UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

ADMINISTRATIVE PROCEEDING

File No. 3-20171 

In the Matter of

Robinhood Financial, LLC,

Respondent.

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PROPOSED PLAN OF 

DISTRIBUTION

I. OVERVIEW

1. Purpose. This Proposed Plan of Distribution (“Plan”) has been developed 

pursuant to Rule 1101 of the Commission’s Rules on Fair Fund and Disgorgement Plans 

(“Commission Rules”), 17 C.F.R. § 201.1101. The Plan proposes a distribution of the civil 

money penalty paid by Robinhood Financial, LLC (“Robinhood” or “Respondent”) to customers 

who were harmed as a result of Robinhood’s false and misleading disclosures beginning July 1, 

2016 through June 30, 2019, inclusive (“Harm Period”).

2. Background. On December 17, 2020, the Commission issued an Order Instituting 

Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act 

of 1933 and Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and 

Imposing Remedial Sanctions and a Cease-and-Desist Order (the “Order”)1against Robinhood. 

The Commission found material misrepresentations and omissions by Robinhood relating to its 

revenue sources, specifically its receipt of payments from certain principal trading firms, for 

routing Robinhood customer orders to them.

In the Order the Commission found that Robinhood launched its retail brokerage business 

in 2015, and by mid-2018, it was one of the largest retail broker-dealers in the United States. 

One of Robinhood’s primary selling points was that it did not charge its customers trading 

commissions. In reality, however, “commission free” trading at Robinhood came with a catch: 

Robinhood’s customers received inferior execution prices compared to what they would have 

received from Robinhood’s competitors. For larger value orders, this price differential exceeded 

the amount of commissions that Robinhood’s competitors would have charged. These inferior 

prices were caused, in large part, by the unusually high fees Robinhood charged the principal 

 

1

 Securities Act Rel. No. 10906 (Dec. 17, 2020).
2

trading firms to which it routed its customer orders for the opportunity to obtain Robinhood’s 

customer order flow. These fees are generally referred to as “payment for order flow.”2

Robinhood omitted to disclose its receipt of payment for order flow in certain of its 

communications with its retail customers. Since Robinhood’s launch, payment for order flow 

has been Robinhood’s single largest source of revenue. In its customer agreements and trade 

confirmations, Robinhood stated it “may” receive payment for order flow, and it disclosed 

certain information about those payments, as required, in its SEC-mandated Rule 606 reports. 

However, in FAQs on its website describing how it made money, and in certain communications 

with customers addressing the same issue, Robinhood omitted payment for order flow when it 

described its revenue sources because it believed that payment for order flow might be viewed as 

controversial by customers. Robinhood also instructed its customer service representatives not 

to mention payment for order flow in responding to questions about Robinhood’s sources of 

revenue. 

As a broker-dealer that routed its customer orders for execution, Robinhood had a duty to 

seek to obtain the best reasonably available terms for its customers’ orders, including price. This 

duty is referred to as the duty of “best execution.” From July 2016 through June 2019, while 

Robinhood was on notice that its high payment for order flow rates from principal trading firms 

could result in inferior execution prices for its customers, Robinhood violated its duty of best 

execution by failing to conduct adequate, regular, and rigorous reviews of the execution quality it 

provided on customer orders. Robinhood did not begin comparing its execution quality to that of 

its competitors until October 2018, and did not take appropriate steps during the entire period to 

assess whether its high payment for order flow rates adversely affected customer execution 

prices. 

As a result of the conduct described in the Order, the Commission ordered Robinhood to 

pay a civil penalty of $65,000,000.00. In the Order, the Commission established a fair fund, 

pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the civil penalty paid can be 

distributed to harmed investors (the “Fair Fund”). 

Robinhood paid the $65,000,000.00 civil penalty pursuant to the Order. The Fair Fund 

has been deposited in an interest-bearing account at the United States Department of the 

Treasury’s Bureau of the Fiscal Service (“BFS”). Other than potential interest income from the 

BFS investment, the Commission does not anticipate that the Fair Fund will receive additional 

funds.

This Plan provides for the distribution of the Fair Fund, plus accrued interest and 

earnings thereon, less the Reserve (defined below) and Administrative Costs (defined below) 

(“Net Available Fair Fund”) to Eligible Investors, as defined in Paragraph 6.

 

2 Exchange Act Rule 10b-10(d)(8) defines “payment for order flow” as including any monetary payment, service, 

property, or other benefit that results in remuneration, compensation, or consideration to a broker-dealer in return for 

the routing of customer orders.
3

3. Jurisdiction and Control. The assets of the Fair Fund are subject to the 

continuing jurisdiction and control of the Commission. The Plan is subject to approval by the 

Commission, and the Commission retains jurisdiction over its implementation.

II. DEFINED TERMS

4. “Administrative Costs” means all costs of administering the Fair Fund, including 

taxes, fees, and expenses of administration. All Administrative Costs shall be paid from the Fair 

Fund, first from the interest earned on the funds, and if the interest is not sufficient, then from the 

corpus of the Fair Fund.

5. “Distribution Payment” means a payment made from the Fair Fund to an Eligible 

Investor in accordance with the terms of this Plan.

6. “Eligible Investor” means a person who suffered harm as a result of the 

Respondent’s conduct described in the Order and who is determined by the Fund Administrator 

to be eligible for a Distribution Payment from the Fair Fund.

7. “Harm Amount” means the amount that the Commission staff has calculated that 

an Eligible Investor suffered on his, her, or its orders during the Harm Period as a result of the 

Respondent’s conduct.

8. “Harm Period” means July 1, 2016 through June 30, 2019, inclusive.

9. “Information Packet” means the written correspondence from the Fund 

Administrator to Eligible Investors including, among other things, the Plan, Plan Notice, a 

Substitute Form W-9, and a letter explaining what is required to receive a Distribution Payment.

10. “Interest Amount” means the amount the Commission staff has calculated as 

reasonable interest to compensate an Eligible Investor for the time value of his, her or its Harm 

Amount.

11. “Minimum Distribution Amount” is $10.00. No Eligible Investor shall receive a 

distribution payment unless his, her or its Distribution Payment calculated pursuant to the 

Methodology in Paragraph 19 below is equal to or greater than $10.00.

12. “Net Available Fair Fund” means the Fair Fund, plus accrued interest and 

earnings thereon, less the Reserve and Administrative Costs.

13. “Plan” means this Proposed Distribution Plan in the form approved by the 

Commission.

III. ADMINISTRATION OF THE PLAN

14. Reserve. A reserve will be established for future taxes and fees and expenses of 

the Tax and Fund Administrators and to accommodate any unexpected expenditures or 

distribution payments (the “Reserve”). After all disbursements and Administrative Costs are 
4

paid, any remaining amounts in the Reserve will become part of the residual described in 

paragraph 31.

15. Qualified Settlement Fund. The Fair Fund constitutes a Qualified Settlement 

Fund (“QSF”) under Section 468B(g) of the Internal Revenue Code, 26 U.S.C. § 468B(g), and 

related regulations, 26 C.F.R. §§ 1.468B-1 through 1.468B-5.

16. Fund Administrator. The Commission has appointed JND Legal Administration 

(“JND”) as the fund administrator for the Fair Fund (“Fund Administrator”) and set the 

administrator’s bond equal to the amount of the Fair Fund at $65,000,000.00, in accordance with 

Rules 1105(a) and 1105(c) of the Commission’s Rules , 17 C.F.R. §§ 201.1105(a) and 

201.1105(c).3 All reasonable fees and expenses, including the administrator’s bond premium, 

will be paid from the Fair Fund. 

The Fund Administrator will, among other things, provide the following services: oversee 

the administration of the Fair Fund, obtain and confirm mailing information for the Eligible 

Investors, prepare a final accounting with assistance from the Tax Administrator, establish a 

website, email address, and toll-free number to address inquiries from investors; cooperate with 

the Tax Administrator in providing the information necessary to accomplish income tax 

compliance; and distribute money from the Fair Fund in accordance with the Plan. 

17. Tax Administrator. Pursuant to the Omnibus Order Directing the Appointment of 

Tax Administrator in Administrative Proceedings that Establish Distribution Funds governing 

calendar years 2019-2021,4the Commission appointed Miller Kaplan Arase LLP as the tax 

administrator (“Tax Administrator”) for the Fair Fund.5 

The Fund Administrator will cooperate with the Tax Administrator in providing 

information necessary to accomplish the income tax compliance of the QSF and any other work 

of the Tax Administrator ordered by the Commission. Further, the Fund Administrator will 

cooperate with the Tax Administrator for purposes of timely and accurately fulfilling the 

information reporting and withholding obligations of the Fair Fund in compliance with IRS 

regulations including, but not limited to, the Foreign Account Tax Compliance Act (FATCA). 

The Tax Administrator shall prepare a description of the tax information reporting and 

other related tax matters, which shall be provided to the Fund Administrator for dissemination to 

Eligible Investors before or contemporaneously with their Distribution Payments. The Tax 

Administrator will be compensated for all reasonable costs and expenses from the Fair Fund 

according to the terms of Tax Administrator’s 2019-2021 Letter Agreement with the 

Commission, and tax obligations will be from the Fair Fund.

 

3 See Order Appointing Fund Administrator and Setting Administrator Bond Amount, Exchange Act Rel. No.

91590 (Apr. 16, 2021).

4

 Exchange Act Rel. No. 85174 (Feb. 22, 2019).

5

 See Order Appointing Tax Administrator, Exchange Act Rel. No. 91061 (Feb. 4, 2021).
5

IV. FAIR FUND ADMINISTRATION

18. No Claims Process. Based on information obtained by the Commission staff 

during its investigation and the review and analysis of applicable records, the Commission staff 

has reasonably concluded that it has all records necessary to calculate harm amounts for each 

Eligible Investor as described in Paragraph 19. As a result, the Fair Fund is not being distributed 

according to a claims-made process, so procedures for making and approving claims in 

accordance with Rule 1101(b)(4) of the Commission’s Rules, 17 C.F.R. § 201.1101(b)(4), are 

not applicable. 

19. Methodology for Determining Distribution Payments. Using information 

collected during the investigation, the Commission staff will determine the Distribution Payment

for each Eligible Investor as follows:

(a) Calculate harm on each customer order as the industry benchmark price 

improvement6less Robinhood’s price improvement, less the industry benchmark

commission on such an order, for orders where the difference in price 

improvement exceeds the industry benchmark commission. For orders where the 

difference in price improvement is less than or equal to the industry benchmark

commission, harm will be zero.

(b) Calculate reasonable interest on each customer order with non-zero harm using 

the short-term Applicable Federal Rate, compounded quarterly from the end of 

the calendar quarter of the Order through August 31, 2021.

(c) Calculate the Harm Amount for each Eligible Investor as the sum of the harm 

calculated in (a) above across all of his, her or its orders during the Harm Period. 

(d) Calculate the Interest Amount for each Eligible Investor as the sum of the 

reasonable interest calculated in (b) above across all of his, her or its orders 

during the Harm Period.

(e) Combine each Eligible Investor’s Harm Amount and Interest Amount to 

determine their Distribution Payment.

The Net Available Fair Fund exceeds the aggregate harm suffered by all Eligible 

Investors, so each Eligible Investor will receive a Distribution Payment equal to his, her or its 

Harm Amount plus Interest Amount subject to below.

No Eligible Investor shall receive a distribution unless the Distribution Payment is equal 

to or greater than the Minimum Distribution Amount of $10.00. No Eligible Investor shall 

receive a Distribution Payment in excess of his, her or its Harm Amount, plus Interest Amount.

 

6

Price improvement is defined as the difference between the customer’s execution price and the National Best Bid

and Offer at the time of order receipt. 
6

In the view of the Commission staff and the Fund Administrator, this methodology 

constitutes a fair and reasonable allocation of the Fair Fund to compensate an investor’s harm. 

20. Procedures for Locating and Notifying Eligible Investors and Eligible Investors’

Obligation with Respect to the Plan Notice. Within fourteen (14) calendar days of Commission 

approval of the Plan, the Fund Administrator will:

(a) Establish and maintain a website devoted solely to the Fair Fund. The Fair 

Fund’s website will make available a copy of the approved Plan, include a copy 

of the Plan Notice, and related materials in downloadable form, and such other 

information that the Fund Administrator believes will be beneficial to Eligible 

Investors. 

(b) Establish and maintain a toll-free telephone number for Eligible Investors to call 

and speak to a live representative of the Fund Administrator during its regular 

business hours or, outside of such hours, to hear pre-recorded information about 

the Fair Fund. 

(c) The Fund Administrator will also establish and maintain a traditional mailing 

address and an email address which will be listed on all correspondence from the 

Fund Administrator to Eligible Investors as well as on the Fair Fund’s website.

(d) Send to each Eligible Investor’s last known email address (if known) and/or 

mailing address an Information Packet which shall include: (i) a letter which 

includes a statement characterizing the distribution, a link to the approved Plan 

posted on the Commission’s website and instructions for requesting a copy of the 

Plan; (ii) a notice (the “Plan Notice”) regarding the Commission’s approval of the 

Plan; (iii) specification of any information needed from the Eligible Investor, 

including confirmation of their contact information sufficient to issue a 

Distribution Payment and a Substitute Form W-9 to be completed by the Eligible 

Investor; (iv) a calculation of the Distribution Amount; (v) a description of the tax 

information reporting and other related tax matters; (vi) the procedure for the 

distribution as set forth in the Plan; and (vii) the name and contact information for 

the Fund Administrator in order to provide any requested information or to 

contact with questions regarding the distribution.

The Commission staff retains the right to review and approve any material posted on the 

Fair Fund’s website and any scripts used in connection with communications with investors.

Prior to any mailing under the Plan, the Fund Administrator will run a National Change 

of Address search on any domestic address to retrieve updated U.S. addresses, and make best 

efforts to confirm updated addresses for foreign records, thereby ensuring updated mailing 

information.

21. Failure to Respond. If an Eligible Investor fails to provide the information 

requested in the Information Packet within fourteen (14) days of the postmarked dated of the 

Information Packet, the Fund Administrator will make no fewer than two (2) attempts to contact 
7

the Eligible Investor by telephone or email. The second attempt will in no event take place more 

than thirty (30) days from the mailing of the Information Packet. If an Eligible Investor fails to 

respond to the Fund Administrator’s contact attempts as described in this paragraph, the Fund 

Administrator, in its discretion, may remove such Eligible Investor from the distribution, and the 

allocated Distribution Payment will remain in the Fair Fund as part of the Residual. 

22. Undeliverable Mail. If an Information Packet and/or Distribution Payment is/are 

returned as undeliverable, the Fund Administrator will make best practicable efforts to ascertain 

an Eligible Investor’s correct address. If another address is obtained, the Fund Administrator 

will then resend the Information Packet and/or Distribution Payment to the Eligible Investor’s 

new address as expeditiously as possible. If the Information Packet and/or Distribution Payment 

is returned again, and the Fund Administrator, despite best practicable efforts, is unable to find 

an Eligible Investor’s correct address, the Fund Administrator, in its discretion, may remove such 

Eligible Investor from the distribution and the Eligible Investor’s Distribution Payment will be 

added to the Residual. 

Any Eligible Investor who relocates or otherwise changes contact information after 

receipt of the Information Packet must promptly communicate any change in address or contact 

information to the Fund Administrator.

23. Distribution Timing. The Fund Administrator will use its best efforts to start the 

distribution within fourteen (14) days after the issuance of the Commission’s Order approving 

the Plan (the “Deadline”), but no later than September 30, 2021.

The Fund Administrator will provide the Commission with a list of each Eligible Investor 

who timely returned the information requested in the Information Packet, including a Substitute 

Form W-9 (“Payee List”) within fourteen (14) days of the Deadline. If Eligible Investors return 

the requested information after the Deadline but before a final cut-off date determined by the 

Fund Administrator, in conjunction with the Commission staff, the Fund Administrator will 

prepare and provide to the Commission staff further Payee Lists and the staff will seek an 

order(s) for disbursement of those funds to the Eligible Investors.

24. Escrow Account and Reissues. Prior to disbursement of the Fair Fund, the Fund 

Administrator will establish an escrow account at a U.S. commercial bank (“Bank”), not 

unacceptable to Commission staff. The Escrow Account shall be established pursuant to an 

escrow agreement (the “Escrow Agreement”) to be provided by the Commission staff, in the 

name of and bearing the Employer Identification Number (“EIN”) of the QSF (the “Escrow 

Account”). The Fund Administrator shall also establish with the Bank a separate deposit account 

(the “Deposit Account”) (e.g., controlled distribution account, managed distribution account, 

linked checking and investment account) for the purpose of funding the Distribution Payments to 

be distributed to Eligible Investors by the Fund Administrator pursuant to the Distribution Plan. 

The name of each account shall be in the following form: Robinhood Financial Fair Fund (EIN 

XX-XXXXXXX), as custodian for the benefit of investors allocated a distribution pursuant to 

the Distribution Plan In the Matter of Robinhood Financial, LLC, Administrative Proceeding File 

No. 3-20171.
8

During the term of the Escrow Agreement, if invested, the Escrow Account shall be 

invested and reinvested in short-term United States Treasury securities backed by the full faith 

and credit of the United States Government or an agency thereof, of a type and term necessary to 

meet the cash liquidity requirements for payments to Eligible Investors, tax obligations and 

administration costs, including investment or reinvestment in a bank account insured by the 

Federal Deposit Insurance Corporation (“FDIC”) up to the guaranteed FDIC limit, or in money 

market mutual funds registered under the Investment Company Act of 1940 that invest 100% of 

their assets in direct obligations of the United States Government. 

The Fund Administrator shall provide duplicate original bank and/or investment 

statements on any accounts established by the Fund Administrator to the Tax Administrator on a 

monthly basis and shall assist the Tax Administrator in obtaining mid-cycle statements, as 

necessary.

The Fund Administrator shall deposit or invest funds in the Escrow and Deposit 

Accounts so as to result in the maximum reasonable net return, taking into account the safety of 

such deposits or investments. In consultation with Commission staff, the Fund Administrator 

shall work with the Bank on an ongoing basis to determine an allocation of funds between the 

Escrow and the Deposit Accounts that will preserve earnings, if possible, while providing 

maximum protection for the Fair Fund. All interest earned will accrue for the benefit of the Fair 

Fund and all costs associated with the Escrow Account and Deposit Accounts will be paid from 

the Fair Fund.

Upon transfer from the Commission, the assets of the Fair Fund will be held in the 

Escrow Account, separate from Bank assets, until the presentation of checks. All Fair Fund 

checks presented for payment or electronic transfers will be subject to “positive pay” controls 

before being honored by the Bank, and all such checks issued to Eligible Investors by the Fund 

Administrator shall bear a stale date of ninety (90) days. The “positive pay” system provides 

protection against fraud arising from counterfeit or altered checks. The “positive pay” system 

will require, at a minimum, confirmation by the Bank that all checks presented for payment 

match the identifiers and amounts on the Payee List prior to honoring such checks. 

Checks that are not negotiated within this 90-day period shall be voided and the issuing 

financial institution shall be instructed to stop payment on those checks. Such Eligible Investor’s 

claim is extinguished as of the stale date and the funds will remain in the Fair Fund. If a check 

reissue has been requested before the stale date, such request will be honored and the check 

reissue will bear a stale date of sixty (60) days. Accordingly, checks that are not negotiated 

within this 60-day period shall be voided and the issuing financial institution shall be instructed 

to stop payment on those checks. Such Eligible Investor’s claim is extinguished as of the stale 

date and the funds will be added to the Residual. A check reissue request should be submitted 

before the stale date of the original check has passed. For any electronic payment, the exact 

amount necessary to make a payment shall be transferred from the Escrow Account directly to 

the payee bank account in accordance with written instruction provided to the Bank by the Fund 

Administrator.
9

25. Payment to Eligible Investors. The Fund Administrator will compile the Payee 

List and prepare a payment file in a Commission-approved format along with a reasonable 

assurances letter for submission to Commission staff. Pursuant to Rule 1101(b)(6) of the 

Commission’s Rules, Commission staff will seek to obtain an order from the Commission to 

disburse the Fair Fund to the Escrow Account. All disbursements will be made pursuant to a 

Commission order. Upon issuance of the Commission’s order authorizing distribution of the 

Fair Fund in accordance with the Plan, the Fund Administrator will distribute by check to each 

Eligible Investor his, her, its, or their Distribution Payment, as reported to the Commission on 

the Payee List, at the most recent address reported by the Eligible Investor.7 Any dispute 

regarding a check must be received by the Fund Administrator prior to the expiration of the 

check.

Distribution checks and/or accompanying communications will clearly indicate: (a) that 

the money is being distributed from a Fair Fund established to compensate investors for harm 

suffered as a result of securities law violations; (b) that the tax treatment of the distribution is the 

responsibility of each Eligible Investor and that the Eligible Investor should consult its tax 

advisor for advice regarding the tax treatment of the distribution; (c) the contact information for 

the Fund Administrator for questions regarding the distribution payment; and (d) that checks will 

be void after ninety (90) days and cannot be reissued after one hundred fifty (150) days from the 

date of the original check.

The Fund Administrator will work with the Bank and maintain information about 

uncashed checks, any returned items due to non-delivery, insufficient addresses, and/or other 

deficiencies. The Fund Administrator is responsible for researching and reconciling errors and 

reissuing payments when possible. The Fund Administrator is also responsible for accounting 

for all payments. The amount of all uncashed payments will continue to be held in the Fair 

Fund. 

26. Outreach Efforts. The Fund Administrator will make reasonable efforts to contact 

Eligible Investors to follow-up on the status of uncashed distribution checks over $1,000 (other 

than those returned as “undeliverable”) and take appropriate action to follow-up on the status of 

uncashed checks at the request of Commission staff. The Fund Administrator may reissue such 

checks, subject to the time limits detailed herein.

27. Accountings. Pursuant to Rule 1105(f) of the Commission’s Rules, 17 C.F.R. 

§ 201.1105(f), the Fund Administrator will file an accounting with the Commission during the 

first ten (10) days after the end of each calendar quarter on a standardized form provided by the 

Commission staff. The Fund Administrator will file an accounting of all monies earned or 

received and all monies spent in connection with the administration of the Plan. Once all 

payments are disbursed to Eligible Investors pursuant to the procedures described above, and all 

Administrative Costs have been paid, the Fund Administrator will submit a final accounting for 

approval by the Commission, on a standardized form provided by the Commission staff, prior to 

the discharge of the Fund Administrator and cancellation of the Fund Administrator’s bond.

 

7 Under certain circumstances, the Fund Administrator may disburse a Distribution Payment to an Eligible Investor

utilizing a payment method other than check, if agreed to by the Fund Administrator and the Commission staff.
10

28. Amendments and Procedural Deadline Extensions. The Fund Administrator shall 

take reasonable and appropriate steps to distribute the Net Available Fair Fund in accordance 

with the general purposes of this Plan. The Fund Administrator will inform Commission staff of 

any changes needed to the Plan. If upon consultation with Commission staff, a change is 

determined to be material, Commission approval is required prior to implementation by 

amending the Plan. Immaterial changes may be made by the Fund Administrator with approval 

of the Commission staff. For good cause shown, and in consultation with the Commission staff, 

the Fund Administrator may extend any of the procedural deadlines set forth in this Plan.

29. Procedures to Request Plan Notice. Any person or entity who does not receive a 

Plan Notice, as described in Paragraph 20, but who is aware of this Plan (e.g., through other 

Eligible Investors or on www.sec.gov) and believes he/she/it should be included as an Eligible 

Investor should contact the Fund Administrator within thirty (30) days of the publication of the 

Plan for notice and comment to establish eligibility to receive a Distribution Payment. The 

Fund Administrator will send a Plan Notice within fourteen (14) days of receiving 

documentation of eligibility, if the Fund Administrator determines that the person or entity 

should have received a Plan Notice, as provided in Paragraph 20.

30. Procedures for Disputing Amounts Received. Disputes will be limited to 

calculation of the Distribution Payment to Eligible Investors. Within thirty (30) days of receipt 

of the Plan Notice, the Fund Administrator must receive a written communication detailing the 

dispute along with any supporting documentation. The Fund Administrator will investigate the 

dispute, and such investigation will include a review of the written dispute, as well as, any 

supporting documentation. Within ninety (90) days of receipt of the written dispute, the Fund 

Administrator will notify the investor of its resolution of the dispute, which shall be final. 

31. Residual Funds and Disposition of Undistributed Funds. A residual within the 

Fair Fund will be established for any amounts remaining after distribution of the Net Available 

Fair Fund to Eligible Investors has occurred (the “Residual”). The Residual may include, 

among other things, funds reserved for future taxes and related expenses, annual bond fee 

premiums, administrative expenses, distributions from checks that have not been cashed, 

undelivered checks, and tax refunds for overpayment or for waiver of IRS penalties. All funds 

remaining in the Residual after all expenses of administration and taxes have been satisfied will 

be returned to the Commission for further disposition as approved by the Commission. Upon 

approval of the distribution final accounting by the Commission, any amounts remaining that 

are infeasible to return to investors, and any amounts returned to the Commission in the future 

that are infeasible to return to investors, may be transferred to the general fund of the U.S. 

Treasury, subject to Section 21F(g)(3) of the Exchange Act. 

32. Miscellaneous. The Fund Administrator is authorized to enter into agreements 

with financial institutions, (“Institutions”) as may be appropriate or necessary in the 

administration of the Fair Fund, provided such Institutions are not excluded pursuant to other 

provisions of this Plan. In connection with such agreements, the Institutions shall be deemed to 

be agents of the Fund Administrator under this Plan.
11

The Fund Administrator, and/or each of its designees, agents and assistants, shall be 

entitled to rely on all outstanding rules of law; and any orders issued by the Commission, the 

Secretary by delegated authority or an Administrative Law Judge; and/or any investor 

information provided by Commission staff.

33. Document Retention. The Fund Administrator will retain all documents in paper 

and electronic form for a period of six (6) years after approval of the final accounting and 

thereafter will transfer the documents to the Commission, pursuant to Commission staff 

direction. In addition, the Fund Administrator will shut down the Fair Fund’s website 

established specifically for the administration of the Fair Fund six (6) months after the closing of 

the Escrow and Deposit Accounts, or at such earlier time as the Fund Administrator determines 

with concurrence of the Commission staff.

34. Termination of Fair Fund, and Discharge of the Fund Administrator. The Fair 

Fund will be eligible for termination and the Fund Administrator will be eligible for discharge 

after all of the following have occurred: a) a final accounting, in a standard accounting format 

provided by Commission staff, has been submitted by the Fund Administrator, and has been 

approved by the Commission; b) all Administrative Costs have been paid from the Fair Fund; 

and c) any amount remaining in the Fair Fund has been received by the Commission. When the 

Commission has approved the final accounting, the Commission staff shall seek an order from 

the Commission authorizing: (a) the disposition of the Residual, and any amounts returned to the 

Fair Fund in the future; (b) termination of the Fair Fund; (c) discharge of the Fund 

Administrator; and (d) cancellation of the Fund Administrator’s bond. 

35. Notice of Proposed Plan and Opportunity for Comment. The Notice of the 

Proposed Plan of Distribution and Opportunity for Comment (the “Notice”) shall be published 

on the Commission’s website at http://www.sec.gov/litigation/fairfundlist.htm. Any person 

wishing to comment on the Plan must do so in writing by submitting their comments within 

thirty (30) days of the date of the Notice: (a) to the Office of the Secretary, United States 

Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090; (b) by 

using the Commission’s Internet comment form (http://www.sec.gov/litigation/admin.shtml); or 

(c) by sending an email to rule-comments@sec.gov. Comments submitted by email or via the 

Commission’s website should include “Administrative Proceeding File No. 3-20171” in the 

subject line. Comments received will be publicly available. Persons should only submit 

comments that they wish to make publicly available.