UNITED STATES OF AMERICA
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UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
ADMINISTRATIVE PROCEEDING
File No. 3-20963
In the Matter of
Eagle Bancorp, Inc.,
Respondent.
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 disgorgement, prejudgment interest, and civil money
penalties paid by Eagle Bancorp, Inc. (“Eagle” or the “Respondent”) in the above-captioned
matter.1
2.
As described more specifically below, the Plan seeks to compensate investors
who were harmed by the Respondent’s conduct described in the Order in connection with Eagle
Bancorp’s non-disclosure of related party loans. 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 Eagle Bancorp common stock traded under the symbol EGBN (the “Security”) that
were purchased or acquired on March 2, 2015, through July 17, 2019, inclusive (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.
II.
BACKGROUND
4.
On August 16, 2022, the Commission issued a Corrected Order Instituting Ceaseand-Desist Proceedings, Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of
1
Corrected Order Instituting Cease-and-Desist Proceedings, Pursuant to Section 8A of the Securities Act of 1933
and Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order,
Securities Act Rel. No. 11092 (Aug. 16, 2022) (the “Order”).
the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order
(the “Order”) against the Respondent. In the Order, the Commission found that Eagle made
material misstatements and omissions about related party loans that Eagle’s principal subsidiary,
EagleBank, extended to family trusts affiliated with Eagle’s former Chairman, CEO, and
President, Ronald D. Paul (“Paul”), and to other related parties. From March 2015 through April
2018, Eagle failed to include these undisclosed loans in the related party loan balances included
in its annual reports and proxy statements filed with the Commission. Eagle and Paul also made
false statements regarding the nature of the loans in two press releases. Based on this conduct,
the Commission found that Eagle violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of
1933 (the “Securities Act”), and Sections 13(a), 13(b)(2)(A), 13(b)(2)(B) and 14(a) of the
Securities Exchange Act of 1934 (the “Exchange Act”) and Rules 12b-20, 13a-1, and 14a-9
thereunder.
5.
Investors who purchased or acquired the Security between March 2, 2015, and
July 17, 2019, inclusive, suffered losses as a result of Eagle’s non-disclosure of related-party
loans, which caused artificial inflation in the price of the Security and price drops surrounding
corrective disclosures.
6.
The Commission ordered Eagle to pay $2,600,000 in disgorgement, $750,493 in
prejudgment interest, and a $10,000,000 civil money penalty, for a total of $13,350,493, to the
Commission. In its order, the Commission also created the Fair Fund pursuant to Section 308(a)
of the Sarbanes-Oxley Act of 2002, so the penalty collected, along with the disgorgement and
interest collected, could be distributed to harmed investors (the “Fair Fund”). The Commission
further ordered that the Fair Fund may be combined with any fund established for the benefit of
harmed investors in SEC v. Ronald D. Paul, 22-cv-06985 (S.D.N.Y.) (the “Related Action”).2
7.
The Fair Fund consists of the $13,350,493 collected from the Respondent in this
matter and the $431,216 collected in the Related Action. The Fair Fund has been deposited in a
Commission-designated account at the U.S. Department of the Treasury, and any accrued
interest will be added to the Fair Fund.
III.
DEFINITIONS
As used in this Plan, the following definitions will apply:
8.
“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.
9.
“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 the Security during the Relevant Period such that
eligibility under the Plan can be determined, tax identification and other related information from
2
The Commission corrected the Order to add this language, which was inadvertently omitted at the time of
issuance. The Fair Fund has received $431,216.00 from the Related Action in accordance with the Court’s Order
dated October 11, 2023. See Dkt. No. 16, SEC v. Ronald D. Paul, 22-cv-06985 (S.D.N.Y.).
2
the Preliminary Claimant as determined necessary by the Fund Administrator in coordination
with the Tax Administrator, and a certification that the Preliminary Claimant is not an Excluded
Party.
10.
“Claim Status Notice” means the notice sent by the Fund Administrator within
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 will provide
instructions regarding what is required to do so.
11.
“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 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.
12.
“Class Action” means Siva Stein v. Eagle Bancorp, Inc., et al., Case No. 1:19-cv06873-LGS (S.D.N.Y.).
13.
“Class Action Authorized Claimant” means a Person who filed an approved
claim in the Class Action. Such Persons are Preliminary Claimants.
14.
“Class Action Authorized Claim Notice” means the notice that is sent to Class
Action Authorized Claimants. This notice shall:
(a)
inform them of the Fair Fund;
(b)
inform them that their approved claim in the Class Action will be
automatically submitted as a claim to the Fair Fund and will be processed
according to the provisions of this Plan;
(c)
state that they do not need to take any action to be included in the
distribution unless additional action is requested by the Fund
Administrator, or unless they wish to amend their Class Action claim to
include additional transactions;
(d)
state that requests to amend a Class Action claim to include additional
transactions must be made by the Claims Bar Date by submitting a Claim
Form; and
(e)
explain how to submit a Claim Form to amend their Class Action 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.
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15.
“Class Action Deficient Claimant” means a Person who filed a claim in the
Class Action whose claim was determined to be deficient and who failed to cure such deficiency
in the Class Action. Such Persons are Preliminary Claimants.
16.
“Class Action Deficient Claim Notice” means the notice that is sent to Class
Action Deficient Claimants. This notice shall:
(a)
inform them of the Fair Fund;
(b)
inform them that their deficient claim in the Class Action will be
automatically submitted as a claim to the Fair Fund and will be processed
according to the Review of Claims and Deficiency Process set forth in
paragraphs 62 to 66 of this Plan, and that they have an opportunity to cure
the deficiencies in their Class Action claim pursuant to those provisions;
(c)
identify the deficiencies in their claim and explain what they must do to
cure those deficiencies;
(d)
inform them that they may also amend their Class Action claim to include
additional transactions;
(e)
state that requests to add transactions to a Class Action claim must be
made by submitting a Claim Form by the Claims Bar Date; and
(f)
explain how to submit a Claim Form, 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.
17.
“Determination Notice” shall mean the written notice sent by the Fund
Administrator to all Preliminary Claimants notifying the Preliminary Claimant of its eligibility
determination. The Determination Notice will further provide each Preliminary Claimant who 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.
18.
“Distribution Payment” means a payment from the Fair Fund to a Payee in
accordance with the terms of this Plan.
19.
“Eligible Claimant” means a Preliminary Claimant who submitted a valid Claim
Form and has suffered a Recognized Loss as calculated in accordance with the Plan of
Allocation, and who is not an Excluded Party.
20.
“Excluded Party” shall mean:
(a)
The Respondent;
4
(b)
Present or former officers or directors of Respondent or any assigns,
creditors, heirs, distributees, spouses, parents, dependent children or
controlled entities of any of the foregoing Persons or entities;
(c)
Any employee or former employee of the Respondent 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 Respondent
has 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.
21.
“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 Respondent’s
violations described in the Order.
22.
“Net Available Fair Fund” means the Fair Fund, plus any interest or earnings,
less Administrative Costs.
23.
“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.
24.
“Person” means natural individuals as well as legal entities such as corporations,
partnerships, or limited liability companies.
25.
“Plan Notice” means a written notice from the Fund Administrator to Preliminary
Claimants who are neither Class Action Authorized Claimants nor Class Action Deficient
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 explaining how
to obtain a copy of the approved Plan and Claim Form by request or from the Fair Fund’s
website.
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26.
“Plan of Allocation” means the methodology used by the Fund Administrator to
calculate if a Preliminary Claimant has suffered a Recognized Loss. The Plan of Allocation is
attached as Exhibit A.
27.
“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
Security during the Relevant Period, including all Class Action Authorized Claimants or Class
Action Deficient Claimants.
28.
“Recognized Loss” means the amount of loss calculated in accordance with the
Plan of Allocation.
29.
“Relevant Period” means the period of time between March 2, 2015, and July
17, 2019, inclusive.
30.
“Security” refers to shares of Eagle Bancorp common stock and traded under the
symbol EGBN.
31.
“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 Plan Notice and Claim Form, and the Claims Bar Date. The Summary Notice will
be published once a week for three weeks starting within 10 days of the initial mailing of the
Plan Notice.
32.
“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 20 above.
IV.
TAX COMPLIANCE
33.
On May 17, 2023, the Commission appointed Heffler, Radetich & Saitta, 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 2022 to 2024 Engagement Letter Agreement with the
Commission.4
34.
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 Act Rel. No. 97517 (May 17, 2023).
See Omnibus Order Directing the Engagement of Two Tax Administrators for Appointment on a Case-By-Case
Basis in Administrative Proceedings that Establish Distribution Funds, Exchange Act Rel. No. 94845 (May 4, 2022).
4
6
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.
35.
All tax obligations will be paid from the Fair Fund, subject to the review and
approval of Commission staff.
V.
FUND ADMINISTRATOR
36.
On November 14, 2023, the Commission appointed JND Legal Administration, as
the fund administrator for the Fair Fund (the “Fund Administrator”),5 I and the Fund
Administrator has obtained a bond in the amount of $13,781,709, as ordered.6 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.
37.
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 and updating 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’s 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.
38.
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
JND also served as the administrator of the Class Action settlement fund and possesses all the claims that were
submitted in the Class Action.
6
See Order Appointing Fund Administrator and Setting Bond Amount, Exchange Act Rel. No. 98922 (Nov. 14,
2023).
7
39.
The Fund Administrator may extend any procedural deadline contained in the
Plan for good cause shown, if agreed upon by the Commission staff.
40.
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 agents of the Fund Administrator under this Plan.
41.
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
42.
The Fund Administrator will, insofar as practicable, use its best efforts to
identify Preliminary Claimants, in addition to those claimants already identified through their
participation in the Class Action, by reviewing trading records, obtaining records from
registered broker-dealers and investment advisors, and seeking 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 in the Fair Fund.
43.
Within 60 days after Commission approval of the Plan, the Fund Administrator
shall:
(a)
design and submit the Plan Notice, Class Action Authorized Claim Notice,
Class Action Deficient Claim 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 notice, as applicable, to each Preliminary Claimant
identified by the Fund Administrator and a Plan Notice to the Fund
Administrator’s list of banks, brokers, and other nominees in accordance
with paragraph 48 below;
(e)
establish and maintain a website devoted solely to the Fair Fund. The Fair
Fund’s website, located at www.EagleBancorpFairFund.com, will make
available a copy of the approved Plan; provide information regarding the
claims process and eligibility requirements for participation in the Fair
8
Fund in the form of frequently asked questions; include in downloadable
form the Plan Notice, the Class Action Authorized Claim Notice, the Class
Action Deficient Claim Notice, 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, 888-995-0214, 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.
44.
The Fund Administrator will publish the Summary Notice on the internet and/or
in print media acceptable to Commission staff once a week for three weeks starting three times
and will appear within 10 days of the initial mailing of the Plan Notice.
45.
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.
46.
In all materials that refer to the Claims Bar Date, the filing deadline will be
clearly identified with the calendar date, which is 120 days from the date of the initial mailing of
the Plan Notice.
47.
Subject to the limitation identified in paragraph 50, the Fund Administrator will
promptly provide a Plan Notice and/or Claim Form to any Preliminary Claimant upon request
made via mail, phone, or email prior to the Claims Bar Date.
48.
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 Security 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
Security:
(a)
within 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 Claim Form, 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 Plan Notice and Claim Form, and other
relevant materials, is properly disseminated to the beneficial owners;
and/or
9
(b)
provide to the Fund Administrator, within 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 Security during
the Relevant Period, so that the Fund Administrator can communicate with
the beneficial owners directly.
49.
An unlimited number of Plan Notices and Claim Forms may be downloaded by
the Nominees or Custodians. In the event paper copies are needed, the Fund Administrator may
provide no more than 50 additional copies of the materials relevant to submitting a claim to any
Nominee or Custodian requesting it for the purpose of distribution to beneficial owners.
50.
Documented reasonable out-of-pocket expenses incurred by the Nominees or the
Custodians, which would not have been incurred but for compliance with paragraph 48 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 $0.03 per Plan Notice and/or Claim Form, plus postage at
the pre-sort postage rate per Plan Notice and/or Claim Form actually
mailed;
(b)
a maximum of $0.05 per email of the Plan Notice with a link to the Claim
Form; 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.
51.
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 mailings 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
52.
To avoid being barred from asserting a claim, on or before the Claims Bar Date,
each Preliminary Claimant who would like to submit a new claim or amend an existing claim
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 substantiate the claim.
Without limitation, this information may include third party documentary evidence of purchases
and dispositions of the Security during the Relevant Period and holdings of the Security at
pertinent dates.
10
53.
To avoid being barred from amending a Class Action claim, on or before the
Claims Bar Date, any Class Action Authorized Claimant or Class Action Deficient Claimant who
wishes to add transactions to their Class Action claim must submit to the Fund Administrator a
properly completed Claim Form reflecting such additional transactions, together with all required
supporting documentation as described in the preceding paragraph.
54.
Electronic claims submission is encouraged. The notices will include instructions
on how Preliminary Claimants can submit their claims or amend an existing claim 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. EST on the Claims
Bar Date. The Plan Notice will also include instructions for submission of claims if the
Preliminary Claimant is unable to submit his, her, or its claim electronically.
55.
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, and after consultation
with the Commission staff.
56.
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.
57.
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.
58.
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 the Security 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 their SSN (for
individuals) or TIN (for entities), 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 the Security (account statements, confirmations, and other
documentation of purchases and dispositions), as well as holdings of the Security on pertinent
dates. 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
11
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 in the
Determination Notice, is final and within the discretion of the Fund Administrator.
59.
The receipt of the Security by gift, inheritance, devise, or operation of law will
not be deemed to be a purchase of the Security, nor will it be deemed an assignment of any claim
relating to the purchase of such Security, unless specifically so provided in the instrument of
inheritance. The recipient of the Security 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 regarding the same transactions in Security, 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.
60.
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.
61.
Each Preliminary Claimant has the burden of notifying the Fund Administrator of
any change in his, her or, its current address and other contact information and ensuring that such
information is properly reflected on the Fund Administrator’s records.
Review of Claims and Deficiency Process
62.
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 that the Fund Administrator deems relevant.
63.
The Fund Administrator will provide a Claim Status Notice within 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.
12
64.
Any Preliminary Claimant with a deficient claim will have 30 days from the date
of the Claim Status Notice to cure any deficiencies identified in the Claim Status Notice.
65.
Any Preliminary Claimant seeking reconsideration of a denied claim must submit
their request to the Fund Administrator, in writing, within 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.
66.
The Fund Administrator will have the authority, in its sole discretion, to waive
technical claim deficiencies and approve claims on a case-by-case basis, or in groups of claims.
Claims Eligibility Determination
67.
Within 180 days of the Claims Bar Date, the Fund Administrator will complete all
claims determinations and send a Determination Notice to all Preliminary Claimants who timely
submitted a Claim Form, including Class Action Authorized Claimants and Class Action
Deficient Claimants, 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 of the claim.
68.
The Fund Administrator may consider disputes of an Eligible Claimant’s
Recognized Loss calculation if presented in writing to the Fund Administrator within 30 days of
the date of the Determination Notice. The Fund Administrator will consult with Commission
staff as appropriate. Within 30 days of receiving an Eligible Claimant’s 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 the Recognized Loss calculations for the claim.
Distribution Methodology
69.
Any Preliminary Claimant, who submitted a valid Claim Form and has suffered a
Recognized Loss, as calculated in accordance with the Plan of Allocation, and who is not an
Excluded Party will be deemed an Eligible Claimant.
70.
No Distribution Payments will be made for less than $10.00. If an Eligible
Claimant’s Recognized Loss, in accordance with the Plan of Allocation, calculates to a
distribution amount less than $10.00, 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 $10.00. All
Eligible Claimants whose Recognized Loss calculates to a distribution amount equal to or greater
than $10.00 will be deemed a Payee and will receive a Distribution Payment.
Establishment of a Reserve
71.
Before determining the amount of funds available for distribution and calculating
each Payee’s Distribution Payment, the Fund Administrator, in conjunction with the Tax
13
Administrator, will establish a reserve to pay Administrative Costs and to accommodate any
unexpected expenditures (the “Reserve”).
72.
After all disbursements and Administrative Costs are paid, any remaining
amounts in the Reserve will become part of the Residual described in paragraph 94 below.
Preparation of the Payment File
73.
Within 105 days following the date of the Determination Notices described above
in paragraph 67, 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) includes 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) includes the total amount of funds to be
disbursed, and if applicable, includes the total amount of such funds to be withheld pursuant to
paragraph 84(b) below; and (f) provides all information necessary to make a payment to each
Payee.
The Escrow Account
74.
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.
75.
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 both shall
be named, and records maintained, in accordance with the Escrow Agreement.
76.
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.
14
77.
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
monthly basis and shall assist the Tax Administrator in obtaining mid-cycle statements as
necessary.
78.
The Fund Administrator shall deposit or invest funds in the Escrow and
Distribution Accounts so as to achieve 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 Accounts.
79.
All interest, dividends, and/or income earned by the Escrow Property will accrue
for the benefit of the Fair Fund. 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
80.
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.
81. Upon the Commission’s 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. § 201.1101(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.
82. 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 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.
83.
All Distribution Payments will be issued by the Fund Administrator from the
Distribution Account. All checks will bear a stale date of 120 days from the date of issuance.
Reissuance of a check must be requested before the stale date, and such request is governed by
paragraph 90 below.
84.
All Distribution 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,
however, any backup withholding required under IRC § 3406(a) and the regulations promulgated
15
thereunder, or withholding required with respect to nonresident aliens (“NRAs”) under Chapter 3
of the IRC, or FATCA-subject Payees under Chapter 4 of the IRC, will be withheld as required
from the Distribution Payment and remitted to the Internal Revenue Service on the Payee’s
behalf; (c) a statement that checks will be void and cannot be reissued after 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 prepared by the Tax Administrator and provided to
the Commission staff for review and approval.
85.
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 caused by securities law violations.
86.
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. Compensation to a Third-Party
Filer for its services may not be paid or deducted from the Distribution Payment.
87.
The submission of a Claim Form and the receipt and acceptance of a Distribution
Payment by a Payee is not a release of a Payee’s rights and claims against any party
88.
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 20 or
more Payees. Wire transfers will be initiated by the Fund Administrator using a two-party check
and balance system, whereby completion of a wire transfer will require an authorization by two
members of the Fund Administrator’s senior staff.
Post Distribution; Handling of Returned or Uncashed Checks; and Reissues
89.
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, within 120 days after the initial mailing of the distribution check, new address
information for the Payee is not available, or if the distribution check is returned again, the Fund
Administrator will void the distribution check, and 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.
90.
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 its authenticity and the propriety of the change request. If, in the
discretion of the Fund Administrator, such change request is properly documented, the Fund
16
Administrator will issue an appropriately redrawn Distribution Payment to the requesting party.
Reissued checks will be void 30 days from the reissuance, and in no event will a check be
reissued after 120 days from the date of the original issuance without the approval of
Commission staff.
91.
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. If a Distribution Payment remains
uncashed after the stale date the Fund Administrator will instruct the Bank to issue a stop
payment on the check. 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.
Administrative Costs
92.
All Administrative Costs will be paid from the Fair Fund in accordance with the
Commission’s Rules. Upon completion of the final distribution, the Fund Administrator shall
make arrangements, in consultation with the Commission staff, for the final payment of all
Administrative Costs.
Disposition of Undistributed Funds
93.
If funds remain following the initial distribution, the Fund Administrator, in
consultation with the Commission staff, may seek subsequent distribution of any remaining
funds, pursuant to the Commission’s Rules.
94.
A residual will be established for any amounts remaining after the final
disbursement to Payees from the Fair Fund (the “Residual”). The Residual could 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, and tax refunds received due to the Fair Fund’s overpayment of taxes or for waiver
of IRS penalties.
95.
Upon completion of the final distribution, the Fund Administrator will direct the
Bank to stop payment on all uncashed distribution checks and return any funds remaining in the
Escrow and Distribution Accounts to the Commission to become part of the Residual.
96.
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 Commission
approves the final accounting. Returning such money to Respondent would be inconsistent with
the equitable principle that no Person should profit from their own wrongdoing. Therefore, in
these circumstances, distributing disgorged funds to the U.S. Treasury is the most equitable
alternative.
17
Filing of Reports and Accountings
97.
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 45 days of the Commission’s
approval of the Plan and shall provide to Commission staff additional reports and quarterly
account statements within 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.
98.
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, which will also include the final distribution statistics regarding
distributions to individuals and entities, and such other information requested by the Commission
staff. The Fund Administrator will also submit in accordance with Rule 1105(f) of the
Commission’s Rules, 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.
Miscellaneous
99.
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.
Wind-down and Document Retention
100. 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
months after the transfer of any remaining funds to the Commission, or at such earlier time that
the Fund Administrator determines is appropriate, with the concurrence of the Commission staff.
101. The Fund Administrator will retain all materials submitted by Preliminary
Claimants in either paper or electronic form for a period of six years from the date of approval of
a final accounting. Materials maintained in electronic form must be accessible and readable for
the duration of retention. Upon expiration of this period, and 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.
Receipt of Additional Funds
102. Should any additional funds be received pursuant to Commission or Court order,
agreement, or otherwise, 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.
18
Termination of the Fair Fund
103. 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.
104. Once the Commission has approved the final accounting, the Commission staff
will seek an order from the Commission authorizing (a) transfer of any amounts remaining in the
Fair Fund that are infeasible to return to investors, and any amounts received by 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.
105. Once the Fair Fund has been terminated and funds, if any, are transferred to the
U.S. Treasury, no further claims will be allowed, and no additional payments will be made
whatsoever.
VII.
NOTICE AND COMMENT PERIOD
106. 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 (www.sec.gov/litigation/admin.shtml); 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 3-20963” in the subject line.
Comments received will be available to the public. Persons should only submit comments that
they wish to make publicly available.
19
Exhibit A
PLAN OF ALLOCATION
This Plan of Allocation1 is designed to compensate investors based on their losses on
shares of Eagle Bancorp common stock traded under the symbol EGBN (the “Security”)
purchased or acquired on March 2, 2015, through July 17, 2019, inclusive (the “Relevant
Period”), due to Eagle Bancorp’s non-disclosure of related-party loans. Preliminary Claimants
who did not purchase or acquire shares of the Security during the Relevant Period or who are an
Excluded Party are ineligible to recover under this Plan. A Preliminary Claimant who submits a
valid Claim Form, who suffered a Recognized Loss, and who is not an Excluded Party will be
deemed an Eligible Claimant. Artificial inflation in the price of the Security over various date
ranges surrounding corrective disclosures and average closing prices of the Security have been
calculated by Commission’s staff economists and are reflected below in Table A and Table B,
respectively.
The Fund Administrator will calculate the amount of loss for each share of the Security
purchased or acquired during the Relevant Period (“Recognized Loss per Share”) as follows.
I.
For each share of the Security purchased or acquired on March 2, 2015, through
July 17, 2019, and
A.
Sold prior to December 1, 2017, the Recognized Loss per Share is $0.00.
B.
Sold on or after December 1, 2017, and prior to the close of trading on
July 17, 2019, the Recognized Loss per Share is the lesser of:
C.
1
1.
the amount of inflation per share on the purchase/acquisition date
as set forth in Table A below minus the amount inflation per share
on the sale date as set forth in Table A; or
2.
the purchase/acquisition price minus the sale price.
Sold after the close of trading on July 17, 2019, and prior to the close of
trading on October 15, 2019 (i.e., during the “Lookback Period”), the
Recognized Loss per Share is the least of:
1.
the amount of inflation per share on the purchase/acquisition date
as set forth in Table A; 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.
All capitalized terms used herein but not defined shall have the same meanings ascribed to them in the Plan.
1
D.
II.
Held as of the close of trading on October 15, 2019, the last day of the
Lookback Period, the Recognized Loss per Share is the lesser of:
1.
the amount of inflation per share on the purchase/acquisition date
as set forth in Table A; or
2.
the purchase/acquisition price minus $41.35, the average closing
price of the Security during the Lookback Period, as shown in the
last row in Table B.
For shares of the Security purchased or acquired to cover a short position, the
Recognized Loss per Share is as follows:
A.
B.
For shares purchased between December 4, 2017, and July 17, 2019,
inclusive, to cover a short position opened between March 2, 2015, and
November 30, 2017, inclusive, the Recognized Loss per Share is the lesser
of:
1.
the purchase price to cover minus the short sale price; or
2.
$6.49.2
For all other purchases to cover a short position, the Recognized Loss per
Share is $0.00.
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.
Additional Provisions
FIFO Methodology: Multiple purchases/acquisitions and sales of the Security 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 all initial holdings have been matched, or in the event that there are
no beginning holdings, then any further sales will be matched against the earliest Relevant
Period purchases/acquisitions and chronologically thereafter. The FIFO methodology for short
sales is described below in “Short Sales.”
Acquisitions: The receipt or grant of the Security by gift, devise, inheritance, or
operation of law during the Relevant Period is not considered an eligible purchase if the original
This is the share price reaction to Eagle Bancorp’s December 4, 2017 denial of a short-seller report on
December 1, 2017 as calculated by Commission’s staff economists.
2
2
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: EGBN common stock is the only security eligible for recovery
under this Plan. Option contracts to purchase or sell the Security are not eligible for recovery
under the Plan. With respect to the Security purchased or sold through the exercise of an option,
the purchase/sale date is the option’s exercise or assignment date, and the purchase/sale price is
the option’s strike price at the time of exercise or assignment. Transactions in the Security
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: Shares purchased between December 4, 2017, and July 17, 2019, inclusive,
to cover a short position opened between March 2, 2015, and November 30, 2017, are eligible
for recovery. All other short positions will have a Recognized Loss equal to $0.00. The earliest
Relevant Period purchases will be matched against any short position existing on the date prior
to the start of the Relevant Period until that short position is fully covered. The date of a “short
sale” is deemed to be the date of sale of the Security and the date of covering a “short sale” is
deemed to be the date of purchase of the Security.
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 the Security purchased or
acquired during the Relevant Period. If the Recognized Loss calculates to a negative number
(i.e., a gain), then the Recognized Loss will be $0.00. The Recognized Loss may be adjusted
according to the provisions that follow.
Market Loss Limitation: If a Preliminary Claimant’s actual market loss on shares of the
Security 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 Recognized Loss will be $0.00.
The actual market loss will be calculated as (a) the total purchase amount for shares of
the Security purchased/acquired during the Relevant Period,3 less the sum of (b) the sales
proceeds from shares of the Security purchased/acquired during the Relevant Period and sold
during the Relevant Period or during the Lookback Period,4 and (c) the holding value on the
remaining of those shares purchased/acquired during the Relevant Period, which for the purposes
of this calculation will be $41.35 per share, the average closing price of the Security during the
Lookback Period, as shown on the last row in Table B.5
3
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.
4
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.
5
Any open short positions at the end of the Lookback Period will be ignored for purposes of calculating the actual
market loss.
3
Allocation of Funds: If the Net Available Fair Fund 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 any “Reasonable Interest” awarded.
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 “Offset for Prior Recovery” and “Minimum
Distribution Amount.”
Pro Rata Share: A Pro Rata Share computation is intended to measure Eligible Claimants’
Recognized Losses against one another. An Eligible Claimant’s Pro Rata Share will be calculated as
the ratio of his, her, or its Recognized Loss to the sum of Recognized Losses of all Eligible Claimants.
Offset for Prior Recovery: To avoid payment of a windfall, an Eligible Claimant’s distribution
amount will be no larger than his, her, or its 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 (“Prior
Recovery”), plus any “Reasonable Interest” awarded. That is, the distribution amount will be capped
at the Recognized Loss less the Prior Recovery, plus any “Reasonable Interest” awarded.
Reasonable Interest: If the Net Available Fair Fund exceeds the amount necessary to pay all
Eligible Claimants their Recognized Loss (minus any Prior Recovery) in full, the Fund Administrator,
in consultation with the Commission staff, may include interest in the distribution amount to
compensate for the time value of money. Reasonable Interest will be 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, Reasonable Interest will be awarded on a pro
rata basis from the excess funds.
Minimum Distribution Amount: The Minimum Distribution Amount will be $10.00. An
Eligible Claimant whose distribution amount, inclusive of Reasonable Interest, if any, is less than
the Minimum Distribution Amount will be deemed ineligible, and his, her, or its distribution
amount may 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 will receive a Distribution Payment equal to his, her, or its distribution amount.
4
Table A: Eagle Bancorp Common Stock Inflation Schedule
Inflation per
Share
$31.33
$12.64
$0.00
Date Range
March 2, 2015, through November 30, 2017
December 1, 2017, through July 17, 2019
On or after July 18, 2019
Table B: Eagle Bancorp Common Stock Average Closing Price during Lookback Period
Date
7/18/2019
7/19/2019
7/22/2019
7/23/2019
7/24/2019
7/25/2019
7/26/2019
7/29/2019
7/30/2019
7/31/2019
8/1/2019
8/2/2019
8/5/2019
8/6/2019
8/7/2019
8/8/2019
8/9/2019
8/12/2019
8/13/2019
8/14/2019
8/15/2019
Average
Closing Price
from July 18,
2019, to Date
Shown
$39.15
$39.39
$39.56
$39.69
$39.91
$39.98
$40.08
$40.03
$40.00
$40.03
$39.90
$39.82
$39.67
$39.55
$39.45
$39.42
$39.45
$39.45
$39.46
$39.45
$39.42
Date
8/16/2019
8/19/2019
8/20/2019
8/21/2019
8/22/2019
8/23/2019
8/26/2019
8/27/2019
8/28/2019
8/29/2019
8/30/2019
9/3/2019
9/4/2019
9/5/2019
9/6/2019
9/9/2019
9/10/2019
9/11/2019
9/12/2019
9/13/2019
9/16/2019
5
Average
Closing Price
from July 18,
2019, to Date
Shown
$39.44
$39.48
$39.51
$39.55
$39.59
$39.59
$39.60
$39.59
$39.59
$39.62
$39.65
$39.66
$39.68
$39.73
$39.78
$39.86
$39.94
$40.04
$40.17
$40.30
$40.42
Date
9/17/2019
9/18/2019
9/19/2019
9/20/2019
9/23/2019
9/24/2019
9/25/2019
9/26/2019
9/27/2019
9/30/2019
10/1/2019
10/2/2019
10/3/2019
10/4/2019
10/7/2019
10/8/2019
10/9/2019
10/10/2019
10/11/2019
10/14/2019
10/15/2019
Average
Closing Price
from July 18,
2019, to Date
Shown
$40.53
$40.63
$40.71
$40.79
$40.86
$40.91
$40.98
$41.05
$41.12
$41.19
$41.24
$41.25
$41.25
$41.26
$41.27
$41.28
$41.28
$41.29
$41.31
$41.33
$41.35
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.