DTCC Corrects Misrepresentation on Naked Short Selling Litigation

NEW YORK--(BUSINESS WIRE)--Jan. 27, 2006--The Depository Trust & Clearing Corporation today announced its intention to correct the continuing misrepresentation being put out by third parties on DTCC and naked short selling litigation.

To date, 14 suits have been brought against DTCC or its subsidiaries involving naked short selling. Of these 14 cases, 9 were either dismissed by the courts or withdrawn by the plaintiffs. In 4 cases, suits were filed, but DTCC and its subsidiaries were never served.

In dismissing one case in Nevada brought by Nanopierce Technologies, Inc., Judge Brent Adams wrote, "(S)tate law may not be applied as to impose damages on (DTCC). To do this would be to forbid Defendants from doing what the SEC authorized them to do."

"We are concerned about the continuing effort by third party groups to mischaracterize and misrepresent the facts surrounding these lawsuits and the degree of concern over this issue," said Larry Thompson, DTCC general counsel and managing director. "From what regulators have said, there is little empirical evidence that widespread abuses such as naked short selling are occurring."

DTCC subsidiaries clear and settle trades. Short selling and naked short selling are trading strategies regulated by the marketplaces and the SEC. DTCC is involved after a trade is completed at the marketplace. DTCC does not have regulatory powers or regulatory responsibility over trading or to forcing the completion of trades that fail. As the SEC has stated, fails can be the result of a wide range of factors.

The SEC has also pointed out that their efforts, in promulgating Reg SHO to effectively safeguard extended fails associated with short selling or naked short selling have been successful in achieving their goal.

A complete list of the cases and their disposition as of today follows:

Cases Filed Against The Depository Trust & Clearing Corporation (DTCC)
    and its Affiliates Related to the Issue of Naked Short Selling
    --------------------------------------------------------------

    Name of Case          Filed                 Disposition
----------------------------------------------------------------------
 1. Williamson v.    January 31, 2003  Dismissed by court, March 17,
    Goldman, Sachs                     2004 (as to moving defendants
    & Co., et al.                      - DTCC Defendants never
                                       served)
----------------------------------------------------------------------
 2. Nutek v.         March 21, 2003    Dismissed voluntarily as
    Ameritrade,                        against DTCC Defendants, July
    Inc., et al.                       30, 2004
----------------------------------------------------------------------
 3. Genemax Corp. v. November 14, 2003 Dismissed by court, November 9,
    Knight                             2004 (DTCC Defendants not
    Securities, LP,                    served)
    et al.
----------------------------------------------------------------------
 4. Capece v.        April 28, 2004    Dismissed voluntarily by
    Elgindy, et al.                    plaintiff as against DTCC
                                       Defendants, August 3, 2004
----------------------------------------------------------------------
 5. Nanopierce       April 29, 2004    Dismissed by court on DTCC
    Technologies,                      Defendants' motion to dismiss,
    Inc. v. The                        April 28, 2005.  Appeal
    Depository                         pending in Supreme Court of
    Trust Co., et                      Nevada
    al.
----------------------------------------------------------------------
 6. Sporn v.         August 30, 2004   Dismissed by court on DTCC
    Elgindy, et al.                    Defendants' motion to dismiss,
                                       July 25, 2005.  Sanctions
                                       awarded in favor of DTCC
                                       Defendants
----------------------------------------------------------------------
 7. Walters v. DTCC, August 30, 2004   Dismissed by court on DTCC
    et al.                             Defendants' motion to dismiss
                                       (no opposition filed),
                                       December 7, 2004
----------------------------------------------------------------------
 8. Pet Quarters,    October 29, 2004  DTCC Defendants' motion to
    Inc. v. The                        dismiss and plaintiffs' motion
    Depository                         to remand to state court
    Trust &                            pending
    Clearing
    Corporation, et
    al.
----------------------------------------------------------------------
 9. Capece v. DTCC,  April 29, 2005    Dismissed by court on DTCC
    et al.                             Defendants' motion, October
                                       11, 2005
----------------------------------------------------------------------
10. Whistler         May 12, 2005      DTCC Defendants' motion to
    Investments,                       dismiss pending (argument to
    Inc. v. DTCC,                      be heard February 6, 2006)
    et al.
----------------------------------------------------------------------
11. Miller, as       January, 2006     Filed, not served.
    Trustee v.
    Boston Partners
    Management LP,
    et al.
----------------------------------------------------------------------

                          Related Early Cases
                          -------------------

----------------------------------------------------------------------
1. X-Clearing Corporation v.     February 18, 2003 Dismissed by court
   Depository Trust                                on DTCC Defendants
   Corporation, et al.                             motion to dismiss,
   (Intergold, Inc. action)                        October 3, 2003
----------------------------------------------------------------------
2. Intergold Corporation v.      March 10, 2003    Filed, never served
   Depository Trust
   Corporation, et al.
----------------------------------------------------------------------
3. X-Clearing Corporation v.     February 25, 2003 Dismissed by court
   Depository Trust Corporation,                   on DTCC Defendants'
   et al.                                          motion to dismiss,
   (Petrogen Corp. action)                         September 5, 2003
----------------------------------------------------------------------

About DTCC

Through its subsidiaries, DTCC provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities and over-the-counter derivatives. DTCC's depository also provides custody and asset servicing for almost 2.5 million securities issues from the United States and 100 other countries and territories. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks. DTCC has operating facilities in multiple locations in the United States and overseas. For more information on DTCC, visit www.dtcc.com.