Class Actions and Proxy Processing

1. Class Actions and Proxy Processing Bank Depository User Group Scottsdale, Arizona October 25, 2005

2. Panel • Xcitek – John Kehoe, Senior Sales Executive • ProxyTrust – John Jansing, President • ADP ICS – John Keegan, Vice President, Account Management

3. Xcitek “Class Action Processing” • Issues • The Industry • Financial Institutions Headaches • Class Actions Defined • Event Lifecycle • What are the Vendors doing to help with Class Action Processing? • Data Providers • Outsource Solutions • Software Solutions • What is needed and next steps?

4. Xcitek “Class Action Processing” • Class Action Processing Issues • The industry: • Settlements in the last several years increased into the billions requiring financial institutions to pay close attention to filing. (Approximately 200 class actions are announced each year, of which 75% settle) • No central oversight effort. Disparate requirements • No definitive legal requirements for financial institutions to file on who’s behalf • Mostly US driven - hard to find international class action data sources

5. Xcitek “Class Action Processing” • Class Action Processing Issues • Financial Institution’s Headaches • Class Actions getting more complex (i.e. Worldcom with several different filing forms) • Class Actions typically go back 9 years. Data in different databases or most likely in microfiche • Different financial institutions filing for the same account. Some rejected and some dually paid upon settlement • Years before settlement is received thus making accounts owed proceeds hard to find if left financial institution • Unlike a corporate action, you miss the filing date and you miss out on the settlement. With a corporate action you may have cash or own the security. Huge Risk! • Usually a cost center to the financial institution • Time intensive, manual effort

6. Xcitek “Class Action Processing” • Class Action Lifecycle – Similar to Corporate Action Processing • Build Class Action • Notify Recipients • Create Data Requests • Import/Add Data • Solicit Responses • Create/File Claims • Reconcile Payments/Settlements

7. Xcitek “Class Action Processing” • Class Action Lifecycle • Build Class Action • Of the top 50 plaintiff law firms, 10 represent 60% of securities class actions that settle

8. Xcitek “Class Action Processing” • Class Action Lifecycle • Notify Recipients • Who are they? • Individual account holders – Trust Clients • Pension Funds • How and in different ways? • Global Notification - Provide an Optional Global Announcement of the Event • Announcement Notification - Send Cleansed Data to Eligible Recipients • Incomplete Response Reminder - Solicit Response from Eligible Recipients • Advice Response Received - Advise Receipt of Responses • Claim Notification - Notify Eligible Recipients Claim has been Filed on Their Behalf - New Claim Notification Template

9. Xcitek “Class Action Processing” • Class Action Lifecycle • Create Data Requests - Request Data to Complete the Claim Report • Begin & End Date of Holdings • Date Range of Transactions • Transaction Type to Identify Eligible Trades • Yes/No Indicators for Additional Data Elements • File or Report Format

10. Xcitek “Class Action Processing” • Class Action Lifecycle • Import / Add Data • Import Holdings (Beginning / Ending) & Transactions • Import Data from Client Spreadsheets • Rapid Data Entry for Non-Imported Data • Account Data • Holdings Data • Transaction Data

11. Xcitek “Class Action Processing” • Class Action Lifecycle • Solicit Responses & Capture Responses • Opt In • Opt Out • Auto Opt In

12. Xcitek “Class Action Processing” • Class Action Lifecycle • Create / File Claims • Provide Generic Agent Claim Form • Include Required Fields & Values to Submit Claim • Populate Claim Data • Only Include Accounts that Opt In • Create Claim Filing Notifications • Export Claim Data for Electronic Filing • View Claim Report on the CA for Holding & Transaction Data

13. Xcitek “Class Action Processing” • Class Action Lifecycle • Recon Payments / Settlements • Calculate and Record Class Action Settlement Proceed Payment • Report Class Action Settlement Proceed Payment • MT 566 • Entitlement Export • Develop Payment Reconciliation Statuses for Views and Management Reporting

14. Xcitek “Class Action Processing” • What are the Vendors doing to help with Class Action Processing? • Data Providers • Xcitek: Xcitek Class Actions™ (XCA) • ISS • Outsource Solutions • ISS • Magenta One • Software Solutions • Xcitek: XSP™ Class Actions

15. Xcitek “Class Action Processing” • What is needed and next steps? • Step 1: Look to fix your problems now • Review your data offerings • Look to automate or outsource • Step 2: Start Industry Initiatives • Financial Industry Groups Unit (Steering Committees) • Step 3: Hire Research firms • Formulate papers to guide industry groups • Step 4: Government Regulation? • Why do the lawyers hold so much power and make so much? • Look to see how lobbying as a financial industry sector can help. “JUST DO IT!”

16. Proxy Processing • Discussion Topic: The Current Beneficial Proxy Process • How it Actually Works • Third Party Processors Typically Handle: • Requests from Vote Agents • Exception Processing • What’s Good for the Bank • How it Benefits Your Clients

17. Proxy Processing • Discussion Topic: Helping Investment Company and Registered Investment Advisor Clients Comply with SEC Regulations • Challenges faced • Current Process • What works/Doesn’t • Options Available

18. Proxy Processing • Discussion Topic: Future Processing, Challenges to the Current Process and What They Mean for the Bank • Business Roundtable • Access to the Customer • Cost Model • Deregulation

19. Proxy Processing • Discussion Topic: Electronic Delivery • Current Model • Options

20. Proxy Processing • Discussion Topic: What Does the Future Hold? • Will There be Additional Regulatory Oversight? • What Will it Be? • What Will it Mean for the Bank?