named

herein.

                              DISCOVERY CONTROL PLAN

          2.   Pursuant to Texas Rule of Civil Procedure 190.1, discovery will be conducted

under Level 3 due to the complexity of the case.

                                 NATURE OF THE ACTION

          3.   This is a shareholder action brought for the benefit of Nominal Defendant Penson

Worldwide, Inc. (“Penson” or the “Company”), against Roger J. Engemoen, Jr. (“Engemoen”),

David M. Kelly (“Kelly”), James S. Dyer (“Dyer”), David Johnson (“David Johnson”), Phil

                                    Plaintiff’s Verified Shareholder Derivative Petition – Page 1
Pendergraft (“Pendergraft”), David A. Reed (“Reed”), Thomas R. Johnson (“Thomas Johnson”)

and Daniel P. Son (“Son”) (collectively referred to herein as “Defendants” or the “Defendant

Directors”) for breaches of their fiduciary duties owed to the Company during the Relevant

Period, February 10, 2011 through the present (the “Relevant Period”). 1

                                SUMMARY AND OVERVIEW

         4.    Penson is a holding company, incorporated under the laws of Delaware, that

conducts business through its wholly owned subsidiary SAI Holdings, Inc. (SAI). SAI conducts

business, through its principal direct and indirect operating subsidiaries, Penson Financial

Services, Inc. (PFSI), Penson Financial Services Canada Inc. (PFSC), Penson Financial Services

Ltd. (PFSL), Nexa Technologies, Inc. (Nexa), Penson GHCO (Penson GHCO), Penson Asia

Limited (Penson Asia) and Penson Financial Services Australia Pty Ltd (PFSA). The Company

is a provider of a range of critical securities and futures processing infrastructure products and

services to the global financial services industry. The Company’s products and services include

securities and futures clearing and execution, financing and cash management technology and

other related offerings. The Company’s primary business offices are located in Dallas County,

Texas.

         5.    Penson describes itself as a group of companies that “provides execution,

clearing, custody, settlement, and technology infrastructure products and services to financial

services firms and others servicing the global financial services industry.”

         6.    Prior to and during the Relevant Period, Penson derived a substantial portion of its

revenue from interest it received on margin loans to customers. In connection with margin

1
  Because Defendants have failed to take action to remedy the breaches of fiduciary duties that
occurred between at least February 10, 2011, and August 4, 2011, the Relevant Period continues
through this day instead of ceasing on August 4, 2011, the day the public became aware of the
wrongdoings at the Company.
                                      Plaintiff’s Verified Shareholder Derivative Petition – Page 2
lending to customers, Penson’s customers would pledge collateral, such as securities, in return

for such loans. Penson further represented that the Company maintained adequate policies and

procedures to manage and monitor credit risk relating to Penson’s margin lending.

         7.     During the Relevant Period, and hidden from investors, by at least 2010: (1) the

Company had approximately $96-97 million in receivables (“Nonaccrual Receivables”) of which

approximately $43 million were collateralized by illiquid securities and therefore unlikely to be

collected; (2) the Company’s assets were materially overstated and should have been written

down at least by the end of 2010; (3) as a result of the foregoing, the Company’s reported

income and EBITDA (earnings before interest, taxes, depreciation, amortization and stock-based

compensation, and excluding certain non-operating expenses) were materially overstated; and (4)

the Company’s financial statements were not prepared in accordance with Generally Accepted

Accounting Principles (“GAAP”).

         8.     On May 9, 2011, Penson filed its quarterly report for the quarter ended March 31,

2011. Penson disclosed that with respect to Nonaccrual Receivables, approximately $43 million

were collateralized by illiquid securities issued by a troubled horse track and real estate project in

Texas:

         with respect to the Nonaccrual Receivables, at March 31, 2011, approximately
         $42,580[,000] were collateralized by bonds issued by the Retama Development
         Corporation (“RDC”) and certain other interests in the horse racing track and real
         estate project (“Project”) financed by the RDC’s bonds. In each case these are
         owned by customers and pledged to the Company and/or its affiliates. Certain
         related parties to the Company own approximately $14,745 of RDC bonds that
         are pledged to the Company and/or its affiliates (see Note 17 to our December 31,
         2010 consolidated financial statements as filed with the SEC on Form 10-K).
         There are a number of factors potentially affecting the value of the Project and the
         Nonaccrual Receivables related thereto including potential legislation in the
         Texas Legislature that could expand gambling privileges at the Project. Should
         such legislation be enacted there should be a positive impact on the value of the
         Project and therefore upon the collateral underlying related Nonaccrual
         Receivables. However, should such legislation not be enacted, depending on other

                                       Plaintiff’s Verified Shareholder Derivative Petition – Page 3
         factors potentially impacting the Project and related Nonaccrual Receivables, it is
         possible that the value of the collateral associated with the Project and related
         Nonaccrual Receivables might be impaired, resulting in a write down of a
         portion of these receivables that could be material in amount.2

         9.      On May 12, 2011, Penson issued a press release stating in relevant part:

         Penson Worldwide, Inc. Says Market Activity Related to Non Accrual
         Receivables
         Dallas, TX, May 12, 2011 — Penson Worldwide, Inc. (NASDAQ: PNSN) today
         said it believes that the recent declines in its stock price appear to be related to its
         recent Form 10-Q disclosure of a concentrated collateral position associated with
         Retama Development Corporation related receivables. The Company currently
         expects to resolve this situation without a loss, but even if a loss were realized,
         Penson said it would have no impact on the Company’s solid regulatory capital or
         sound financial condition. As reported in the Company’s Form 10-Q, as filed with
         the Securities and Exchange Commission on May 9, 2011, Penson has
         approximately $42.6 million in non accruing receivables collateralized by
         securities related to the Retama Development Authority, which have declined in
         liquidity . . . .

         The Company also announced the resignation of Thomas R. Johnson from its
         Board of Directors. Based on Mr. Johnson’s position as chief executive officer of
         Call Now, Inc, a holder of a portion of the Retama related collateral, both Mr.
         Johnson and the Company felt it appropriate for him to resign his position at this
         time.

         10.     On May 12, 2011, Penson shares declined $0.81 per share further, or

approximately 21%, to close at $3.12 per share, on heavy volume. On May 12, 2011, The Wall

Street Journal published an article entitled Director of Clearing Firm Penson Resigns Amid

Collateral Disclosure. The article stated in relevant part:

         A board member of Penson Worldwide Inc. resigned Thursday after the
         company's disclosure of his relationship to a large, illiquid bond position held by
         the company, which sent shares in the clearing-and-settlement firm to an all-time
         low.

         Penson reported this week that it held as trading collateral $42.6 million in bonds
         issued by a horse-racing track operator that maintains ties with director Thomas
         R. Johnson, which the company said in a filing this week could bring a "material"
         write-down . . . .

2
    All emphasis added unless otherwise stated
                                        Plaintiff’s Verified Shareholder Derivative Petition – Page 4
       The Dallas-based company's core business lies in clearing trades in securities and
       derivatives contracts for broker-dealers serving individual investors, as well as
       high-frequency trading firms that need access to exchanges. The company also
       operates a Chicago-based futures brokerage.

       The company said that Mr. Johnson's ties to the Texas horse track that issued the
       bonds made it "appropriate for him to resign his position at this time." Both
       Penson and Mr. Johnson agreed on the decision, according to the statement. Mr.
       Johnson hasn't returned a call seeking comment . . . .

       At the end of the first quarter, Penson held $97.4 million in nonaccruing
       receivables, which analysts said reflect nonliquid assets held as collateral against
       trades gone bad. Nearly half that figure represented bonds issued by Retama
       Development Corp., owner of Retama Park, a racetrack located in Selma, Texas.

       Those bonds are collateralized by the value of Retama Park's real estate, and
       although they were regularly traded at the time Penson took them as collateral,
       "there is no longer any active market," according to a note from Raymond James
       analyst Patrick O'Shaughnessy.

       Raising further questions was the relationship of Mr. Johnson, the Penson director
       and chief executive of Call Now Inc., which manages the racetrack and owns $15
       million of the Retama Development Corp. bonds, according to Sandler O'Neill
       analyst Rich Repetto; Call Now was an early investor in Penson.

       "While we believe that Call Now's use of RDC bonds as collateral for margin
       loans could have reasonable explanations, Penson's exposure to $27.8 million of
       other Retama bonds raises questions about how the concentration of risk
       developed," Mr. Repetto wrote in a research note Thursday that warned of
       competitors poaching Penson's existing customers and potential clients taking
       their business elsewhere. "We believe that a significant risk to Penson is that the
       new disclosures affect its correspondent clearing customers."

       For Penson, which has seen its stock-market valuation nearly halved to $87.5
       million this week, nearly $100 million in nonaccrual receivables is "a troubling
       level," Mr. Repetto wrote.

       11.      Further, JP Morgan published a research report which stated that the owner of

Retama Entertainment Group fully impaired the Series B bonds in 2006 and that Penson did not

disclose “other information on collateral backing the other portion of $97 million of nonaccrual

receivables.”



                                     Plaintiff’s Verified Shareholder Derivative Petition – Page 5
        12.      Following the close of trading on August 4, 2011, Penson disclosed to the public

that “the Company recorded a non-cash write down of $43 million, equal to $26.7 million or

($0.94) per share net of tax, against $96.6 million of nonaccrual receivables. The write down

was recorded in conjunction with Penson’s initiation of foreclosure proceedings on the majority

of the collateral underlying these receivables, including, but not solely related to, certain assets

associated with the Retama Development Corporation, and shares of Penson Worldwide stock.”

        13.      Following this announcement, Penson’s shares declined by $0.49 per share on

August 5, 2011 to close at $2.12 per share. Also on August 5, 2011, Moody’s downgraded

Penson from B1 to B2. On August 8, 2011, the next trading day, Penson stock declined 9%

further to close at $1.92 per share.

        14.      On August 8, 2011, JP Morgan issued a report stating:

              Penson is in a challenging position with inadequate risk management,
              ongoing operating losses, and a shrinking capital base . . . given very mixed
              risk management results in the past, we think investors should be particularly
              concerned . . . we see unorthodox margin loans with questionable collateral as
              being worrisome, particularly because Penson is highly leveraged.

                                    JURISDICTION AND VENUE

        15.      This Court has jurisdiction because Nominal Defendant is a Delaware corporation

with its principal place of business in Dallas County, Texas.

        16.      Venue is proper in Dallas County because Nominal Defendant’s principal place of

business is in this county and because many of the acts complained of, including the

dissemination of materially false and misleading statements and reports prepared by or with the

participation, acquiescence, encouragement, cooperation, or assistance of Defendants, occurred,

at least in part, in this county.




                                       Plaintiff’s Verified Shareholder Derivative Petition – Page 6
                                          PARTIES

       17.    Plaintiff Chadwick McHugh is and was at relevant times a shareholder of

Nominal Defendant Penson.

       18.    Nominal Defendant Penson is a Delaware corporation with its principle place of

business and headquarters in Dallas, Texas. It is traded on the NASDAQ under the symbol

PNSN. It has its principal executive offices at 1700 Pacific Avenue, Suite 1400, Dallas, Texas.

Penson can be served with process at 1209 Orange Street, Wilmington, Delaware, 19801.

       19.    Engemoen has served as Chairman of Penson’s Board of Directors since

September 2000, and served as Chairman of Penson’s predecessor entities since 1995. He can be

served with process at 1700 Pacific Avenue, Suite 1400, Dallas, Texas.

       20.    Kelly has served as a member of Penson’s Board of Directors since September

2000 and as the lead independent director since 2007. Kelly is a member of the Board’s Audit

and Compensation Committees. He can be served with process at 1700 Pacific Avenue, Suite

1400, Dallas, Texas.

       21.    Dyer has served as a member of Penson’s Board of Directors since September

2000. Dyer is a member of the Board’s Audit and Nominating and Corporate Governance

Committee. He can be served with process at 1700 Pacific Avenue, Suite 1400, Dallas, Texas.

       22.    David Johnson has served as a member of Penson Worldwide, Inc.’s Board of

Directors since January 2006. Johnson is Chairman of the Board’s Compensation Committee

and is a member of the Nominating and Corporate Governance Committee. He can be served

with process at 1700 Pacific Avenue, Suite 1400, Dallas, Texas.

       23.    Pendergraft was appointed as Penson’s Chief Executive Officer in July 2005.

From October 2000 through July 2005, Mr. Pendergraft served as the Executive Vice President



                                    Plaintiff’s Verified Shareholder Derivative Petition – Page 7
and Chief Operating Officer. He has served as a member of Penson’s Board of Directors since

September 2000, and has served as an executive officer and Director of certain of the Company’s

affiliated entities since 1995. Pursuant to SEC and NASDAQ rules and regulations, Pendergraft

is not an independent director. He can be served with process at 1700 Pacific Avenue, Suite

1400, Dallas, Texas.

        24.      Reed has served as a member of Penson’s Board of Directors since January,

2006.   Reed is the Chairman of the Board’s Audit Committee and is a member of the

Compensation Committee. He can be served with process at 1700 Pacific Avenue, Suite 1400,

Dallas, Texas.

        25.      Thomas Johnson served as a member of Penson’s Board of Directors from August

2003 until his resignation on May 12, 2011 following the revelation that as chief executive

officer of Call Now, he operated Retama Development Corporation (“RDC”) which was

responsible for $43 million in receivables classified as nonaccrual by Penson. Thomas Johnson

served as a member of the Nominating and Corporate Governance Committee. He can be served

with process at 1 Retama Parkway, Selma, Texas, 78154.

        26.      Son is the Non-Executive Vice Chairman of the Board of Directors of Penson.

Son has been a member of the Board of Directors since 2000. He served as President of Penson

from its inception in 2000 until his retirement in August of 2010. Son served as President of

Penson Financial Services, Inc., a subsidiary of Penson, from its inception in 1995 through 2005,

and has served as an executive officer and/or director of many of Penson’s subsidiaries. Son co-

founded Penson Financial Services, Inc. with Pendergraft. Pursuant to SEC and NASDAQ rules

and regulations, Son is not an independent director. He can be served with process at 1700

Pacific Avenue, Suite 1400, Dallas, Texas.



                                     Plaintiff’s Verified Shareholder Derivative Petition – Page 8
                               DUTIES OF THE DEFENDANTS

       27.     By reason of their positions as officers and/or directors of the Company and

because of their ability to control the business and corporate affairs of the Company, Defendants

owed the Company and its shareholders the fiduciary obligations of good faith, trust, loyalty, and

due care, and were and are required to use their utmost ability to control and manage the

Company in a fair, just, honest, and equitable manner. Defendants were and are required to act

in furtherance of the best interests of the Company and its shareholders so as to benefit all

shareholders equally and not in furtherance of their personal interests or benefit. Each director

and officer of the Company owed to the Company and its shareholders the fiduciary duty to

exercise good faith and diligence in the administration of the affairs of the Company and in the

use and preservation of its property and assets, and the highest obligation of fair dealing.

       28.     Defendants, because of their positions of control and authority as directors and/or

officers of the Company, were able to and did, directly and/or indirectly, exercise control over

the wrongful acts complained of herein.

       29.     To discharge their duties, Defendants were required to exercise reasonable and

prudent supervision over the management, policies and practices and controls of the Company.

By virtue of such duties the Defendants were required to, inter alia:

               a.      exercise good faith to ensure that the affairs of the Company were
                       conducted in an efficient, business-like manner so as to make it possible to
                       provide the highest quality performance of their business;

               b.      exercise good faith to ensure that the Company was operated in a diligent,
                       honest and prudent manner and complied with all applicable federal and
                       state laws, rules, regulations and requirements, and all contractual
                       obligations, including acting only within the scope of its legal authority;

               c.      exercise good faith in taking action to correct any misconduct and prevent
                       its recurrence when placed on notice of improper or imprudent conduct by
                       the Company and/or its employees.

                                      Plaintiff’s Verified Shareholder Derivative Petition – Page 9
       30.     Defendants, particularly the members of the Audit Committee of the Company’s

Board of Directors, were responsible for maintaining and establishing adequate internal

accounting controls and controls over financial reporting for the Company and to ensure that the

Company’s financial statements were based on accurate financial information.

       31.     Presently Penson’s Board of Directors consists of seven (7) members: Engemoen,

Kelly, Dyer, David Johnson, Pendergraft, Reed, and Son. As further alleged herein, Penson’s

Board of Directors is unable to make an impartial determination as to whether to institute legal

proceedings to redress the wrongdoing alleged herein because a majority of its members: (1) face

a substantial likelihood of liability for non-exculpated breaches of their fiduciary duties to the

Company by their participation or acquiescence in the wrongdoing alleged herein and/or

complete failure to perform their oversight duties to the Company, failure to implement internal

financial and accounting controls sufficient to reasonably assure that the Company’s financial

statements were properly prepared and presented to the public, failure to oversee the Company’s

compliance with legally mandated disclosure standards and systemic failure to assure that a

reasonable information and reporting system existed; and/or (2) are not independent from

members of Penson’s Board of Directors who face a substantial likelihood of liability.

   A. Duties of the Audit Committee Defendants

       32.     Pursuant to the Audit Committee’s Charter, the purpose of the Audit Committee

is to assist the Board in fulfilling their oversight responsibilities. Specifically, the members of

the Audit Committee are required, inter alia, to:

               a. review and discuss with management and the independent auditors the
                  annual audited financial statements to be included in the Company’s
                  annual report on Form 10-K, the quarterly financial statements to be
                  included in the Company’s quarterly reports on Form 10-Q, the
                  Company’s disclosures under “Management’s Discussion and

                                    Plaintiff’s Verified Shareholder Derivative Petition – Page 10
   Analysis of Financial Condition and Results of Operations,” and any
   other financial disclosures to be included in SEC filings prior to their
   release. The Committee shall review major issues regarding
   accounting principles and financial statement presentations;

b. recommend to the Board whether the audited financial statements
   should be included in the Company’s annual report on Form 10-K;

c. review earnings press releases prior to their release, as well as the type
   of financial information and earnings guidance and the type of
   presentation to be provided to analysts and rating agencies;

d. prepare the Committee report required by the rules of the SEC to be
   included in the Company’s annual proxy statement;

e. discuss periodically with management the Company’s risk
   management policies and procedures and system of internal controls;

f. review periodically the Company’s Code of Business Conduct and
   Ethics, and shall have the authority to grant waivers of it to the
   Company’s directors and executive officers;

g. oversee the Company’s disclosure controls and procedures, including
   internal control over financial reporting, and, where applicable, shall
   oversee changes in internal control over financial reporting intended to
   address any significant deficiencies or material weaknesses in the
   design or operation of internal control and any fraud involving
   management or other employees that is reported to the Committee. In
   addition, the Committee shall review and discuss the annual report of
   management on the effectiveness of the Company’s internal control
   over financial reporting and the independent auditors’ report on, and
   attestation of, such management report, to the extent those reports are
   required by SEC rules;

h. establish procedures for the approval of all related-party transactions
   involving executive officers and directors;

i. establish procedures for (i) the receipt, retention, and treatment of
   complaints received by the Company regarding accounting, internal
   accounting controls, or auditing matters, and (ii) the confidential,
   anonymous submission by Company employees of concerns regarding
   questionable accounting or auditing matters;

j. review and assess the adequacy of this Charter annually and
   recommend any proposed changes to the Board for its approval; and



                     Plaintiff’s Verified Shareholder Derivative Petition – Page 11
               k. perform any other activities consistent with this Charter, the
                  Company’s Certificate of Incorporation, the Company’s Bylaws, and
                  governing law, as the Committee or the Board may deem necessary or
                  appropriate.

   B. Penson’s Code of Ethics

       33.     Penson’s Worldwide Code of Business Conduct and Ethics (the “Code of Ethics”)

that governs the Company’s Board states, inter alia, that the directors and officers are charged to

conduct “the Company’s business in a manner that demonstrates a commitment to the highest

standards of ethics and integrity.” The Board of Directors is responsible to commit to, and insure

that the Company’s employees, officers, and directors avoid conflicts of interest and the

appearance of conflicts, cause the Company to make full, fair, accurate and timely disclosures to

the public, and make prompt reporting of any violations of the Company’s code of ethics.

                                        BACKGROUND

       34.     Penson is a provider of a range of critical securities and futures processing

infrastructure products and services to the global financial services industry. The Company’s

products and services include securities and futures clearing and execution, financing and cash

management technology and other related offerings. The Company conducts business, through

its wholly owned subsidiary SAI Holdings, Inc. (SAI). SAI conducts business, through its

principal direct and indirect operating subsidiaries, Penson Financial Services, Inc. (PFSI),

Penson Financial Services Canada Inc. (PFSC), Penson Financial Services Ltd. (PFSL), Nexa

Technologies, Inc. (Nexa), Penson GHCO (Penson GHCO), Penson Asia Limited (Penson Asia)

and Penson Financial Services Australia Pty Ltd (PFSA). Through these operating subsidiaries,

the Company provides securities and futures clearing services, including integrated trade

execution, foreign exchange trading, custody services, trade settlement, technology services, risk

management services, customer account processing and data processing services. The Company

                                    Plaintiff’s Verified Shareholder Derivative Petition – Page 12
also participates in margin lending and securities lending and borrowing transactions to facilitate

clearing and financing activities.

       35.     As a securities and futures processing infrastructure provider, Penson’s services

include securities and futures clearing and settlement, custody, account maintenance, data

processing services, and technology services. The Company also provides commodity risk

management and other services to certain of its futures customers. During the year ended

December 31, 2009, the Company processed an average of 1.2 million equity transactions, 1.4

million equity options contracts and 428,000 futures contracts per day. It provides securities

clearing services to the Company’s correspondents in the United States. Penson’s United States

securities clearing broker is PFSI. With respect to futures transactions, Penson GHCO provides

the Company’s clearing and execution services for futures and FCG, which operates as a division

of Penson GHCO, provides risk management and consultation services for some of its futures

customers.

       36.     Penson focuses primarily on providing services to Type 2 and Type 3

correspondent brokers. As a Type 2 or 3 carrying broker, the Company offerings include the

trading of securities for customers accounts and for the correspondent’s principal business,

making deliveries and settlements of cash and securities in connection with such trades, holding

securities and/or cash of customers and of the correspondent and preparing and delivering

directly to customers documents as required by applicable law and requirements with respect to

the trades cleared by the Company, including confirmation of trades, monthly statements

summarizing transactions for the preceding month and, for inactive accounts, quarterly

statements of securities and money balances held by Penson for customers. In the United

Kingdom the Company offers a range of securities clearing services, through PFSL, its United


                                     Plaintiff’s Verified Shareholder Derivative Petition – Page 13
Kingdom clearing broker, including Model A and Model B clearing and settlement, Euroclear,

global custody, customized data processing, regulatory reporting, execution, and portfolio

management and modeling systems. In Model A clearing, Penson provides administrative back-

office service and acts as an agent for its correspondents customers, and supply these customers

with the information needed to settle their transactions. Model B clearing provides the authority

to process transactions under a fully-disclosed clearing model.

       37.     The Company’s technology and data product offerings are principally developed

and marketed, through its Nexa subsidiary. The Company’s technology and data product

offerings include customizable front-end trading platforms, a database of historic United States

and international equities, options and futures trade data, and order-management services. It also

provides risk management and consultation services to its futures customers, through the FCG

division of the Company’s Penson GHCO subsidiary. Nexa specializes in direct access trading

technology and provides online brokerage solutions, including direct access trading applications,

browser-based trading interfaces, back-office order management systems, market data feeds,

historical data, and execution technology services, on a license-fee basis. Nexa’s FastPath

product provides a range of Financial Information Exchange (FIX) gateway solutions. FIX

execution solutions enable customers to automatically transmit, receive or cancel advanced-order

types, execution reports, order status, positions, liquidity flags and account balances. Nexa’s

products, such as Omni Pro, Axis Pro, and Meridian, are designed to accommodate various

market segments by providing different trading platforms and functionality to users. The

Company’s technology revenue includes revenue from software development, customization of

products and features and licensing fees.




                                    Plaintiff’s Verified Shareholder Derivative Petition – Page 14
       38.     The Company competes with Goldman Sachs Execution & Clearing, L.P., BNY

Securities Group, National Financial Services LLC, Merrill Lynch & Co., Inc., MF Global Ltd.

and RJ O’Brien & Associates LLC.

       39.     Since its initial public offering (“IPO”), Penson has experienced bad press and

questions surrounding its leadership as a result of the lack of credibility of its key executives.

For example, in 1991, Defendant Pendergraft was suspended from association with any member

of the National Association of Securities Dealers (“NASD”) as a financial and operations

principal because he did not make deposits to his firm’s reserve account for the exclusive benefit

of customers and failed to maintain required minimum net capital. In other words, Penson used

customer’s funds for purposes which he was not authorized to use them.

       40.     In addition, Defendant Pendergraft has 20 customer disputes on his FINRA

BrokerCheck Report and has had judgments, fines, and settlements rendered against him in

FINRA arbitration in the total amount of approximately $48,190,114.00 since 1991

       41.     Penson’s Chairman, Defendant Engmoen, is no better.              He has 21 customer

disputes on hi FINRA BrokerCheck Report and has had judgments, fines, and settlements

rendered against him in FINRA in the total amount of approximately $26,881,739 since 1991.

       42.     The lack of credible leadership at the top of Penson reflected on the Company’s

balance sheet as it posted its fourth consecutive quarterly loss in May 2011.

   A. Defendants Cause the Company to Issue False and Misleading Statements

       43.     The Relevant Period beings on February 10, 2011, when Defendants caused the

Company to issue a press release concerning its financial results for the quarter and year ended

December 31, 2010, which stated in relevant part:



                                    Plaintiff’s Verified Shareholder Derivative Petition – Page 15
Dallas, TX, February 10, 2011 – Penson Worldwide, Inc. (NASDAQ: PNSN)
today reported improved results for the fourth quarter ended December 31, 2010,
with net revenues of $80.0 million increasing 15% from the third quarter of 2010
and the net loss declining significantly, to $3.2 million, or ($0.11) per share.

Results included $1.8 million in certain non-operating expenses, equal to ($0.04)
per share net of tax.

“We are pleased to report that during the fourth quarter, revenues increased by
double digit percentages in all categories,” said Philip A. Pendergraft, Chief
Executive Officer. “In addition, Penson Australia achieved profitability, business
from the former Ridge correspondents outperformed expectations, and we
reduced expenses in key areas. However, we will not be satisfied until we report
profitable consolidated results.

Based on the fourth quarter, we are headed in the right direction.”

Penson Canada Completes Broadridge Conversion
Penson also announced that as of February 6, 2011, Penson Financial Services
Canada, Inc., based in Montreal, had become the first subsidiary to convert its
securities processing technology to the Broadridge Financial Solutions, Inc.
(NYSE: BR) platform. Penson Financial Services, Inc., based in Dallas, expects
to complete the conversion of its correspondents in the third quarter. By moving
these subsidiaries to the Broadridge platform, Penson expects to reduce annual
costs $7-$10 million and improve overall scalability.

Additional 4Q10 Analysis (on a sequential quarter basis)
   • Non-interest revenues of $59.8 million increased 15% from the third
       quarter, with clearing and commission fees up 13%, “other” revenues up
       26% and technology revenues up 11%. Growth reflects stronger trading
       volume in equities, options and futures. This compares to mixed average
       daily industry volume in the US (equities down 2%, options up 20%, and
       futures up 4%). Penson’s performance versus US industry metrics was
       enhanced by the re-engagement of active traders, and added volume from
       new correspondents in the US and Australia.
   • Net interest revenues of $20.2 million increased 12%. Growth primarily
       reflects an increase of 21%, or $1.4 billion, in interest earning average
       daily balances, partially offset by a 5 bps decline in interest spread.
       Penson’s performance was enhanced by additional assets from new
       correspondents and the pickup in activity among existing correspondents.
   • While net revenues increased 15%, total expenses remained virtually level
       on a reported basis. As a percentage of net revenues, pro-forma
       compensation expenses, which excludes certain non-operating expenses,
       declined to 36.0% from 41.6% and were at their lowest level in the last
       two years, reflecting Penson’s ongoing cost reduction program. Fourth
       quarter expenses included $8.0 million of non-cash items that had a $5.2

                            Plaintiff’s Verified Shareholder Derivative Petition – Page 16
                 million net after tax effect compared to $8.1 million and $5.1 million,
                 respectively, in the third quarter. Fourth quarter non-operating expenses
                 of $1.8 million reflect litigation and bad debt, severance related to
                 headcount reductions, and costs to prepare subsidiaries for their
                 technology conversion.
             •   Adjusted EBITDA (earnings before interest, taxes, depreciation,
                 amortization and stock-based compensation, and excluding certain non-
                 operating expenses) was $13.0 million in the fourth quarter compared to
                 $3.7 million in the third quarter, and totaled $40.2 million for the 12
                 months ended December 31, 2010.

       Record Number of Correspondents
       Penson had a record 430 revenue-generating correspondents at December 31,
       2010, compared to 386 at September 30, 2010. Penson securities clearing
       operations added a net 42, for a total of 371. This included 34 modestly sized
       Australian correspondents added in November. Penson Futures added a net 2,
       for a total of 59. As of December 31, 2010, there was a “pipeline” of 30 new
       correspondents signed but not yet contributing to revenues.

       Interest Rate Sensitivity
       Based on the size and composition of Penson’s interest-earning and interest-
       paying average balances for the fourth quarter of 2010, the Company estimates
       that each 25 basis point increase in the federal funds rate would benefit net
       interest revenue by approximately $1.3 million per quarter.

       44.       On March 4, 2011, Defendants caused the Company to file its 2010 10-K.

The 2010 10-K was signed by each of the Defendants and repeated the financials results

stated in the Company’s February 10, 2011 press release. The 2010 form 10-K also

included Sarbanes-Oxley certifications, and stated in relevant part:

       Margin risk management
       Our margin lending activities expose our capital to significant risks. These risks
       include, but are not limited to, absolute and relative price movements, price
       volatility and changes in liquidity, over which we have virtually no control. We
       attempt to minimize the risks inherent in our margin lending activities by
       retaining in our margin lending agreements the ability to adjust margin
       requirements as needed and by exercising a high degree of selectivity when
       accepting new correspondents. When determining whether to accept a new
       correspondent, we evaluate, among other factors, the correspondent’s experience
       in the industry, its financial condition and the background of the principals of the
       firm. In addition, we have multiple layers of protection, including the balances in
       customers’ accounts, correspondents’ commissions on deposit, clearing deposits
       and equity in correspondent firms, in the event that a correspondent or one of its

                                     Plaintiff’s Verified Shareholder Derivative Petition – Page 17
       customers does not deliver payment for our services. We also maintain a bad debt
       reserve.

                                              ***

       Our margin lending business subjects us to credit risks and if we are unable to
       liquidate an investor’s securities when the margin collateral becomes
       insufficient, the profitability of our business may suffer.

       We provide margin loans to investors; therefore, we are subject to risks inherent
       in extending credit. As of December 31, 2010, our receivables from customers
       and correspondents were $2.3 billion, which predominantly reflected margin
       loans. The Company generally recognizes interest income on an accrual basis as it
       is earned. At December 31, 2010 and 2009, the Company had approximately
       $97.4 million and $52.4 million in receivables, respectively, primarily from
       customers and correspondents, that were substantially collateralized and
       considered collectable, for which interest income was being recorded only when
       received.

                                              ***

       Our discussion and analysis of our financial condition and results of operations
       are based on our consolidated financial statements, which have been prepared in
       accordance with accounting principles generally accepted in the U.S.

       45.    On May 9, 2011, Defendants caused Penson to file its quarterly report for the

quarter ended March 31, 2011 which was signed by Defendant Pendergraft. The 10-Q included

Sarbanes-Oxley certifications signed by Defendant Pendergraft and represented that “[i]n the

opinion of management, the accompanying unaudited interim condensed consolidated statements

of financial condition and related statements of operations, cash flows, and stockholders’ equity

include all adjustments, consisting only of normal recurring items, necessary for their fair

presentations in conformity with U.S. GAAP” and stated the following:

       with respect to the Nonaccrual Receivables, at March 31, 2011, approximately
       $42,580[,000] were collateralized by bonds issued by the Retama Development
       Corporation (“RDC”) and certain other interests in the horse racing track and real
       estate project (“Project”) financed by the RDC’s bonds. In each case these are
       owned by customers and pledged to the Company and/or its affiliates. Certain
       related parties to the Company own approximately $14,745[,000] of RDC bonds
       that are pledged to the Company and/or its affiliates (see Note 17 to our

                                   Plaintiff’s Verified Shareholder Derivative Petition – Page 18
       December 31, 2010 consolidated financial statements as filed with the SEC on
       Form 10-K). There are a number of factors potentially affecting the value of the
       Project and the Nonaccrual Receivables related thereto including potential
       legislation in the Texas Legislature that could expand gambling privileges at the
       Project. Should such legislation be enacted there should be a positive impact on
       the value of the Project and therefore upon the collateral underlying related
       Nonaccrual Receivables. However, should such legislation not be enacted,
       depending on other factors potentially impacting the Project and related
       Nonaccrual Receivables, it is possible that the value of the collateral associated
       with the Project and related Nonaccrual Receivables might be impaired,
       resulting in a write down of a portion of these receivables that could be material
       in amount.

       46.     The statements above were materially false and misleading because: 1) the

Company had approximately $96-97 million in Nonaccrual Receivables of which approximately

$43 million were collateralized by illiquid securities and therefore unlikely to be collected; 2) the

Company’s assets (Nonaccrual Receivables) were materially overstated and should have been

written down at least by the end of 2010; 3) as a result of the foregoing, the Company’s reported

income and EBITDA were materially overstated; and 4) the Company’s financial statements

were not prepared in accordance with GAAP.

   B. The Truth Begins to Emerge

       47.     On May 12, 2011, The Wall Street Journal published an article entitled Director

of Clearing Firm Penson Resigns Amid Collateral Disclosure. The article stated in relevant part:

       A board member of Penson Worldwide Inc. resigned Thursday after the
       company's disclosure of his relationship to a large, illiquid bond position held by
       the company, which sent shares in the clearing-and-settlement firm to an all-time
       low.

       Penson reported this week that it held as trading collateral $42.6 million in bonds
       issued by a horse-racing track operator that maintains ties with director Thomas
       R. Johnson, which the company said in a filing this week could bring a "material"
       write-down . . . .

       The Dallas-based company's core business lies in clearing trades in securities and
       derivatives contracts for broker-dealers serving individual investors, as well as



                                     Plaintiff’s Verified Shareholder Derivative Petition – Page 19
       high-frequency trading firms that need access to exchanges. The company also
       operates a Chicago-based futures brokerage.

       The company said that Mr. Johnson's ties to the Texas horse track that issued the
       bonds made it "appropriate for him to resign his position at this time." Both
       Penson and Mr. Johnson agreed on the decision, according to the statement. Mr.
       Johnson hasn't returned a call seeking comment . . . .

       At the end of the first quarter, Penson held $97.4 million in nonaccruing
       receivables, which analysts said reflect nonliquid assets held as collateral against
       trades gone bad. Nearly half that figure represented bonds issued by Retama
       Development Corp., owner of Retama Park, a racetrack located in Selma, Texas.

       Those bonds are collateralized by the value of Retama Park's real estate, and
       although they were regularly traded at the time Penson took them as collateral,
       "there is no longer any active market," according to a note from Raymond James
       analyst Patrick O'Shaughnessy.

       Raising further questions was the relationship of Mr. Johnson, the Penson director
       and chief executive of Call Now Inc., which manages the racetrack and owns $15
       million of the Retama Development Corp. bonds, according to Sandler O'Neill
       analyst Rich Repetto; Call Now was an early investor in Penson.

       "While we believe that Call Now's use of RDC bonds as collateral for margin
       loans could have reasonable explanations, Penson's exposure to $27.8 million of
       other Retama bonds raises questions about how the concentration of risk
       developed," Mr. Repetto wrote in a research note Thursday that warned of
       competitors poaching Penson's existing customers and potential clients taking
       their business elsewhere. "We believe that a significant risk to Penson is that the
       new disclosures affect its correspondent clearing customers."

       For Penson, which has seen its stock-market valuation nearly halved to $87.5
       million this week, nearly $100 million in nonaccrual receivables is "a troubling
       level," Mr. Repetto wrote.

       48.      That same day Penson shares declined $0.81 per share further, or approximately

21%, to close at $3.12 per share, on heavy volume.

       49.      JP Morgan subsequently published a research report which stated that the owner

of Retama Entertainment Group fully impaired the Series B bonds in 2006 and that Penson did

not disclose “other information on collateral backing other portion of $97 million of nonaccrual

receivables.”

                                   Plaintiff’s Verified Shareholder Derivative Petition – Page 20
        50.    Following the close of trading on August 4, 2011, Penson disclosed to the public

that “the Company recorded a non-cash write down of $43 million, equal to $26.7 million or

($0.94) per share net of tax, against $96.6 million of nonaccrual receivables. The write down

was recorded in conjunction with Penson’s initiation of foreclosure proceedings on the majority

of the collateral underlying these receivables, including, but not solely related to, certain assets

associated with the Retama Development Corporation, and shares of Penson Worldwide stock.”

        51.    Following this announcement, Penson’s shares declined by $0.49 per share on

August 5, 2011 to close at $2.12 per share. Also on August 5, 2011, Moody’s downgraded

Penson from B1 to B2. On August 8, 2011, the next trading day, Penson stock declined 9%

further to close at $1.92 per share.

        52.    On August 8, 2011, JP Morgan issued a report stating:

        Penson is in a challenging position with inadequate risk management, ongoing
        operating losses, and a shrinking capital base . . . given very mixed risk
        management results in the past, we think investors should be particularly
        concerned . . . we see unorthodox margin loans with questionable collateral as
        being worrisome, particularly because Penson is highly leveraged.

        53.    On August 9, 2011, Penson filed its quarterly report for the quarter ended June 30,

2011. The 10-Q stated in relevant part:

        Based upon the Company’s re-assessment of the value of collateral securing the
        Nonaccrual Receivables, including review of recent appraisals of underlying real
        estate and the Retama Project, among other factors, the Company’s determined
        that the carrying value of the Nonaccrual Receivables was not fully realizable and
        recorded a charge of $43,000[,000]” and reported a related charge of
        approximately $43 million for “bad debt expense.”

    C. The Truth About Penson

        54.    Unfortunately, the full truth about Penson has yet to be fully revealed. The March

31, 2011 10Q revealed that Penson held $97 million in nonaccrual receivables. Approximately

40% of the nonaccruing receivables, or $42.6 million, was represented by collateral backed by a

                                       Plaintiff’s Verified Shareholder Derivative Petition – Page 21
horse racing track called Retama Park near San Antonio, Texas which was operated by Call Now,

Inc., whose CEO is former Penson Board member Thomas Johnson. Thomas Johnson resigned

from Penson’s Board on May 12, 2011.

          55.    From 2005 through 2009, Retama Park posted net income of -$17.5 million, -

$15.5 million, -$16.2 million, -$18.5 million, and -$20.1 million for an average net income of -

$17.6 million. Aside from their knowledge of Retama Park’s financials as a result of basic due

diligence, Defendants were also fully aware of the financial state of Retama Park because Thomas

Johnson operated Retama Park while a member of Penson’s Board of Directors. Gary Bader, the

Chairman of Retama Development Group, was quoted on MySanAntonio.com in September 2010

as saying, “It’s kind of a minor miracle, in my opinion, that we have kept [Retama] alive as long

as we have.” Clearly, Retama Park’s financial status was no secret to any person associated with

Penson.

          56.    The RDC bonds were partially backed by the value of the real estate upon which

Retama Park sat. On May 18, 2011, Pendergraft was quoted as saying:

          We have gone so far as to conduct a real estate appraisal of the RDC property and
          our collateral is partly covered by just the value of the raw land underlying the
          race track without any improvement.

          57.    As stated above, Thomas Johnson is the CEO of Call Now. Call Now currently

owns $44 million in par value of RDC bonds and its primary business is the operation of Retama

Park racetrack. Despite this ownership of RDC bonds, Call Now only has a market capitalization

of approximately $500,000.00. In 2006, Call Now impaired the RDC bonds to zero, and currently

estimates the fair market value of the RDC bonds at .02 on the dollar. In 2005, shortly before

Call Now impaired the RDC bonds to zero, analysis was done by a third party on the value of the

real estate upon which Retama Park was built. Obviously, the value of the land was not enough



                                     Plaintiff’s Verified Shareholder Derivative Petition – Page 22
to keep Call Now from impairing the RDC bonds to zero. Since 2005, real estate prices have

fallen nationally by 25% and in the areas surrounding Retama Park by 1.5%. The 2005 appraisal

included the value of the buildings, horse stables, grandstands, and other improvements, yet it was

still not enough to keep Call Now from impairing the RDC bonds to zero.

        58.     According to estimates of value in Call Now’s SEC filings, the entire series of

RDC bonds have never been worth more than $17 million. Since Penson’s IPO in 2006, the

entire series of RDC bonds have never been worth more than $6.4 million. This begs the

question, if the entire series of RDC bonds were never worth more than $17 million, how did

Defendants allow Penson to end up with $43 million of exposure?

        59.     Normal operating procedure when a margin balance goes on nonaccrual is to ask

the client to post additional collateral. If no additional collateral is posted, the next step would

then be to close out the customer position by liquidating the collateral. Lastly, legal alternatives

may be sought to recover the remaining debt.

        60.     This is not how Defendants treated Call Now and their fellow Board member

Thomas R. Johnson. Call Now’s form 10-K, filed on April 4, 2011, detailed their dealings with

Penson in relevant part as follows:

        [Call Now] had a margin loan in this account [with Penson] in the amount of
        $13.3 million…in September 2009, [Penson] determined that, for margin account
        purposes…[the] Series B bonds should require a 100% margin requirement,
        effectively making these bonds non-marginable. As a result, Call Now received
        a margin call letter…notifying [Call Now] that it needed to deposit $5.3 million in
        additional cash or margin collateral…[Call Now] did not make the requested
        deposit.       [Penson] elected not to pursue remedial actions…but
        continued…working with the [Call Now] to restructure the margin loan. As part
        of the margin loan restructuring…the Company entered into a Promissory
        Note…of $13.9m. On September 16, 2010, [Call Now] borrowed an additional
        $400,000 from [Penson]….




                                      Plaintiff’s Verified Shareholder Derivative Petition – Page 23
        61.     In summary, Penson made a margin call on the RDC bonds. Call Now failed to

post additional collateral and Penson did not liquidate the position. In fact, Penson allowed Call

Now to borrow an additional $400,000 despite the fact that Call Now had been valuing the

underlying collateral at zero for three years prior.

        62.     The incestuous relationship between Call Now and Penson was not over. Shortly

after converting Call Now’s missed margin call to a $14 million note, Penson extended a new

$5.5 million margin loan to Call Now, making Penson’s total Call Now exposure $19.6 million as

of March 31, 2010 and more than $20 million as of today.

        63.     The new margin loan was collateralized by 501,000 shares of Penson which were

owned by Call Now and $2.3 million of subordinated municipal bonds 3 with limited liquidity.

The $2.3 million of subordinated municipal bonds were purchased by Call Now from their

Chairman, Christopher Hall, for $4 million. Within a month, these bonds, along with the 501,000

shares of Penson stock were used to collateralize a new $5.5 million margin loan with Penson.

This was in addition to the previous margin loan that was converted to a $14 million note to

Penson. On March 31, 2010, the first quarter the margin loan was reported, Penson gave it a loss-

to-value ration of 75%, despite 68% of the collateral being represented by equities which usually

have a margin of 50% and the remaining 32% of collateral represented by subordinated municipal

bonds with limited liquidity.

        64.     Call Now’s margin loan is over 100% loss-to-value when Penson’s shares are

worth $4.60 or below.




 3
  $2.08 million in Leon County, Florida Education Facilities Series B and $1.87 million in
 Cambridge Student Housing Financing Series C. These municipal bonds were marked down to a
 market value of $2.3 million on March 31, 2010, and marked up to $3.6 million on March 31,
 2011.
                                      Plaintiff’s Verified Shareholder Derivative Petition – Page 24
         65.     Penson is already facing massive exposure. The Company maintains a highly

leveraged business with assets/tangible equity equaling 94x. Now Penson is not liquidating

margin accounts of related parties when they go bad and continues to grow their exposure to bad

loans. As a result, Penson’s nonaccruing margin loans represent 76% of their tangible equity. Of

the $97 million of nonaccrual receivables, Penson has only identified one security backing these

non accruals, the $42.6 million backed by RDC, an operation which has been losing money hand

over fist since its inception.

         66.     Penson continues to hide the truth from its investors. Through good detective

work, investors and the public might have been able to find out that Call Now values the

underlying RDC bonds at $0, but Penson does not disclose their current valuation mark for the

RDC bonds. If Penson were forced to write down all of its nonaccrual receivables, tangible

equity would drop to $31 million and total leverage to tangible equity would be an incredible

385x.

         67.     In order to correct the course of Penson’s business, Defendants must control

Penson’s related party transactions. Penson has just recently revealed the RDC bonds backing the

$42.6 million in nonaccruals through a related party transaction. The collateral backing the

remaining $54 million in nonaccruals has yet to be revealed. In addition, Penson entered a

$180,000 per year consulting agreement with Defendant Son, which not only presents a conflict

of interest, but is inappropriate given Penson’s recurring losses.

         68.     In addition, the Board must cause Penson to make appropriate disclosures to its

investors and the public, including:

                 a. Disclose the par amount of RDC bonds currently backing the $43 million of
                    exposure and how the bonds are being valued;




                                       Plaintiff’s Verified Shareholder Derivative Petition – Page 25
               b. Disclose how and when Penson first accepted RDC bonds as collateral and
                  their historical valuation on these holdings;

               c. Disclose the assets backing the other $54 million of nonaccruing receivables;
                  and

               d. Disclose the number of times and amounts margin calls Penson has made to
                  clients in which the margin call was not met and no further action was taken.

        69.    Defendants have shown no signs of limiting Penson’s related party transactions or

benefitting themselves and their acquaintances through the use of the Company’s assets. Neither

have Defendants shown any inclination to correct the damaging lack of internal and disclosure

controls at the Company. Amazingly, in the Company’s form 10-Q filed with the SEC on August

9, 2011, Defendants caused the Company to state the following:

        Management’s evaluation of disclosure controls and procedures
         Our management, with the participation of our Chief Executive Officer and Chief
        Financial Officer, evaluated the effectiveness of the design and operation of our
        disclosure controls and procedures (as that term is defined in Rule 13a-15(e) of
        the Exchange Act) as of the end of the period covered by this quarterly report.
        Based on that evaluation, our management, including our Chief Executive Officer
        and our Chief Financial Officer, concluded that our disclosure controls and
        procedures were effective in recording, processing, summarizing and reporting
        information required to be disclosed by us in reports that we file or submit under
        the Exchange Act, within the time periods specified by the SEC’s rules and
        regulations.

        Changes in internal control over financial reporting
        There have been no changes in our internal controls or in other factors that
        have materially affected, or are reasonably likely to materially affect, our
        internal controls over financial reporting during the quarter ended June 30,
        2011.

        70.    According to Defendants, no changes need to be made to the Company’s

disclosure and internal controls, despite massive amounts of evidence (and the resignation of a

Board member due to a damaging related party transaction) to the contrary.

                VIOLATIONS AND BREACHES OF FIDUCIARY DUTIES

        71.    As alleged herein, Defendants have breached their fiduciary duties in that

                                    Plaintiff’s Verified Shareholder Derivative Petition – Page 26
Defendants either: (i) knowingly and substantially participated or acquiesced in the issuance of

public documents and statements issued or disseminated in the name of the Company (or in

their own name) that were materially false and misleading; (ii) engaged in self-dealing by

personally benefiting from such manipulated issuances; and/or (iii) have failed to remedy such

offenses by commencing a derivative action on behalf of the Company or by demanding the

disgorgement of improperly derived profits.

             A. Issuance of Misleading Statements

       72.      The statements detailed above were inaccurate and misleading, contained untrue

statements of material facts, omitted facts necessary to make the statements made therein not

misleading, and omitted to state material facts required to be stated therein. Defendants, by

virtue of their control over and/or receipt of information reflecting the true facts regarding

Penson, either caused the issuance of the materially misleading statements or failed to timely

correct such statements. These Defendants each had a duty to ensure that such statements were

accurate and contained all facts required to be stated therein, and that there were no omissions

of material facts that would make the statements misleading. In the exercise of reasonable care,

the Defendants should have known of the material misstatements contained in the Company’s

press releases, SEC filings, and in statements made by Defendant Pendergraft and also should

have known of the omissions of material facts that were necessary to make the statements made

therein not misleading. As such, the Defendants breached their fiduciary duties of loyalty and

due care.

             B. Failure to Remedy

       73.      Defendants have further breached their fiduciary duties by failing to remedy the

acts alleged herein. Indeed, the current Board has failed to commence derivative proceedings



                                    Plaintiff’s Verified Shareholder Derivative Petition – Page 27
against any officer and/or director for their breaches of fiduciary duties despite the

overwhelming evidence of such breaches.             Director Defendants’ failure to remedy the

aforementioned offenses is an effective ratification of the wrongdoing and constitutes a breach of

the Director Defendants’ fiduciary duties.

             C. Damages to the Company

       74.      As a result of the foregoing, Penson has suffered, and will continue to suffer,

millions of dollars in damages from class action litigation, investigations by the Board of

Directors, and potential SEC investigations. In addition, Defendants’ actions have placed the

future of the Company at risk. The incestuous relationship between Defendants, Call Now, and

RDC and the favoritism shown by Defendants to Call Now and RDC to the detriment of the

Company and its shareholders will cause significant damages to the Company. The revelations

of Defendants’ wrongdoing have caused the Company to suffer damage to its reputation and

goodwill.

                         DERIVATIVE AND DEMAND FUTILITY
                       ALLEGATIONS FOR THE BOARD OF PENSON


       75.      Plaintiff brings this action derivatively in the right and for the benefit of Penson to

redress injuries suffered by Penson as a result of breaches of fiduciary duties by the Defendants.

This is not a collusive action to confer jurisdiction on this Court that it would not otherwise have.

       76.      Plaintiff will adequately and fairly represent the interests of Penson and its

shareholders in enforcing and prosecuting Penson’s rights.

       77.      Plaintiff is an owner of Penson common stock and was an owner of Penson

common stock at times relevant to the Defendants’ wrongful course of conduct alleged herein

through the present.



                                     Plaintiff’s Verified Shareholder Derivative Petition – Page 28
        78.    Penson’s Board of Directors currently consists of seven (7) members: Engemoen

(Chairman of the Board), Pendergraft (co-founder of the Company and CEO), Kelly (member of

the Audit and Compensation Committees), Dyer (member of the Audit and Nominating and

Corporate Governance Committees), David Johnson (Chairman of the Compensation Committee

and member of the Nominating and Corporate Governance Committee), Reed (Chairman of the

Audit Committee and member of the Compensation Committee), and Son (co-founder of the

Company and Vice Chairman of the Board). Each of these Board members has been named as a

defendant in this action. In addition, Defendant Pendergraft has been named as a defendant in a

securities fraud class action lawsuit.

        79.    Plaintiff has not made a demand on the Board of Directors to bring the causes of

action alleged herein because such a demand would be futile. Penson’s Board of Directors at the

time this Complaint was filed was unable to make an impartial determination as to whether to

institute legal proceedings to redress the wrongdoing alleged herein because a majority of its

members: (1) face a substantial likelihood of liability for non-exculpated breaches of their

fiduciary duties to the Company by their participation or acquiescence in the wrongdoing alleged

herein and/or complete failure to perform their oversight duties to the Company, failure to ensure

the Company’s compliance with legally mandated disclosure standards; and/or (2) are not

independent from members of Penson’s Board of Directors who face a substantial likelihood of

liability.

                        I. Substantial Likelihood of Liability for the Entire Board of
                           Directors

        80.      The Director Defendants acted in bad faith by breaching their fiduciary duties in

failing to adequately manage and oversee the Company which has, as alleged herein, severely

impacted the Company’s financial condition and future prospects.

                                     Plaintiff’s Verified Shareholder Derivative Petition – Page 29
       81.     By failing to satisfy their fiduciary duties, Director Defendants caused irreparable

reputational harm to the Company, exposed the Company to millions of dollars of liability in

securities class action lawsuits, and have potentially threatened Penson’s ability to exist in the

future. Director Defendants caused or allowed Penson to mislead its shareholders and the

general public. Specifically, the Director Defendants failed to disclose: 1) that the Company had

approximately $96-97 million in Nonaccrual Receivables of which approximately $43 million

were collateralized by illiquid securities and therefore unlikely to be collected; 2) the Company’s

assets (Nonaccrual Receivables) were materially overstated and should have been written down

at least by the end of 2010; 3) as a result of the foregoing, the Company’s reported income and

EBITDA were materially overstated; and 4) the Company’s financial statements were not

prepared in accordance with GAAP.

       82.     Each Director Defendant had a duty to diligently evaluate information provided to

the Board by management and to ensure that reasonable systems of reporting existed such that all

relevant information, including but not limited to information regarding the Company’s business,

its revenues, its decreasing market share, and the veracity of the Company’s financial disclosures

and projections. It was the duty of the Director Defendants to properly evaluate this information

and provide thorough guidance and governance to the Company. The Director Defendants failed

in these duties. The Director Defendants either evaluated this information and intentionally or

recklessly rubber-stamped Penson’s misrepresentations, or recklessly failed to ensure the

disclosure of information necessary to prevent the statements from being materially false and

misleading.

       83.     Each of the Director Defendants faces a substantial likelihood of liability in this

action because of his/her failure, as a director, to assure that reliable systems of controls were



                                    Plaintiff’s Verified Shareholder Derivative Petition – Page 30
implemented and functioning effectively to prevent the Company from issuing materially

misleading statements.      Based on the size, scope, and blatancy of the wrongdoing, the

Defendants must have known, or were reckless in not knowing, that the statements disseminated

during the Relevant Period were materially misleading and/or omitted material information

necessary not to make the statements materially misleading. Accordingly, Director Defendants

face substantial exposure to liability for their total abrogation of their duty of oversight.

       84.      Each Defendant directly attested and approved, by their signatures, the materially

false and misleading statements made by Penson in the Company’s 2010 10-K filed with the

SEC on March 3, 2011. By signing the Form 10-K, each of these Director Defendants asserted

to the public and its shareholders that the statements contained within the SEC filing were

accurate and comprehensive. The Director Defendants affixed their signatures to the 2010 10-K

in bad faith.     The Director Defendants either knew of, or recklessly disregarded, the

misrepresentations and omissions made in the Company’s 2010 10-K, thereby becoming an

accessory to the false statements and misrepresentations.

       85.      Because each of the Director Defendants faces a substantial likelihood of liability

for unexculpated breaches of duty, demand is excused.

                           II.     Additional Substantial Likelihood of Liability for the
                                   Audit Committee Defendants

       86.      Defendants Reed (Chairman), Dyer, and Kelly were, during the Relevant Period,

members of the Audit Committee of the Company’s Board of Directors. The Audit Committee

is responsible, by its Charter, for preparing, reviewing, and discussing Penson’s financial

statements with management and independent auditors.                The Audit Committee is also

responsible for discussing Penson’s internal audit function and reviewing reports concerning the

Company’s operation of internal controls. Thus, the Audit Committee was responsible for

                                      Plaintiff’s Verified Shareholder Derivative Petition – Page 31
overseeing and directly participating in Penson’s financial reporting process.

       87.     However, Defendants Reed, Dyer, and Kelly breached their fiduciary duties of

due care, loyalty and good faith because the Audit Committee failed to disclose material facts to

shareholders during the Relevant Period. These Defendants authorized the issuance of Penson’s

SEC filings and financial releases, which contained materially false and misleading statements

about the Company’s existing business, business potential, and financial future. As members of

the Audit Committee, Reed, Dyer, and Kelly were directly involved in preparing or reviewing

such materially false and misleading statements. Thus, Defendants knowingly or recklessly

issued materially false and misleading statements that conflicted with facts known by them at

that time.

       88.     Indeed, the Audit Committee wholly abdicated their responsibilities to the

Company and its shareholders by failing to adequately supervise the statements made during the

Relevant Period. Because of this abdication, the Company is exposed to significant legal costs

as a result of its violations of governing securities laws. Moreover, the Audit Committee’s

failures took place despite their explicit, particularized duty to ensure the Company’s compliance

with all federal and state laws.

                           III.    Additional Likelihood of Substantial Liability for the
                                   Compensation Committee Defendants

       89.     Director Defendants David Johnson (Chairman), Reed, and Kelly are further

exposed to liability because of their participation on the Compensation Committee. In these

positions they approved compensation and finance plans for senior executives, including

Defendants Pendergraft and Son, pursuant to which substantial sums of money were paid out by

the Company based on artificially inflated stock prices that resulted from misleading information

about the Company’s business prospects. As a result, these Defendants face a sufficiently

                                    Plaintiff’s Verified Shareholder Derivative Petition – Page 32
substantial likelihood of liability for their breach of fiduciary duties and any demand upon them

would be futile.

                          IV.     The Members         of   the   Board     of   Directors    Lack
                                  Independence

       90.      It appears that in order to be a member of Penson’s Board of Directors, you are

required to leave your independence at the door.        Rife with related party transactions and

favoritism towards croneys and acquaintances, Penson has been severely damaged as a direct

result of the lack of independence of the Director Defendants. In addition, as a result of this lack

of independence, the Director Defendants are incapable of considering Plaintiff’s demand.

       91.      Director Defendant Pendergraft is the Company’s CEO and co-founder.

Accordingly, Defendant Pendergraft’s principle source of income is based on his employment

with the Company. In 2010, the Company paid Pendergraft $545,000, and $5,000 in other

compensation.      Because of his dependence on the Company for continued income, he is

beholden to the Company and lacks sufficient independence with which to render a disinterested

decision on whether to pursue the derivative claims. Indeed, the Company has admitted that

Defendant Pendergraft does not qualify as an independent director within the meaning of the

NASDAQ director independence standards. As a result of the entangling relationship between

Pendergraft, Penson, and the entire Board of Directors, and the substantial financial benefits

Pendergraft receives as a result, Pendergraft lacks the necessary independence to render a

disinterested decision on Plaintiff’s demand.

       92.      Director Defendant Son is the Company’s co-founder and Vice Chairman of the

Board. In 2010, the Company paid Son $334,583 in salary and $320,403 in other compensation.

Because of his dependence on the Company for continued compensation, Defendant Son lacks

sufficient independence with which to render a disinterested decision on whether to pursue the

                                    Plaintiff’s Verified Shareholder Derivative Petition – Page 33
derivative claims against the Defendants. Indeed, the Company has admitted that Defendant Son

does not qualify as an independent director within the meaning of the NASDAQ director

independence standards. As a result of the entangling relationship between Son, Penson, and the

entire Board of Directs, and the substantial financial benefits Son receives as a result, Son lacks

the necessary independence to render a disinterested decision on Plaintiff’s demand.

       93.     Each of the Defendants has shown their lack of independence in protecting

Defendant Thomas Johnson by refusing to follow normal procedure when Call Now’s margin

balance became nonaccruing. The Board of Directors failed to force Call Now, the operator of

RDC, to post additional collateral, liquidate the collateral, or pursue legal options to make

recovery on behalf of Penson. Instead, Penson allowed Call Now to borrow an additional

$400,000 and extended a new margin loan of $5.5 million to Call Now, raising Penson’s Call

Now exposure to $19.6 million. As a result of the entangling relationship between each of the

Defendants, and the substantial financial benefits they receive as a result, each of the Defendants

lacks the necessary independence to render a disinterested decision on Plaintiff’s demand.

       94.     Defendant Engemoen is a significant stockholder in, and serves as the Chairman

of the Board for, SAMCO Holdings, Inc. (“SAMCO”), which owns all of the outstanding stock

or equity interests, as applicable, of each of SAMCO Financial Services, Inc. (“SAMCO

Financial”), SAMCO Capital Markets, Inc. (“SAMCO Capital Markets”), and SAMCO-BD,

LLC (“SAMCO-BD”) (collectively the “SAMCO Entities”).                 Penson currently provides

technology support and other similar services to SAMCO and provides clearing services,

including margin lending, to the customers of SAMCO Capital Markets. The Company had

provided clearing and margin lending services to customers of SAMCO Financial prior to

SAMCO Financial’s termination of its broker-dealer status on December 31, 2006.



                                    Plaintiff’s Verified Shareholder Derivative Petition – Page 34
       95.     On July 18, 2006, three claimants filed separate arbitration claims with the NASD

(which is now known as FINRA) against PFSI related to the sale of certain collateralized

mortgage obligations by SAMCO Financial Services, Inc. (“SAMCO Financial”) to its

customers. In the ensuing months, additional arbitration claims were filed against PFSI and

certain of our directors and officers based upon substantially similar underlying facts. These

claims generally allege, among other things, that SAMCO Financial, in its capacity as broker,

and PFSI, in its capacity as the clearing broker, failed to adequately supervise certain registered

representatives of SAMCO Financial, and otherwise acted improperly in connection with the sale

of these securities during the time period from approximately June 2004 to May 2006. In

addition to the arbitration claims, on March 21, 2008, Ward Insurance Company, Inc., et al, filed

a claim against PFSI and Roger J. Engemoen, Jr., the Company’s Chairman of the Board, in the

Superior Court of California, County of San Diego, Central District, based upon substantially

similar facts. The Company has now settled, or agreed in principle to settle, all claims with

respect to this matter of which the Company is aware. No further claims based on this matter are

expected at this time.

       96.      Engemoen owns approximately 52% of the outstanding stock, of SAMCO

Holdings, Inc., the holding company of SAMCO Financial and SAMCO Capital Markets, Inc.

Certain of the SAMCO Entities received certain assets from the Company when those assets

were split-off immediately prior to the Company’s initial public offering in 2006 (the “Split-

Off”). In connection with the Split-Off and through contractual and other arrangements, certain

of the SAMCO Entities have agreed to indemnify the Company and its affiliates against

liabilities that were incurred by any of the SAMCO Entities in connection with the operation of

their businesses, either prior to or following the Split-Off. During the third quarter of 2008, the



                                    Plaintiff’s Verified Shareholder Derivative Petition – Page 35
Company’s management determined that, based on the financial condition of the SAMCO

Entities, sufficient risk existed with respect to the indemnification protections to warrant a

modification of these arrangements with the SAMCO Entities, as described below.

       97.     On November 5, 2008, the Company entered into a settlement agreement with

certain of the SAMCO Entities pursuant to which the Company received a limited personal

guaranty from Defendant Engemoen of certain of the indemnification obligations of various

SAMCO Entities with respect to claims related to the underlying facts described above, and, in

exchange, the Company agreed to limit the aggregate indemnification obligations of the SAMCO

Entities with respect to certain matters described above to $2,965. Unpaid indemnification

obligations of $800 were satisfied prior to February 15, 2009. Of the $800 obligation, $86 was

satisfied through a setoff against an obligation owed to the SAMCO Entities by PFSI, with the

balance paid in cash by December 31, 2009. Effective as of December 31, 2009, the Company

and the SAMCO entities entered into an amendment to the settlement agreement, whereby

SAMCO Holdings, Inc. agreed to pay an additional $133 on the last business day of each of the

first six calendar months of 2010 (a total of $800).

       98.     Technology support and similar services are provided to SAMCO pursuant to the

terms of a Transition Services Agreement entered into between Penson and SAMCO on May 16,

2006. Clearing services are provided to SAMCO Capital Markets pursuant to the terms of a

clearing agreement entered into between the Company and SAMCO Capital Markets on May 19,

2005, as amended effective December 31, 2009.

       99.     Penson sublets space to SAMCO Capital Markets at the Company’s principal

offices at 1700 Pacific Avenue in Dallas, Texas and at One Penn Plaza, in New York, NY. In

2010, for occupying the 20th floor of the Company’s Dallas office, SAMCO Capital Markets



                                    Plaintiff’s Verified Shareholder Derivative Petition – Page 36
made payments totaling an incredible $122 to the landlord of that property. For occupying a

portion of Suite 5120 in the Company’s New York office, SAMCO Capital Markets made

minuscule payments totaling $169 to the landlord of that property. As a result of the entangling

relationship between Engemoen and Penson, and the substantial financial benefits Engemoen

receives from Penson, Engemoen lacks the necessary independence to render a disinterested

decision on Plaintiff’s demand.

       100.   Lastly, Plaintiff has not made a demand on the Board of Directors to bring the

causes of action alleged herein because such a demand would be a futile and useless act for the

following additional reasons:

       a.      Director Defendants, because of their inter-related business, professional
       and personal relationships, have developed debilitating conflicts of interest that
       prevent the Board members of the Company from taking the necessary and proper
       action on behalf of the Company as requested herein.

       b.      The Director Defendants of Penson, as more fully detailed herein,
       participated in, approved and/or permitted the wrongs alleged herein to have
       occurred and participated in efforts to conceal or disguise same. Each of the
       Director Defendants exhibited a sustained and systematic failure to fulfill their
       fiduciary duties, which could not have been an exercise of good faith business
       judgment and amounted to gross negligence and extreme recklessness.

       c.     In order to bring this suit, a majority of the Directors of Penson would be
       forced to sue themselves and persons with whom they have extensive business
       and personal entanglements, which they will not do, thereby excusing demand.

       d.     The acts complained of constitute violations of the fiduciary duties owed
       by Penson’s officers and directors and these acts are incapable of ratification.

       e.      Penson has been and will continue to be exposed to significant losses due
       to the wrongdoing complained of herein, yet the Director Defendants have not
       filed any lawsuits against themselves or others who were responsible for that
       wrongful conduct to attempt to recover for Penson any part of the damages
       Penson suffered and will suffer thereby.

       f.     The actions of the directors has impaired the Board’s ability to validly
       exercise its business judgment and rendered it incapable of reaching an
       independent decision as to whether to accept Plaintiff’s demands.

                                   Plaintiff’s Verified Shareholder Derivative Petition – Page 37
       g.     Any suit by the directors of Penson to remedy these wrongs would likely
       expose the Director Defendants and Penson to further violations of securities laws
       which could result in additional civil actions being filed against one or more of
       the Director Defendants thus they are hopelessly conflicted in making any
       supposedly independent determination as to whether to sue themselves.

       101.    Plaintiff has not made any demand on the shareholders of Penson to institute this

action since demand would be a futile and useless act for the following reasons:

       a.      Penson is a publicly held company with approximately 27.61 million
       shares outstanding, and thousands of shareholders;

       b      Making demand on such a number of shareholders would be impossible
       for Plaintiff, who has no way of finding out the names, addresses or phone
       numbers of all the shareholders; and

       c.     Making demand on all shareholders would force Plaintiff to incur huge
       expenses, assuming all shareholders could be individually identified.


                              COUNT I
      AGAINST ALL DEFENDANTS FOR BREACH OF FIDUCIARY DUTY FOR
          DISSEMINATING FALSE AND MISLEADING INFORMATION

       102.    Plaintiff incorporates by reference and realleges each and every allegation set

forth above, as though fully set forth herein.

       103.    As alleged in detail herein, each of the Defendants (and particularly Defendants

who were members of the Audit Committee) had a duty to ensure that Penson disseminated

accurate, truthful and complete information to its shareholders.

       104.    Defendants violated their fiduciary duties of care, loyalty, and good faith by

causing or allowing the Company to disseminate to Penson’s shareholders materially misleading

and inaccurate information through, inter alia, SEC filings and other public statements and

disclosures as detailed herein. These actions could not have been a good faith exercise of

prudent business judgment.



                                     Plaintiff’s Verified Shareholder Derivative Petition – Page 38
        105.    As a direct and proximate result of Defendants’ foregoing breaches of fiduciary

duties, the Company has suffered significant damages, as alleged herein.

                              COUNT II
     AGAINST ALL DEFENDANTS FOR BREACH OF FIDUCIARY DUTIES FOR
               FAILING TO MAINTAIN INTERNAL CONTROLS

        106.    Plaintiff incorporates by reference all preceding and subsequent paragraphs as if

fully set forth herein.

        107.    As alleged herein, each of the Defendants had a fiduciary duty to, among other

things, exercise good faith to ensure that the Company's financial statements were prepared in

accordance with GAAP, and, when put on notice of problems with the Company's business

practices and operations, exercise good faith in taking appropriate action to correct the

misconduct and prevent its recurrence.

        108.    Defendants willfully ignored the obvious and pervasive problems with Penson’

internal controls practices and procedures and failed to make a good faith effort to correct the

problems or prevent their recurrence.

        109.    As a direct and proximate result of the Defendants' foregoing breaches of

fiduciary duties, the Company has sustained damages.

                             COUNT III
     AGAINST ALL DEFENDANTS FOR BREACH OF FIDUCIARY DUTIES FOR
       FAILING TO PROPERLY OVERSEE AND MANAGE THE COMPANY

        110.    Plaintiff incorporates by reference and realleges each and every allegation

contained above, as though fully set forth herein.

        111.    Defendants owed and owe Penson fiduciary obligations.          By reason of their

fiduciary relationships, Defendants specifically owed and owe Penson the highest obligation of

good faith, fair dealing, loyalty and due care.



                                     Plaintiff’s Verified Shareholder Derivative Petition – Page 39
       112.    Defendants, and each of them, violated and breached their fiduciary duties of

care, loyalty, reasonable inquiry, oversight, good faith and supervision.

       113.    As a direct and proximate result of Defendants’ failure to perform their fiduciary

obligations, Penson has sustained significant damages, not only monetarily, but also to its

corporate image and goodwill.

       114.    As a result of the misconduct alleged herein, Defendants are liable to the

Company.

       115.    Plaintiff, on behalf of Penson, has no adequate remedy at law.

                                COUNT IV
              AGAINST ALL DEFENDANTS FOR UNJUST ENRICHMENT

       116.    Plaintiff incorporates by reference and realleges each and every allegation set

forth above, as though fully set forth herein.

       117.    By their wrongful acts and omissions, the Defendants were unjustly enriched at

the expense of and to the detriment of Penson.

       118.    Plaintiff, as a shareholder and representative of Penson, seek restitution from

these Defendants, and each of them, and seek an order of this Court disgorging all profits,

benefits and other compensation obtained by these Defendants, and each of them, from their

wrongful conduct and fiduciary breaches.

                                 COUNT V
               AGAINST ALL DEFENDANTS FOR ABUSE OF CONTROL

       119.    Plaintiff incorporates by reference and realleges each and every allegation

contained above, as though fully set forth herein.

       120.    Defendants’ misconduct alleged herein constituted an abuse of their ability to

control and influence Penson, for which they are legally responsible. In particular, Defendants



                                     Plaintiff’s Verified Shareholder Derivative Petition – Page 40
abused their positions of authority by causing or allowing Penson to misrepresent material facts

regarding its financial position and business prospects.

       121.    As a direct and proximate result of Defendants’ abuse of control, Penson has

sustained significant damages.

       122.    As a result of the misconduct alleged herein, Defendants are liable to the

Company.

       123.    Plaintiff, on behalf of Penson, has no adequate remedy at law.

                                COUNT VI
            AGAINST ALL DEFENDANTS FOR GROSS MISMANAGEMENT

       124.    Plaintiff incorporates by reference and realleges each and every allegation set

forth above, as though fully set forth herein.

       125.    Defendants had a duty to Penson and its shareholders to prudently supervise,

manage and control the operations, business and internal financial accounting and disclosure

controls of Penson.

       126.    Defendants, by their actions and by engaging in the wrongdoing described herein,

abandoned and abdicated their responsibilities and duties with regard to prudently managing the

businesses of Penson in a manner consistent with the duties imposed upon them by law. By

committing the misconduct alleged herein, Defendants breached their duties of due care,

diligence and candor in the management and administration of Penson’s affairs and in the use

and preservation of Penson’s assets.

       127.    During the course of the discharge of their duties, Defendants knew or recklessly

disregarded the unreasonable risks and losses associated with their misconduct, yet Defendants

caused Penson to engage in the scheme complained of herein which they knew had an




                                     Plaintiff’s Verified Shareholder Derivative Petition – Page 41
unreasonable risk of damage to Penson, thus breaching their duties to the Company. As a result,

Defendants grossly mismanaged Penson.

                             COUNT VII
        AGAINST ALL DEFENDANTS FOR WASTE OF CORPORATE ASSETS

       128.    Plaintiff incorporates by reference and realleges each and every allegation

contained above, as though fully set forth herein.

       129.    As a result of the misconduct described above, and by failing to properly consider

the interests of the Company and its public shareholders, Defendants have caused Penson to

incur (and Penson may continue to incur) significant legal liability and/or legal costs to defend

itself as a result of Defendants’ unlawful actions.

       130.    As a result of this waste of corporate assets, Defendants are liable to the

Company.

       131.    Plaintiff, on behalf of Penson, has no adequate remedy at law.

                                     PRAYER FOR RELIEF

       WHEREFORE, Plaintiff demands judgment as follows:

       A.      Against all Defendants and in favor of the Company for the amount of damages

sustained by the Company as a result of Defendants’ breaches of fiduciary duties;

       B.      Directing Penson to take all necessary actions to reform and improve its corporate

governance and internal procedures to comply with applicable laws and to protect the Company

and its shareholders from a repeat of the damaging events described herein;

       C.      Awarding to Penson restitution from Defendants, and each of them, and ordering

disgorgement of all profits, benefits and other compensation obtained by the Defendants;

       D.      Awarding to Plaintiff the costs and disbursements of the action, including

reasonable attorneys’ fees, accountants’ and experts’ fees, costs, and expenses; and

                                     Plaintiff’s Verified Shareholder Derivative Petition – Page 42
E.     Granting such other and further relief as the Court deems just and proper.

                           JURY TRIAL DEMANDED

Plaintiff demands a trial by jury.




                             Plaintiff’s Verified Shareholder Derivative Petition – Page 43
E.     Granting such other and further relief as the Court deems just and proper.

                           JURY TRIAL DEMANDED

Plaintiff demands a trial by jury.




                             Plaintiff’s Verified Shareholder Derivative Petition – Page 43

								
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