European Securities and Markets Authority Following the establishment of the European Securities and Markets Authority (ESMA) on 1 January 2011, the Board of Supervisors (BoS) of ESMA held its first meeting on 11 January 2011. ESMA is an independent EU Authority and replaced the Committee of European Securities Regulators (CESR), an advisory body comprised of EU securities regulators that advised the European Commission from 2001 to 2010 on policy issues around securities legislation. Date January 11, 2011

News Article In a Dec. 28 letter to the commission, three trade industry trade groups, FIA, ISDA, and SIFMa, warned the CFTC to tread lightly as it writes the regulations regarding trading practices that disrupt markets, manipulate prices or amount to fraud. The associations are particularly concerned with the commission's proposed definition of fraud. The CFTC, writing a proposed "antimanipulation" rule in November, said it wants to set "broad" criteria for judging traders. The commission likely will take aim at schemes that are intended to mislead investors or manipulate the market. The

Litigation Release The SEC today charged Charles Schwab Investment Management and Charles Schwab & Co., Inc. with making misleading statements regarding the Schwab YieldPlus Fund and failing to establish, maintain and enforce policies and procedures to prevent the misuse of material, nonpublic information, alleging and, in its related order, finding that each entity willfully violated anti-fraud provisions of the 33 Act, Sections 17(a)(2) and (3). Document Number Litigation Release No. 21806 Date January 11, 2011 Cross References (links may require a Cabinet subscription) Sections 17(a)(2) and

SEC Press Release The SEC announced a settled enforcement action against two Charles Schwab entities and their employees for making material misstatements in marketing a "YieldPlus" fund as a "cash alternative" despite the presence of significant market risk in the securities the funds invested in. The SEC actions allege violations of a number of provisions of the securities laws, including anti-fraud charges under the Securities Act against the Schwab entities, and 10b-5 charges against the individuals. The Schwab entities paid over $110 million to settle the actions. Please contact any of

SEC Release (Litigation) The SEC announced the filing of a civil complaint bringing insider trading charges against (1) a hedge fund advisory firm; (2) the firm's manager and an analyst at the firm; (3) a corporate executive; and (4) an employee of an investor relations firm. The charges stem from the receipt, by the hedge fund, of insider information from a defendant and cooperating witness in the Galleon investigation. Please contact any of the following Cadwalader attorneys if you have any questions about this item: Steven Lofchie; [email protected] Bradley Bondi; [email protected]