Capital Markets
Exhibit 4: Selected Historical SEC Settlements – U.S. Financial Services Sector
US$ in millions, unless otherwise stated
Date of Fine
Complaint Name of Entity Imposed Allegation
9/24/2001 Chase Manhattan Bank $1 Alleging that Chase committed recordkeeping and reporting violations while acting as a
registered transfer agent for numerous corporate and municipal bond issues.
1/22/2002 Credit Suisse First Boston Corporation $100 Alleging violations of certain Conduct Rules of the National Association of Securities Dealers, Inc.
("NASD"), and of books and records requirements under the federal securities laws. Given the
nature and scale of the misconduct alleged in the Complaint, the Commission determined to
seek an injunction based, in part, on violations of NASD Conduct Rules. According to the
Complaint, in exchange for shares in "hot" IPOs, CSFB wrongfully extracted from certain
customers a large portion of the profits that those customers made by immediately selling
("flipping") their IPO stock. The profits were channeled to CSFB in the form of excessive
brokerage commissions generated by the customers in unrelated securities trades that the
customers effected solely to share the IPO profits with CSFB.
3/17/2003 Merrill Lynch $80 The Securities and Exchange Commission today charged Merrill Lynch & Co., Inc. and four of its
former senior executives with aiding and abetting Enron Corp.'s securities fraud. The
Commission's complaint, filed in U.S. District Court in Houston, alleges that Merrill Lynch and its
former executives aided and abetted Enron Corp.'s earnings manipulation by engaging in two
fraudulent year-end transactions in 1999. The transactions had the purpose and effect of
overstating Enron's reported financial results. Specifically, Enron used these transactions to add
approximately $60 million to its fourth quarter of 1999 income (improving net income from $199
million to $259 million or 33 percent) and to increase its full year 1999 earnings per share from
$1.09 to $1.17.
7/28/2002 JP Morgan Chase & Co. $135 The Securities and Exchange Commission ("Commission") today charged J.P. Morgan Chase &
Co. with aiding and abetting Enron Corp.'s securities fraud. The Commission's complaint, filed in
U.S. District Court in Houston, alleges that J.P. Morgan Chase aided and abetted Enron's
manipulation of its reported financial results through a series of complex structured finance
transactions, called "prepays," over a period of several years preceding Enron's bankruptcy.
10/1/2003 J.P. Morgan Securities Inc. $25 The Securities and Exchange Commission ("Commission") announced the filing of a settled civil In settlement of this matter, J.P. Morgan has consented, without admitting or denying the
injunctive action in federal court against J.P. Morgan Securities Inc. ("J.P. Morgan"), a subsidiary allegations of the complaint, to a final judgment that would permanently enjoin J.P. Morgan
of J.P. Morgan Chase & Co., relating to the firm's allocation of stock to institutional customers in from violating Rule 101 of the Commission's Regulation M and NASD Conduct Rule 2110,
initial public offerings ("IPOs") it underwrote during 1999 and 2000. Alleges that J.P. Morgan
violated Rule 101 of Regulation M under the Securities Exchange Act of 1934 by attempting to
induce certain customers who received allocations of IPOs to place purchase orders for
additional shares in the aftermarket. The complaint further alleges that J.P. Morgan did in fact
induce certain customers to place such orders and such customers often purchased stock during
the new issues' first few trading days. The Commission's complaint also alleges that, in another
instance, J.P. Morgan violated NASD Conduct Rule 2110, which requires member firms to
observe just and equitable principles of trade, by persuading one or more customers in July
1999, to accept an allocation of a "cold" IPO (i.e., one where there is little interest in IPO shares) by
Source: SEC
5
Settlement/Order Date of Settlement
Chase consented to the cease-and-desist order without admitting or denying the findings in 9/24/2001
the order. The Commission thanks the Federal Reserve Bank of New York and the State of
New York Banking Department for their assistance in this matter. Chase consented to the
imposition of the penalty without admitting or denying the allegations in the Complaint.
Chase, a New York banking corporation wholly owned by J.P. Morgan Chase & Co., and
based in New York, New York, is a registered transfer agent.
CSFB agreed (1) to pay a total of $100 million in the Commission's action and in a related 1/22/2001
action announced today by the National Association of Securities Dealers Regulation, Inc.
("NASDR"); (2) to be enjoined by a federal court from future violations; and (3) to adopt
extensive new policies and procedures. The $100 million payment is composed of $70
million in disgorgement of improper gains, and $30 million in civil penalties or fines. CSFB
has agreed to settle the Commission's action and has consented, without admitting or
denying the allegations of the Complaint, to the entry of a final judgment that: (1)
permanently enjoins CSFB, directly or indirectly, from certain violations of NASD Conduct
Rules thereunder; (2) orders disgorgement of $70 million, which would be reduced to $35
million in recognition of CSFB's anticipated payment of $35 million in disgorgement to
NASDR in a related NASDR proceeding against CSFB; (3) orders a civil penalty of $30
million pursuant to Section 21(d).
Simultaneous with the filing of this action, the Commission has agreed to accept Merrill 3/17/2003
Lynch's offer to settle this matter. Merrill Lynch, without admitting or denying the allegations
in the complaint, has agreed to pay $80 million dollars in disgorgement, penalties and
interest and has agreed to the entry of a permanent anti-fraud injunction prohibiting future
violations of the federal securities laws.
Simultaneous with the filing of the complaint, J.P. Morgan Chase agreed to file a consent 7/28/2002
and final judgment settling the Commission's action against it. In the consent, J.P. Morgan
Chase has agreed, without admitting or denying the allegations of the complaint, to the
entry of a final judgment permanently enjoining it from future violations of Section 10(b) of
the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. J.P. Morgan Chase
also has agreed to pay disgorgement, penalties and interest in the amount of $135 million.
The Commission intends to have these funds paid into a court account pursuant to the Fair
Fund provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002 for ultimate
distribution to victims of the fraud.
and order it to pay a $25 million civil penalty. The settlement terms are subject to approval
by the court.
19 April 2010
Capital Markets
Exhibit 5 Selected Historical SEC Settlements – U.S. Financial Services Sector
US$ in millions, unless otherwise stated
Date of Fine
Complaint Name of Entity Imposed Allegation
1/25/2005 Morgan Stanley $40 In its complaint, the Commission alleges that Morgan Stanley violated Rule 101 of Regulation M
under the Securities Exchange Act of 1934 by attempting to induce certain customers who
received allocations of IPOs to place purchase orders for additional shares in the aftermarket.
The complaint further alleges that Morgan Stanley did induce certain customers to place such
orders during the new issues' first few trading days.
1/25/2005 Goldman Sachs & Co. $40 In connection with this matter, the Commission today filed a Complaint against Goldman Sachs
in the U.S. District Court for the Southern District of New York alleging that Goldman Sachs
violated Rule 101 of Regulation M under the Securities Exchange Act of 1934 by unlawfully
attempting to induce, or inducing, certain customers to purchase stock in the aftermarket of
certain IPOs underwritten by Goldman Sachs during 1999 and 2000.
6/2/2005 Huntington Bancshares $8 In 2001 and 2002 Huntington reported inflated earnings in its financial statements, enabling
Huntington to meet or exceed Wall Street analyst earnings per share ("EPS") expectations and
internal EPS targets that determined bonuses for senior management. In a related settled
administrative proceeding, the Commission charged that in 2001 and 2002 Huntington violated
the Securities Act of 1933 ("Securities Act") and the Securities Exchange Act of 1934 ("Exchange
Act"),thereunder; that Hoaglin violated Exchange Act Rule 13a-14 (the Sarbanes-Oxley provision
that requires a CEO and CFO to certify the accuracy of a public company's financial statements)
with respect to fiscal year 2002; that McMennamin and Van Fleet violated Securities Act and
Exchange Act in 2001 and 2002; and that McMennamin directly violated Exchange Act Rule 13a-
14 in 2002. Each respondent has agreed to cease and desist from committing and/or causing the
violations charged as well as any future violations of these provisions.
2/9/2006 AIG $800 The Commission’s complaint, filed today in federal court in Manhattan, alleges that AIG’s
reinsurance transactions with General Re Corporation (Gen Re) were designed to inflate falsely
AIG’s loss reserves by $500 million in order to quell analyst criticism that AIG’s reserves had
been declining. The complaint also identifies a number of other transactions in which AIG
materially misstated its financial results through sham transactions and entities created for the
purpose of misleading the investing public.
5/10/2006 Morgan Stanley $15 Civil injunctive action against Morgan Stanley & Co. Incorporated (Morgan Stanley) for failing to
produce tens of thousands of e-mails during the Commission's IPO and Research Analyst
investigations from December 11, 2000 through at least July 2005.
5/23/2006 Federal National Mortgage Association $400 Alleged that Fannie Mae failed to comply with the accounting requirements of Statement of
Accounting Standards ("SFAS") 91, which requires companies to recognize loan fees, premiums
and discounts as an adjustment over the life of the applicable loans. Also alleges that Fannie
Mae failed to comply with the accounting requirements of SFAS 133, which governs the
accounting for derivative instruments and hedging activities. In addition the complaint also
alleged improper accounting practices involving the estimation and maintenance of the Loan
Loss Reserve, the process of classifying the company's portfolio securities, the amortization of
debt issuance costs, the consolidation of certain securitization transactions, the accounting for
Dollar Rolls, and the valuation of aircraft asset-backed securities, among others.
Source: SEC
6
Settlement/Order Date of Settlement
In settlement of this matter, Morgan Stanley has consented, without admitting or denying 1/25/2005
the allegations of the complaint, to a final judgment that would permanently enjoin Morgan
Stanley from violating Rule 101 of the Commission's Regulation M and order it to pay a $40
million civil penalty. The settlement terms are subject to court approval.
Goldman Sachs has agreed to a settlement in which it will pay a $40 million penalty and be 1/25/2005
enjoined from future violations of the applicable laws. The settlement is subject to court
approval.
Subject to court approval and without admitting or denying the allegations in the complaint, 6/2/2005
Huntington consented to pay a penalty of $7.5 million. In addition, Hoaglin, McMennamin,
and Van Fleet agreed to pay disgorgement, pre-judgment interest, and penalties in the
amounts of $667,609, $415,215, and $51,660, respectively. The penalties may be
distributed to harmed investors pursuant to the Sarbanes-Oxley Act of 2002.
The settlement is part of a global resolution of federal and state actions under which AIG 2/9/2006
will pay in excess of $1.6 billion to resolve claims related to improper accounting, bid
rigging and practices involving workers’ compensation funds. The settlement with the
Commission provides that AIG will pay $800 million, consisting of disgorgement of $700
million and a penalty of $100 million, and undertake corporate reforms designed to prevent
similar misconduct from occurring. The penalty amount takes into account AIG’s
substantial cooperation during the Commission’s investigation.
Morgan Stanley has agreed to settle this matter. Without admitting or denying the 5/10/2006
allegations of the complaint, Morgan Stanley has consented to a final judgment that
permanently enjoins Morgan Stanley from violating Section 17(b) of the Securities
Exchange Act of 1934 (Exchange Act) and Exchange Act Rule 17a-4(j) and orders the firm
to pay a $15 million civil penalty, $5 million of which will be paid to NASD and the New York
Stock Exchange, Inc. in separate related proceedings. Morgan Stanley also has agreed to
adopt and implement policies, procedures and training focused on the preservation and
production of e-mail communications. It will also hire an independent consultant to review
these reforms. The settlement terms are subject to court approval.
Commission filed a settled enforcement proceeding charging the Federal National 5/23/2006
Mortgage Association ("Fannie Mae"), a shareholder-owned government-sponsored
enterprise, with fraudulent accounting in violation of the anti-fraud, books and records,
internal controls and reporting provisions of the Securities Exchange Act of 1934 (the
"Exchange Act") and the anti-fraud provisions of the Securities Act of 1933 (the "Securities
Act"). In a related proceeding, the Office of Federal Housing Enterprise Oversight
("OFHEO") reached a settlement with Fannie Mae. As a result of its settlement with both
OFHEO and the Commission, Fannie Mae will pay a total civil penalty of $400 million to the
U.S. government.
19 April 2010
Capital Markets
Exhibit 6: Selected Historical SEC Settlements – U.S. Financial Services Sector
US$ in millions, unless otherwise stated
Date of Fine
Complaint Name of Entity Imposed Allegation
12/20/2006 Friedman Billings Ramsey & Co $4 Alleged that FBR, in connection with a Private Investment in Public Equity (PIPE) offering: (i)
failed to establish, maintain and enforce policies and procedures reasonably designed to prevent
the misuse of material, nonpublic information; (ii) unlawfully traded while aware of material,
nonpublic information; and (iii) conducted unregistered sales of securities.
1/29/2007 MBIA $51 Alleging securities fraud charges against MBIA Inc., one of the nation's largest insurers of
municipal bonds, arising out of a sham reinsurance transaction that was restated in 2005, which
the Company had previously entered into to avoid having to recognize a $170 million loss.
2/7/2007 First Bancorp $9 Alleged that former senior management of the NYSE-listed, Puerto Rico-based bank holding
company concealed the true nature of more than $4 billion worth of transactions involving “non-
conforming” mortgages from 2000 until 2005. The Commission’s complaint, which was filed in
the United States District Court for the Southern District of New York, charges First BanCorp with
aiding and abetting violations of the Securities Exchange Act of 1934.
10/12/2007 HSBC Bank USA $11 For allowing its name and logo to be used in connection with a Florida-based offering fraud by
Pension Fund of America, L.C. (Pension Fund). According to the Commission's Complaint,
HSBC allowed the use of its name and logo in Pension Fund's offering materials. HSBC also
allowed Pension Fund to use marketing materials that falsely suggested that the trust plans were
co-developed by HSBC and Pension Fund, and that investors' funds would be "totally safe"
because the money would be deposited in a trust account at HSBC.
12/11/2008 UBS Securities LLC and Citigroup Global $28 Citi and UBS misrepresented to customers that ARS were safe, highly liquid investments that
Markets, Inc. were comparable to money markets.
12/11/2008 Zurich Financial Services $26 The Commission’s complaint alleges that Zurich aided and abetted Converium’s violation of
Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. aiding and
abetting a fraud by Converium Holding AG involving the use of finite reinsurance transactions to
inflate improperly Converium’s financial performance.
Source: SEC
7
Settlement/Order Date of Settlement
Without admitting or denying the allegations in the complaint, FBR consented to the entry 12/20/2006
of a final judgment, subject to the court's approval, in which it is: permanently enjoined from
further violations of Sections 5 and 17(a) of the Securities Act and Sections 10(b) and 15(f)
of the Exchange Act and Rule 10b-5 thereunder; and ordered to pay disgorgement of its
trading profits and placement agent fees, plus prejudgment interest, and civil penalties
totaling $3,755,839. FBR also has consented to the entry of a Commission order censuring
FBR and ordering it to comply with certain undertakings. Without admitting or denying the
allegations in the complaint, Friedman consented to the entry of a final judgment, in which
he is: permanently enjoined from violating Section 5 of the Securities Act and, as a
controlling person, from violating Sections 10(b) and 15(f) of the Exchange Act and Rule
10b-5 thereunder; and ordered to pay civil penalties of $754,046. Friedman also consented
to the entry of a Commission order barring him from association in a supervisory capacity
with any broker or dealer.
Under the settlement, MBIA consents to the entry of a final judgment directing it to pay a 1/29/2007
$50 million penalty plus $1 in disgorgement and, in a related administrative proceeding,
consents to a cease-and-desist order and to retain an independent consultant to examine a
number of other specified transactions to which MBIA was a party.
Without admitting or denying the Commission’s charges, First BanCorp consented to being 2/7/2007
permanently enjoined from violating those antifraud, reporting, books and records and
internal control provisions of the federal securities laws and to paying an $8.5 million civil
penalty.
The Final Judgment was entered in the civil case with HSBC's consent, without admitting 10/12/2007
or denying the allegations of the Commission's Complaint. The Final Judgment orders
HSBC to pay a total of approximately $10.5 million, which will be paid into a Fair Fund for
the benefit of investors injured in the Pension Fund offering fraud. The Securities and
Exchange Commission ("Commission") announced today that on September 25, 2007, the
District Court for the Southern District of Florida entered a Final Judgment in its settled civil
action against HSBC Bank USA, N.A. ("HSBC"), imposing a $10 million penalty and
ordering HSBC to pay disgorgement in the amount of $463,893, with prejudgment interest
of $36,667
Both Citi and UBS will also be permanently enjoined from violating the provisions of Section 12/11/2008
15(c) of the Exchange Act of 1934, which prohibit the use of manipulative or deceptive
devices by broker-dealers. Both firms also face the prospect of financial penalties to the
Commission. After the buy back periods are substantially complete, the Commission may
consider imposing a financial penalty against Citi and/or UBS based on the traditional
factors the Commission considers for penalties and based on whether the individual firm
has fulfilled its obligations under its settlement agreement.
In connection with the settlement, Zurich has agreed, without admitting or denying the 12/11/2008
allegations in the Commission’s complaint, to pay a $25 million penalty, plus $1 in
disgorgement. In a related administrative proceeding, Zurich has also agreed, without
admitting or denying the Commission’s findings, to the issuance of an order that requires
Zurich to cease and desist from committing or causing any violation and any future violation
of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
19 April 2010
Capital Markets

Exhibit 7: Selected Historical SEC Settlements – U.S. Financial Services Sector

US$ in millions, unless otherwise stated
Date of Fine
Complaint Name of Entity Imposed Allegation Settlement/Order Date of Settlement
2/18/2009 UBS AG $200 Alleges that UBS's conduct facilitated the ability of certain U.S. clients to maintain undisclosed To settle these charges, UBS has consented to the entry of a final judgment that (1) 2/18/2009
accounts in Switzerland and other foreign countries, which enabled those clients to avoid paying permanently enjoins UBS from further violation of those provisions; (2) orders it to pay
taxes related to the assets in those accounts. As charged in the SEC's complaint, as a result of $200 million in disgorgement, to be paid together with an additional $180 million in
its conduct, UBS violated Section 15(a) of the Securities Exchange Act of 1934 and Section disgorgement that will be paid as part of a settlement of a related criminal investigation;
203(a) of the Investment Advisers Act of 1940. and (3) orders UBS to comply with its undertakings to terminate its U.S. cross-border
business and to retain an independent consultant to conduct an examination of UBS's
termination of the business. In connection with a related criminal investigation, UBS has
entered into a deferred prosecution agreement with the Department of Justice pursuant to
which UBS will pay an additional $180 million in disgorgement, as well as $400 million in
tax-related payments.
6/3/2009 Banc of America Securities LLC, RBC $7 Bank of America, RBC and Deutsche Bank will also be permanently enjoined from violating the The settlements, which are subject to court approval, will restore approximately $4.5 billion 6/3/2009
Capital Markets Corporation, Deutsche provisions of Section 15(c) of the Exchange Act of 1934, which prohibit the use of manipulative or in liquidity to Bank of America customers, $800 million in liquidity to RBC customers and
Bank Securities Inc. deceptive devices by broker-dealers. The Commission reserves the right to seek a financial $1.3 billion in liquidity to Deutsche Bank customers. Previously, on October 8, 2008, the
penalty against the firms. Commission’s Division of Enforcement announced preliminary settlements with Bank of
America and RBC. Bank of America, RBC and Deutsche Bank agreed to be permanently
enjoined from violations of the broker-dealer fraud provisions and to comply with a number
of undertakings, some of which are set forth below.

8/3/2009 Bank of America Corp. $33 Misleading investors about billions of dollars in bonuses that were being paid to Merrill Lynch & The Securities and Exchange Commission today filed a motion seeking court approval of a 2/4/2010
Co. executives at the time of its $50 billion acquisition of the firm. proposed settlement whereby Bank of America will pay $150 million and strengthen its
corporate governance and disclosure practices to settle SEC charges that the company
failed to properly disclose employee bonuses and financial losses at Merrill Lynch before
shareholders approved the merger of the companies in December 2008.

1/20/2010 General Re Corporation $12 The complaint alleges that a foreign subsidiary of Gen Re entered into two sham “reinsurance”
transactions with AIG in 2000 to improperly allow AIG to reverse the declining reserve trend and
falsely report additions to both loss reserves and premiums written. Senior officials at Gen Re
helped AIG structure the two sham transactions. The contracts show reinsurance transactions
that appeared to transfer risk to AIG, but the transactions did not transfer risk.
Without admitting or denying the allegations in the complaint, Gen Re has consented to a 1/20/2010
judgment enjoining it from aiding and abetting violations of Sections 13(b)(2)(A) and
13(b)(2)(B) of the Securities Exchange Act of 1934 and directing it to pay $12.2 million in
disgorgement and prejudgment interest. The settlement is subject to court approval.

2/4/2010 State Street Bank and Trust Company $57 The Commission today instituted related cease-and-desist proceedings against State Street
concerning the same conduct. In connection with these proceedings, State Street agreed to an
order requiring it to cease and desist from committing or causing any violations and any future
violations the Securities Act of 1933. misleading investors during the subprime mortgage crisis in
2007 about the extent of subprime mortgage-backed securities held in certain funds under its
management, and then selectively disclosing more complete information about subprime
investments to certain investors.
Without admitting or denying the allegations of the complaint, State Street consented to the 2/4/2010
entry of a final judgment ordering it to pay a civil penalty of $50 million, disgorgement of
$7,331,020, and $1,019,161 in prejudgment interest. These amounts will be paid into a
Fair Fund and for the benefit of harmed investors, together with an additional amount of
$255,240,472 that State Street has agreed to pay to compensate harmed investors. State
Street also gets credit for having already paid over $340 million to some harmed investors
through settlements of private actions, resulting in total compensation to injured investors
of $663,191,540

19 April 2010
Source: SEC
8