9526CIVIL COVER i E

JS 44C/SONY The JS-44 civil cover sheet and the ioformatiorr oorrtained herein neither replace nor supplement the filing and service ofREV, 1/97 p!eadings cr other papers as required by law, except as p revided by local rules ofcourt . Thisform, approvedbythe JudicialWEB 12/02 Conferer ;ce of the United States in September 1974, is required foruse of the Clerk ofCour€ for the purpose of irniliat€rr.g

the civil docket sheet.

PLAINTIFFS DEFENDANTSHADASSAH GURFEIN, individually and on behalf of all AMERITRADE, INC ., AMERICAN STOCK EXCHANGE,

others similarly situated LLC, KNIGHT TRADING GROUP, INC ., SPEAR, LEED S(SEE ATTACHED RIDER FOR CONTINUATION)

ATTORNEYS (FIRM NAME, ADDRESS, AND TELEPHONE NUMBER ATTORNEYS (IF KNOWN )

LOVELL STEWART HALEBIAN LLP, 500 Fifth Avenue, SQUITIERI & FEARON, LLP, 32 East 57th Street, 12th

58th Floor, New York, New York 10110 (212) 608-1900 Floor, New York, New York 10022, (212) 421-649 2

CAUSE OF ACTION (CITE THE U5 CIVIL STATUTE UNDER WHICH YOU ARE FILING AND WRITE A ERIEF STATEMENT OF CAUSE )

The claims alleged arise under Section 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U .S .C. Sections 78j(b)and 78t(a), and Rule 10-5, 17 C .F .R. Section 240.10b-5 promulgated thereunder.

Has this or a similar case been previously filed in SONY at any time? No[s Yes? ❑ JudgIPr€- ICfi 4 As grta[

If yes, was this case Voi .❑ Invol . ❑ Di s mis sed . No ❑ Yes ❑ If yes, give date ? $ ase No l

(PLACE AN [x] IN ONE BOX ONLY) NATURE OF SUIT t J :? xl. s f

ACTIONS NOER Sa1U '

TORTS FORFEITUREIPENALTY BANKRtW1CY. OTHER

CONTRACT

[ J 110 INSURANCE1 J 120 MARINE

[ ] 130 MILLER ACT140 NEGOTIABLE

INSTRUMEN T150 RECOVERY OF

OVERPAYMENT &ENFORCEMENT OF

JUDGMEN T

[ J 151 MEDICARE ACT

[ ] 152 RECOVERY OFDEFAULTED

STUDENT LOANS

(EXCL VETERANS )

[ 1153 RECOVERY OFOVERPAYMENT OFVETERAN'S BENEFITS

[ [160 STOCKHOLDERSSUITS

( 1 190 OTHER CONTRACT[1195 CONTRACT PRODUCT

LIABILIT Y

REAL PROPERTY

PERSONAL INJURY

[ J31(1 AIRPLAN E

[ ] 315 AIRPLANE PRODUCTLIABILITY

[ J 320 ASSAULT . LIBEL &

SLANDER[1330 FEDERAL

EMPLOYERS`

LIABILITY[ 1340 MARIN E[ 1345 MARINE PRODUCT

LIABILITY[ 1 350 MOTOR VEHICL E[ 1 355 MOTOR VEHICLE

PRODUCT LIABILITY[1360 OTHER PERSONAL

INJUR Y

ACTIONS UNDER STATUTES

CIVIL RIGHTS

PERSONAL INJURY 1 ] 610 AGRICULTURE[[ 620 FOOD & DRU G

[ ] 362 PERSONAL INJURY- [ 1 625 DRUG RELATEDMED MALPRACTICE SEIZURE OF

[[395 PERSONAL INJURY PROPERTY

PRODUCT LIABILITY 21 USC 68 1[ ] 358 ASBESTOS PERSONA L [ 1 E30 LIQUOR LAWS

INJURY PRODUCT [ [640 RR & TRUCKLIABILITY [ (S50 AIRLINE BEGS

[ ] 660 OCCUPATIONA LPERSONAL PROPERTY SAFETY/HEALT H

[1690 OTHER

[ ] 370 OTHER FRAU D[ ] 371 TRUTH IN LENDING[ 1 380 OTHER PERSONAL

PROPERTY DAMAG E[1385 PROPERTY DAMAGE

PRODUCT LIABILITY

PRISONER PETITION S

[ 1210 LAND CONDEMNAT ION [ ] 441 VOTING [ 1510 MOTIONS TO[ J 220 FORECLOSURE [ ] 442 EMPLOYMENT VACATE SENTENC E[ 1230 RENT LEASE & [ ] 443 HOUSING 20 USC 2255

EJECTMENT ACCOMMODATIONS [ 1 530 HABEAS CORPU S[ 1 240 TORTS TO LAND [ 1 444 WELFARE [ J 535 DEATH PENALT Y[ 1 246 TORT PRODUCT [ [440 OTHER CUML RIGHTS [ 1 540 MANDAMUS & OTHER

LIASIL€TY 1 1 550 CIVIL RIGHTS[ 1 290 ALL OTHER [ ] 555 PRISON CONDITIO N

. REAL PROPERTY

(1422 APPEAL28 USC 158

[ 1423 WITHDRAWAL28 USC 15 7

PROPERTY RIGHTS

[ 1820 COPYRIGHTS

]830 PATEN T

[ 1840 TRADEMAR K

SOCIAL SECURIT YLABOR

[ ] 861 MIA l1395FF)

[ 1 7113 FAIR JASON [ 1862 BLACK LL8JG (923)STANDARDS ACT I i 853 DIN/C 1405[g))

[ 1720 LABORIMGMT [ 1863 DIWW (405(5))RELATIONS [ ] 864 SSID TITLE XVI

[ J 730 LABORJMOMT [ ] 865 RSI (405(9) )REPORTING &DISCLOSURE AC T

[ 1 740 RAILWAY LABOR AC T FEDERAL TAX SUrf S[ ] 790 OTHER LABOR

LITIGATION [1870 TAXES[ 1 751 EMPL RET INC [ J871 IRS-THIRD PARTY

SECURITY ACT 20 U5C 7609

[]400 STATE

REAPPORTIONMENT

( 1410 ANTITRUST[ ] 420 BANKS & BANKING

[ 1450 COMMERCEICC

13ATESYETC

[]450 DEPORTATION470 RACKETEER INFLU-

ENCED & CORRUPTORGANIZATION ACT(RICO )

[ ] 810 SELECTIVE SERVICEIN 850 SECURITIES?

COMMODITIES!EXCHANG E

[1875 CUSTOMERCHALLENGE12 USC 3410

[]891 AGRICULTURE ACTS[ ] 892 ECONOMIC

STABILIZATION AC T[ 1893 ENVIRONMENTAL

MATTERS[ 1894 ENERGY

ALLOCATION ACT

[ ] 895 FREEDOM OF

INFORMATION AC T

[ [900 APPEAL OF FEEDETERMINATIONUNDER EQUAL ACCESSTO JUSTIC E

[ 1850 CONSTITUTIONALITY

OF STATE STATUTES[]690 OTHER STATUTORY

ACTIONS

Check if demanded in complaint:

CHECK IF THIS IS A CLASS ACTIONUNDER F .R .C .P . 23

DEMAND $ OTHER

Check YES only if demanded in complaintJURY DEMAND : ® YES ❑ NO

l~.

DO YOU CLAIM THIS CASE IS RELATED TO A CIVIL CASE NOW PENDING IN S .DNY,?IF SO, STATE :

JUDGE DOCKET NUMBE R

NOTE : Please submit at the time of filing an exp l anation of why cases are deemed related .

(SEE REVERSE)

RIDER TO CIVIL COVER SHEET

AND KELLOG, INTERACTIVEBROKERS and PREFERRED CAPITALMARKETS

AMERICAN STOCK EXCHANGE, LLC86 Trinity Plac eNew York, New York 1000 6

New York Count y

KNIGHT TRADING GROUP, INC .525 Washington BoulevardJersey City, New Jersey 0731 0

Hudson County

SPEAR, LEEDS and KELL OCR120 Broadway, 21st .FloorNew York, New York 1.027 1

New York Count y

INTERACTIVE BROKERS2 Pickwick Plaz aGreenwich , Connecticut 0683 0

Fairfield Count y

PREFERRED CAPITAL MARKETSdib/a Preferred Trade Inc .667 Mission Street4"' Floo rSan Francisco, California 9410 5

San Francisco County

A0 440 {Rev . 10193 Summons in a Civil Action - SONY WEB 419 9

dire t tc ttrictSOUTHERN Dis' rRICT OF T EW I OR L' " -_`-

HADASSAH GURFEIN , individually and on behalfof all others similarly situated ,

V .

SUMMONS IN A ,CASEPlaintiff, ,

AI

TONC'QSE NUMBE R

AMERITRADE, INC ., AMERCIAN STOCKEXCHANGE, LLC, KNIGHT TRADING GROUP,INC., SPEAR, LEEDS AND KELLOG,INTERACTIVE BROKERS and PREFERREDCAPTIAL MARKETS, Defendants .

TO: (Name and address of defendant)

0 7

AMERITRADE, INC .4211 South 102nd StreetOmaha, Nebraska 6812 7(SEE ATTACHED RIDER TO SUMMONS FOR CONTINUATION )

YOU ARE HEREBY SUMMONED and required to serve upon PLAINTIFF'S ATTORNEY (name and address )

LOVELL STEWART HALEBIAN LLP SQUITIERI & FEARON, LLP500 Fifth Avenue 32 East 57th Street58th Floor 12th FloorNew York. New York 10110 New York, New York 1002 2

an answer to the complaint which is herewith served upon you, within _._ 20 _ days after service of thissummons upon you, exclusive of the day of service . If you fail to do so, judgment by default will be taken against you forthe relief demanded in the complaint . You must also file your answer with the Clerk of this Court within a reasonable periodof time after service .

3 . .

CLERK

0 3DATE

(BY) DEPUTY CLERK

RIDER TO SUMMON S

AMERICAN STOCK. EXCHANGE, LILC86 Trinity PlaceNew York, New York 1000 6

KNIGHT TRADING GROUP_ INC .525 Washington Boulevard

Jersey City, New Jersey 0731 0

SPEAR, LEEDS and KELLOG120 Broadway, 21'" FloorNew York, New York 1027 1

INTERACTIVE BROKERS2 Pickwick Plaz aGreenwich , Connecticut 0683 0

PREFERRED CAPITAL MARKETSd!b/a Preferred Trade Inc .(67 M ission Street41h Floo r

San Francisco , California 94105

LOVELL STEWART HA .LEBIAN L LP" ' '.'""' ,"John H.alebian (JH-8005 )Frederick W. Gerkens, III (FWG-7595)500 Fifth Avenue, 58`h FloorNew York, New York 10110Tel : (212) 608-190 0

SQUITIERI & FEARON, LLPOlimpio Lee Squitieri (OLS-I684)Daniel R . Lapinski (DRL-7447)

32 East 57th Street . 12"' Floor

New York, New York 10022Tel : (212) 421-649 2

Attorneys for Plaintiff

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK

9

e F~

1 - is

HADASSAH GURFEIN, individuallyand on behalf of all others similarlysituated,

Civil Action No .

Plaintiff ,

V.

AMERITRADE, INC ., KNIGHT TRADING,GROUP, INC ., SPEAR, LEEDS ANDKELLOG; INTERACTIVE BROKERS,PREFERRED CAPITAL MARKETS andAMERICAN STOCK EXCHANGE, LLC

CLASS ACTION COMPLAIN T

JURY TRIAL DEMANDE D

Defendants

NATURE OF THE ACTIO N

Plaintiff, Hadassah Gurfein ("Plaintiff'), by and through her attorneys, for her complain t

against defendants- alleges upon knowledge as to herself and her own circumstances, and upon

information and belief, based on the investigation of her counsel, as to all other matters an d

states as follows :

Plaintiff, a retail customer of defendant Ameritrade, Inc . ("Ameritrade") brings

this class action on behalf of herself, and members of a class (the "Class"), against Ameritrade ,

the defendant American Stock Exchange (the "AMEX") and certain of the AMEX's agents

and/or members, i .e . defendant options specialists, who together conspired with the AMEX to

materially misrepresent both (1) real time electronically displayed "bid" and "ask" quotes o n

listed equity options and (ii) that customer orders would be executed instantaneously when.

plaintiff (and other "Direct Access" customers) accepted the bid or offer that was electronically

displayed by the particular options specialist . Instead, defendants knowingly and intentionally,

systematically refused to execute stock option transactions when Plaintiff, and others, submitte d

a limit order that specifically accepted the displayed quote or was specifically within th e

electronically displayed bid and ask-- which should have been executed instantaneously .

Starting in late 1999, broker-dealers developed and implemented systems designed to provid e

their public customers with "Direct Access" to the options exchanges, including the option s

exchanges automatic execution systems . Accordingly, customers of Direct Access firm s

expected to receive fast, and preferably automatic executions of their orders .

2. However, contrary to the fast and automatic executions expected by publi c

customers like Plaintiff, defendants knowingly falsely and misleadingly represented

electronically displayed real time bid and ask quotes that, at the time that such quotes were

electronically displayed, defendants knew and intended that such quotes would not be honored

with respect to a large segment of the investing public, such as retail customers like Plaintiff . In

addition, to the extent that defendants honored such quotes with respect to larger more favored

7

customers, defendants discriminated against Plaintiff and members of the Class, defendant s

engaged in anti-competitive conduct and otherwise breached obligations of good faith and fai r

dealing. The wrongdoing committed by defendants constitutes violations of the anti-fraud

provisions of the federal securities laws and gives rise to state law claims such as breach o f

contract .

3. Defendants' wrongful conduct has been so systematic and so egregious that bot h

the United States Justice Department (the "Justice Department") and the United States Securitie s

and Exchange Commission (the "SEC") have brought and settled charges against the AMEX

multiple times, the SEC issued a blistering report regarding the AMEX's misconduct in Jun e

2003, and as recently, as November 12, 2004, it was reported that the SEC was threatening th e

top three executives of the AMEX for still failing to enforce the very same AMEX rules whos e

wholesale violations caused substantial monetary damage to plaintiff and members of the Class .

4 . Specifically, from in or about April 2001 through the date of this complaint (th e

"Class Period"), Plaintiff, and members of the Class, regularly placed orders to purchase and/or

sell equity options on the AMEX within the real time quoted bid and ask, directly or indirectl y

through the AMEX's agents and/or members, i .e . options specialists (the "Options Specialist

Defendants") . The Options Specialist Defendants either refused to execute the limit order s

placed at the displayed quote, or, in the case of market orders, were executed at a price les s

favorable than the displayed quote, in direct violation of the Firm Quote Rule, the antifrau d

provisions of the federal securities laws, and state law . In addition, Plaintiff seeks to represent a

subclass of similarly situated persons, consisting of customers who placed purchase or sal e

orders for equity options through A.meritrade which were not executed by the Options Specialist

Defendants at the displayed quotation, thus violating the Firm Quote Rule, or in the case o f

market orders, were executed at a price less favorable than the displayed quote .

In or about September 2000, both the United States Securities and Exchang e

Commission (the "SEC") and the United States Department of Justice (the "Justice Department" )

investigated and commenced proceedings against the AMEX and others for violations of certai n

securities and antitrust statutes and regulations for anticompetitive behavior concerning, inter

falra, preferential treatment of larger customers trading in exchange traded options an d

agreements reached in restraint of trade amongst certain exchanges to allocate amongs t

themselves, the options to be listed on each exchange .

6. Shortly thereafter, on November 20, 2000, the SEC adopted amendments t o

Exchange Act Rule 11 AC-l, The Quote Rule, (or "Firm Quote" Rule) to extend that Rule to th e

options markets . The AMEX followed with the adoption of its own version of the Firm Quot e

Rule, AMEX Rule 958A, "Application of the Firm Quote Rule," which requires each optio n

specialist to execute any customer order in an amount up to its published size and any broker-

dealer order in an amount Up to the size established and periodically published by the Exchange

7 . As a result of these investigations and proceedings, the defendants in th e

government instituted proceedings, including the AMEX, entered into consent orders and th e

SEC promulgated regulations that prohibited options exchanges and their members, including the

AMEX and the Option Specialist Defendants from discriminating in priority and\or price whe n

executing options orders on behalf of customers either directly or through their brokers, such a s

defendant Ameritrade .

4

Notwithstanding these sanctions and additional rules, the SEC began receivin g

complaints from customers and\or their brokers in or about 2001 that the AMEX and it s

specialist members frequently violated the Firm Quote Rule .

9 . On June 13, 2003, after an investigation of the foregoing complaints , the SEC

issued a lengthy report finding that (1) the AMEX and its specialist members were executin g

preferred customer option orders before executing orders from customers like Plaintiff an d

members of the Class, and (2) were intentionally failing to fill limit orders at the displayed quote ,

to the financial detriment of customers, like Plaintiff . The SEC Report confirmed the

widespread nature of the violations of the Firm Quote Rule. The findings of the SEC

investigation revealed that from approximately 89 .9% of Direct Access limit orders went unfilled

at certain times whereas only 12 .4%, of non-direct access orders went unfilled under simila r

circumstances .

10. More specifically, the SEC's June, 2003 Report, found with respect to the fact s

underlying Plaintiffs claims here, in pertinent part :

(a) That the AMEX Board of Governors has failed to adequately ensure tha t

the Amex is complying with the undertakings in the September 200 0

Order ;

(b) That the Exchange's regulatory program to detect and discipline violations

of the Firm Quote Rule was deficient to the extent that the Exchange ha s

not meaningfully enforced the Firm Quote Rule since it became effectiv e

in April 2001 ;

(c) That the SEC staff conducted an independent analysis of audit trail dat a

and found that Amex specialists routinely violated the Firm Quote Rule ;

and

(d) That the SEC Staff found serious deficiencies in the Annex's regulator y

programs related to trade reporting, trading ahead, limit order display, bes t

execution, and anti-competitive conduct .

11 . Anleritrade, as many on-line brokers, provided to their retail customers lik e

Plaintiff, real time quotations of options' bid and ask prices on the Internet or through other on-

line facilities, i .e . Direct Access . However, Ameritrade refused to execute Plaintiffs options

orders at the real time quoted prices, and in a conspiracy with Knight Trading, one of the Option

Specialist Defendants, Knight refused to honor the Firm Quote Rule or executed Plaintiff s

orders behind those orders of its preferred customers . The AMEX conspired with Ameritrade

and the Options Specialist Defendants and engaged in concerted activity to conceal suc h

violations and to manipulate government regulatory investigations and hearings to allow the

Options Specialist Defendants to avoid preventative action by government regulators . Thus,

Plaintiff and members of the Class suffered damages because purchase and sell orders placed b y

Plaintiff and members of the Class that were placed within the real time displayed quotes, were

either not executed at all or were executed at less favorable prices than larger favored customers .

JURISDICTION AND VENUE

12 . The claims alleged herein arise under Sections 10(b) and 20(a) of the Securitie s

Exchange Act of 1934 (the "Exchange Act"), 15 L .S .C. § 78j (b) and 78t(a), and Rule lOb-5, 1 7

C.F.R. §240.lOh-5 promulgated thereunder . This Court also has supplemental jurisdiction ove r

6

asserted state law claims pursuant to 28 U.S .C. § 1367(a) because the state law claims are s o

related to Plaintiff's federal claims that they form a part of the same case or controversy betwee n

the parties tinder Article III of the United States Constitution .

13 . The Jurisdiction of the Court is based on Section 27 of the Exchange Act, 1 5

U.S .C. § 78aa, and 28 U .S.C . § 1331 . In connection with the acts, transactions, and conduct

alleged herein, defendants used the means and instrumentalities of interstate commerce ,

including interstate telephone communications . and the facilities of interstate national securities

exchanges and markets .

14 . Venue is proper in this District pursuant to Section 27 of the Exchange Act an d

28 U.S .C. § 1391(b)_ Many of the acts alleged herein , including the dissemination to th e

investing public of the materially false and misleading electronically displayed quotes on liste d

options, originated from or were disseminated from this District .

THE PARTIES

15 . Plaintiff Hadassah Gurfein ("Gurfein") is a citizen of the State of New Jersey.

During the Class Period she maintained a brokerage account with defendant Ameritrade throug h

which she and/or her authorized representative ("Plaintiff') was provided with direct electroni c

access to AMEX options specialists for the transactions of her options purchase and sell orders.

Plaintiff's account at Ameritrade allowed her to transmit her equity options orders directly to th e

AMEX trading floor ("Direct Access") . As set forth in greater detail below, in connection with

option limit sell orders for equity options on Forest Laboratories, Inc . ("Forest Labs"), certain

defendants, in effect, refused to honor specific quotes that were electronically displayed by those

defendants and accepted and contracted to by Plaintiff, and consequently, Plaintiff suffere d

7

approximately $50,000 of damages, comprising both lost profits that would have been realize d

but for defendants' wrongful conduct, and out-of-pocket losses that were sustained when

defendants refused to execute Plaintiff's limit orders that accepted a bid displayed by th e

defendant options specialist .

16. During the Class Period, defendant American Stock Exchange, LLC, was a

national securities exchange registered with the SEC pursuant to Section 6 of the Securities

Exchange Act of 1934 (the "1934 Act") located in New York, New York . The Amex maintain s

a market to purchase and sell stocks, bonds and equity options, including the equity options fo r

Forest Labs . The AMEX is a self-regulatory organization, also called an SRO . As such, it i s

responsible for and obligated to manage and supervise the conduct of its members and related o r

associated persons in the manner in which such persons conduct business under the auspices o f

the AMEX . In this connection , the AMEX is required to maintain various regulatory program s

such as surveillance, investigative and disciplinary programs related to options order handlin g

that are supposed to be designed to enforce compliance not only with the AMEX's owns rule s

and regulations but also with the federal securities laws and regulations . As previously alleged

above, and as alleged below in greater detail, the AMEX has so egregiously failed in it s

regulatory mission to police and enforce options order handling as to become an active an d

willing participant in the actual commission of the wrongdoing alleged herein .

17 . During the Class Period , defendant Knight Trading Group , LLC ("Knight") was a

broker-dealer that, through its wholly-owned subsidiary, Knight Financial Products , LI..C ,

operated as the assigned options specialist at the AMEX for the purchase and sale of put and cal l

options for Forest Labs and other stocks . According to its own promotional materials, Knight i s

the second largest provider of options execution by volume and is the named specialist in

approximately 468 options which covers more than two-thirds of all equity option order flow o n

all five United States options exchanges .

18 . During the Class Period, defendant Spear, Leeds & Kellog ("Spear Leeds") was a

broker dealer that was an assigned options specialist at the AMEX for the trading of equit y

options .

19 . During the Class Period, defendant Interactive Brokers ("Interactive") was a

broker dealer that was an assigned options specialist at the AMEX for the trading of equity

options .

20 . During the Class Period, defendant Preferred Capital Markets ("Preferred

Capital") was a broker dealer that was an assigned options specialist at the AMEX for the trading

of equity options .

21 . During the Class Period, defendant Ameritrade, Inc . ("Ameritrade"), a Delawar e

corporation, was headquartered in Omaha, Nebraska, and was in the business of providing sel f

directed investors gateways to trading securities through the electronic medium, online access

from it's customers home personal computers ("PCs") to the rest of the financial markets .

22 . Defendants listed in paragraphs 17 through 20 above are collectively referred t o

herein as the "Options Specialist Defendants . "

CLASS ACTION ALLEGATION S

23 . Plaintiff brings this action as a class action pursuant to Rules 23(a) and (b)(3) o f

the Federal Rules of Civil Procedure, on behalf of herself and all others similarly situated wh o

placed direct access orders to open and/or close put or call equity options positions with respec t

to all equity options on stocks transacted on the AMEX, including, but not limited to, the stock s

C)

of Forest Laboratories , Inc . ; Qlogic ; Verisign; Juniper Networks ; Dupont; Merrill Lynch QQQ ;

Affymetrix ; Broadcotn ; Lehman Brothers , Inc . ; and Exxon Mobil from April 2, 2001 to the dat e

of this Complaint (the "Class Period") which were not executed at the displayed quotation pric e

(the "Firm Quote Class") and on behalf of a subclass of Ameritrade customers who placed order s

to open and/or close put or call equity option positions from April 2, 2001 to the date of thi s

Complaint that were not executed at the displayed quotation price (the "Ameritrad e

Subclass")(Both the Firm Quote Class and the Ameritrade Subclass are hereinafter collectivel y

referred to as the "Class")

24. Excluded from the Class are the defendants, each of their subsidiaries an d

affiliates, entities in which each of the defendants have a controlling interest, and the successors ,

affi liates or assigns of any of the foregoing excluded persons and entities .

25. The persons in the Class are so numerous that joinder of all members i s

impracticable . During the Class Period, the AMEX received over 2000 equity option orders b y

direct access per week .

26. Plaintiffs claims are typical of the claims of other members of the Class, as :

(a) Plaintiff and the members of the Finn Quote Class were Direct Access

customers, whose orders to buy or sell option contracts were not executed at the electronicall y

displayed quotation by defendants and thus sustained damages, as a result of defendants '

wrongful conduct complained of herein ; and

(b) Plaintiff's claims are typical of the claims of members of the Ameritrad e

Subclass, whose orders to buy or sell option contracts were not executed at the electronicall y

displayed quotation by Anieritrade and thus sustained damages, as a result of defendants '

wrongful conduct complained of herein .

10

27 . Plaintiff is a representative party who will fairly and adequately protect th e

interests of the other members of the Class and has retained counsel competent and experience d

in class action securities litigation . Plaintiff has no interests which are antagonistic to, or in

conflict with, the Firm. Quote Class or Ameritrade Subclass that she seeks to represent .

28 . A class action is superior to other available methods for the fair and efficient

adjudication of the claims asserted herein . As the damages suffered by the individual class

members may be relatively small, the expense and burden of individual litigation make i t

virtually impossible for class members individually to redress the wrongs done to them . The

likelihood of individual class members prosecuting separate claims is remote . Plaintiff

anticipates no unusual difficulties in the management of the action as a class action .

29. There are questions of law and fact common to the Firm Quote Violation Clas s

which predominate over any questions solely affecting individual members of the Class ,

including :

(a) whether the defendants entered into the contracts when they displayed bi d

and ask prices that were accepted by Plaintiff and members of the Class ;

(b) whether the Firm Quote .Rule violations described herein constitute a

breach of contract and violations of section 10(b) of the Securities Exchange Act ;

(c) whether Plaintiff and the Class are third-party beneficiaries to th e

contracts between the Options Specialist Defendants and introducing brokers such a s

Ameritrade ;

(d) the appropriate measure of damages .

11

30. There are questions of law and fact common to the Ameritrade Subclass whic h

predominate over any questions of law and fact solely affecting individual members of th e

Arneritrade Subclass, including :

(a) whether Ameritrade is liable for committing the wrongful acts alleged

herein by not filling option purchase or sale limit orders at the electronically displayed quotes ;

(b) whether the members of the Anmeritrade Subclass have sustained

significant financial damages and, if so, what is the proper measure thereof ;

(c) whether Ameritrade's conduct constitutes violations of Section 10(b) o f

the Securities Exchange Act ;

(d) whether Ameritrade breached the parties' applicable agreements wit h

respect to the execution of options trades of Plaintiff and other members of the Ameritrad e

Subclass, and the covenants of good faith and fair dealing implied therein, breached the fiduciar y

duties owed to Plaintiff and other rnernbers of the Ameritrade Subclass in connection with th e

execution of options trades and\or has been unjustly enriched ;

(e) whether Ameritrade should provide an accounting of all commissions an d

other compensation of any kind that it directly or indirectly received in connection with th e

execution of options trades by Ameritrade on behalf of Plaintiff and the Aineritrade Subclass an d

(f) whether Plaintiff and the Ameritrade Subclass members are entitled t o

equitable relief, restitution and damages .

12

SUBSTANTIVE ALLEGAT IONS

The AMEX and Execution of Option Order s

31 . Defendant AMEX through its members or their agents, the Option Specialis t

Defendants, among other things, provides a market place for the buying and selling of stock

options,

32 . The Options Specialist Defendants are members of the AMEX . They are charge d

with. maintaining a fair and orderly market in one or more securities . The Option Specialis t

Defendants execute orders, including limit orders, on behalf of other AMEX members, such as

defendant Aneritrade, a registered stockbroker, for a portion of the broker's commission .

33 . Defendants guarantee performance of the counter parties to the transactions tha t

take place on the AMEX . One of the services defendants provide for their customers and\o r

counterparties is the real time quotation of stock option prices, including bid and ask quotes, a t

which public custo .€:ners, such as Plaintiff and the Class, can buy and sell options contracts .

34 . One of the ways the defendants provide these price quotations is through thei r

various electronic transfer or display systems .

35 . Once the real time price is displayed on the computer screens , the public

customer, directly or indirectly through his broker, may buy or sell the option by clicking on th e

price shown on the screen.

13

36. Defendants, either directly or indirectly, affirmatively represented to the publi c

customer, that when the customer "clicks" on the represented price (either to buy or sell) that th e

transaction is executed instantly .

37. After this instantaneous stock option transaction is completed, defendants send a n

instantaneous confirmation notice that appears on the public customer ' s (or his broker's )

computer screen .

38 . The Options Specialist Defendants all maintain systems to allow equity option s

investors such as Plaintiff and members of the Class to have direct access to the AMEX option s

specialists .

N. During the Class Period, Plaintiff received the AMEX's options price quotation s

on her computer screen through Ameritrade's facilities for providing Plaintiff with Direc t

Access .

40. Defendants through conduct and practices described above and below, repeatedl y

failed to execute options trades at the displayed or represented price .

The 2000 SEC and Justice Department Actions Against the AME X

The Year 2000 SEC Proceedings

41 . On September 11, 2000, the SEC issued an Order that required the AMEX to :

promptly enhance and improve its surveillance, investigative andenforcement processes and activities with respect to options order

handling rules, including, the duty of best execution with respect to

the handling of orders after the broker-dealer routes the order to

such respondent exchange, compliance with limit order displayrules, priority rules, trade reporting and firm quote r€ules .

The Order also required the AMEX to :

promptly enhance and improve i ts surveillance , investigative andenforcement processes and activities with a view to preventingand eliminating . . . harassment . intimidation, refusals to deal and

14

retaliation against market participants for acting competitively, orseeking to act competitively, and . . . other anticompetitive conduct .

In The Matter of Certain Activities of Options Exchanges, Order Instituting Publi c

Achninistrative Proceedings Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934,

Making Findings and Imposing Remedial Sanctions, Securities Exchange Act Release No . 43268

(Sept . 11, 2000) .

42 . On November 20, 2000, the SEC adopted amendments to Exchange Act Rule 1 1

Act-1, the Quote Rule (or "Firm Quote Rule"), extending its application to the options markets .

As amended, Rule 11 Ac I -1 required responsible brokers or dealers (including the Options

Specialist Defendants) to execute options transactions with customers at prices at least as

favorable as their published bids or offers at the time the orders are presented and in any amount s

of contracts up to their published sizes . An options specialist is excused from the firm quot e

obligation only under very speci fic limited conditions not applicable here .

43 . The AMEX adopted its own version of the "Firm Quote Rule ." As amended,

AMEX Rule 958A "Application of the Firm Quote Rule," obligates each specialist to execut e

any customer order in an option series in an amount up to its published quotation size and an y

broker dealer order in an amount up to the size established and periodically published by th e

Exchange . The AMEX is responsible for ensuring that specialists such as the Options Specialis t

Defendants adhere to rules and regulations including the Firm Quote Rule described above .

The Year 2000 Department of Justice Proceeding s

44. The AMEX is no stranger to anticompetitive behavior . On September 1 I, 2000 ,

the Antitrust Division of the Justice Department filed a complaint against the AMEX and othe r

exchanges for violations of Section 1 of the Sherman Act . 15 U .S.C . § 1 .

15

45. On September 25, 2000, the defendants entered into a "Proposed Order,

Stipulation and Competitive Impact Statement" with the United States .

46. The complaint and proposed order alleged that the "defendant exchanges reached

an [illicit] understanding between and among one another to refrain from listing equity option

classes that were already listed on another exchange . "

47 . The complaint also alleged "that the exchanges enforced the agreement in various

ways, including, threatening and harassing exchanges and market makers that desired to multi-lis t

option classes . . . "

The 2003 SEC Follow-Up Investigation & Findings

48 . According to a June 16, 2003 report by the SEC, it began receiving complaints in

early 2001 from customers that AMEX specialists were frequently violating "firm quote"

requirements with respect to options orders by, among other things, backing away from thei r

electronically displayed quotations in response to limit orders and, in the case of market orders ,

executing their orders at prices inferior to their displayed prices . The SEC commenced an

investigation of the AMEX thereafter .

49. As part of the aforementioned investigation , the SEC conducted an analysis o f

audit trail data from the week of October 22, 2001 to evaluate order handling by AMEX option s

specialists including the Options Specialist Defendants . The SEC analyzed both market order s

and marketable limit orders that did not receive an automatic execution through the AMEX' s

Auto-Ex system. Marketable limit orders are buy (sell) orders for which the limit price is greate r

(less) than or equal to the prevailing ask (bid) when the order is received by the specialist . These

orders should have been executed at the prevailing quotes when the orders were received, unles s

an exception to the Firm Quote Rule was applicable .

16

50. The SEC's investigation into the AMEX and the Options Specialist Defendants '

compliance with the Firm Quote Rule revealed significant disparities in the way option s

specialists handled Direct Access orders versus orders received from firms not offering Direc t

Access to its customers. According to the SEC Report, the disparity in the way specialists ,

including the Options Specialist Defendants, handled orders indicated that specialists routinel y

discriminated against orders from Direct Access customers by failing to execute their marketabl e

orders, in likely violation of the "firm quote," "due diligence" and "priority" niles .

51 . The ability of the Options Specialist Defendants to identify the order routing firm

such as Ameritrade, allowed specialists to discriminate against particular customers' orders . The

SEC also found that the AMEX failed to adequately detect, investigate and discipline thi s

conduct .

52 . According to the SEC Report (when the specialists were not busy with any othe r

orders), 37 .6%, of marketable limit orders from Direct Access customers went unfilled while onl y

5 .2% of orders from all other customers went unfilled in likely violation of the firm quote, du e

diligence and priority rules . The SEC also found that, as options specialist post activit y

increased, the chance of receiving an execution decreased at a higher rate for direct acces s

customers versus other customers . When the Arnex specialists were busy (for purposes of th e

SEC's analysis, when the specialists had received ten or more orders in the previous 30 seconds) .

the direct access customers had only an 11 .2% chance of receiving an execution, while all othe r

customers had an 87.6% chance of receiving an execution .

53 . In response to these findings, the SEC recommended :

[T]he AMEX immediately remove the firm-identifyinginformation from incoming electronic orders to limit the

specialist's ability to discriminate when handling customer orders .

The Staff does not believe this information is necessary for a

17

specialist to fulfill its obligations, and its removal should limit thespecialist's ability to discriminate when handling customer orders .

54. It is the responsibility of the AMEX to monitor its member's compliance with al l

applicable rules including the AMEX Firm Quote Rule . The SEC found serious deficiencies i n

the Amex's regulatory program for detecting, investigating, and disciplining firm quot e

violations that resulted in the Amex's failure to effectively enforce the Firm Quote Rule .

55 . According to the SEC Report, even a cursory review of one of the AMEX's firm

quote exception reports revealed that Amex specialists appeared to fail to honor their

disseminated quotes at high rates in response to orders from public customers, and at even highe r

rates in response to orders from Direct Access firms . According to the SEC Report, the AMEX

knew, or should have known, from the high volume of complaints it received, that its option s

specialists were engaging in improper conduct .

5 6 . The SEC found that the AMEX failed to enforce the Firm Quote Rule an d

employed incorrect or inadequate review procedures in its analysis and investigation of potentia l

firm quote violations that caused it to improperly conclude that firm quote violations had no t

occurred. Moreover, when the AMEX did conclude that a firm quote violation had occurred, i t

failed to discipline its member(s) in any meaningful way . The SEC found, through interviews o f

several members of the Floor Violation Disciplinary Committee, that the committee could no t

clearly articulate the requirements of the Firm Quote Rule and often failed to issue fines for Fir m

Quote Rule violations when such fines were warranted .

5 7 . The SEC found that the AMEX failed to file the annual progress reports require d

by the September 2000 Order in a timely fashion . The SEC found that the AMEX's regulatory

program to detect and discipline violations of the Firm Quote Rule was deficient to the exten t

18

that the AMEX failed to meaningfully enforce the Firm Quote Rule since it became effective i n

April 2001 .

Ameritrade and Knight

58 . Ameritrade promoted, as an advantage to Plaintiff and other similarly situated

customers, its ability to provide them Direct Access to options exchanges including the AME X

and the AMEX's automatic option execution systems, known as "Auto-Ex."

59 . Ameritrade utilizes electronic systems which display real time prices of th e

various stock options on the computer screens of public customers, such as Plaintiff, and allo w

the customer to have "Direct Access" to the trading floor of the AMEX through Auto-Ex and

other means . Once the price is displayed on the computer screen, the public customer may bu y

or sell the option by "clicking" on the price shown on the screen .

60. Arneritrade has a financial interest in Knight Trading through its approximate 6 %

ownership interest in Knight Trading . This financial interest gives Ameritrade a financia l

incentive to route as many orders as possible through Knight even if such routing is to th e

financial detriment of its own customers .

61 . Ameritrade routed Plaintiffs limit orders to Knight, the AMEX options specialis t

for Forest Labs equity options, to the exclusion of other exchanges trading Forest Labs equit y

options and refused to reroute such orders when Knight failed, several times, to execute the limi t

order at the purported firm quote .

62 . There is an "order flow" agreement between Ameritrade and Knight pursuant t o

which 7 5° i, of all orders placed by Ameritrade customers are routed through Knight Trading .

63 . Defendant Knight, at various times throughout the Class Period while acting a s

a member of an exchange that is registered by that exchange as a specialist, or is authorized by

19

that exchange to perform functions substantially similar to that of a specialist, failed t o

immediately publish bids or offers that reflected (i) the price and the full size of each custome r

limit order held by the specialist that is at a price that would improve the bid or offer of suc h

specialist in such security and failed to publish (ii) the full size of each customer limit order hel d

by the specialist that; (A) is priced equal to the bid or offer of such specialist for such security ;

(B) is priced equal to the national best bid or offer ; and (C) represents more than a de ininimis

change in relation to the size associated with the specialist's bid or offer . Defendant Knight als o

failed to execute transactions at the electronically displayed quotes in violation of the Firni Quot e

Rule .

64 . On January 7, 2002, the NASD announced that Knight had been censured and

fined $700 ,000 in sanctions for wide-ranging market making and trading violations , including

failure to honor posted quotes and to accurately report trades to the NASD . NASD Regulatio n

found that Knight committed numerous violations of federal securities laws and NASD Rules

spanning the 4-year period from July 1997 to May 2001 . Knight violated the locked and crossed

markets rule, and found that Knight failed to honor posted quotes, promptly display limit order s

and report trades timely and accurately to the NASD .

65 . SEC Administrative Proceeding File No . 3-10839 also states that Knight was

censured and fined for violations of the Limit Order Display Rule between October 1997 an d

August 1999 .

Defendants Wrongfully Failed to Execute Plaintiffs Limit Orders that Accepted the Bidsthat were Electronically Displayed by Defendant s

66 . In or about December 2002, Plaintiff attempted to purchase and then sell, equity

options on Forest Labs through transmission of limit orders via online transmission from he r

home computer, through the facilities of Anreritrade, to the AMEX trading floor .

20

The Forest Labs December 100 Puts

67 . On or about December 4, 2002, Plaintiff bought 50 Forest Labs December 100

put contracts (FXAXT) at a price of $0.90 per contract for a total price of $4,500 . 00 (exclusiv e

of commissions), Two days later, on December 6 , 2002, the value of the FXAXT contracts ha d

increased significantly from $0.90 per contract to almost $8 .00 per contract. Accordingly, on

December 6, 2002 , at 8 :52 :54 AM (CST), the electronically displayed "bid" on F XAXT was

$7.70 (the price that a buyer was willing to pay for the put) and the "ask" (i .e. the price that a

seller was willing to sell a put) was $8 .00. Thus, if a seller placed an order or otherwise accepte d

the "bid" at $7 .70 (or less), that transaction should have been executed instantaneously . These

bid and ask prices were electronically displayed on Plaintiffs computer through Ameritrade' s

facilities . At 8 :53 :34 (CST) Plaintiff placed a limit order via the Internet , to sell 50 FXAXT

contracts at $7.70 .

68. Ameritrade purportedly, immediately routed Plaintiff's order to the market . In

fact, at the same moment that Plaintiff placed her order, the displayed bid actually increased . to

$7.80, so that Plaintiff was actually willing to sell the contracts for a lower price than was bein g

bid. But in almost three minutes that transpired, what is considered an eternity in placing order s

and executing transactions in the securities markets, that order was not instantaneously execute d

as it should have been and was required to be . So at 8 :56 :21 AM (CST) Plaintiff cancelled that

order and replaced it with another order that was at or below the electronically displayed bid ,

which similarly should have been instantaneously executed . However, similarly, it was not .

This scenario was repeated several times, and each time that the order should have bee n

instantaneously executed, it was not .

21

69. Because of the materially false and misleading real time quotes displayed b y

Arneritrade and the defendant options specialist, under the auspices of the AMEX and with it s

knowledge, and the failure and refusal of both Atieritrade and the defendant options specialist to

execute the transaction, as they were required to do, Plaintiff was compelled to use an alternat e

means to salvage a rapidly decreasing unrealized gain . Plaintiff ultimately exercised the 5 0

FHAXT contracts by purchasing 5000 common shares of Forest Labs (F.RX), the underlying

instrument . She purchased 100 shares at S94.90 and 4900 shares at 94,97 . She then immediately

sold the 5,000 shares for $100 per share for a profit of $24,157 , less the cost of the options which

would make the profit approximately $20,500 . Had the initial options sell order been executed

timely, the gross proceeds would have been $34,000, i .e ., $7 .70- $0.90 - $6 .80 x 5,000- $34,000 .

Thus, Plaintiff was deprived of approximately $13,500 of profits by defendants' wrongdoing .

The Forest Labs February 85 Puts

70. Between October 11, 2002 and November 19, 2002 Plaintiff purchased an d

accumulated 100 Forest Labs February 85 Puts (FHANQ) . These puts were purchased at prices

ranging from $2.00 per contract to $6 .00 per contract for a total purchase price of $39,85 0

(exclusive of commissions ) . On December 6, 2002, the same day that Plaintiff attempted to sel l

the Forest Labs December 100 puts , Plaintiff submitted orders to sell 100 contracts of FHANQ at

$4.50 which price was also below the bid, displayed and represented by Ameritrade on Plaintiff s

computer at that time . That order should have been immediately executed . Instead, of these

100 contracts, only 25 contracts were sold and at a significantly lower price of $3 .00 for a loss of

$3,750, i.e . ; $4 .50- $3 .00= $1 .50 x 2500= $3,750 . Subsequently, as a result of a 2-for-I split, th e

remaining 75 contracts were converted to 150 FHANV, which were sold on January 21, 2003 at

$0.20 equivalent to $3,000. This, when compared to 75 contracts at $4 .50 (or S33,750), resulted

22

in a negative differential of S' )0,750, The total negative impact of the FHANQ matter equal s

534,500 .

71 . Plaintiffs limit orders were eligible for the "automatic execution" by the Fores t

Labs options specialist at the AMEX, namely Knight. In effect, Knight's display of bid or ask

prices constituted offers to contract for the purchase or sale of those options and Plaintiffs '

transmission of sell orders constituted an acceptance which required A neritrade and Knight t o

accept the contract and execute the agreed upon transaction .

72 . The Defendants failed to allow Plaintiff and other members of the Class to

properly use their respective electronic trading systems and realize investment gains by :

(a) Failing to execute option transactions when Plaintiff and others similarl y

situated submitted orders which agreed to the displayed bid or ask price o r

otherwise "clicked" on prices transmitted through their respectiv e

electronic transfer systems ; or

(b) Changing or "fading" the option price quoted through their respectiv e

electronic trading systems when "clicked" on by Plaintiff and other s

similarly situated .

Other Wrongful Conduct Committed By Defendant s

73 . The Options Specialist Defendants, the AMEX and Amentrade conspired by

concerted action based on shared information which allowed the co- conspirators to identify

direct access orders from four letter acronyms included by the AMEX on the incoming electroni c

order and refuse to execute same at the electronically displayed quote .

74 . The co-conspirators acted in concert in the investigation and reporting of Fir m

Quote Rule violations by refusing to enforce the firm Quote Rule and improperly manipulatin g

?3

the work of the "Minor Floor Violation Disciplinary Committee" to which all . except one of the

Firm Quote Rule Violations was referred by the AMEX . Up until June, 2003, the ten perso n

committee consisted entirely of floor members including persons affiliated with the defendant s

named herein .

75 . The Defendants also engaged in anti-competitive conduct to the detriment o f

Plaintiff and the Class, by refusing to execute trades with Plaintiff and the Class .

FIRST CLAIM FOR RELIE F(Against All Defendants for Violation of Section 10(b)

of the Exchange Act and :Rule I 0NS-5 )

76. Plaintiff repeats and realleges each and every allegation contained in all of th e

foregoing paragraphs as if fully set forth herein .

77 . During the Class Period, defendants, singly and in concert, directly and indirectly ,

engaged in a common plan, scheme, and unlawful course of conduct, pursuant to which the y

intentionally, knowingly or recklessly, engaged in acts, transactions, practices and courses o f

business which operated as a fraud and deceit upon Plaintiff and other members of the Class, and

made various deceptive and untrue statements of material facts and omitted to state materia l

facts, in order to make the statements made, in light of the circumstances under which they wer e

made, not misleading to Plaintiff and members of the Class .

78 . During the Class Period, the Options Specialist Defendants knowingly ,

intentionally, regularly and systematically displayed, by electronic means, materially false an d

misleading real time bid and ask prices on options listed at the defendant AMEX in that th e

Options Specialist Defendants knew that, although required to, they would refuse to execut e

transactions on behalf of a large segment of the investing public like Plaintiff and members o f

the Class to the financial detriment of Plaintiff and members of the Class . Plaintiff and members

24

of the Class did not know that in many cases they had little if any chance of executing a

transaction on an AMEX listed option simply by electronically accepting a displayed bid or as k

quote .

79 . As a result of the Options Specialist Defendants' electronic display of materiall y

false and misleading real time bid and ask quotes, Plaintiff and members of the Class wer e

materially denied the represented benefits of "Direct Access" trading and were denied large r

profits or subjected to larger losses because their limit orders would not be executed by the

Options Specialist Defendants . Plaintiff and members of the Class, by reason of defendants '

display of quotes that they knew were false and misleading with respect to a large segment of th e

investing public and which they had no intention of honoring, suffered damages in an amount t o

be proven at trial .

SECOND CLAIM FOR RELIEF(Against Defendant AMEX for Violation of

Section 20(a) of the Exchange Act )

80. Plaintiff repeats and realleges each and every allegation contained in all of th e

foregoing paragraphs as if fully set forth herein .

81 . Defendant AMEX by virtue of its authority as a self-regulatory organization an d

by virtue of its obligation to maintain various regulatory programs such as surveillance ,

investigative and disciplinary programs related to options order handling that are supposed to b e

designed to enforce compliance not only with the AMEX' s owns rules and regulations but also

with the federal securities laws and regulations, is a controlling person of the Options Specialis t

Defendants with respect to their compliance with the rules and regulations of the AMEX and the

anti-fraud provisions of the federal securities laws . As documented by the June 2003 S .EC

Report related to the AMEX's handling of compliance and enforcement of the options handlin g

25

responsibilities of the Options Specialist Defendants, the AMEX's purported regulator y

personnel, knowingly, intentionally, and purposefully turned a blind eye to gross violations o f

the Firm Quote Rule with respect to the knowing display of materially false and misleading bi d

and ask quotes and the systematic failure and refusal of the Options Specialist Defendants to

properly execute transactions . The regular and systematic gross violations of SEC and AMEX

rules and regulations and the federal securities laws by the Options Specialist Defendants could

not have occurred but for the complicit but affirmative acquiescence of defendant AMEX .

82 . The AMEX had the power and influence and exercised the sane to cause th e

Options Specialist Defendants to engage in and/or affirmatively permit the illegal conduct an d

practices complained of herein.

83 . By reason of the conduct alleged above, defendant AMEX is liable for th e

aforesaid wrongful conduct, and is liable to Plaintiff and the Class for damages which they

suffered in connection with the refusal of the Options Specialist Defendants to properly execut e

their limit orders, in an amount to be proven at trial .

THIRD CLAIM FOR RELIE F(Against Defendant Ameritrade for Breach of Contract)

84. Plaintiff repeats and realleges each and every allegation contained in all of th e

foregoing paragraphs as if fully set forth herein .

85 . During the Class Period, Ameritrade made representations concernin g

Anieritrade's practices, procedures and capabilities for execution of orders . An eritrade' s

marketing materials stated as follows :

How Does Ameritrade route orders differently than other brokers?

Our sophisticated order routing technology allows us todynamically distribute orders to multiple market centers in an

effort to obtain best execution . In addition, we continually an d

26

routinely monitor our execution quality to make improvements thatwill benefit our clients . We employ over 100 metrics includingprice, speed , liquidity and opportunities for price improvement, toassure that order flow is directed to markets that provide bestexecution for our clients .

What is auto-execution?Auto-execution is a threshold established by a liquidity provider(market maker) that allows for the automated execution of ordersregardless of the actual displayed size on the National Best Bid andOffer (NBBO). In an attempt to increase the likelihood that yourorder is executed in its entirety, Ameritrade routes orders tonumerous liquidity providers that offer auto-execution . Auto-execution, however, is never guaranteed . It can be decreased o rdiscontinued at will by the liquidity provider .

86. In addition, in materials provided to Plaintiff and the Ameritrade Subclass ,

Ameritrade represented :

How Your Account Is Managed` ?

28. All transactions under this Agreement are made subject to theconstitution , rules, regulations , customs and usage of the exchange

or market and its clearinghouse , if any, where Advanced or itsassigns execute the transactions .

29. Stock orders are routed via an electronic matrix to a listed,NASDAQ, or over- the-counter agent , depending upon the securitybeing ordered . Ameritrade and Advanced cannot accept requeststo route orders to a specific exchange for execution . Ameritrade orAdvanced receives cash payments for routing any stock orders forexecution to certain agents on specific listed , NASDAQ , and over-the-counter securities . These agents are market makers and theycarry inventory in their specific securities , which allows for priceimprovement to the retail customer for securities ordered throughtheir inventory . Accordingly, any order is always executed at the"best bid," "best offer ," or at price superior to the other one byvirtue of the market maker ' s inventory positioning capability .

87. Defendant Ameritrade, through the conduct and practices described above ,

intentionally failed to execute orders submitted by Plaintiff and the Ameritrade Subclass' at the

27

"best bid," "best offer," or "at a price superior to other ones," and, accordingly, breached it s

contract with Plaintiff and the Anneritrade Subclass to obtain the best execution .

88 . As alleged above, defendant Ameritrade also failed to execute orders of Plaintiff

and the Ameritrade Subclass "instantaneously" through automatic executions, and, accordingly ,

breached its contract with Plaintiff and the Ameritrade Subclass to obtain the best execution .

89. As a direct result of the defendant Ameritrade's actions and/or omissions , Plaintiff

and the Atneritrade Subclass suffered damages including, but not limited to, lost profits, loss of

business, amounts of overpayments and 'interest, in an amount to be proven at trial .

FOURTH CLAIM FOR RELIEF

(Against Defendant Ameritrade for Breach o fCommon Law Covenant o f Good Faith and Fair Dealing)

90 . Plaintiff repeats and realleges each and every allegation contained in all of th e

foregoing paragraphs as if fully set forth herein .

91 . Defendant Ameritrade was obligated to act in good faith, to deal fairly, and t o

adhere to the terms and spirit of the agreements made between the Ameritrade Subclas s

members, including Plaintiff, as there has long been recognized that an implied covenant of goo d

faith and fair dealing exists between parties to a contract .

92. These obligations included, under the circumstances, that defendant Ameritrad e

act in good faith and deal fairly by not taking advantage of and benefiting from the failure t o

execute option trades at the prices offered so that Plaintiff and the Ameritrade Subclass woul d

receive their respective full consideration to which they were entitled .

9 3. Defendant A.meritrade violated the implied covenant of good faith and fai r

dealing that accompanied its performance of, and obligations under, the Arneritrade agreement ,

28

by benefiting from not executing Plaintiffs and the Ameritrade Subclass' orders at the prices a t

which Ameritrade offered it would .

94. Plaintiff and the other members of the Ameritrade Subclass have been damage d

by defendant Ameritrade's breaches of the implied covenant of good faith and fair dealing, in a n

amount to be proven at trial .

FIFTH. CLAIM FOR RELIE F(Against Defendant .Ameritrade for Breach of Fiduciary Duty )

95. Plaintiff repeats and realleges each and every allegation contained in all of th e

foregoing paragraphs as if fully set forth herein .

96. Ameritrade had a fiduciary responsibility to Plaintiff and the Ameritrade Subclas s

to seek alternate routing market maker venues to fulfill execution and order handling standard s

governed by the regulatory agencies .

97 . As a fiduciary, defendant Ameritrade owed Plaintiff and the Ameritrade Subclas s

duties of loyalty, due care and fair dealing including, protecting Plaintiffs and the Ameritrad e

Subcl uass' interests ; to refrain from doing any acts Inju riou's to, or which would depriveu ti~

Ameritrade Subclass members of, any profit or advantage, and to not elevate Arneritrade's or it s

affiliates, such as Knight, interests, ahead of Plaintiff and other members of the Ameritrad e

Subclass .

98, Ameritrade failed, throughout the entire Class Period, to implement the foregoin g

responsibilities and to protect the assets of their client base, past and present .

99 . As a direct and proximate result of defendant Ameritrade's breaches of fiduciar y

duties, Plaintiff and the other members of the Ameritrade Subclass suffered damages in an

amount to be proven at trial .

29

SIXTH CLAIM FOR RELIE FjAgainst The Options Specialist Defendants For Breach of Contract )

100. Plaintiff repeats and realleges each and every allegation contained in all of th e

foregoing paragraphs as if fully set forth herein .

101 . Defendants, by quoting prices through their respective electronic transfer system ,

have made numerous offers to Plaintiff to buy or sell options contracts at specified prices .

102 . Plaintiff, by submitting orders that specifically accepted the electronicall y

displayed quote or by otherwise "clicking" on the quoted prices posted by the Defendants tha t

appeared on her computer screen, accepted the offers of the Defendants, thereby creating lega l

contracts .

103. The Defendants breached these contracts by refusing to execute optio n

transactions when Plaintiff either submitted orders that specifically accepted the electronicall y

displayed quote or otherwise "clicked" on prices transmitted through her respective electroni c

transfer systems .

104. As a direct result of the defendants' actions a€Fd/or omissions , Plaintiff and the

Class suffered damages including, but not limited to, lost profits, loss of business, amounts o f

overpayments and interest, in an amount to be proven at trial .

BASIS OF ALLEGATION S

105 . Plaintiff makes the foregoing allegations on information and belief except thos e

pertaining to herself, which are based upon Plaintiffs personal knowledge. Plaintiff' s

information and belief is based upon the investigation conducted by her attorneys, which

included, inter a/ial , a review of various SEC filings and repo rt s , press releases, media reports ,

statements made by certain of defendants and' .or their €gents, relating to the acts and practice s

30

alleged herein, and pleadings and litigation in other cases that relate to the acts and practice s

alleged herein .

PRAYER FOR RELIEF

WHEREFORE, Plaintiff respectfully requests that this Court grant the following relief :

A. Certifying this case as a class action pursuant to Fed. R. Civ. P. 23(b)(2) and (3 )

and certifying Plaintiff as the Class Representative and her chosen counsel as Class Counsel ;

B . Awarding monetary damages and/or rescissionary relief against all defendants ,

jointly and severally, in favor of Plaintiff and other members of the Class for all losses an d

damages suffered as a result of the acts and transactions complained of herein ; and

C . Awarding plaintiff the costs of this action together with reasonable attorneys '

fees, and such other and further relief as this Court deems necessary and proper.

DEMAND FOR TRIAL BY JUR Y

Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Plaintiff de . hands

a trial by jury on all questions of fact raised by the Complaint .

Dated: December 3, 2004

LOVELL STEWART HALEBIAN LL P

New York, New York. 103110Tel : 212-608-1900

31

SQUITIERI & FEARON LLP

By.Olinpio Lee Squ eri (OLS-1684)Daniel R . Lapins'il (DRL-7447)

32 East 57th Street, 12"' Floor

New York, New York 10022Tel: (212) 421-649 2Counsel for Plaintiff and the Clas s

3?

fr

i f

J

{ LOVELL STEW.ART HALEBI.AN LLB'

CERTIFICATION OF NAMED PLAINTIFFPURSUANT TO FEDERAL SECURITIES LAW S

1, Hadassah Gurfein, ("Plaintiff") declare as to theclaims asserted under the federal securities laws, that :

Plaintiff has reviewed the complaint and authorized its filing .

1 . Plaintiff did not purchase the security that is thesubject of this action at the direction of plaintiff's counsel orin order to participate in this private action .

2 . Plaintiff is willing to serve as a representativeparty on behalf of the class, including providing testimony atdeposition and trial, if necessary .

3 . Plaintiff's transactions in the securities that arethe subject of this action during the Class Period are as follows :

Security Transaction Price Date

SEE ANNEXED SCHEDULE

4 . Plaintiff has sought to serve or served as aSY representative party for a class in the following actions filed }

under the Securities Exchange Act of 1934 or Securities Act of 1933subsequent to December 22, 1995 ; NONE

5 . Plaintiff will not accept any payment for serving asa representative party on behalf of the class beyond thePlaintiff's pro rata share of any recovery, except such reasonablecosts and expenses (including lost wages) directly relating to therepresentation of the class as ordered or approved by the court ,

I declare under penalty of rjury that the foregoing istrue and correct . Executed this day of December, 2004, atEnglewood, New Jersey .(City) (State)

Signature

it E

SCHEDULE OF TRANSACTIONS OF HADASSAH GURFEI N

Transaction/Security/ Amt of Security Attempted Transaction

FHAXT - 50 Forest Labs Dec . 100 put bough tFHAXT - 50 accepted bid to sell

not executed

exercised put optio nForest Labs common shares - 100 boughtForest Labs common shares - 4,900 boughtForest Labs common shares - 5,000 sol d

FHANQ - Forest Labs Feb 85 pu tFHANQ - 20 boughtFHANQ - 20 bough tFHANQ - 10 boughtFHANQ - 25 boughtFHANQ - 25 bought

FHANQ - 100 accepted bid to sellnot executed

FHANQ-252 for I stock splitFHANV - 150

sold

sold

Price Date

$0 .90 12/4/2002$7 .70 12/6/2002

$94.90 12/6/2002$94.97 12/6/200 2

$100.00 12/6/2002

X6.00$4.20$4.20$4.10$2.00

10/11/20021 011 612 00210/16/200210/16/200211/19/2002

$4 .50

$3 .00

$0 .20

12/6/2002

12/6/2002

1 12 1 1200 3

9/15/0 3

INDIVIDUAL PRACTICES OF JUDGE LOUIS L . STANTON

Unless otherwise orderedbefore Judge Stanton shall bethe following practices :

by Judge Stanton, mattersconducted in accordance with

1 . Communications With Chamber s

A. Letters . Except as otherwise provided below,communications with chambers shall be by letter, with copiessimultaneously delivered to all counsel . Copies ofcorrespondence between counsel shall not be sent to theCourt .

B . Telephone Calls . In addition to Paragraph 1(D)

below, telephone calls to chambers are permitted . For

matters other than docketing, scheduling or calendaring,call chambers at (212)805-0252 .

C . Faxes . Faxes to chambers are not permitted .

D . Docketing , Scheduling , and Calendar Matters . Fordocketing, scheduling and calendar matters, call chambers at(212)805-0252 .

E. Requests for Adjournments or Extensions of Time .All requests for adjournments or extensions of time muststate (1) the original date, (2) the number of previousrequests for adjournment or extension, (3) whether theseprevious requests were granted or denied, and (4) whetherthe adversary consents, and, if not, the reasons given bythe adversary for refusing to consent . If the requestedadjournment or extension affects any other scheduled dates,a proposed Revised Scheduling Order (reflecting onlybusiness days) must be attached . If the request is for anadjournment of a court appearance, absent an emergency itshall be made at least 48 hours prior to the scheduledappearance .

F . Inquiries . If a matter is not decided within sixtydays of the time it is fully submitted, or its pendencyundecided creates particular problems for any party, counselmay write so advising the court .

2 . Motion s

A . Pre-Motion Conferences in Civil Cases . Fordiscovery motions, follow Local Civil Rule 37 .2 . Formotions other than discovery motions, a pre-motionconference with the court is required before making anymotion, except a lications for ..tem]2orary restraining orders

or for injunctive relief, motions made by persons incustody, motions to dismiss in lieu of an answer, motionsfor reduction of sentence, motions for rear ument motionsto affirm or vacate an arbitration award, Pro Hac Vicemotions, and a eals from a magistrate judge's ru .l.i.nqs . Toarrange a pre-motion conference, the moving party shallsubmit a letter not to exceed three pages in length settingforth the basis for the anticipated motion .

B . Courtesy Copies . Courtesy copies of all motionpapers, marked as such, should be submitted to chambers atthe time papers are served .

[C . Memoranda of Law . Omitted . ]

D . Filing of Motion Papers . Motion papers shall befiled promptly after service .

E . Oral Argument on Motions . Parties may request oralargument by letter at the time their moving or opposing orreply papers are filed . The court will determine whetherargument will be heard and, if so, will advise counsel ofthe argument date .

F . Paragraphs A and D above do NOT apply to any of themotions described in Federal Rule of Appellate Procedure4(a) (4) (A) . A pre-motion conference is not required beforemaking such motions, which should be filed when served .

3 . Pretrial Procedure s

Judge Stanton's form for pre-trial orders differssubstantially from that of other judges of this Court .Instructions for preparing the pre-trial order, along with asample pre-trial order and trial procedures, will be givento the parties at a pre-trial conference and also may beobtained by calling chambers .

2

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK

: CONSENT TO PROCEED BEFOREPlaintiff(s), . .. : UNITED STATES MAGISTRATE JUDGE .

- against - Civ. ( ) ( }

Defendant(s) .

IT IS HEREBY STIPULATED by the undersigned :

1 . All parties consent, pursuant to 28 U.S.C. § 636(c) and Fed . R . Civ. P. 73, that a UnitedStates Magistrate Judge conduct all further proceedings in this action, including any trial and entryof final judgment .

2. Any appeal from a judgment entered in this case will he to the Court of Appeals for theSecond Circuit as from any other judgment of the district court pursuant to 28 U .S.C. § 636(c)(3)and Fed . R. Civ. P : 73(c) .

Attorney(s) for Plaintiff(s)AddressTelephone

Attorney(s) forAddressTelephone

Attorney(s) for Defendant(s)AddressTelephone

Attorney(s) forAddressTelephone

(Separately executed forms may be submitted . See Fed. R. Civ. P. 73(b) .)

SO ORDERED .

Magistrate Judge

S DNY Web 4199

U.S.D.J .

was assigned this case on

For: Clerk U .S.D.C . S .D,N.Y.

CRITICAL INSTRUCTIONS TO ATTOR-NEYS :

* * * * Please Read Immediately * * * *

You must read and comply with all of the instructions on the attached sheet .Your case CANNOT be opened until you have correctly followed ALL ofthe required steps .

J .MICHAEtMcMAHON UNITED STATES DISTRICT COURT WWW .NYSU .VS000RTSCOV

CLEFK OF COURT SOUTHERN DISTRICT OF NEW YORK June 7, 2 0 0 4600 PEARL STREET, NEW YORK, NY 10007

300 QUARROPAS STREET , WHITE PLAINS, NY 1060 1

3rd Amended Instructions for Filing an Electronic Case or Appeal

Important - your new case is an electronically filed case (ECF case) and you will be required to file documents electronicallyinstead of on paper (with certain exceptions listed below) . If you don't have your ECF password yet, you should register now(no fee required) on the CM/ECF page of the Court's website at www .nysd .uscourts.gov Please follow the instructions below .

ECF Judges :Baer *** Castel ** Griesa ** Knapp *** McMahon * Preska * Stein *Batts * Cedarbaum*** Haight ** KoeItl * Motley *** Rakoff ** Swain * *Berman Chin ** Hetlerstein Kram *** Mukasey * Robinson * Swee tBrieant * Conner * Holwell Leisure ** Owen *** Sand *** Wood **Buchwald ** Cote ** Jones ** Lynch ** Patterson *** Scheindlin ** Magistrate-Carter *** Daniels ** Kaplan * Marrero ** Pauley ** Sprizzo *** Judge sCasey ** Duffy ** Keenan McKenna *** Pollack ** Stanton ** *

* ECF Wave 1 Judge, assigning ne w cases filed on or after December 2 , 2003 to the ECF system .** ECF Wave 2 Judge, assigning new cases filed on or after March 1, 2004 to the ECF system.*** ECG' Wave 3 Judge, assigning new cases filed on or after June 7, 2004 to the ECF system .

Important note on non-ECF cases : Older cases filed prior to the above dates, as well as Pro Se cases, Habeas Corpus cases,Social Security cases, and Multi-District Litigation will not be electronically filed and should be filed on paper. Do not filedocuments electronically in cases that are not assigned to the ECF system .

Instructions

(1) Electronic cases are opened and service of the initiating documents (complaint, notice of removal, etc .) is accomplished inthe traditional manner, on paper .

(2) Important - In addition to serving the initiating documents in the traditional manner , on paper , you are alsorequired to deliver paper copies of the following documents to all other parties (copies available at the courthouse,& on our website) :

(a) The assigned Judge's Individual Rule s(b) USDC/SDNY Instructions for Filing an Electronic Case or Appeal (this document)(e) USDC/SDNY Procedures for Electronic Case Filin g(d) USDC/SDNY Guidelines for Electronic Case Filing .

(3) Within 24 hours of the assignment of a case number, you are required to email to the Clerk of Court the initiatingdocuments in Adobe Acrobat pdf format only. Failure to do so within 24 hours will delay adding your case to thecomputerized ECF docket . Include a F .R .C .P . Rule 7 .1 Statement (if applicable) and any exhibits . The case number, theJudge's initials, and "ECF CASE" must appear in the document's case caption . Each document must be in a separate pdffile no larger than 2 . 5 megabytes (separate large computer files into smaller parts if necessary, and label accordingly) .When sending email, the subject line of the email & the file name of the pdf should list only the case number followed by adocument description (ex . "Re: 0I cv1234-complaint") . Send the email (do not file on the ECF system) to .,

(a) For new civil cases assigned to a Manhattan Judge, email a pdf copy of the documents t o

case openings@nysd.uscourts .gov

(b) For new civil cases assigned to a White Plains Judge, email a pdf copy of the documents to

wpclerk@a)nysd .uscourts.gov Pace I Of 2

USDC/SDNY Instructions for Filing an Elec tronic Case or Appeal Page 2 of 2

(4) File the Affidavit of Service for the initiating document (complaint, notice of removal, etc .) in the following manner :

(a) electronically file the Affidavit of Service for the initiating document on the ECF system {do not send by email),

(b) file the original Affidavit of Service with summons attached in the traditional manner, on paper with the Clerk .

(5) All subsequent documents, including the Defendant's Answer, must be filed electronically on the ECF system atecf.nysd .uscourts .gov. Electronic filing involves using your ECF password to docket the item directly into the ECFsystem. Electronic filing is not the same as email to the Clerk . Read the Judge's Individual Rules to determine if courtesycopies (on paper) are required .

(6) Appeals will be assigned to the ECF system only if the original case was also electronically filed. File the appeal in thetraditional manner, on paper. Then within 24 hours of filing the paper copy of your Appeal at the courthouse, you arerequired to email to the Clerk of Court an electronic copy of the Appeal in pdf format . Include any exhibits . Eachdocument must be in a separate pdf file no larger than 2 .5 megabytes. The District Court case number, the Judge's initials,and "ECF CASE" must appear in the document's case caption .

When sending email, the subject line of the email should always list the case number followed by a document description(ex. "Re: 0lcvl234-appeal") . Send the email (do not file on the ECF system) to :

(a) For appeals from an ECF case assigned to a Manhattan Judge, email a pdf copy of the appeal t o

appeals@nysd .uscourts .gov

(b) For appeals from an ECF case assigned to a White Plains Judge, email a pdf copy of the appeal to

wpclerk@nysd .useourts .gov

(7) Follow all the rules for Electronic Case Filing (available at www.nysd.uscourts .gov) :

(a) SDNY Procedures for Electronic Case Filing (d) Local Rules of this Court, and(b) SDNY Guidelines for Electronic Case Filing (e) Federal Rules of Civil Procedure

(c) Individual Rules of the Assigned Judg e

✓ Learn More About Electronic Case Filing at wvww.nysd .nscourts .t ov

✓

✓

Click on the "CM-ECF" page for the official ECF filing rules, training information , computer requirements , and more

Attorneys should use the "Attorney Registration" page to register on-line for a SDNY ECF password (no fee) . Your ECFpassword will be sent to you by email . You must have an ECG' password from SDNY District Court to file documentselectronically .

Sign up now for a SDNY PACER account if you don't already have one, Call (800) 676-6856, or go tohttp://par er .psc . uscourts .gov

Electronically file documents in ECF cases over the Internet at ecf .nysd .uscourts.gov

Don't have a computer or scanner? Bring your ECF password and the paper documents to the courthouse, and you can useour public computers to electronically file your documents . Call the ECF Help Desk for more information .

The ECF Help Desk. is available to answer your ECF questions from 8 :30 AM to 7 :30 PM at (212) 805-0800, and from8:30 AM to 5 :00 PM at (914) 390--4204, and by email at help_desk@nysd .nscourts .gov

WWW.NYSD.USCOURTS .GOV

i4

J . MICHAEL MCMAHON UNITED STATES DISTRICT COURTWWW.NYSD . USCOURTS .GOV

CLMOr COUar SOUTHERN DISTRICT OF NEW YORK December 1, 2003500 PEARL STREET, NEW YORK, NY 1000 7

Guidelines for. Electronic Case Filing

The following guidelines apply to all electronically filed cases and have been written by theClerk of Court under the authority of this Court's Procedures for Electronic Case Filing .

Q. What is the web address for the SDNY ECF system?

The new ECF system will be on the Internet at bttps://eef.nysd .uscourts.gov

Q. Should I use Netscape Navigator or Internet Explorer to use ECF ?

Only Netscape Navigator 4.6, 4.7, or Internet Explorer 5 .5 have been certified for use with theECF program. Other browsers have not been certified, and while they may work part of the time,they may also cause errors in the middle of filing .

~. Is there a limit to the size of a document that can be filed on ECF?

Yes, 2 .5 megabytes (approximately 50 pages) . If your file is too large, the system will reject it .The solution is to separate an oversized file'into 2 or more parts and docket it in a single event.Simply label each file 1, 2, 3, etc . In all cases assigned to the ECF system, no single documenttotaling more than 15 megabytes (even if separated into individual computer files) shall beelectronically filed without prior permission of the Court .

~. Can I file documents that originate on paper and are then scanned to create a pdf file?.

Yes, but . . . . .the ECF system will not accept any single document that is larger than 2 .5 megabytes,or approximately 50 pages . Wherever possible, you should create pdf files directly from a word .processing program. When you create a pdf file from a scanned paper document, the file size issignificantly larger. This may prevent you from filing it as a single document on the ECF systemand will also take up unnecessary computer memory on your own computer system : Besides, it'seasier to create a pdf directly from a word processor .

Q. Who can file documents on ECF?

Only an attorney admitted to practice in SDNY, and registered to use the ECF system, or an"authorized agent" of the filing user, is permitted to file (ECF Procedures, 8b) . A filing will bedeemed to be the sole responsibility of the filing user whose log-in and password were used tofile the document . Be careful whom you allow to use your ECF log-in and password . Attorneyscan register on-line to use ECF at www.nysd.uscourts .gov

Q . Can an attorney admitted Pro Hac Vice file documents electron ically?

Yes. Immediately after a motion to be admitted pro hac vice is granted, the attorney is requiredto register to be an ECF Filing User at www .nysd.uscourts .gov

SDNY Guidelines for Electronic Case Filing

Q. How do I sign an electronically filed document?

The filing user's ECF log-in and password serve as his/her electronic signature . (ECFProcedures #8). The filing user should place an S1 in place of the signature . Signatures for allother persons must be scanned in order to capture the actual ink signature .

Q. Will older cases be assigned to the ECF system ?

No. Only those cases filed after the ECF system goes live are subject to electronic filing . Casesfiled before the ECF system goes live will not be converted to ECF cases . You will be able toview the docket sheets in older cases on-line, but not the documents .

Q. Which cases will be ECF cases ?

Civil and criminal cases filed after December 1, 2003, will be subject to electronic filing . SocialSecurity cases , Habeas Corpus cases and Pro Se cases will not be assigned to the ECF-system .

Q. Which Judges will entertain ECF cases?

Eventually all the courts Judges and Magistrate-Judges will be able to entertain ECF cases :Groups of judges will be added to the ECF system over a 12 month period . The first group willinclude Judges Batts, Brieant, Conner, Kaplan, Koeltl, McMahon, Mukasey, Preska, Robinson,Stein, Sweet, and all the Court's Magistrate Judges . Parties are directed to refer to each judge'sindividual rules (available on the court's website) to learn whether a particular case will beassigned to the ECF system .

Q. How do I view a document in an ECF case?

Use an approved Internet web browser (see above) and go to https ://ecEnysd .'uscourts .govClick on Query, enter the case number, find the document, and click on the blue hyperlink next tothat entry. An electronic copy of the complete document will then appear on your computerscreen. If there is no blue hyperlink, then there is no electronic version of that document .

Q. Does filing electronically affect the filing deadline?

No. Filing electronically does not change your obligation to comply with the Federal Rules andany applicable Local Rules . Filing must be completed before midnight local time in order to beconsidered timely filed that day (ECF Procedures 3c)(See also Judges Individual Rules) .

Q. How do I open an ECF case ?

To open a civil action, you must file the complaint on paper at the courthouse, pay any applicablefee, and serve the documents in the traditional manner, on paper . (See SDNY ECF Proceduresl d) . Then you must email (not electronically file) a pdf copy of all filed documents to the Clerkof Court within 24 hours . All documents must be marked with the case number and assignedJudge's name. Email a copy of all filed documents in pdf format to :

SDNY Guidelines for Electronic Case Filin g

Q. How do I file a proposed order, judgment or stipulation ?

Proposed orders, judgments and stipulations should not be submitted through the ECF system.Instead they should be sent by email to the Clerk . Proposed orders should be submitted in wordprocessing format (WordPerfect or Word) rather than as a pdf document . Stipulations should besubmitted in pdf format . Stipulations must contain all required signatures (the last person to signcan email it to the clerk) . Email the proposed order, judgment or stipulation to :

For cases assigned to a Manhattan Judge : orders_andjudgments@nysd .uscourts.gov

For cases assigned to a White Plains Judge : wpclerk®nysd .ascourts .gov

Q. How do I file an Order to Show Cause ?

In all cases assigned to the ECF system, Orders to Show Cause seeking a stay shall be submittedin the traditional manner, in person before the Court .

Orders to Show Cause that do not seek a stay , shall be submitted by email (not fi led on the ECFsystem) to the Clerk in word processing format (WordPerfect or Word) rather than as a pdfdocument . Email the proposed Order to Show Cause to :

For cases assigned to a Manhattan Judge : orders-andjudgments@nysd .uscourts.gov

For cases assigned to a White Plains Judge : wpclerk@nysd . uscou rt s .gov

Q. How do I file a default judgment ?

Default judgments should not be submitted through the ECF system . Instead they should be sentby email to the Clerk, in word processing format (WordPerfect or Word) rather than as a pdfdocument. Email the default judgment documents to :

For cases assigned to a Manhattan Judge : orders-andjudgments@nysd .useourts.gov

For cases assigned to a White Plains Judge : wpclerk@nysd.uscourts.gov

Q. How do I submit a letter?

In the traditional manner on paper. Do not submit letters through the ECF system. (See alsoeach Judge's Individual Rules) .

Q. Will sealed documents be filed electronically?

No. Sealed documents will filed in the traditional manner, in paper form .

5

SDNY Guidelines for El ec tronic Case Filing

Q. How can I learn how to use ECF?

On the Court's website you will find "ECF 101 ", an on-line introduction to ECF, as well asdetailed training materials for beginners and advanced users . Go to www.nysd.uscourts.gov

7

United States District CourtSouthern District of New York

Procedures for Electronic Case Filing

March 6, 2003

Procedures for Electronic Case Filing

Procedures for Electronic Case FilingThe Court will accept for filing documents submitted, signed or verified byelectronic means

that comply with the following procedures . .

1 . Scope of Electronic Filing(a) The Court will designate which cases will be assigned to the Electronic Filing System.

Except as expressly provided and in exceptional circumstances preventing a Filing User from filingelectronically, all petitions, motions, memoranda of law, or otherpleadings and documents requiredto be filed with the Court in a case assigned to the Electronic Filing System must be filedelectronically. A paper may be filed electronically (i) from a remote location, (ii) by bringing it tothe Clerk's office during regular business hours, in a form or electronic format prescribed by theClerk, for input into the System, or (iii) where permitted by the Court, by bringing the paper to theClerk's office during regular business hours to be scanned into the System .

(b) Unless limited by their terms to civil cases, the provisions of these procedures relatingto electronic filing apply in criminal cases that are initiated by the filing of an indictment orinformation. Electronic filing procedures shall not apply to applications for arrest, search orelectronic surveillance warrants ; for other orders in aid of or ancillary to a criminal investigation;or to proceedings relating to the grand jury .

(c) Electronic filing procedures shall not apply to Social Security Cases .

(d) The filing and service of the initial papers in a civil case, including the complaint, theissuance of the summons and the proof of service of the summons and complaint, as well as service

of non-party subpoenas, will be accomplished in the traditional manner on paper in accordance withthe Federal Rules of Civil Procedure and applicable Local Rules governing service, rather thanelectronically. In a criminal case, the indictment or information, including any superseders, shall alsobe filed and given to the defendant in the traditional manner on paper accordance with the Federal

Rules of Criminal Procedure and applicable Local Rules rather than electronically; in addition,service of subpoenas shall be made in the traditional manner on paper in accordance with the FederalRules of Criminal Procedure and applicable Local Rules . In a case assigned to the Electronic FilingSystem after it has been opened, parties must promptly provide the Clerk with electronic copies ofall documents previously provided in paper form . All subsequent documents must be filedelectronically except as provided in these procedures or as ordered by the Court .

2 . Eligibility, Registration , Passwords(a) Attorneys admitted to the bar of this Court, including those admitted pro hac vice and

attorneys authorized to represent the United States, may register and may be required to register asFiling Users of the Court's Electronic Filing System . Unless excused by the Court, attorneys notalready Filing Users appearing in cases assigned to the Electronic Filing System must register asFiling Users forthwith upon the case being so designated . Registration is in a form prescribed by theClerk and requires the Filing User's name, address, telephone number, Internet e-mail address, and

Procedures for Electronic Case FilingPage 3

(c) Filing a document electronically does not alter the filing deadline for that documentFiling must be completed before midnight local' time where the Court is located in order to beconsidered timely filed that day.

(d) Individual judges' practices should continue to be followed with respect to delivery ofcourtesy copies .

4. Entry of Court Orders(a) All orders, decrees, judgments, and proceedings of the Court will be filed in accordance

with these procedures and entered on the'docket kept bythe Clerk under Fed .R.Civ.P. 58 and 79-andFed.R.Crim.P. 49 and 55. Each document signed by a judge shall be scanned so as to contain animage of the judge's signature and shall be filed electronically by the Court, and the manually signedoriginal shall be filed by the Clerk of the Court . In the event of a discrepancy between theelectronically filed copy and the manually signed original, the manuallysigned original shall control .

(b) A Filing User submitting a document electronically that requires a judge's signature mustpromptly deliver the document in such other form as the Court requires, if any .

5. Attachments and Exhibit sFiling Users must submit in electronic form all documents referenced as exhibits or

attachments, unless the Court permits paper filing . A Filing User must submit as exhibits orattachments only those excerpts of the referenced documents that are relevant to the matter underconsideration by the Court . Excerpted material must be clearly and prominently identified as such.Filing Users who file excerpts of documents as exhibits or attachments under this procedure do sowithout prejudice to their right to file timely additional excerpts or the complete document

Responding parties may file timely additional excerpts that they believe are relevant or the completedocument. A party may move for permission to serve and file in hard copy documents that cannotreasonably be scanned . In cases where the recordofan administrative or otherpriorproceedingmustbe filed with the Court, such record may be served and filed in hard copy without prior motion andorder of the Court .

6. Sealed DocumentsDocuments ordered to be placed under seal maynot be filed electronically unless specifically

authorized by the Court . A motion to file documents under seal should be filed electronically-unlessprohibited by law; however, a motion to file under seal that includes a . statement of why the filingshould not be made electronically may be made in paper copy. The order of the Court authorizingthe filing of documents under seal maybe filed electronically unless prohibited by law . A paper copyof the order must be attached to the documents under seal and be delivered to the Clerk .

7. Retention RequirementsDocuments that are electronically filed and require original signatures other than that of the

Filing User must be maintained in paper form bythe Filing User until one year after all time periodsfor appeals expire, except that affidavits, declarations and proofs of service must be maintained in

Procedures for Electronic Case FilingPage 5

11. Technical FailuresA Filing User whose filing is made untimely as the result of a technical failure may seek

appropriate relief from the Court.

12. .Public AccessA person may review at the Clerk's office filings that have not been sealed by the Court . A

person also may access the Electronic Filing System at the Court's Internet sitewww.nysd.uscourts .gov by obtaining a PACER log-in and password. A person who has PACERaccess may retrieve docket sheets in civil and criminal cases and documents in a civil case, but onlycounsel for the government and for a defendant may retrieve documents .in a criminal case. Only aFiling User under Procedure 2 herein may file documents .

July 15, 199 8

INDIVIDUAL PRACTICES OF MAGISTRATE JUDGE MICHAEL H . DOLINGER

Unless otherwise ordered by Magistrate Judge Michael H . Dolinger, matters before himshall be conducted in accordance with the following practices . These practices are applicable tocases before Magistrate Judge Michael H . Dolinger if the matter is within the scope of theDistrict Judge's Order of Reference or if the case is before Magistrate Judge Michael H . Dolingerpursuant to the parties' consent under 28 U.S .C. § 636(c) . Otherwise, the practices of the DistrictJudge to whom the case is assigned apply .

1. Communications With Chambers

A. Letters. Copies of letters to chambers shall simultaneously be delivered to allcounsel . Copies of correspondence between counsel shall not be sent to the court .

B. Telephone Calls . In addition to Paragraph 1(D) below, telephone calls to chambersare permitted. For matters other than docketing, . scheduling or calendaring, call chambers at(212) 805-0204 .

C. Faxes. Faxes to chambers are permitted only if copies are also simultaneously faxedor delivered to all counsel . No document longer than ten (10) pages may be faxed without priorauthorization. Do not follow with hard copy. The fax number is (212) 805-7928 .

D. Docketing , Scheduling , and Calendar Matters . For docketing, scheduling andcalendar matters, call the Deputy Clerk, Mr . Kevin Snell at (212) 805-0098 or Ms . Joan Pasini at(212) 805-0204 between 9 :30 A.M. and 4:30 P.M.

E. Requests for Adjournments or Extensions of Time. All requests for adjournmentsor extensions of time must state (1) the original date, (2) the number of previous requests foradjournment or extension, (3) whether these previous requests were granted or denied, an d(4) whether the adversary consents, and, if not, the reasons given by the adversary for refusing toconsent. If the requested adjournment or extension affects any other scheduled dates, a proposedRevised Scheduling Order (reflecting only business days) must be attached. If the request is foran adjournment of a court appearance, absent an emergency it shall be made at least 48 hoursprior to the scheduled appearance .

2 . Motions

A. Pre-Motion Conferences in Civil Cases. For discovery motions , follow SouthernDistrict Local Civil Rule 3 7 .2. For motions other than discovery motions, pre-motionconferences are not required .

ix. A designation by each party of deposition testimony to be offered in its case inchief, with any cross-designations and objections by any other party .

x. A list by each party of exhibits to be offered in its case in chief, with one starindicating exhibits to which no party objects on grounds of authenticity, and two starsindicating exhibits to which no party objects on any ground.)

B. Filings Prior to Trial in Civil Cases . Unless otherwise ordered by the Court, eachparty shall file, 15 days before the date of commencement of trial if such a date has been fixed, or30 days after the filing of the final pretrial order if no trial date has been fixed :

i . Injury cases, requests to charge and proposed voir dire questions . Whenfeasible, proposed jury charges should also be submitted on a 3 . 5" diskette inWordPerfect version 5 .1 or higher format;

ii . In non-jury cases, a statement of the elements of each claim or defenseinvolving such party, together with a summary of the facts relied upon to establish eachelement;

iii . In all cases , motions addressing any evidentiary or other issues which shouldbe resolved in limine; and

n-ariycasewhem-suc - -.._. . .

- ire zpar~y Nieves it ~`tivouid be use , a realmemorandum.

3

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK

x

Plaintiff(s),

- against -

Defendant(s) .

x

IT IS HEREBY STIPULATED by the undersigned :

CONSENT TO PROCEED BEFOREUNITED STATES MAGISTRATE JUDGE

Civ. ( ) ( )

1 . All parties consent, pursuant to 28 U.S.C. § 636(c) and Fed. R. Civ . P. 73, that a United

States Magistrate Judge conduct all further proceedings in this action , including any trial and entry

of final judgment .

2. Any appeal from a judgment entered in this case will lie to the Court of Appeals for theSecond Circuit as from any other judgment of the district court pursuant to 28 U .S .C. § 636(c)(3)

and Fed. R. Civ. P. 73(c) .

Attorney(s) for Plaintiff(s)Address

Telephone

Attorney(s) for

AddressTelephone

Attorney(s) for Defendant(s)AddressTelephone

Attorney(s) forAddressTelephone

(Separately executed forms may be submitted . See Fed . R. Civ. P. 73(b) . )

SO ORDERED .

Magistrate Judge

U .S.D .J .

was assigned this case on

For: Clerk U.S .D.C. S .D.N.Y.

SONY Web 4199