UNITED STATES OF AMERICA
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UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
ADMINISTRATIVE PROCEEDING
File No. 3-15635
In the Matter of
Fifth Third Bancorp and Daniel
Poston,
Respondents.
I.
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PROPOSED PLAN OF
DISTRIBUTION
OVERVIEW
1.
The Division of Enforcement submits this Proposed Plan of Distribution (the
“Plan”) to the United States Securities and Exchange Commission (the “Commission”) pursuant
to Rule 1101 of the Commission’s Rules on Fair Fund and Disgorgement Plans (the
“Commission’s Rules”), 17 C.F.R. § 201.1101. This Plan provides for the distribution of a Fair
Fund (the “Fair Fund”), comprised of civil money penalties paid by Fifth Third Bancorp (“Fifth
Third”) and Daniel Poston (“Poston”) (collectively, the “Respondents”) in the above-captioned
matter.1
2.
As described more specifically below, the Plan seeks to compensate investors
who were harmed by the Respondents’ failure to record substantial losses during the 2008
financial crisis by not properly classifying and accounting for a portion of its commercial real
estate loan portfolio. As calculated using the methodology detailed in the Plan of Allocation
(attached as Exhibit A), investors will be compensated for their losses on shares of Fifth Third
Bancorp common stock, American Depositary Shares of Series F and Series G preferred stock
that were purchased, as well as related warrants that were granted, between October 21, 2008 and
January 22, 2009 (the “Relevant Period”). In the view of the Commission staff and the Fund
Administrator, this methodology constitutes a fair and reasonable allocation of the Fair Fund.
3.
The Commission has custody of the Fair Fund and shall retain control of the
assets of the Fair Fund. The Plan is subject to approval by the Commission, and the Commission
retains jurisdiction over its implementation.
1
See Order Instituting Public Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the
Securities Act of 1933 and Sections 4C and 21C of the Securities Exchange Act of 1934 and Rule 102(e) of the
Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions and Cease-and-Desist Orders
and Penalties, Securities Act Rel. No. 9490 (Dec. 4, 2013) (the “Order”).
II.
BACKGROUND
4.
On December 4, 2013, the Commission issued the Order instituting and
simultaneously settling an accounting fraud action against the Respondents. In the Order, the
Commission made the following findings. It found that Fifth Third failed to record substantial
losses during the 2008 financial crisis by not properly accounting for a portion of its commercial
real estate loan portfolio. In the third quarter of 2008, Fifth Third decided to sell large pools of
non-performing commercial loans. U.S. accounting rules required the company to reclassify the
loans from “held for investment” to “held for sale” and to carry them at fair value. Because the
fair value of these loans was significantly below Fifth Third’s carrying value, classifying them as
held for sale would have resulted in a $169 million impairment and increased the company’s
pretax loss in the third quarter of 2008 by 132 percent. Instead, Fifth Third continued to classify
the loans as “held for investment,” which incorrectly suggested that the company had not made
the decision to sell the loans. In addition, according to the Order, Fifth Third’s Chief Financial
Officer Poston was familiar with the company’s loan sale efforts and understood the relevant
accounting rules. Nevertheless, he failed to direct that Fifth Third classify the loans as required.
Poston also made representations in a management letter to Fifth Third’s auditors that, in light of
the company’s loan sale activities, were not true. Fifth Third’s and Poston’s accounting
violations operated to deceive investors during a time of significant upheaval and financial
distress for the company. In total, the Commission ordered the Respondents to pay $6,600,000
in civil money penalties to the Commission.
5.
On July 28, 2021, the Commission issued an order2 that created the Fair Fund,
pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalties paid can be
distributed to harmed investors.
6.
The Respondents have paid in full. The Fair Fund has been deposited at the
United States Department of the Treasury (“U.S. Treasury”) Bureau of the Fiscal Service
(“BFS”) for investment, and any accrued interest will be for the benefit of the Fair Fund.
III.
DEFINITIONS
As used in this Plan, the following definitions will apply:
7.
“Administrative Costs” shall mean any administrative costs and expenses,
including without limitation the fees and expenses of the Tax Administrator and the Fund
Administrator, tax obligations, bond premium expenses, and investment and banking costs.
8.
“Claim Form” means the form designed by the Fund Administrator, in
consultation with the Commission staff, for the filing of claims in accordance with this Plan.
The claim form will require, at a minimum, sufficient documentation reflecting any Preliminary
Claimant’s purchases and dispositions of Securities during the Relevant Period such that
eligibility under the Plan can be determined, tax identification and other related information from
the Preliminary Claimant as determined necessary by the Fund Administrator in coordination
2
Order Establishing a Fair Fund, Exchange Act Rel. No. 92511 (July 28, 2021).
2
with the Tax Administrator, and a certification that the Preliminary Claimant is not an Excluded
Party.
9.
“Claim Status Notice” means the notice sent by the Fund Administrator within
ninety (90) days of the Claims Bar Date to any Preliminary Claimant that submitted a deficient
Claim Form. The Claim Status Notice will provide to each Preliminary Claimant whose claim is
deficient, in whole or in part, the reason(s) for the deficiency and in the event the claim is denied,
the Claim Status Notice will state the reason(s) for such denial. The Claim Status Notice will
also notify the Preliminary Claimant of the opportunity to cure any deficiency, request
reconsideration, or dispute the determination made by the Fund Administrator and provide
instructions regarding what is required to do so.
10.
“Claims Bar Date” means the date established in accordance with this Plan by
which a Preliminary Claimant’s Claim Form must be postmarked or submitted electronically in
order to receive consideration under the Plan. The Claims Bar Date shall be one hundred twenty
(120) days after the initial mailing of the Plan Notice. Claim Forms submitted by Preliminary
Claimants postmarked or received after the Claims Bar Date will not be accepted unless the Fund
Administrator is directed to do so by the Commission staff.
11.
“Claims Packet” means the materials relevant to submitting a claim that will be
provided to Preliminary Claimants who request such materials through a website or otherwise
prior to the Claims Bar Date. The Claims Packet will include, at a minimum, a copy of the Plan
Notice and a Claim Form (together with instructions for completion of the Claim Form).
12.
“Determination Notice” shall mean the written notice sent by the Fund
Administrator to all Preliminary Claimants who timely submitted a Claim Form notifying the
Preliminary Claimant of its eligibility determination. The Determination Notice will further
provide each Preliminary Claimant that is determined to be an Eligible Claimant with his, her, or
its calculated Recognized Loss. The Determination Notice will constitute the Fund
Administrator’s final ruling regarding the eligibility status of the claim.
13.
“Distribution Payment” means a payment from the Fair Fund to a Payee in
accordance with the terms of this Plan.
14.
“Eligible Claimant” means a Preliminary Claimant, who is not an Excluded
Party, who submitted a valid Claim Form and has suffered a Recognized Loss, as calculated in
accordance with the Plan of Allocation.
15.
“Excluded Party” shall mean:
(a)
The Respondents;
(b)
Present or former officers or directors of Respondents or any assigns,
creditors, heirs, distributees, spouses, parents, siblings, dependent children
or controlled entities of any of the foregoing Persons or entities;
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(c)
Any employee or former employee of the Respondents or any of its
affiliates who has been terminated for cause or has otherwise resigned, in
connection with the conduct described in the Order;
(d)
Any Person who, as of the Claims Bar Date, has been the subject of
criminal charges related to the conduct described in the Order or any
related Commission action;
(e)
Any firm, trust, corporation, officer, or other entity in which Respondents
have or had a controlling interest;
(f)
The Fund Administrator, its employees, and those Persons assisting the
Fund Administrator in its role as the Fund Administrator; or
(g)
Any purchaser or assignee of another Person’s right to obtain a recovery
from the Fair Fund for value; provided, however, that this provision shall
not be construed to exclude those Persons who obtained such a right by
gift, inheritance or devise.
The Claim Form will require claimants to certify that they are not an Excluded Party. All
Excluded Parties will be deemed ineligible to participate in the distribution of the Fair Fund.
16.
“Fair Fund” means the fund created by the Commission pursuant to Section
308(a) of the Sarbanes-Oxley Act of 2002, for the benefit of investors harmed by Respondents’
violations described in the Order.
17.
“Net Available Fair Fund” means the Fair Fund, plus any interest or earnings,
less Administrative Costs.
18.
“Payee” means an Eligible Claimant whose Recognized Loss calculates, in
accordance with the Plan of Allocation, to a distribution amount equal to or greater than $10.00
who will receive a Distribution Payment.
19.
“Person” means natural individuals as well as legal entities such as corporations,
partnerships, or limited liability companies.
20.
“Plan Notice” means a written notice from the Fund Administrator to Preliminary
Claimants informing them of the Fair Fund; the Plan and its eligibility requirements; explaining
how to submit a claim, including instructions for any online claims process; and how to obtain a
copy of the approved Plan and Claim Form by request or from the Fair Fund’s website. The Plan
Notice will also be available on the Fair Fund’s website that is maintained by the Fund
Administrator.
21.
“Plan of Allocation” means the methodology used by the Fund Administrator to
determine if a Preliminary Claimant has suffered a Recognized Loss. The Plan of Allocation is
attached as Exhibit A.
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22.
“Preliminary Claimant” shall mean a Person, or their lawful successors,
identified by the Fund Administrator as having a possible claim to recover from the Fair Fund
under this Plan, or a Person asserting prior to the Claims Bar Date that he, she, or it has a
possible claim to recover from the Fair Fund under this Plan as a result of transactions in the
Securities during the Relevant Period.
23.
“Recognized Loss” means the amount of loss calculated in accordance with the
Plan of Allocation.
24.
“Relevant Period” means the period of time between October 21, 2008 and
January 22, 2009.
25.
“Securities” refers to shares of Fifth Third common stock listed on a U.S.
exchange and registered with the Commission and traded under the symbol FITB, American
Depositary Shares (“ADS”) of Series G preferred stock, Series F preferred shares and their
related warrants purchased by the U.S. Treasury as part of the Troubled Asset Relief Program.
26.
“Summary Notice” means the notice published in print or internet media that
shall include, at a minimum, a statement of the purpose of the Fair Fund and the Plan, the means
of obtaining a Claims Packet, and the Claims Bar Date. The Summary Notice will be published
in Investor’s Business Daily and PR Newswire one (1) time, and will appear within ten (10) days
of the initial mailing of the Plan Notice.
27.
“Third-Party Filer” means a third party, including without limitation a nominee,
custodian, or an intermediary holding in street name, who is authorized to submit and submits a
claim(s) on behalf of one or more Preliminary Claimants. Third-Party Filer does not include
assignees or purchasers of claims that are excluded from receiving Distribution Payments under
paragraph 15(g) above.
IV.
TAX COMPLIANCE
28.
On September 23, 2021, the Commission appointed Miller Kaplan Arase LLP as
the tax administrator (the “Tax Administrator”) for the Fair Fund to handle the tax obligations of
the Fair Fund.3 The Tax Administrator will be compensated for reasonable fees and expenses
from the Fair Fund in accordance with its 2019-2021 Engagement Letter Agreement with the
Commission.4
29.
The Fair Fund constitutes a Qualified Settlement Fund (“QSF”) under Section
468B(g) of the Internal Revenue Code of 1986, as amended, 26 U.S.C. § 468B(g), and related
regulations, 26 C.F.R. §§ 1.468B-1 through 1.468B-5. The Tax Administrator is the
administrator of such QSF, for purposes of Treas. Reg. § 1.468B-2(k)(3)(I) and shall satisfy the
3
See Order Appointing Tax Administrator, Exchange Rel. No. 93110 (Sept. 23, 2021).
See Omnibus Order Directing the Appointment of Tax Administrator in Administrative Proceedings that Establish
Distribution Funds, Exchange Act Rel. No. 85174 (Feb. 22, 2019).
4
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tax-related administrative requirements imposed by Treas. Reg. § 1.468B-2, including, but not
limited to:
(a)
Obtaining a taxpayer identification number;
(b)
Requesting funds necessary for the timely payment of all applicable taxes,
the payment of taxes for which the Tax Administrator has received funds,
and the filing of applicable returns; and
(c)
Fulfilling any information reporting or withholding requirements required
for distributions from the Fair Fund.
30.
All tax obligations will be paid from the Fair Fund, subject to the review and
approval of Commission staff.
V.
FUND ADMINISTRATOR
31.
On December 29, 2021, the Commission appointed Guidehouse, Inc., Baker &
Hostetler LLP, and Pace Claim Services LLC (“GBP”), as the fund administrator for the Fair
Fund (the “Fund Administrator”), and the Fund Administrator has obtained a bond in the amount
of $6,600,000, as ordered.5 Pursuant to Rule 1105(a) of the Commission’s Rules, 17 C.F.R. §
201.1105(a), the Fund Administrator may be removed at any time by order of the Commission or
hearing officer.
32.
The Fund Administrator will be responsible for administering the Fair Fund in
accordance with the Plan. This will include, among other things, taking reasonable steps to
identify and contact Preliminary Claimants; obtaining mailing information for Preliminary
Claimants; establishing a website and staffing a call center to address inquiries during the claims
process; developing a claims database; preparing accountings; cooperating with the tax
administrator appointed by the Commission to satisfy any tax liabilities and to ensure
compliance with income tax reporting requirements, including but not limited to Foreign
Account Tax Compliance Act (“FATCA”); advising Preliminary Claimants of deficiencies in
claims and providing an opportunity to cure any documentary defects; taking antifraud measures,
such as identifying false, ineligible, and overstated claims; making determinations under the
criteria established herein as to Preliminary Claimant eligibility; advising Preliminary Claimants
of final claim determinations; disbursing the Fair Fund in accordance with this Plan as ordered
by the Commission; and researching and reconciling errors and reissuing payments when
possible.
33.
To carry out the purposes of this Plan, the Fund Administrator is authorized to
make and implement immaterial changes to the Plan upon agreement of the Commission staff. If
a change is deemed to be material by the Commission staff, Commission approval is required
prior to implementation by amending the Plan.
5
See Order Appointing Fund Administrator and Setting Bond Amount, Exchange Act Rel. No. 93875 (Dec. 29,
2021).
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34.
The Fund Administrator may extend any procedural deadline contained in the
Plan for good cause shown, if agreed upon by the Commission staff.
35.
The Fund Administrator is authorized to enter into agreements with third parties
as may be appropriate or necessary in the administration of the Fair Fund, provided such third
parties are not excluded pursuant to other provisions of this Plan. In connection with such
agreements, the third parties shall be deemed to be agents of the Fund Administrator under this
Plan.
36.
The Fund Administrator will be entitled to payment from the Fair Fund of
reasonable fees and expenses, including the bond premium, incurred in the performance of its
duties (including any such fees and expenses incurred by agents, consultants or third parties
retained by the Fund Administrator in furtherance of its duties).
VI.
ADMINISTRATION OF THE FAIR FUND
Identification of and Notification to Preliminary Claimants
37.
The Fund Administrator will, insofar as practicable, use its best efforts to
identify Preliminary Claimants from a review of trading records, obtain records from
registered broker-dealers and investment advisors, and seek information from any other source
available to it. The Fund Administrator may also engage a third-party firm, after consultation
with, and approval of the Commission staff, to assist in identifying Preliminary Claimants to
maximize the participation rate of investors in the Fair Fund.
38.
Within sixty (60) days after Commission approval of the Plan, the Fund
Administrator shall:
(a)
design and submit a Claims Packet, including the Plan Notice and the
Claim Form, to the Commission staff for review and approval;
(b)
create a mailing and claim database of all Preliminary Claimants based
upon information identified by the Fund Administrator;
(c)
run a National Change of Address search to retrieve updated addresses for
all records in the database, thereby ensuring the mailing information for
Preliminary Claimants is up-to-date;
(d)
email and/or mail a Plan Notice to each Preliminary Claimant identified
by the Fund Administrator and to the Fund Administrator’s list of banks,
brokers, and other nominees in accordance with paragraph 43 below;
(e)
establish and maintain a website devoted solely to the Fair Fund. The Fair
Fund’s website, located at www.FifthThird.FundAdministratorGBP.com,
will make available a copy of the approved Plan; provide information
regarding the claims process and eligibility requirements for participation
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in the Fair Fund in the form of frequently asked questions; include in
downloadable form the Claim Form and other related materials; and such
other information the Fund Administrator believes will be beneficial to
Preliminary Claimants;
(f)
establish and maintain a toll-free telephone number, 1-833-373-3535, for
Preliminary Claimants to call to speak to a live representative of the Fund
Administrator during its regular business hours or, outside of such hours,
to hear prerecorded information about the Fair Fund. The toll-free number
will be listed on all correspondence from the Fund Administrator to
Preliminary Claimants as well as on the Fair Fund’s website; and
(g)
establish and maintain a traditional mailing address and an email address
which will be listed on all correspondence from the Fund Administrator to
Preliminary Claimants as well as on the Fair Fund’s website.
39.
The Fund Administrator will publish the Summary Notice on the internet and/or
in print media acceptable to Commission staff in Investor’s Business Daily and PR Newswire
one (1) time, and will appear within ten (10) days of the initial mailing of the Plan Notice.
40.
The Commission staff retains the right to review and approve any material posted
on the Fair Fund’s website, any material mailed, and any scripts used in connection with any
communication with Preliminary Claimants.
41.
In all materials that refer to the Claims Bar Date, the filing deadline will be
clearly identified with the calendar date, which is one hundred twenty (120) days from the date
of the initial mailing of the Plan Notice.
42.
The Fund Administrator will promptly provide a Claims Packet to any
Preliminary Claimant upon request made via mail, phone, or email prior to the Claims Bar Date.
43.
The Fund Administrator will send by mail, email, or other means, the Plan Notice
to the Fund Administrator’s list of banks, brokers, and other nominees, as well as any other
institutions identified during the outreach process that may have records of the Securities during
the Relevant Period (collectively, the “Nominees or Custodians”). The Fund Administrator will
request that these entities, to the extent that they were record holders for beneficial owners of the
Securities:
(a)
within fourteen (14) days of the Nominees’ or Custodians’ receipt of the
Plan Notice, notify and send the Plan Notice to the respective beneficial
owners, and, as requested, provide to the beneficial owners a Claims
Packet, so that the beneficial owners may timely file a claim. The burden
will be on the Nominees or Custodians to ensure the claims process
information, including, if requested, the Claims Packet and other relevant
materials, is properly disseminated to the beneficial owners; and/or
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(b)
provide to the Fund Administrator, within fourteen (14) days of receipt of
the Plan Notice, a list of last known names and addresses for all beneficial
owners for whom/which they purchased, as the record holder, the
Securities during the Relevant Period, so that the Fund Administrator can
communicate with the beneficial owners directly.
44.
At the discretion of the Fund Administrator, in consultation with the Commission
staff, a reasonable number of additional copies of the Claims Packet shall be made available to
any Nominee or Custodian requesting it for the purpose of distribution to beneficial owners.
45.
Requests to the Fund Administrator for additional copies of the Claims Packet in
excess of five hundred (500) are subject to approval by the Fund Administrator, in consultation
with the Commission staff.
46.
Documented reasonable out-of-pocket expenses incurred by the Nominees or the
Custodians, which would not have been incurred but for compliance with paragraph 44 above,
shall be reimbursed from the Fair Fund. The amount of such expenses allowed will be at the
discretion of the Fund Administrator, in consultation with the Commission staff. Unless
otherwise determined by the Fund Administrator in consultation with the Commission staff, outof-pocket expenses based on the following rates will be considered reasonable:
(a)
a maximum of $0.08 per Claims Packet, plus postage at the pre-sort
postage rate per Claim Packet actually mailed;
(b)
a maximum of $0.05 per email of Summary Notice or Plan Notice and
Claim Form link disseminated; or
(c)
$0.20 per name, address, and email address provided to the Fund
Administrator, up to a maximum of amount of $1,500.00.
47.
The Fund Administrator will attempt to locate any Preliminary Claimant whose
mailing is returned as “undeliverable” and will document all such efforts. The Fund
Administrator shall use its best efforts to make use of commercially available resources and other
reasonably appropriate means to obtain updated addresses in response to “undeliverable” notices,
and forward any returned mail for which an updated address is provided or obtained. The Fund
Administrator will make available, upon request by the Commission staff, a list of all
Preliminary Claimants whose Plan Notices have been returned as “undeliverable” due to
incorrect addresses and for which the Fund Administrator has been unable to locate current
addresses.
Filing a Claim
48.
To avoid being barred from asserting a claim, on or before the Claims Bar Date,
each Preliminary Claimant must submit to the Fund Administrator a properly completed Claim
Form reflecting such Preliminary Claimant’s claim, together with all required supporting
documentation as the Fund Administrator, in its discretion, deems necessary or appropriate to
9
substantiate the claim. Without limitation, this information may include third-party documentary
evidence of purchases and dispositions of Securities during the Relevant Period, as well as
holdings of Securities at pertinent dates.
49.
Electronic claims submission is strongly encouraged. The Plan Notice will
include directions on how Preliminary Claimants can submit their claims electronically via the
Fair Fund’s website. If using the web-based claim filing option, a Preliminary Claimant must
submit his, her, or its claim to the Fund Administrator by 11:59 p.m. Eastern Time on the Claims
Bar Date. The Plan Notice will also include directions for submission of claims if the
Preliminary Claimant is unable to submit his, her, or its claim electronically.
50.
The burden will be upon the Preliminary Claimant to ensure that his, her, or its
Claim Form has been properly and timely received by the Fund Administrator. A Claim Form
that is postmarked or otherwise received after the Claims Bar Date will not be accepted unless
the deadline is extended by the Fund Administrator for good cause shown, after consultation
with the Commission staff.
51.
All Claim Forms and supporting documentation necessary to determine a
Preliminary Claimant’s eligibility to receive a distribution from the Fair Fund under the terms of
the Plan must be endorsed by a declaration executed by the Preliminary Claimant under penalty
of perjury under the laws of the United States. The declaration must be executed by the
Preliminary Claimant, unless the Fund Administrator accepts such declaration from a Person
authorized to act on the Preliminary Claimant’s behalf, whose authority is supported by such
documentary evidence as the Fund Administrator deems necessary.
52.
When submitting claims to the Fair Fund on behalf of its clients, all Third-Party
Filers must use the electronic filing template provided by the Fund Administrator in this matter.
Third-Party Filers that do not comply with the template and format provided by the Fund
Administrator may be rejected. Third-Party Filers must also submit a signed master proof of
claim and release, as well as proof of authority to file on behalf of the claimant(s) at the time the
electronic file of transactions is submitted. Failure to do so may result in rejection of the claim.
53.
Each Third-Party Filer must establish the validity and amount of each claim in its
submission. Third-Party Filers must submit such supporting documentary evidence of
purchases, dispositions, and holdings of Securities as the Fund Administrator deems necessary or
appropriate to substantiate each individual claim. Without limitation, this includes the complete
name of the Preliminary Claimant (beneficial account owner) and his or her TIN (for individuals)
or EIN (for companies), sufficient contact information to confirm the identity of the beneficial
owner, and documentation from the original bank, broker or other institution of purchases and
dispositions of Securities (account statements, confirmations and other documentation of
purchases and dispositions), as well as holdings of the Securities on pertinent dates.
Documentation generated by the Third-Party Filer and affidavits in lieu of supporting
documentation will not be accepted unless, for good cause, the Fund Administrator determines it
acceptable. The Fund Administrator will have the right to request, and the Third-Party Filer will
have the burden of providing to the Fund Administrator, any additional information and/or
documentation deemed necessary by the Fund Administrator to substantiate the claim(s)
contained in the submission. Documentation from a Third-Party Filer that is not acceptable to
10
the Fund Administrator will result in rejection of the affected claim(s). The determination of the
Fund Administrator to reject a claim for insufficient documentation, as reflected on the
Determination Notice, is final and within the discretion of the Fund Administrator.
54.
The receipt of Securities by gift, inheritance, devise, or operation of law will not
be deemed to be a purchase of Securities, nor will it be deemed an assignment of any claim
relating to the purchase of such Securities unless specifically so provided in the instrument of
inheritance. The recipient of Securities as a gift, inheritance, devise or by operation of law will
be eligible to file a Claim Form and participate in the distribution of the Fair Fund to the extent
the original purchaser would have been eligible under the terms of the Plan. Only one claim may
be submitted with regard to the same transactions in Securities, and in cases where duplicative
claims are filed by the donor and donee, the donee claim will be honored, assuming it is
supported by proper documentation.
55.
Claims on behalf of a retirement plan covered by Section 3(3) of ERISA, 29
U.S.C. § 1002(3), which do not include Individual Retirement Accounts and such plan’s
participants, are properly made by the administrator, custodian, or fiduciary of the plan and not
by the plan’s participants. The Fund Administrator will distribute any payments on such claims
directly to the administrator, custodian or fiduciary of the retirement plan. The custodian or
fiduciary of the retirement plan will distribute any payments received in a manner consistent with
its fiduciary duties and the governing account or plan provisions.
56.
The Preliminary Claimant has the burden of notifying the Fund Administrator of a
change in his, her, or its current address and other contact information, and of ensuring that such
information is properly reflected on the Fund Administrator’s records.
Review of Claims and Deficiency Process
57.
The Fund Administrator will review all claim submissions and determine the
eligibility of each Preliminary Claimant to participate in the Fair Fund by reviewing claim data
and supporting documentation (or the lack thereof) and verifying the claim. Each Preliminary
Claimant will have the burden of proof to establish the validity and amount of his, her, or its
claim. The Fund Administrator will have the right to request, and the Preliminary Claimant will
have the burden of providing to the Fund Administrator, any additional information and/or
documentation deemed relevant by the Fund Administrator.
58.
The Fund Administrator will provide a Claim Status Notice within ninety (90)
days of the Claims Bar Date to each Preliminary Claimant who has filed a deficient Claim Form
with the Fund Administrator. The Claim Status Notice will provide to each Preliminary
Claimant whose claim is deficient, in whole or in part, the reason(s) for the deficiency (e.g.,
failure to provide required information or documentation). In the event the claim is denied, in
whole or in part, the Claim Status Notice will state the reason(s) for such denial. The Claim
Status Notice will also notify the Preliminary Claimant of the opportunity to cure any deficiency,
request reconsideration, or dispute the determination made by the Fund Administrator and
provide instructions regarding what is required to do so.
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59.
Any Preliminary Claimant with a deficient claim will have thirty (30) days from
the date of the Claim Status Notice to cure any deficiencies identified in the Claim Status Notice.
60.
Any Preliminary Claimant seeking reconsideration of a denied claim must advise
the Fund Administrator in writing within thirty (30) days of the date of the Claim Status Notice.
All requests for reconsideration must include the necessary documentation to substantiate the
basis upon which the Preliminary Claimant is requesting reconsideration of his, her, or its claim.
61.
The Fund Administrator will have the authority, in its sole discretion, to waive
technical claim deficiencies and approve claims, or groups of claims, on a case-by-case basis.
Claims Eligibility Determination
62.
Within one hundred fifty (150) days of the Claims Bar Date, the Fund
Administrator will complete all claims determinations and send a written Determination Notice
to all Preliminary Claimants who timely submitted a Claim Form notifying the Preliminary
Claimant of its eligibility determination. The Determination Notice will further provide to each
Preliminary Claimant that is determined to be an Eligible Claimant with his, her, or its calculated
Recognized Loss. The Determination Notice will constitute the Fund Administrator’s final
ruling regarding the eligibility status of the claim.
63.
The Fund Administrator may consider disputes of an Eligible Claimant’s
Recognized Loss calculation if notice of the dispute is presented in writing to the Fund
Administrator within thirty (30) days of the date of the Determination Notice. The Fund
Administrator will consult with Commission staff as appropriate. Within thirty (30) days of
receiving an Eligible Claimant’s notice of dispute, the Fund Administrator will notify the
Eligible Claimant, in writing, of its calculation of the Eligible Claimant’s Recognized Loss after
considering the dispute. This notice will constitute the Fund Administrator’s final ruling
regarding its loss calculation for the claim.
Distribution Methodology
64.
Any Preliminary Claimant, who is not an Excluded Party, who submitted a valid
Claim Form and has suffered a Recognized Loss, as calculated in accordance with the Plan of
Allocation, will be deemed an Eligible Claimant. All Eligible Claimants whose Recognized
Loss calculates to a distribution amount equal to or greater than $10.00 will be deemed a Payee
and receive a Distribution Payment.
Establishment of a Reserve
65.
Before determining the amount of funds available for distribution and calculating
each Payee’s Distribution Payment, the Fund Administrator, in conjunction with the Tax
Administrator, will establish a reserve to pay Administrative Costs and to accommodate any
unexpected expenditures (the “Reserve”).
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66.
After all disbursements and Administrative Costs are paid, any remaining
amounts in the Reserve will become part of the Residual described in paragraph 91 below.
Preparation of the Payment File
67.
Within ninety (90) days following the date of the Determination Notices
described in paragraph 62 above, the Fund Administrator will compile and send to the
Commission staff the Payee information, including the name, address, calculated Recognized
Loss, and the amount of the Distribution Payment for all Payees (the “Payee List”). The Fund
Administrator will also provide a Reasonable Assurances Letter to the Commission staff,
representing that the Payee List: (a) was compiled in accordance with the approved Plan; (b) is
accurate as to Payees’ names, addresses, Recognized Losses and amounts of their Distribution
Payment; (c) includes the number of Payees compensated; (d) the percentage of the Payee’s
Recognized Loss being compensated by the disbursement from the Fair Fund, and, if applicable,
the total percentage to include all prior disbursements; (e) the total amount of funds to be
disbursed; and (f) provides all information necessary to make a payment to each Payee.
The Escrow Account
68.
Prior to the disbursement of funds from the Net Available Fair Fund, the Fund
Administrator will establish an escrow account (the “Escrow Account”) with a United States
commercial bank that is a well-capitalized financial institution as defined by the Federal Reserve
Act, Subpart D, 12 C.F.R. 208.43 and that is not unacceptable to the Commission staff (the
“Bank”), pursuant to an escrow agreement (the “Escrow Agreement”) to be provided by
Commission staff.
69.
The Fund Administrator, pursuant to the Escrow Agreement, shall also establish
with the Bank a separate deposit account (e.g., controlled distribution account, managed
distribution account, linked checking and investment account) (the “Distribution Account”),
insured by the Federal Deposit Insurance Corporation (“FDIC”) up to the guaranteed FDIC pass
through limit. The Distribution Account shall be linked with the Escrow Account and shall be
named, and records maintained, in accordance with the Escrow Agreement.
70. During the term of the Escrow Agreement, the portions of the Fair Fund transferred
to the Escrow Account (the “Escrow Property”) shall be invested and reinvested in short-term
U.S. Treasury securities backed by the full faith and credit of the United States Government or
an agency thereof. The investment shall be of a type and term necessary to meet the cash
liquidity requirements for payments to Payees, tax obligations, and/or fees of the Tax
Administrator and/or Fund Administrator, including investment or reinvestment in a bank
account insured by the FDIC up to the guaranteed FDIC limit, or in money market mutual funds
registered under the Investment Company Act of 1940 that invest 100% of their assets in direct
obligations of the United States Government.
71. The Fund Administrator shall provide duplicate original bank and/or investment
statements on any accounts established by the Fund Administrator to the Tax Administrator on a
13
monthly basis and shall assist the Tax Administrator in obtaining mid-cycle statements as
necessary.
72. The Fund Administrator shall deposit or invest funds in the Escrow and
Distribution Accounts so as to result in the maximum reasonable net return, taking into account
the safety of such deposits or investments. In consultation with Commission staff, the Fund
Administrator shall work with the Bank on an ongoing basis to determine an allocation of funds
between the Escrow and Distribution Account.
73. All interest, dividends, and/or income earned by the Escrow Property will accrue
for the benefit of the Escrow Property. All Administrative Costs associated with the Escrow and
Distribution Accounts will be the responsibility of the Fund Administrator, who may be
reimbursed for said costs as provided in this Plan. No such Administrative Costs may be paid to
the Bank, its agents, and/or its affiliates from the Escrow Property.
Distribution of the Fair Fund
74.
The Fund Administrator will seek to distribute the Net Available Fair Fund to all
Payees only after all Claim Forms have been processed and all Preliminary Claimants whose
claims have been rejected or disallowed, in whole or in part, have been notified and provided the
opportunity to contest or cure pursuant to the procedures set forth herein.
75. Upon the Commission staff’s receipt, review, and acceptance of the Payee List and
Reasonable Assurances Letter from the Fund Administrator, the Commission staff will seek an
Order from the Commission pursuant to Rule 1101(b)(6) of the Commission’s Rules, 17 C.F.R. §
210.1101(b)(6), to disburse funds from the Net Available Fair Fund to the Bank in accordance
with the Payee List for distribution by the Fund Administrator in accordance with the Plan. All
disbursements will be made pursuant to a Commission Order.
76. Upon issuance of an Order to disburse, the Commission staff will direct the transfer
of funds in accordance with the Payee List to the Bank. The Fund Administrator will then use its
best efforts to commence mailing Distribution Payment checks and/or effect wire transfers
within ten (10) business days of the release of the funds into the Escrow Account. All efforts
will be coordinated to limit the time between the Escrow Account’s receipt of the funds and the
issuance of Distribution Payments.
77.
All Distribution Payments will be issued by the Fund Administrator from the
Distribution Account. All checks will bear a stale date of one hundred twenty (120) days from
the date of issuance. Checks that are not negotiated by the stale date will be voided, and the
Bank will be instructed to stop payment on those checks. A Payee’s claim will be extinguished
if he, she, or it fails to negotiate his, her, or its check by the stale date, and the funds will remain
in the Fair Fund, except as provided in paragraph 86.
78.
All payments will be preceded or accompanied by a communication that includes,
as appropriate: (a) a statement characterizing the distribution; (b) a statement that the tax
treatment of the distribution is the responsibility of each Payee and that the Payee should consult
his, her, or its tax advisor for advice regarding the tax treatment of the distribution; (c) a
14
statement that checks will be void and cannot be reissued after one hundred twenty (120) days
from the date the original check was issued; and (d) contact information for the Fund
Administrator for questions regarding the Distribution Payment. The letter or other mailings to
Payees characterizing a Distribution Payment will be submitted to the Tax Administrator and
Commission staff for review and approval.
79.
All Distribution Payments, either on their face or in the accompanying mailing,
will clearly indicate that the money is being distributed from the Fair Fund established by the
Commission to compensate investors for harm as a result of securities law violations.
80.
Distribution Payments must be made by check or electronic payment payable to
the Payee (the beneficial account owner). A Third-Party Filer shall not be the payee of any
Distribution Payment check or electronic Distribution Payment. Any other payment arrangement
must be discussed with the Fund Administrator in consultation with the Commission staff and
must be authorized by the Payee. Compensation to a Third-Party Filer for its services may not
be paid or deducted from the Distribution Payment.
81.
If, after discussion with the Fund Administrator in consultation with the
Commission staff, and authorization by the Payee(s), a Distribution Payment is to be made to a
Third-Party Filer to distribute to the Payee(s), the Third-Party Filer will be required to complete
a certification that will require it, at a minimum, to attest that any distribution to the custodian,
trustee, or investment professional representing multiple potentially eligible beneficial owners
will be allocated for the benefit of current or former pooled investors and not for the benefit of
management. The certification form will be available on the Fair Fund website and upon request
from the Fund Administrator. All such Third-Party Filers must have an auditable mechanism
available to the Fund Administrator and the Commission staff to confirm that each Payee
received the Distribution Payment directed to them.
82.
The submission of a Claim Form and the receipt and acceptance of a Distribution
Payment by a Payee is not intended to be a release of a Payee’s rights and claims against any
party.
83.
Electronic or wire transfers may be utilized at the discretion of the Fund
Administrator to transfer approved Distribution Payments to filers of claims on behalf of twenty
(20) or more Payees. Wire transfers will be initiated by the Fund Administrator using a twoparty check and balance system, whereby completion of a wire transfer will require an
authorization by two members of the Fund Administrator’s senior staff.
84.
At the discretion of the Fund Administrator, certain costs that were not factored
into the Reserve, such as bank fees for the return of a payment, may reduce the Payee’s
Distribution Payment. In such situations, the Fund Administrator will immediately notify the
Tax Administrator of the reduction in the Distribution Payment.
15
Post Distribution; Handling of Returned or Uncashed Checks; and Reissues
85.
The Fund Administrator shall use its best efforts to make use of commercially
available resources and other reasonably appropriate means to locate all Payees whose checks
are returned to the Fund Administrator as “undeliverable.” If new address information becomes
available, the Fund Administrator will repackage the distribution check and send it to the new
address. If new address information is not available after a diligent search (and in no event no
later than one hundred twenty (120) days after the initial mailing of the original check) or if the
distribution check is returned again, the check shall be voided and the Fund Administrator shall
instruct the issuing financial institution to stop payment on such check. If the Fund
Administrator is unable to find a Payee’s correct address, the Fund Administrator, in its
discretion, may remove such Payee from the distribution and the allocated Distribution Payment
will remain in the Fair Fund for distribution, if feasible, to the remaining Payees.
86.
The Fund Administrator will reissue checks to Payees upon the receipt of a valid,
written request from the Payee prior to the initial stale date. In cases where a Payee is unable to
endorse a Distribution Payment check as written (e.g., name changes, IRA custodian changes, or
recipient is deceased) and the Payee or a lawful representative requests the reissuance of a
Distribution Payment check in a different name, the Fund Administrator will request, and must
receive, documentation to support the requested change. The Fund Administrator will review the
documentation to determine the authenticity and propriety of the change request. If, in the
discretion of the Fund Administrator, such change request is properly documented, the Fund
Administrator will issue an appropriately redrawn Distribution Payment to the requesting party.
Reissued checks will be void at the later of one hundred twenty (120) days from issuance of the
original check or ninety (90) days from the reissuance, and in no event will a check be reissued
after one hundred twenty (120) days from the date of the original issuance without the approval
of Commission staff.
87.
The Fund Administrator will make reasonable efforts to contact Payees who have
failed to negotiate their Distribution Payment check and take appropriate action to follow up on
the status of uncashed checks at the request of Commission staff. The Fund Administrator may
reissue such checks subject to the time limits detailed herein.
Administrative Costs
88.
All Administrative Costs will be paid from the Fair Fund in accordance with the
Commission’s Rules.
Disposition of Undistributed Funds
89.
If funds remain following the initial distribution and payment of all
Administrative Costs, the Fund Administrator, in consultation with the Commission staff, may
seek subsequent distribution of any available remaining funds, pursuant to the Commission’s
Rules.
16
90.
A residual within the Fair Fund will be established for any amounts remaining
after the final disbursement to Payees from the Fair Fund (the “Residual”). The Residual may
include funds from, among other things, amounts remaining in the Reserve, distribution checks
that have not been cashed, checks or electronic payments that were not delivered or were
returned to the Commission, tax refunds for overpayment or for waiver of IRS penalties.
91.
All funds remaining in the Residual that are infeasible to distribute to investors
will be returned to the Commission and transferred to the U.S. Treasury after the final
accounting is approved by the Commission.
Filing of Reports and Accountings
92.
In accordance with Rule 1105(f) of the Commission’s Rules, the Fund
Administrator shall provide to the Commission staff a progress report and a quarterly account
statement in a format to be provided by Commission staff within forty-five (45) days of the
Commission’s approval of the Plan, and shall provide to Commission staff additional reports and
quarterly account statements within ten (10) days after the end of every calendar quarter. Such
progress reports shall inform the Commission staff of the activities and status of the Fair Fund
during the reporting period, and shall specify, at a minimum, the location of the account(s)
comprising the Fair Fund, including among other things, an interim accounting of all monies in
the Fair Fund.
93.
When the final distribution is completed, the Fund Administrator shall provide to
Commission staff a final report summarizing all tasks undertaken and the outcome of its
administrative efforts. The Fund Administrator shall make arrangement for the final payment of
all Administrative Costs, and submit a final accounting of all monies received, earned, spent, and
distributed in connection with the administration of the Plan in a format provided by the
Commission staff. The Fund Administrator will also submit a report to the Commission staff
containing the final distribution statistics regarding distributions to individuals and entities, and
such other information requested by the Commission staff.
Termination of the Fair Fund
94.
The Fair Fund will be eligible for termination and the Fund Administrator will be
eligible for discharge after all of the following have occurred: (a) a final accounting in a standard
accounting format provided by the Commission staff has been submitted by the Fund
Administrator and approved by the Commission; (b) all Administrative Costs have been paid;
and (c) any amount remaining in the Fair Fund has been returned to the Commission for transfer
to U.S. Treasury. Once the Commission has approved the final accounting, the Commission
staff will seek an order from the Commission authorizing: (a) the transfer of any amounts
remaining in the Fair Fund that is infeasible to return to investors, and any amounts returned to
the Fair Fund in the future that are infeasible to return to investors, to the U.S. Treasury, subject
to Section 21F(g)(3) of the Exchange Act; (b) discharge of the Fund Administrator; (c)
cancellation of the Fund Administrator’s bond; and (d) termination of the Fair Fund.
17
95.
Once the Fair Fund has been terminated and remaining funds, if any, are
transferred to the U.S. Treasury, no further claims will be allowed and no additional payments
will be made whatsoever.
Miscellaneous
96.
When administering this Plan, the Fund Administrator, and/or each of its
designees, agents and assigns, may rely on: all applicable law; orders issued by the Commission,
including orders issued by delegated authority; orders issued by an administrative law judge, if
any, appointed in this proceeding; and any records, including records containing investor
information, provided by Commission staff.
97.
Should any additional funds be received prior to the Commission’s termination of
the Fair Fund, such funds will be added to the Fair Fund and distributed, if feasible, in
accordance with the Plan, pursuant to the Commission’s Rules.
Wind-Down and Document Retention
98.
The Fund Administrator will shut down the website, P.O. Box and customer
service telephone line(s) established specifically for the administration of the Fair Fund six (6)
months after the transfer of any remaining funds to the Commission, or at such earlier time as the
Fund Administrator determines with the concurrence of the Commission staff.
99.
The Fund Administrator will retain all materials submitted by Preliminary
Claimants in either paper or electronic form for a period of six (6) years from the date of
approval of a final fund accounting. Materials maintained in electronic form must be accessible
and readable for the duration of retention. Pursuant to the Commission staff’s direction, the
Fund Administrator will either turn over to the Commission or destroy all materials, including
documents in any media, upon expiration of this period.
VII.
NOTICE AND COMMENT PERIOD
100. The Notice of Proposed Plan of Distribution and Opportunity to Comment (the
“Notice”) will be published on the Commission’s website at
http://www.sec.gov/litigation/fairfundlist.htm. Any Person wishing to comment on the Plan
must do so in writing by submitting their comments to the Commission within thirty (30) days of
the publication of the Notice: (a) to the Office of the Secretary, United States Securities and
Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090; (b) by using the
Commission’s Internet comment form (https://www.sec.gov/litigation/admin.htm); or (c) by
sending an email to rule-comments@sec.gov. Comments submitted by email or via the
Commission’s website should include “Administrative Proceeding File Number 3-15635” in the
subject line. Comments received will be available to the public. Persons should only submit
comments that they wish to make publicly available.
18
Exhibit A
PLAN OF ALLOCATION
This Plan of Allocation is designed to compensate investors based on their losses on
shares of Fifth Third Bancorp common stock, American Depositary Shares (“ADS”) of Series F
and Series G preferred stock purchased, as well as related warrants that were granted
(collectively, the “Securities”), between October 21, 2008 and January 22, 2009 (the “Relevant
Period”), due to the Respondents’ misconduct described in the Order. Investors who did not
purchase shares of the Securities during the Relevant Period, did not purchase shares at prices
inflated by the Respondents’ violative conduct, or who are an Excluded Party1 are ineligible to
recover under this Plan. Artificial inflation in the prices of the Securities over the Relevant
Period and the average closing prices of the Securities have been calculated by the Commission’s
economists and are reflected in Table A and Table B, respectively.
The Fund Administrator will calculate the amount of loss for each share of the Securities
purchased or acquired during the Relevant Period (“Recognized Loss per Share”) as follows:
For each share of Fifth Third Bancorp common stock or Series G preferred stock ADS
purchased or acquired between October 21, 2008 and January 21, 2009, inclusive, and
A.
Sold prior to the close of trading on January 21, 2009, the Recognized Loss per
Share is $0.00.
B.
Sold after the close of trading on January 21, 2009 and prior to the close of
trading on April 21, 2009 (the “Lookback Period”) the Recognized Loss per Share
is the least of:
C.
1
1.
the amount of inflation per share on the purchase/acquisition date for the
Security as set forth in Table A below; or
2.
the purchase/acquisition price minus the sale price; or
3.
the purchase/acquisition price minus the moving average closing price of
the Security on the sale date as set forth in Table B below.
Held as of the close of trading on April 21, 2009, the Recognized Loss per Share
is the lesser of:
1.
the amount of inflation per share on the purchase/acquisition date for the
Security as set forth in Table A below; or
2.
the purchase/acquisition price minus the average closing price of the
Security between January 22, 2009 and April 21, 2009, as shown on the
last row in Table B.
All capitalized terms used herein but not defined shall have the same meanings ascribed to them in the Plan.
If the Recognized Loss per Share calculates to a negative number, reflecting a gain, the
Recognized Loss per Share on such shares will be $0.00.
All prices mentioned in the calculations exclude all taxes, fees, and commissions.
Purchases/acquisitions and sales shall be deemed to have occurred on the “contract” or “trade”
date as opposed to the “settlement” or “payment” date.
For Fifth Third Bancorp Series F preferred stock and related warrants purchased in the
private placement, the Recognized Loss is $2,000,000. Because all the Series F preferred stock
and related warrants were purchased by only one investor and were never traded on a secondary
market, the Recognized Loss per Share is not calculated.
Additional Provisions
FIFO Methodology: Transactions for an Eligible Claimant who made multiple
purchases/acquisitions and sales of Securities during the Relevant Period will be matched
according to the first-in, first-out (“FIFO”) method. The earliest sales during the Relevant Period
will be matched first against any holdings at the opening of the Relevant Period. Once the
beginning holdings have all been matched, or in the event there are no beginning holdings, then
any further sales will be matched against the earliest Relevant Period purchases/acquisitions and
chronologically thereafter.
Acquisitions: The receipt or grant of the Securities to the Eligible Claimant by gift,
devise, inheritance, or operation of law during the Relevant Period is not considered an eligible
purchase if the original purchase did not occur during the Relevant Period. Shares acquired
outside the relevant Period will be excluded from the calculation of the Recognized Loss.
Options and Derivatives: Fifth Third Bancorp common stock, Series G preferred stock
ADS, and Series F preferred stock and related warrants are the only securities eligible for
recovery under this Plan. Option contracts to purchase or sell the Securities are not securities
eligible for recovery under the Plan. With respect to the Securities purchased or sold through the
exercise of an option, the purchase/sale date is the exercise date of the call and the assignment
date of the put, and the purchase/sale price is the strike price of the call at the time of exercise
and the strike price of the put at the time of assignment. Transactions in the Securities during the
Relevant Period that are pursuant to, or in connection with, a swap or another derivative will not
be eligible for a recovery and will be excluded from the Recognized Loss calculation.
Short Sales: If the sale date for a share falls before the purchase date, then the share has a
Recognized Loss per Share of $0.00. The date of covering of a short sale is deemed to be the
date of purchase of the Securities and the date of a short sale is deemed to be the date of sale of
the Securities. The earliest Relevant Period purchases will be matched against any short position
existing on the date prior to the start of the Relevant Period, and will not be entitled to a
recovery, until that short position is fully covered.
2
Recognized Loss: An Eligible Claimant’s Recognized Loss will be the sum of the
Recognized Loss per Share, as calculated above, on all shares of Fifth Third Bancorp common
stock and all Series G preferred stock ADS purchased or acquired during the Relevant Period
plus the Recognized Loss on Series F preferred stock and related warrants purchased or acquired
during the Relevant Period. If the Recognized Loss calculates to a gain, then the Recognized
Loss will be $0.00.
Market Loss Limitation: If an Eligible Claimant’s actual market loss on the Securities
purchased/acquired during the Relevant Period is less than his, her, or its Recognized Loss, then
his, her, or its Recognized Loss shall be limited to the actual market loss amount. If the actual
market loss calculates to a gain, then the Eligible Claimant’s Recognized Loss will be $0.00. An
Eligible Claimant’s actual market loss will be the sum of the actual market losses for the three
Securities, each described below, allowing for a market gains to offset market losses.
The actual market loss on common stock and Series G preferred stock ADS will be
calculated as (a) the total purchase amount for shares of the Securities purchased or acquired
during the Relevant Period,2 less the sum of (b) the sales proceeds from shares of the Securities
purchased or acquired during the Relevant Period and sold during the Relevant Period or
Lookback Period,3 and (c) the holding value on the remaining of those shares of the Securities
purchased or acquired during the Relevant Period, which for the purposes of this calculation will
be the moving average price as of the last day of the Lookback Period ($2.41 and $34.58 for
common stock and Series G preferred stock ADS, respectively).4
The actual market loss on the investment in Series F preferred stock and related warrants
is assumed to be $2,000,000 for the sole investor because the Series F preferred stock and related
warrants were not traded in a secondary market.
Allocation of Funds: If the Net Available Fair Fund, as defined in the Plan, is equal to or
exceeds the sum of Recognized Losses of all Eligible Claimants, each Eligible Claimant’s
distribution amount will equal his, her or, its Recognized Loss, plus “Reasonable Interest” if
applicable. If the Net Available Fair Fund is less than the sum of the Recognized Losses of all
Eligible Claimants, each Eligible Claimant’s distribution amount will equal his, her, or its “Pro
Rata Share” of the Net Available Fair Fund (and no Reasonable Interest). In either case, the
distribution amount will be subject to the “Minimum Distribution Amount.”
Reasonable Interest: If the Net Available Fair Fund exceeds that necessary to pay all
Eligible Claimants their Recognized Losses in full, the Fund Administrator, in consultation with
the Commission staff, may include interest in the distribution amount to compensate Eligible
Claimants for the time value of their respective Recognized Losses. Reasonable interest will be
2
Purchases during the Relevant Period to cover short positions will be included in the calculation of actual market
loss if the purchase is matched to a short sale during the Relevant Period. Purchases/acquisitions that are not
eligible for recovery will not be considered for purposes of calculating the actual market loss.
3
Sales of the Security during the Relevant Period will be matched first against the opening position and the
proceeds of such sales will not be considered for purposes of calculating the actual market loss. Short sales will be
considered for purposes of calculating the actual market loss.
4
Any open short positions at the end of the Lookback Period will be ignored for purposes of calculating the actual
market loss.
3
calculated using the Short-term Applicable Federal Rate plus three percent (3%), compounded
quarterly from the end of the Relevant Period through the approximate date of the disbursement
of the funds. If there are insufficient funds to pay Reasonable Interest in full to all Eligible
Claimants, each Eligible Claimant will receive his, her, or its Pro Rata Share of the excess funds
as the Reasonable Interest amount.
Pro Rata Share: A Pro Rata Share computation is intended to measure Eligible
Claimants’ Recognized Losses against one another. The Fund Administrator shall determine
each Eligible Claimant’s Pro Rata Share as the ratio of his, her, or its Recognized Loss to the
sum of Recognized Losses of all Eligible Claimants.
Minimum Distribution Amount: The Minimum Distribution Amount will be $10.00. If
an Eligible Claimant’s distribution amount is less than the Minimum Distribution Amount, that
Eligible Claimant will be deemed ineligible to receive a Distribution Payment and his, her, or its
distribution amount will be reallocated on a pro rata basis to Eligible Claimants whose
distribution amounts are greater than or equal to the Minimum Distribution Amount.
Payee: An Eligible Claimant whose distribution amount (inclusive of Reasonable
Interest, if any) equals or exceeds the Minimum Distribution Amount will be deemed a Payee
and receive a Distribution Payment equal to his, her, or its distribution amount.
Prior Recovery: To avoid payment of a windfall, the Distribution Payment will be no
larger than the Payee’s Recognized Loss minus the amount of any compensation for the loss that
resulted from the conduct described in the Order that was received from another source (e.g.,
class action settlement), to the extent known by the Fund Administrator. Reasonable Interest, if
awarded, may be added to such Distribution Payment.
Table A: Inflation Schedule for Fifth Third Bancorp Common Stock and Series G
Preferred Stock ADS
Date Range
October 21, 2008 through January 21, 2009
On or after January 22, 2009
Common Stock
Inflation per Share
$0.08
$0.00
Series G Pref ADS
Inflation per Share
$0.69
$0.00
The share prices of Fifth Third Bancorp’s common stock and Series G Preferred ADS fell $1.14
and $10.25, respectively, on January 22, 2009. The inflation per share shown here is adjusted for
market and industry movements and confounding company-specific news on the same day.
4
Table B: Moving Average Closing Price for Fifth Third Bancorp Common Stock and
Series G Preferred Stock ADS, January 22, 2009 – April 21, 2009
Date
1/22/2009
1/23/2009
1/26/2009
1/27/2009
1/28/2009
1/29/2009
1/30/2009
2/2/2009
2/3/2009
2/4/2009
2/5/2009
2/6/2009
2/9/2009
2/10/2009
2/11/2009
2/12/2009
2/13/2009
2/17/2009
2/18/2009
2/19/2009
2/20/2009
2/23/2009
2/24/2009
2/25/2009
2/26/2009
2/27/2009
3/2/2009
3/3/2009
3/4/2009
3/5/2009
3/6/2009
Moving Average Closing Price
from January 22, 2009 to Date
Shown
Common
Series G
Stock
Pref ADS
$2.85
$35.98
$2.88
$37.36
$2.82
$37.21
$2.77
$36.97
$2.92
$38.52
$2.95
$38.97
$2.87
$38.58
$2.77
$37.77
$2.66
$36.67
$2.55
$35.52
$2.47
$35.31
$2.48
$35.27
$2.51
$35.38
$2.49
$35.14
$2.47
$34.96
$2.46
$34.80
$2.43
$34.49
$2.39
$34.02
$2.34
$33.37
$2.28
$32.61
$2.22
$31.84
$2.18
$31.24
$2.15
$30.83
$2.14
$30.67
$2.14
$30.63
$2.14
$30.63
$2.13
$30.55
$2.11
$30.42
$2.10
$30.33
$2.07
$30.08
$2.05
$29.82
5
Date
3/9/2009
3/10/2009
3/11/2009
3/12/2009
3/13/2009
3/16/2009
3/17/2009
3/18/2009
3/19/2009
3/20/2009
3/23/2009
3/24/2009
3/25/2009
3/26/2009
3/27/2009
3/30/2009
3/31/2009
4/1/2009
4/2/2009
4/3/2009
4/6/2009
4/7/2009
4/8/2009
4/9/2009
4/13/2009
4/14/2009
4/15/2009
4/16/2009
4/17/2009
4/20/2009
4/21/2009
Moving Average Closing Price
from January 22, 2009 to Date
Shown
Common
Series G
Stock
Pref ADS
$2.03
$29.61
$2.02
$29.47
$2.00
$29.32
$1.99
$29.19
$1.99
$29.11
$1.98
$29.06
$1.98
$29.03
$1.99
$29.06
$1.99
$29.11
$1.99
$29.15
$2.00
$29.27
$2.01
$29.40
$2.01
$29.50
$2.02
$29.65
$2.03
$29.78
$2.04
$29.93
$2.06
$30.16
$2.08
$30.44
$2.10
$30.78
$2.12
$31.12
$2.14
$31.41
$2.15
$31.65
$2.16
$31.85
$2.19
$32.18
$2.23
$32.58
$2.25
$32.90
$2.28
$33.25
$2.32
$33.64
$2.36
$34.03
$2.38
$34.30
$2.41
$34.58
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.