UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

ADMINISTRATIVE PROCEEDING 

File No. 3-17956

In the Matter of

MagnaChip Semiconductor 

Corporation and Margaret HyeRyoung Sakai, CPA,

Respondents.

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PROPOSED PLAN OF 

DISTRIBUTION 

I. OVERVIEW

1. The Division of Enforcement submits this Proposed Plan of Distribution (the 

“Plan”) to the United States Securities and Exchange Commission (the “Commission”) pursuant 

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

“Commission’s Rules”), 17 C.F.R. § 201.1101. This Plan provides for the distribution of a Fair 

Fund (the “Fair Fund”), comprised of civil money penalties paid by MagnaChip Semiconductor 

Corporation and Margaret Hye-Ryoung Sakai, CPA (collectively, the “Respondents”) in the 

above-captioned matter.1

2. As described more specifically below, the Plan seeks to compensate investors 

who were harmed by the Respondents’ conduct described in the Order, in connection with a 

scheme involving improper and fraudulent accounting practices intended to artificially inflate 

revenue and meet gross margin targets it had previously announced to the public. As calculated 

using the methodology detailed in the Plan of Allocation (attached as Exhibit A), investors will 

be compensated for their losses on shares of MagnaChip common stock (the “Security”) that 

were purchased between February 1, 2012 and February 12, 2015, inclusive (the “Relevant 

Period”). In the view of the Commission staff and the Fund Administrator, this methodology 

constitutes a fair and reasonable allocation of the Fair Fund. 

3. The Commission has custody of the Fair Fund and shall retain control of the 

assets of the Fair Fund. The Plan is subject to approval by the Commission, and the Commission 

retains jurisdiction over its implementation.

 

1

 See Order Instituting Public Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the 

Securities Act of 1933, Sections 4C and 21C of the Securities Exchange Act of 1934, and Rule 102(e) of the 

Commission’s Rules of Practice, Making Findings, and Imposing Remedial Sanctions and Cease-and-Desist Orders, 

Securities Act Rel. No. 10352 (May 1, 2017) (the “Order”).
2

II. BACKGROUND

4. On May 1, 2017, the Commission issued the Order instituting and simultaneously 

settling administrative and cease-and-desist proceedings against the Respondents. In the Order, 

the Commission found that Respondents violated the antifraud, books and records and internal 

control provisions of the federal securities laws, when it began engaging in a variety of practices 

to inappropriately inflate its revenues and meet the gross margin targets it previously had 

announced to the public. As a result, MagnaChip’s financial statements and related disclosures 

were materially misstated in its periodic, annual, and current reports filed with the Commission.

MagnaChip also falsely stated in an October 2013 press release that it had met its revenue and 

gross margin guidance for ten consecutive quarters following its IPO. Following an internal 

investigation, MagnaChip self-reported the revenue issues and, as a result, MagnaChip restated 

its financial statements in early 2015, reducing its previously reported revenue for 2011 through 

2013 by $121 million. In total, the Commission ordered the Respondents to pay $3,135,000 in 

civil money penalties to the Commission. The Commission also created the Fair Fund, pursuant 

to Section 308(a) of the Sarbanes-Oxley Act of 2002, so the penalties paid can be distributed to 

harmed investors.

5. The Respondents have paid $3,134,999.99. The Fair Fund has been deposited at 

the United States Department of the Treasury’s Bureau of the Fiscal Service (“BFS”) for 

investment, and any accrued interest will be for the benefit of the Fair Fund.

III. DEFINITIONS

As used in this Plan, the following definitions will apply:

6. “Administrative Costs” shall mean any administrative costs and expenses, 

including without limitation the fees and expenses of the Tax Administrator and the Fund 

Administrator, tax obligations, bond premium expenses, and investment and banking costs.

7. “Claim Form” means the form designed by the Fund Administrator, in 

consultation with the Commission staff, for the Preliminary Claimants to file their claims in 

accordance with this Plan. The Claim Form will require, at a minimum, sufficient 

documentation reflecting any Preliminary Claimant’s purchases and dispositions of Securities 

during the Relevant Period such that eligibility under the Plan can be determined, tax 

identification and other related information from the Preliminary Claimant as determined 

necessary by the Fund Administrator in coordination with the Tax Administrator, and a 

certification that the Preliminary Claimant is not an Excluded Party. Class Action Authorized 

Claimants will not be required to submit a Claim Form.

8. “Claim Status Notice” means the notice sent by the Fund Administrator within 

ninety (90) days of the Claims Bar Date to all Preliminary Claimants who submitted a Claim 

Form; all Class Action Second Settlement Claimants who timely submitted a Personalized Claim 

Form, or otherwise responds to his, her, or its Plan Notice; and all Class Action Authorized 

Claimants whose claims have been identified as possibly fraudulent. The Claim Status Notice 
3

will set forth the Fund Administrator’s determination of the eligibility of the claim (eligible, 

partially or wholly deficient, or ineligible). The Claim Status Notice will provide to each 

Preliminary Claimant and Class Action Second Settlement Claimant whose claim is deficient, in 

whole or in part, the reason(s) for the deficiency and in the event the claim is denied, the Claim 

Status Notice will state the reason(s) for such denial. The Claim Status Notice will also notify 

the Preliminary Claimant or Class Action Second Settlement Claimant of the opportunity to cure 

any deficiency or dispute the determination made by the Fund Administrator, and will provide 

instructions regarding what is required to do so.

9. “Claims Bar Date” means the date established in accordance with this Plan by 

which (a) a Class Action Second Settlement Claimant’s Personalized Claim Form or (b) a 

Preliminary Claimant’s Claim Form must be postmarked or submitted electronically in order to 

receive consideration under the Plan. The Claims Bar Date shall be one hundred twenty (120) 

days after the initial mailing of the Claims Packet. Claim Forms submitted by Preliminary 

Claimants and Class Action Second Settlement Claimants that are postmarked or received after 

the Claims Bar Date will not be accepted unless the Fund Administrator is directed to do so by 

the Commission staff.

10. “Claims Packet” means the materials relevant to submitting a claim that will be 

provided to Preliminary Claimants and Class Action Second Settlement Claimants known to the 

Fund Administrator or to those who request such materials prior to the Claims Bar Date. The 

Claims Packet for Preliminary Claimants will include, at a minimum, a copy of the Plan Notice 

and a Claim Form (together with instructions for completion of the Claim Form). The Claims 

Packet for the Class Action Second Settlement Claimants will include, at a minimum, a copy of 

the Plan Notice and a Personalized Claim Form.

11. “Class Action” shall mean Thomas, et al. v. MagnaChip Semiconductor Corp., et 

al., Case No.: 3:14-cv-01160-JST (N.D. Cal), in which the consolidated amended complaint was 

filed June 26, 2015.

12. “Class Action Authorized Claimant” means a Person who filed an approved 

claim in the first Class Action settlement involving investments occurring between February 1, 

2012 and February 12, 2015, inclusive.

13. “Class Action Second Settlement Claimant” means a Person who filed an 

approved claim only in the second Class Action settlement, whose claim included the period 

from February 1, 2012 through and including March 11, 2014, and excluded the period from 

March 12, 2014 through February 12, 2015, inclusive.

14. “Distribution Payment” means a payment from the Fair Fund to a Payee in 

accordance with the terms of this Plan.

15. “Eligible Claimant” means a Class Action Authorized Claimant, or a 

Preliminary Claimant or Class Action Second Settlement Claimant who submitted a valid claim,

and who is not an Excluded Party.
4

16. “Excluded Party” shall mean:

(a) The Respondents;

(b) Present or former officers or directors of Respondents or any assigns, 

creditors, heirs, distributees, spouses, parents, siblings, dependent children 

or controlled entities of any of the foregoing Persons or entities;

(c) Any employee or former employee of the Respondents or any of its 

affiliates who has been terminated for cause or has otherwise resigned, in 

connection with the conduct described in the Order; 

(d) Any Person who, as of the Claims Bar Date, has been the subject of 

criminal charges related to the conduct described in the Order or any 

related Commission action;

(e) Any firm, trust, corporation, officer, or other entity in which Respondents 

have or had a controlling interest;

(f) The Fund Administrator, its employees, and those Persons assisting the 

Fund Administrator in its role as the Fund Administrator; or

(g) Any purchaser or assignee of another Person’s right to obtain a recovery 

from the Fair Fund for value; provided, however, that this provision shall 

not be construed to exclude those Persons who obtained such a right by 

gift, inheritance or devise.

The Claim Form will require claimants to certify that they are not an Excluded 

Party.

17. “Fair Fund” means the fund, comprised of the $3,134,999.99 paid by the 

Respondents and created by the Commission pursuant to Section 308(a) of the Sarbanes-Oxley 

Act of 2002, for the benefit of investors harmed by Respondents’ violations described in the 

Order.

18. “Final Determination Notice” shall mean the written notice sent by the Fund 

Administrator to any Preliminary Claimant, Class Action Authorized Claimant, or Class Action 

Second Settlement Claimant who timely responded to the Claim Status Notice in an effort to 

cure a deficiency or dispute the determination made by the Fund Administrator, notifying the 

Preliminary Claimant, Class Action Authorized Claimant, or Class Action Second Settlement 

Claimant of its determination. The Final Determination Notice will constitute the Fund 

Administrator’s final ruling regarding the status of the claim.

19. “Net Available Fair Fund” means the Fair Fund, plus any interest or earnings, 

less Administrative Costs. 
5

20. “Payee” means an Eligible Claimant who is determined to receive a Distribution 

Payment, as calculated in accordance with the Plan of Allocation.

21. “Person” means natural individuals as well as legal entities such as corporations, 

partnerships, limited liability companies, or trusts.

22. “Personalized Claim Form” means a form drafted by the Fund Administrator, in 

consultation with the Commission staff, for Class Action Second Settlement Claimants to file 

transaction data from March 12, 2014 through and including February 12, 2015, as well as 

holding data as of the close of trading on February 12, 2015. The Personalized Claim Form will 

require, at a minimum, sufficient documentation reflecting any Class Action Second Settlement 

Claimant’s purchases and dispositions of Securities during the Relevant Period such that

eligibility under the Plan can be determined, tax identification and other related information from 

the Class Action Second Settlement Claimant as determined necessary by the Fund 

Administrator in coordination with the Tax Administrator, and a certification that the Class 

Action Second Settlement Claimant is not an Excluded Party. Class Action Authorized 

Claimants will not be required to submit a Personalized Claim Form.

23. “Plan Notice” means a written notice from the Fund Administrator sent to 

Preliminary Claimants and Class Action Second Settlement Claimants within ninety (90) days of 

the Plan’s approval informing the Preliminary Claimants and Class Action Second Settlement 

Claimants of the Fair Fund and how to participate in the distribution of the Fair Fund. For Class 

Action Second Settlement Claimants, the Plan Notice and Personalized Claim Form will indicate 

that he, she, or it is required to return the additional documentation, as detailed therein, for the 

period between March 12, 2014 through and including February 12, 2015 to complete their claim

to participate in the distribution. For the Preliminary Claimants, the Plan Notice and Claim Form

will provide instructions as to what is required to participate in the distribution of the Fair Fund.

The Plan Notice will also be available on the Fair Fund’s website, which is maintained by the 

Fund Administrator.

24. “Plan of Allocation” means the methodology by which an Eligible Claimant’s 

Recognized Loss is calculated. The Plan of Allocation is attached as Exhibit A.

25. “Postcard Notice” means the notice designed by the Fund Administrator, in 

consultation with the Commission staff, that will be mailed to Class Action Authorized 

Claimants to notify them of the Fair Fund and advise them that they do not have to file another 

claim form.

26. “Preliminary Claimant” shall mean a Person, or his, her, or its lawful successor, 

who is not a Class Action Authorized Claimant or a Class Action Second Settlement Claimant, 

whose name and address is in the Fund Administrator’s Class Action database as having a 

possible claim to recover from the Fair Fund under this Plan, including those who opted-out of 

participating in the Class Action, or a Person who traded during the Relevant Period and is 

asserting prior to the Claims Bar Date that he, she, or it has a possible claim to recover from the 

Fair Fund under this Plan. 
6

27. “Recognized Loss” means the amount of loss calculated for an Eligible Claimant 

in accordance with the Plan of Allocation.

28. “Relevant Period” means the period of time between February 1, 2012 and

February 12, 2015, inclusive. 

29. “Securities” refers to shares of MagnaChip common stock listed on a U.S. 

exchange and registered with the Commission and traded under the symbol MX.

30. “Summary Notice” means the notice published on an Internet based newswire 

service with national distribution and the Plan Notice with the Claim Form published with the 

Depository Trust Company (“DTC”) on its Legal Notice System (“LENS”). LENS provides 

DTC participants the ability to search and download legal notices, as well as to receive e-mail 

alerts based on particular notices or particular Committee on Uniform Securities Identification 

Procedures (“CUSIPs”), once a legal notice has been posted.

31. “Third-Party Filer” means a third-party, including without limitation a nominee, 

custodian, or an intermediary holding in street name, who is authorized to submit and submits a 

claim(s) on behalf of one or more Preliminary Claimants or Class Action Second Settlement 

Claimants. Third-Party Filer does not include assignees or purchasers of claims, who are 

Excluded Parties and are therefore not eligible to receive Distribution Payments.

IV. TAX COMPLIANCE

32. On June 14, 2018, the Commission appointed Miller Kaplan Arase LLP as the tax 

administrator (the “Tax Administrator”) for the Fair Fund to handle the tax obligations of the 

Fair Fund.

2 The Tax Administrator will be compensated for reasonable fees and expenses from 

the Fair Fund in accordance with its Revised 2017-2018 Engagement Letter Agreement with the 

Commission.3

33. The Fair Fund constitutes a Qualified Settlement Fund (“QSF”) under Section 

468B(g) of the Internal Revenue Code of 1986, as amended, 26 U.S.C. § 468B(g), and related 

regulations, 26 C.F.R. §§ 1.468B-1 through 1.468B-5. The Tax Administrator is the 

administrator of such QSF, for purposes of Treas. Reg. § 1.468B-2(k)(3)(I) and shall satisfy the 

tax-related administrative requirements imposed by Treas. Reg. § 1.468B-2, including, but not 

limited to:

(a) Obtaining a taxpayer identification number; 

(b) Requesting funds necessary for the timely payment of all applicable taxes, 

the payment of taxes for which the Tax Administrator has received funds, 

and the filing of applicable returns; and 

 

2

 See Order Appointing Tax Administrator, Exchange Rel. No. 83437 (June 14, 2018).

3

 See Omnibus Order Directing the Appointment of Tax Administrator in Administrative Proceedings that Establish 

Distribution Funds, Exchange Act Rel. No. 81057 (June 30, 2017).
7

(c) Fulfilling any information reporting or withholding requirements required 

for distributions from the Fair Fund.

34. All tax obligations will be paid from the Fair Fund, subject to the review and 

approval of Commission staff.

V. FUND ADMINISTRATOR

35. On March 19, 2020, the Commission appointed Strategic Claims Services as the 

fund administrator for the Fair Fund (the “Fund Administrator”). The Fund Administrator has 

obtained a bond in the amount of $3,134,999.99, as ordered.4 Pursuant to Rule 1105(a) of the 

Commission’s Rules, 17 C.F.R. § 201.1105(a), the Fund Administrator may be removed at any 

time by order of the Commission or hearing officer. 

36. The Fund Administrator will be responsible for administering the Fair Fund in 

accordance with the Plan. This will include, among other things, taking reasonable steps to 

identify and contact Preliminary Claimants; obtaining mailing information for Preliminary 

Claimants; establishing a website and staffing a call center to address inquiries during the claims 

process; developing a claims database; preparing accountings; cooperating with the tax 

administrator appointed by the Commission to satisfy any tax liabilities and to ensure 

compliance with income tax reporting requirements, including but not limited to Foreign 

Account Tax Compliance Act (FATCA); advising Preliminary Claimants, Class Action 

Authorized Claimants, and Class Action Second Settlement Claimants of deficiencies in claims 

and providing an opportunity to dispute the deficiency or to cure any documentary defects; 

taking antifraud measures, such as identifying false, ineligible and overstated claims, including 

the claims submitted in the Class Action settlement by Class Action Authorized Claimants; 

making determinations under the criteria established herein as to Preliminary Claimant 

eligibility; advising Preliminary Claimants, Class Action Authorized Claimants, and Class 

Action Second Settlement Claimants of final claim determinations; disbursing the Fair Fund in 

accordance with this Plan, as ordered by the Commission; and researching and reconciling errors 

and reissuing payments, when possible.

37. To carry out the purposes of this Plan, the Fund Administrator is authorized to 

make and implement immaterial changes to the Plan upon agreement of the Commission staff. If 

a change is deemed to be material by the Commission staff, Commission approval is required 

prior to implementation by amending the Plan.

38. The Fund Administrator may extend any procedural deadline contained in the 

Plan for good cause shown, if agreed upon by the Commission staff.

39. The Fund Administrator is authorized to enter into agreements with third-parties 

as may be appropriate or necessary in the administration of the Fair Fund, provided such thirdparties are not Excluded Parties. In connection with such agreements, the third-parties shall be 

deemed to be agents of the Fund Administrator under this Plan. 

 

4

 See Order Appointing Fund Administrator and Setting Bond Amount, Exchange Act Rel. No. 88430 (Mar. 19, 

2020).
8

40. The Fund Administrator will be entitled to payment from the Fair Fund of 

reasonable fees and expenses, including the bond premium, incurred in the performance of its 

duties (including any such fees and expenses incurred by agents, consultants or third-parties 

retained by the Fund Administrator in furtherance of its duties).

VI. ADMINISTRATION OF THE FAIR FUND

Identification of and Notification

41. Based upon records obtained in its capacity as claims administrator in the Class 

Action, the Fund Administrator has identified several Preliminary Claimants, including those 

who opted-out of the Class Action, and those whose name and address was provided to the 

Fund Administrator by nominees but who did not file a claim in the Class Action. The Fund 

Administrator will, insofar as practicable, use its best efforts to identify additional Preliminary 

Claimants by contacting nominees who did not respond to the previous two Class Action

settlements, and by mailing a Claims Packet to those previously identified but who did not 

previously file a claim form. The Fund Administrator may also engage a third-party firm, after 

consultation with and approval of the Commission staff, to assist in identifying additional 

Preliminary Claimants to maximize the participation rate in this distribution.

42. Within sixty (60) days after Commission approval of the Plan, the Fund 

Administrator shall:

(a) design and submit a Claims Packet, including the Plan Notice, the Claim 

Form, and the Personalized Claim Form, to the Commission staff for 

review and approval; 

(b) design and submit a Postcard Notice to the Commission staff for review 

and approval;

(c) create a mailing database of all Preliminary Claimants based upon 

information identified by the Fund Administrator, and will create a claim

database consisting of Preliminary Claimants, Class Action Authorized 

Claimants, and Class Action Second Settlement Claimants;

(d) run a National Change of Address search to retrieve updated addresses for 

all records in the database, thereby ensuring the mailing information for 

Preliminary Claimants, Class Action Authorized Claimants, and Class 

Action Second Settlement Claimants is up-to-date;

(e) send the appropriate Claims Packet to the last known email address (if 

known) and/or mailing address of each Class Action Second Settlement 

Claimant and Preliminary Claimant identified by the Fund Administrator;
9

(f) send the Postcard Notice to the last known email address (if known) 

and/or mailing address of each Class Action Authorized Claimant;

(g) send a letter to the Fund Administrator’s list of banks, brokers, and other 

nominees who did not respond to the Class Action settlements, in 

accordance with paragraph 46 below;

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

Fund’s website, located at www.strategicclaims.net/secvmagnachip, will 

make available a copy of the approved Plan, Plan Notice, and Postcard 

Notice; provide information regarding the claims process and eligibility 

requirements for participation in the Fair Fund in the form of frequently 

asked questions; include in downloadable form, the Claim Form and 

Personalized Claim Form; and such other information the Fund 

Administrator believes will be beneficial;

(i) establish and maintain a toll-free telephone number, 1-866-274-4004 for 

anyone to call to speak to a live representative of the Fund Administrator 

during its regular business hours or, outside of such hours, to hear 

prerecorded information about the Fair Fund. The toll-free number will be 

listed on all correspondence from the Fund Administrator as well as on the 

Fair Fund’s website; 

(j) establish and maintain a traditional mailing address and an email address 

which will be listed on all correspondence from the Fund Administrator to 

Preliminary Claimants, Class Action Authorized Claimants, and Class 

Action Second Settlement Claimants, as well as on the Fair Fund’s 

website; and

(k) publish the Summary Notice on an Internet-based newswire service with 

national distribution and the Plan Notice and Claim Form with the DTC on 

LENS.

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

on the Fair Fund’s website, any material mailed, and any scripts used in connection with any 

communication with Preliminary Claimants, Class Action Authorized Claimants, and Class 

Action Second Settlement Claimants. 

44. In all materials that refer to the Claims Bar Date, the filing deadline will be 

clearly identified with the calendar date, which is one hundred twenty (120) days from the date 

of the initial mailing of the Claims Packet.

45. The Fund Administrator will promptly provide a Claims Packet to any 

Preliminary Claimant or Class Action Second Settlement Claimant upon request made via mail, 

phone, or email prior to the Claims Bar Date.
10

46. The Fund Administrator will send by mail, email, or other means, a letter to the 

Fund Administrator’s list of banks, brokers, and other nominees, as well as any other institutions 

identified during the outreach process that may have records of the Securities during the 

Relevant Period (collectively, the “Nominees or Custodians”) who did not respond to or request 

forms for the Class Action settlements. The Fund Administrator will request that these entities

who did not respond to the Class Action settlements, to the extent that they were record holders 

for beneficial owners of the Securities:

(a) within ten (10) days of the Nominees’ or Custodians’ receipt of the letter, 

notify and send the Plan Notice to the respective beneficial owners, and, as 

requested, provide to the beneficial owners a Claims Packet, so that the 

beneficial owners may timely file a claim. The burden will be on the 

Nominees or Custodians to ensure the claims process information, 

including, if requested, the Claims Packet and other relevant materials, is 

properly disseminated to the beneficial owners; and/or

(b) provide to the Fund Administrator, within ten (10) days of receipt of the 

letter, a list of last known names and addresses for all beneficial owners 

for whom/which they purchased, as the record holder, the Securities 

during the Relevant Period, so that the Fund Administrator can 

communicate with the beneficial owners directly.

47. For the Nominees or Custodians who previously responded to the Class Action

settlements and requested forms to mail themselves, they should contact the Fund Administrator 

within ten (10) days of receipt of the letter to determine how many Claims Packets will be 

required to mail to those who did not file a claim form in the Class Action settlements.

48. At the discretion of the Fund Administrator, in consultation with the Commission 

staff, a reasonable number of additional copies of the Claims Packet shall be made available to 

any Nominee or Custodian requesting it for the purpose of distribution to beneficial owners.

49. Documented reasonable out-of-pocket expenses incurred by the Nominees or the 

Custodians, which would not have been incurred but for compliance with paragraphs 46 and 47

above, shall be reimbursed from the Fair Fund. The amount of such expenses allowed will be at 

the discretion of the Fund Administrator, in consultation with the Commission staff. Unless 

otherwise determined by the Fund Administrator in consultation with the Commission staff, outof-pocket expenses based on the following rates will be considered reasonable:

(a) a maximum of $0.05 per Claims Packet, plus postage at the pre-sort 

postage rate per Claim Packet actually mailed; 

(b) a maximum of $0.05 per email of Summary Notice or Plan Notice and 

Claim Form link disseminated; or

(c) $0.05 per name, address, and email address provided to the Fund 

Administrator, up to a maximum of amount of $1,500.00.
11

50. The Fund Administrator will attempt to locate any Preliminary Claimant and 

Class Action Second Settlement Claimant whose mailing is returned as “undeliverable,” and will 

document all such efforts. The Fund Administrator shall use its best efforts to make use of 

commercially available resources and other reasonably appropriate means to obtain updated 

addresses in response to “undeliverable” notices, and forward any returned mail for which an 

updated address is provided or obtained. The Fund Administrator will make available, upon 

request by the Commission staff, a list of all Preliminary Claimants and Class Action Second 

Settlement Claimants whose Claims Packets have been returned as “undeliverable” due to 

incorrect addresses and for which the Fund Administrator has been unable to locate current 

addresses.

51. The Fund Administrator, with Commission staff approval, may engage a thirdparty search firm to conduct more rigorous searches for any Preliminary Claimant whose Claims 

Packet is returned as undeliverable. Additional efforts to identify new addresses for returned 

undeliverable mail will be conducted as necessary and economically reasonable after 

consultation with the Commission staff.

Filing a Claim

52. To avoid being barred from asserting a claim, the following must be postmarked 

or submitted electronically to the Fund Administrator on or before the Claims Bar Date: (a) the 

Class Action Second Settlement Claimant’s Personalized Claim Form and all required 

supporting documentation for investments in the Securities between March 12, 2014 and 

February 12, 2015, as described in his, her, or its Plan Notice; or (b) the Preliminary Claimant’s

properly completed Claim Form and all required supporting documentation, as described in his, 

her, or its Plan Notice. Without limitation, this information may include third-party documentary 

evidence of purchases and dispositions of Securities during the Relevant Period, as well as 

holdings of Securities at pertinent dates.

53. The burden will be upon the Preliminary Claimant or Class Action Second 

Settlement Claimant to ensure that his, her, or its Claim Form or Personalized Claim Form has 

been properly and timely received by the Fund Administrator. A Claim Form or Personalized 

Claim Form that is postmarked after the Claims Bar Date will not be accepted unless the 

deadline is extended by the Fund Administrator for good cause shown, after consultation with 

the Commission staff. 

54. All Claim Forms, Personalized Claim Forms, and supporting documentation 

necessary to determine a Preliminary Claimant’s or Class Action Second Settlement Claimant’s 

eligibility to receive a distribution from the Fair Fund under the terms of the Plan must be 

verified by a declaration executed by the Preliminary Claimant or Class Action Second 

Settlement Claimant under penalty of perjury under the laws of the United States. The 

declaration must be executed by the Preliminary Claimant or Class Action Second Settlement 

Claimant, unless the Fund Administrator accepts such declaration from a Person authorized to 

act on the Preliminary Claimant’s or Class Action Second Settlement Claimant’s behalf, whose 

authority is supported by such documentary evidence as the Fund Administrator deems 

necessary.
12

55. Electronic claims submission is encouraged; the Plan Notice will include 

directions on how Preliminary Claimants and Class Action Second Settlement Claimants can 

submit the required documentation electronically via the Fair Fund’s website. If using thewebbased claim filing option, a Preliminary Claimant or Class Action Second Settlement Claimant 

must submit his, her, or its required documentation to the Fund Administrator by 11:59 p.m. on 

the Claims Bar Date. The Plan Notice will also include directions for submission of claims if the 

Preliminary Claimant or Class Action Second Settlement Claimant is unable to submit his, her, 

or its claim electronically. 

56. When submitting claims to the Fair Fund on behalf of its clients, all Third-Party 

Filers must use the electronic filing template provided by the Fund Administrator in this matter. 

Claims submitted by Third-Party Filers that do not comply with the template and format 

provided by the Fund Administrator may be rejected. Third-Party Filers must also submit a 

signed master proof of claim and release, as well as proof of authority to file on behalf of the 

claimant(s) at the time the electronic file of transactions is submitted. Failure to do so may result 

in rejection of the claim.

57. Each Third-Party Filer must establish the validity and amount of each claim in its 

submission. Third-Party Filers must submit such supporting documentary evidence of 

purchases, dispositions, and holdings of Securities as the Fund Administrator deems necessary or 

appropriate to substantiate each individual claim. Without limitation, this includes the complete 

name of the Preliminary Claimant (beneficial account owner) or Class Action Second Settlement 

Claimant, and his, her, or its TIN (for individuals) or EIN (for companies), sufficient contact 

information to confirm the identity of the beneficial owner, and documentation from the original 

bank, broker, or other institution of purchases and dispositions of Securities (account statements, 

confirmations and other documentation of purchases and dispositions), as well as holdings of the 

Securities on pertinent dates. Documentation generated by the Third-Party Filer and affidavits in 

lieu of supporting documentation will not be accepted. The Fund Administrator will have the 

right to request, and the Third-Party Filer will have the burden of providing to the Fund 

Administrator, any additional information and/or documentation deemed necessary by the Fund 

Administrator to substantiate the claim(s) contained in the submission. Documentation from a 

Third-Party Filer that is not acceptable to the Fund Administrator will result in rejection of the 

affected claim(s). The determination of the Fund Administrator to reject a claim for insufficient 

documentation, as reflected on the Final Determination Notice, is final and within the discretion 

of the Fund Administrator. 

58. The receipt of Securities by gift, inheritance, devise, or operation of law will not 

be deemed to be a purchase of Securities, nor will it be deemed an assignment of any claim 

relating to the purchase of such Securities unless specifically so provided in the instrument of 

inheritance. However, the recipient of Securities as a gift, inheritance, devise or by operation of 

law will be eligible to file a Claim Form or Personalized Claim Form and participate in the 

distribution of the Fair Fund to the extent the original purchaser would have been eligible under 

the terms of the Plan. Only one claim may be submitted with regard to the same transactions in 

Securities, and in cases where multiple claims are filed by the donor and donee, only the donee 

claim will be honored, assuming it is supported by proper documentation. 
13

59. Claims on behalf of a retirement plan covered by Section 3(3) of ERISA, 29 

U.S.C.§ 1002(3), which do not include Individual Retirement Accounts and such plan’s 

participants, are properly made by the administrator, custodian or fiduciary of the plan and not 

by the plan’s participants. The Fund Administrator will distribute any payments on such claims 

directly to the administrator, custodian or fiduciary of the retirement plan. The custodian or 

fiduciary of the retirement plan will distribute any payments received in a manner consistent with 

its fiduciary duties and the governing account or plan provisions. 

60. The Preliminary Claimant, Class Action Authorized Claimant, and Class Action 

Second Settlement Claimant has the burden of notifying the Fund Administrator of a change in 

his, her, or its current address and other contact information, and of ensuring that such 

information is properly reflected on the Fund Administrator’s records.

Claims Eligibility Determination

61. The Fund Administrator will review all claim submissions and determine the 

eligibility of each Preliminary Claimant and Class Action Second Settlement Claimant to 

participate in the Fair Fund by reviewing claim data and supporting documentation (or the lack 

thereof) and verifying the claim. Any Preliminary Claimant or Class Action Second Settlement 

Claimant with a valid claim who held the Security during the Relevant Period and who is not an 

Excluded Party will be deemed an Eligible Claimant. Each Preliminary Claimant and Class 

Action Second Settlement Claimant will have the burden of proof to establish the validity and 

amount of his, her, or its claim, and qualification as an Eligible Claimant. The Fund 

Administrator will have the right to request, and the Preliminary Claimant or Class Action 

Second Settlement Claimant will have the burden of providing to the Fund Administrator, any 

additional information and/or documentation deemed relevant by the Fund Administrator. Class 

Action Authorized Claimants are automatically deemed Eligible Claimants, provided that there is 

no indicia of fraud in the claim that he, she, or it submitted in the Class Action settlement.

62. The Fund Administrator will provide a Claim Status Notice within ninety (90)

days of the Claims Bar Date to each Preliminary Claimant or Class Action Second Settlement 

Claimant who has filed a Claim Form or Personalized Claim Form, or who has otherwise 

responded to his, her, or its Plan Notice with the Fund Administrator, and to any Class Action 

Authorize Claimant whose claim is identified as potentially fraudulent, setting forth the Fund 

Administrator’s determination of the eligibility of the claim (eligible, partially or wholly 

deficient, or ineligible). The Claim Status Notice will provide to each Preliminary Claimant or 

Class Action Second Settlement Claimant whose claim is deficient, in whole or in part, the 

reason(s) for the deficiency (e.g., failure to provide required information or documentation). In 

the event the claim is denied, in whole or in part, the Claim Status Notice will state the reason(s) 

for such denial. The Claim Status Notice will provide to each Class Action Authorized Claimant 

whose claim is identified as potentially fraudulent the reason(s) that it was so identified. The 

Claim Status Notice will also notify the Preliminary Claimant, Class Action Second Settlement 

Claimant, or Class Action Authorized Claimant of the opportunity to cure any deficiency or 

dispute the determination made by the Fund Administrator, and will provide instructions 

regarding what is required to do so.
14

63. Any Preliminary Claimant or Class Action Second Settlement Claimant with a 

deficient claim will have thirty (30) days from the date of the Claim Status Notice to cure any 

deficiencies identified in theClaim Status Notice.

64. Any Preliminary Claimant or Class Action Second Settlement Claimant disputing

a denied claim must submit a written request for reconsideration to the Fund Administrator 

within thirty (30) days of the date ofthe Claim Status Notice. All requests for reconsideration 

must include the necessary documentation to substantiate the basis upon which the Preliminary 

Claimant or Class Action Second Settlement Claimant is requesting reconsideration of his, her, 

or its claim. 

65. Any Class Action Authorized Claimant whose claim is identified as potentially 

fraudulent will have thirty (30) days from the date of the Claim Status Notice to dispute the 

determination and/or provide documentation demonstrating the validity of the claim.

66. The Fund Administrator may, in its sole discretion, consider disputes of any 

nature presented in writing within thirty (30) days of the Claim Status Notice, and will consult 

Commission staff as appropriate.

67. The Fund Administrator will send a Final Determination Notice to any claimant

who responds to the Claim Status Notice in an effort to cure a deficiency or dispute the 

determination made by the Fund Administrator, notifying the claimant of its determination. The 

Fund Administrator will send such Final Determination Notices no later than thirty (30) days 

following receipt of documentation or information in response to the Claim Status Notice, or 

such longer time as the Fund Administrator determines is necessary for a proper determination

concerning the claim.

68. The Fund Administrator will have the authority, in its sole discretion, to waive 

technical claim deficiencies and approve claims on a case-by-case basis, or in groups of claims. 

All determinations made by the Fund Administrator in accordance with the Plan in any dispute 

or request to cure a deficient claim will be final and not subject to appeal.

Distribution Methodology

69. The Fund Administrator will calculate each Eligible Claimant’s Recognized Loss 

in accordance with the Plan of Allocation. All Eligible Claimants who are determined to receive 

a Distribution Payment will be deemed a Payee.

Establishment of a Reserve

70. Before determining the amount of funds available for distribution and calculating 

each Payee’s Distribution Payment, the Fund Administrator, in conjunction with the Tax 

Administrator, will establish a reserve to pay Administrative Costs and to accommodate any 

unexpected expenditures (the “Reserve”).
15

71. After all disbursements and Administrative Costs are paid, any remaining 

amounts in the Reserve will become part of the Residual described in paragraph 94 below.

Preparation of the Payment File

72. Within forty-five (45) days following the date of the Final Determination Notices 

described in paragraph 67 above, the Fund Administrator will compile and send to the 

Commission staff the Payee information, including the name, address, calculated Recognized 

Loss, and the amount of the Distribution Payment for all Payees (the “Payee List”). The Fund 

Administrator will also provide a Reasonable Assurances Letter to the Commission staff, 

representing that the Payee List: (a) was compiled in accordance with the approved Plan; (b) is 

accurate as to Payees’ names, addresses, Recognized Losses and amounts of their Distribution 

Payment; (c) includes the number of Payees compensated; (d) includes the percentage of the 

Payee’s Recognized Loss being compensated by the disbursement from the Fair Fund, and if 

applicable, the total percentage to include all prior disbursements; (e) includes the total amount 

being distributed; and (f) provides all information necessary to make a payment to each Payee.

The Escrow Account

73. Prior to the disbursement of the Net Available Fair Fund, the Fund Administrator 

will establish an escrow account (the “Escrow Account”) with a United States commercial bank 

that is a well-capitalized financial institution as defined by the Federal Reserve Act, Subpart D, 

12 C.F.R. 208.43 and that is not unacceptable to the Commission staff (the “Bank”), pursuant to 

an escrow agreement (the “Escrow Agreement”) to be provided by Commission staff.

74. The Fund Administrator, pursuant to the Escrow Agreement, shall also establish 

with the Bank a separate deposit account (e.g. controlled distribution account, managed 

distribution account, linked checking and investment account) (the “Distribution Account”), 

insured by the Federal Deposit Insurance Corporation (“FDIC”) up to the guaranteed FDIC pass 

through limit. The Distribution Account shall be linked with the Escrow Account and shall be 

named, and records maintained, in accordance with the Escrow Agreement. 

75. During the term of the Escrow Agreement, the portions of the Fair Fund transferred 

to the Escrow Account (the “Escrow Property”), shall be invested and reinvested in short-term 

U.S. Treasury securities backed by the full faith and credit of the United States Government or 

an agency thereof. The investment shall be of a type and term necessary to meet the cash 

liquidity requirements for payments to Payees, tax obligations, and/or fees of the Tax 

Administrator and/or Fund Administrator, including investment or reinvestment in a bank 

account insured by the 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.

76. 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.
16

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

Distribution 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 Distribution Account.

78. All interest, dividends, and/or income earned by the Escrow Property will accrue 

for the benefit of the Escrow Property. All Administrative Cost associated with the Escrow and 

Distribution Accounts will be the responsibility of the Fund Administrator, who may be 

reimbursed for said costs as provided in this Plan. No such Administrative Costs may be paid to 

the Bank, its agents, and/or its affiliates from the Escrow Property.

 Distribution of the Fair Fund

79. The Fund Administrator will seek to distribute the Net Available Fair Fund to all 

Payees only after all claims have been processed and all claimants whose claims have been 

rejected or disallowed, in whole or in part, have been notified and provided the opportunity to 

contest or cure pursuant to the procedures set forth herein.

80. Upon the Commission staff’s receipt, review, and acceptance of the Payee List and 

Reasonable Assurances Letter from the Fund Administrator, the Commission staff will seek an 

Order from the Commission pursuant to Rule 1101(b)(6) of the Commission’s Rules, 17 C.F.R. 

§ 210.1101(b)(6), to disburse funds to the Bank in accordance with the Payee List for 

distribution by the Fund Administrator in accordance with the Plan. All disbursements will be 

made pursuant to a Commission Order.

81. Upon issuance of an Order to disburse, the Commission staff will direct the transfer 

of funds in accordance with the Payee List to the Bank. The Fund Administrator will then use its 

best efforts to commence mailing Distribution Payment checks and/or effect wire transfers 

within ten (10) business days of the release of the funds into the Distribution Account. All 

efforts will be coordinated to limit the time between the Distribution Account’s receipt of the 

funds and the issuance of Distribution Payments.

82. All Distribution Payments will be issued by the Fund Administrator from the 

Distribution Account. All checks will bear a stale date of one hundred twenty (120) days from 

the date of issuance. Checks that are not negotiated by the stale date will be voided, and the 

Bank will be instructed to stop payment on those checks. A Payee’s claim will be extinguished 

if he, she, or it fails to negotiate his, her, or its check by the stale date, and the funds will remain 

in the Fair Fund, except as provided in paragraph 90. 

83. All payments will be preceded or accompanied by a communication that includes, 

as appropriate: (a) a statement characterizing the distribution; (b) a statement that the tax 

treatment of the distribution is the responsibility of each Payee and that the Payee should consult 

his, her, or its tax advisor for advice regarding the tax treatment of the distribution; (c) a 

statement that checks will be void and cannot be reissued after one hundred twenty (120) days 

from the date the original check was issued; and (d) contact information for the Fund 
17

Administrator for questions regarding the Distribution Payment. The letter or other mailings to 

Payees characterizing a Distribution Payment will be submitted to the Tax Administrator and 

Commission staff for review and approval.

84. All Distribution Payments, either on their face or in the accompanying mailing, 

will clearly indicate that the money is being distributed from the Fair Fund established by the 

Commission to compensate investors for harm as a result of securities law violations. 

85. Distribution Payments must be made by check or electronic payment payable to 

the Payee (the beneficial account owner). A Third-Party Filer shall not be the payee of any 

Distribution Payment check or electronic Distribution Payment. Any other payment arrangement 

must be discussed with the Fund Administrator in consultation with the Commission staff and 

must be authorized by the Payee. Compensation to a Third-Party Filer for its services may not 

be paid or deducted from the Distribution Payment. 

86. If, after discussion with the Fund Administrator in consultation with the 

Commission staff, and authorization by the Payee(s), a Distribution Payment is to be made to a 

Third-Party Filer to distribute to the Payee(s), the Third-Party Filer will be required to complete 

a certification, which will require it, at a minimum, to attest that any distribution to the custodian, 

trustee, or investment professional representing multiple potentially eligible beneficial owners, 

will be allocated for the benefit of current or former pooled investors and not for the benefit of 

management. All such Third-Party Filers must have an auditable mechanism available to the 

Fund Administrator and the Commission staff to confirm that each Payee received the 

Distribution Payment directed to him, her, or it.

87. The submission of a Claim Form or a Personalized Claim Form, as applicable, 

and the receipt and acceptance of a Distribution Payment by a Payee is not intended to be a 

release of a Payee’s rights and claims against any party.

88. Electronic or wire transfers may be utilized at the discretion of the Fund 

Administrator to transfer approved Distribution Payments to filers of claims on behalf of twenty 

(20) or more Payees. Wire transfers will be initiated by the Fund Administrator using a twoparty check and balance system, whereby completion of a wire transfer will require an 

authorization by two members of the Fund Administrator’s senior staff.

Post Distribution; Handling of Returned or Uncashed Checks; and Reissues

89. The Fund Administrator shall use its best efforts to make use of commercially 

available resources and other reasonably appropriate means to locate all Payees whose checks 

are returned to the Fund Administrator as “undeliverable.” If new address information becomes 

available, the Fund Administrator will repackage the distribution check and send it to the new 

address. If new address information is not available after a diligent search (and in no event no 

later than one hundred twenty (120) days after the initial mailing of the original check), or if the 

distribution check is returned again, the check shall be voided and the Fund Administrator shall 

instruct the issuing financial institution to stop payment on such check. If the Fund 

Administrator is unable to find a Payee’s correct address, the Fund Administrator, in its 
18

discretion, may remove such Payee from the distribution and the allocated Distribution Payment 

will remain in the Fair Fund for distribution, if feasible, to the remaining Payees.

90. The Fund Administrator will reissue checks to Payees upon the receipt of a valid, 

written request from the Payee prior to the initial stale date. In cases where a Payee is unable to 

endorse a Distribution Payment check as written (e.g., name changes, IRA custodian changes, or 

recipient is deceased) and the Payee or a lawful representative requests the reissuance of a 

Distribution Payment check in a different name, the Fund Administrator will request, and must 

receive, documentation to support the requested change. The Fund Administrator will review the 

documentation to determine the authenticity and propriety of the change request. If, in the 

discretion of the Fund Administrator, such change request is properly documented, the Fund 

Administrator will issue an appropriately redrawn Distribution Payment to the requesting party. 

Reissued checks will be void at the later of one hundred twenty (120) days from issuance of the 

original check or ninety (90) days from the reissuance, and in no event will a check be reissued 

after one hundred twenty (120) days from the date of the original issuance without the approval 

of Commission staff.

91. The Fund Administrator will make reasonable efforts to contact Payees who have 

failed to negotiate their Distribution Payment check 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.

Administrative Costs

92. All Administrative Costs will be paid from the Fair Fund in accordance with the 

Commission’s Rules.

Disposition of Undistributed Funds

93. If funds remain following the initial distribution and payment of all 

Administrative Costs, the Fund Administrator, in consultation with the Commission staff, may 

seek subsequent distribution of any available remaining funds, pursuant to the Commission’s 

Rules.

94. A residual within the Fair Fund will be established for any amounts remaining 

after the final disbursement to Payees from the Fair Fund (the “Residual”). The Residual may 

include funds from, among other things, amounts remaining the Reserve, distribution checks that 

have not been cashed, checks or electronic payments that were not delivered or returned to the 

Commission, tax refunds for overpayment or for waiver of IRS penalties.

95. All funds remaining in the Residual that are infeasible to distribute to investors 

will be returned to the Commission, and will be transferred to the U.S. Treasury after the final 

accounting is approved by the Commission.
19

Filing of Reports and Accountings

96. In accordance with Rule 1105(f) of the Commission’s Rules, the Fund 

Administrator shall provide to the Commission staff a progress report and a quarterly account 

statement in a format to be provided by Commission staff, within forty-five (45) days of the 

Commission’s approval of the Plan, and shall provide to Commission staff additional reports and 

quarterly account statements within ten (10) days after the end of every calendar quarter. Such 

progress reports shall inform the Commission staff of the activities and status of the Fair Fund 

during the reporting period, and shall specify, at a minimum, the location of the account(s) 

comprising the Fair Fund, including among other things, an interim accounting of all monies in 

the Fair Fund.

97. When the final distribution is completed, the Fund Administrator shall provide to 

Commission staff a final report summarizing all tasks undertaken and the outcome of its 

administrative efforts. The Fund Administrator shall make arrangement for the final payment of 

all Administrative Costs, and submit a final accounting of all monies received, earned, spent, and 

distributed in connection with the administration of the Plan in a format provided by the 

Commission staff. The Fund Administrator will also submit a report to the Commission staff 

containing the final distribution statistics regarding distributions to individuals and entities, and 

such other information requested by the Commission staff.

Termination of the Fair Fund

98. 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 the Commission staff has been submitted by the Fund 

Administrator and approved by the Commission; (b) all Administrative Costs have been paid; 

and (c) any amount remaining in the Fair Fund has been returned to the Commission for transfer 

to U.S. Treasury. Once the Commission has approved the final accounting, the Commission 

staff will seek an order from the Commission authorizing: (a) the transfer of any amounts 

remaining in the Fair Fund that are infeasible to return to investors, and any amounts returned to 

the Fair Fund in the future that are infeasible to return to investors, to the U.S. Treasury, subject 

to Section 21F(g)(3) of the Exchange Act; (b) discharge of the Fund Administrator; 

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

99. Once the Fair Fund has been terminated and funds, if any, are transferred to the 

U.S. Treasury, no further claims will be allowed and no additional payments will be made 

whatsoever.

Miscellaneous

100. When administering this Plan, the Fund Administrator, and/or each of its 

designees, agents and assigns, may rely on: all applicable law; orders issued by the Commission, 

including orders issued by delegated authority; orders issued by an administrative law judge, if 

any, appointed in this proceeding; and any records, including records containing investor 

information, provided by Commission staff.
20

101. Should any additional funds be received pursuant to Commission or Court order, 

agreement, or otherwise, prior to the Commission’s termination of the Fair Fund, such funds will 

be added to the Fair Fund and distributed, if feasible, in accordance with the Plan, pursuant to the 

Commission’s Rules.

Wind-down and Document Retention

102. The Fund Administrator will shut down the website, P.O. Box and customer 

service telephone line(s) established specifically for the administration of the Fair Fund six (6) 

months after the transfer of any remaining funds to the Commission, or at such earlier time as the 

Fund Administrator determines with the concurrence of the Commission staff. 

103. The Fund Administrator will retain all materials submitted by Preliminary 

Claimants and Class Action Second Settlement Claimants in either paper or electronic form for a 

period of six (6) years from the date of approval of a final fund accounting. Materials 

maintained in electronic form must be accessible and readable for the duration of retention.

Pursuant to the Commission staff’s direction, the Fund Administrator will either turn over to the 

Commission or destroy all materials, including documents in any media, upon expiration of this 

period.

VII. NOTICE AND COMMENT PERIOD

104. The Notice of Proposed Plan of Distribution and Opportunity to Comment (the 

“Notice”) will 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 to the Commission within thirty (30) days of 

the publication 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 Number 3-17956” in the 

subject line. Comments received will be available to the public. Persons should only submit 

comments that they wish to make publicly available.
Exhibit A

PLAN OF ALLOCATION

This Plan of Allocation is designed to compensate investors based on their losses on 

MagnaChip common stock listed on a U.S. exchange and registered with the Commission and 

traded under the symbol MX (the “Securities”) between February 1, 2012 and February 12, 2015, 

inclusive (the “Relevant Period”) due to the misconduct of the Respondents. Investors who did not

purchase shares of the Securities during the Relevant Period did not purchase shares at prices 

inflated by the Respondents’ violative conduct or who are an Excluded Party1are ineligible to 

recover under this Plan. 

The Respondents made multiple corrective disclosures during the Relevant Period. The 

periods between successive corrective disclosures during the Relevant Period are identified as 

“Inflation Periods,” and the extent to which the Securities price was inflated (“Per-Share Inflation”) 

is consistent through the duration of an Inflation Period. In order for the Securities purchased 

during the Relevant Period to have suffered a loss, the shares must have been held at the time when 

Respondents issued a corrective disclosure and the price of the Securities declined concomitantly.

Artificial inflation in the price of the Securities over various date ranges surrounding 

corrective disclosures and average closing prices of the Securities during the Lookback Period 

(defined below) have been calculated by Commission’s staff economists and are reflected in Table 

A and Table B, respectively.

The Fund Administrator will calculate the amount of loss for each share of the Securities 

purchased or acquired during the Relevant Period (“Recognized Loss per Share”) as follows:

For each share of the Securities that was:

i. Sold prior to January 28, 2014, the Recognized Loss per Share shall be $0.00.

ii. Sold during the period January 28, 2014 through February 12, 2015, inclusive, 

the Recognized Loss per Share shall be the lesser of:

(a) the inflation on the purchase/acquisition date as appears in Table A

below, minus the amount of inflation on the sale date as appears in 

Table A;

2

or

(b) the purchase/acquisition price minus the sale price.

iii. Sold during the period February 13, 2015 through May 13, 2015, inclusive (the 

Lookback Period), the Recognized Loss per Share shall be the least of:

 

1

 All capitalized terms used herein but not defined shall have the same meanings ascribed to them in the Plan.

2

 If the price inflation reflected in Table A exceeds the purchase price, then the price inflation shall be equal to the 

purchase price. A share purchased during an Inflation Period and sold during the same Inflation Period as the purchase 

shall have a Recognized Loss of $0.00.
2

(a) the inflation on the purchase/acquisition date as appears in Table A

below; 

(b) the purchase/acquisition price minus the sale price; or 

(c) the purchase/acquisition price minus the “Lookback Value” on the 

sale date as appears in Table B below.

iv. Held as of the close of trading on May 13, 2015 (the last day of the Lookback 

Period), the Recognized Loss per Share shall be the lesser of:

(a) the inflation on the purchase/acquisition date as appears in Table A

below; or

(b) the purchase/acquisition price minus $5.60, the average closing price 

of the Securities during the Lookback Period, as appears in the last 

row of Table B.

In all instances, a share of Securities purchased during the Relevant Period and sold during 

the Relevant Period or the Lookback Period, where the sale price is greater than or equal to the 

purchase price, reflecting a gain, shall have a Recognized Loss per Share of $0.00.

Example Calculations: A share of the Securities purchased on July 25, 2014 for $14.04, 

would have a Recognized Loss per Share of 

 $0.00 if it were sold on August 6, 2014 (within the same Inflation Period);

 $0.00 if it were sold at $14.30 (for a gain); 

 $0.91 if it were sold on December 18, 2014 for $12.99 (the difference in inflation from 

Tables A, $0.91= $8.43 – $7.52, being smaller than the difference in prices, $1.05= 

14.04 – $12.99); and

 $8.43 if it were held through the close of trading on May 13, 2015 (the inflation at the 

purchase from Table A, $8.43, being smaller than the purchase price less the Lookback

Period holding value, $8.44= $14.04 – $5.60).

All prices mentioned in the calculations exclude all fees and commissions. Purchases, 

acquisitions and sales shall be deemed to have occurred on the “contract” or “trade” date as 

opposed to the “settlement” or “payment” date. Any transactions executed outside of regular 

trading hours for the U.S. financial markets shall be deemed to have occurred during the next 

regular trading session.
3

Additional Provisions

FIFO Methodology: Transactions for an Eligible Claimant who made multiple 

purchases/acquisitions and sales of Security during the Relevant Period, will be matched according 

to the first-in, first-out (“FIFO”) method. The earliest sales during the Relevant Period will be 

matched first against any holdings at the opening of the Relevant Period. Once the beginning 

holdings have all been matched, or in the event there are no beginning holdings, then any further 

sales will be matched against the earliest Relevant Period purchases/acquisitions and 

chronologically thereafter. 

Acquisitions: The receipt or grant of the Securities to the Eligible Claimant by gift, devise, 

inheritance, or operation of law during the Relevant Period is not considered an eligible purchase if 

the original purchase did not occur during the Relevant Period. Shares acquired outside of the 

Relevant Period will be excluded from the calculation of the Recognized Loss per Share.

Options and Derivatives: MagnaChip common stock is the only security eligible for 

recovery under this Plan. Option contracts to purchase or sell the Securities are not securities 

eligible for recovery under the Plan. With respect to the Securities purchased or sold through the 

exercise of an option, the purchase/sale date is the exercise date of the call and the assignment date 

of the put. The purchase/sale price is the strike price of the call at the time of exercise and the 

strike price of the put at the time of assignment. Transactions in the Securities during the Relevant 

Period that are pursuant to, or in connection with, a swap or another derivative will not be eligible 

for a recovery and shall be excluded from the Recognized Loss per Share calculation.

Short Sales: If the sale date for a share falls before the purchase date, then the share has a 

Recognized Loss per Share of $0.00. The date of covering a short sale is deemed to be the date of 

purchase of the Securities and the date of a short sale is deemed to be the date of sale of the 

Securities. The earliest Relevant Period purchases shall be matched against any short position 

existing on the date prior to the start of the Relevant Period, and not be entitled to a recovery until 

that short position is fully covered.

Recognized Loss: An Eligible Claimant’s Recognized Loss will be the sum of the 

Recognized Loss per Share, as calculated above, on all shares of the Securities purchased or 

acquired during the Relevant Period. If the Recognized Loss calculates to a gain, then the 

Recognized Loss will be $0.00.

Allocation of Funds: If the Net Available Fair Fund is equal to or exceeds the sum of 

Recognized Losses of all Eligible Claimants, each Eligible Claimant’s distribution amount will 

equal his, her, or its Recognized Loss, plus “Reasonable Interest” if applicable. If the Net 

Available Fair Fund is less than the sum of the Recognized Losses of all Eligible Claimants, each 

Eligible Claimant’s distribution amount will equal his, her, or its “Pro Rata Share” of the Net 

Available Fair Fund (and no Reasonable Interest). In either case, the distribution amount will be 

subject to the “Minimum Distribution Amount.”

Reasonable Interest: If the Net Available Fair Fund exceeds that necessary to pay all 

Eligible Claimants their Recognized Losses in full, the Fund Administrator, in consultation with the 

Commission staff, may include interest in the distribution amount to compensate for the time value 
4

of money on Recognized Losses. Reasonable Interest will be calculated using the Short-term 

Applicable Federal Rate plus three percent (3%), compounded quarterly from the end of the 

Relevant Period through the approximate date of the disbursement of the funds. If there are 

insufficient funds to pay Reasonable Interest in full to all Eligible Claimants, Reasonable Interest 

will awarded on a pro-rata basis from the excess funds.

Pro Rata Share: A Pro Rata Share computation is intended to measure Eligible Claimants’

Recognized Losses against one another. The Fund Administrator shall determine each Eligible 

Claimant’s Pro Rata Share as the ratio of his, her, or its Recognized Loss to the sum of Recognized 

Losses of all Eligible Claimants.

Minimum Distribution Amount: The Minimum Distribution Amount will be $10.00. If an 

Eligible Claimant’s distribution amount is less than the Minimum Distribution Amount, that 

Eligible Claimant will be deemed ineligible to receive a Distribution Payment and his, her, or its 

distribution amount will be reallocated on a pro-rata basis to Eligible Claimants whose distribution 

amounts are greater than or equal to the Minimum Distribution Amount.

Payee: An Eligible Claimant whose distribution amount (inclusive of Reasonable Interest, if 

any) equals or exceeds the Minimum Distribution Amount will be deemed a Payee and receive a 

Distribution Payment equal to his, her, or its distribution amount.

Prior Recovery: To avoid payment of a windfall, the Distribution Payment will be no larger 

than the Payee’s Recognized Loss minus the amount of any compensation for the loss that resulted 

from the conduct described in the Order that was received from another source (e.g., class action 

settlement), to the extent known by the Fund Administrator. Reasonable Interest, if awarded, may 

be added to such Distribution Payment.
5

Table A: Inflation Schedule 

Inflation Period Beginning Date Ending Date Per-Share Inflation

1 February 1, 2012 January 27, 2014 $11.71

2 January 28, 2014 March 11, 2014 $10.22

3 March 12, 2014 March 30, 2014 $9.70

4 March 31, 2014 May 20, 2014 $8.97

5 May 21, 2014 August 12, 2014 $8.43

6 August 13, 2014 November 12, 2014 $7.83

7 November 13, 2014 February 12, 2015 $7.52

8 February 13, 2015 Thereafter $0.00

Table B: Moving Average Closing Price during Lookback Period

Sale / 

Disposition 

Date

Moving 

Average 

Closing Price 

from 

February 13, 

2015 to Date

Shown

Sale / 

Disposition 

Date

Moving 

Average 

Closing Price 

from 

February 13, 

2015 to Date 

Shown

Sale / 

Disposition 

Date

Moving 

Average 

Closing Price 

from 

February 13, 

2015 to Date 

Shown

2/13/2015 $7.52 3/17/2015 $5.74 4/16/2015 $5.64

2/17/2015 $7.20 3/18/2015 $5.72 4/17/2015 $5.64

2/18/2015 $7.01 3/19/2015 $5.71 4/20/2015 $5.64

2/19/2015 $6.82 3/20/2015 $5.70 4/21/2015 $5.64

2/20/2015 $6.63 3/23/2015 $5.70 4/22/2015 $5.64

2/23/2015 $6.47 3/24/2015 $5.70 4/23/2015 $5.64

2/24/2015 $6.33 3/25/2015 $5.69 4/24/2015 $5.64

2/25/2015 $6.30 3/26/2015 $5.68 4/27/2015 $5.64

2/26/2015 $6.24 3/27/2015 $5.67 4/28/2015 $5.64

2/27/2015 $6.18 3/30/2015 $5.67 4/29/2015 $5.63

3/2/2015 $6.15 3/31/2015 $5.66 4/30/2015 $5.63

3/3/2015 $6.11 4/1/2015 $5.66 5/1/2015 $5.63

3/4/2015 $6.07 4/2/2015 $5.66 5/4/2015 $5.62

3/5/2015 $6.02 4/6/2015 $5.66 5/5/2015 $5.61

3/6/2015 $5.97 4/7/2015 $5.66 5/6/2015 $5.60

3/9/2015 $5.92 4/8/2015 $5.66 5/7/2015 $5.60

3/10/2015 $5.88 4/9/2015 $5.66 5/8/2015 $5.59

3/11/2015 $5.86 4/10/2015 $5.65 5/11/2015 $5.59

3/12/2015 $5.83 4/13/2015 $5.65 5/12/2015 $5.59

3/13/2015 $5.80 4/14/2015 $5.64 5/13/2015 $5.60

3/16/2015 $5.77 4/15/2015 $5.64