Consumer Protection Unit acts to safeguard Delawareans in debt

The Delaware Department of Justice announced today that a California debt
management services company will pay $153,000 in restitution to 105 Delaware consumers with whom it conducted business without complying with Delaware’s debt management services statute.

Freedom Debt Relief, LLC (“FDR”) had been providing debt management services in Delaware without first completing the licensing process required by the 2007 Uniform Debt Management Services Act. FDR, which is now licensed in Delaware, will also pay $10,000 to the Attorney General’s Consumer Protection Unit to cover its enforcement costs.

“Companies that violate the licensing requirements of Delaware’s Debt Management Services Act undermine the credibility of those who provide struggling Delawareans with much-needed financial relief,” stated Timothy Mullaney, Director of the Delaware Department of Justice Fraud and
Consumer Protection Division. “By taking action against this previously unlicensed company we’re holding them accountable to the law and we’re ensuring that consumers have the tools they need to select trustworthy companies to help them manage their debt.”

The Attorney General’s Consumer Protection Unit enforces Delaware’s Debt Management Services Act. The Unit screens and licenses debt management companies doing business in Delaware, regulates and monitors their activities, and publicizes a list of approved providers in an effort to safeguard Delawareans from potentially fraudulent companies.

To access the list of licensed debt management providers approved by the Attorney General, visit http://www.attorneygeneral.delaware.gov/consumers/protection/debtmanadvisory.shtml.
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Royal Bank of Canada Capital Markets fined $22,156 for sale of Auction Rate Securities

The Delaware Department of Justice announced today that it has reached an
agreement with the Royal Bank of Canada Capital Markets (RBC) following an investigation into its marketing and sale of auction rate securities (ARS). The company paid a fine of $22,156 to the State of Delaware for misleading investors about the safety of the ARS market. Fines collected from this
investment firm will be paid to the Delaware Investor Protection Fund.

In November 2008, following a multi-state investigation into the failure of the ARS market, settlements were reached between state and federal securities regulators and eleven investment firms who offered these products for sale. The firms agreed to repurchase more than $60 billion of auction
rate securities from investors nationwide and were required to notify investors of the repurchase offer.

In Delaware alone, RBC sold more than $4 million in auction rate securities.
“This agreement sends a clear message to investment firms that we will hold them accountable for misleading investors about the sale of these supposedly safe and liquid investment products,” stated James Ropp, Delaware Securities Commissioner. “We encourage Delaware investors to contact us at
(302) 577-8424 if they have questions about the repurchase of Auction Rate Securities by this or other investment firms.”

Auction rate securities, also referred to as ARPS, short term paper, 7 day paper, or floaters, are long-term financial instruments with interest rates that are reset through weekly or monthly auctions. When auctions run properly, investors who hold these securities can buy and sell them on a regular
basis. However, when there are not enough buyers for every ARS being offered for sale, auctions “fail” and investors are forced to hold their ARS until the next successful auction. Since early 2008, the majority of these auctions have failed and many investors have been unable to sell their frozen ARS holdings.

In response to investor complaints, state-led investigations into possible violations of securities laws in connection with the sale of ARS began in April 2008. Since April 2009, Delaware has reached agreements with 4 firms, which has resulted in $1,099,760 being paid to the Delaware Investor Resource Fund.
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Attorney General’s Office announces sentencing in cyberstalking case

On August 19, 2009, Richard McCullough, age 42 of Bear, pled guilty to 1 count
of harassment and 1 count of non-compliance with a bond order.

The Attorney General, with assistance from University of Delaware Police, New Castle County Police, and Wilmington Police, arrested McCullough on April 15, 2009 for stalking women using the web. The investigation revealed that, over the past two years, McCullough used the internet to stalk women in Delaware, making contact with his victims using the fictitious names of JToms, Kevin, and
John. McCullough posted bail on May 22, 2009, violated the no contact provisions of his release, and was rearrested by the Delaware Department of Justice on June 24, 2009. He was held on $250,000 cash bail.

On September 11, 2009, Superior Court Judge Jan R. Jurden sentenced McCullough to 84 days in prison, followed by 18 months of probation and psychological treatment in a Maryland facility. He was ordered to have no contact with the victim, Richard McCullough.
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Merrill Lynch to Pay $459,660 Fine to Delaware for Sale of Auction Rate Securities

The Delaware Department of Justice announced today that it has reached
agreements with Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) following an investigation into its marketing and sale of auction rate securities (ARS). The company will pay a fine of more than $459,660 to the State of Delaware for misleading investors about the safety of the ARS
market. Fines collected from these investment firms will be paid to the Delaware Investor Protection Fund.

In November 2008, following a multi-state investigation into the failure of the ARS market, settlements were reached between state and federal securities regulators and eleven investment firms who offered these products for sale. The firms agreed to repurchase more than $60 billion of auction rate securities from investors nationwide and were required to notify investors of the repurchase offer.

In Delaware alone, Merrill Lynch sold more than $49 million in auction rate securities. These agreements send a clear message to investment firms that we will hold them accountable for misleading investors about the sale of these supposedly safe and liquid investment products,” stated James Ropp, Delaware Securities Commissioner. “We encourage Delaware investors
to contact us at (302) 577-8424 if they have questions about the repurchase of Auction Rate Securities by these or other investment firms.”

Auction rate securities, also referred to as ARPS, short term paper, 7 day paper, or floaters, are long-term financial instruments with interest rates that are reset through weekly or monthly auctions. When auctions run properly, investors who hold these securities can buy and sell them on a regular
basis. However, when there are not enough buyers for every ARS being offered for sale, auctions “fail” and investors are forced to hold their ARS until the next successful auction. Since early 2008, the majority of these auctions have failed and many investors have been unable to sell their frozen
ARS holdings.

In response to investor complaints, state-led investigations into possible violations of securities laws in connection with the sale of ARS began in April 2008. The North American Securities Administrators Association formed a multi-state Task Force, comprised of securities regulators in 12
states, to investigate whether Wall Street firms had systematically misled investors who purchased these securities. The Delaware Department of Justice Securities Unit is a Task Force member.
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2009 investor education campaign empowers Delawareans to avoid investment frauds and scams

The Delaware Department of Justice announced the launch of its 2009 investor education campaign. The effort includes a September 15 seminar featuring award-winning journalist and best-selling author Jean Chatzky who brings investing tips for thriving during a tough economy as well as updated print and online resources to help Delawareans avoid investment fraud and scams.

On Tuesday, September 15 at 7:30 p.m., the Department hosts a free online seminar featuring
award-winning journalist, best-selling author and motivational speaker Jean Chatzky. Chatzky is the
financial editor for NBC’s Today, a contributor to the Oprah Winfrey Show, and a columnist for The
New York Daily News. Her most recent book, The Difference, outlines strategies for thriving during a
tough economy. Her live hour-long “webinar” will provide tips for saving and investing, and she’ll
answer participants’ financial questions. Register at www.investorresourcecenter.org today to join the
webinar from any internet connection.

“Arming Delaware families with financial knowledge and tools empowers them to make more
informed decisions and strengthens their ability to avoid becoming victims of investment fraud,” stated
Delaware Securities Commissioner James Ropp.

The Department also announced that its popular investor protection tools have been updated
and enhanced. The online Investor Resource Center (www.investorresourcecenter.org), launched by
Attorney General Biden in 2007, features new material tailored to address the challenges of today’s
economic climate. It provides a one-stop shop of helpful references, video webcasts, investor alerts, an
investment professional background check, online complaint form, and links to tools that promote
sound investing. The 2009 Safe Investing Guide, a printed companion to the Investor Resource Center,
is being delivered this week as a free insert in newspapers statewide. The 2009 edition features this
year’s top investor traps, outlines financial and investment implications following a job dislocation,
sheds light on the importance of scrutinizing IRA investments, and much more.

Delawareans can request the 2009 Safe Investing Guide by calling the Department’s Securities
Unit at (302) 577-8935. The 2009 investor education campaign is funded by fines and penalties paid
by those who violate the Delaware Securities Act. The Delaware Department of Justice Securities Unit
uses these funds to combat investment fraud and sponsor investment education programs.
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