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William T.

P.O. Box
City, State - zip
December 16, 2008

Dear Mr. Levitt:

Thank you for mentioning that you read my emails. You are correct; I’m not the Bill George
who was once the CEO of Medtronics. If I can trust my sister’s genealogy work, that Bill
George and I are not even distantly related.

The part of my background that is relevant to the part of my writing you have seen is 30 plus
years in the investment consulting and soft dollar brokerage industry. In the early 1970’s I
was a “retail” stockbroker. In early 1976 I left the brokerage business (voluntarily). Part of
the reason I left retail brokerage was the changed economics of retail brokerage caused by
the mandate for fully-negotiated commissions (May Day 1975). Later, in the early 1980’s I
joined SEI Financial Services Corporation. My responsibilities at SEI were the sales of
sophisticated investment research and portfolio analytic services to SEI’s institutional
investment advisor clients (trust companies, bank trust departments, and mutual funds).
SEI had its own fully-disclosed agency brokerage division. My institutional clients paid for
the research services I sold using fully-disclosed soft dollar brokerage arrangements. In the
mid-1980’s I moved to Wilshire Associates’ Institutional Sales Group where I sold Wilshire’s
investment research and portfolio analytics to the same kinds of institutional advisors to
which I sold services while working for SEI. (Wilshire also had its own agency soft dollar
brokerage division). Wilshire’s Institutional Sales Group was disbanded, as a consequence
of the paucity of institutional trading, shortly after the Crash of 1987.

After leaving Wilshire I began working for third party brokers who, at that time, had no
proprietary research offerings. I worked as an institutional broker and sold third party
research services (in sequence) for Hoenig & Company, Fidelity Capital Markets and Lynch
Jones & Ryan (LJR). I was always proud of the fact that the institutional investment
research I sold was competitively priced, fully-disclosed and unbiased. I have been a long
term believer in the principles expressed by The Alliance in Support of Independent

I was working in the institutional services sales group at Lynch, Jones & Ryan during the
last half of The Sweep Inspections and at the time of the September 1998 release of the
OCIE’s Inspection Report on the Soft Dollar Practices of Broker-Dealers, Investment
Advisers and Mutual Funds. Shortly after the release of the OCIE’s Inspection Report LJR’s
institutional sales group was disbanded in preparation for the sale of LJR to Instinet. The
sale of LJR was, in large part, a result of LJRs’ principals’ frustration that the Inspection
Report did not mandate the unbundling and disclosure of full-service brokerage firms’ soft
dollars and research services. LJRs principals recognized that this signaled a continuation
of the “un-level” competitive playing field when comparing the regulatory attention focused
on third party brokerage and independently produced research, (when compared) to the
seeming lack of attention on full-service institutional brokers’ bundled undisclosed services.

Reply to Arthur Levitt - 12/16/08 Page 1 of 2

Congress’ original intent for Section 28(e) of The Securities Exchange Act of 1934. Mr. my primary goal is to highlight what I believe was the U. FL. 2000 and in your Remarks Before The 2000 Meeting of the Securities Industry Association . mutual fund late trading the post “May Day” environment of fully-negotiated brokerage commissions.Boca Raton. the foregoing paragraphs undoubtedly provide more information on my background than you.* * Abuses like: mutual fund shelf space arrangements. A. or probably anybody else.S. Mr. and your November institutional clients’ fiduciary advisors . I believe the best examples of your message in this series of speeches are found in your November 3. Levitt. Sommer Lectureship at Fordham Law School. To your credit.So. arrangements. Another of my goals is to direct attention to the long term disparity between the intense regulatory focus on soft dollars generated in fully-disclosed third party brokerage arrangements and used to acquire independently produced research. Reply to Arthur Levitt . voluntary violations of Reg. I believe the true intent of Section 28(e) was to facilitate the limited use of institutional clients’ brokerage commissions . Additionally. allocation of IPOs and the opportunity to ‘flip’ allocated IPOs before lock-ups terminate. I believe institutional clients would benefit from conservation of capital and higher compound investment returns if the uses of their commission dollars were subject to better oversight and are more carefully managed. in my writing I attempt to focus attention and stress that it’s very difficult if not impossible for regulators. it seems your speeches may have been a catalyst or perhaps on-going motivation for New York State Attorney General Eliot Spitzer’s investigations of the conflicts of interest and the quid pro quos shared between the institutional advisors and full service brokers. in a series of speeches you delivered toward the end of your tenure as Chairman of the SEC. Retrospectively. paid-up in excess of the fully-negotiated costs of brokerage execution. trustees and clients to monitor the uses of institutional clients’ brokerage commissions. New York. FD by investment banking / brokerage firms. versus the seeming lack of historic regulatory attention to full service brokers’ bundled undisclosed institutional soft dollar brokerage arrangements. really cares to know. without the identification.12/16/08 Page 2 of 2 . 2000 speech titled. lavish entertainment in exchange for trading relationships. Spitzer’s investigations contributed significantly to the SEC’s Global Research Analyst Settlement. and still are. personal loans. and other consideration. the motivation for many institutional investment abuses. As for the goals of the writing you’ve seen. and etc. As you know. It seems obvious that the bundled undisclosed exchange of institutional clients’ brokerage commissions paid-up in excess of the fully-negotiated costs of execution have been. I believe you gave the institutional investment industry “a shot across the bow” which should have been adequate warning. pricing and disclosure of the services provided over-and-above the fully negotiated costs of transaction execution. Costs Paid With Other People’s Money remarks before the A. corporate executives awarding 401K management contracts to brokerage affiliated asset management firms in exchange for investment banking.