Consolidated Reply to Responses by SEC and Co.

No one has disputed in their oppositions that the Investor Committee lacks a majority of independent and disinterested investors, which is necessary to adequately represent the interests of investors. To the contrary, the Investor Committee admits that three of its non-investor attorney members have substantial contingency fee agreements with the Receiver, and that the non-investor Examiner is paid out of the receivership estate – resulting in a situation where four of the seven members are interested.

Additionally, a fifth member, an attorney, is not an investor. The Movants seek intervention based on the simple and uncontroversial principle that the Investor Committee should be comprised of at least a majority of disinterested investors.

The motion should be granted on this basis alone.

Rather than substantively address this concern and reassure investors that they are in fact adequately representing their interests, the Investor Committee prefers to attack Movants’ counsel in a personal and, frankly, inaccurate character assassination, for which they should be ashamed. The fact that the Investor Committee is seeking to repel rather than welcome independent support and help is very telling.

To their credit, the SEC and the Receiver did not engage in personal attacks, but also did not address the principal concern: whether the receivership is adding value to the estate for investors.

One of the concerns raised by Movants in their motion was a 25% contingency fee agreement with attorneys on the Investor Committee (representing the receivership and essentially therefore all investors), that could generate hundreds of millions of dollars in attorneys’ fees, in cases that the Receiver has already investigated and developed, and with no provision for judicial review or approval of the appropriateness of the fees in relation to the work performed…



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