In the Matter of Certain Transactions, File No. HO-9325 PRIVILEGED AND CONFIDENTIAL, eee 040747 DESCRIPTION OF INVESTIGATION Information gathered from domestic sources: September 12. and Continuing September 18-20 Office of Market Surveillance (OMS) begen review of trading in common stock and derivative securities in various sectors Identified following sectors for more detailed review and analysis: airlines and aerospace; insurance; financial services; banks; defense; security providers; index products; and certain cruise lines. Initial focus on large transactions in the options markets related to identified companies. Review, however, includes trading of even one contract with respect to certain securities. Bluesheet requests made as well, Requests for information made to following domestic exchanges/SRO’s: Chicago Board Options Exchange; New York Stock Exchange; American Stock Exchange; Philadelphia Stock Exchange; Pacific Exchange; and NASDR. Requests for identification of short positions made to: Depository ‘Trust Company and the National Securities Clearing Corp. ‘Subpoena later sent to SunGard Securities Finance Inc., formerly Loanet, Inc., for similar information. (Formal Order issued September 28.) Request made to major brokerage firms that they survey trading desks for any actual or proposed unusual activity. Request that they extend inquiry to global desks and foreign affiliates, Following firms contacted: PaineWebber; UBS Warburg; Morgan Stanley Dean Witter; Goldman Sachs; Bear Steams; A.G. Edwards; DLJ; Credit Suisse First Boston; Deutsche Bank Alex Brown; Raymond James; SG Cowen; Merrill; J.P. Morgan; Charles Schwab; Salomon; National Financial; Lehman; Prudential; Jefferies; and Bank of America. Request to Market Surveillance Unit of the New York Fed that they review treasury markets for any unusual activity Have received unsolicited information from variety of sources (hedge funds, attomeys, other individuals), reporting suspected unusual trading activityPRIVILEGED AND CONFIDENTIAL Efforts to Locate Accounts of Suspected Terrorists Week after September 12 September 20-21 September 26 gation after Unusual Tra Checked names of identified hijackers through MeDonald’s Information Service. Obtained account documents, including new account documentation, account statements, and documents reflecting any deposits or transfers Account documents of suspected terrorists provided to FBUFRG. Issued Press Release 2001-103 publicizing information contained in the Executive Order and FBI list, Requested that securities entities voluntarily search records and notily Commission of any ‘accounts or transactions with persons or organizations identified on lists. Established electronic mailbox (E see ov) 10 receive information and identified mail stop for hard copy responses. saction/Account Identified Typically, have obtained additional information, including account opening documentation and account statements. Identified entity/petson behind the transaction, Conducted interviews either of person at firm handling transaction o person placing order. In some instances, through access grant have provided information to the FBI Requests for Foreign Assistance ptember 18 Requested that foreign regulators review trading in their markets. Asked that they: 1) provide trading data for any suspicious transactions involving U.S. registered stocks and derivatives based on U.S. registered stocks; and 2) provide trading data for the stocks and derivatives of all U.S, registered cogspanies in certain sectors (airlines, hotels, brokerage finms, bank ffolding companies, and insurance and re-insurance companies). Following foreign regulators contacted: 9/11 LawEnforcementSensitiveSeptember 24 PRIVILEGED AND CONFIDENTIAL, 9/11 LawEnforcementSensitive ‘Same request made to Swiss Federal Banking Commission 9/11 LawEnforcementSensitiveOstober 9 Systems Used or Created to Track Inform September Meeting with Other September 17 September 20 September 25 September 26 September 28 PRIVILEGED AND CONFIDENTIAL In addition, list identifying particular list of securities pplied to Swiss and foreign regulators contacted previously Response from Federal Banking Commission. (Check with OIA before sharing information with other agencies.) Complete list of US. registered stocks and derivatives traded in Switzerland provided. Surveillance offices of Swiss exchanges are analyzing market data for unusual trading. SFBC with then determine customer identifications. Provided press communication issued on October 2 by SFBC ordering reporting on terrorist accounts. cand tion Created intemal database to record and search names provided by FBI ~ instituted system to update database on timely basis with information from FB Created computer system to log identified accounts/transactions nquiry or analysis undertaken by SEC stall ernment Official /Ayencies and Access Grants ‘Mecting held at FBI headquarters with FBI and other criminal authorities and regulators, Coordination to ensure all potentially relevant information reported to contact at FBI headquarters, Effort to ensure that central database has all relevant information, including information provided to local USAO's or FBI offices pursuant to access grants, For part of meeting, SEC met separately th FBI representative and other regulators (CFTC and NASDR), Described our review Meeting with FBI agents 1 Law€nforcementPrivacy William Macke and ‘now representing the Financial Review Group. Meeting with FBI, USAO of SDNY, and AUSA Ken Breen from EDNY who is principal contact person for Financial Review Group Briefod repr Council jesentative (Joseph M. Myers) from National Security Bricfed stat of Senate Banking Committee.PRIVILEGED AND CONFIDENTIAL Numerous contacts both in person and'by telephone with AUSA. Breen, principal contact person for Financial Review Group. In addition, we have been in frequent contact with AUSA Khuzami, detailed to the New York Command Center. Meeting with Industry Groups and Others October 4 Prophylactic § Met with SIA members, DOJ representatives, FBI and Secret Service agents. Topic: whether requests for information can be more detailed and streamlined Asked exchanges to notify Commission if detect any unusual activity in a particular sectors, e.g., pharmaceuticals,