K&LNGAlert. Mortgage Banking/Consumer Finance Commentary. NYAG Settlement Focuses on Both Fair Lending and Fairness in Lending

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1 K&LNGAlert DECEMBER 2006 Mortgage Banking/Consumer Finance Commentary NYAG Settlement Focuses on Both Fair Lending and Fairness in Lending On November 22, 2006, Countrywide Home Loans, Inc. ( Countrywide ) voluntarily resolved an investigation by the Attorney General of the State of New York ( Attorney General ) addressing the issue of whether its loan pricing policies and practices discriminate on the basis of race and/or national origin in violation of the New York Human Rights Law and the federal Fair Housing Act. Begun as a review for possible price discrimination, the ultimate settlement incorporated other consumer protection issues, particularly those arising from increased scrutiny of alternative loan products, and intertwined these issues with possible claims of unlawful discrimination. The settlement defers largely to Countrywide's continued refinement of an already sophisticated fair lending analytical program, confirms the significance of consumer education, and establishes procedures to ensure that loan applicants are properly informed of the advantages and disadvantages of various loan programs. The settlement is a harbinger of issues likely to be raised in the future by both federal and state enforcement officials, and, while not imposing great burdens on Countrywide, may raise difficulties for lenders that lack the resources and compliance techniques of a Countrywide. I. BACKGROUND AND CONSIDERATIONS LEADING TO SETTLEMENT Countrywide was one of several targets of the Attorney General's well-publicized focus on loan pricing information reported under the Home Mortgage Disclosure Act (HMDA), for the first time, for the 2004 calendar year. 1 A number of other targeted lenders asserted that the Attorney General did not have jurisdiction over them due to federal preemption. Countrywide, which did not have a claim for preemption, decided to cooperate with the Attorney General by submitting 2004 loan origination data and fully explaining its compliance monitoring system. Countrywide was represented by Kirkpatrick & Lockhart Nicholson Graham LLP. Although the inquiry was initiated because of the perceived disparities revealed by the rate-spread loans reported under HMDA, the Attorney General analyzed data regarding all of the 2004 loans, not merely those reported as rate-spread loans. He retained an economist to conduct a regression analysis of the loan data. 2 The purpose of the regression was to determine whether, after controlling for credit and transaction characteristics, the differences in average prices paid by minority borrowers as compared to similarly situated white borrowers were statistically significant. The Attorney General's press release accompanying the settlement reveals his conclusion that legitimate factors, such as credit scores or outstanding debts... explained much of the disparity but he contended that on average black and Latino borrowers still paid more than whites for their mortgage loans. The Attorney General expressed the view that the remaining differences in price were caused by racial and ethnic differences in the discretionary components of pricing, principally Pricing Exceptions [i.e., departures from the rate sheet pricing for a loan] in the retail sector and Broker Compensation in the wholesale sector.

2 The Attorney General also considered issues, such as product placement issues, that might not arise from a regression analysis. It is significant to note that the settlement contains no contention that any identified borrower did not make an informed decision in selecting an Alt A product, or that any identified borrower who received a non-prime loan was qualified for a prime product. Yet, in the settlement, Countrywide agreed to conduct additional analysis and inquiry to ensure that borrowers were properly informed and properly placed in loan products for which they qualified. The Attorney General commended Countrywide for its full cooperation with his inquiry, and the settlement notes that Countrywide has long had fair lending compliance protocols, policies and procedures in place. Countrywide fully explained its sophisticated and advanced methodologies for fair lending compliance, including its own use of multiple regression analysis to analyze loan pricing and its monitoring of both retail and wholesale lending to ensure compliance. Countrywide previously had monitored product placement to help ensure that borrowers would not receive a non-prime product if they qualified for a prime product. Perhaps this background caused the Attorney General to describe Countrywide as the type of lender willing to go the extra mile in their efforts to ensure that minorities do not pay higher prices for mortgages than similarly-situated non-minorities. In sum, the investigation led to a conclusion that the Office of the Attorney General and Countrywide share the common goal of assuring that all individuals who apply to Countrywide for mortgage loans receive equal treatment regardless of their race or ethnicity. The settlement terms largely defer to Countrywide's continued implementation of its fair lending compliance program, although an outside consultant will be responsible for confirming that the program is reasonable. Certain issues the Attorney General raised will be analyzed more carefully by Countrywide and corrective action will be taken, and monetary relief provided, in the event that borrowers are identified who received an improper loan placement. Perhaps most importantly, the settlement recognizes the importance of consumer education in achieving the joint objective of Countrywide and the Attorney General. II. SUMMARY OF KEY SETTLEMENT TERMS A. Consumer Education Program The centerpiece of the settlement is a consumer education program ( Program ) that enhances Countrywide's existing consumer education efforts. The Program will provide New York consumers with instruction on the home buying and mortgage loan application process through consumer education seminars and telephone counseling. The topics to be covered in the Program will include the role a person's credit plays in the loan application process, the different types of loan products available (e.g., fixed, ARM, reduced documentation and nontraditional mortgage products), the fact that interest rates and fees are often negotiable, the role of mortgage brokers and how they are compensated, the negotiability of price exceptions, the importance of comparison shopping, and guidance on how to obtain the most affordable and appropriate loan product. Countrywide agreed to invest $3 million over three years in the development, implementation and advertisement of the Program. The sole purpose of the Program is to educate consumers in order that they may be better prepared to obtain an advantageous mortgage from a lender of their choice. Countrywide will not market its own products in the Program, but can identify itself as the Program sponsor and respond to attendees' inquiries for contact information for the company. B. Enhanced Monitoring In the settlement agreement, The [Attorney General] acknowledges that Countrywide currently has a series of existing models, methodologies, and analyses for examining whether racial and/or ethnic disparities exist in Pricing Exceptions and Broker Compensation. Countrywide will continue to enhance its existing fair lending monitoring procedures in connection with New York loans. Countrywide will engage an independent consultant to provide advice on and approve the statistical and other models, methodologies, and analyses that Countrywide will utilize in measuring performance. The consultant will not actually conduct the analyses, nor 2

3 will it dictate the precise methodologies to be used by Countrywide. Rather, the consultant will be responsible for certifying to the Attorney General that the models, methodologies and analyses adopted by Countrywide to comply with the agreement are reasonable, and periodically ensuring that Countrywide is conducting the regression and other required analyses in accordance with the approved specifications. The settlement recognizes that the monitoring will be conducted separately for each of Countrywide's four operating divisions, and will not, for example, compare loans made in its retail prime division to loans made in its wholesale division. The enhanced monitoring will address the following topics: 1. Retail Pricing Exceptions: At least twice a year, Countrywide will perform a regression analysis to determine whether there are material disparities in the pricing exceptions (i.e., a departure from the rate sheet pricing for a loan) granted to its black and Hispanic customers as compared to its similarly situated non-hispanic white customers. The agreement does not define the term material ; instead, Countrywide and the consultant must establish what constitutes a material disparity for each of the analyses to be performed. This is noteworthy in that the agreement does not establish a bright line test identifying when a disparity is large enough to warrant remedial action. Countrywide also will analyze whether its retail branches or loan officers with significant black or Hispanic customer bases have materially higher overages or lower underages than other retail branches or loan officers in the same MSA with a predominantly non-hispanic white customer base. This second analysis is designed to identify any individual branches or loan officers that do not have price disparities between their white and minority borrowers - typically because they have very few white borrowers to serve as comparators - but whose overall prices are materially higher than other branches or loan officers within the same market. The settlement provides that Countrywide will take corrective action if and when its analyses reveal material disparities for black or Hispanic customers. The corrective action taken will be determined by Countrywide depending on, among other matters, the size, scope and persistence of the disparity in question. Specific corrective actions will include counseling, retraining, enhanced scrutiny of loan originations, limiting or eliminating price exception discretion and termination of employment. The agreement requires additional action in connection with disparities in excess of 65 basis points. If Countrywide identifies any retail branch or loan officer with a price exception disparity in excess of 65 basis points for black or Hispanic customers, the company will perform a pre-closing review on each of the loan officer's or branch's future loans to black or Hispanic customers to ensure that any proposed pricing exception to such customers appears reasonable. Countrywide shall continue such reviews for so long as the applicable price exception disparity remains 65 basis points or higher. (This 65 basis point review should not be interpreted as a new compliance benchmark below which remedial action is not required. Rather, it is a disparity threshold that the Attorney General and Countrywide believe is so high that it warrants additional remedial action.) 2. Broker Compensation Countrywide will perform similar analyses on broker compensation in its wholesale divisions. In particular, at least twice a year, Countrywide will perform regression analyses to determine whether there are material disparities in broker compensation paid by black or Hispanic customers on a statewide basis and for any particular broker that delivers a sufficient volume of loans to Countrywide to permit analysis. Countrywide also will analyze whether its brokers with significant black or Hispanic customer bases have materially higher broker compensation than other brokers in the same MSA with a predominantly non-hispanic white customer base. Under the settlement, Countrywide will take appropriate corrective action if and when its broker compensation analyses reveal material disparities for black or Hispanic customers. The corrective 3

4 action taken will depend on, among other matters, the size, scope and persistence of the disparity in question. Specific corrective actions will include counseling, fair lending training, enhanced scrutiny of the broker's loans, reducing broker compensation caps and severing the broker relationship. Countrywide will take additional action if it identifies any broker with a broker fee disparity in excess of 65 basis points for black or Hispanic customers. In such cases, unless the broker can show that the disparity was not caused by discriminatory factors or that it has already taken steps to address the problem, Countrywide will reduce the broker's compensation cap by 20 percent. If the disparity continues to exceed 65 basis points in the next review period, Countrywide will terminate its relationship with the broker. 3. Underwriting Exceptions The settlement agreement does not contain an allegation by the Attorney General that there were unexplained racial or ethnic disparities in the underwriting exceptions that Countrywide granted to its borrowers. Countrywide agreed, however, to develop and implement procedures to track and monitor underwriting exceptions to ensure that they are granted in a non-discriminatory manner. Countrywide will analyze its underwriting exceptions at least annually to determine if there are material disparities in how they are granted. If its analysis reveals any such disparity, Countrywide will take action - such as employee counseling and training - to correct the problem on a going forward basis. 4. Product Placement and Reduced Documentation Disclosure Countrywide offers prime, non-prime, and Alt A loan products. Non-prime products typically are directed to borrowers of lower credit quality, while borrowers may choose Alt A products for a variety of reasons. In many cases, for example, borrowers with prime credit may be unable to document their income or assets as required under prime, full documentation underwriting requirements. Such borrowers often can still qualify for financing under a reduced documentation program, but typically will pay more than they would if they provided full documentation. Countrywide agreed to develop and perform analyses at least annually to determine whether black and Hispanic borrowers with prime credit receive subprime or Alt A loan products disproportionately as compared to similarly situated non-hispanic white borrowers. If Countrywide's product placement analyses reveal material disparities for black or Hispanic borrowers as compared to similarly situated white borrowers that are not caused by underwriting criteria or informed borrower choice, Countrywide will take corrective action, such as retraining and counseling. Countrywide also agreed to provide enhanced disclosures in connection with this issue (see Section II.C, below). 5. APR Analyses Most fair lending experts agree that mortgage loan pricing analyses should focus on the discretionary components of a loan's price - typically overages/underages for retail loans and broker fees for wholesale loans - because fees that can vary on a loan-by-loan basis in the discretion of an individual are most susceptible to potential disparities. Government agencies have begun to focus on APR, however, because the price component reported under HMDA - rate spread - is derived from APR. 3 Countrywide agreed to review its New York loans at least annually to determine whether there are material disparities in the APRs paid by black and Hispanic borrowers as compared to similarly situated non-hispanic white borrowers. If such APR analyses reveal material disparities, Countrywide will seek to determine the cause of the disparities - e.g., discretionary pricing, underwriting exceptions, product placement. If these practices do not explain the APR disparities, Countrywide will take additional steps to identify the cause and take appropriate remedial steps. 4

5 6. Anonymous Audits Countrywide also agreed to conduct anonymous audits (often referred to as mystery shopping ) on selected branches and loan officers to compare, among other items, products offered, prices quoted and information provided to similarly situated non-hispanic white borrowers, and black and Hispanic borrowers. C. Disclosure Requirements Countrywide agreed to take steps to ensure that its retail loan officers inform their New York customers of the best product options and to provide full documentation loan product quotes to applicants who received reduced documentation product quotes. Countrywide also agreed to provide a Reduced Documentation Product Disclosure Statement to its New York loan applicants who apply for a reduced documentation loan product. Additionally, Countrywide agreed to advise its brokers that before they seek Countrywide's approval on a reduced documentation loan application for a New York customer, they should make similar disclosures and product quotes available to the customer. If Countrywide identifies any instance where these undertakings have been violated resulting in the origination of a reduced documentation product that was not in the customer's best interests, Countrywide will compensate the borrower. D. Loan File Review Countrywide agreed to conduct a match pair review of retail New York loans made in The purpose of the review is to identify instances in which a black or Hispanic customer received a subprime or Alt A loan when a similarly situated white non-hispanic borrower received a prime loan. If a loan file review does not explain the difference in product placement, Countrywide will compensate the borrower for the difference in the cost of the loan he/she received and the lower priced loan he/she should have received. In some cases, the file review will reveal that the borrowers did not receive a prime loan because they chose to provide less than full documentation of their assets and/or income. In such cases, the borrowers will not be entitled to compensation unless they demonstrate that they could have qualified for a full documentation loan. If the borrower is able to do so, Countrywide will compensate the borrower for the difference in the cost of the loan he/she received and the loan he/she could have received if he/she had provided full documentation. E. Other Provisions The settlement also includes provisions regarding enhanced fair lending training, fair lending complaint processing and reporting, recordkeeping and compliance reporting to the Attorney General. The settlement agreement will expire three years and three months following its effective date. III. SIGNIFICANCE TO THE INDUSTRY The amendments to Regulation C, which required the reporting of certain information regarding loan pricing beginning with the 2004 calendar year, allowed regulators and enforcement officials, as well as private advocacy groups, their first opportunity to evaluate the distribution of higher-priced loans to persons of different races and ethnicities. Since the data became publicly available in the spring of 2005, the lending industry has feared an onslaught of litigation. The onslaught has not occurred. But, for almost two years, the federal financial regulatory agencies, the Department of Justice, HUD, the FTC and state attorneys general have focused inquiries on individual lenders to determine whether claims of unlawful conduct could be established based on the HMDA or other loan pricing data. The New York Attorney General's settlement with Countrywide is the first product of those inquiries. That fact, by itself, makes the settlement significant. One conclusion that rings loud from the settlement is the HMDA data is not very meaningful in determining whether a lender is discriminating in loan pricing. Rather, a complex analysis of a lender's pricing policies and the implementation of those policies is necessary to reach conclusions. Even then, firm conclusions are difficult to reach. 5

6 For example, the Attorney General's sophisticated, and likely expensive, regression analysis of all 2004 loan data - not merely the rate-spread loans - caused him to conclude that some of the variance in loan pricing between white and minorities could not be explained by the nondiscriminatory factors considered, but he did not identify any specific victim of unlawful conduct. Rather, the settlement allows Countrywide, with the assistance of a new consultant, to continue to evaluate the issues and look for appropriate solutions. Also, during the two-year period of review, fair lending pricing issues have become more complex and the legal analysis, as revealed by the New York settlement, now seems to merge concepts of discrimination with those of consumer protection, thus morphing fair lending into fairness in lending. For example, the numerous loan products on the market today make it even more difficult to determine whether loan prices are based on impermissible factors such as race or national origin, or permissible factors such as consumer choice. The settlement agreement reveals the Attorney General's view that a defense of consumer choice may be meaningful only if the consumer was fairly informed of the advantages and disadvantages of certain loan products. The provisions of the settlement addressing informed consumer choice invoke typical consumer protection concepts. A consumer protection violation might arise if a consumer of any race or national origin was deceived into purchasing a more expensive loan product, for example, by a loan officer who emphasized the apparent advantages of the more expensive product but failed to describe the disadvantages. This claim may switch to one of discrimination with an allegation that such practices are applied to minorities but not to whites. These new concepts may present difficult compliance challenges for lenders, particularly those who have made expanded efforts to remove barriers to minority homeownership. For example, a recent academic paper presented to HUD identified underwriting guidelines that constituted potential barriers to Hispanic homeownership, including citizenship requirements, sparse credit histories, and the requirements to document income and assets. See, Review of Selected Underwriting Guidelines to Identify Potential Barriers to Hispanic Homeownership, presented to HUD by Abt Associates Inc., March One would expect that a program designed to remove the identified barriers would be of particular benefit to Hispanics, and that Hispanics would therefore constitute a proportion of the borrower pool that exceeds their proportion of the lender's overall borrower pool. One would also expect that such a program, although presenting many layers of risk to a lender, would be viewed as a positive fair lending program. The New York settlement instructs, however, that the very imbalance of Hispanic borrowers in the program may raise a concern of possible discrimination, and lenders may be required to establish that Hispanics were not improperly steered to such products instead of less expensive, but more onerous, standard products. Further complicating the matter is the fact that loan files seldom answer the concerns like those presented in New York. A lender may assume that a borrower seeking a stated income loan was making an informed decision and believed it was to her advantage; a suspicious enforcement agency may contend that she certainly would have documented her income if she were aware that a lower price loan was possible. Loan files likely will not answer the questions. Certain Countrywide borrowers will be given an opportunity to answer these questions. In the longer term, the public policy question is whether lenders will be required to maintain better records demonstrating informed consumer choice to fend off such challenges. The settlement as a whole does not impose significant burdens on Countrywide. The consumer education program is expensive but is a consumer friendly action to take. Some individual borrowers may be entitled to compensation, but the process to be followed may not result in many persons actually receiving compensation. While enhancements will be made, Countrywide's overall fair lending compliance program received a stamp of approval from the settlement terms. This does not suggest that the Attorney General was soft on Countrywide, but rather that Countrywide already has a sophisticated methodology for addressing the issues, as well as the commitment to continue to seek solutions. The Attorney General's objectives were achieved by keeping the compliance burden in Countrywide's hands. 6

7 The difficulty for the industry may be that Countrywide has set the compliance bar very high. It might be argued that the settlement merely reflects how Countrywide previously had chosen to address compliance. But Countrywide's compliance program is now embodied in a legally enforceable document, and may be viewed as being imposed by the Attorney General to avert claims of unlawful conduct. If the settlement is interpreted to mean that other lenders must mirror the Countrywide program, the challenge will be daunting for those companies that do not have the resources or technical expertise to match the Countrywide program. At the same time, all lenders can obtain guidance from the settlement even if they cannot mirror Countrywide's program. Discretionary pricing can be limited and monitored to ensure that the discretion is not exercised in a manner that results in higher pricing correlated with race or national origin. In particular, pricing in the retail channel should be carefully addressed since many regulators are not interested in hearing that a lender cannot control the loan pricing of its own employees. Also, the settlement confirms the importance accorded by at least one regulator on seeking to exert some controls on the pricing of loans originated through brokers. If one concedes that lenders have some responsibility to monitor broker pricing, the settlement terms have at least some elements that are beneficial to the industry. For example, the settlement confirms that wholesale pricing should be analyzed separately from retail pricing. Even more importantly, the terms of the settlement do not preclude Countrywide from controlling for broker in conducting its regression analysis of broker pricing. It is not uncommon for brokers to serve borrowers of a particular race or national origin, and a vexing problem that has troubled lenders is how to deal with disparities that are caused by such brokers charging uniform prices to their customers, but prices that differ, although not materially, from one broker to another within the same MSA. By not precluding Countrywide from controlling for broker, the Attorney General seems to recognize that Countrywide is not responsible for such disparities. Countrywide will, however, be required to examine whether brokers serving minority borrowers of Countrywide are charging materially higher prices (a term not yet defined) than brokers serving white borrowers in the same MSA, and take corrective action against such high-price brokers. An interesting question is whether other enforcement officials and regulators will follow this approach. At the same time, Countrywide agreed to monitor broker pricing and take remedial action if it appears that brokers are discriminating on the basis of race or national origin. This program was already largely in place at Countrywide and certainly is a positive fair lending effort, but it may present a significant new challenge to other industry members. The goal of avoiding business with brokers who discriminate certainly is noble, but it may be difficult to identify those who actually discriminate. For example, the loans presented to Countrywide by a particular broker may reveal pricing disparities correlated with race or national origin, but represent only a small portion of the loans presented to other lenders by the broker. The overall portfolio of the broker may reveal no pricing disparities correlated with race or national origin. Secondary market purchasers of loans struggle with similar issues in attempting to implement fair lending compliance programs; they receive only a portion of a lender's loans and thus have difficulty in determining the meaning of statistics revealing possible racial or ethnic disparities. Finally, the settlement terms may be read as addressing issues such as suitability that have been hotly debated between industry representatives and consumer advocates. The requirement that Countrywide loan officers inform customers of the best mortgage loan product options, including with respect to price, for which they qualify and that meet their expressed needs and preferences may be read as approaching the suitability issue. It is significant, however, that the requirement is to provide a product that meets the borrower's expressed needs and preferences. Thus, the borrower, not Countrywide, has primary responsibility for determining what is suitable for him or her. Also, this provision of the settlement should not be interpreted as limiting discretionary pricing. The price component refers to product. The settlement terms do suggest, however, that a customer who is fully able to document income should not be pushed toward a more expensive state-income product merely to make the work of the loan officer easier. 7

8 It is reasonable to expect that, in the future, other enforcement officials will raise similar claims, based either on consumer protection standards or laws prohibiting discrimination on the basis of race or national origin. IV. CONCLUSION It often is difficult to ascribe meaning to settlement agreements since they do not flow from an established legal violation, but rather represent a negotiated agreement between the parties. At the same time, fair lending compliance has generally been guided by settlement agreements reached with government agencies, since few enforcement matters proceed to litigation. The New York settlement offers new guidance that should be evaluated carefully, but with a recognition that Countrywide's compliance plan may not have to be fully copied by other lenders. The concerns raised by the Attorney General may well arise again in other enforcement contexts. If you have any questions about the settlement, please call Melanie Brody, Paul Hancock or any other member of K&LNG's mortgage banking/consumer finance group. ENDNOTES 1 Pursuant to amendments to HMDA s implementing regulation, in early 2005, residential mortgage lenders for the first time publicly reported information about the prices borrowers paid on their loans. In particular, for those loans on which the APR exceeded the yield on comparable Treasury securities, lenders reported the amount by which the APR on loan exceeded the benchmark Treasury yield (these loans are referred to as rate spread reportable loans and the amount reported is referred to as the rate spread ). HMDA has long required lenders to collect and report other information about certain residential mortgage loan applications, including the disposition on the application, the location of the subject property and the race/ethnicity of the loan applicant(s). This has enabled regulators and other interested parties to identify whether, among other matters, lenders are disproportionately declining minority borrowers loan applications as compared to white borrowers applications. This new reporting obligation enabled government agencies and others to analyze whether minority class borrowers appear to be paying more for loans than white borrowers. The utility of the HMDA data is extremely limited, however, because it does not take into account many of the differences in borrower credit and transaction characteristics that affect the price charged on any given loan. Thus, HMDA data can be used as a screening tool to identify lenders with potential pricing disparities, but is not sufficient to fully analyze whether apparent differences in prices paid by one group of borrowers as compared to another are due to differences in the groups respective credit and transaction characteristics, or are potentially evidence of discrimination. 2 If a difference is statistically significant at the 95% confidence level (the confidence level generally accepted by courts), then there is a 95% probability that the difference is not attributable to random chance. 3 Some would argue that APR analyses are a waste of time and resources, because they require sophisticated and expensive modeling and any disparities that are unexplained by neutral factors such as credit grade, LTV, property characteristics, etc., often are caused by the discretionary components of the overall price. Thus, a lender that goes to the time and expense to analyze APR disparities often will ultimately wind up focusing on discretionary prices. 8

9 MORTGAGE BANKING/CONSUMER FINANCE PRACTICE Kirkpatrick & Lockhart Nicholson Graham LLP has approximately 1,000 lawyers who practice in offices located in Boston, Dallas, Harrisburg, London, Los Angeles, Miami, Newark, New York, Palo Alto, Pittsburgh, San Francisco, and Washington. K&LNG represents entrepreneurs, growth and middle market companies, capital markets participants, and leading FORTUNE 100 and FTSE 100 global corporations, nationally and internationally. For more information, please visit our website at or contact one of the lawyers listed below. ATTORNEYS Laurence E. Platt Phillip L. Schulman Costas A. Avrakotos Melanie Hibbs Brody Steven M. Kaplan Jonathan Jaffe H. John Steele R. Bruce Allensworth Irene C. Freidel Nanci L. Weissgold Paul F. Hancock Phillip John Kardis II Stephen E. Moore Stanley V. Ragalevsky Rebecca H. Laird Ira L. Tannenbaum David L. Beam Emily J. Booth Krista Cooley Eric J. Edwardson Suzanne F. Garwood David Keith Gaston Anthony C. Green Laura A. Johnson Kris D. Kully Drew A. Malakoff David G. McDonough, Jr Erin Murphy Lorna M. Neill Stephanie C. Robinson Kerri M. Smith Holly M. Spencer Erin E. Troy Staci P. Newman Elwood F. Collins Steve H. Epstein Nadya N. Fitisenko Brian M. Forbes Thomas J. Poletti Thomas C. Russler DIRECTOR OF LICENSING Stacey L. Riggin REGULATORY COMPLIANCE ANALYSTS Dana L. Lopez Nancy J. Butler Marguerite T. Frampton Jeffrey Prost Allison A. Rosenthal Brenda R. Kittrell Joann Kim Teresa Diaz Robin L. Dinneen BOSTON DALLAS HARRISBURG LONDON LOS ANGELES MIAMI NEWARK NEW YORK PALO ALTO PITTSBURGH SAN FRANCISCO WASHINGTON Kirkpatrick & Lockhart Nicholson Graham (K&LNG) has approximately 1,000 lawyers and represents entrepreneurs, growth and middle market companies, capital markets participants, and leading FORTUNE 100 and FTSE 100 global corporations nationally and internationally. K&LNG is a combination of two limited liability partnerships, each named Kirkpatrick & Lockhart Nicholson Graham LLP, one qualified in Delaware, U.S.A. and practicing from offices in Boston, Dallas, Harrisburg, Los Angeles, Miami, Newark, New York, Palo Alto, Pittsburgh, San Francisco and Washington and one incorporated in England practicing from the London office. This publication/newsletter is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer. Data Protection Act 1988 We may contact you from time to time with information on Kirkpatrick & Lockhart Nicholson Graham LLP seminars and with our regular newsletters, which may be of interest to you. We will not provide your details to any third parties. Please london@klng.com if you would prefer not to receive this information KIRKPATRICK & LOCKHART NICHOLSON GRAHAM LLP. ALL RIGHTS RESERVED.