Accretive, Llc

Event Detail: ONE COUNT OF INSIDER TRADING (FELONY) IN VIOLATION OF ARTICLE L-4651 OF THE FRENCH MONETARY AND FINANCIAL CODE. TRADING RELATED TO VIVENDI UNIVERSAL STOCK OPTIONS Status: Final Disposition: DISPOSITION ON SINGLE CHARGE OF INSIDER TRADING: (A) DISPOSITION TYPE: CONVICTED (B) DATE: JANUARY 21, 2011 (C) SENTENCE/PENALTY: A FINE OF 5 MILLION EUROS, REDUCED TO 2.5 MILLION EUROS ON APPEAL, AND A SUSPENDED SENTENCE OF 15 MONTHS, WHICH WAS REMOVED ON APPEAL (D) DURATION: SUSPENDED SENTENCE OF 15 MONTHS, WHICH WAS REMOVED ON APPEAL (E) START DATE OF PENALTY: A DEADLINE FOR PAYMENT OF THE PENALTY HAS NOT BEEN SET. (F) PENALTY/FINE AMOUNT: 5 MILLION EUROS, REDUCED TO 2.5 MILLION EUROS ON APPEAL. (G) DATE PAID: NOT YET PAID. SEE EXPLANATION IN SUB-SECTION (E) ABOVE. Summary: APPAC, A MINORITY SHAREHOLDER GROUP OF VIVENDI UNIVERSAL, INITIATED AN INQUIRY IN THE PARIS COURT OF APPEAL INTO VARIOUS ISSUES RELATING TO VIVENDI, INCLUDING VIVENDI'S FINANCIAL DISCLOSURES, THE APPROPRIATENESS OF EXECUTIVE COMPENSATION, AND TRADING IN VIVENDI STOCK BY CERTAIN INDIVIDUALS PREVIOUSLY ASSOCIATED WITH VIVENDI. THE INQUIRY HAS ENCOMPASSED CERTAIN TRADING BY MR. BRONFMAN IN VIVENDI STOCK. SEVERAL INDIVIDUALS, INCLUDING MR. BRONFMAN AND THE FORMER CEO, CFO AND COO OF VIVENDI, HAD BEEN GIVEN THE STATUS OF "MIS EN EXAMEN" IN CONNECTION WITH THE INQUIRY. ALTHOUGH THERE IS NO EQUIVALENT TO "MIS EN EXAMEN" IN THE U.S. SYSTEM OF JURISPRUDENCE, IT IS A PRELIMINARY STAGE OF PROCEEDINGS THAT DOES NOT ENTAIL ANY FILING OF CHARGES. IN JANUARY 2009, THE PARIS PUBLIC PROSECUTOR FORMALLY RECOMMENDED THAT NO CHARGES BE FILED AND THAT MR. BRONFMAN NOT BE REFERRED FOR TRIAL. ON OCTOBER 22, 2009, THE INVESTIGATING MAGISTRATE REJECTED THE PROSECUTOR'S RECOMMENDATION AND RELEASED AN ORDER REFERRING FOR TRIAL MR. BRONFMAN AND SIX OTHER INDIVIDUALS, INCLUDING THE FORMER CEO, CFO AND COO OF VIVENDI. WHILE THE INQUIRY ENCOMPASSED VARIOUS ISSUES, MR. BRONFMAN WAS REFERRED FOR TRIAL SOLELY WITH RESPECT TO CERTAIN TRADING IN VIVENDI STOCK. IN JUNE 2010, MR. BRONFMAN WAS PART OF A TRIAL IN THE TRIAL COURT IN PARIS AT WHICH THE PUBLIC PROSECUTOR AND THE LEAD CIVIL CLAIMANT BOTH TOOK THE POSITION THAT MR. BRONFMAN SHOULD BE ACQUITTED. ON JANUARY 21, 2011, THE COURT FOUND MR. BRONFMAN GUILTY OF THE CHARGE RELATING TO HIS TRADING IN VIVENDI STOCK, FOUND HIM NOT LIABLE TO THE CIVIL CLAIMANTS, AND IMPOSED A FINE OF 5 MILLION EUROS AND A SUSPENDED SENTENCE OF 15 MONTHS. MR. BRONFMAN APPEALED THE TRIAL COURT DECISION TO THE PARIS COURT OF APPEAL. IN NOVEMBER 2013, MR. BRONFMAN PARTICIPATED IN A RE-TRIAL BEFORE A NEW JUDICIAL PANEL AS PART OF HIS APPEAL OF THE PARIS TRIAL COURT'S 2011 RULING. IN MAY 2014, THE NEW JUDICIAL PANEL RENDERED ITS DECISION. THE NEW JUDICIAL PANEL AFFIRMED THE PARIS TRIAL COURT'S FINDING THAT MR. BRONFMAN WAS GUILTY OF THE CHARGE, BUT STATED THAT ITS FINDING WOULD APPEAR ONLY IN FRENCH JUDICIAL RECORDS AND NOT MR. BRONFMAN'S PUBLIC RECORD, REMOVED THE SUSPENDED SENTENCE IMPOSED BY THE PARIS TRIAL COURT AND SUSPENDED 2.5 MILLION EUROS OF THE ORIGINAL FINE OF 5 MILLION EUROS. THE NEW JUDICIAL PANEL AFFIRMED THE PARIS TRIAL COURT'S FINDING THAT MR. BRONFMAN WAS NOT LIABLE TO THE CIVIL CLAIMANTS. MR. BRONFMAN APPEALED THE VERDICT. ON APRIL 20, 2017, THE APPELLATE COURT REJECTED THE APPEAL. A REQUEST FOR PAYMENT OF THE PENALTY HAS BEEN ISSUED. MR. BRONFMAN BELIEVES THAT HIS TRADING IN VIVENDI STOCK WAS PROPER AND PURSUED A CHALLENGE TO THE APPELLATE COURT'S DECISION BEFORE THE EUROPEAN COURT OF HUMAN RIGHTS. THE EUROPEAN COURT OF HUMAN RIGHTS DECLINED TO HEAR THE CHALLENGE.

Allegations: SEE RESPONSE TO QUESTION 3 ABOVE. Status: Final Summary: AS NOTED ABOVE, NUMEROUS CIVIL CLAIMANTS ASSERTED CLAIMS FOR DAMAGES IN CONNECTION WITH AN INQUIRY INTO VARIOUS ISSUES RELATING TO VIVENDI UNIVERSAL. IN JUNE 2010, A TRIAL WAS HELD IN THE TRIAL COURT IN PARIS ON BOTH THE CRIMINAL CHARGES (REFERENCED IN THE CRIMINAL DISCLOSURE REPORTING PAGE FILED HEREWITH) AND THE CIVIL CLAIMS (REFERENCED ABOVE). AT THE TRIAL, THE PUBLIC PROSECUTOR AND THE LEAD CIVIL CLAIMANT BOTH TOOK THE POSITION THAT MR. BRONFMAN SHOULD BE ACQUITTED. WITH RESPECT TO THE CIVIL CLAIMS, ON JANUARY 21, 2011, MR. BRONFMAN WAS FOUND NOT LIABLE TO THE CIVIL CLAIMANTS. ON JANUARY 28, 2011, SEVERAL CIVIL CLAIMANTS FILED A GENERAL APPEAL OF THE JUDGMENT AS TO ALL DEFENDANTS. UNDER FRENCH LAW, THE GENERAL APPEAL ENCOMPASSED THE CIVIL JUDGMENT IN MR. BRONFMAN'S FAVOR. IN NOVEMBER 2013, MR. BRONFMAN PARTICIPATED IN A RE-TRIAL BEFORE A NEW JUDICIAL PANEL AS PART OF HIS APPEAL OF THE PARIS TRIAL COURT'S JANUARY 2011 DECISION. IN MAY 2014, THE NEW JUDICIAL PANEL RENDERED ITS DECISION AND AFFIRMED THE PARIS TRIAL COURT'S FINDING THAT MR. BRONFMAN WAS NOT LIABLE TO THE CIVIL CLAIMANTS.

Allegations: PLAINTIFFS CHALLENGED THE NEUTRALITY OF CONSUMER ARBITRATIONS CONDUCTED BY THE NATIONAL ARBITRATION FORUM (NAF), A COMPANY PROVIDING ARBITRATION SERVICES SIMILAR TO THOSE OFFERED BY AAA. PLAINTIFFS FURTHER ALLEGED THAT ACCRETIVE, LLC'S INVESTMENT IN COMPANIES THAT PROVIDED BACK OFFICE ADMINISTRATIVE AND PROCESSING SERVICES TO THE NAF AND MANN BRACKEN, LLP (MANN BRACKEN), A DEBT COLLECTION LAW FIRM, CREATED A CONFLICT OF INTEREST, DEPRIVING CONSUMERS OF A NEUTRAL ARBITRATION FORUM. THE PLAINTIFFS ASSERTED AGAINST THE DEFENDANTS (NAF, MANN BRACKEN, AXIANT, LLC (AXIANT), DISPUTE MANAGEMENT SERVICES, LLC (D/B/A FORTHRIGHT), ACCRETIVE, LLC AND CERTAIN FUNDS) VIOLATIONS OF THE FEDERAL RICO ACT, THE FEDERAL ARBITRATION ACT, THE MINNESOTA PREVENTION OF CONSUMER FRAUD ACT, UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION LAWS OF ALL FIFTY STATES AND THAT THE DEFENDANTS' ACTS OR OMISSIONS CONSTITUTED TORTIOUS INTERFERENCE WITH CONTRACT, FRAUD AND NEGLIGENCE UNDER THE LAWS OF ALL FIFTY STATES, AMONG OTHER CLAIMS. Status: Final Summary: CERTAIN FUNDS UNDER THE MANAGEMENT OF ACCRETIVE, LLC, MADE TWO INVESTMENTS IN AXIANT, LLC ("AXIANT") AND DISPUTE MANAGEMENT SERVICES (D/B/A FORTHRIGHT), WHICH INVESTMENTS WERE MADE IN 2006 AND 2007, RESPECTIVELY. AXIANT AND FORTHRIGHT WERE COMPANIES THAT PROVIDED BACK OFFICE ADMINISTRATIVE AND PROCESSING SERVICES TO THEIR CUSTOMERS. AXIANT PROVIDED SERVICES TO MANN BRACKEN, A DEBT COLLECTION LAW FIRM THAT CEASED OPERATIONS IN LATE 2009 FOLLOWING AXIANT'S 2009 BANKRUPTCY FILING, AND FORTHRIGHT PROVIDED (AND CONTINUES TO PROVIDE) SERVICES TO THE NATIONAL ARBITRATION FORUM ("NAF"). IN 2009, A SIGNIFICANT MAJORITY OF THE NAF'S BUSINESS WAS COMPRISED OF CONSUMER ARBITRATIONS INCLUDING THE ARBITRATION OF CONSUMER CREDIT CARD DEBT. IN JULY 2009, THE MINNESOTA ATTORNEY GENERAL FILED A COMPLAINT AGAINST THE NAF AND FORTHRIGHT ALLEGING CONSUMER FRAUD, DECEPTIVE TRADE PRACTICES AND FALSE ADVERTISING (THE "MINNESOTA AG SUIT") UNDER MINNESOTA LAW. THE CIVIL SUIT WAS FILED IN THE MINNESOTA STATE DISTRICT COURT IN MINNEAPOLIS. NAF AND FORTHRIGHT ENTERED INTO A CONSENT DECREE WITH THE MINNESOTA ATTORNEY GENERAL ON JULY 17, 2009, SETTLING THE MINNESOTA AG SUIT. UNDER THE TERMS OF THE CONSENT DECREE, THE NAF AGREED TO EXIT THE CONSUMER ARBITRATION BUSINESS BUT WAS PERMITTED TO CONTINUE TO CONDUCT ARBITRATIONS FOR NON-CONSUMER RELATED DISPUTES (E.G., INTERNET DOMAIN DISPUTES). NONE OF ACCRETIVE, LLC, FUNDS UNDER ITS MANAGEMENT OR ACCRETIVE SUPERVISED PERSONS WERE NAMED IN OR PARTY TO THE MINNESOTA AG SUIT. FOLLOWING THE MINNESOTA AG SUIT, THERE WERE A NUMBER OF CLASS ACTION LAWSUITS FILED AGAINST THE NAF, FORTHRIGHT, AXIANT, MANN BRACKEN, ACCRETIVE, LLC, AND CERTAIN RELATED PERSONS OF ACCRETIVE, LLC, AND, IN SOME CASES, THE DIRECTORS (AND OFFICERS) AND FORMER DIRECTORS (AND OFFICERS) OF THOSE ENTITIES (INCLUDING MR. CLINE IN HIS CAPACITY AS A DIRECTOR). THE CLASS ACTION LAWSUITS WERE CONSOLIDATED IN FEBRUARY 2010 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MINNESOTA PURSUANT TO AN ORDER OF THE MULTI-DISTRICT LITIGATION PANEL UNDER THE CAPTION AND CASE NUMBER: IN RE: NATIONAL ARBITRATION FORUM TRADE PRACTICES LITIGATION, CIVIL NO. 10-MD-02122 (PAM/JSM) (A NUMBER OF THE CASES HAD PREVIOUSLY BEEN CONSOLIDATED IN A CASE CAPTIONED IN RE: NATIONAL ARBITRATION FORUM LITIGATION, CIVIL NO. 09-1939 (PAM/JSM) (COLLECTIVELY, THE "MULTI-DISTRICT LITIGATION")). THE MULTI-DISTRICT LITIGATION INVOLVED CLAIMS THAT THE ORGANIZATIONAL AND OWNERSHIP STRUCTURE OF THE DEFENDANTS PERPETUATED AN ARBITRATION PROCESS THAT WAS BIASED AGAINST CONSUMERS IN FAVOR OF CREDITORS. THE MULTI-DISTRICT LITIGATION SETTLED IN 2011 THROUGH MEDIATION WITH NO ADMISSION OF WRONGDOING ON THE PART OF ANY OF THE DEFENDANTS. AS PART OF THE SETTLEMENT, ACCRETIVE, LLC AND CERTAIN RELATED PERSONS UNDER COMMON CONTROL AGREED TO REFRAIN FROM INVESTING IN ANY CONSUMER ARBITRATION BUSINESSES FOR A PERIOD OF TEN YEARS COMMENCING ON AUGUST 8, 2011, THE DATE OF THE FINAL DISTRICT COURT ORDER APPROVING THE SETTLEMENT TERMS OF THE MULTI-DISTRICT LITIGATION. BOTH AXIANT AND MANN BRACKEN CEASED OPERATIONS IN 2009 DUE TO A DECREASE IN BUSINESS FOLLOWING THE MINNESOTA AG SUIT AND THE CONCURRENT DOWNTURN IN THE U.S. ECONOMY. AXIANT FILED FOR BANKRUPTCY IN NOVEMBER 2009 AND MANN BRACKEN ENTERED INTO A RECEIVERSHIP PROCEEDING UNDER MARYLAND STATE LAW. THEREAFTER, THE COURT-APPOINTED TRUSTEE OF THE AXIANT BANKRUPTCY ESTATE AND THE COURT-APPOINTED RECEIVER FOR THE MANN BRACKEN RECEIVERSHIP ESTATE COMMENCED SEPARATE LAWSUITS AGAINST (I) CERTAIN ACCRETIVE-MANAGED FUNDS AND INVESTMENT VEHICLES AND (II) AGAINST FORMER OFFICERS AND DIRECTORS OF AXIANT, INCLUDING MR. CLINE IN HIS CAPACITY AS A DIRECTOR. THOSE MATTERS HAVE SINCE BEEN SETTLED AND DISMISSED WITH PREJUDICE WITHOUT ADMISSION OF GUILT OR WRONGDOING BY ACCRETIVE OR FUNDS UNDER ITS MANAGEMENT; THE RELIEF IN THESE SETTLEMENTS WAS LIMITED TO MONEY DAMAGES.