1 Bank Depository User Group Annual Seminar Improving Settlement Distributions: An Ongoing Dialogue Francis E. McGovern Professor of Law Duke University Law School Scottsdale, Arizona September 16, 2008

2 Progress-to-Date Gathering stakeholder perspectives –Claims Administrators Conference, San Francisco, February 2008 –Institutional Filers Conference, New York, September 2008 Identifying issues and reform options −Bottom-up Beginning to make improvements to meet the needs of stakeholders

3 Trends and Variation in Securities Litigation Economic conditions Changes in the securities industry −Growth in transactions −New products and services Responses of investors, regulators and lawmakers

4 Federal Securities Class Action Filings by Year Source: Cornerstone Research, 2008

5 Variation in Response Rates Is Not Well Understood Global Fannie Mae

6 Changing Method and Message Can Impact the Outcome Response Rates SettlementPhase IPhase II Fannie Mae23% Global Research Analyst 44%70% cumulative 47% among Phase I non-filers MasterCard/Visa90,00010 million

7 Inherent Tensions in the Distribution of Securities Settlements Efficiency –Time to distribute – Administrative and other costs – Burden of proof Equity – Adequate and informative notice – Filing rates among harmed investors – Excluding ineligible and fraudulent claims – Percent of monies distributed Stakeholders perspectives vary

Claims Administrators Conference San Francisco, CA February 21-22, 2008

9 Conference Goals Explore strengths and weaknesses from multiple perspectives −Traditional claims process −Recent innovations Identify issues and problems that should be addressed Discuss trade-offs Plan a process for continued identification of possible improvements

10 Institutional Filers Panel Jodi Carman Kortsha, Arbor Capital Management, LLC Alyson Grossberg, State Street Bank and Trust Co. Mike Kania, BNY Mellon Asset Services Adam Savett, RiskMetrics Group, Inc. Deborah Sturman, Esq., Sturman, LLC Joseph Swanson, Northern Trust Corp.

11 Conference Products Summary of conference proceedings –Identified issues –To request a copy Continue dialogue to identify and implement solutions with stakeholders –Advisory Group plans fall conference in New York Settlement Fund Clearinghouse

12 AGENDA Thursday, September 25 th 9:00 - 9:05 am WELCOME AND OBJECTIVES OF THE CONFERENCE Francis McGovern, Professor of Law, Duke University School of Law Chris Ritchie, Senior Vice President, Citizens Bank 9:05 - 9:50 am PERSPECTIVES FROM REGULATORS SEC, FTC, FINRA, and New York Attorney General 9: :00 am TENSIONS IN THE DISTRIBUTION PROCESS Francis McGovern 10: :15 am BREAKOUT GROUPS: NOTICE Five groups to discuss issues and options surrounding Notice 11: :00 pm GROUP REPORTS AND DISCUSSION: NOTICE

13 AGENDA Thursday, September 25 th, Cont. 1:00 - 2:00 pm BREAKOUT GROUPS: FILING Five groups to discuss issues and options surrounding Filing 2:15 - 3:00 pm GROUP REPORTS AND DISCUSSION: FILING 3:00 – 4:00 pm BREAKOUT GROUPS: PAYMENT Five groups to discuss issues and options surrounding Payment 4:15 – 5:00 pm GROUP REPORTS AND DISCUSSION: PAYMENT 5:00 pm CLOSING REMARKS

14 Conference Goal Is to Seek Workable Solutions Notice Issues −Duplication vs. adequacy −Legal accuracy vs. clarity −Optimal timing

15 Conference Goal Is to Seek Workable Solutions Filing and Processing Issues −Response rates −Adequate vs. burdensome proof −Validity and accuracy vs. risk of fraud and costs

16 Conference Goal Is to Seek Workable Solutions Payment Distribution Issues − Percentage of investors paid vs. percentage of loss paid per claim − Residual funds vs. second distribution costs

17 Settlement Fund Clearinghouse

18 Home Page

19 Individual Settlement

20 Calendar

21 Calendar

22 Registration

23 Registration

24 Contact Information Website Launch Coming in October: To Request a Registration Form

25 Next Steps  Judges conference in Spring 2009  Attorneys conference in Spring 2009  Other mechanisms for implementing improvements