notice of motion - kcc class actionclassaction.kccllc.net/documents/sei0001/sei... · notice of...

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

UNITED STATES SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,

V.

ROBERT G. PEARSON and ILLINOIS STOCK TRANSFER COMPANY (d/b/a IST SHAREHOLDER SERVICES),

Case No. 14 C 3785

Hon. Rebecca R. Pallmeyer Magistrate Judge Young B. Kim

Defendants.

NOTICE OF MOTION

PLEASE TAKE notice that on August 4, 2014, at 9:00 a.m., I shall appear before the Honorable Rebecca R. Pallmeyer, or any judge sitting in her stead, in Room 2144 of the United States District Court for the Northern District of Illinois, 219 S. Dearborn Street, Chicago, Illinois 60604, and then and there present the RECEIVER'S MOTION FOR ORDER APPROVING CLAIMS PROCEDURES, ESTABLISHING CLAIMS BAR DATE, AND APPROVING OTHER RELATED RELIEF.

Dated: July 23, 2014 Respectfully submitted,

By: /s/ Geoffrey S. Goodman

Geoffrey S. Goodman (ARDC # 6272297) Foley & Lardner LLP 321 North Clark Street, Suite 2800 Chicago, IL 60654-5313 Phone: (312) 832-4500 Fax: (312) 832-4700 [email protected] Counsel to the Receiver

Case: 1:14-cv-03785 Document #: 58 Filed: 07/23/14 of 6 PageID #:428

CERTIFICATE OF SERVICE

I, Geoffrey S. Goodman, hereby certify that on July 23, 2014, I caused to be electronically filed the NOTICE OF MOTION and RECEIVER'S MOTION FOR ORDER APPROVING CLAIMS PROCEDURES, ESTABLISHING CLAIMS BAR DATE, AND APPROVING OTHER RELATED RELIEF, each of which is being served electronically via the Court's ECF system on all registered parties of record listed below.

• AUSA USAILN.ECFAUSAgusdoj.gov • Barbara Anne Mallon [email protected] • Barry I. Mortge mortgelaw@comcastnet • Daniel J. Hayes [email protected] , [email protected] , [email protected] • Dexter B. Johnson [email protected] • Steven Lee Klawans [email protected] • Tracy W. Lo [email protected]

I also hereby certify that on July 23, 2014, I caused a true and correct copy of the NOTICE OF MOTION and RECEIVER'S MOTION FOR ORDER APPROVING CLAIMS PROCEDURES, ESTABLISHING CLAIMS BAR DATE, AND APPROVING OTHER RELATED RELIEF to be served via U.S. mail, upon the following and via e-mail (unless an e-mail address is not provided, via facsimile) on the issuers listed on the attached:

Randall W. Graff 11611 N. Meridian St., Ste. 350 Carmel, IN 46032 [email protected]

/s/ Geoffrey S. Goodman

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Issuers Email Contact I Fax Contact r Adtegrity.com International, Inc. [email protected]

Adtegrity.com International, Inc. [email protected] Aereon Corporation [email protected] American Bancorp of Illinois [email protected] American Patriot Financial Group [email protected] Ames National Corporation [email protected] Ames National Corporation [email protected] Analytical Bio-Chemistry Laboratories, Inc. [email protected] Andover Bancorp, Inc. [email protected] ASB Financial Corporation [email protected] Atlas Financial Holdings, Inc. [email protected] Atlas Financial Holdings, Inc. [email protected] Azincourt Uranium, Inc. [email protected] Azincourt Uranium, Inc. [email protected] BAB, Inc. [email protected] Bancorp Financial, Inc. [email protected] Bexil Corporation [email protected] Bexil Corporation [email protected] Bishop Hardware & Supply, Inc. (217) 528-0104 Blackhawk Bancorp, Inc. [email protected] _ BlueRidge Bank [email protected]

'-(570) 443-8414 Blue Ridge Real Estate Co. [email protected] Boyle Bancorp

Boyle Bancorp [email protected] Burke & Herbert Bank [email protected] CapitalMark Bank & Trust [email protected] Capstar Bank [email protected] Carlisle Goldfields Limited [email protected] Carlisle Goldfields Limited [email protected] CFB Bancshares [email protected] Choice Bank [email protected] The Citizens Bank of DeGraff [email protected] Citizens Commerce Bancshares, Inc. [email protected] Citizens First Corporation [email protected] ClearTrust LLC [email protected] Commerce Union Bank [email protected] Community Business Bank [email protected] Community Financial Shares, Inc. [email protected] Community National Corporation [email protected] Cornerstone Bancshares, Inc. [email protected] Cortland Bancorp, Inc. [email protected] Cortland Bancorp, Inc. [email protected] Cortland Bancorp, Inc. [email protected] County Bank Corp — [email protected] County Bank Corp [email protected] DMB Corporation [email protected] Eagle Hospitality Properties Trust, Inc. [email protected] The Edgar Lomax Company [email protected] Emclaire Financial Corporation [email protected] Emclaire Financial Corporation [email protected] Eureka Financial Corporation [email protected] Eureka Financial Corporation [email protected] Farmers & Merchants Bancorp [email protected] Farmers & Merchants Bancorp [email protected]

4847-3681-0779.1


Issuers Email Contact Fax Contact Fentura Financial, Inc. [email protected] Financial Holdings, Inc. [email protected] Financial Services Holding Corporation [email protected] First America Holdings Corporation [email protected] First Bancshares of Texas, Inc. [email protected] First Bancshares, Inc. [email protected] First BancTrust Corporation (First Bank & Trust) [email protected] First Bankers Trustshares, Inc. [email protected] First Citizens Banc Corp. [email protected] First Citizens Banc Corp. [email protected]

[email protected] First Community Financial Corporation First Community Financial Partners [email protected] First Community Financial Partners [email protected] First Evanston Bancorp, Inc. [email protected] First Farmers Bank Holding Company [email protected]

[email protected] First Financial Corp. Foothills Bank & Trust , [email protected] Foxby Corporation [email protected] Foxby Corporation [email protected]

(403) 212-1302

-,

Franklin Bancorp [email protected] Franklin Bancorp [email protected] Franklin Bancorp alex_ [email protected] Glenmark Capital Corp. Golden Valley Bank [email protected] Greenville Federal Financial Corp. [email protected] Greenwoods Financial Group, Inc. [email protected] Greenwoods Financial Group, Inc. [email protected] Hardin County Bancshares [email protected]

[email protected] Hastings City Bank Hawthorn Bancshares [email protected] HCB Financial [email protected] HCB Financial [email protected] High Country Bancorp, Inc. [email protected] Home City Financial Corporation [email protected]

[email protected] IFB Holdings, Inc. Infinity Energy Resources, Inc. [email protected] Infinity Energy Resources, Inc. [email protected] iSIGN Media Solutions, Inc. [email protected] Kentucky First Federal Bancorp [email protected] Kentucky Home Bancshares, Inc. [email protected] Kentucky National Bancorp, Inc. [email protected]

-,

Kilo Goldmines Ltd. [email protected] Kilo Goldrnines Ltd. [email protected] Lake Shore III Corporation [email protected] Lake Shore III Corporation [email protected] Legal Research Center [email protected] LKQ Corporation [email protected] — Lucas Energy, Inc. [email protected] Lucas Energy, Inc. [email protected] , Madison Financial Corporation dneal@ withmadison.com bank Mercantile Bancorp, Inc. [email protected] Mercantile Bancorp, Inc. kim.newmarch@dlapipercom Meritage Hospitality Group, Inc. [email protected]

4847-3681-0779.1


Issuers Email Contact [email protected] [email protected]

Fax Contact Meritage Hospitality Group, Inc. Metropolitan Capital Bancorp, Inc. Midland States Bancorp, Inc. [email protected] Midland States Bancorp, Inc. [email protected] MidwestOne Financial Group, Inc. [email protected] Monona Bankshares [email protected] Monument Bank [email protected] Mountain Commerce Bancorp, Inc. [email protected] Mountain Services Corporation [email protected] MYR Group, Inc. [email protected] MYR Group, Inc. [email protected] National Research Corporation [email protected] NB&T Financial Group, Inc. [email protected] NB&T Financial Group, Inc. [email protected] NEW Bancshares, Inc. [email protected] NI Bancshares Corporation [email protected] Northern California National Bank [email protected] Norwood Financial Corporation [email protected] NVE Corporation [email protected] Ohio Legacy Corporation [email protected] Ohio Valley Banc Corp [email protected] Ohio Valley Banc Corp [email protected] Petrolympic [email protected] Petroshale, Inc. [email protected] Petroshale, Inc. [email protected] Phoenix Bancorp, Inc. [email protected] Portage Bancshares [email protected] QCR Holdings, Inc. [email protected] QCR Holdings, Inc. [email protected] Redwood Financial [email protected] Richardson Electronics, Ltd. [email protected] Ridgestone Financial Services, Inc. [email protected] Seaway Bancshares, Inc. [email protected] SFSB, Inc. [email protected] Singpoli Capital Corporation [email protected] Skyhook Wireless, Inc. [email protected] Skyhook Wireless, Inc. [email protected] Sphere 3D Corporation [email protected] Sphere 3D Corporation [email protected] Southeast Bancshares [email protected] Southeast Bancshares [email protected] Southern Heritage Bancshares, Inc. [email protected] Southern Michigan Bancorp [email protected] Sparton Corporation [email protected] Sterling Energy Group, Inc. [email protected] TCSB Bancorp, Inc. [email protected] Telco Capital Corporation [email protected] Tennessee Valley Financial Holdings, Inc. [email protected] The Stephan Company [email protected] TMX Equity Financial Trust Company [email protected] TMX Equity Financial Trust Company [email protected] Town Center Bank [email protected] Town Center Bank [email protected] Tuxis Corporation [email protected]

4847-3681-0779.1


Issuers Email Contact Fax Contact U308 Corp. [email protected] Union State Bank [email protected] United Citizens Bancorp, Inc. [email protected] United Community Bancorp bill. ritzmann@bankucbl .com United Community Bancorp [email protected] United Community Bancorp [email protected] United Community Banks, Inc. [email protected] United Community Banks, Inc. [email protected]

,

Universal Mfg. Co [email protected] VASCO Data Security International, Inc. [email protected] Veltex Corporation [email protected] Washington Bancshares, Inc. [email protected] Washington Bancshares, Inc. [email protected] West Bancorporation, Inc. [email protected] Westell Technologies, Inc. [email protected] Westell Technologies, Inc. [email protected] Western Reserve Bancorp, Inc. [email protected] Winmill & Co. Incorporated [email protected] Wintrust Financial Corporation [email protected] Xmet Inc. [email protected]

4847-3681-0779.1



EASTERN DIVISION


Plaintiff,

V.


Case No. 14 CV 3785


Defendants.

RECEIVER'S MOTION FOR ORDER APPROVING CLAIMS PROCEDURES, ESTABLISHING CLAIMS BAR DATE,

AND APPROVING OTHER RELATED RELIEF

Jill L. Nicholson, not individually but solely in her capacity as the court-appointed

receiver (the "Receiver") for the estates of Illinois Stock Transfer Company d/b/a ist Shareholder

Services (the "Company") and Robert G. Pearson ("Pearson," and together with the Company,

the "Receivership Estates"), respectfully files this motion (the "Motion") requesting entry of an

order in substantially the form of the proposed order attached hereto as Exhibit A, (i) approving

the procedure to be used by the Receiver with respect to claims submitted against the

Receivership Estates; (ii) fixing a date certain (the "Claims Bar Date") as the last date by which

the Receiver must receive proofs of claim; and (iii) approving the form and manner of notice of

the Claims Bar Date and proof of claim form to be sent to customers, issuers, shareholders,

vendors, creditors, and other parties in interest in this matter (collectively, the "Interested

Parties"). In further support of the Motion, the Receiver respectfully asserts as follows:

Case: 1:14-cv-03785 Document #: 57 Filed: 07/23/14 Page 1 of 36 PageID #:392

BACKGROUND

1. This action was initiated by the Securities and Exchange Commission (the

"SEC") on May 22, 2014. That same day, the Court entered its Order Appointing Receiver (the

"Receiver Order"), which named Jill L. Nicholson as the Receiver for the Receivership Estates.

2. The Receiver believes that it is necessary and appropriate under the circumstances

to establish procedures for Interested Parties to submit claims against the Receivership Estates so

that the claims resolution process may begin in an expedient and streamlined fashion.

3. By way of background, the Company had over 130 issuers and other parties for

which the Company provided transfer agent services. It is estimated that the Company had over

40,000 shareholders with whom it had various points of contact. The Company also maintained

vendor relationships for goods and services provided to the Company. Accordingly, the

Receiver proposes the establishment of a Claims Bar Date and a claims process as proposed

herein (the "Claims Process").

4. For the Court's convenience and to assist the Court's review of the Motion, the

Receiver submits as Exhibit B a summary (the "Summary") of the relief requested herein.

RELIEF REQUESTED

5. By this Motion, the Receiver requests entry of an order: (i) approving the

procedure to be used by the Receiver for the Claims Process against the Receivership Estates; (ii)

fixing a Claims Bar Date as the last date by which the Receiver must receive proofs of claim

from the Interested Parties; and (iii) approving the form and manner of notice of the Claims Bar

Date and proof of claim form (the "Proof of Claim Form") to be sent to Interested Parties.

6. The Claims Process described herein will greatly assist the Receiver in

determining the maximum amount of allowed claims, and ultimately, the amounts to be

distributed to those Interested Parties whom the Receiver determines holds allowed claims (the

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"Allowed Claims"). Setting the Claims Bar Date as described below will enable the Receiver to

make distributions following the eventual confirmation and consummation of a proposed Plan of

Liquidation (the "Liquidation Plan").

A. Establishment Of Claims Bar Date

7. The Receiver requests that the Court fix a date certain as the Claims Bar Date —

the last date by which the Receiver must receive Proof of Claim Forms of any type or of any

nature whatsoever against any of the Receivership Estates.

8. The setting of the Claims Bar Date is necessary in order to provide certainty and

finality to the Claims Process and to allow for the implementation of an eventual Liquidation

Plan.

9. The Receiver proposes September 30, 2014 at 5:00 p.m. Central Standard

Time as the Claims Bar Date. The September 30, 2014 date will allow an ample period of time

for notice to be provided by KCC Class Action, LLC ("KCC"), the court-appointed claims agent,

to all Interested Parties of the Claims Process and for those Interested Parties to submit their

respective Proof of Claim Forms.

B. Effect Of Failure To Submit Proof Of Claim Form Prior To Claims Bar Date

10. Any party who fails to submit a Proof of Claim Form by the Claims Bar Date: (i)

will not, with respect to any such claim, be treated as holding an Allowed Claim against the

Receivership Estates, (ii) will be forever barred, estopped and enjoined from asserting any claim

against the Receivership Estates; and (iii) will not receive any distribution on account of such

claim. This aspect of the requested order is essential to ensure finality and to allow for the

timely and efficient administration of the Receivership Estates.

11. KCC, as claims agent, will maintain for the Receiver a record of all Proof of

Claim Forms received by the Claims Bar Date, as well as any untimely Proof of Claim Forms.

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C. Claims Of Shareholders Satisfied By Issuers And Related Notice

12. Certain issuers may have volunteered to satisfy claims that their shareholders may

potentially have against the Company (the "Satisfied Shareholder Claims"). Such issuers may

submit a Proof of Claim Form for the Satisfied Shareholder Claims. To be eligible for a

potential distribution on account of a Satisfied Shareholder Claim, such issuer must submit a

single Proof of Claim Form by the Claims Bar Date with a schedule of each Satisfied

Shareholder Claim, identifying: (a) the amount paid by the issuer; (b) how the amount was paid

(check, wire, etc.); (c) when the amount was paid; (d) to whom the amount was paid, including

name and address; (e) why the amount was paid; and (e) any additional information the issuer

may believe is relevant. The issuer must also submit an affidavit (the "Issuer Affidavit") for

each shareholder it has paid in the form attached hereto as Exhibit C. A consolidated Issuer

Affidavit or an Issuer Affidavit identifying more than one shareholder will not be accepted. The

Issuer Affidavit may not be modified except to fill in the blanks provided.

13. Certain issuers have also requested that the Receiver not send Proof of Claim

Forms to their shareholders where the issuer has already satisfied their shareholders' claims.

The Receiver will agree not to send Proof of Claim Forms to shareholders who have

Satisfied Shareholder Claims if the issuer submits the Issuer Affidavit on or before 5:00

p.m. Central Standard Time on August 12, 2015 to the Receiver at istreceiverWoley.com .

As noted above, the Issuer Affidavit may not be modified except to fill in the blanks provided,

and a consolidated Issuer Affidavit or an Issuer Affidavit identifying more than one shareholder

will not be accepted.

14. The Receiver believes that the issuers' requests regarding the Satisfied

Shareholder Claims are in the best interests of the Receivership Estates, as they avoid the need to

4


expend funds notifying shareholders whose claims have already been satisfied. It also avoids the

need for the Receiver to expend funds to review and reconcile duplicative Proof of Claim Forms,

as well as time spent addressing questions that may arise by shareholders who have already been

made whole.

15. The Receiver believes that issuers who have Satisfied Shareholder Claims will act

in good faith in submitting claims related to Satisfied Shareholder Claims. In the event,

however, any issuer misrepresents the amount the issuer paid to a shareholder, the Receiver,

upon receiving this Court's approval, (a) will send the applicable shareholder a Proof of Claim

Form, (b) will deduct the amount of the alleged Shareholder Satisfied Claim from any claims that

may be asserted by the issuer, and (c) may seek an appropriate remedy to be determined by the

Court with respect to the misrepresentation.

C. Approval Of Proof Of Claim Form

16. Attached as Exhibit D is the proposed Proof of Claim Form and related

instructions that the Receiver asks the Court to approve for the submission of any and all types of

claims.

D. Approval Of Notice Of Claims Bar Date

17. Subject to the caveat provided below, the Receiver proposes to give notice of the

Claims Bar Date and to provide copies of the Proof of Claim Form to all known Interested

Parties who may have claims as determined by a review of the Company's books and records

and the schedules of Pearson's liabilities provided to the Receiver by Pearson.

18. As previously noted, the Company had various touch points with an estimated

40,000 shareholders. The Receiver will not notify all 40,000 shareholders.

19. The Receiver estimates that approximately 9,400 shareholders may have claims

against the Receivership Estates. Of this amount, 2,200 shareholders may have claims against

5


the Receivership Estates in excess of $10.00. Given that the vast majority of shareholder claims

are equal to or less than $10.00 and in many instances are even cents, the Receiver believes that

the cost to be borne by the Receivership Estates for the solicitation, mailing, and review of

claims under $10.00 would present an undue burden to the estates and would cause the Estates to

incur substantial administrative expenses that are neither warranted nor in the Estates' best

interests.

20. As a result, the Receiver proposes to have KCC distribute Proof of Claim

Forms to those Interested Parties who may have claims against the Receivership Estates in

an amount greater than $10.00. Those Interested Parties who hold claims under $10.00

will not receive a Proof of Claim Form.

21. Given that the Receiver proposes to limit notice to those Interested Parties with

claims greater than $10.00, the Receiver proposes to publish a notice regarding the Claims Bar

Date in the legal notices section of the Wall Street Journal on a nationwide basis (the "Wall

Street Journal Notice") the first Monday following the Court's entry of an order approving the

Motion. A copy of the proposed Wall Street Journal notice is attached hereto as Exhibit E. The

estimated cost for such publication is approximately $4,157.15. The Receiver believes that the

cost of the Wall Street Journal Notice to the Receivership Estates is warranted, given that

Interested Parties with claims under $10.00 will not receive individual notice. In the event an

Interested Party has a claim that is $10.00 and under and receives notice through the Wall Street

Journal Notice, that claimant can download a copy of the Proof of Claim Form from the

receivership website at www.istreceivership.com (the "Receivership Website") and may submit

it for consideration.

6


22. The Receiver believes that these efforts will ensure the broadest possible notice to

potential claimants while concurrently balancing the cost borne by the Receivership Estates.

23. Upon approval of this protocol, the Receiver proposes to have KCC issue the

Notice of Claims Bar Date substantially in the form contained on Exhibit F. The Notice of

Claims Bar Date will be included with the Proof of Claim Form. In an attempt to reduce

expenses to the estates, the Receiver will also post answers to frequently asked questions (the

"FAQs"), in the form attached as Exhibit G, on the Receivership Website. The Receiver will

update the FAQs as necessary and as developments occur during the receivership.

E. Review And Allowance Of Submitted Proof Of Claim Forms

24. The Claims Process is necessary in order for the Receiver to determine the

maximum amount of claims that will be entitled to allowance and, ultimately, distributions

pursuant to a confirmed Liquidation Plan. To accomplish this, the Receiver will review timely

submitted Proofs of Claim Forms and reconcile those Proofs of Claim Forms with the books and

records of the Receivership Estates. The Receiver will conduct such review in the most cost-

effective maimer practicable, by, among other things, utilizing the court-appointed claims agent,

KCC, her counsel, consultants, and/or other resources.

25. To avoid undue burden on the Court and unnecessary litigation expense, in the

event the Receiver does not agree with the information provided by an Interested Party in its

Proof of Claim Form, the Receiver will provide each Interested Party with an opportunity to

review and object to the Receiver's proposed treatment of the Interested Party's claim (the

"Claim Determination"). The Interested Party will have twenty (20) calendar days after the

Claim Determination is mailed to the Interested Party to submit a written objection to the

Receiver's Claim Determination at Illinois Stock Transfer Company & Robert G. Pearson

Receivership, P.O. Box 10351, Chicago, IL 60610 (the "Objection Process"). Failure to

7


send a timely written objection to the Claim Determination in accordance with the

Objection Process will result in the Interested Party's claim being treated as set forth in the

Receiver's Claim Determination.

26. Following the Receiver's review of timely submitted Proof of Claim Forms and

the Objection Process, the Receiver will file motions (the "Claims Determination Motions") with

the Court on a rolling basis as claims are reviewed to establish the treatment for each claim

submitted by an Interested Party. Each motion will contain a schedule of Interested Parties

identifying: (a) the amount alleged in the Interested Party's Proof of Claim Form, and (b)

whether the claim is (i) allowed in its entirety, (ii) allowed in some respects and disallowed as to

others, or (iii) disallowed in its entirety. If the claim is not consensually resolved at the time of

the filing of the applicable Claims Determination Motion, the Interested Party may file a written

objection with the Court to the Claims Determination Motion.

27. Upon an Interested Party's filing of an objection, the Court will determine the

allowed amount and the proper classification of the claim (if any) by utilizing summary

procedures to ensure expeditious administration of the Receivership Estates.

F. Fees And Expenses Associated With The Claims Process, Objections, And Related Litigation

28. The Receiver notes that that any litigation surrounding the Claims Process will

only reduce the ultimate amount to be distributed to Interested Parties. As such, the Receiver

will endeavor under the applicable circumstances to work with Interested Parties towards a

consensual resolution of claims to the extent feasible and as appropriate. In the event (a) a

consensual resolution is not reached, (b) the Interested Party tenders a written objection

with the Court, and (c) such objection is overruled, the Receiver reserves the right to seek

permission from the Court to recover reasonable fees incurred by the Receiver from a

8


claimant in connection with the objection and any related litigation, with such fees to be

reviewed and approved by the Court. The Receiver will not seek the recovery of any such

fees absent court approval.

G. Timing Of Claims Process In Connection With Liquidation Plan

29. Given that the Receiver anticipates a voluminous number of claims, the Receiver

will not be able to review and resolve all claims in advance of the filing and approval of the

Liquidation Plan. As a result, an Interested Party whose claim becomes an Allowed Claim after

the Court approves a Liquidation Plan shall receive the same treatment as those Interested Parties

who may have already been determined to have an Allowed Claim prior to the Court's approval

of the Liquidation Plan.

BASIS FOR RELIEF REQUESTED

30. The Receiver Order empowers the Receiver, "without further Order of this Court"

to "dispose of any Assets, other than real estate, in the ordinary course of business, on terms and

in the manner the Receiver deems most beneficial to the Receivership Estates . . . ." (Receiver

Order at it 37.) The Receiver is further "authorized to take all actions to manage, maintain,

and/or wind-down business operations of the Receivership Estates, including making legally

required payments to creditors, employees, and agents of the Receivership Estates and

communication with vendors, investors, governmental and regulatory authorities, and others, as

appropriate." (Id. at ¶ 40.)

A. This Court Has Broad Equitable Discretion To Establish Procedures For The Administration Of Claims

31. It is well settled that district courts supervising federal equity receiverships have

broad discretion to adopt appropriate procedures to administer the assets of, and claims asserted

against the receivership estate. SEC v. Capital Consultants, LLC, 397 F.3d 733, 738 (9th Cir.

9


2005); S.E.C. v. Hardy, 803 F.2d 1034 (9th Cir. 1986); S.E.C. v. Universal Fin., 760 F.2d 1034,

1037 (9th Cir. 1985).

32. A district court's power to supervise an equity receivership and to determine the

appropriate action to be taken in the administration of the receivership is extremely broad. Broad

deference is accorded to the district court's supervisory role in equity receiverships because most

receiverships involve multiple parties and complex transactions. Accordingly, a district court's

determinations concerning the supervision of an equitable receivership is reviewed only for

abuse of discretion. Capital Consultants, 397 F.3d at 738 (citations omitted); see also

Commodities Futures Trading Comm'n. v. Topworth Intl, Ltd., 205 F.3d 1107, 1115 (9th Cir.

1999) ("This court affords 'broad deference' to the court's supervisory role, and 'we generally

uphold reasonable procedures instituted by the district court that serve th[e] purpose' of orderly

and efficient administration of the receivership for the benefit of creditors.").

33. Therefore, the Court has broad authority to grant the relief requested in this

Motion in order to ensure the timely and efficient administration of any claims against the

Receivership Estates.

B. The Receiver Should Be Permitted To Use Summary Procedures

34. Receivership courts have the general power to use summary procedures in

allowing, disallowing, and subordinating claims. United States v. Arizona Fuels, 739 F.2d 455,

458 (9th Cir. 1984); Hardy, 803 F.2d at 1040 (summary proceeding to approve categorization

scheme regarding investors' claims was reasonable; fair notice and a reasonable opportunity to

respond was given); S.E.C. v. Elliot, 953 F.2d 1560, 1571 (11th Cir. 1992) (summary claim

determinations upheld where claimants cannot demonstrate their rights would have been better

protected by a fuller proceeding).

10


35. Summary procedures (as proposed herein) should be used to adjudicate the

amounts and priority of any claims asserted against the Receivership Estates, since using plenary

proceedings for the adjudication of claims would unnecessarily consume the resources of the

Receivership Estates.

CONCLUSION

36. For all of the foregoing reasons, the Receiver requests that the Court enter the

proposed Order attached hereto as Exhibit A:

a. Approving the relief requested herein;

b. Setting the Claims Bar Date as 5:00 p.m. Central Standard Time on September 30, 2014;

c. Approving the Proof of Claim Form;

d. Approving the proposed (i) form of Notice of Claims Bar Date, (ii) the publication procedure, and (iii) form of publication;

e. Approving the Claims Process described above, along with the use of summary procedures to resolve claim objections; and

f. Granting further relief as appropriate.

Dated: July 23, 2014 /s/ Jill Nicholson Not individually, but solely as Receiver for the Estates of Illinois Stock Transfer Company and Robert G. Pearson Foley & Lardner LLP 321 North Clark Street, Suite 2800 Chicago, IL 60654 Ph: (312) 832-4500 Fax: (312) 832-4700

/s/ Geoffrey Goodman Counsel to the Receiver Foley & Lardner LLP 321 North Clark Street, Suite 2800 Chicago, IL 60654 Ph: (312) 832-4500 Fax: (312) 832-4700

11


EXHIBIT A


IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION


Plaintiff,

V.


Case No. 14 C 3785


Defendants.

ORDER GRANTING RECEIVER'S MOTION FOR ORDER APPROVING CLAIMS PROCEDURES, ESTABLISHING CLAIMS BAR

DATE, AND APPROVING OTHER RELATED RELIEF

This matter coming before the Court on the motion (the "Motion"), 1 of Jill L. Nicholson,

not individually but solely in her capacity as the duly appointed receiver (the "Receiver") for the

estates of Illinois Stock Transfer Company d/b/a ist Shareholder Services (the "Company") and

Robert G. Pearson ("Pearson," and together with the Company, the "Receivership Estates"),

requesting entry of an order (i) approving the procedure to be used by the Receiver for the claims

process against the Receivership Estates; (ii) fixing a date certain (the "Claims Bar Date") as the

last date by which the Receiver must receive proofs of claim; and (iii) approving the form and

manner of notice of the Claims Bar Date and Proof of Claim Form to be sent to creditors and

other parties in interest; the Court having reviewed the Motion and its exhibits and having

considered the statements of counsel at a hearing before the Court (the "Hearing"); and the Court

having determined that the legal and factual bases set forth in the Motion and at the Hearing

establish grounds for the relief granted herein; and the Court having found that: (a) the Court has

' Capitalized terms not otherwise defined herein shall have the meanings given to them in the Motion.


jurisdiction over this matter, and (b) notice of the Motion and the Hearing was sufficient under

the circumstances;

IT IS HEREBY ORDERED THAT:

1. The relief requested in the Motion is granted.

2. The Claims Process described in the Motion is approved.

3. The Claims Bar Date is set as 5:00 p.m. Central Standard Time on September 30,

2014.

4. The Proof of Claim Form is approved.

5. The proposed (a) form of Notice of Claims Bar Date, (b) publication procedure,

and (c) form of publication notice are approved.

6. This court shall use summary procedures as set forth in the Motion to resolve any

claim objections.

DATED: United States District Court Judge

2


EXHIBIT B


Deadlines

August 12, 2015 at 5:00 p.m. CST

SUMMARY OR RELIEF REQUESTED

Exhibit A — Draft Order Exhibit B — Summary Exhibit C — Issuer Affidavit (Relating to Claims of Shareholders Satisfied by Issuers) Exhibit D — Proof of Claim Form Exhibit E — Notice to Be Published in the Wall Street Journal Exhibit F — Notice of Claims Bar Date to Be Sent with Proof of Claim Form Exhibit G — Answers to Frequently Asked Questions (FAQs) to Be Added to Receiver Website

Relief Requested Relevant Dates/ Other

Deadline for Issuers to Provide Issuer Affidavit(s) to Receiver re Voluntary Payment of Issuer's Shareholders

1. Issuer Affidavit(s) to be sent to istreceivergfoley.com .

2. The issuer must submit an Issuer Affidavit for each shareholder it has paid ("Satisfied Shareholder Claim") in the form attached as Exhibit C. A consolidated Issuer Affidavit or an Issuer Affidavit identifying more than one shareholder will not be accepted.

3. The Issuer Affidavit may not be modified except to fill in the blanks provided.

4. Shareholders identified in Issuer Affidavits will not receive a Proof of Claim Form.

5. Receiver may seek court approval to enforce remedies against any Issuer who misrepresents amounts paid to shareholders.

Claims Bar Date September 30, 2014 at 5:00 p.m. CST

1. Proof of Claim Forms to be received by SEC v. Illinois Stock Transfer Company & Robert G. Pearson, c/o KCC LLC, 2335 Alaska Avenue, El Segundo, California 90245.

2. Claims not received by Claims Bar Date will be barred from seeking claims against the Receivership Estates.

3. Proof of Claim Forms will only be sent to those Interested Parties with claims as reflected by the Receivership


Relief Requested Relevant Dates/ Other Deadlines

Estates' books and records in an amount greater than $10.00.

Claims Process for Issuers Who Have Paid Their Shareholders' Claims

September 30, 2014 at 5:00 p.m. CST

1. Proof of Claim Forms to be received by SEC v. Illinois Stock Transfer Company & Robert G. Pearson, c/o KCC 2335 Alaska Avenue, El Segundo, California 90245.

2. Claims not received by Claims Bar Date will be barred from seeking claims against the Receivership Estates.

3. To be eligible for a potential distribution on account of a Satisfied Shareholder Claim, issuer must submit a single Proof of Claim Form with a schedule of each Satisfied Shareholder Claim, identifying: (a) the amount paid to the shareholder; (b) how the amount was paid (check, wire, etc.); (c) when the amount was paid; (d) to whom the amount was paid, including name and address; (e) why the amount was paid; and (e) any additional information the issuer may believe is relevant.

3. In addition to Proof of Claim Form, issuer must also include Issuer Affidavits with Proof of Claim Form.

4. The issuer must submit an Issuer Affidavit for each shareholder it has paid in the form attached as Exhibit C. A consolidated Issuer Affidavit or an Issuer Affidavit identifying more than one shareholder will not be accepted.

Publication of Claims Bar Date in Wall Street

Notice to Run the 1st Monday after the District Court enters the order approving the Claims Procedure Motion on the docket

Approximate cost for notice is $4,157.15.

Journal

Claim Objection Process Interested Party has 20 1. Interested Party's objection to Claims

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Relief Requested Relevant Dates/

Other Deadlines

days after mailing of

Determination must be mailed to Illinois Receiver's Claim

Stock Transfer Company & Robert G. Determination to submit Pearson Receivership, P.O. Box 10351, objection

Chicago, IL 60610.

2. In the event Interested Party's objection is not received by the Receiver within 20 days after mailing of Claim Determination, Receiver's Claim Determination will be final.

3. If objection is timely submitted and no consensual resolution is reached, Receiver will file Claims Determination Motion with Court, and Interested Party may file objection to Claims Determination Motion with Court.

5. In event (a) consensual resolution is not reached; (b) the Interested Party files written objection with the Court, and (c) such objection is overruled, Receiver may seek recovery of reasonable fees incurred by the Receiver in connection with objection and any related litigation. Receiver will not seek such remedies absent advance court approval.

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EXHIBIT C



EASTERN DIVISION


Plaintiff,

V.


Case No. 14 CV 3785


Defendants.

ISSUER AFFIDAVIT

I, [INSERT AFFIANT'S NAME HERE], upon being duly sworn, depose and

state as follows:

1. I am over 18 years of age.

2. I am competent to testify as to the matters set forth herein.

3. I am employed by [INSERT ISSUER NAME HERE] and my title is

4. I am authorized to give this testimony, and I make this affidavit of my personal

knowledge.

5. If called upon as a witness, I would testify competently as stated herein.

6. This affidavit is made under penalty of perjury, and I represent that the

information set forth herein is true and accurate in all regards.

7. On 2014, JINSERT ISSUER NAME HERE1 paid the sum

of $ to LINSERT SHAREHOLDER NAME HERE], a shareholder of

[INSERT ISSUER NAME HERE], at the address of [INSERT SHAREHOLDER


ADDRESS HERE] on JINSERT DATE OF PAYMENT] by [INSERT METHOD OF

PAYMENT, WIRE, CHECK, ETC.].

8. [INSERT REASON FOR PAYMENT, INCLUDING WHETHER SUCH

PAYMENT WAS FOR A DIVIDEND PAYMENT OR OTHER ITEM FOR WHICH

ILLINOIS STOCK TRANSFER COMPANY WAS ACTING AS TRANSFER AGENT]

FURTHER AFFIANT SAYETH NOT.

[INSERT AFFIANT'S NAME HERE]

SUBSCRIBED AND SWORN to before me this day of , 2014.

Notary Public

My Commission expires

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EXHIBIT D



EASTERN DIVISION


Plaintiff,

V.

ROBERT G. PEARSON and ILLINOIS STOCK TRANSFER COMPANY (d/b/a IST SHAREHOLDER SERVICES)

Defendants.

Case No.: 14-cv-3785

Judge: Honorable Rebecca R. Pallmeyer

PROOF OF CLAIM FORM

DEADLINE FOR FILING PROOF OF CLAIM FORM. This Proof of Claim Form must be actually received by the Receiver at SEC v. Illinois Stock Transfer Company & Robert G. Pearson do KCC LLC, 2335 Alaska Avenue, El Segundo, California 90245 by no later than 5:00 p.m. Central Standard Time on September 30, 2014. Failure to timely submit a proper Proof of Claim Form

against the receivership estates and a of funds pursuant to any Liquidation Plan.

Transfer Company d/b/a ist Shareholder

will result in a waiver of your right to make any claim waiver of your right to participate in any distribution The "Receivership Defendants" are defined as Illinois Stock Services and Robert G. Pearson.

CLAIMANT CONTACT INFORMATION:

Name of Claimant:

CLAIM

Principal

Interest, Penalties, Charges**

Total

*If your a statement claim.

**Please interest,

such amounts

AMOUNT:*

$

Name of Person Submitting Form (if different from Claimant):

Late Fees, or Other

$ Name and Address Where Notices Should Be Sent:

$

and a description

claim is not for money, please attach describing the nature of your

attach a statement that itemizes all late fees, penalties, or other charges

of the basis for seeking in your claim.

Telephone No.:

Email Address:

Fax No.:

Account Number Used with Receivership Defendants, if any:

CUSIP Number and/or Issuer Name, if any:

1. Please specify the Receivership Defendant or Defendants against whom you make this claim and the amount you are claiming. (You may check more than one box.) Identify which amounts were due before May 22, 2014 and which amounts were due on or after May 22, 2014.

All information is provided under penalty of pedury. Additionally, providing false, misleading or incomplete information or incomplete documentation will delay the resolution of your claim and could result in the disallowance of your claim.

Please Initial:


Illinois Stock Transfer Company d/b/a ist Shareholder Services (BEFORE MAY 22, 2014)

$

Robert G. Pearson (BEFORE MAY 22, 2014)

$

Illinois Stock Transfer Company d/b/a ist Shareholder Services (ON OR AFTER MAY 22, 2014)

$

Robert G. Pearson (ON OR AFTER MAY 22, 2014)

$

2. Please specify your relationship with the Receivership Defendant or Defendants.

Employee or Independent Contractor

Governmental Authority

ri Shareholder Issuer

Lender

Regulatory Agency

i---1 Stock Exchange

E Vendor/Trade Creditor

Other*

*If other, please attach a statement explaining the relationship.

3. Please state the basis for your claim. (Set forth briefly the relevant dates and facts and explain how the claim arose. If additional room is needed, please attach additional pages.)

4. Please check the box below if you believe your claim is secured by a lien. Please attach all documentation evidencing your lien.

Claim is secured by a lien.

5. Please identify any amounts you owe to the Receivership Defendant or Defendants (including, but not limited to all deconversion fees, commissions, funds, accounts payable, amounts due under any contracts, rebates, refunds, etc.) Please also identify the nature of such amounts you owe.

Illinois Stock Transfer Company d/b/a ist Shareholder Services

$

Robert G. Pearson

$

Nature of Amounts Owed by Claimant to Receivership Defendant:

Nature of Amounts Owed by Claimant to Receivership Defendant:

All information is provided under penalty of perjury. Additionally, providing false, misleading or incomplete information or incomplete documentation will delay the resolution ofyour claim and could result in the disallowance of your claim.

Please Initial:


6. Please identify if you have or ever had any of the following relationships with any of the Receivership Defendants:

I am a present or former officer, director, employee, or agent of a Receivership Defendant.

E I am a relative, legal representative, heir, successor, or assignee of a Receivership Defendant.

7. In support of this claim, I attach the following documents which constitute all of the documents in my possession regarding this claim. (Describe briefly each document attached. If additional room is needed, please attach additional pages).

Certification of Truthfulness

I, the undersigned, hereby certify, under penalty of perjury, that all of the information provided in this Proof of Claim Form, including all schedules and attachments to the Proof of Claim Form, is true and correct and that the undersigned is authorized to make this claim.

Signed, under penalty of perjury, this day of , 2014.

Signature:

Print Name:

Name of Claimant:

Relationship to Claimant (Title):

[Sign and print your name, the name of the Claimant on whose behalf you are submitting this C'laim and your relationship to the Claimant. If you are signing on behalf of the Claimant, state the basis for your authorization to sign on behalf of claimant and attach any power of attorney or other relevant authorization.]

All information is provided under penalty of perjury. Additionally, providing false, misleading or incomplete information or incomplete documentation will delay the resolution of your claim and could result in the disallowance of your claim.

Please Initial:


PROOF OF CLAIM FORM INSTRUCTIONS

1. Deadline and Location for Sending Proof of Claim Forms. The Proof of Claim Form must be actually received by the

Receiver at SEC v. Illinois Stock Transfer Company & Robert G. Pearson dio KCC LLC, 2335 Alaska Avenue, El

Segundo, California 90245 by no later than 5:00 p.m. Central Standard Time on September 30, 2014. Failure to timely submit a proper Proof of Claim Form will result in a waiver of your right to make any claim against the receivership estates and a waiver of your right to participate in any distribution of funds pursuant to any

Liquidation Plan.

2. Information and Documentation to be Provided by Claimant. Each item of information and documentation requested

in the Proof of Claim Form will be used by the Receiver in determining each Claimant's eligibility to participate in

any Liquidation Plan and in calculating the appropriate

amount of your claim, if any. Please be as detailed and complete as possible with regard to submissions and

accounts attached to the Proof of Claim form, as such

information may affect both your eligibility to participate

and the amount of any claim you may have against the

receivership estates.

3. Accuracy of Proof of Claim and Information Provided by Claimant. All information provided by Claimant is made under

penalty of perjury. Providing false information will result

in the denial of your claim. Misleading or incomplete

information or incomplete documentation will delay a

resolution of your claim and may result in the denial of

your claim.

4. Computing Your Allowed Claim. The Receiver will review the information provided in and

with your Proof of Claim Form, including the amount you claim is due from the receivership estates. The Receiver

will determine what the Receiver believes is the amount of your Allowed Claim, if any, and will provide notice to

you of such determination.

5. Supporting Documents. You must attach to the Proof of Claim Form copies of all documents that show the basis for your claim. If

documents are not available, you must attach an

explanation as to why they are not available. Do not send original documents. Please make sure that you sequentially label all of the documents that you produce to the Receiver in connection with your claim. It is recommended that you label on the bottom right hand corner of each document using your initials and beginning with the number 001 (e.g., for John Q. Smith, the first page of the documents would be labeled "JQS001 " the second page "JQS002" and so on). Labeling by hand is acceptable.

6. Signatures — Legal Authority to Submit Claim. The Proof of Claim Form must be signed and dated by the Claimant, or a duly authorized officer or legal

representative in the space provided on the final page. To

the extent that the signatory is authorized pursuant to a

power of attorney or court appointment, documentation

of such authority must be provided.

7. Cooperation with Law Enforcement Authorities. Failure to cooperate with federal or state authorities

investigating possible unlawful activity relating to the Illinois Stock Transfer Company d/b/a ist Shareholder

Services and/or Robert G. Pearson may result in the

disallowance of your claim.

8. Independent Verification of Claims — Requests

for Supplemental Information or Documents. All claims are subject to independent verification by the

Receiver. It is important to provide complete and

accurate information to facilitate this effort. Claimants may be asked to provide additional information to

complete this process. Claims may not be considered for

payment until they have been verified. By submitting a Proof of Claim Form, each Claimant agrees to cooperate and to provide to the Receiver information relevant to your Proof of Claim Form. Failure to timely provide all requested information may result in the delay of the claims process or may result in the partial or complete disallowance of your claim.


EXHIBIT E


UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS UNITED STATES SECURITIES and EXCHANGE COMMISSION, Plaintiff, v. ROBERT G.

PEARSON and ILLINOIS STOCK TRANSFER COMPANY (d/b/a 1ST SHAREHOLDER SERVICES), Defendants

Case No. 14 C 3785 Hon. Rebecca R. Pallmeyer Illinois Stock Transfer Company d/b/a ist Shareholder Services located at 433 South Carlton Avenue, Wheaton, Illinois and Robert G. Pearson have been placed into receivership in connection with the above-captioned case pending in Chicago, Illinois. If you believe you are owed money from Illinois Stock Transfer Company or Robert G. Pearson, the court-appointed receiver must receive a Proof of Claim Form on or before 5:00 p.m. Central Standard Time on September 30, 2014 in order for you to be considered for a possible distribution on your claim. Proof of Claim Forms received after that date shall be denied. Proof of Claim Forms and additional instructions are available at www.istreceivership.com .


EXHIBIT F



EASTERN DIVISION


Plaintiff,

V.


Case No. 14 CV 3785


Defendants.

NOTICE OF SEPTEMBER 30, 2014 CLAIMS BAR DATE

Background

Illinois Stock Transfer Company d/b/a ist Shareholder Services located at 433 South Carlton Avenue, Wheaton, Illinois and Robert G. Pearson have been placed into receivership in connection with the above-captioned case pending in Chicago, Illinois. If you believe you are owed money from Illinois Stock Transfer Company or Robert G. Pearson, you must timely complete and submit a Proof of Claim Form. The Proof of Claim Form is enclosed with this notice and is also available at www.istreceivership.com . PLEASE NOTE that the court-appointed Receiver (the "Receiver") must receive a Proof of Claim Form on or before 5:00 p.m. Central Standard Time on September 30, 2014 in order for you to be considered for a possible distribution from the receivership estates. PLEASE FURTHER NOTE that filing a Proof of Claim Form is a requirement, but does not guarantee that any distribution will be provided to you. Whether you may receive a distribution will depend on: (1) whether your claim is allowed by the Receiver and (2) the treatment of your claim under a Liquidation Plan which will be filed by the Receiver at a later date.

The Receiver is responsible for reviewing Proof of Claim Forms, and when appropriate, objecting to Proof of Claim Forms, as well as making distributions on account of claims that are allowed. The purpose of the Proof of Claim Form is to help the Receiver learn who you are, how much you are owed, the reason(s) you have a claim, and how the Receiver can contact you. The more information you provide (including supporting documentation), the more quickly and efficiently your Proof of Claim Form can be reviewed.

INSTRUCTIONS

Your completed Proof of Claim Form must be executed by an individual: (a) who is authorized to represent the amount of the claim and (2) who has knowledge of the submitted claim. Failure to have a Proof of Claim Form executed by an authorized individual with knowledge of the claim will result in the disallowance of your claim. COMPLETED PROOF


OF CLAIM FORMS AND SUPPORTING DOCUMENTATION MUST BE DELIVERED TO THE ADDRESS BELOW PURSUANT TO THE FOLLOWING INSTRUCTIONS ON OR BEFORE 5:00 P.M. CENTRAL STANDARD TIME ON SEPTEMBER 30, 2014 IN ORDER TO BE CONSIDERED TIMELY:

SEC v. Illinois Stock Transfer Company & Robert G. Pearson c/o KCC LLC 2335 Alaska Avenue El Segundo, California 90245

FAILURE TO SUBMIT A TIMELY PROOF OF CLAIM FORM WILL RESULT IN THE DENIAL OF ANY RIGHT YOU MAY HAVE TO SHARE IN DISTRIBUTIONS UNDER ANY LIQUIDATION PLAN, AND YOU SHALL BE PERMANENTLY ENJOINED FROM SEEKING ANY RELIEF OR EXERCISING ANY RIGHTS OR REMEDIES WHATSOEVER WITH RESPECT TO CLAIMS YOU MAY HAVE AGAINST THE RECEIVERSHIP ESTATES OF ILLINOIS STOCK TRANSFER COMPANY AND ROBERT G. PEARSON. Do not send originals of supporting documentation with your Proof of Claim Form. Do not file your Proof of Claim Form with the District Court.

In the event the Receiver has questions about or objections to your Proof of Claim Form, you will be contacted by the Receiver or her designee. For more information about the receivership and for answers to frequently asked questions (FAQs), please visit www.istreceivership.com .

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EXHIBIT G



EASTERN DWISION


Plaintiff,

V.


Case No. 14 CV 3785


Defendants.

FREQUENTLY ASKED QUESTIONS (FAQS)

Q: Who serves as Receiver?

A: Jill L. Nicholson has been appointed as the Receiver by the United States District Court for the Eastern District of Illinois (the "District Court") in Chicago, Illinois. Ms. Nicholson is acting in her capacity solely as receiver and not in any individual capacity.

Q: What is the Receiver's job?

A: The Receiver identifies, collects, and seeks to preserve the assets (the "Receivership Property") of certain defendants in S.E.C. v. Pearson, et al., including Illinois Stock Transfer Company d/b/a ist Shareholder Services (the "Company") and Robert G. Pearson ("Pearson," and together with the Company, the "Receivership Defendants"). The Receiver will, among other activities, review and evaluate claims submitted in connection with the Receivership Defendants' estates. The Receiver will also file a proposed Liquidation Plan pursuant to which funds will be distributed to those claimants who are determined to have allowed claims (the "Allowed Claims").

Q: What must you do in order to be considered for a recovery under the Liquidation Plan?

A: You must submit a Proof of Claim Form and any supporting documentation to the following address so that it is received on or before 5:00 p.m. Central Standard Time on September 30, 2014:

SEC v. Illinois Stock Transfer Company & Robert G. Pearson do KCC LLC 2335 Alaska Avenue El Segundo, California 90245


Q: Do I file my Proof of Claim form with the District Court?

A: No. You should mail the Proof of Claim Form only to the address specified above.

Q: What happens if I fail to submit a Proof of Claim Form to the address specified above so that it is received by the September 30, 2014 deadline?

A. Failure to submit a timely Proof of Claim Form will result in the denial of your claim and any right you may have to share in distributions under any Liquidation Plan. You will be permanently enjoined from seeking any relief or exercising any rights or remedies whatsoever with respect to claims you may have against the receivership estates of Illinois Stock Transfer Company and Robert G. Pearson.

Q:

Do I need to hire an attorney?

A: It is entirely up to each claimant to decide whether to consult with an attorney on this matter. You are not required to have an attorney submit a Proof of Claim Form on your behalf. However, you should understand that your rights may be affected if, among other things, the Proof of Claim Form is not timely submitted or if it lacks the requested information. Please note that the Receiver and her attorneys cannot provide legal advice to you.

Q:

What happens after I submit my Proof of Claim Form?

A: Upon receipt of your Proof of Claim Form, the Receiver will review the claim to determine, among other things, its validity and timeliness (the "Claim Determination"). It is anticipated that there will be a significant number of claims. As such, the Receiver may not send you a Claim Determination for several months. Once a Claim Determination is made, you will be promptly notified.

Q:

What can I do if I do not agree with the Claim Determination?

A. You will have twenty (20) calendar days after the date the Claim Determination was mailed to you to submit a written objection. Your objection to the Claim Determination must be mailed to the Receiver at Illinois Stock Transfer Company & Robert G. Pearson Receivership, P.O. Box 10351, Chicago, IL 60610. Failure to send a written objection to the Claim Determination will result in your claim being treated as set forth in the Receiver's Claim Determination.

If your claim cannot be consensually resolved, the Receiver will file a motion (the "Claims Determination Motion") with the District Court to establish final treatment for your claim. You will receive notice of the Claims Determination Motion and will have an opportunity to file a written objection with the District Court at that time.

Any litigation surrounding the claims process will only reduce the ultimate amount to be distributed under the Liquidation Plan. As such, the Receiver will endeavor under the applicable circumstances to work with claimants towards a consensual resolution of claims to the extent

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feasible and as appropriate. In the event (a) a consensual resolution is not reached; (b) you submit a written objection regarding the Claim Determination with the District Court; and (c) your objection is overruled, the Receiver reserves the right to seek permission from the District Court to seek reasonable fees incurred by the Receiver in connection with your overruled claim. Such a request must be authorized and approved by the District Court.

Additional information and instructions will be provided to you regarding this process when the Claim Determination is sent to you.

Q: Will I get all of my money back?

A: It is too early to tell how much money will be available for distribution. The Receiver will make every effort to return to each claimant with an Allowed Claim as much of the Allowed Claim as possible and consistent with the claimant's treatment under the Liquidation Plan. At this early stage in the Receiver's investigation, it appears that the Receivership Property available for distribution is less than the sum of outstanding amounts, absent additional recoveries to the receivership estates.

Q: Does the Receiver get paid a percentage of the funds in this ease?

A: No. Subject to the District Court's approval, the Receiver's fees and expenses, as well as those of Retained Personnel, are paid out of any Receivership Property as expenses necessary to the administration of the receivership estates.

Q: I am an issuer who has paid the claims of shareholders who lost money in connection with Illinois Stock Transfer Company. Will my shareholders receive a Proof of Claim Form?

A: Yes. All shareholders with claims over $10.00 as reflected by the Receivership Defendants' books and records will receive a Proof of Claim Form unless you submit an affidavit indicating that you have paid the claims of your shareholders (the "Shareholder Satisfied Claims"). The Affidavit (the "Issuer Affidavit") can be found at www.istreceivership.com and is identified as "Issuer Affidavit." The Issuer Affidavit must be notarized and received by the Receiver on or before 5:00 p.m. Central Standard Time on August 12, 2014 at [email protected] . The issuer must submit an Issuer Affidavit for each shareholder it has paid. A consolidated Issuer Affidavit or an Issuer Affidavit identifying more than one shareholder will not be accepted. The Issuer Affidavit may not be modified except to fill in the blanks provided. In the event any issuer misrepresents the amount the issuer paid to the shareholder, the Receiver, upon receiving District Court Approval, (a) will send the applicable shareholder a Proof of Claim Form, (b) will deduct the amount of the alleged Shareholder Satisfied Claim from any claims that may be asserted by the issuer, and (c) may seek an appropriate remedy to be determined by the Court against the issuer for the misrepresentation.

Q: I am an issuer who has paid the claims of individuals who lost money in connection with Illinois Stock Transfer Company. May I submit a Proof of Claim Form on behalf of the shareholders whose claims I have satisfied?

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A: Yes. Issuers who have Satisfied Shareholder Claims may submit a Proof of Claim Form for the Satisfied Shareholder Claims. To be eligible for a potential distribution on account of a Satisfied Shareholder Claim, such issuer must submit a single Proof of Claim Form by the Claims Bar Date with a schedule of each Satisfied Shareholder Claim, identifying: (a) the amount paid to the shareholder; (b) how the amount was paid (check, wire, etc.); (c) when the amount was paid; (d) to whom the amount was paid, including name and address; and (e) why the amount was paid. The issuer must also submit the Issuer Affidavit with its Proof of Claim Form. The issuer must submit an Issuer Affidavit for each shareholder it has paid. A consolidated Issuer Affidavit or an Issuer Affidavit identifying more than one shareholder will not be accepted. The Issuer Affidavit may not be modified except to fill in the blanks provided. Submitting these materials does not guarantee that your claim will be determined to be an Allowed Claim.

Q:

Whom do I contact if I have a question?

A: Please direct all telephone or written inquiries to:

Katherine Hall Foley & Lardner LLP 321 North Clark Street, Suite 2800 Chicago, IL 60654 Phone: (312) 832-4718 Email: [email protected]

Q: What is the address for the Receiver?

A: The Receiver's address is:

Illinois Stock Transfer Company & Robert G. Pearson Receivership P.O. Box 10351 Chicago, IL 60610

Q: What if I have information that may be helpful to the Receiver or any regulatory agencies or investigators?

A: You may contact the Receiver by any of the methods stated above. If you have information that you believe would be helpful to the United States Securities and Exchange Commission (the "SEC") in this investigation or in any other investigation, please contact the SEC at:

Daniel J. Hayes, Esq. U.S. Securities and Exchange Commission 175 West Jackson Blvd, Suite 900 Chicago, IL 60604

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