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USING THE LAW TO PROTECT YOUR FUND’S ASSETS:

The Role of Institutional Investors in U.S. Shareholder Litigation

Prepared for:

The Tel Aviv Institutional Investor ConferenceMay 24, 2010

Todd Kammerman, Esq.Associate

Benjamin Kaufman, Esq.Partner

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Protection of Future Income

Litigation to Prevent or Recover Institutional Investor Losses through:

•Securities Litigation;

•Derivative Litigation; and

•Transactional Litigation

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Securities Fraud Class Action Cases in the United States

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“This Court has long recognized that meritorious private actions to enforce federal antifraud securities laws are an essential supplement to criminal prosecutions and

civil enforcement actions brought, respectively, by the Department of Justice and the Securities and Exchange

Commission (SEC).”

-- Justice Ruth Bader Ginsburg in the opinion of the Supreme Court in Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 313 (2007), which was litigated by

Milberg LLP

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Traditional Securities Class Action Litigation

Historically, as fiduciaries, institutional investors have actively sought to recover fund losses due to fraud

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Institutional Investors Role Private and public funds dominate the market

and have vested interest in:

Maintaining integrity of financial markets

Assuring corporate accountability

Maximizing returns

Increasingly stepping forward to seek recoveries for losses due to securities fraud

Fulfill fiduciary duties to take action when necessary

Serve as Lead Plaintiff and/or Class Representative

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U.S. Securities Class Actions with Union/Public Pension Fund As Lead Plaintiff

Sources: PricewaterhouseCoopers 2008 Securities Litigation Study (April 2009) and PricewaterhouseCoopers 2009 Securities Litigation Study (April 2010)Final 2009 data was not available; the full-year projections were based upon filings through June 30, 2009.

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U.S. Securities Class Actions with Any Institutional Investor As Lead Plaintiff

Sources: PricewaterhouseCoopers 2009 Securities Litigation Study (April 2010)Final 2009 data was not available; the full-year projections were based upon filings through June 30, 2009.

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Institutional Investors Account for Vast Majority of Settlements 91 total settlements valued at $3.1 billion in 2009

57% of cases settled in 2009 had an institutional investor as lead plaintiff

However, the value of the cases led by an institutional investor that settled in 2009 accounted for 85% of the value of total 2009 settlements

Nine of the top ten settlements in 2009 had institutional investors as the lead plaintiff

Sources: PricewaterhouseCoopers 2009 Securities Litigation Study (April 2010)

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Recent Jury Verdict: In re Vivendi Universal, S.A.

Recent trial ended with a jury verdict finding Vivendi liable on all counts

Retirement System for the General Employees of the City of Miami was a lead plaintiff

Class includes foreign institutional and individual investors

Investors estimated to recover up to $9.3 billion

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Transactional and Derivative Litigation – Protecting Assets From Future Losses

Comverse Derivative Litigation $62 million in cash + significant corporate governance reforms

(subject to court approval at June 21, 2010 hearing)

Southwest Airlines Improved reporting procedures

Anheuser Busch Litigation Settled for additional disclosures in proxy statement concerning

merger with InBev, protections for certain AB employees and an increase in the merger consideration

Madoff Litigation Brought on behalf of feeder funds that invested with Madoff Alleges that the funds’ managers failed to conduct adequate

due diligence Alleges that the funds’ auditors failed to conduct proper

audits

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Foreign Fund Trends and Statistics

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A Foothold in 2000-2010 Two of Top 10 securities class action settlements of all time

have been against foreign corporations

Nortel (two cases brought in 2001 and 2004): $2.2 billion

Royal Ahold N.V. (2003): $1.1 billion

Cross-border transactions

Globalization of the securities marketplace

Outreach by U.S.-based securities class action firms

Education and marketing efforts of U.S.-based securities litigators

Growing relationships between U.S. class actions firms and international institutional investors

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Non-U.S. Institutional Investor Lead-Plaintiff Applicants Trend

0%

2%

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6%

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12%

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18%

1999 2000 2001 2002 2003 2004 2005 2006 2007

Non-U.S. Movants as a Percentage of Newly Filed Cases

Source: ISS Research (Dec 2008)

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Growing Geographic Distribution 234 instances of international institutional investors moving for

lead plaintiff status (1996 through 2007)

134 different cases

25 different countries

31 different law firms represented the international institutional investors

Top 5 Countries:

Germany, Canada, Israel, Italy and United Kingdom

Included public pension funds, asset managers, mutual funds, union pension plans, and hedge funds

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Non-U.S. Institutional Investor Lead Plaintiff Applicants by Country: 1996 - 2007

Source: ISS Research (Dec 2008)

Rank Country No. of Movants Percentage of Total1 Germany 56 23.9%2 Canada 42 17.9%3 Israel 25 10.7%4 Italy 15 6.4%5 United Kingdom 14 6.0%6 Austria 13 5.6%7 Sweden 12 5.1%8 British Virgin Islands 7 3.0%9 Netherlands 7 3.0%10 Belgium 6 2.6%11 France 6 2.6%12 Luxembourg 6 2.6%13 Mexico 5 2.1%14 Denmark 4 1.7%15 Ireland 4 1.7%16 Switzerland 3 1.3%17 Bahamas 1 0.4%18 Bahrain 1 0.4%19 Bermuda 1 0.4%20 Cayman Islands 1 0.4%21 Czech Republic 1 0.4%22 Finland 1 0.4%23 Greece 1 0.4%24 Isle of Man 1 0.4%25 Netherlands Antilles 1 0.4%

Total 234 100.0%

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Foreign Participation Contributions in U.S. Securities Class Actions Maximize shareholders’ returns

Nortel Networks cases

Help achieve important corporate governance changes

Increase credibility of cases

Steer class definition to include Eurobond purchasers and/or shares purchased on foreign exchanges

Increased participation by non-U.S. investors in U.S.-based securities class actions may drive legal reforms in their own countries

Structure settlements to include international institutional investors

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Attractiveness of U.S. Lawsuits Ability to sue on behalf of other similarly situated persons is

largely unique to the United States

Availability of contingency fee arrangements

Absence of “loser pays” fee-shifting rules

Confidentiality Order

Scheduling Orders, which move the litigation

Right to expansive discovery after Motion to Dismiss phase

Well-developed system for certifying class actions

Potential for a large jury verdict

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Lead Plaintiff Incentives Submit claim forms in a timely fashion

30-70% of institutional investors fail to file claim forms in cases where they have losses

Extraordinary percentage in light of $6.9 billion in securities class action settlements finalized in 2007

Unaware of lawsuits until after the LP deadline

Increased attention to the filing process may lead to more active involvement by international institutional investors

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Opting-Out of Class Actions Depends on the particulars of a plaintiff’s claims and

the strengths of those claims connected to the plaintiff’s purchases

Typically reserved for plaintiffs with substantial losses and financial and structural wherewithal to pursue its own claims

The ability of defendants to pay damages

Advantages of opting-out The ability to select the venue in which to file

The power to select counsel

The ability to direct settlement unimpeded by the court or class issues

Possibility of obtaining a recovery many times larger than what would have been obtained in a class recovery

No need to seek class certification

Risks

Opt-out plaintiff runs the risk of non-recovery- opting out forever bars that plaintiff in participating in the class settlement or judgment

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The Milberg Difference

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Milberg LLP: Setting the Standard Expertise

Lead Counsel in 29 of the Top 100 Settlements Co-lead counsel in more of the 100 largest settlements than any

other plaintiff law firm Top 10 plaintiff’s law firm based on total settlements in 2008 Leadership in landmark cases (e.g., Tellabs, Inc. v. Makor)

Resources Financial and human resources to oppose defense firms Top-tier attorneys supported by in-house experts Forensic accountants and investigators Litigation technical support

Results 40 years of unparalleled recoveries on behalf of investors

Sources: RiskMetrics SCAS 100 for 2009 and SCAS 50 for 2008

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Recent and Notable Milberg LLP Securities Class Action Results

Date Case Recovery ($)

January 29, 2010 In re Vivendi Universal, S.A. Securities Litig., No. 1:02-cv-05571-RJH-HBP$9,300,000,000

(est)

August 9, 2009 In re Initial Public Offerings Sec. Litig., No. 21 MC 92 (SAS) (S.D.N.Y.) $586,000,000

January 14, 2009 Carlson v. Xerox Corp. et. al., No. 3:00-CV-1621 (D. Conn.) $750,000,000

January 6, 2009 In re Chiron Corp. Sec. Litig., No. C 04-4293 (N.D. Cal.) $30,000,000

August 8, 2008 In re Biovail Sec. Litig., No. 03-CV-8917 (S.D.N.Y.) $138,000,000

December 19, 2007

In re Tyco Int’l, Ltd. Multidistrict Litigation, No. 02-1335 (D.N.H.) $3,200,000,000

September 6, 2007

In re CMS Energy Sec. Litig., No. 02-72004 (E.D. Mich.) $200,000,000

July 18, 2007 In re American Express Fin. Advisors Sec. Litig., No. 04-1773 (D.N.J.) $100,000,000

June 8, 2007 In re Martha Stewart Living Omnimedia, Inc., Sec. Litig., No. 02-6273 (S.D.N.Y.) $30,000,000

January 29, 2007 In re Nortel Networks Corp. Sec. Litig. (Nortel I), No. 01-CV-1855 (S.D.N.Y.) $1,142,000,000

January 8, 2007 In re Sears, Roebuck & Co. Sec. Litig., No. 02-7527 (N.D. Ill.) $215,000,000

September 7, 2005

In re CVS Corp. Securities Litigation, No. 01-11464 (D. Mass.) $110,000,000

June 14, 2005 In re Deutsche Telekom AG Securities Litigation, No. 00-9475 (S.D.N.Y.) $120,000,000

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Milberg LLP Practice Areas Institutional Investor Services

Portfolio Monitoring

Quarterly Reporting

Case Evaluation

Corporate Governance and Shareholder Rights Advice

Litigation

Bankruptcy

Pro Bono Litigation

False Claims – Qui Tam

Mass Torts

Class Action Litigation

Securities Fraud

Consumer Fraud

ERISA

Insurance

Antitrust

Human Rights and Labor Practices

Derivative

Madoff

Transactional

Governance and Fees

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Thank You

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Benjamin Y. Kaufman, Esq.E bkaufman@milberg.com Admitted: States of New York and New JerseyT 212.631.8641 Education: B.A., Yeshiva University, 1985F 212.273.4378 J.D., Benjamin N. Cardozo School of Law of Yeshiva

University, 1988 Beklin Fellow, Belkin Scholar M.B.A., Stern School of Business of New York University, 1999

Mr. Kaufman focuses on class actions on behalf of defrauded investors and consumers.  Mr. Kaufman’s successful securities litigations include In re Deutsche Telekom AG Securities Litig., No. 00-9475 (S.D.N.Y.), a complex international securities litigation requiring evidentiary discovery in both the United States and Europe, which settled for $120 million.  Mr. Kaufman was also part of the team that recovered $46 million for investors in In re Asia Pulp & Paper Securities Litigation, No. 01-CV-7351 (S.D.N.Y.) and $43.1 million, with contributions of $20 million, $14.85 million and $8.25 million from Motorola, the individual defendants, and defendant underwriters respectively, in Freeland v. Iridium World Commc’ns, Ltd.

Mr. Kaufman’s outstanding representative results in derivative and transactional litigations include: In re Trump Hotels Shareholder Derivative Litigation (Trump personally contributed some of his holdings; the company increased the number of directors on its board, and certain future transactions had to be reviewed by a special committee.)He recently argued the appeal in In re Comverse Technology, Inc. Derivative Litig., 56 AD3d 49 (2008) which led to the seminal New York Appellate Division opinion which clarified the standards of demand futility, and held that a board of directors loses the protection of the business judgment rule where there is evidence of self-dealing and poor judgment by the directors; and In re Topps Company, Inc. Shareholder Litig. which resulted in a 2007 decision which vindicated the rights of shareholders under the rules of comity and doctrine of forum non conveniens and to pursue claims in the most relevant forum notwithstanding the fact that jurisdiction might exist as well in the state of incorporation.

Mr. Kaufman is also at the forefront of consumer litigations with a recently-filed litigation brought on behalf of paid e-mail subscribers against web hosting and e-mail service providers in Golf Clubs Away LLC v. Hostway Corporation, et al., Case No. 09-29596 (Fl. Cir. Ct., Broward County).In addition, Mr. Kaufman represents many of the firm's corporate clients in complex commercial litigation matters and arbitrations, including Puckett v. Sony Music Entertainment, No. 108802/98 (New York Cty. 2002) (a complex copyright royalty class action) and in arbitrations on behalf of oppressed minority shareholders in both public and privately held corporations.  Prior to joining Milberg in August of 1998, Mr. Kaufman was a Court Attorney for the New York State Supreme Court, New York County (1988-1990) and Principal Law Clerk to Justice Herman Cahn of the Commercial Division of the New York State Supreme Court, New York County (1990-1998).

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Todd Kammerman, Esq.E tkammerman@milberg.com Admitted: States of New York and New JerseyT 646.733.5692 Education: B.A., Brandeis University, 1999 cum laude with honorsF 212.273.4339 J.D., Benjamin N. Cardozo School of Law of Yeshiva

University, 2002 Alexander Fellow

Mr. Kammerman focuses his practice on litigation involving defrauded investors and consumers.  Mr. Kammerman’s successful litigations include In re CMS Energy Securities Litigation, No. 02-72004 (E.D. Mich.) ($200 million recovery); In re Royal Dutch/Shell Transport ERISA Litigation, No. 04-1398 (D.N.J.) ($90 million recovery); Scheiner v. i2 Technologies, et al., No. 01-418 (N.D. Tex.) ($87.8 million recovery); and In re Collins & Aikman Corporation Securities Litigation, No. 03-71173 (E.D. Mich.) ($10.8 million recovery).

Mr. Kammerman played a pivotal role in the In re Comverse Technology, Inc. Derivative Litigation ($62 million recovery), particularly in drafting the appellate briefs which led to the seminal New York Appellate Division opinion, reported at 56 A.D.3d 49 (2008), clarifying the standards of demand futility, and holding that a board of directors loses the protection of the business judgment rule where there is evidence of self-dealing and poor judgment by the directors.  He was also a member of the team that litigated the appeal in Tellabs, Inc. v. Makor Issues & Rights, Ltd. before the United States Supreme Court, in which the Supreme Court issued an opinion defining the pleading standard for scienter in all federal securities fraud cases, and is reported at 551 U.S. 308 (2007). While at Cardozo, he was named an Alexander Fellow, through which he worked as a judicial intern in the chambers of the Honorable Joseph A. Greenaway, Jr., U.S.D.J. in Newark, New Jersey.  Mr. Kammerman is a member of the bars of the States of New York and New Jersey and is admitted to practice before the United States District Courts for the District of New Jersey, Southern District of New York, Eastern District of Michigan and the Eastern District of New York and the United States Courts of Appeals for the Third and Eleventh Circuits.

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