UNITED STATES OF AMERICA

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SECURITIES AND EXCHANGE COMMISSION

ADMINISTRATIVE PROCEEDING

File No. 3-22327

In the Matter of

United Parcel Service, Inc.,

Respondent.

PROPOSED PLAN OF

DISTRIBUTION

OVERVIEW

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 collected from United Parcel

Service, Inc. (“UPS” or the “Respondent”) in the above-captioned matter. 1

As described more specifically below, the Plan seeks to compensate investors

based on their losses, due to the misconduct of the Respondents, on shares of United Parcel

Service Class A and Class B common stock (each an “Equity Security”) and certain United

Parcel Service bonds (each a “Debt Security,” and the Equity Securities and Debt Securities

collectively “Securities”) purchased or acquired from October 22, 2019, the filing date of UPS’s

first misleading Form 8-K in which it did not comply with Generally Accepted Accounting

Principles in disclosing or properly accounting for a goodwill impairment of one of its business

units, through January 24, 2021, 2 (the “Relevant Period”). In the view of the Commission staff

and the Fund Administrator, the methodology detailed in the Plan of Allocation (attached as

Exhibit A) constitutes a fair and reasonable allocation of the Fair Fund.

See 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. 11328 (Nov. 22, 2024) (the “Order”).

On January 25, 2021, UPS publicly disclosed that it had reached an agreement to sell the aforementioned business

unit for a fair value that was $650 million less than its previously reported $1.3 billion carrying value (Order,

paragraphs 6 and 29), harming investors who purchased shares at inflated prices or received depressed bond yields

during the Relevant Period.

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

On November 22, 2024, the Commission issued an Order Instituting Cease-andDesist 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

(the “Order”) against United Parcel Service, Inc. (the “Respondent” or “UPS”). The

Commission found that UPS failed to adhere to the basic accounting principle that the “fair

value” of an asset is the price that would be received to sell that asset in an orderly transaction

between market participants. These failures resulted in material misrepresentations to investors

regarding its earnings and other reported items and activities.

According to the Order, in 2019, UPS’s corporate strategy group conducted an

analysis of UPS Freight (“Freight”). Although UPS was carrying the business on its balance

sheet at $1.4 billion, the 2019 analysis, which was available prior to the company’s annual

goodwill impairment test, concluded Freight was likely to sell for only about $350 million to

$650 million and reflected that the nearly $500 million of goodwill associated with Freight was

impaired. The Commission found that when conducting the goodwill impairment testing

required by Generally Accepted Accounting Principles (“GAAP”) in 2019, UPS ignored the

company’s own assessment of Freight’s fair value. Instead, it relied on a valuation estimate of

$2 billion prepared by an external consultant to support the carrying value UPS had assigned to

Freight without giving the consultant the information it needed to fairly value the business. The

Commission found that UPS relied on this valuation and did not record a goodwill impairment.

Commission staff economists calculated that UPS’s failure to properly record a goodwill

impairment caused UPS’s share price to be artificially inflated and UPS’s bond yields to be

artificially depressed during the Relevant Period.

Equity investor losses occurred when UPS publicly disclosed on January 25,

2021, that it had reached an agreement to sell Freight for $650 million less than its $1.3 billion

carrying value. Equity investors who had purchased the shares when the carrying value was

misstated and then sold once the agreement was disclosed were harmed because they purchased

shares at inflated prices. Bond investor losses occurred throughout the Relevant Period as

bondholders received a lower yield than they otherwise would have.

The Commission ordered the Respondent to pay a $45,000,000 civil money

penalty to the Commission. The Commission also created the Fair Fund, pursuant to Section

308(a) of the Sarbanes-Oxley Act of 2002, so the penalty collected can be distributed to harmed

investors.

The Respondent has paid in full. The Fair Fund has been deposited in a

Commission-designated account at the United States 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:

“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.

10.

“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 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

with the Tax Administrator; and a certification that the Preliminary Claimant is not an Excluded

Party.

11.

“Claim Status Notice” means the notice sent by the Fund Administrator within

60 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.

12.

“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 90 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.

13.

“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.

14.

“Distribution Payment” means a payment from the Fair Fund to a Payee in

accordance with the terms of this Plan.

15.

“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.

16.

“Excluded Party” shall mean:

(a)

The Respondent;

(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.

17.

“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.

18.

“Net Available Fair Fund” means the Fair Fund, plus any interest or earnings,

less Administrative Costs.

19.

“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 $25 who

will receive a Distribution Payment.

20.

“Person” means natural individuals as well as legal entities such as corporations,

partnerships, or limited liability companies.

21.

“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. The initial mailing of the Plan Notice is the mailing sent by the Fund

Administrator in accordance with paragraph 39(d).

22.

“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.

23.

“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 before 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.

24.

“Recognized Loss” means the amount of loss calculated in accordance with the

Plan of Allocation.

25.

“Relevant Period” means the period of time from October 22, 2019, through

January 24, 2021.

26.

“Securities” refers to shares of United Parcel Service Class A and Class B

common stock and United Parcel Service bonds consisting of four CUSIPs: 911312BV7,

911312BW5, 911312BX3, and 911312BY1.

27.

“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 Claim Form and Plan Notice, and the Claims Bar Date. The Summary Notice will

be published once and will appear within ten days of the initial mailing of the Plan Notice.

28.

“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 14.

IV.

TAX COMPLIANCE

29.

On January 27, 2025, 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 2025 Engagement Letter Agreement with the Commission. 4

See Order Appointing Tax Administrator, Exchange Act Rel. No. 103342 (Jun. 27, 2025).

See Omnibus Order Extending 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. 101986 (Dec. 19,

2024).

30.

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

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, including but not limited to Foreign

Account Tax Compliance Act (FATCA).

31.

All tax obligations will be paid from the Fair Fund, subject to the review and

approval of Commission staff.

FUND ADMINISTRATOR

32.

On May 22, 2026, the Commission has appointed Epiq Class Actions & Claims

Solutions, Inc. (“Epiq”), as the fund administrator for the Fair Fund (the “Fund Administrator”),

and the Fund Administrator has obtained a bond in the amount of $45,000,000 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.

33.

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’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.

34.

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

See Order Appointing Fund Administrator and Setting Bond Amount, Exchange Act Rel. No. 105545.

a change is deemed to be material by the Commission staff, Commission approval is required

prior to implementation by amending the Plan.

35.

The Fund Administrator may extend any procedural deadline contained in the

Plan for good cause shown, if agreed upon by the Commission staff.

36.

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.

37.

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

38.

The Fund Administrator will, insofar as practicable, use its best efforts to

identify Preliminary Claimants from a review of 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.

shall:

39.

Within 60 days after Commission approval of the Plan, the Fund Administrator

(a)

design and submit 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 44;

(e)

establish and maintain a website devoted solely to the Fair Fund. The Fair

Fund’s website, located at www.UPSFairFund.com, will make available a

copy of the approved Plan; provide information regarding the claims

process and eligibility requirements for participation 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, 877-417-7404, 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.

40.

The Fund Administrator will publish the Summary Notice on the internet and/or

in print media acceptable to Commission staff once and will appear within ten days of the initial

mailing of the Plan Notice [match to par. 27].

41.

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.

42.

In all materials that refer to the Claims Bar Date, the filing deadline will be

clearly identified with the calendar date, which is 90 days from the date of the initial mailing of

the Plan Notice.

43.

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.

44.

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 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 Claim Form, Plan Notice and other relevant

materials, is properly disseminated to the beneficial owners; and/or

(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

on whose behalf, as record holder, they purchased the Securities during

the Relevant Period and sold at a loss as calculated according to the

methodology in the Plan of Allocation, so that the Fund Administrator can

communicate with the beneficial owners directly.

45.

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.

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, 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, out-of-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.

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

substantiate the claim. Without limitation, this information may include third party documentary

evidence of purchases and dispositions of the Securities during the Relevant Period, as well as

holdings of the Securities at pertinent dates.

49.

Electronic claims submission is encouraged. The Plan Notice will include

instructions 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. 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.

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,

and must provide each beneficial owner’s name, address, and other available contact

information. 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

claims.

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 the 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 its 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 the Securities (account statements, confirmations, and other documentation of

purchases and dispositions), as well as holdings of the Securities 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 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.

54.

The receipt of the Securities by gift, inheritance, devise, or operation of law will

not be deemed to be a purchase of the 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 the 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 the Securities, and in cases where

duplicative claims are filed by the donor and donee, the donee’s 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 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 60 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.

59.

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.

60.

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.

61.

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

62.

Within 200 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 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.

63.

The Fund Administrator may consider disputes of an Eligible Claimant’s

Recognized Loss calculation if presented in writing to the Fund Administrator within 14 days of

the date of the Determination Notice. Within 14 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 loss calculations for the claim.

Third Party Review

64.

After the Fund Administrator has completed the process of analyzing the claims

and determining claim amounts in accordance with the Plan, and prior to the distribution of any

funds, the Fund Administrator will engage an independent, third party firm, not unacceptable to

Commission staff, to perform a set of agreed upon procedures, review a statistically significant

sample of claims, and ensure accurate and comprehensive application of the Plan of Allocation.

The Fund Administrator will communicate the results of the review to Commission staff together

with any written analysis or reports related to the review, and upon request, will make the firm

available to the Commission staff to respond to questions concerning the review.

Distribution Methodology

65.

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.

66.

No Distribution Payments will be made for less than $25. If an Eligible

Claimant’s distribution amount, in accordance with the Plan of Allocation, calculates to a

distribution amount less than $25, 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 $25. All

Eligible Claimants whose Recognized Loss calculates to a distribution amount equal to or greater

than $25 will be deemed a Payee and receive a Distribution Payment.

Establishment of a Reserve

67.

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”).

68.

After all disbursements and Administrative Costs are paid, any remaining

amounts in the Reserve will become part of the Residual described in paragraph 91.

Preparation of the Payment File

69.

Within 45 days following the date of the Determination Notices described in

paragraph 62, 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 that (a) represents that the

Payee List was compiled in accordance with the approved Plan and is accurate as to Payees’

names, addresses, Recognized Losses, and amounts of their Distribution Payment; (b) includes

the number of Payees compensated; (c) states 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; (d) states the total amount of funds to be disbursed,

and if applicable, includes the total amount of such funds to be withheld pursuant to

paragraph 80; and (e) provides all information necessary to make a payment to each Payee.

The Escrow Account

70.

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.

71.

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.

72. 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.

73. 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.

74. 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.

75. 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

76.

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.

77. 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.

78. 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.

79.

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 87.

80.

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

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.

81.

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.

82.

Distribution Payments must be made by check or electronic payment payable to

the Payee (the beneficial account owner). Payments shall be sent to the Payee directly and will

not be sent to the Third Party Filer to be forwarded to the Payee. 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.

83.

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.

84.

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.

85.

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.

Post Distribution; Handling of Returned or Uncashed Checks; and Reissues

86.

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 90 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.

87.

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 120 days from reissuance, and in no event will a check be reissued

later than 120 days from the date of the original issuance without the approval of Commission

staff.

88.

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

89.

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

90.

If funds remain following the initial distribution, the Fund Administrator, in

consultation with the Commission staff, may seek subsequent distribution(s) of any available

remaining funds in a manner consistent with this Plan and pursuant to the Commission’s Rules.

91.

A residual will be established for any amounts remaining after the final

disbursement to Payees from the Fair Fund and payment of all Administrative Costs (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, and tax refunds received due to the Fair

Fund’s overpayment of taxes or for waiver of IRS penalties.

92.

Once the Fund Administrator, in consultation with the Commission staff, deems

further distribution of the Fair Fund to investors infeasible, the Fund Administrator will direct

the Bank to stop payment on all uncashed distribution payments, and return any funds remaining

in the Escrow and Distribution Accounts to the Commission to become part of the Residual.

93.

All funds remaining in the Residual that are infeasible to distribute to investors

will be held by the Commission and transferred to the U.S. Treasury after the final accounting is

approved by the Commission.

Filing of Reports and Accountings

94.

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 20 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.

95.

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.

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 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.

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

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 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. 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.

Termination of the Fair Fund

100. 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 amount returned to the Fair Fund

in the future that is 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.

101. 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.

102. 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

103. The Notice of Proposed Plan of Distribution and Opportunity to Comment (the

“Notice”) will be published on the Commission’s website at

https://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 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.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 3-22327” in the

subject line. Comments received will be available to the public. Persons should only submit

comments that they wish to make publicly available.

Exhibit A

PLAN OF ALLOCATION

This Plan of Allocation 1 is designed to compensate investors based on their losses, due to the

misconduct of the Respondent, on shares of United Parcel Service Class A and Class B common

stock 2 (each an “Equity Security”) and certain United Parcel Service bonds 3 (each a “Debt Security,”

and the Equity Securities and Debt Securities collectively “Securities”) purchased or acquired from

October 22, 2019, the filing date of UPS’s first misleading Form 8-K in which it did not comply with

Generally Accepted Accounting Principles (“GAAP”) in disclosing or properly accounting for a

goodwill impairment of one of its business units, UPS Freight (“Freight”), through January 24, 2021,

the eve of UPS’s public disclosure that it had reached an agreement to sell Freight for $650 million

less than its carrying value (the “Relevant Period”).

Investors who did not purchase Equity Securities or the Debt Securities during the Relevant

Period, or who are an Excluded Party, are ineligible to recover under this Plan. Artificial inflation in

the prices of the Equity Securities and the additional interest owed on the Debt Securities during the

Relevant Period have been calculated by Commission staff economists.

The Methodology

Recognized Loss on the Equity Securities

The Fund Administrator will calculate the amount of loss for each share of the Equity

Securities purchased or acquired during the Relevant Period (“Recognized Loss per Share”) as

follows.

For each share of an Equity Security purchased or acquired from October 22, 2019, through

January 24, 2021, and

Sold at or prior to the close of trading on January 24, 2021, the Recognized

Loss per Share is $0.

Sold after the close of trading on January 24, 2021, or still held, the

Recognized Loss per Share is the lesser of:

a) $2.09 (the amount of inflation per share on the purchase/acquisition

date); or

All capitalized terms used herein but not defined shall have the same meanings ascribed to them in the Plan.

Each Class A common share has 10 votes and is convertible into one Class B common share. The Class A shares are

not listed on an exchange or traded “over the counter.” Each Class B share has 1 vote. Class B shares are listed on the

New York Stock Exchange under the symbol “UPS.” Class B shares cannot be converted to Class A shares.

Debt Securities consist of four CUSIPs: 911312BV7, 911312BW5, 911312BX3, and 911312BY1.

b) the purchase/acquisition price minus $161.75, the closing price of the

Equity Securities on January 25, 2021. 4

For purposes of this Plan of Allocation, converting a Class A share into a Class B share shall

not be treated as a sale of the Class A share or a purchase of the Class B share. Each Class B share

received through the conversion of a Class A share will be treated as having the same purchase price

and purchase date as the original Class A share from which it was converted.

If the Recognized Loss per Share calculates to a negative number, reflecting a gain, the

Recognized Loss per Share will be $0.

Purchases/acquisitions and sales shall be deemed to have occurred on the “contract” or

“trade” date as opposed to the “settlement” or “payment” date.

Recognized Loss on Debt Securities

The Fund Administrator will calculate the amount of loss for each $1,000 par value of a Debt

Security purchased or acquired during the Relevant Period (“Recognized Loss per $1,000 Par

Value”) as follows.

For each $1,000 par value of a Debt Security purchased or acquired from October 22, 2019,

through January 24, 2021, and

Sold at or prior to the close of trading on January 24, 2021, the Recognized

Loss per $1,000 Par Value is $0.0605 multiplied by the number of days from

the purchase date up to, but not including, the sale date, divided by 30.

Sold after the close of trading on January 24, 2021, the Recognized Loss per

$1,000 Par Value is $0.0605 multiplied by the number of days from the

purchase date up to, but not including, January 25, 2021, divided by 30.

Purchases/acquisitions and sales shall be deemed to have occurred on the “contract” or

“trade” date as opposed to the “settlement” or “payment” date.

II.

Additional Provisions

FIFO Methodology

Multiple purchases/acquisitions and sales of any of the Securities during the Relevant Period

will be matched to transactions in the same Security according to the first-in, first-out (“FIFO”)

method. (As explained in the Methodology, each Class B share that is converted from a Class A

share will be deemed to have the same purchase price and purchase date as the Class A share from

which the Class B share was converted.) For each Security separately, 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 all have been matched, or if there are no beginning holdings, then any

For purposes of this Plan of Allocation, Class A shares are deemed to have the same closing price as Class B shares,

because the Class A shares are not listed on an exchange or traded over-the-counter and they are convertible into Class B

shares on a 1-for-1 basis.

further sales will be matched against the earliest Relevant Period purchases/acquisitions and

chronologically thereafter.

Acquisitions

The receipt or grant of the Securities 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. Securities acquired outside the Relevant Period will be excluded from

the calculation of the Recognized Loss.

Options and Derivatives

United Parcel Service Class A and Class B common stock and the United Parcel Service

bonds with CUSIPs 911312BV7, 911312BW5, 911312BX3, and 911312BY1 are the only securities

eligible for recovery under this Plan. Option contracts to purchase or sell the Securities are not

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 options’ 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 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 calculation of the

Recognized Loss.

Short Sales

Shares of the Equity Securities purchased during the Relevant Period to cover short positions

held at the beginning of the Relevant Period or to cover short positions opened during the Relevant

Period will have a Recognized Loss per Share of $0. Debt Securities purchased during the Relevant

Period to cover short positions opened during the Relevant Period will have a Recognized Loss per

$1,000 Par Value of $0. 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. The

earliest Relevant Period purchases will be matched against any short position existing at the opening

of the Relevant Period until that short position is fully covered.

III.

Calculating Recognized Loss

Recognized Loss for each Equity Security will be the sum of the Recognized Loss per Share,

as calculated above, on all shares of that Equity Security purchased or acquired during the Relevant

Period.

Recognized Loss for each Debt Security will be the sum of the Recognized Loss per $1,000

Par Value, as calculated above, for all par value of that Debt Security purchased or acquired during

the Relevant Period.

If a Preliminary Claimant transacted in more than one Security, the Recognized Loss will be

the sum of the Recognized Losses for each Security.

IV.

Becoming an Eligible Claimant

A Preliminary Claimant, who is not an Excluded Party, who submits a Claim Form and has

suffered a Recognized Loss as calculated above, will be deemed an Eligible Claimant.

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 Percentage” of the Net Available Fair Fund.

In either case, the distribution amount will be subject to the “Offset for Prior Recovery” and

“Minimum Distribution Amount.”

Calculating an Eligible Claimant’s Pro Rata Percentage

This computation is intended to measure Eligible Claimants’ Recognized Losses against one

another. Each Eligible Claimant’s Pro Rata Percentage 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 pro rata from the excess funds.

Minimum Distribution Amount

The Minimum Distribution Amount will be $25. An Eligible Claimant whose distribution

amount is less than the Minimum Distribution Amount will be deemed ineligible and his, her, or its

distribution amount may be reallocated pro rata to Eligible Claimants whose distribution amounts

are greater than or equal to the Minimum Distribution Amount.

Payee and Distribution Payment

An Eligible Claimant whose distribution amount equals or exceeds the Minimum

Distribution Amount will be deemed a Payee and will receive a Distribution Payment equal to his,

her, or its calculated distribution amount.

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.