<SEC-DOCUMENT>0000950123-11-077236.txt : 20120217
<SEC-HEADER>0000950123-11-077236.hdr.sgml : 20120217
<ACCEPTANCE-DATETIME>20110815092758
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000950123-11-077236
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20110815

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			OPPENHEIMER HOLDINGS INC
		CENTRAL INDEX KEY:			0000791963
		STANDARD INDUSTRIAL CLASSIFICATION:	SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211]
		IRS NUMBER:				980080034
		STATE OF INCORPORATION:			A6
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		SUITE 1110, P.O. BOX 2015
		STREET 2:		20 EGLINTON AVE. WEST
		CITY:			TORONTO
		STATE:			A6
		ZIP:			M4R 1K8
		BUSINESS PHONE:		(416)322-1515

	MAIL ADDRESS:	
		STREET 1:		PO BOX 2015 SUITE 1110
		STREET 2:		20 EGLINTON AVENUE WEST
		CITY:			TORONTO
		STATE:			A6
		ZIP:			M4R 1K8

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FAHNESTOCK VINER HOLDINGS INC
		DATE OF NAME CHANGE:	19950725

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	VINER E A HOLDINGS LTD
		DATE OF NAME CHANGE:	19880622

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	GOLDALE INVESTMENTS LTD
		DATE OF NAME CHANGE:	19861030
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<HTML>
<HEAD>
<TITLE>corresp</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">August&nbsp;15, 2011
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">United States Securities and Exchange Commission<BR>
Division of Corporation Finance<BR>
100 F Street, N.E.<BR>
Washington D.C. 20549<BR>
Attention: Kevin Woody, Accounting Branch Chief

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Re:</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Oppenheimer Holdings Inc.</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Form&nbsp;10-K</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>Filed March&nbsp;2, 2011</B></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><B>File No.&nbsp;001-12043</B></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Dear Sirs:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Oppenheimer Holdings Inc. (the &#147;Company&#148;) is in receipt of a comment letter from the United States
Securities and Exchange Commission (the &#147;Commission&#148; or the &#147;SEC&#148;) dated August&nbsp;4, 2011. The
Company&#146;s responses follow the numbered points in the comment letter.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>Form&nbsp;10-K for the year ended December&nbsp;31, 2010</I></U><BR>
<U><I>Item&nbsp;8. Financial Statements and Supplementary Data</I></U><BR>
<U><I>Notes to Consolidated Financial Statements</I></U><BR>
<U><I>1. Summary of Significant accounting policies</I></U><BR>
<U><I>Basis of Presentation, page 75</I></U>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>1. We note your disclosure that you adjusted for certain over-accruals in compensation and related
expenses relating to prior periods during 2010. We further note that you have determined that the
&#147;out-of-period adjustments&#148; were not material to any prior period. Please provide us with your
materiality analysis related to these adjustments.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As a result of the over-accruals in compensation and related expenses, the Company performed an
analysis in accordance with SEC Staff Accounting Bulletin No.&nbsp;99 &#151; <I>Materiality </I>and SEC Staff
Accounting Bulletin No.&nbsp;108 &#151; <I>Quantifying Misstatements</I>. A copy of the analysis dated March&nbsp;30,
2010 is included as Appendix&nbsp;A.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>Balance Sheet Items</I></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>2. Securities purchased under agreements to resell and securities sold under agreements to
repurchase, page 80</I>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Please provide us with the following information related to securities financing
transactions which have been accounted for as sales:</I>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Quantify the amount of repurchase agreements qualifying for sales accounting at each
quarterly balance sheet date for each of the past three years.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The below table quantifies the amount of repurchase agreements that qualify for sale accounting
each quarter since the Company began its government trading operations. Amounts represent
&#147;repo-to-maturity&#148; transactions that qualify for sale accounting under ASC Topic 860, <I>Transfers and
Servicing</I>. See ensuing responses below for additional information around the Company&#146;s government
trading desk and &#147;repo-to-maturity&#148; transactions.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000"><I>(in thousands)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Notional</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Amount</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">800,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,150,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,450,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,400,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,250,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Quantify the average quarterly balance of repurchase agreements qualifying for
sales accounting for each of the past three years.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The below table quantifies the average quarterly balances of repurchase agreements that qualify for
sale accounting since the Company began its government trading operations. Average amounts
represent &#147;repo-to-maturity&#148; (&#147;RTM&#148;) transactions that qualify for sale accounting under ASC Topic
860, <I>Transfers and Servicing</I>. See ensuing responses below for additional information around the
Company&#146;s government trading desk and &#147;repo-to-maturity&#148; transactions.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000"><I>(in thousands)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Average RTM</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Balance</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">408,172</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">970,622</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,022,927</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,468,173</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,298,961</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Describe </I><U><I>all</I></U><I> the differences in transaction terms that result in certain
of your repurchase agreements qualifying as sales versus collateralized financings.</I></TD>
</TR>

</TABLE>
</DIV>
<P align="right" style="font-size: 10pt"><!-- Folio -->2<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company transacts in only one type of transaction that is treated as a sale versus
collateralized financing. As disclosed in Note 1 &#147;Summary of Significant Accounting Policies&#148;
under the subheading &#147;Securities Purchased Under Agreements to Resell and Securities Sold Under
Agreements to Repurchase&#148; in the Company&#146;s Annual Report on Form 10-K for the year ended December
31, 2010 (the &#147;December&nbsp;31, 2010 Form&nbsp;10-K&#148;), the Company enters into securities financing
transactions (e.g., repurchase agreement) that mature on the same date as the underlying
collateral. These transactions are often referred to &#147;repo-to-maturity&#148; transactions as the
termination date on the repurchase agreement used to finance the underlying collateral is the same
as the maturity date of the underlying collateral. The Company accounts for these transactions in
accordance with the accounting guidance in ASC Topic 860, <I>Transfers and Servicing</I>. Such
transactions are treated as a sale of financial assets and a forward repurchase commitment.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Provide a detailed analysis supporting your use of sales accounting for your repurchase
agreements.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In June&nbsp;2009, the Company significantly expanded its government trading operations and began
financing those operations through the use of repurchase agreements and reverse repurchase
agreements. Prior to June&nbsp;2009, the Company had not used repurchase agreements for almost a
decade. During the fourth quarter of 2009, the Company entered into its first &#147;repo-to-maturity&#148;
transaction. At that time, the Company performed a detailed analysis of how to account for
&#147;repo-to-maturity&#148; transactions which is detailed in the Repo-to-Maturity section of its October
15, 2010 Government Trading Accounting Policy memo an excerpt of which is as follows:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Repo-to-Maturity</B></U></TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the fourth quarter of 2009, the Company entered a repo transaction with a
counterparty and used the Company&#146;s bonds as collateral. The repo will not be
settled until the bonds mature and this type of transaction is commonly known as a
&#147;Repo-to-Maturity&#148;.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Repos-to-Maturity are considered to meet the following three sales criteria under
Accounting Standards Codification (&#147;ASC&#148;) Topic 860-10-40-5, formally known as
Statement of Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;140, paragraph 9.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">i.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The transferred assets must be legally isolated from the
transferor. Paragraph&nbsp;201 of SFAS 140 states that repos typically are
documented as sales with forward purchase contracts and generally are
treated as <U>sales</U> in bankruptcy law and receivers&#146; procedures.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">ii.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The transferee has the right to pledge or exchange the
assets it received, and no condition both constrains the transferee from
taking advantage of this right and provides more than a trivial benefit
to the transferor. In</TD>
</TR>

</TABLE>
</DIV>

<P align="right" style="font-size: 10pt"><!-- Folio -->3<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>this transaction, the Company cannot constrain the repo counterparty from
pledging or exchanging the assets it received.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">iii.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The transferor does not retain effective control over the
transferred assets. Examples of a transferor&#146;s effective control over
the transferred financial assets include, but are not limited to:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an agreement that both entitles and obligates the
transferor to repurchase and redeem them before maturity;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an agreement that provides the transferor with both
unilateral ability to cause the holder to return specific assets</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">In this transaction, there is no agreement in place to obligate the Company to
repurchase the assets <U>before</U> maturity and the Company does not have
the <U>unilateral</U> ability to cause the holder to return the transferred
assets.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">Also, in practice, repos to maturity always have been treated as sales.
Paragraph&nbsp;202 of SFAS No.&nbsp;140 states the following:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">&#147;Previous accounting practice generally has treated repos as secured
borrowings, although &#147;Repos-to-Maturity&#148; and certain other longer term repos
have been treated as sales&#148;.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">Based on the above analysis, the Repos-to-Maturity meet the sales criteria in ASC
Topic 860-10-40-5 SFAS 140 and, as a result, the Company should account for the
repos as a sale of financial assets and a forward repurchase commitments in
accordance with ASC Topic 860-10-55-55 (SFAS 140, paragraph 98).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">The Company should account the transaction in accordance with ASC Topic
860-10-25-1 (SFAS 140, paragraph 11).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">Upon completion of a transfer of assets, the transferor shall:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Derecognize all assets sold, in this transaction; it will be
the bonds the Company sold to its repo counterparty.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Recognize all assets obtained and liabilities incurred in
consideration as proceeds of the sale at fair value. The Company receives cash in this transaction.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Recognize in earnings any gain or loss on the sale.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 8%">ASC Topic 860-10-25-2 (Footnote (3)&nbsp;of the paragraph 11 of SFAS 140) also
states that although a transfer of securities may not be considered to have
reached completion until the settlement date, SFAS 140 does not modify other
generally accepted accounting principles, and audit and accounting Guides for
certain industries. Since the Company follows the AICPA Broker Dealer Audit
Guide, we can consider the completion of sale on trade date.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The forward purchase commitment that results from &#147;repo-to-maturity&#148; transactions is disclosed
in Note 4 <I>Financial Instruments </I>in the &#147;Fair Value of Derivative Instruments&#148; table for both
December&nbsp;31, 2010 and December&nbsp;31, 2009 on pages 92 and 93 of the December&nbsp;31, 2010 Form 10-K. See
item 2 to the table &#147;Fair Value of Derivative Instruments&#148; which reads &#147;Forward commitment to
repurchase government securities that received sale treatment related to &#147;Repo-to-Maturity&#148;
transactions.&#148;
</DIV>





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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Describe the business reasons for structuring the repurchase agreements as sales
transactions versus collateralized financings. To the extent the amounts accounted for as
sales transactions have varied over the past three years, discuss the reasons for
quarterly changes in the amounts qualifying for sales accounting.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The business reason for entering into a &#147;repo-to-maturity&#148; transaction is that it is a low risk
trade in which the financing profit on the underlying collateral is known with certainty to the
maturity date of the underlying collateral. The table below represents the &#147;repo-to-maturity&#148;
balances at each quarter end since the Company began entering into repurchase agreements.
Variances in the first several quarters represent a ramping up of the business in its early stages
while the later periods&#146; activity is reflective of current transaction activity coupled with the
expiration of existing contracts.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000"><I>(in thousands)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Notional</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Amount</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="5" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">800,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,150,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,450,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,400,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,250,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Describe how your use of sales accounting for certain of your repurchase
agreements impacts any ratios or metrics you use publicly, provide to analysts and credit
rating agencies, disclose in your filings with the SEC, or provide to other regulatory
agencies.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company is not covered by any equities research analysts nor does it provide any ratio
information in the form of non-GAAP disclosures in any of its filings with the SEC. The Company
does, however, provide Gross Leverage (Total Assets divided by Stockholders&#146; Equity) information to
credit rating agencies. Sale accounting as it relates to &#147;repos-to-maturity&#148; (&#147;RTM&#148;) has the
following impact on the Gross Leverage Ratio:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000"><I>(in thousands)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Gross Leverage Ratio</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Including</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Excluding</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left"><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RTM&#146;s</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RTM&#146;s</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR style="font-size: 1px">
    <TD colspan="9" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4Q-10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.9</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Tell us whether the repurchase agreements qualifying for sales accounting are
concentrated with certain counterparties and/or concentrated within certain</I></TD>
</TR>

</TABLE>
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><I>countries.</I></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>If you have any such concentrations, please discuss the reasons for them.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As indicated above, the Company&#146;s repurchase agreements that qualify for sales accounting are
limited to &#147;repo-to-maturity&#148; transactions. All &#147;repo-to-maturity&#148; transactions are entered into
with the Fixed Income Clearing Corporation (formerly known as the Government Securities Clearing
Corporation) as counterparty.
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Tell us whether you have changed your original accounting on any repurchase agreements
during the last three years. If you have, explain specifically how you determined the
original accounting as either a sales transaction or as a collateralized financing
transaction noting the specific facts and circumstances leading to this determination.
Describe the factors, events or changes which resulted in your changing your accounting
and describe how the change impacted your financial statements.</I></TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">As indicated above, the Company began entering into repurchase agreement transactions after it
expanded its government trading operations in June&nbsp;2009. From June&nbsp;2009, the Company accounted for
its repurchase agreements and reverse repurchase agreements at contract value plus accrued interest
as is required under the AICPA Audit &#038; Accounting Guide for Brokers and Dealers in Securities. As
the government trading desk expanded its operations, it began trading in longer dated positions
which required the use of repurchase agreements (or reverse repurchase agreements) with longer
termination dates (sometimes referred to as &#147;term repos&#148;). Due to the volatility of the term repos
and the potential mismatch between marking the long (or short) position to market versus recording
the repurchase agreement (or reverse repurchase agreement) at contract value plus accrued interest,
the Company decided to make a one-time irrevocable fair value option election under ASC Topic 825
for repurchase agreements or reverse repurchase agreements that do not settle overnight or have an
open settlement date or that are not accounted for as purchase and sale agreements (i.e.,
&#147;repo-to-maturity&#148; transactions). See the following paragraph for an excerpt of &#147;Fair Value
Option&#148; section of the Company&#146;s October&nbsp;15, 2010 Government Trading Desk Accounting Policy memo
for a detailed analysis of the fair value option election. Note that this election did not impact
the treatment of repurchase agreements as either sales transactions or collateralized financing
transactions.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%"><U><B>Fair Value Option</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">The Company currently accounts for its repos/reverse repos at contract plus
accrued interest as is required under the AICPA Broker Dealer Guide. Generally,
it makes sense to account for overnight and other shorter-term repos/reverse repos
on an accrual basis since the carrying value for such agreements generally
approximates fair value. However, repos and reverse repos that have embedded
derivatives and/or have longer maturity periods generally have greater volatility.
To mitigate the volatility, some companies elect to adopt an <U>irrevocable
</U>fair value option for certain types of repos and reverse repos in accordance
with ASC
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">Topic 825 (formerly SFAS No.&nbsp;159, &#147;The Fair Value Option for Financial Assets and
Financial Liabilities&#148;).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">Occasionally, the Company will enter into term repos and reverse repos which have
longer-terms than overnight repos and reverse repos. Due to the volatility of the
longer-term repos/reverse repos and the potential mismatch between marking the
long (or short) position versus recording the repo (or reverse repo) at contract
value plus accrued interest, the Company has decided to elect fair value option
for repo and reverse repo that do not settle overnight or have an open settlement
date or that are not accounted for as purchase and sale agreements (such as
repo-to-maturity transactions). The Company considers the following in order to
make the election:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>ASC Topic 825-10-25-7 (Paragraph&nbsp;12 of SFAS No.&nbsp;159) states
that the fair value option may be elected for a single eligible item
without electing it for other identical items with the four exceptions
outlined in this paragraph. The four exceptions do not apply to repos
and reverse repos with a maturity greater than one month. Thus, the
Company can elect for fair value option for such repo/reverse repo
without electing the entire repo/reverse repo portfolio.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Entity can elect fair value option for eligible item
existing at effective date or conditions that outlined in ASC Topic
825-10-25-4 (Paragraph&nbsp;9 of SFAS No.&nbsp;159). ASC Topic 825-10-25-4 (a)
(Paragraph&nbsp;9(a) of SFAS No.&nbsp;159) allows entity to elect the fair value
option for an eligible item when the entity first recognizes the eligible
item. The Company began trading in repos and reverse repos in the 2Q-09
and has subsequently expanded the scope of its repo and reverse repo
trading activities later in the 3Q-09 and into the 4Q-09. Repos and
reverse repos traded are usually short-term in nature done through
overnight repos and reverse repose. Late in the 3Q-09 and into the
4Q-09, the trading volume in longer term repos/reverse repo (for example,
repos-to-maturity) has increased. Per discussion with PwC, the Company
can elect fair value option for a single eligible item and the Company
can elect fair value option for repos/reverse repos with a maturity date
of more than one month going forward. The Company will elect fair value
option for repos/reverse repos that do not settle overnight or have an
open settlement date or that are not accounted for as purchase and sale
agreements starting January&nbsp;1, 2010.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company is required to disclose the following
information in accordance with ASC Topic 825-10-50-25 (Paragraph&nbsp;18 of
SFAS No.&nbsp;159):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">i.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Management&#146;s reasons for electing a fair value
option for repos/reverse repos which have maturity more than one
month.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">ii.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Since the Company did not elect the entire
repos/reverse repos portfolio, the Company needs to include a
description of those similar items and the reasons for partial
election.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="12%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">iii.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Company should include all the disclosure
requirements under ASC Topic 820 (formally known as SFAS 157, &#147;Fair
Value Measurements and Disclosures&#148;).</TD>
</TR>

</TABLE>
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>4. Financial Instruments</I></U><BR>
<U><I>Other, page 85</I></U>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>3. We note that the company purchased approximately $36.7&nbsp;million in auction rate
securities during the year pursuant to settlement agreements with regulators. Please tell
us how the purchase price of the securities was determined. In your response, explain to
us how the purchase price compares to the fair value of the securities as of December&nbsp;31, 2010.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The purchase price of the $36.7&nbsp;million in auction rate securities (&#147;ARS&#148;) was at par value (i.e.,
$36.7&nbsp;million) as stipulated in the settlement agreements with the regulators. This compares to a
fair value of $35.3&nbsp;million for the purchased ARS as of December&nbsp;31, 2010. Accordingly, the
Company had recorded a valuation adjustment of $1.4&nbsp;million related to the ARS securities purchased
pursuant to the settlement agreements with regulators.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><U><I>13. Commitments and Contingencies, page 113</I></U>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>4. We note that you have disclosed several litigation matters beginning on page 29 of your
document. For each item, explain to us whether there is a reasonable possibility that a loss has
been incurred and whether a loss or range of loss can be estimated. In addition, explain to us how
you have met all of the disclosure requirements of ASC Topics 450-20-50-3 through 450-20-50-5
related to outstanding litigation.</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company accrues for estimated loss contingencies related to legal and regulatory matters when
available information indicates that it is probable a liability had been incurred at the date of
the financial statements and the Company can reasonably estimate the amount of that loss. In many
proceedings, however, it is inherently difficult to determine whether any loss is probable or even
possible or to estimate the amount of any loss. In addition, even where loss is possible or an
exposure to loss exists in excess of the liability already accrued with respect to a previously
recognized loss contingency, it is often not possible to reasonably estimate the size of the
possible loss or range of loss or additional losses or range of additional losses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For certain legal and regulatory proceedings, the Company can estimate possible losses, or, range
of loss in excess of amounts accrued, but does not believe, based on current knowledge and after
consultation with counsel, that such losses, individually or in the aggregate, will have a material
adverse effect on the Company&#146;s financial statements as a whole.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For certain other legal and regulatory proceedings, the Company cannot reasonably estimate such
losses, particularly for proceedings that are in their early stages of development or where
plaintiffs seek substantial, indeterminate, or special damages. When assessing loss contingencies
at any given reporting interval, numerous issues may
</DIV>




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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">need to be reviewed, analyzed, or resolved, including through potentially lengthy discovery, review
by and consultation with industry experts and determination of important factual matters, and by
addressing novel or unsettled legal questions relevant to the proceedings in question, which may be
in a preliminary stage, before a loss or additional loss or range of loss or additional loss can be
reasonably estimated for any proceeding. Even after lengthy review and analysis, the Company, in
many legal and regulatory proceedings, may not be able to reasonably estimate possible losses or
range of losses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Disclosures related to auction rate securities litigation matters in 2010 Form&nbsp;10-K &#151; Cases 1&#038;2</I></B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>On April&nbsp;11, 2008, Oppenheimer (and a number of its affiliates) was named as
a defendant in a proposed class action complaint captioned </B><B><I>Bette M. Grossman v.
Oppenheimer &#038; Co. Inc. et. al </I></B><B>in the United States District Court for the Southern
District of New York. The complaint alleges, among other things, that Oppenheimer
violated </B><B>Section 10(b)</B><B> of the Securities Exchange Act of 1934 (as well as other
provisions of the Federal securities laws) by making material misstatements and
omissions and engaging in deceptive activities in the offer and sale of ARS.
Oppenheimer filed an answer to the complaint denying the allegations. Oppenheimer
believes it has meritorious defenses to the claims raised in the lawsuit. On
February&nbsp;20, 2009, this action was consolidated with the </B><B><I>Vining </I></B><B>action described
below.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>On May&nbsp;12, 2008, Oppenheimer (and a number of its affiliates) was named as a
defendant in a proposed class action complaint captioned </B><B><I>David T. Vining v.
Oppenheimer &#038; Co. Inc. et. al. </I></B><B>in the United States District Court for the
Southern District of New York. The complaint alleges, among other things, that
Oppenheimer violated </B><B>Section 10(b)</B><B> of the Securities Exchange Act of 1934 (as well
as other provisions of the Federal securities laws) by making material
misstatements and omissions and engaging in deceptive activities in the offer and
sale of ARS. Oppenheimer filed an answer to the complaint denying the allegations.
Oppenheimer believes it has meritorious defenses to the claims raised in the
lawsuit. On February&nbsp;20, 2009, the </B><B><I>Grossman </I></B><B>action discussed above was
consolidated with this action. The complaint requests relief in the form of
compensatory damages in an amount to be proven at trial as well as costs and
expenses. On September&nbsp;10, 2009, Oppenheimer (and a number of its affiliates)
filed a motion to dismiss this consolidated action. On September&nbsp;27, 2010,
Oppenheimer&#146;s motion to dismiss was granted without prejudice. Plaintiff filed an
appeal of this dismissal with the United States Circuit Court for the Second
Circuit on October&nbsp;28, 2010. On or about January&nbsp;26, 2011, Plaintiff and
Oppenheimer stipulated to a dismissal of the appeal with prejudice.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Cases 1&#038;2 Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During its year end analysis, the Company concluded that there was not a reasonable possibility
that a loss had been incurred as the plaintiffs agreed to a dismissal with prejudice of the
consolidated Grossman/Vining matters in January&nbsp;2011. Therefore, there were no disclosure
requirements under ASC Topic 450.
</DIV>



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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Disclosures related to auction rate securities litigation matters in 2010 Form&nbsp;10-K &#151; Cases 3&#038;4</I></B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>On November&nbsp;18, 2008, the Massachusetts Securities Division (the &#147;MSD&#148;) filed
an Administrative Complaint (the &#147;Complaint&#148;) against Oppenheimer &#038; Co. Inc. and
certain individuals alleging violations of the Massachusetts General Law, the
Massachusetts Uniform Securities Act and regulations thereunder with respect to
the sale by Oppenheimer of ARS to its clients. The Complaint alleged, inter alia,
that Oppenheimer improperly misrepresented the nature of ARS and the overall
stability and health of the ARS market. All respondents filed an answer to the
Complaint denying that the allegations in the Compliant had any basis in fact or
law.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>As previously disclosed, Oppenheimer entered into a Consent Order (the &#147;Order&#148;)
pursuant to the Massachusetts Uniform Securities Act on February&nbsp;26, 2010 settling
the pending administrative proceeding against the respondents related to
Oppenheimer&#146;s sales of ARS to retail and other investors in the Commonwealth of
Massachusetts. Oppenheimer agreed to pay, and has paid, the external costs
incurred by the MSD related to the investigation and the administrative proceeding
in the amount of $250,000.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>As previously disclosed, on February&nbsp;23, 2010, the New York Attorney General
(&#147;NYAG&#148;) accepted Oppenheimer&#146;s offer of settlement and entered an Assurance of
Discontinuance (&#147;AOD&#148;) pursuant to New York State Executive Law Section&nbsp;63(15) in
connection with Oppenheimer&#146;s marketing and sale of ARS. Oppenheimer did not
admit or deny any of the findings or allegations contained in the AOD and no fine
was imposed.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>Pursuant to the terms of the Order, Oppenheimer commenced several offers to
purchase Eligible ARS (as defined in the Order) from Customer Accounts (as defined
in the Order) during 2010. Pursuant to the Order, the Company made an initial
offer to purchase ARS from Massachusetts customers on May&nbsp;21, 2010 which closed on
August&nbsp;4, 2010. Pursuant to the Order, on August&nbsp;19, 2010, Oppenheimer commenced a
second offer to purchase Eligible ARS from Massachusetts customers which closed on
October&nbsp;6, 2010. In addition, pursuant to the terms of the AOD, the Company made
an initial offer to purchase ARS from Eligible Investors on May&nbsp;21, 2010 which
closed on August&nbsp;4, 2010. Pursuant to the AOD, on December&nbsp;3, 2010, Oppenheimer
commenced an additional offer to purchase Eligible ARS from Eligible Investors
which closed on February&nbsp;16, 2011. Accounts were, and will continue to be,
aggregated on a &#147;household&#148; basis for purposes of these offers. As at December&nbsp;31,
2010, the Company had purchased approximately $36.7&nbsp;million of ARS from its
clients pursuant to these offers. The Company&#146;s purchases of ARS from clients will
continue on a periodic basis pursuant to the settlements with the Regulators. On
February&nbsp;15, 2011, Oppenheimer commenced a third offer to purchase additional
Eligible ARS from all eligible Massachusetts Customer Accounts. Starting on or
about March&nbsp;15, 2011 or such time as Oppenheimer receives approval from the NYAG,
and continuing every six months thereafter until Oppenheimer has extended a
purchase offer to all Eligible Investors, Oppenheimer will offer to purchase
Eligible ARS from Eligible Investors</B>
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>who did not receive an initial purchase offer, as excess funds become available to
Oppenheimer after giving effect to the financial and regulatory capital
constraints applicable to Oppenheimer. Such offers will remain open for a period
of seventy-five days from the date on which each such offer to purchase is sent.
The Company expects to purchase at least an additional $9.6&nbsp;million of ARS from
its clients by May&nbsp;2011. The ultimate amount of ARS to be repurchased by the
Company cannot be predicted with any certainty and will be impacted by redemptions
by issuers and client actions during the period, which also cannot be predicted.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>In addition, Oppenheimer has agreed to work with issuers and other interested
parties, including regulatory and other authorities and industry participants, to
provide liquidity solutions for other Massachusetts clients not covered by the
offers to purchase. In that regard, on May&nbsp;21, 2010, Oppenheimer offered such
clients a margin loan against marginable collateral with respect to such account
holders&#146; holdings of Eligible ARS. As of December&nbsp;31, 2010, Oppenheimer had
extended margin loans to five holders of Eligible ARS from Massachusetts.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>Further, Oppenheimer has agreed to (1)&nbsp;no later than 75&nbsp;days after Oppenheimer has
completed extending a purchase offer to all Eligible Investors (as defined in the
AOD), use its best efforts to identify any Eligible Investors who purchased
Eligible ARS (as defined in the AOD) and subsequently sold those securities below
par between February&nbsp;13, 2008 and February&nbsp;23, 2010 and pay the investor the
difference between par and the price at which the Eligible Investor sold the
Eligible ARS, plus reasonable interest thereon (the &#147;ARS Losses&#148;); (2)&nbsp;no later
than 75&nbsp;days after Oppenheimer has completed extending a Purchase Offer to all
Eligible Investors, use its best efforts to identify Eligible Investors who took
out loans from Oppenheimer after February&nbsp;13, 2008 that were secured by Eligible
ARS that were not successfully auctioning at the time the loan was taken out from
Oppenheimer and who paid interest associated with the ARS-based portion of those
loans in excess of the total interest and dividends received on the Eligible ARS
during the duration of the loan (the &#147;Loan Cost Excess&#148;) and reimburse such
investors for the Loan Cost Excess plus reasonable interest thereon; (3)&nbsp;upon
providing liquidity to all Eligible Investors, participate in a special
arbitration process for the exclusive purpose of arbitrating any Eligible
Investor&#146;s claim for consequential damages against Oppenheimer related to the
investor&#146;s inability to sell Eligible ARS; and (4)&nbsp;work with issuers and other
interested parties, including regulatory and governmental entities, to
expeditiously provide liquidity solutions for institutional investors not within
the definition of Small Businesses and Institutions (as defined in the AOD) that
held ARS in Oppenheimer brokerage accounts on February&nbsp;13, 2008. Oppenheimer
believes that because items (1)&nbsp;through (3)&nbsp;above will occur only after it has
provided liquidity to all Eligible Investors, it will take an extended period of
time before the requirements of items (1)&nbsp;through (3)&nbsp;will take effect.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>Each of the AOD and the Order provides that in the event that Oppenheimer enters
into another agreement that provides any form of</B>
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>benefit to any Oppenheimer ARS customer on terms more favorable than those set
forth in the AOD or the Order, Oppenheimer will immediately extend the more
favorable terms contained in such other agreement to all eligible investors. In
the case of the Order, it is limited to more favorable agreements entered into
subsequent to the February&nbsp;26, 2010 Order while, in the case of the AOD, it covers
more favorable agreements entered into prior and subsequent to the February&nbsp;23,
2010 AOD. The AOD further provides that if Oppenheimer pays (or makes any pledge
or commitment to pay) to any governmental entity or regulator pursuant to any
other agreement costs or a fine or penalty or any other monetary amount, then an
equivalent payment, pledge or commitment will become immediately owed to the State
of New York for the benefit of New York residents.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>If Oppenheimer fails to comply with any of the terms set forth in the Order, the
MSD may institute an action to have the Order declared null and void and
reinstitute the previously pending administrative proceedings. If Oppenheimer
defaults on any obligation under the AOD, the NYAG may terminate the AOD, at his
sole discretion, upon 10&nbsp;days written notice to Oppenheimer.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>Reference is made to the Order between the MSD and Oppenheimer et. al, described
in Item&nbsp;3 of the Company&#146;s Annual Report on </B><B>Form 10-K</B><B> for the year ended December
31, 2009 and attached as Exhibit&nbsp;10.24 thereto, as well as the disclosures related
thereto in the Company&#146;s Quarterly Reports on </B><B>Form 10-Q</B><B> for the quarters ended
March&nbsp;31, 2010, June&nbsp;30, 2010 and September&nbsp;30, 2010, for additional details of
the agreements with the MSD. Reference is also made to the AOD between the NYAG
and Oppenheimer, described in Item&nbsp;3 of the Company&#146;s Annual Report on Form&nbsp;10-K
for the year ended December&nbsp;31, 2009 and attached as Exhibit&nbsp;10.22 thereto as well
as the disclosures related thereto in the Company&#146;s Quarterly Reports on Form&nbsp;10-Q
for the quarters ended March&nbsp;31, 2010, June&nbsp;30, 2010 and September&nbsp;30, 2010, for
additional details of the agreements with the NYAG.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>The Company is continuing to cooperate with investigating entities from states
other than Massachusetts and New York.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Cases 3&#038;4 Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During its year end analysis, the Company concluded that there was not a reasonable possibility
that a loss had been incurred in connection with either the NYAG investigation or the MSD
proceeding as both matters had been settled in February&nbsp;2010. Therefore, there were no disclosure
requirements under ASC Topic 450. However, the Company did provide disclosure of future purchase
commitments under the above-mentioned settlements in Note 4. &#147;Financial Instruments&#148; under the
subheading &#147;Other&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Disclosures related to auction rate securities litigation matters in 2010 Form&nbsp;10-K &#151; Case 5</I></B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>In February&nbsp;2009, Oppenheimer received notification of a filing of an
arbitration claim before FINRA captioned </B><B><I>U.S. Airways v. Oppenheimer &#038; Co. Inc.,
et. al </I></B><B>seeking an award compelling Oppenheimer to purchase approximately $250
million in ARS previously purchased by U.S. Airways</B>
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>through Oppenheimer (which has subsequently been reduced to a $110&nbsp;million
liquidated damages claim) or, alternatively, an award rescinding such sale.
Plaintiffs&#146; seek an award of punitive damages from Oppenheimer as well as interest
on such award. Plaintiff bases its claims on numerous causes of action including,
but not limited to, fraud, gross negligence, misrepresentation and suitability.
U.S. Airways is a publicly-traded corporation that bought and sold ARS for many
years through several broker dealers, not just Oppenheimer. It is also a
&#147;Qualified Institutional Buyer&#148; (as defined in Rule&nbsp;144A of the Securities
Exchange Act of 1934) and purchased ARS for cash management purposes. On July&nbsp;10,
2009, Oppenheimer asserted a third party statement of claim against Deutsche Bank
Securities, Inc. (&#147;DBSI&#148;) and Deutsche Bank A.G. (&#147;Deutsche AG&#148;). Deutsche AG
challenged Oppenheimer&#146;s efforts to compel that entity to appear at a FINRA
arbitration, since, Deutsche AG argued, it is not a FINRA member. Subsequently,
Oppenheimer deferred further action against Deutsche AG and proceeded prosecuting
its third party claim against DBSI. At the same time, Oppenheimer filed its
answer denying any liability to U.S. Airways. DBSI subsequently filed a motion to
sever the arbitration into a separate proceeding which motion was granted on July
28, 2010. To the extent there is a determination by an arbitration panel that U.S.
Airways has been harmed, Oppenheimer&#146;s third party statement of claim against DBSI
alleges that DBSI is liable to U.S. Airways because of its role in the process of
creating, marketing and procuring ratings for certain auction rate credit-linked
notes purchased by U.S. Airways. The arbitration with U.S. Airways is scheduled
to commence in August&nbsp;2011. No date has yet been set for the arbitration with the
DBSI. On January&nbsp;28, 2011, DBSI filed a motion to stay the DBSI arbitration.
Oppenheimer is in the process of filing its opposition to the DBSI motion to stay.
Oppenheimer believes it has meritorious defenses to the claims made and intends to
vigorously defend itself against the allegations in the </B><B><I>U.S. Airways </I></B><B>action.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Case 5 Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The incurrence of a loss is not probable in this case based on strong defenses to the case.
Whether the incurrence of a loss is reasonably possible in this case cannot yet be determined as
the case is still in the midst of significant discovery disputes that remain unresolved.
Therefore, there were no disclosure requirements under ASC Topic 450. However, due to the amounts
claimed, the Company did provide disclosure of the nature of the contingency, the type of case, and
the status of the case.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Disclosures related to auction rate securities litigation matters in 2010 Form&nbsp;10-K &#151; Case 6</I></B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>In April&nbsp;2009, Oppenheimer was served with a complaint in the United States
District Court, Eastern District of Kentucky captioned </B><B><I>Ashland, Inc. and Ash
Three, LLC v. Oppenheimer &#038; Co. Inc. </I></B><B>seeking compensatory and consequential
damages as a result of plaintiff&#146;s purchase of approximately $194&nbsp;million in ARS.
Plaintiff sought an award of punitive damages from Oppenheimer as well as interest
on such award. Plaintiff based its claim on numerous causes of action including,
but not limited to, fraud, gross negligence, misrepresentation and suitability.
Ashland is a publicly-traded corporation that bought and sold ARS for many years
through several</B>
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>broker dealers, not just Oppenheimer. It is also a &#147;Qualified Institutional
Buyer&#148; (as defined in Rule&nbsp;144A of the Securities Exchange Act of 1934) and
purchased ARS for cash management purposes. The court granted Oppenheimer&#146;s
motion to dismiss this action with prejudice on February&nbsp;22, 2010. Plaintiff filed
an appeal of this dismissal with the United States Circuit Court for the Sixth
Circuit on March&nbsp;19, 2010. Oppenheimer believes it has meritorious defenses to the
claims made and intends to vigorously defend itself in the appeal process.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Case 6 Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During its year end analysis, the Company concluded that there was not a reasonable possibility
that a loss had been incurred as the case was dismissed in February&nbsp;2010. Therefore, there were no
disclosure requirements under ASC Topic 450.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Disclosures related to auction rate securities litigation matters in 2010 Form&nbsp;10-K &#151; Case 7</I></B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>In February&nbsp;2009, the Company was served with an arbitration claim before
FINRA captioned </B><B><I>Hansen Beverage Company v. Oppenheimer &#038; Co. Inc., et.al</I></B><B>. Hansen
demands that its investments in approximately $60&nbsp;million in ARS, which are
illiquid and which Hansen purchased from Oppenheimer, be rescinded. The claim
alleges that Oppenheimer misrepresented liquidity and market risks in the ARS
market when recommending ARS to Hansen. Oppenheimer has filed its response to the
claim and also filed a motion to dismiss respondents Oppenheimer Holdings and
Oppenheimer Asset Management as parties improperly named in the arbitration. The
arbitration is scheduled to commence no earlier than May&nbsp;2011. The Company
believes that, as of December&nbsp;31, 2010, approximately $26.5&nbsp;million of the $60
million Hansen held in ARS have been redeemed at par by their issuers. Hansen is
a &#147;Qualified Institutional Buyer&#148; (as defined in Rule&nbsp;144A of the Securities
Exchange Act of 1934) and purchased ARS for cash management purposes. Oppenheimer
believes it has meritorious defenses to the claims made and intends to vigorously
defend itself against the allegations in the </B><B><I>Hansen </I></B><B>action.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Case 7 Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During its year end analysis, the Company concluded that the loss contingency was probable and that
the loss could be reasonably estimated. The loss was not disclosed as the amount of such loss was
not deemed to be material to the overall financial statements. However, due to the amounts
claimed, the Company did provide disclosure of the nature of the contingency, the type of case, and
the status of the case.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Disclosures related to auction rate securities litigation matters in 2010 Form&nbsp;10-K &#151; Case 8</I></B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>In August&nbsp;2009, Oppenheimer received notification of the filing of an
arbitration claim before FINRA captioned </B><B><I>Investec Trustee (Jersey) Limited as
Trustee for The St. Paul&#146;s Trust v. Oppenheimer &#038; Co. Inc. et. al </I></B><B>seeking an award
ordering Oppenheimer to repurchase approximately $80&nbsp;million in ARS previously
purchased by Investec as Trustee for the St. Paul&#146;s Trust, and seeking additional
damages of $7.5&nbsp;million as a result of claimant&#146;s</B>
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>liquidation of certain ARS positions in a private securities transaction.
Oppenheimer filed its answer denying any liability to the claimant and asserted a
counter-claim against Investec as Trustee for the Trust, alleging that Investec,
and not Oppenheimer or its representatives, owed a fiduciary duty to the St.
Paul&#146;s Trust and violated that duty. On July&nbsp;15, 2010 Investec as Trustee moved in
the Supreme Court of the State of New York for a partial stay of the arbitration,
arguing, that Oppenheimer&#146;s claim against Investec as Trustee is in reality a
claim against Investec itself, and that Oppenheimer is inappropriately seeking
damages against, Investec. On January&nbsp;4, 2011, the New York State Supreme Court
denied Investec&#146;s application for a partial stay. Investec filed a notice of
appeal to the New York State Appellate Division, First Department on January&nbsp;28,
2011. On February&nbsp;9, 2011, Oppenheimer filed its opposition to Investec&#146;s motion
for a partial stay of the arbitration proceedings and cross-moved for a stay of
the arbitration in its entirety and an adjournment of the appeal until the
Appellate Division&#146;s June&nbsp;2011 term. At the same time Oppenheimer filed its
answer, Oppenheimer asserted third party claims against the underwriters of the
ARS still held by claimant. Oppenheimer argued in its third party arbitration
claim that those underwriters are liable to claimant because of their role in the
processing, trading, marketing and supporting of the ARS still held by claimant
and for other actions by the underwriters which lead to the interruption in the
ARS market. The underwriters filed a motion to sever the arbitration into a
separate proceeding which motion was granted on June&nbsp;18, 2010. The arbitration
with Investec is scheduled to commence in May&nbsp;2011, subject to the appellate
motions to stay the arbitration discussed above. No date has yet been set for the
arbitration with the underwriters. Oppenheimer believes it has meritorious
defenses to the claims made as well as third party claims and intends to
vigorously defend itself in this matter.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Case 8 Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During its year end analysis, the Company concluded that the loss contingency was probable and that
the loss could be reasonably estimated. The loss was not disclosed as the amount of such loss was
not deemed to be material to the overall financial statements. However, due to the amounts
claimed, the Company did provide disclosure of the nature of the contingency, the type of case, and
the status of the case.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Disclosures related to auction rate securities litigation matters in 2010 Form 10-K  &#151; Various
Auction Rate Securities Cases</I></B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>Between April&nbsp;2008 and December&nbsp;31, 2010, Oppenheimer and certain affiliated
parties have been served with approximately 31 arbitration claims before FINRA,
brought by individuals and entities who purchased ARS through Oppenheimer in
amounts ranging from $25,000 to $25&nbsp;million, as well as five court actions brought
in various jurisdictions, seeking awards compelling Oppenheimer to repurchase such
ARS or, alternatively, awards rescinding such sales, based on a variety of causes
of action similar to those described above. The Company has filed, or is in the
process of filing, its responses to such claims and has participated in or is
awaiting hearings regarding such claims before FINRA or in the court actions.
During 2010, four ARS matters were concluded in either court or arbitration with
Oppenheimer prevailing in three of those matters and the claimant</B>
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>prevailing in the fourth. Oppenheimer believes it has meritorious defenses to
these claims and intends to vigorously defend against these claims. Oppenheimer
may also implead third parties, including underwriters where it believes such
action is appropriate. It is possible that other individuals or entities that
purchased ARS from Oppenheimer may bring additional claims against Oppenheimer in
the future for repurchase or rescission.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Various Auction Rate Securities Cases Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During its year end analysis, the Company concluded that in many of these cases there was not a
reasonable possibility that a loss had been incurred as the case was too preliminary for any such
determination to be made. As of the time of the disclosure, many of these cases were in a
preliminary procedural stage, no arbitration panel had been established and little or no discovery
had occurred. Accordingly, no estimate of loss or range of loss could have been made at that time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During its year end analysis, the Company did conclude in several cases that the loss contingency
was probable and that the loss could be reasonably estimated. However, the loss was not disclosed
as the amount of such loss was not deemed to be material to the overall financial statements.
However, the Company did provide general disclosure of the type of case and a range of amounts
claimed in accordance with Item&nbsp;103 of Regulation&nbsp;S-K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Disclosures related to other litigation matters in 2010 Form 10-K  &#151; Case 9</I></B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>In addition to the ARS cases discussed above, on or about March&nbsp;13, 2008,
Oppenheimer was served in a matter pending in the United States Bankruptcy Court,
Northern District of Georgia, captioned </B><B><I>William Perkins, Trustee for International
Management Associates v. Lehman Brothers, Oppenheimer &#038; Co. Inc., JB Oxford &#038; Co.,
Bank of America Securities LLC and TD Ameritrade Inc. </I></B><B>The Trustee seeks to set
aside as fraudulent transfers in excess of $25&nbsp;million in funds embezzled by the
sole portfolio manager for International Management Associates, a hedge fund.
Said portfolio manager purportedly used the broker/dealer defendants, including
Oppenheimer, as conduits for his embezzlement. Oppenheimer filed its answer to the
complaint on June&nbsp;18, 2010 and limited discovery has commenced. Oppenheimer
believes it has meritorious defenses to the claims raised and intends to defend
against these claims vigorously.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Case 9 Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During its year end analysis, the Company concluded that the loss contingency was probable and that
the loss could be reasonably estimated. The loss was not disclosed as the amount of such loss was
not deemed to be material to the overall financial statements. However, due to the amounts
claimed, the Company did provide disclosure of the nature of the contingency, the type of case, and
the status of the case.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Disclosures related to other litigation matters in 2010 Form 10-K  &#151; Case 10</I></B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>In April&nbsp;2009, Oppenheimer received notification of the filing of an
arbitration claim before FINRA captioned </B><B><I>Groff et. al v. Oppenheimer </I></B><B>in which the
grantors and beneficiaries of the Groff Family Trust filed a claim</B>
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>alleging that, beginning in January&nbsp;2005, Oppenheimer made recommendations that
were unsuitable. The claim alleges damages in excess of $16&nbsp;million and alleges as
causes of action breach of fiduciary duty, constructive fraud, fraud by
misrepresentation and omission, unauthorized withdrawals of assets, breach of
written contract and failure to supervise as well as elder abuse and violation of
state and federal securities laws and the FINRA Rules of Fair Practice. In
September&nbsp;2010, the parties entered into a settlement agreement pursuant to which
Oppenheimer agreed to pay, and in October&nbsp;2010 Oppenheimer paid, $4&nbsp;million to the
plaintiffs. Pursuant to the settlement agreement, the plaintiffs assigned their
claims against certain individuals to Oppenheimer. Oppenheimer intends to pursue
these claims vigorously.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Case 10 Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During its year end analysis, the Company concluded that there was not a reasonable possibility
that a loss had been incurred as the case was settled in September&nbsp;2010. Therefore, there were no
disclosure requirements under ASC Topic 450.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Disclosures related to other litigation matters in 2010 Form 10-K  &#151; Case 11</I></B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>In March&nbsp;2010, the Company received a notice from counsel representing a
receiver appointed by a state district court in Oklahoma (the &#147;Receiver&#148;) to
oversee a liquidation proceeding of Providence Property and Casualty Company
(&#147;Providence&#148;), an Oklahoma insurance company. That notice demanded the return of
Providence&#146;s municipal bond portfolio of approximately $55&nbsp;million that had been
custodied at Oppenheimer beginning in January&nbsp;2009. In January&nbsp;2009, the municipal
bond portfolio had been transferred to an insurance holding company, Park Avenue
Insurance LLC (&#147;Park Avenue&#148;), as part of a purchase and sale transaction. Park
Avenue used the portfolio as collateral for a margin loan used to fund the
purchase of Providence from Providence&#146;s parent. On October&nbsp;19, 2010,
Oppenheimer was named as a co-defendant in a complaint filed by the Receiver in
state district court for Oklahoma County, Oklahoma captioned </B><B><I>State of Oklahoma, ex
rel. Kim Holland, Insurance Commissioner, as Receiver for Park Avenue Property and
Casualty Insurance Company v. Providence Holdings, Inc., Falcon Holdings, LLC et.
al </I></B><B>alleging</B><B><I>, </I></B><B>that all defendants conspired to unlawfully transfer the assets of
Providence to Park Avenue. In addition to Oppenheimer, the complaint names as
defendants nine individuals alleging they were members of the board of directors
of Oppenheimer &#038; Co. Inc. during the time period at issue. In fact, for the time
period alleged, six of these individuals were not members of such board. The
complaint was subsequently amended to name three individuals who were directors
of Oppenheimer &#038; Co. Inc. at the time of the events in question. The complaint
alleges causes of action for negligence, breach of fiduciary duty and trespass to
chattel and/or conversion and seeks actual damages of $102&nbsp;million, punitive
damages, interest and costs, including attorneys&#146; fees. Oppenheimer moved to
remove the matter to the United States District Court, Western District of
Oklahoma on December&nbsp;2, 2010. Thereafter, the Receiver moved to remand the matter
to the District Court of Oklahoma County, Oklahoma. Oppenheimer filed its
opposition to this motion on February&nbsp;3, 2011, and is reviewing the Receiver&#146;s
<font style="white-space: nowrap">request to</font></B>
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>remand. Oppenheimer believes it has meritorious defenses to the claims raised and
intends to defend against these claims vigorously including seeking dismissal of
the claims against all the directors.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Case 11 Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During its year end analysis, the Company concluded that there was not a reasonable possibility
that a loss had been incurred as the case was too preliminary for any determination to be made. As
of the time of the disclosure, the case was in a preliminary procedural stage, no venue had been
established and no discovery had occurred. Accordingly, no estimate of loss or range of loss could
have been made at that time. However, due to the amounts claimed, the Company did provide
disclosure of the nature of the contingency, the type of case, and the status of the case.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B><I>Disclosures related to other litigation matters in 2010 Form 10-K  &#151; Case 12</I></B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><B>In September&nbsp;2010, Oppenheimer was named as a co-defendant in a complaint
filed in the United States District Court for the Southern District of New York
captioned </B><B><I>TPTCC NY, Inc., The Proton Institute of NY, LLC, and NY Medscan, LLC v.
Radiation Therapy Services Inc., New York Proton Management LLC et. al </I></B><B>(10 CIV
7097) alleging that all defendants conspired to eliminate plaintiffs as
competitors in providing a developing cancer treatment in the Greater New York
Area. Oppenheimer provided certain investment banking services to the various
parties. The complaint alleges causes of action for violation of the Sherman Act,
conversion, misappropriation of trade secrets, unfair competition, and breaches of
fiduciary duty and contract, and requests damages of $350&nbsp;million, punitive
damages and injunctive relief. On November&nbsp;12, 2010, Oppenheimer filed its motion
to dismiss plaintiffs&#146; complaint, and thereafter plaintiffs filed their First
Amended Complaint. On January&nbsp;7, 2011, Oppenheimer refiled its motion to dismiss
the amended complaint which motion was granted in its entirety on February&nbsp;25,
2011. The case has been dismissed.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Case 12 Response:</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During its year end analysis, the Company concluded that there was not a reasonable possibility
that a loss had been incurred as the case was dismissed with prejudice in February&nbsp;2011.
Therefore, there were no disclosure requirements under ASC Topic 450.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company notes that it will continue to monitor and evaluate cases in subsequent reporting
periods and will modify its disclosures as appropriate.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">*****
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company acknowledges that it is responsible for the adequacy and accuracy of the disclosure in
the filing; staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and the Company may not assert
staff comments as a defense in any proceeding
</DIV>




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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">initiated by the Commission or any person under the federal securities laws of the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Should you have further questions or comments, do not hesitate to contact the undersigned.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Yours truly,<BR>
Oppenheimer Holdings Inc.

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Jeffrey J. Alfano,<BR>
Chief Financial Officer

</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>APPENDIX A</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>March&nbsp;30, 2010</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Background:</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company filed its 2009 Annual Report on Form 10-K on Friday, March&nbsp;5, 2010. The following
event occurred subsequent to that filing that necessitates conducting an assessment of the impact
on the 2009 financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In performing its monthly review of the February FOCUS Report filing for Oppenheimer &#038; Co. Inc.,
the Company identified on Wednesday, March&nbsp;17, 2010 an over accrual related to production-related
compensation in its loan trading business. In January&nbsp;2008 as part of the Company&#146;s acquisition of
the U.S. capital markets business from Canadian Imperial Bank of Commerce (&#147;CIBC&#148;) the Company
acquired a business that conducts trading of syndicated loans in the secondary market through the
Loan Sales &#038; Trading department (&#147;LS&#038;T&#148;). LS&#038;T&#146;s business was conducted through a newly
established non-regulated legal entity, OPY Credit Corp. since January&nbsp;2008. In December&nbsp;2008, the
Global High Yield (&#147;GHY&#148;) trading desk of the Taxable Fixed Income Trading department hired a loan
trader. This loan trader did not have any reporting responsibility to the existing loan trading
department that was hired as a result of the CIBC transaction. As a result, compensation accruals
for loan trading production were accrued and paid out of the GHY department. These compensation
payouts for the GHY bond and loan trading desks were calculated by the business unit and forwarded
to the Commissions department for review and transmission to the Payroll department for processing.
Upon the Commission department&#146;s review, an accrual would be posted in the current month related
to current month&#146;s production. That accrual would then be reversed versus the payment made in the
following month by the Payroll department. As part of the OPY Credit Corp. subsidiary accounting,
the Accounting department was responsible for production-related compensation accruals related to
the LS&#038;T business. At OPY Credit Corp. each month-end compensation accruals were booked on
unsettled transactions and reversed on settled transactions as employees were paid. Under
generally accepted accounting standard in the United States, OPY Credit Corp. is required to record
commissions and related compensation payouts on a trade date basis. As a result, OPY Credit Corp.
records accruals at the end of each month for commissions and related compensation payouts even
though the sales personnel and traders are not paid until settlement date. Settlement convention
for the loan trading business is different from the securities business (e.g., T&#043;3 for equities) in
that settlement of a transaction does not take place for a three to six-week period. Accordingly,
trade date commission and compensation-related accruals for &#147;regular way&#148; transactions are booked
in the month the commissions are earned and automatically reversed in the subsequent month.
Compensation accruals are then reestablished for yet to be settled trades, once trade compensation
payments are made by the Payroll department. As indicated above, production-related compensation
accruals for the GHY loan business were performed by the Commission department for both the GHY
bond and loan businesses and by the Accounting department for the LS&#038;T business in its entirety
(including the GHY Loan and LS&#038;T originated trades). As noted, the Accounting department was
accruing
</DIV>




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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">production-related for the GHY loan business due to the requirement of recording this business
through the OPY Credit Corp. legal entity. As a result of these overlapping processes,
compensation accruals <B>were duplicated </B>by both the Commissions and Accounting departments. The
compensation accruals recorded for the GHY loan business at OPY Credit Corp. occurred monthly
throughout 2009 without reversal for settled trades in the subsequent period resulting in an
overstatement to compensation and related expenses in the amount of $4,066,850. During the post
year end review of the settlement date un-reversed duplicative accruals, it was also revealed that
there were also some issues surrounding the reversal of accruals made on a trade date basis
resulting in an understatement of compensation and related expenses in the amount of $316,912,
resulting in a net overstatement to compensation and related expenses in the amount of $3,749,938.
It is the Company&#146;s policy to pay sales personnel and traders only on settled loan transactions.
<B>This overstatement did not result in any overpayment of compensation.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Assessing Materiality</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company performed an analysis of the materiality of the out-of-period adjustments related to
the GHY Loan issue in order to determine if it was probable that the judgment of a reasonable
person relying upon the financial statements would have been changed or influenced by the inclusion
or correction of these items. The Company performed this analysis in the context of SEC Staff
Accounting Bulletin No.&nbsp;99 &#151; Materiality and its policy on materiality. The evaluation was also
conducted in accordance with SEC Staff Accounting Bulletin No.&nbsp;108 &#151; Quantifying Misstatements
and, accordingly, the Company applied the &#147;Dual Method&#148; using the &#147;Iron Curtain&#148; and &#147;Rollover&#148;
methods. During this evaluation the Company has considered all relevant facts and circumstances
from both a qualitative and quantitative perspective and the impact of the errors, both
individually and in the aggregate, to the financial statements taken as a whole.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Quantitative</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the matter described above, the Company performed an analysis of the impact in relation to the
respective SEC Reporting line item on the income statement (i.e., compensation and benefits),
subtotal (i.e., total revenues and total expenses), pre-tax profits, net income (earnings per
share), and book value per share on each of the condensed consolidated financial statements for the
three month periods ended March&nbsp;31, 2009, June&nbsp;30, 2009, September&nbsp;30, 2009 as well as for the full
year ended December&nbsp;31, 2009 consolidated financial statements including summary information for
the three month period ended December&nbsp;31, 2009. The following table highlights the Company&#146;s
quarterly and annual financial results for 2009 by key SEC reporting line item:
</DIV>


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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>OPY 2009 Financial Results</I></B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Pre-Tax</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>&#038; Related</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Income</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Net Income/</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Expenses</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Expenses</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Loss)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Loss)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>ETR</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">205,265,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">208,087,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">140,662,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,822,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(2,014,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">28.63</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">250,724,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">237,748,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">167,902,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,976,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,130,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">45.05</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">262,067,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">248,017,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">175,504,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14,050,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,908,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">43.72</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">273,377,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">262,768,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">188,257,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,609,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,463,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">39.08</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">991,433,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">956,620,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">672,325,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34,813,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19,487,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">44.02</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The table below provides a summary the amounts related to the item described above:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>GHY Loan</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">281,176</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,033,180</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">611,663</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,823,916</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,749,935</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table summarizes the impact on pre-tax income and net income when taking into
account GHY Loan out-of-period adjustments as well as other issues that were identified at year end
prior to the issuance of the financial statements (i.e., &#147;Period End Passed Adj.&#148;) for each of
these periods under both the &#147;Rollover&#148; and &#147;Iron Curtain&#148; approaches:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Quantitative Materiality Assessment &#151; Rollover Method</I></B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 7pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>Percentage Impact On:</B></TD>
</TR>
<TR style="font-size: 7pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Tot. Adj. % of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Comp. &#038;</B></TD>
</TR>
<TR style="font-size: 7pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Period End</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Annual Pre-</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Pre-Tax</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Net</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Related</B></TD>
</TR>
<TR style="font-size: 7pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Method</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Passed Adj.</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>GHY Loan</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Adjustment</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Tax Income</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Income</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Income</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Expenses</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Exp.</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD align="left" valign="top">1Q-09</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rollover</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">107,266</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">281,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">388,442</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-13.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-13.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.19</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.19</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.20</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Iron Curtain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">785,059</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">281,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,066,235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-37.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-37.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.52</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.51</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.40</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD align="left" valign="top">2Q-09</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rollover</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(59,372</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,033,180</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">973,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">7.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.39</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.41</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.91</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Iron Curtain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(234,960</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,314,356</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,079,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.43</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.45</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.24</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD align="left" valign="top">3Q-09</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rollover</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(837,840</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">611,663</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(226,177</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-0.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-1.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-1.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-0.09</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-0.09</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.57</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Iron Curtain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(1,461,816</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,926,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">464,203</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.18</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.19</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em">
    <TD align="left" valign="top">4Q-09</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rollover</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(135,293</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,823,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,688,623</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">15.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">15.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.62</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.64</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.97</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Iron Curtain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(426,458</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,749,935</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,323,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">31.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">31.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.22</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1.26</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2.02</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD align="left" valign="top">2009</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rollover</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(339,683</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,749,935</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,410,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.34</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.36</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.56</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Iron Curtain</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(426,458</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,749,935</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">3,323,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.34</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.35</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0.56</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">When considering whether the financial statements for each of the periods listed in the above
tables are materially misstated, the Company focused on whether the corrected financial statements
would be materially different from the previously issued financial statements. Management used the
&#147;Rollover&#148; method to evaluate whether previously issued financial statements are materially
misstated as this method quantifies the <B>actual </B>financial statement errors for each period. The
&#147;Iron Curtain&#148; approach was also used to evaluate the timing and impact of correcting the
adjustments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Under the Rollover method, the impact of the adjustments on a percentage basis on pre-tax income
(loss)&nbsp;or net income (loss)&nbsp;appears to be significant; however, given the Company&#146;s low pre-tax
profits (losses)&nbsp;over the last several quarters, particularly in the 1Q-09, the large percentage is
somewhat misleading. When considering these GHY Loan out-of-period adjustments as a percentage of
total revenues and total expenses the
</DIV>


<P align="right" style="font-size: 10pt"><!-- Folio -->22<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">impact is much more muted as it ranges from 9bps to 64bps on
an absolute basis during the four quarters and full year 2010. In addition, when considering the
impact on the compensation and related expenses line item under the Rollover approach the impact on
an absolute basis ranged from 20bps to 97bps during the quarters and 51bps for the full year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Compensation as a percentage of revenues, a widely used metric in the securities industry, was not
significantly impacted by the adjustments. As indicated in the below table, under the Rollover
method this ratio was effected on an absolute basis between 13bps and 62bps for the quarters and
34bps for the full year.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="24%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="12" style="border-bottom: 0px solid #000000"><B>Comp % of Revenues &#151; Rollover Method</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Before</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>After</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Diff.</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">68.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">68.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.13</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">67.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">66.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.22</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">67.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">66.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.24</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4Q-09</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">68.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">68.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.62</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">67.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">67.5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0.34</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The impact of the out-of-period adjustment on the 4Q-09 was more pronounced than on the 2Q-09
and 3Q-09 as a result of decreased profitability levels (i.e., $10.6&nbsp;million) versus profitability
levels in the 2Q-09 of $13&nbsp;million and the 3Q-09 of $14.1&nbsp;million. The decline in profitability
from the 2Q-09 and the 3Q-09 of $2.4&nbsp;million and $3.5&nbsp;million, respectively when compared to the
4Q-09 resulted in increasing the percentage impact of the out-of-period adjustment on pre-tax
income by 3% and 4%, respectively, for those same periods. When considering the impact of the
out-of-period adjustment on total revenues, total expenses, and compensation as a percentage of
revenues for the 4Q-09, the effect was only 62bps, 64bps, and 97bps, respectively. Another
mitigating factor is the fact that the 4Q-09 financial results are not required to be filed
separately on a Form 10-Q (since it is the last quarter of the fiscal year) and are only disclosed
as part of the Annual Report on Form 10-K (see note 21 &#147;Quarterly Information). Consequently the
focus of management&#146;s discussion and analysis and investors is directed to the full year results
rather than the 4Q-09.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company also assessed the impact of correcting the out-of-period adjustments on the 1Q-10 and
the full year 2010 in the context of ASC 250-10-45 <I>Accounting for Changes and Errors. </I>The Company
used actual results through February&nbsp;2010 and estimates of March&nbsp;2010 and the remainder of the year
as a basis for its assessment. Through February&nbsp;2010, the Company had pre-tax income of
$7,253,000. Based on March estimated results plus year-to-date February actual results, the
Company expects to have pre-tax profit of approximately $16,253,000 (which includes the correcting
entry for the out-of-period adjustment as listed in the table below). In addition, based on the Company&#146;s
financial projections (originally calculated in January&nbsp;2010 and filed with the Company&#146;s Senior
Secured and Subordinated creditors in early March&nbsp;2010), the Company expects pre-tax income of
$77,229,000 for the full year 2010. Based on those
</DIV>



<P align="right" style="font-size: 10pt"><!-- Folio -->23<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">estimates, the below table highlights the
expected impact in the 1Q-10 and the full year 2010 of recording the adjustments in the 1Q-10:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Quantitative Materiality Assessment &#151; 2010E</I></B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 7pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="19" style="border-bottom: 1px solid #000000"><B>Percentage Impact On:</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Comp. &#038;</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Period End</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Pre-Tax</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Net</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Related</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Method</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Passed Adj.</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>GHY Loan</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Income</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Income</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Revenues</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Expenses</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Exp.</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD align="left" valign="top">1Q-10</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rollover</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">135,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(3,749,935</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(3,614,642</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-23</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-23</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-2</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD align="left" valign="top">2010</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rollover</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">135,293</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(3,749,935</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(3,614,642</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD nowrap align="right">-1</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The impact of the corrections under the Rollover approach on 1Q-10 estimated pre-tax income is
significant at 23%; however, the impact is less pronounced for the full year 2010 estimated pre-tax
income at 5%. The impact is much more muted (i.e., 1% or less) when considering the impact on
total revenues and total expenses. Furthermore, the impact on compensation and related expenses
is 2% or lower for the 1Q-10 and the full year 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The performance of the Company and the impact on the pre-tax income (loss)&nbsp;benchmark can have a
profound effect on the materiality assessment. The business has underperformed from a
profitability perspective due to many factors including the low interest rate environment, lack of
access to the capital markets of many of the Company&#146;s middle market clients resulting in
significantly lower investment banking revenues, and the remaining issues in the credit markets.
In fact, due to the low interest rate environment, the Company&#146;s interest revenue is down
$66,931,859 or 59% on an annual basis from 2007 ($111,410,249) to 2009 ($45,478,390). Also, the
investment banking business has underperformed significantly since the CIBC acquisition in January
2008. Investment banking revenues for 2009 were $90,960,000 which was significantly below
projected results for the combined businesses. On a pro-forma basis the investment banking
revenues for the combined businesses were $311,180,000 versus $64,770,000 for 2008 the first full
year after the acquisition, representing a decrease of 79%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s 2009 pre-tax income of $34.8&nbsp;million was about 27% of 2007 pre-tax income of $127.4
million and about 43% of 2006 pre-tax income of $80.5&nbsp;million. As indicated in the Company&#146;s 2010
projections, the Company expects to return to 2006 profitability levels by the end of 2010. While
the 2009 adjustments of $3.4&nbsp;million under the Rollover method were 9.8% of 2009 pre-tax, it
represented only 2.7% of 2007 and 4.2% of 2006 pre-tax income, respectively. The poor performance
of the business in 2008 (i.e., pre-tax loss of $36&nbsp;million) due to the credit crisis and the impact
of the CIBC acquisition caused similar issues when calculating materiality due to the low pre-tax
amounts. It is important to note overall revenues were $801&nbsp;million, $914&nbsp;million, $920&nbsp;million,
and $991&nbsp;million in 2006, 2007, 2008, and 2009, respectively. Additionally, on
an absolute basis net income (loss)&nbsp;has been much lower than historical levels for the periods
beginning the 2Q-08 through the 4Q-09, particularly the 2Q-08 through 1Q-09 as depicted in the
following table:
</DIV>


<P align="right" style="font-size: 10pt"><!-- Folio -->24<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Net Income</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Net Income</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>% of 1Q-06 to 1Q-</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(Loss)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(Loss)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>08 Avg. NI/(NL)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1Q-06</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">17,217,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">1Q-08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(16,115,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2Q-06</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9,137,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">2Q-08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,646,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">11</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3Q-06</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7,673,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">3Q-08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(2,477,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">16</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4Q-06</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">10,550,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">4Q-08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(3,824,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">25</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1Q-07</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">16,790,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">1Q-09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(2,014,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">13</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2Q-07</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">15,766,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">2Q-09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7,130,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">47</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3Q-07</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">16,274,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">3Q-09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7,908,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">52</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">4Q-07</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">26,537,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">4Q-09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,463,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">43</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In accordance with ASC 250-10-45-27 <I>materiality determination for correction of an error</I>, the
Company analyzed the effect of a correction on the trend of earnings. The following table shows
the Company&#146;s pre-tax earning trend over the last eight quarters as well as the Company&#146;s
forecasted earnings over the next four quarters compared to the adjusted pre-tax earnings under the
Rollover approach for the periods affected by the GHY Loan out-of-period adjustments:
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><IMG src="y92374y9237401.gif" alt="(CHART)">
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The GHY Loan trading desk resides in the Company&#146;s Capital Markets business segment for segment
reporting purposes. The Capital Markets business segment grew significantly as a result of the
January&nbsp;2008 acquisition of CIBC&#146;s U.S. based capital markets business. Despite the poor
performance of the purchased businesses (as discussed above), gross revenues increased 75% from
2007 ($156,477,000) to 2008 ($273,203,000). With the turn around in the business in 2009, revenues
increased 37% to $375,164,000. The impact of the GHY Loan out-of-period adjustment represented
only 1% of gross revenues for the Capital Markets business segment in 2009. From a profitability
standpoint, non-recurring costs associated with the CIBC acquisition
contributed to a pre-tax loss of $93,975,000 in 2008. As the capital markets improved in 2009, the
Capital Markets segment had a pre-tax loss of $4,854,000. Although the out-of period adjustment
would have reduced the pre-tax loss to $1,104,000, the Capital Markets segment was still in a loss
position for the year. In addition, the out-of-period adjustment was only a small percentage of
the year-over-year change in pre-tax loss (i.e.,
</DIV>



<P align="right" style="font-size: 10pt"><!-- Folio -->25<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">4.2%) and did not significantly impact the trend
back to projected future profitability for the segment. The results of the Capital Markets
business segment are only disclosed in the notes to the consolidated financial statements and the
segment is not discussed as a whole in either the earnings press release or the Management
Discussion and Analysis of Financial Condition and Results of Operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Qualitative</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For purposes of performing a qualitative assessment, the Company considered the following factors
related to the GHY Loan accrued compensation expense out-of-period adjustment:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="75%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Compensation Over Accrual</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B><I>Cause:</I></B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Over statement of accrued compensation
expenses</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top" rowspan="3"><DIV style="margin-left:0px; text-indent:-0px"><B><I>Internal Controls over
Financial Reporting:</I></B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Issues identified by Finance &#038;
Accounting Group (subsequently)&nbsp;as part of
monthly review of FOCUS Report</DIV></TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Low detective probability in review
process due to nature of error</DIV></TD>
</TR>
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Incident was isolated and not due to any
inherent internal control breakdown</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px">
<FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Detective
measures did not identify error in a timely manner</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B><I>Impact on Metrics:</I></B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Compensation and Related Expenses</I></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Impact is &#060; 1% for 2009 periods and
expected to be 2% or less for 2010 periods</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Compensation as a percentage of revenue,
a metric closely followed in the securities
industry, was not impacted significantly</DIV></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Total Expenses</I></TD>
</TR>


<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Impact is &#060; 1% for 2009 periods and
expected to be 2% or less for 2010 periods</DIV></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Book Value</I></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Shareholders&#146; equity impacted by 46bps</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Book value per share for 2009 impacted
by $0.16</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B><I>Effected Users:</I></B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Investors</I></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Based on the impact of the relevant
metrics and the overall magnitude of the
amounts, investors are unlikely to change or
influence conclusions</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Creditors / Credit Agency</I></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Financial and regulatory debt covenants
improve as a result of recording the corrections
when considering the passed adjustments in the
aggregate as well as the
</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="right" style="font-size: 10pt"><!-- Folio -->26<!-- /Folio -->

</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="20%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="75%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;GHY Loan over accrual
of compensation individually
</TD></TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Regulators</I></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Regulatory capital and excess net
capital improve when considering the passed
adjustments in the aggregate as well as the GHY
Loan over accrual of compensation individually</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Excess net capital well above the minimum requirements</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B><I>Materiality Computation</I></B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Benchmark starting point in materiality
calculation is significantly lower due to under
performance of the business</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><B><I>Other Factors:</I></B>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;No concealment of trend or change in
earnings</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;No analyst coverage of common stock</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Offsetting effect on incentive
compensation (if over accrual had not occurred,
the overall incentive compensation pool would
more than likely have been larger)</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Management&#146;s compensation not directly
impacted</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>

<TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Compliance with regulatory requirements not compromised</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Customers not negatively impacted</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Despite low pre-tax income (loss)
amounts adjustments do not cause income (loss)
to result in a loss (income)&nbsp;for any of the
periods in question</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;Low trading volume of public shares</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;No fraud identified</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;High concentration of publicly-traded
shares owned by management and employees</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><FONT style="font-family: Wingdings">&#167;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;No overpayments of compensation to
employees </DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Sarbanes-Oxley Section&nbsp;404 Considerations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Section&nbsp;404 of the 2002 Sarbanes-Oxley legislation indicates that a <B><I>control deficiency </I></B>in internal
control over financial reporting exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent or
detect misstatements on a timely basis. A <B><I>material weakness </I></B>is a deficiency, or a combination of
deficiencies, in internal control over financial reporting, such that there is a <B>reasonable
possibility </B>that a material
</DIV>



<P align="right" style="font-size: 10pt"><!-- Folio -->27<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">misstatement of the company&#146;s annual or interim financial statements
will not be prevented or detected on a timely basis. The act further indicates that a <B><I>significant
deficiency </I></B>is a deficiency, or a combination of deficiencies, in internal control over financial
reporting that is less severe than a material weakness, yet important enough to merit attention by
those responsible for oversight of the company&#146;s financial reporting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company has performed an assessment of the severity of the internal control deficiency that led
to an overstatement of compensation expenses. Although the Company&#146;s controls failed to detect in
a timely manner the over accrual, management believes that this incidence was isolated and not due
to any inherent internal control breakdown, and therefore that the internal controls can be relied
upon. In its assessment, the Company considered the financial statement accounts effected and
related disclosures and determined that the impact was not material. In fact, the Company&#146;s
internal controls did detect the issue before it rose to a material amount. Additionally, the
susceptibility of the liability to fraud was low as this related to an accrual and did not impact
GHY or LS&#038;T compensation payouts. The complexity of the new loan business and its relationship
with legal entity reporting and allocations was also considered.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Conclusion</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">After careful consideration of all of the quantitative and qualitative aspects described above, the
Company believes that it is highly unlikely that the out-of-period adjustments discussed herein
would affect the judgment of a reasonable person relying upon the financial statements nor would
such a person&#146;s judgment have been changed or influenced by the inclusion or correction of the
item. Thus, the Company has deemed the errors identified as immaterial to the condensed
consolidated financial statements for the three month periods ended March&nbsp;31, 2009, June&nbsp;30, 2009,
September&nbsp;30, 2009 and for the consolidated financial statements for the twelve month period ended
December&nbsp;31, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In addition, as noted above the Company analyzed the effect of a correction on the trend in
earnings in accordance with ASC 250-10-45-27 <I>materiality determination for correction of an error</I>.
Based on the Company&#146;s results for the two month period ended February&nbsp;28, 2010 and the projections
for March&nbsp;2010 as well as the Company projections for the full year 2010, the Company does not
expect that the adjustments will materially affect the results of those periods. Also, in
accordance with ASC 270-10-45-16 <I>accounting changes in interim periods </I>and APB 28 <I>Interim Financial
Reporting </I>paragraph 29, changes or errors that are material with respect to an interim period but
not material with respect to the estimated income for the full fiscal year or to the trend of
earning shall be separately disclosed in the interim period. Accordingly, the Company will record
the out-of-period adjustments to the condensed consolidated financial
statements for the three months ended March&nbsp;31, 2010 and will disclose the nature and amounts of
these adjustments the notes therein. The note disclosure will read as follows:
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><I>The Company identified certain over accruals in compensation and related expenses
relating to prior periods which the Company has adjusted in the current period.
These out-of-period adjustments, which</I>
</DIV>

<P align="right" style="font-size: 10pt"><!-- Folio -->28<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 4%"><I>were not material to any prior period,
resulted in a decrease to compensation and related expenses of $3.7&nbsp;million for
the three months ended March&nbsp;31, 2010.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company analyzed the error made in the accrual process for GHY Loan compensation expense in the
context of the guidelines provided in Section&nbsp;404 of the Sarbanes-Oxley Act of 2002 as well as in
SAB 99 and SAB 108 materiality assessment and quantification of misstatements. In its analysis,
the Company took into account that the error was identified by management before it became
material. Due to the nature of the error made and the results of the analysis above, management
has classified this as a significant deficiency under Section&nbsp;404 of the Sarbanes-Oxley Act of
2002. The Company is in the process of implementing additional controls around the institutional
sales accrued compensation process.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The above matters were communicated to the Company&#146;s Audit Committee and Board of Directors on
Friday March&nbsp;19, 2010. The Company has consulted with its Audit Committee chair and external legal
counsel and they are in agreement with the above conclusions.
</DIV>



<P align="right" style="font-size: 10pt"><!-- Folio -->29<!-- /Folio -->
</DIV>



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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
