AMICUS PROGRAM 2007 Year in Review

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					                                                            AMICUS PROGRAM:
                                                            2007 Year in Review

SIFMA files amicus, or “friend of the court,” legal briefs in cases that raise serious policy issues
that may affect the securities markets or common practices within the financial services industry.
SIFMA’s Office of General Counsel analyzes requests for amicus participation by SIFMA and
makes preliminary recommendations to SIFMA’s Litigation Advisory Committee, which
ultimately determines whether a brief should be filed, and which issues should be addressed.

During fiscal year 2007, SIFMA’s amicus program was more active and successful than it has
ever been. SIFMA filed a total of 22 amicus briefs, which is more than the former SIA and
TBMA have ever filed, collectively, in any given year.

During 2007, SIFMA’s amicus program continued to pursue its core objective of participating in
securities cases where plaintiffs’ lawyers attempt to inappropriately expand legal theories or alter
procedural rules in their favor. SIFMA’s briefs in this area addressed a broad range of securities
issues including: (i) the viability of private actions against secondary actors for securities fraud
(Regents, Stoneridge) (ii) class action pleading standards (Dynex, Tellabs), (iii) foreign plaintiff
lawsuits against foreign companies in U.S. courts (National Australia Bank), and (iv) the element
of reliance in research analyst report cases (Millowitz). In each of these cases, SIFMA opposed
the unprincipled expansion of securities litigation and highlighted its negative implications for
U.S. competitiveness. During 2007, U.S. global competitiveness was a top SIFMA Board
priority and SIFMA’s amicus program clearly advanced this objective.

In addition to cases that directly addressed significant securities law issues, SIFMA also
participated in numerous other cases that raised a diverse range of issues of importance to the
securities industry. SIFMA’s briefs addressed the following far-ranging topic areas: (i)
immunity from defamation suits for statements made by firms to regulators about the reason for
terminating a broker (Rosenberg), (ii) expungement of customer complaint records (Kay,
Kurrasch), (iii) the enforceability of arbitration agreements (Hadacheck), (iv) patent infringement
liability (Seagate), (v) municipal bond financing issues (Strand, Davis), (vi) tax issues (MBNA),
and (vii) bankruptcy issues (Enron, NWA, Scotia, Gredd, LeNature, Musicland, American Home,
New Century). Through these cases, SIFMA demonstrated its appreciation of, and willingness to
advocate for our members on, the full spectrum of issues that impact the operation of securities
marketplaces and the conduct of the securities business.

SIFMA’s amicus program not only championed and advanced our members’ legal and policy
perspectives, but also delivered its share of tangible and positive results in 2007. For example:

•   Tellabs (Supreme Court): In June 2007, the Supreme Court ruled 8-1 to endorse a high
    pleading standard for class-action securities fraud lawsuits. The Court ruled that plaintiffs
    must plead “with particularity” facts giving rise to a “strong inference” of scienter. SIFMA’s
    amicus brief in this case argued that lower pleading standards would encourage abusive suits
    that the Private Securities Litigation Reform Act (PLSRA) intended to prevent, and that such
    low standards would make it more difficult to obtain early dismissal of suits based on
    speculative allegations of fraud (known as ‘scienter’ allegations).

•   Credit Suisse v. Billings (Supreme Court): Also in June 2007, the Supreme Court ruled 7-1
    that an antitrust lawsuit against Wall Street firms involving the pricing of initial public
    offerings (IPOs) could not go forward. The decision, which SIFMA advocated in its amicus
    brief, immunizes securities underwriting practices from civil antitrust liability.

•   In re Enron (U.S. District Court): In August 2007, a U.S. District Court judge overturned two
    prior bankruptcy decisions and ruled that a bankruptcy claim held by an innocent purchaser
    could not be equitably subordinated or disallowed based solely on the bad conduct of the
    prior holder of the claim. SIFMA’s amicus brief persuasively argued that any decision to the
    contrary would have dramatic and negative market implications.

•   Strand v. Escambia County (FL state court): In October 2007, Florida’s Supreme Court
    revisited its prior ruling that bonds payable through tax increment financing (TIFs) and
    certificates of participation (COPs) are subject to the referendum requirements of Florida’s
    Constitution. SIFMA joined the litigation as of-counsel to Escambia County and provided
    substantial assistance in drafting their brief. Prior to oral argument, the court issued a revised
    opinion that represented an enormous victory for SIFMA – and for issuers and the markets –
    by alleviating concern regarding the approximately $13 billion in TIFs and COPs that had
    been issued prior to the original ruling.

SIFMA is optimistic that several other high-profile cases in which SIFMA participated as an
amicus, will be decided in the industry’s favor. These cases include:

•   Stoneridge (Supreme Court): This case, which was orally argued before the Supreme Court
    on Oct. 9th, will set the standard for private actions against secondary actors for securities
    fraud. Because of its potentially far reaching implications for investment banks, attorneys,
    accountants and other third-parties who do business with public companies that commit
    fraud, this case has been called “the most important case in a generation.”

•   National Australia Bank (2nd Cir.): This case will determine whether foreign plaintiffs may
    sue foreign companies for foreign conduct under U.S. securities laws. SIFMA’s brief, filed
    on July 12th, argued that extraterritorial application of U.S. securities laws to foreign-based
    disputes would harm U.S. markets.

•   Kentucky v. Davis (Supreme Court): This case, which was orally argued before the Supreme
    Court on Nov. 5th, will decide whether a state statute that gives residents a tax break on
    municipal bonds issued by the state, but not on bonds issued by other states, is constitutional.
    SIFMA’s brief focused on the legitimate and compelling local concerns that are served by
    such statutes. State bonds finance public needs like schools and highways and thus, states
    should encourage residents to purchase their bonds. Any possible burden imposed by the
    Kentucky tax scheme upon interstate commerce could not possibly outweigh the compelling
    public benefit it serves.

In sum, 2007 was a highly successful year for SIFMA’s amicus program in terms of the quantity,
breadth, diversity, and quality of the briefs filed by SIFMA on behalf of its members. SIFMA
participated in significant securities law cases and other cases that raised an extraordinarily
diverse range of important issues to our industry.

We continue to seek ways to improve our already successful program and we actively seek
member and other input in this regard. We will continue to provide you with timely updates on
amicus program developments and enhancements in the coming year. SIFMA amicus briefs from
2003 to present are now available online at


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