Document:

Consent Order, dated August 28, 2006

 Exhibit 10.6 
 STATE OF NEW JERSEY 
 OFFICE OF THE ATTORNEY GENERAL 
 DEPARTMENT OF LAW & PUBLIC SAFETY 
 NEW JERSEY BUREAU OF SECURITIES 
 P.O. Box 47029 
 Newark, New Jersey 07101 
 (973) 504-3600 
  

					
	 	 	:	    	 
		 	:	    	
	IN THE MATTER OF	 	:	    	CONSENT ORDER
		 	:	    	
	PRUDENTIAL SECURITIES Incorporated.	 	:	    	
	n/k/a PRUDENTIAL EQUITY GROUP, LLC	 	:	    	
		 	:	    	
		 	:	    	
	  	 		    	

 Pursuant to the authority granted to the Chief of the New Jersey Bureau of Securities
(“Bureau”) by the Uniform Securities Law (1997) N.J.S.A. 49:3-47 et seq. (the “Securities Law”), and after investigation and review and due consideration of the facts and statutory provisions set forth below,
the Bureau Chief has determined that Prudential Securities, Incorporated (“PSI” or the “Respondent”) shall pay disgorgement in the amount of $270 million as part of a joint administrative settlement. Payment of this amount
pursuant to an order issued in a related Securities and Exchange Commission proceeding (the “SEC Final Order”) shall be deemed payment in satisfaction of this Consent Order. Respondent through counsel (Neal E. Sullivan, Esq. of Bingham
McCutchen LLP appearing) now in the interest of avoiding the cost and inconvenience of formal judicial or administrative proceedings, desires to resolve this matter and consent to the form and entry of this order. 
  

 Page 1 of 29 

 WHEREAS, the Bureau is the State agency with responsibility to administer the Securities Law; and

 WHEREAS, N.J.S.A. 49:3-68 provides the Bureau Chief with investigative authority necessary to determine whether there exists a
violation of the Securities Laws; and 
 WHEREAS, PSI is a broker-dealer registered in the State of New Jersey; and 
 WHEREAS, the Bureau has conducted an investigation into the fraudulent trading activities of certain PSI agents in connection with the purchasing,
exchanging, and redeeming of mutual funds on behalf of their clients and discovered evidence that PSI failed to supervise the agents; and 
 WHEREAS, PSI is continuing to cooperate with the Bureau’s ongoing investigation into the activities of the agents and others, by responding to inquiries, providing documentary evidence and other materials, and providing the Bureau with
access to facts relating to the investigation, books and records, and personnel; and 
 WHEREAS, N.J.S.A. 49:3-67 authorizes the
Bureau Chief from time to time to issue such orders as are reasonably necessary to carry out the provisions of the Securities Law; and 
 WHEREAS, the Bureau Chief believes that the sanctions imposed herein are in the public interest, for the protection of investors and consistent with the policy and purposes intended by the Securities Laws, as provided in N.J.S.A.
49:3-67(b) thereof; and 
  

 Page 2 of 29 

 WHEREAS, PSI admits the jurisdiction of the Bureau, neither admits nor denies the Bureau’s
allegations, and solely for the purposes of this consent order, prior to a hearing on the allegations in the consent order and without an adjudication of any issue of law or fact, consents to the entry of this consent order and voluntarily agrees:

  

	 	a.	To waive its opportunity for hearing on the allegations in the consent order after reasonable notice within the meaning of N.J.S.A. 49:3-58(c) (2); and

  

	 	b.	To not seek judicial review of, or otherwise challenge or contest, the validity of this consent order; and 

 WHEREAS, this consent order concludes the investigation by the Bureau and any civil or administrative action that could be commenced under the Securities
Law on behalf of the State of New Jersey as it relates to seeking civil monetary penalties or other relief against PSI for market timing-related activities.1 
 WHEREAS, the Bureau Chief makes the following findings: 
 BACKGROUND 
 1. This matter
concerns a fraudulent market timing scheme perpetrated by agents of PSI whose business involved market 
  

	1	The findings made herein are not binding on Respondent or any other Prudential Financial entity in any other forum. 

  

 Page 3 of 29 

 timing to defraud at least fifty mutual funds and their long term shareholders. Beginning in at least September 1999 and
continuing through at least June 2003 (the “Relevant Period”), the agents used deceptive trading practices to conceal their identities, and those of their customers, to evade mutual funds’ prospectus limitations on market timing.
These practices included the use of multiple identifying numbers (known as Financial Advisor, or “FA” numbers) and multiple customer accounts; the use of accounts coded as confidential in PSI’s systems; and the agents’ use of
“under the radar” trading to avoid notice by mutual funds. Typically, mutual funds screened for market timing trades only above a designated dollar amount. The practice of “under the radar” trading refers to the agents’
splitting of one trade into numerous smaller ones to avoid detection by mutual funds. 
 2. As early as the fourth quarter 1999, several
mutual fund companies identified the agents’ use of deceptive trading practices and notified PSI of the agents’ conduct. In May 2002, PSI itself determined that its top-producing agent used deceptive trading practices to avoid notice by
mutual funds. Throughout the Relevant Period, PSI received hundreds of notices from mutual fund companies that identified the agents’ conduct and asked PSI to take steps to curtail their deceptive market timing practices. 
 3. Despite PSI’s increasing awareness of the agents’ fraudulent market timing practices, PSI elected to continue the business of market timing.
Rather than discipline or sanction any of the agents or even curtail their ability to open additional 

  

 Page 4 of 29 

 
accounts for their market timing customers, PSI failed to prevent their conduct from continuing and actually began to track the agents’ gross revenues.
In 2001, for example, the agents generated more than $16 million in gross commission revenues for PSI, most of which was in danger of being eliminated had PSI phased out market timing at that time. Similarly, the agents generated approximately $23
million in gross commission revenues in 2002, and continued to generate comparable revenues throughout the Relevant Period. 
 4. PSI’s
policies and procedures were ineffective in curtailing the agents’ fraud and were largely not enforced. Even in situations where PSI purportedly enforced any of these policies, PSI senior officers undermined them by granting exceptions for
PSI’s largest producing agents. Additionally, PSI repeatedly failed to deprive the agents of their inappropriate use of hundreds of FA numbers, even though the use of multiple FA numbers was the primary means by which the agents carried out
their fraud. PSI finally issued a market timing policy in January 2003, but PSI did not fully enforce procedures in that policy to curtail the agents’ scheme. 
 FINDINGS OF FACT 
 5. Market timing includes frequent buying and selling of shares of the same
mutual fund or buying or selling of mutual fund shares in order to exploit inefficiencies in mutual fund pricing. Though not illegal per se, market timing can harm mutual 

  

 Page 5 of 29 

 
fund shareholders because it can dilute the value of their shares, if the market timer is exploiting pricing inefficiencies, or disrupt the management of the
mutual fund’s investment portfolio and can cause the targeted mutual fund to incur costs borne by other shareholders to accommodate frequent buying and selling of shares by the market timer. 
 6. Beginning in the late 1990s, many mutual funds determined that market timing harmed their long-term shareholders. As a result, they began to monitor
market timing in their funds’ shares and imposed restrictions on excessive trading. Such restrictions limited the number of trades that an account holder could place in a fund’s shares and often were set forth in the funds’
prospectuses. Many funds monitored trading activity to detect any violations of these prospectus limitations. 
 7. Most mutual funds
received trade instructions from PSI through the National Securities Clearing Corporation (“NSCC”). NSCC is a centralized trade clearance and settlement system that linked the agents, PSI, and virtually all mutual fund companies. To place
trades that were transmitted through NSCC, the agents were required to identify their FA number and a customer account to mutual funds on trade tickets. PSI appended additional information to the agents’ orders and transmitted the transactions
through NSCC to the mutual fund companies. 
 8. Some mutual funds screened for excessive short-term trading by reviewing FA and customer
account numbers that the 

  

 Page 6 of 29 

 
agents transmitted to them via NSCC. Some also monitored for excessive short-term trading by trade size and principal amount and by the branch code attached
to a trade. Typically, if a fund concluded that a shareholder had violated its exchange limitations, the fund would attempt to prevent, or “block” additional trades in a fund or fund family by that shareholder. If a fund determined that a
particular PSI agent or shareholder had violated its exchange limitations, the fund would send a “block letter” to PSI. Block letters varied but generally notified PSI of the mutual fund’s intention to block the agent or
customer’s transaction and often asked PSI to take steps to preclude a particular agent or customer account from engaging in additional trades in a particular fund or fund family. 
 9. Because these mutual funds monitored for excessive trading by FA number and/or customer account number, the agents altered their use of these numbers
to defraud these funds and the funds’ long-term shareholders. By altering their use of these numbers, the agents tricked mutual fund companies into accepting trades that the funds otherwise would have rejected. 
 The Agents’ Deceptive Conduct 
 10. During the
Relevant Period, the agents engaged in a fraudulent scheme to circumvent blocks imposed by mutual funds on their trading privileges. The agents’ scheme worked as follows. The agents’ customers, typically hedge funds, asked the agents to
purchase and sell mutual funds on a short-term basis on their behalf. The agents, however, knew that mutual funds tracked their 

  

 Page 7 of 29 

 
trades by FA number and customer account number, and they knew that if they placed short-term mutual fund trades for their customers using a single FA or
account number, the mutual funds would likely determine the number of trades was excessive and would block any further trades by them. 
 11.
The agents, therefore, devised a scheme to conduct their customers’ trading using dozens of customer accounts, often established under fictitious names, and multiple FA numbers to make it difficult for mutual funds to identify their
customers’ market timing. When the mutual funds succeeded in blocking certain FA numbers or customer accounts from further trading, the agents then used other FA numbers and customer accounts that had not yet been blocked to evade the
funds’ restrictions and continue to trade. 
 The Boston Agents 
 12. For example, one group of PSI agents based in its Boston, Massachusetts branch office (the “Boston Agents”) repeatedly used these deceptive practices to defraud mutual funds throughout the Relevant
Period. The Boston Agents consisted of a group of three PSI agents and several assistants. The group had five customers for whom it placed market timing trades, each of whom acted on behalf of one or more hedge funds. During the Relevant Period, PSI
received approximately $8 million from the Boston Agents’ market timing activities, of which group members received approximately $4.6 million. As a result of this business, the head of the group quickly rose to become one of PSI’s top
producers. 
  

 Page 8 of 29 

 13. Many of the mutual funds in which the Boston Agents traded screened for market timing trades by FA
and customer account numbers. Many fund companies sent notices to PSI that complained that the group’s trades had violated prospectus limitations. Some mutual funds announced steps they had taken to preclude the Boston Agents from further
trading while others asked that PSI take steps to block further trades by the group in the fund. 
 14. During the Relevant Period, the
Boston Agents used at least thirteen FA numbers and hundreds of customer accounts (for what were, in reality, only five customers) to circumvent these blocks and preclude new blocks. The Boston Agents’ use of these devices in connection with
market timing allowed group members to continue to place trades in funds that had taken steps to preclude them from further trading. This scheme created the impression that transactions originated from many agents and represented many different
customers. In fact, what appeared to the mutual funds to be thousands of separate transactions submitted by many agents for many unrelated customers was actually a systematic pattern of market timing by group members on behalf of their five hedge
fund customers. 
 The Garden City Agent 
 15. Another PSI agent based in its Liberty Plaza and Garden City, New York branch offices (the “Garden City Agent”) 

  

 Page 9 of 29 

 
used these same deceptive practices to defraud mutual funds throughout the Relevant Period. The Garden City Agent headed a team of agents and assistants,
although he very rarely reported to work at any PSI location. He had five customers for whom he placed market timing trades, each of whom acted on behalf of one or more hedge funds. During the Relevant Period, PSI received approximately $9.8 million
from the Garden City Agent’s market timing activities (of which the Garden City Agent received approximately $4.7 million). The Garden City Agent was the top producing agent at PSI throughout the Relevant Period. 
 16. Like the Boston Agents, the Garden City Agent traded in mutual funds that screened for market timing by FA and customer account number. During the
Relevant Period, approximately fifty mutual funds complained to PSI about the Garden City Agent’s trading activity. Many mutual funds specifically identified to PSI his use of deceptive trading strategies to evade blocks the fund companies had
imposed. 
 17. To evade these blocks, the Garden City Agent maintained 49 different FA numbers and hundreds of customer account numbers (for
what were, in reality, only five customers). His use of these devices to market time created the impression that the trades originated from many agents and many customers. By shifting trades from one FA number to another, or from one customer
account to another, the Garden City Agent concealed his identity and was able to place trades in mutual funds where PSI previously had blocked his trading under his other FA numbers and accounts. 
  

 Page 10 of 29 

 The Special Accounts Agents 
 18. Another group of PSI agents based in a New York office known within PSI as “Special Accounts” (the “Special Accounts Agents”) also used deceptive practices to defraud mutual funds throughout
the Relevant Period. The Special Accounts Agents consisted of a group of two PSI agents and several assistants. The group had three customers for which it placed market timing trades. During the Relevant Period, PSI received approximately $6.5
million from the Special Accounts Agents’ market timing activities, of which group members received approximately $2.5 million. As a result of this business, the heads of the group quickly achieved membership in PSI’s Chairman’s Club,
a select group consisting of the largest producing agents within the firm. 
 19. Like the Boston Agents and the Garden City Agent, the
Special Accounts Agents knew that most mutual funds identified excessive trading by FA and customer account number. They also understood that mutual funds screened for market timing by reviewing only those trades at or exceeding certain dollar
amounts. The Special Accounts Agents used at least 20 FA numbers and hundreds of customer accounts (for what were, in reality, only three customers) to avoid detection by mutual funds. The Special Accounts Agents also used “under the
radar” trading to disguise their customers’ trading in funds that previously had taken steps to stop them. The agents’ use of these devices in 

  

 Page 11 of 29 

 
connection with market timing deceived mutual funds into accepting trades they otherwise would have rejected. Like the Boston Agents and the Garden City
Agent, their scheme perpetuated the impression that transactions originated from many agents and represented many different customers. 
 PSI Failed to
Prevent the Agents From Obtaining Multiple Identification and Customer Account Numbers 
 20. PSI failed to prevent the agents from
obtaining several different forms of identifying numbers. Consequently, the agents used these numbers to perpetrate their scheme to defraud. When agents began their employment with PSI, PSI assigned them an FA number. The agents used FA numbers to
open customer accounts, execute trades, and track their commissions. When agents worked as a team to service common customers, PSI provided “Joint” numbers. Joint numbers ostensibly represented a commission split between two or more
agents. Here, the agents acquired and used Joint numbers for improper purposes. The numbers were not used to split commissions, but rather to facilitate the agents’ ability to trade after their other agent identifying numbers had been blocked
from trading. PSI also provided the agents with “Also” numbers. The purported purpose of “Also” numbers was to allow the agents’ customers to access only those portions of a given agent’s portfolio that belonged to that
customer or to provide certain customers with commission discounts. The agents, however, used Also numbers improperly in the same manner as they used FA and Joint Numbers – to circumvent blocks that had been imposed on 

  

 Page 12 of 29 

 
their other FA numbers. Indeed, at least one mutual fund became so frustrated by its inability to identify the agents that it threatened to curtail the
trading privileges of all agents within a PSI branch to remedy the conduct. 
 21. Each of the agents maintained numerous FA, Joint, and Also
numbers, and used these numbers interchangeably to execute trades for their customers. For example, the Boston Agents used 13 identifying numbers to place market timing trades and the Garden City Agent used 49 identifying numbers. When one of the
agent’s FA, Joint, or Also numbers was blocked from trading by a particular mutual fund, he used another number assigned to him to place the trade in that fund. Although each joint number ostensibly represented a unique commission split, in
fact each team of agents split commissions from mutual fund purchases according to a single ratio, irrespective of which agent identifying number was used to enter the trade. 
 22. PSI failed to prevent the agents from opening hundreds of customer account numbers. The agents’ customers maintained multiple accounts with PSI,
many of which bore fictitious names that had no relation to the actual customer’s name. The agents used these customer accounts interchangeably to execute trades. When one customer account was blocked from trading by a particular mutual fund,
the agents substituted another account for that same customer to place the trade for that customer, thereby creating the appearance that the trade originated from another customer. 
  

 Page 13 of 29 

 23. PSI failed to prevent the agents from obtaining accounts for their customers that were coded as
“Confidential.” Confidential accounts did not identify the beneficial owner of the account on the transaction data provided to the mutual funds. Although such a designation could have a legitimate purpose, here the agents used Confidential
accounts improperly to impede the mutual funds’ ability to identify which PSI agent or customer was market timing their funds. 
 24.
PSI also failed to prevent the agents from obtaining customer account numbers with multiple branch identifiers. Typically, agents located in one PSI branch office had customer accounts that had a prefix used to identify the branch location. Here,
the agents established accounts for their hedge fund customers using multiple branch codes, which effectively impeded the mutual funds’ ability to identify the particular PSI office location, as well as agent, that was market timing their
funds. The agents used branch identifiers improperly as another mechanism to conceal their identities and the identities of their customers to mutual funds. 
 PSI Received Notifications of the Agents’ Deceptions 
 25. During the Relevant Period, mutual fund companies sent more
than a thousand letters and emails to PSI concerning market timing by the agents. Many of these communications asked PSI to take steps to stop further trading by a particular customer account or FA number. Others expressly notified PSI that the
agents used deceptive trading practices to continue placing market timing trades. 
  

 Page 14 of 29 

 26. High level officers of PSI were aware during the Relevant Period that mutual funds were accusing the
agents of using deceptive practices to evade the mutual funds’ attempts to block the agents’ market timing trades. For example, an individual who joined PSI in 1997 and rose to become the chief administrator of PSI’s Private Client
Group (“PCG”) in January 1999, then to become executive director of PCG in November 2000, and finally to president of PCG in December 2002 (“the Senior Officer”) received repeated notices of wrongdoing by the agents throughout
the Relevant Period, but did not take adequate steps to stop the agents’ fraud. Among other things, the Senior Officer received the following indications that the agents were committing fraud. In some cases, certain other senior managers or
high level officers of PSI also received notices that the agents were committing fraud. 
 27. On November 21, 1999, a senior executive
in the PSI Mutual Fund Operations division forwarded to the Senior Officer a string of emails concerning a complaint from a mutual fund complex that the Garden City Agent had evaded a block on two of his accounts by simply opening new accounts.
Among other things, the email stated: 
 It appears that [the Garden City Agent] circumvented this restriction by requesting new BIN [account]
#s and fund accounts be established, funded by transferring shares into 

  

 Page 15 of 29 

 
these new accounts on 11/8/99. Subsequently on 11/10/99, an exchange out of the money fund into our stock funds was processed, beginning market timing again.

 The cover email commented, “[T]his seems to be a serious matter that will only get worse.” 
 28. On January 19, 2000, the manager of PSI’s Mutual Fund Operations division forwarded to the Senior Officer an email from another mutual fund
complex complaining that a member of the Boston Agents had evaded a trading restriction by opening a new account, stating: 
 It appears that
[the member] set up another account in December for the same client we restricted on 11/22. 
 29. On March 30, 2001, the head of PCG
risk management sent to the Senior Officer an email that attached a letter from another mutual fund complex complaining that “excessive trading activity” by PSI agents in its mutual funds “has become detrimental to both the funds and
shareholders of the funds involved.” The letter described the tactics used by PSI agents to avoid having their trades canceled as follows: 
 Since trade cancellation began on February 26th, 2001, we have noticed several types of reactions by Prudential Financial Advisors in order to circumvent our attempts to terminate excessive trading. Originally, your Financial Advisors
established new identification numbers so that they would not be recognized as a repeat offender. Secondly, Financial Advisors would transfer a fund(s) 

  

 Page 16 of 29 

 
position from account to account, in order to disguise their identity. Lastly, your Financial Advisors have attempted to reduce the dollar amount of the
exchange orders while simultaneously increasing the number of exchanges (in the same fund and account) in the hopes of not being identified. 
 30. On June 28, 2001, the Senior Officer received an email from the manager of the Special Accounts branch warning him that the Special Accounts Agents were obtaining multiple FA numbers in order to conduct their market timing, stating
that: 
 We will have an issue soon with joint FA numbers: in order to get around the MF [mutual fund] timing issue they are starting to
request 99/01 split numbers with their junior partners to help them get around being shut down by some MF companies on timing. 
 31. On
April 4, 2002, the manager of PSI’s Mutual Funds Operations division sent an email to other senior managers forwarding an email from another mutual fund complex complaining that certain PSI agents were using multiple accounts and FA
numbers to evade restrictions on their market timing. The email stated: 
 What we have seen scares us. It appears certain representatives are
changing account registrations, tax id numbers, and branch and rep numbers in an effort to time the [mutual fund complex’s] funds. All of these accounts have been stopped, but each day “new” ones pop up. 
  

 Page 17 of 29 

 When the PSI chief compliance officer saw the above email, he showed it to the Senior Officer. The head of PCG risk
management also discussed the email with the Senior Officer. 
 32. On April 29, 2002, the Senior Officer met with an internal PSI
working group that had been analyzing market timing issues. The group described for the Senior Officer the mutual fund companies’ restrictions on excessive trading, the fund companies’ block letters to PSI, and the deceptive trading
strategies used by certain PSI agents, including multiple accounts and FA numbers. 
 33. On at least two occasions in May 2002, an employee
of PSI’s risk management division detailed for the Senior Officer several deceptive practices used by the Garden City Agent. The employee’s analysis noted that in one 37-day period, the Garden City Agent had 19 different mutual fund
companies request that accounts under the agent’s control, or the agent as an FA, be blocked from their funds. The analysis concluded that the Garden City Agent had circumvented these requests by changing his FA number to an Also or Joint
Number to avoid detection by the fund, or by changing customer account numbers and moving the assets from the blocked account to a newly established account. 
 34. On February 5, 2003, the director of strategic planning at PCG sent the Senior Officer (then the President and most senior officer of PCG) a string of emails from another mutual fund complex complaining that
certain PSI agents were 

  

 Page 18 of 29 

 
using multiple customer accounts and FA numbers for market timing. One of the emails stated: 
 I have spoken to these reps a few times over the past several months about stopping their timing activity to no avail. Over the past several months, we
have placed stops on 325 of their accounts as of 11/30/02 and continue to add accounts daily. We see new accounts/rep id combinations being opened and have determined that we are not able to continue chasing them within our funds. We feel our only
course of action to protect our fund shareholders is to prohibit the attached list of reps from doing business with [our funds]. 
 Another
email in the string stated: 
 These reps have multiple rep ids and have continued to add new ones as we block the ids within the NSCC trading
system for our fund complex... These reps created close to $3 billion in exchanges last year with $75 million of assets during a time in which we placed stops on 350 of their accounts. 
 The director of strategic planning added his own warning to the Senior Officer: 
 I just wanted to give you a heads up on an issue that is sure to reach your desk in the next day or two. As you can see from the attached string of notes,
the senior leadership team at [a mutual fund complex] are completely frustrated with some of the tactics/strategies of FA’s [the 

  

 Page 19 of 29 

 
Garden City Agent and the Boston Agents]. Previous attempts to curtail timing activity in the [mutual fund complex’s] funds by blocking account activity
have been thwarted by the establishment of additional FA numbers. It appears that [the mutual fund complex] is now making overtures that continued activity of this nature will threaten the relationship between Prudential and the fund company.

 35. On February 11, 2003, a PCG risk officer sent an email to the Senior Officer (then the President and most senior officer of PCG)
that forwarded an email from the Garden City branch manager about the Garden City Agent’s market timing business. The branch manager questioned the effectiveness of the Mutual Fund Operations division’s internal blocking system and raised
several other concerns about the Garden City Agent’s activities: 
 Blocking of individual accounts by fund companies is extremely
shortsighted in consideration of the fact that each “entity” maintains multiple accounts with our Firm. There have been repeat offenses, at least in spirit... Fund companies have been mislead as to the identity of the FA’s of
record... Recently, [a mutual find company] was provided with information which was at best misleading to effect the removal [of] a block. 
 [T]here is frequent journaling of funds between accounts. At the present time, [the Garden City Agent and an assistant] either have or have had a total of 48 FA #’s including single, joint and also numbers. 
  

 Page 20 of 29 

 PSI’s Procedures to Limit Market Timing Were Ineffective 
 36. Although PSI senior officers issued policies and procedures ostensibly designed to proscribe the agents’ conduct, these policies and procedures
were ineffective in scope and were never fully enforced. Moreover, even in situations where these policies and procedures purportedly were enforced, PSI senior officers undermined them by granting exceptions for its largest producing agents. As a
result, the agents’ deceptions continued even after these policies and procedures were promulgated. 
 PSI’s June 2002 Procedure Concerning
Issuance of FA Numbers 
 37. In June 2002, PSI instituted a procedure concerning the issuance of FA numbers, in a purported effort to
hinder the agents’ ability to obtain “Joint” numbers and “Also” numbers to evade limitations on market timing (the “June 2002 Procedure”). The June 2002 Procedure provided, simply, that requests for
“Joint” and “Also” numbers would require a documented business request and a PSI Regional Business Manager’s approval. The June 2002 Procedure failed to preclude the agents from misusing previously issued Joint and Also
numbers to evade blocks imposed by mutual fund companies. Indeed, the Garden City Agent obtained 12 new Joint and Also numbers just days before the procedure took effect, purportedly to assist him in transferring customer accounts from one PSI
branch office to another. The June 2002 Procedure also did not subject the agents to any form of discipline or sanction if they continued to use Joint and Also numbers to evade blocks in violation of its terms. 
  

 Page 21 of 29 

 PSI’s January 2003 Market Timing Policy 
 38. After protracted discussion involving PSI senior officers and attorneys during the Fall of 2002, PSI issued a market timing policy on January 8,
2003 (the “Market Timing Policy”). PSI considered, and rejected, defining market timing in the Market Timing Policy as a certain number of trades because of concerns that doing so would have had too great an impact on the agents’
revenues. PSI also rejected an absolute prohibition on the business of market timing. Instead, the Market Timing Policy provided that “inappropriate timing activities [would] continue to be monitored” by mutual fund companies and not by
PSI itself. 
 39. Unlike other PSI policies concerning market timing, the Market Timing Policy expressly provided for the imposition of
sanctions, including termination of employment, for the agents’ use of “manipulative techniques” to evade mutual fund trading restrictions. Any imposition of sanctions was to be decided by a committee consisting of members of
PSI’s Legal, Compliance, and Risk Management divisions. Despite notifications of continuing deceptive practices received by PSI after it issued the Market Timing policy, PSI did not form this committee and failed to take action against any of
the agents to stop their use of “manipulative techniques” to market time. 
 40. The Market Timing Policy also provided that, in
the event a mutual fund company asked PSI to block any one of a agent’s FA numbers, all numbers belonging to the agent similarly would be blocked from trading. However, PSI senior officers 

  

 Page 22 of 29 

 
determined not to implement this critical aspect of the Market Timing Policy. In fact, despite the policy’s clear language, PSI interpreted mutual fund
block requests after it issued the Market Timing Policy in the same manner as it had previously – as narrowly as possible, blocking only the specific FA number or customer account number identified by mutual fund block requests. Thus, even
after issuance of the Market Timing Policy, the agents were able to continue their fraudulent scheme of switching to unblocked FA numbers or customer accounts to evade blocks imposed by mutual fund companies. 
 PSI Profited From the Agents’ Deceptive Acts 
 41. PSI identified the agents as early as 2000 and monitored their revenues and ranks within PSI throughout the Relevant Period. PSI’s Mutual Funds Operations division, which processed the agents’ trades in mutual funds, monitored
the agents’ activity because their rapid trading required the dedication of additional staff within the department to process the trades and strained PSI’s trade processing and settlement systems. 
 42. In 2000, PSI began to track each quarter the gross commission revenues generated by the agents. PSI prepared these reports to determine the amount of
income that would possibly be reduced if PSI determined to eliminate market timing as a business. In 2001, for example, the agents generated more than $16 million in gross commission revenues for PSI, most of which would have been eliminated had PSI
phased out market timing at 

  

 Page 23 of 29 

 
that time. Similarly, the agents generated approximately $23 million in gross commission revenues for 2002, and received another $10 million in gross
commission revenues during the first half of 2003. 
 43. As PSI senior officers became increasingly aware of the agents’ use of
deceptions, PSI elected to continue the business of market timing. Indeed, some of PSI’s senior officers were aware that the June 2002 Procedure concerning the issuance of multiple FA numbers and the January 2003 Market Timing Policy were
wholly ineffective at eradicating the agents’ deceptions and the agents and their hedge fund customers continued this activity. During the Relevant Period, the agents generated approximately $50 million in gross revenues as a result of this
conduct. 
 CONCLUSION OF LAW 
 Solely for the purpose of this consent order and without admitting or denying the findings of fact, PSI consents to the following: 
  

	 	1.	PSI failed to reasonably supervise its agents in violation of its duty under N.J.S.A. 49:3-58(a)(2)(xi) to establish or enforce reasonable supervisory procedures for
detecting and preventing the deceptive market timing practices described herein; 

  

 Page 24 of 29 

 ORDER 
 THEREFORE, it is, on this, 28 day of August, 2006, hereby ORDERED that: 
  

	 	1.	PSI shall disgorge $270 million, payable to the United States Securities and Exchange Commission or as it otherwise directs as part of a joint administrative settlement.

  

	 	2.	PSI shall CEASE AND DESIST from violating the Uniform Securities Law (1997), L. 1997, c.276, N.J.S.A. 49:3-47 et seq.  

  

	 	3.	PSI retain an Independent Distribution Consultant subject to the following provisions: 

  

	 	a.	Respondent shall retain, within 60 days of the entry of this consent order, the services of an independent distribution consultant (“Independent Distribution Consultant”)
acceptable to the staff of Bureau. 

  

	 	b.	Respondent shall be responsible for all costs and expenses associated with the development and implementation of the Distribution Plan, including such costs as further detailed in
the SEC Final Order. 

  

	 	c.	Respondent shall cooperate fully with the Independent Distribution Consultant to provide all information requested for its review, including providing access to its files, books,
records, and personnel. 

  

	 	d.	 The Independent Distribution Consultant shall develop a proposed Distribution Plan for the Distribution of 

  

 Page 25 of 29 

	 	 
the total disgorgement ordered in the SEC Final Order and this consent order, and any interest or earnings thereon, according to a methodology developed in
consultation with and acceptable to the staff of the Commission and the Bureau. 

  

	 	e.	The Independent Distribution Consultant shall simultaneously submit to Respondent and the Bureau the proposed Distribution Plan no more than 180 days after the entry of this consent
order. 

  

	 	f.	The proposed Distribution Plan developed by the Independent Distribution Consultant shall be binding unless, within 210 days after the date of entry of this order, Respondent, the
staff of the SEC or the Bureau advises, in writing, the Independent Distribution Consultant of any determination or calculation from the Distribution Plan that it considers to be inappropriate and states in writing the reasons for considering such
determination or calculation inappropriate. 

  

	 	g.	With respect to any calculation with which Respondent or the staff of Bureau do not agree, such parties shall attempt in good faith to reach an agreement within 240 days of the
entry of this consent order. In the event the Respondent and the Bureau staff are unable to agree on an alternative determination or calculation, the determinations of the Independent Distribution Consultant shall be included in the proposed
Distribution Plan. 

  

 Page 26 of 29 

	 	h.	Within 285 days of the entry of this consent order, the Independent Distribution Consultant shall submit the proposed Distribution Plan for the administration and distribution of
disgorgement funds to the staff of the Commission and to the Bureau. The Independent Distribution Consultant shall take all necessary and appropriate steps to administer the final plan for distribution of disgorgement funds in accordance with the
terms of the approved Distribution Plan. 

  

	 	i.	 For the period of the engagement and for a period of two years from completion of the engagement, the Independent Distribution Consultant shall not enter into any
employment, consultant, attorney-client, auditing, or other professional relationship with Respondent, or any of its present or former affiliates, directors, officers, employees, or agents acting in their capacity as such. Any firm with which the
Independent Distribution Consultant is affiliated in performance of his or her duties under this consent order, or of which he/she is a member, and any person engaged to assist the Independent Distribution Consultant in the performance of his/her
duties under this consent order, shall not, without prior written consent of the Bureau, enter into any employment, 

  

 Page 27 of 29 

	 	 
consultant, attorney-client, auditing or other professional relationship with Respondent, or any of Respondent’s present of former affiliates,
directors, officers, employees, or acting in the capacity as such for the period of the engagement and for a period of two years after the engagement. 

  

	 	j.	For good cause shown, the Bureau may alter any of the procedural deadlines set forth above. 

  

	 	4.	PSI shall cooperate fully and in good faith with the Bureau in any investigation or litigation by the Bureau relating to the allegations in this consent order. Such cooperation will
include, but is not limited to, voluntarily making employees available for interviews and/or testimony, producing business and other records within its possession, custody, and/or control in a timely manner as requested by the Bureau, and providing
other non-privileged information obtained by PSI in connection with its own investigation. PSI will bear the cost of producing documents, information, and/or witnesses requested by either the Attorney General or the New Jersey Bureau of Securities.

  

	 	5.	 This consent order, the SEC Final Order, the NASD Administrative Waiver & Consent, the Stipulation and Consent issued by the New York Stock Exchange and
the order of any other State in related proceedings against PSI shall not be a ground to deny, suspend or revoke the broker-dealer, agent, investment adviser or investment adviser 

  

 Page 28 of 29 

	 	 
representative registration of any Covered Person pursuant to N.J.S.A. 49:3-58, shall not be a ground of denial or revocation of the transactional or
securities exemptions from registration in N.J.S.A. 49:3-50, and shall not be a ground to issue a stop order denying effectiveness to, or suspending or revoking the effectiveness of, any securities registration statement pursuant to
N.J.S.A. 49:3-64. 

 THE PARTIES CONSENT TO THE FORM, CONTENT, AND ENTRY OF THIS CONSENT ORDER ON THE DATES UNDER THEIR
RESPECTIVE SIGNATURES. 
  

			
	FOR THE BUREAU OF SECURITIES:
		
	By:	 	 /s/ Franklin L. Widmann

		 	Franklin L. Widmann
		 	Chief, Bureau of Securities
		
		 	Dated this 28 day of August, 2006.
	
	FOR PRUDENTIAL EQUITY GROUP, LLC:
		
	By:	 	 /s/ Kenneth Y. Tanji

		 	Kenneth Tanji
		 	Senior Vice President
		
		 	Dated this 23 day of August, 2006.

  

 Page 29 of 29Assurance of Discontinuance, dated August 25, 2006

 Exhibit 10.7 
  

			
	ATTORNEY GENERAL OF THE STATE OF NEW YORK	 	
	BUREAU OF INVESTMENT PROTECTION	 	
	----------------------------------------------------------------------------------X	 	
		
	In the Matter of	 	
		
	PRUDENTIAL EQUITY GROUP, LLC,	 	
	Formerly Known As	 	
	PRUDENTIAL SECURITIES INCORPORATED	 	
		
	----------------------------------------------------------------------------------X	 	

 ASSURANCE OF DISCONTINUANCE 
 PURSUANT TO EXECUTIVE LAW § 63 (15) 
 WHEREAS, pursuant to the provisions
of Article 23-A of the General Business Law (the “Martin Act”), Eliot Spitzer, Attorney General of the State of New York (the “Attorney General”), commenced an investigation in September 2003 into the practices, procedures and
conduct of Prudential Securities Incorporated (“PSI”), during the period 1998 through September 2003 respecting market timing and late trading of mutual funds (the “Investigation”);1 
 WHEREAS, the Investigation was conducted in
cooperation with investigations of PSI by the U.S. Securities and Exchange Commission (“SEC”), the Commonwealth of Massachusetts, the State of New Jersey, the New York Stock Exchange and NASD Inc.; 
 WHEREAS, prior to July 1, 2003, PSI was an indirect wholly owned broker-dealer subsidiary of Prudential Financial, Incorporated (“Prudential
Financial”); 
  

  

	1	“Market timing” refers to the practice of short-term investing in mutual fund shares and/or the exploitation of pricing inefficiencies in mutual fund share
pricing. “Late trading” refers to obtaining a given day’s mutual fund share price for orders to buy, sell or exchange shares that were placed after the close of the market on that day. 

  

 -1- 

 WHEREAS, on July 1, 2003, PSI transferred the assets relating to its U.S. retail securities
brokerage operations to a newly formed holding company, now named Wachovia Securities Financial Holdings, LLC (“WFSH”); 
 WHEREAS,
Prudential Financial currently owns 38 percent of WSFH and Wachovia Corporation owns 62 percent of WSFH; 
 WHEREAS, since July 1, 2003,
PSI’s former U.S. retail securities brokerage business has operated as part of Wachovia Securities, LLC; 
 WHEREAS, in the course of
the Investigation, numerous witnesses were interviewed and/or deposed and extensive documentary evidence was reviewed; 
 WHEREAS, Prudential
Equity Group, LLC (“PEG”) has cooperated in the Investigation by producing documentary evidence and witnesses and identifying evidence relevant to the Investigation; 
 WHEREAS, the Investigation revealed that certain practices by PSI violated the Martin Act, General Business Law (“GBL”) §349, and
Executive Law §63 (12); 
 WHEREAS, PEG has advised the Attorney General of its desire to resolve the Investigation; 
 WHEREAS, PEG agrees to implement certain changes with respect to securities practices and to make the payment of $270 million as set forth herein;

 WHEREAS, PEG has entered into an Agreement with the Office of the United States Attorney for the District of Massachusetts relating to
potential criminal charges for violations of the federal Securities Exchange Act of 1934, and PEG has agreed to pay a penalty of $330 million; and 
  

 -2- 

 WHEREAS, the Attorney General finds the following sanctions appropriate and in the public interest and
PEG agrees to the sanctions provided herein; 
 NOW, THEREFORE, the Attorney General, based upon the Investigation, makes the following
findings: 
 FINDINGS 
 1.
At all relevant times until on or about July 1, 2003, PSI was a Delaware corporation with its headquarters in New York, New York, was registered with the Department of Law of the State of New York as a securities broker-dealer, and conducted
business in and from the State of New York. 
 2. The Attorney General has jurisdiction over this matter pursuant to the Martin Act, GBL
§ 349, and Executive Law§ 63 (12). 
 A. Summary of the Fraud 
 3. This matter concerns a fraudulent market timing scheme perpetrated by PSI registered representatives (collectively, the “Representatives”) whose business involved market timing to defraud at least 50
mutual funds and their long-term shareholders. Beginning in at least September 1999 and continuing through at least June 2003 (the “Relevant Period”), the Representatives used deceptive trading practices to conceal their identities, and
those of their customers, to evade mutual funds’ prospectus limitations on market timing. These practices included the use of multiple broker identifying numbers (known as Financial Advisor, or “FA,” numbers) and multiple customer
accounts; the use of accounts coded as confidential in PSI’s systems; and the Representatives’ use of “under-the-radar” trading to avoid notice by mutual 

  

 -3- 

 
funds. Typically, mutual funds screened for market timing trades only above a designated dollar amount. The practice of “under-the-radar” trading
refers to the Representatives’ splitting of one trade into numerous smaller ones to avoid detection by mutual funds. 
 4. As early as
the fourth quarter 1999, several mutual fund companies identified the Representatives’ use of deceptive trading practices and notified PSI of the Representatives’ conduct. In May 2002, PSI itself determined that its top-producing
registered representative used deceptive trading practices to avoid notice by mutual funds. Throughout the Relevant Period, PSI received hundreds of notices from mutual fund companies that identified the Representatives’ conduct and asked the
firm to take steps to curtail their deceptive market timing practices. 
 5. Despite PSI’s increasing awareness of the
Representatives’ fraudulent market timing practices, the firm elected to continue the business of market timing. Rather than discipline or sanction any of the Representatives or even curtail their ability to open additional accounts for their
market timing customers, PSI failed to prevent their conduct from continuing and actually began to track the Representatives’ gross revenues. In 2001, for example, the Representatives generated more than $16 million in gross commission revenues
for the firm, most of which was in danger of being eliminated had the firm phased out market timing at that time. Similarly, the Representatives generated approximately $23 million in gross commission revenues in 2002, and continued to generate
comparable revenues throughout the Relevant Period. 
 6. PSI’s policies and procedures were ineffective in curtailing the
Representatives’ fraud and were largely not enforced. Even in situations where PSI purportedly enforced any of these policies, PSI senior officers undermined them by granting exceptions for PSI’s largest 

  

 -4- 

 
producing registered representatives. Additionally, PSI repeatedly failed to deprive the Representatives of their inappropriate use of hundreds of FA
numbers, even though the use of multiple FA numbers was the primary means by which the Representatives carried out their fraud. PSI finally issued a market timing policy in January 2003, but the firm did not fully enforce procedures in that policy
to curtail the Representatives’ scheme. As a result of the conduct described above, PSI violated the Martin Act and Executive Law § 63(12). 
 B. Background on Market Timing 
 7. Market timing includes frequent buying and selling of shares of the same mutual fund or
buying or selling of mutual fund shares in order to exploit inefficiencies in mutual fund pricing. Market timing can harm mutual fund shareholders because it can dilute the value of their shares, if the market timer is exploiting pricing
inefficiencies, or disrupt the management of the mutual fund’s investment portfolio and can cause the targeted mutual fund to incur costs borne by other shareholders to accommodate frequent buying and selling of shares by the market timer.

 8. Beginning in the late 1990s, many mutual funds determined that market timing harmed their long-term shareholders. As a result, they
began to monitor market timing in their funds’ shares and imposed restrictions on excessive trading. Such restrictions limited the number of trades that an account holder could place in a fund’s shares and often were set forth in the
funds’ prospectuses. Many funds monitored trading activity to detect any violations of these prospectus limitations. 
 9. Most mutual
funds received trade instructions from PSI through the National Securities Clearing Corporation (“NSCC”). NSCC is a centralized trade clearance and settlement system that linked the Representatives, PSI, and virtually all mutual fund
companies. 
  

 -5- 

 To place trades that were transmitted through NSCC, the Representatives were required to identify their FA number and a
customer account to mutual funds on trade tickets. PSI appended additional information to the Representatives’ orders and transmitted the transactions through NSCC to the mutual fund companies. 
 10. Some mutual funds screened for excessive short-term trading by reviewing FA and customer account numbers that the Representatives transmitted to them
via NSCC. Some also monitored for excessive short-term trading by trade size and principal amount and by the branch code attached to a trade.2 Typically, if a fund concluded that a shareholder had violated its exchange limitations, the fund would attempt to prevent, or “block” additional trades in a fund or fund family by that shareholder. If a fund
determined that a particular PSI registered representative or shareholder had violated its exchange limitations, the fund would send a “block letter” to PSI. Block letters varied but generally notified PSI of the mutual fund’s
intention to block the registered representative’s or customer’s transaction and often asked PSI to take steps to preclude a particular registered representative or customer account from engaging in additional trades in a particular fund
or fund family. 
 11. Because these mutual funds monitored for excessive trading by FA number and/or customer account number, the
Representatives altered their use of these numbers to defraud these funds and the funds’ long-term shareholders. By altering their use of these numbers, the Representatives tricked mutual fund companies into accepting trades that the funds
otherwise would have rejected. 
  

	2	PSI assigned branch codes to each of its retail branch offices. Branch codes identified to mutual funds the PSI branch office from which a particular market timing
trade originated. 

  

 -6- 

 C. The Representatives’ Deceptive Conduct 
 12. During the Relevant Period, the Representatives engaged in a fraudulent scheme to circumvent blocks imposed by mutual funds on their trading
privileges. The Representatives’ scheme worked as follows. The Representatives’ customers, typically hedge funds, asked the Representatives to purchase and sell mutual funds on a short-term basis on their behalf. The Representatives,
however, knew that mutual funds tracked their trades by FA number and customer account number, and they knew that if they placed short-term mutual fund trades for their customers using a single FA or account number, the mutual funds would likely
determine the number of trades was excessive and would block any further trades by them. 
 13. The Representatives, therefore, devised a
scheme to conduct their customers’ trading using dozens of customer accounts, often established under fictitious names, and multiple FA numbers to make it difficult for mutual funds to identify their customers’ market timing. When the
mutual funds succeeded in blocking certain FA numbers or customer accounts from further trading, the Representatives then used other FA numbers and customer accounts that had not yet been blocked to evade the funds’ restrictions and continue to
trade. 
 a. Representatives Martin Druffner, Justin Ficken, and Skifter Ajro 
 14. For example, one group of PSI registered representatives based in its Boston, Massachusetts, branch office repeatedly used these deceptive practices
to defraud mutual funds throughout the Relevant Period. The group consisted of PSI registered representatives Martin Druffner, Justin Ficken, Skifter Ajro and several assistants (the “Druffner Group”). The Druffner Group had five customers
for whom it placed market timing trades, each of whom acted on behalf of one or more hedge funds. During the Relevant Period, PSI received approximately $8 million from the Druffner Group’s market timing activities, of which group members
received approximately $4.6 million. As a result of this business, the head of the group, Martin Druffner, quickly rose to become one of PSI’s top producers. 
  

 -7- 

 15. Many of the mutual funds in which the Druffner Group traded screened for market timing trades by FA
and customer account numbers. Many fund companies sent notices to PSI that complained that the group’s trades had violated prospectus limitations. Some mutual funds announced steps they had taken to preclude the Druffner Group from further
trading while others asked that PSI take steps to block further trades by the group in the fund. 
 16. During the Relevant Period, the
Druffner Group used at least thirteen FA numbers and hundreds of customer accounts (for what were, in reality, only five customers) to circumvent these blocks and preclude new blocks. The Druffner Group’s use of these devices in connection with
market timing allowed group members to continue to place trades in funds that had taken steps to preclude them from further trading. Their scheme created the impression that transactions originated from many registered representatives and
represented many different customers. In fact, what appeared to the mutual funds to be thousands of separate transactions submitted by many registered representatives for many unrelated customers was actually a systematic pattern of market timing by
group members on behalf of their five hedge fund customers. 
 b. Representative Frederick O’Meally 
 17. Another PSI registered representative based in its Liberty Plaza, New York, New York, and its Garden City, New York, branch offices, Frederick
O’Meally, used these same deceptive practices to defraud mutual funds throughout the Relevant Period. O’Meally headed a team of registered representatives and assistants, although he very rarely reported to work at any PSI location. He had
five customers for whom he placed market timing trades, each of whom 

  

 -8- 

 
acted on behalf of one or more hedge funds. During the Relevant Period, PSI received approximately $9.8 million from O’Meally’s market timing
activities (of which O’Meally received approximately $4.7 million). O’Meally was the top producing registered representative at PSI throughout the Relevant Period. 
 18. Like the Druffner Group, O’Meally traded in mutual funds that screened for market timing by FA and customer account numbers. During the Relevant
Period, approximately 50 mutual funds complained to PSI about O’Meally’s trading activity. Many mutual funds specifically identified to PSI his use of deceptive trading strategies to evade blocks the fund companies had imposed. 

19. To evade these blocks, O’Meally maintained 49 different FA numbers and hundreds of customer account numbers (for what were, in reality, only
five customers). His use of these devices to market time created the impression that the trades originated from many registered representatives and many customers. By shifting trades from one FA number to another, or from one customer account to
another, O’Meally concealed his identity and was able to place trades in mutual funds where PSI previously had blocked his trading under his other FA numbers and accounts. 
 c. Representatives Jason Ginder and Lawrence Kalish 
 20. Another group of PSI registered representatives based in a New York office known within the firm as “Special Accounts” also used deceptive practices to defraud mutual funds throughout the Relevant
Period. The group consisted of Jason Ginder, Lawrence Kalish and several assistants (the “Ginder/Kalish Group”). The Ginder/Kalish Group had three customers for which it placed market timing trades. During the Relevant Period, PSI received
gross revenue of approximately $6.5 million from the Ginder/Kalish Group’s market timing 

  

 -9- 

 
activities, of which group members received approximately $2.5 million. As a result of this business, the heads of the group quickly achieved membership in
PSI’s Chairman’s Club, a select group consisting of only the largest producing registered representatives within the firm. 
 21.
Like the Druffner Group and O’Meally, the Ginder/Kalish Group knew that most mutual funds identified excessive trading by FA and customer account numbers. They also understood that mutual funds screened for market timing by reviewing only those
trades at or exceeding certain dollar amounts. The Ginder/Kalish Group used at least 20 FA numbers and hundreds of customer accounts (for what were, in reality, only three customers) to avoid detection by mutual funds. The Ginder/Kalish Group also
used “under the radar” trading to disguise their customers’ trading in funds that previously had taken steps to stop them. The registered representatives’ use of these devices in connection with market timing deceived mutual
funds into accepting trades they otherwise would have rejected. Like the Druffner Group and O’Meally, their scheme perpetuated the impression that transactions originated from many registered representatives and represented many different
customers. 
 D. PSI Failed to Prevent the Representatives From Obtaining Multiple Broker Identifying and Customer Account Numbers 
 22. PSI failed to prevent the Representatives from obtaining several different forms of broker identifying numbers. Consequently, the Representatives used
these numbers to perpetrate their scheme to defraud. When registered representatives began their employment with PSI, PSI assigned them an FA number. Registered representatives used FA numbers to open customer accounts, execute trades, and track
their commissions. When registered representatives worked as a team to service common customers, PSI provided “Joint” numbers. Joint numbers ostensibly represented a commission split between two or more registered representatives. Here,
the Representatives acquired and used Joint numbers for improper purposes. The numbers were 

  

 -10- 

 
not used to split commissions, but rather to facilitate the Representatives’ ability to trade after their other broker identifying numbers had been
blocked from trading. PSI also provided the Representatives with “Also” numbers. The purported purpose of “Also” numbers was to allow the Representatives’ customers to access only those portions of a given registered
representative’s portfolio that belonged to that customer or to provide certain customers with commission discounts. The Representatives, however, used Also numbers improperly in the same manner as they used FA and Joint numbers – to
circumvent blocks that had been imposed on their other FA numbers. Indeed, at least one mutual fund became so frustrated by its inability to identify the Representatives that they threatened to curtail the trading privileges of all registered
representatives within a PSI branch to remedy the conduct. 
 23. Each of the Representatives maintained numerous FA, Joint, and Also
numbers, and used these numbers interchangeably to execute trades for their customers. For example, the Druffner Group used 13 broker identifying numbers to place market timing trades and O’Meally used 49 broker identifying numbers. When one of
the Representatives’ FA, Joint, or Also numbers was blocked from trading by a particular mutual fund, he used another number assigned to him to place the trade in that fund. Although each Joint number ostensibly represented a unique commission
split, in fact each team of Representatives split commissions from mutual fund purchases according to a single ratio, irrespective of which broker identifying number was used to enter the trade. 
 24. PSI failed to prevent the Representatives from opening hundreds of customer accounts. The Representatives’ customers maintained multiple
accounts with PSI, many of which bore fictitious names that had no relation to the actual customer’s name. The Representatives used these customer accounts interchangeably to execute trades. When one 

  

 -11- 

 
customer account was blocked from trading by a particular mutual fund, the Representatives substituted another account for that same customer to place the
trade for that customer, thereby creating the appearance that the trade originated from another customer. 
 25. PSI failed to prevent the
Representatives from obtaining accounts for their customers that were coded as “Confidential.” Confidential accounts did not identify the beneficial owner of the account on the transaction data provided to the mutual funds. Although such a
designation could have a legitimate purpose, here the Representatives used confidential accounts improperly to impede the mutual funds’ ability to identify which PSI registered representative or customer was market timing their funds.

 26. PSI also failed to prevent the Representatives from obtaining customer account numbers with multiple branch identifiers. Typically,
registered representatives located in one PSI branch office had customer accounts that had a prefix used to identify the branch location. Here, the Representatives established accounts for their hedge fund customers using multiple branch codes,
which effectively impeded the mutual funds’ ability to identify the particular PSI office location, as well as registered representative, that was market timing their funds. The Representatives used branch identifiers improperly as another
mechanism to conceal their identities and the identities of their customers to mutual funds. 
 E. PSI Received Notifications of the Representatives’
Deceptions 
 27. During the Relevant Period, mutual fund companies sent more than a thousand letters and e-mails to PSI concerning market
timing by the Representatives. Many of these communications asked PSI to take steps to stop further trading by a particular customer account or FA number. Others expressly notified PSI that the Representatives used deceptive trading practices to
continue placing market timing trades. 
  

 -12- 

 28. High level officers of PSI were aware during the Relevant Period that mutual funds were accusing the
Representatives of using deceptive practices to evade the mutual funds’ attempts to block the Representatives’ market timing trades. For example, Michael Rice, who joined PSI in 1997 and rose to become the chief administrator of PSI’s
Private Client Group (“PCG”) in January 1999, then to executive director of PCG in November 2000, and finally to president of PCG in December 2002, received repeated notices of wrongdoing by the Representatives throughout the Relevant
Period, but did not take adequate steps to stop the Representatives’ fraud. Among other things, Rice received the following indications that the Representatives were committing fraud. In some cases, certain other senior managers or high level
officers of PSI also received notices that the Representatives were committing fraud. 
 29. On November 21, 1999, a senior executive in
the PSI Mutual Fund Operations division forwarded to Rice a string of e-mails concerning a complaint from a mutual fund complex that O’Meally had evaded a block on two of his accounts by simply opening new accounts. Among other things, the
e-mail stated: 
 It appears that [O’Meally] circumvented this restriction by requesting new BIN [account] #s and fund accounts be
established, funded by transferring shares into these new accounts on 11/8/99. Subsequently on 11/10/99, an exchange out of the money fund into our stock funds was processed, beginning market timing again. 
 The cover e-mail commented, “[T]his seems to be a serious matter that will only get worse.” 
 30. On January 19, 2000, the manager of PSI’s Mutual Fund Operations Division forwarded to Rice an e-mail from another mutual fund complex
complaining that a member of Druffner Group had evaded a trading restriction by opening a new account, stating: “It appears that [the member] set up another account in December for the same client we restricted on 11/22.” 
  

 -13- 

 31. On March 30, 2001, the head of PCG risk management sent Rice an e-mail that attached a letter
from another mutual fund complex complaining that “excessive trading activity” by PSI registered representatives in its mutual funds “has become detrimental to both the funds and shareholders of the funds involved.” The letter
described the tactics used by PSI registered representatives to avoid having their trades canceled as follows: 
 Since trade cancellation
began on February 26th, 2001, we have noticed several types of reactions by Prudential Financial Advisors in
order to circumvent our attempts to terminate excessive trading. Originally, your Financial Advisors established new identification numbers so that they would not be recognized as a repeat offender. Secondly, Financial Advisors would transfer a
fund(s) position from account to account, in order to disguise their identity. Lastly, your Financial Advisors have attempted to reduce the dollar amount of the exchange orders while simultaneously increasing the number of exchanges (in the same
fund and account) in the hopes of not being identified. 
 32. On June 28, 2001, Rice received an e-mail from the manager of the Special
Accounts branch warning him that the Ginder/Kalish Group were obtaining multiple FA numbers in order to conduct their market timing, stating that: 
 We will have an issue soon with joint FA numbers: in order to get around the MF [mutual fund] timing issue they are starting to request 99/01 split numbers with their junior partners to help them get around being shut down by some MF
companies on timing. 
 33. On April 4, 2002, the manager of PSI’s Mutual Funds Operations division sent an e-mail to other senior
managers forwarding an e-mail from another mutual fund complex complaining that certain PSI registered representatives were using multiple accounts and FA numbers to evade restrictions on their market timing. The e-mail stated: 
 What we have seen scares us. It appears certain representatives are changing account registrations, tax id numbers, and branch and rep numbers in an
effort to time the [mutual fund complex’s] funds. All of these accounts have been stopped, but each day “new” ones pop up. 
  

 -14- 

 When the PSI chief compliance officer saw the above e-mail, he showed it to Rice. The head of PCG risk management also
discussed the e-mail with Rice. 
 34. On April 29, 2002, Rice met with an internal PSI working group that had been analyzing market
timing issues. The group described for Rice the mutual fund companies’ restrictions on excessive trading, the fund companies’ block letters to PSI, and the deceptive trading strategies used by certain PSI registered representatives,
including multiple accounts and FA numbers. 
 35. On at least two occasions in May 2002, an employee of PSI’s risk management division
detailed for Rice several deceptive practices used by O’Meally. The employee’s analysis noted that in one 37-day period, O’Meally had 19 different mutual fund companies request that accounts under the registered representative’s
control, or the registered representative as an FA, be blocked from their funds. The analysis concluded that O’Meally had circumvented these requests by changing his FA number to an Also or Joint Number to avoid detection by the fund, or by
changing customer account numbers and moving the assets from the blocked account to a newly established account. 
 36. On February 5,
2003, the director of strategic planning at PCG sent Rice (then the President and most senior officer of PCG) a string of e-mails from another mutual fund complex complaining that certain PSI registered representatives were using multiple customer
accounts and FA numbers for market timing. One of the e-mails stated: 
 I have spoken to these reps a few times over the past several months
about stopping their timing activity to no avail. Over the past several months, we have placed stops on 325 of their accounts as of 11/30/02 and continue to add accounts daily. We see new accounts/rep id combinations being opened and have determined
that we are not able to continue chasing them within our funds. We feel our only course of action to protect our fund shareholders is to prohibit the attached list of reps from doing business with [our funds]. 
  

 -15- 

 Another e-mail in the string stated: 
 These reps have multiple rep ids and have continued to add new ones as we block the ids within the NSCC trading system for our fund complex... These reps created close to $3 billion in exchanges last year with $75
million of assets during a time in which we placed stops on 350 of their accounts. 
 The director of strategic planning added his own warning to Rice:

 I just wanted to give you a heads up on an issue that is sure to reach your desk in the next day or two. As you can see from the attached
string of notes, the senior leadership team at [a mutual fund complex] are completely frustrated with some of the tactics/strategies of FA’s [O’Meally and the Druffner Group]. Previous attempts to curtail timing activity in the [mutual
fund complex’s] funds by blocking account activity have been thwarted by the establishment of additional FA numbers. It appears that [the mutual fund complex] is now making overtures that continued activity of this nature will threaten the
relationship between Prudential and the fund company. 
 37. On February 11, 2003, a PCG risk officer sent an e-mail to Rice that
forwarded an e-mail from the Garden City branch manager about O’Meally’s market timing business. The branch manager questioned the effectiveness of the Mutual Fund Operations Division’s internal blocking system and raised several
other concerns about O’Meally’s activities: 
 Blocking of individual accounts by fund companies is extremely short-sighted in
consideration of the fact that each “entity” maintains multiple accounts with our Firm. 
 There have been repeat offenses, at least
in spirit . . . 
 Fund companies have been misled as to the identity of the FA’s of record... Recently, [a mutual fund company] was
provided with information which was at best misleading to effect the removal [of] a block. 
 [T]here is frequent journaling of funds between
accounts. 
 At the present time, [O’Meally and an assistant] either have or have had a total of 48 FA #s including single, joint and
also numbers. 
  

 -16- 

 F. PSI’s Procedures to Limit Market Timing Were Ineffective 
 38. Although PSI senior officers issued policies and procedures ostensibly designed to proscribe the Representatives’ conduct, these policies and
procedures were ineffective in scope and were never fully enforced. Moreover, even in situations where these policies and procedures purportedly were enforced, PSI senior officers undermined them by granting exceptions for its largest producing
registered representatives. As a result, the Representatives’ deceptions continued even after these policies and procedures were promulgated. 
 a. PSI’s June 2002 Procedure Concerning Issuance of FA Numbers 
 39. In June 2002, PSI instituted a procedure concerning
the issuance of FA numbers, in a purported effort to hinder the Representatives’ ability to obtain “Joint” numbers and “Also” numbers to evade limitations on market timing (the “June 2002 Procedure”). The June 2002
Procedure provided, simply, that requests for “Joint” and “Also” numbers would require a documented business request and a PSI Regional Business Manager’s approval. The June 2002 Procedure failed to preclude the
Representatives from misusing previously issued Joint and Also numbers to evade blocks imposed by mutual fund companies and it failed to preclude the Representatives from obtaining new FA numbers to facilitate their fraud. Indeed, O’Meally
obtained 12 new Joint and Also numbers just days before the procedure took effect, purportedly to assist him in transferring customer accounts from one PSI branch office to another. The June 2002 Procedure also did not subject the Representatives to
any form of discipline or sanction if they continued to use Joint and Also numbers to evade blocks in violation of its terms. 
 b.
PSI’s January 2003 Market Timing Policy 
 40. After protracted discussion involving PSI senior officers during the Fall of 2002, PSI
issued a market timing policy on January 8, 2003 (the “Market Timing Policy”). PSI 

  

 -17- 

 
considered, and rejected, defining market timing in the Market Timing Policy as a certain number of trades because of concerns that doing so would have too
great an impact on the Representatives’ revenues. PSI also rejected an absolute prohibition on the business of market timing. Instead, the Market Timing Policy provided that “inappropriate timing activities [would] continue to be
monitored” by mutual fund companies and not by PSI itself. 
 41. Unlike other PSI policies concerning market timing, the Market Timing
Policy expressly provided for the imposition of sanctions, including termination of employment, for the Representatives’ use of “manipulative techniques” to evade mutual fund trading restrictions. Any imposition of sanctions was to be
decided by a committee consisting of members of PSI’s Legal, Compliance, and Risk Management divisions. Despite notifications of continuing deceptive practices received by PSI after it issued the Market Timing Policy, PSI did not form this
committee and failed to take action against any of the Representatives to stop their use of “manipulative techniques” to market time. 
 42. The Market Timing Policy also provided that, in the event a mutual fund company asked PSI to block any one of a registered representative’s FA numbers, all numbers belonging to the registered representative similarly would
be blocked from trading. However, PSI senior officers determined not to implement this critical aspect of the Market Timing Policy. In fact, despite the policy’s clear language, PSI interpreted mutual fund block requests after it issued the
Market Timing Policy in the same manner as it had previously – as narrowly as possible, blocking only the specific FA number or customer account number identified by mutual fund block requests. Thus, even after issuance of the Market Timing
Policy, the Representatives were able to continue their fraudulent scheme of switching to unblocked FA numbers or customer accounts to evade blocks imposed by mutual fund companies. 
  

 -18- 

 G. PSI Profited From the Representatives’ Deceptive Acts 
 43. PSI identified the Representatives as early as 2000 and monitored their revenues and ranks within the firm throughout the Relevant Period. The
firm’s Mutual Fund Operations Division, which processed the Representatives’ trades in mutual funds, monitored the Representatives’ activity because their rapid trading required the dedication of additional staff within the department
to process the trades and strained the firm’s trade processing and settlement systems. 
 44. In 2000, PSI began to track each quarter
the gross commission revenues generated by the Representatives. PSI prepared these reports to determine the amount of income that would possibly be reduced if the firm determined to eliminate market timing as a business. In 2001, for example, the
Representatives generated more than $16 million in gross commission revenues for the firm, most of which would have been eliminated had the firm phased out market timing at that time. Similarly, the Representatives generated approximately $23
million in gross commission revenues for 2002, and received another $10 million in gross commission revenues during the first half of 2003. 
 45. As PSI senior officers became increasingly aware of the Representatives’ use of deceptions, the firm elected to continue the business of market timing. Indeed, some of the firm’s senior officers were aware that the June 2002
Procedure concerning the issuance of multiple FA numbers and the January 2003 Market Timing Policy were wholly ineffective at eradicating the Representatives’ deceptions and the Representatives and their hedge fund customers continued this
activity. During the Relevant Period, the Representatives generated approximately $50 million in gross revenues as a result of this conduct. 
  

 -19- 

 H. Violations of the Martin Act, GBL § 349 and Executive Law § 63 (12) 
 46. By virtue of the acts and practices set forth hereinabove, PSI violated the Martin Act, GBL § 349, and Executive Law § 63 (12). 

AGREEMENT 
 IT NOW APPEARING THAT
PEG desires to settle and resolve the Investigation without admitting or denying the Attorney General’s Findings, the Attorney General and PEG hereby enter into this Assurance of Discontinuance (“Assurance”), pursuant to Executive Law
§ 63 (15), and agree as follows: 
 I. Affirmative Relief 
 A. Disgorgement and/or Restitution 
 1. PEG shall pay $270 million in disgorgement and/or restitution.
The $270 million payment shall be remitted and administered in accordance with the SEC’s Order Instituting Administrative Proceedings, Making Findings, and Imposing Remedial Sanctions Pursuant to Section 15(b) of the Securities Exchange
Act of 1934 in In the Matter of Prudential Equity Group, LLC, Formerly Known As Prudential Securities Incorporated, issued on or near the date hereof (the “SEC Order”). 
 2. The provisions in the SEC Order relating to the payment, administration and distribution of the $270 million referred to in this section are
incorporated herein by reference, and such terms are agreed to as part of this Assurance by PEG. 
 3. PEG agrees that it shall not seek or
accept, directly or indirectly, reimbursement or indemnification, including, but not limited to, payment made pursuant to any insurance policy, with regard to any or all of the amount payable pursuant to this Assurance, provided that nothing in this
Assurance shall: (a) prevent PEG from bringing claims (including 

  

 -20- 

 
claims for indemnity and/or contribution) against persons or entities for injuries sustained by, or for amounts paid in disgorgement by, PEG as a result of
such persons’ or entities’ engagement or involvement in, agreement to permit or failure to prevent market timing; or (b) limit or impair the rights of persons other than PEG under any applicable insurance policy. 
 B. Incorporation of Undertakings in the SEC Order 
 As part of this Assurance, PEG agrees to the terms of and shall comply with the provisions of Section K, “Undertakings,” of the SEC Order, which section is incorporated herein by reference. 
 C. General Relief 
 1. PEG admits the
jurisdiction of the Attorney General. PEG will cease and desist from engaging in any acts in violation of the Martin Act, GBL § 349 and/or Executive Law § 63(12) and will comply with the Martin Act, GBL § 349 and Executive Law §
63(12). 
 2. Evidence of a violation of this Assurance by PEG shall constitute prima facie proof of violation of the Martin Act, GBL §
349 and Executive Law § 63(12) in any civil action or proceeding hereafter commenced by the Attorney General against PEG. 
 II. Other Provisions

 A. Scope Of This Assurance 
 1. This Assurance concludes the Investigation brought by the Attorney General and any action the Attorney General could commence against PEG arising from or relating to the subject matter of the Investigation; provided however, that nothing
contained in this Assurance shall be construed to cover claims of any type by any other state agency or any claims that may be brought by the Attorney General to enforce PEG’s obligations arising from or relating to the provisions contained in
this Assurance. 
  

 -21- 

 2. If PEG does not make the payment as provided in Section I.A. of this Assurance (i.e., pursuant
to the SEC Order), or PEG defaults on any obligation under this Assurance, the Attorney General may terminate this Assurance, at his sole discretion, upon 10 days’ written notice to PEG and PEG agrees that any statute of limitations or other
time related defenses applicable to the subject of the Investigation and any claims arising from or relating thereto are tolled from and after the date of execution of this Assurance. In the event of such termination, PEG expressly agrees and
acknowledges that this Assurance shall in no way bar or otherwise preclude the Attorney General from commencing, conducting or prosecuting any investigation, action or proceeding, however denominated, related to the Investigation, against PEG or
from using in any way any statements, documents or other materials produced or provided by PEG after commencement of the Investigation, including, without limitation, any statements, documents or other materials provided for purposes of settlement
negotiations. 
 3. Nothing herein shall preclude New York State, its departments, agencies, boards, commissions, authorities, political
subdivisions and corporations, other than the New York State Attorney General and only to the extent set forth in paragraph II.A.2 above (collectively, “State Entities”) and the officers, agents or employees of State Entities, from
asserting any claims, causes of action, or applications for compensatory, nominal and/or punitive damages, administrative, civil or criminal or injunctive relief against PEG arising from or relating to the subject of the Investigation. 

4. Except as provided in Section I.C.2., above, or in an action by the Attorney General to enforce the obligations of PEG in this Assurance, neither
this Assurance nor any acts performed or documents executed in furtherance of this Assurance: (a) may be deemed or used as an admission of, or evidence of, the validity of any alleged wrongdoing, liability or lack of 

  

 -22- 

 
wrongdoing or liability; or (b) may be deemed or used as an admission of or evidence of any such alleged fault or omission of PEG or any other
Prudential Financial entity in any civil, criminal or administrative proceeding in any court, administrative agency or other tribunal. This Assurance shall not confer any rights upon persons or entities who are not a party to this Assurance. This
Assurance also does not limit or prohibit any defenses of PEG or its current or former affiliates to claims asserted by a person or entity not a party hereto. Nothing herein shall be construed to prohibit the use of any e-mails or other documents of
PEG or of others. 
 5. This Assurance is not intended by the Attorney General to subject PEG or any of its affiliates to any
disqualifications under the laws of any state, the District of Columbia, Puerto Rico or territory (collectively, “State”), including, without limitation, any disqualifications from relying upon the State registration exemptions or State
safe harbor provisions. 
 6. The SEC Order, this Assurance and any order of any other State in a proceeding based upon the acts, practices
and procedures of PEG which are the subject of this Investigation (collectively, the “Settlement Documents”) shall not disqualify PEG or its affiliates from any business that they otherwise are qualified, licensed or permitted to perform
under the applicable laws of the State of New York and any disqualifications from relying upon this state’s registration exemptions or safe harbor provisions that arise from the Settlement Documents are hereby waived. 
 B. Cooperation 
 1. PEG and its current affiliates
have cooperated to date in the Investigation. If requested to do so by PEG, the Attorney General agrees to bring the cooperation of PEG and its current affiliates to the attention of any other governmental agencies or jurisdictions, provided that
PEG, its current affiliates, and its successors, assigns and/or purchasers of all or substantially all the assets of any of the foregoing (collectively, the “Prudential Entities”) continue to cooperate to the satisfaction of the Attorney
General. 
  

 -23- 

 2. The Prudential Entities shall cooperate fully and promptly with the Attorney General with regard to
any investigation, litigation or other proceeding initiated by the Attorney General or to which the Attorney General is a party, whether pending or subsequently initiated, relating to market timing or late trading. The Prudential Entities shall use
their best efforts to ensure that all the current and former officers, directors, trustees, agents and employees of the Prudential Entities also fully and promptly cooperate with the Attorney General. 
 3. Such cooperation shall include, without limitation: 
 (a) production, voluntarily and without service of subpoena, of all documents or other tangible evidence requested by the Attorney General and any compilations or summaries of information or data that the Attorney
General requests be prepared, with the exception of any information or documents with respect to which the Prudential Entities have a statutory or currently existing written contractual obligation of confidentiality to persons or entities who are
not parties to this Assurance (“Confidential Information”) and information or documents protected by the attorney-client and/or work product privileges to the extent to which such information or documents are not subject to the privilege
waiver provided for in subsection B.3. (e), below (“Privileged Information”); 
 (b) without the necessity of a subpoena, having
the current officers, directors, and employees of the Prudential Entities attend any Proceedings (as hereinafter defined) in New York State or elsewhere at which the presence of any such persons is requested by the Attorney General and having such
current officers, directors, and employees answer any and all inquiries that may be put by the Attorney General to any of them at any Proceedings or otherwise 

  

 -24- 

 
(“Proceedings” include, but are not limited to, any meetings, interviews, depositions, hearings, trials, grand jury proceedings or other
proceedings), except to the extent to which such inquiries call for the disclosure of Confidential Information or Privileged Information; 
 (c) the Prudential Entities using their best efforts to cause former officers, directors, trustees, agents and employees of the Prudential Entities and the then-current trustees and agents of the Prudential Entities to attend any
Proceedings in New York State or elsewhere at which the presence of any such persons is requested by the Attorney General and to answer any and all inquiries that may be put by the Attorney General to any of them at any Proceedings or otherwise,
except to the extent to which such inquiries call for the disclosure of Confidential Information or Privileged Information; 
 (d) fully,
fairly and truthfully disclosing all information and producing all records and other evidence in the possession, custody or control of the Prudential Entities relevant to all inquiries made by the Attorney General, except to the extent to which such
inquiries call for the disclosure of Confidential Information or Privileged Information; 
 (e) waiving, upon request by the Attorney
General, all privileges relating to any internal investigations concerning matters in the Investigation including, without limitation, production of all interview notes taken in connection with any internal investigations; and 
 (f) making the Prudential Entities’ outside counsel reasonably available to provide comprehensive presentations concerning any internal
investigation relating to all matters in this Assurance and to answer questions, except to the extent to which such presentations or questions call for the disclosure of Confidential Information or Privileged Information. 
  

 -25- 

 4. All communications relating to cooperation pursuant to this Assurance may be made to the Prudential
Entities’ attorneys as follows: Bingham & McCutchen LLP, Attention: Neal E. Sullivan, Esq., 2020 K Street, NW, Washington, DC 20006. 
 5. In the event that any of the Prudential Entities fails to comply with any provision of this Section II.B. of this Assurance, the Attorney General shall be entitled, in addition to any other remedies in this Assurance or otherwise, to
specific performance. 
 C. Miscellaneous Provisions 
 1. This Assurance and any dispute related thereto shall be governed by the laws of the State of New York without regard to any conflicts of laws principles. 
 2. No failure or delay by the Attorney General in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies provided herein shall be cumulative. 
 3. PEG consents to the jurisdiction of the Attorney General in any proceeding or action to enforce this Assurance. 
 4. PEG enters into this Assurance voluntarily and represents that no threats, offers, promises, or inducements of any kind have been made by the Attorney
General or any member, officer, employee, agent or representative of the Attorney General to induce PEG to enter into this Assurance. 
 5.
This Assurance may be changed, amended or modified only by a writing signed by all parties hereto. 
  

 -26- 

 6. This Assurance constitutes the entire agreement between the Attorney General and PEG and supersedes
any prior communication, understanding or agreement, whether written or oral, concerning the subject matter of this Assurance. 
 7. If any
provision of this Assurance is found to be unenforceable, such finding shall not affect the enforceability of the remaining provisions hereof. 
 8. This Assurance shall be binding upon PEG and its successors and assigns. 
 9. This Assurance shall be effective and binding only
when this Assurance is signed by all parties. This Assurance may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one instrument. 
  

 -27- 

 WHEREFORE, the following signatures are affixed hereto on the dates set forth below. 
  

							
	Dated: August 24, 2006	 		  	PRUDENTIAL EQUITY GROUP, LLC
				
		 		  	By:	  	 /s/ Kenneth Y. Tanji

		 		  		  	Kenneth Y. Tanji
		 		  		  	Senior Vice President
				
	Reviewed August 25, 2006, by:	 		  		  	
				
	 /s/ Neal E. Sullivan by S. Turvey
	 		  		  	
	Neal E. Sullivan	 		  		  	
	Bingham McCutchen LLP	 		  		  	
	Attorneys for Prudential Equity Group, LLC	 		  		  	
			
	Dated: August 25, 2006	 		  	ELIOT SPITZER
		 		  	Attorney General of the State of New York
				
		 		  	By:	  	 /s/ Gary R. Connor

		 		  		  	Gary R. Connor
		 		  		  	First Deputy Bureau Chief

  

 -28- 

 ACKNOWLEDGMENT 
  

			
	STATE OF NEW JERSEY)
	
	COUNTY OF ESSEX)

 On this 24th day of August, 2006, before me personally came Kenneth Y. Tanji, known to me, who, being duly sworn by me, did depose and say that he is
Senior Vice President of Prudential Equity Group, LLC, the entity described in the foregoing Assurance of Discontinuance, is duly authorized by Prudential Equity Group, LLC, to execute the same, and that he signed his name in my presence by
like authorization. 
  

	
	
	 /s/ Maryann Critchley

	Notary Public
	My commission expires: 2-17-2010

  

 -29-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00109-of-00352.parquet"}]]