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To: Sr K who wrote (91362)	10/4/2007 8:30:13 PM
From: Lizzie Tudor	Respond to of 306849

well, ok if they go back to 99 they will get something but still, CFC isn't the right profile for a lot of damages here. The stock was flat from 1999-2002 effectively, and CFC was presumably a much smaller company employee wise. The boom started in 03 and picked up steam in 04, thats when all the employees were hired. But if you look at a chart the 04 hireon options didn't gain too much- although the stock did spike to 45 of this year, but the way these things are valued is the entire lot of outstanding options are revalued as of today's price where most (not all) employee hireons from the boom years are underwater. What you need for a lot of damages is an apple where huge numbers of employees are hired and the stock continues up. edit- oh sorry I read it again, they are disputing EXECUTIVE options but the problem with those are, they have always been expensed and nobody has won damages. It is the employee plans that are usually scrutinized.

To: Sr K who wrote (91362)	10/4/2007 8:30:40 PM
From: Sr K	Respond to of 306849

Apparently, they wrote calls and puts. I wonder how that worked out in the September quarter? sec.gov MORGAN KEEGAN SELECT FUND, INC. page 67 Option Writing—When a Fund writes an option, an amount equal to the premium received by the Fund is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains from investments. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security in determining whether the Fund has realized a gain or loss. If a put option is exercised, the premium reduces the cost basis of the securities purchased by the Fund. The Fund, as writer of an option, bears the market risk of an unfavorable change in the price of the security underlying the written option. and on page 77 There can be no assurance that a Fund could purchase or sell a portfolio security at the price used to calculate the Fund’s NAV. Changes in the fair valuation of portfolio securities may be less frequent and of greater magnitude than changes in the price of portfolio securities valued at their last sale price, by an independent pricing service, or based on market quotations. In light of the market instability and the complexity of fair value judgments, the Board of Directors, effective August 2007, has retained an independent valuation consultant to assist in determining the fair value of certain of the Funds’ portfolio securities. Fair valuation procedures are currently being used to value a substantial portion of the assets of the Funds. The “fair value” of securities may be difficult to determine and thus judgment plays a greater role in this valuation process. - Countrywide Financial paper starts on page 11. The variety of paper and valuations, at 6/30, is enlightening.

To: Sr K who wrote (91362)	10/7/2007 1:10:06 PM
From: Lizzie Tudor	Respond to of 306849

more on this CFC backdating thing. I think they won't get anywhere with this, because the funds are looking at executive option grants which is what everybody wants to find as fraudlent. The problem is, the executive grants have been expensed for a long time at every company. Its the employee grants that are not expensed and backdated for new employees starting in the quarter to the low. The judge here is already telegraphing a lack of interest in this. The only way you can get an executive in one of these cases if IF the execs happen to lump their plans in with the employee grant dates like Apple did. But many like Brocade did not. Thats why Brocade was convicted for employee options only. If they want to get CFC they have to go after the employee plan- but of course thats not as big of a win with the public. Countrywide Financial Corp., the largest U.S. mortgage lender, must provide a shareholder with limited access to its financial records as part of a probe of possible manipulation of stock option grants to executives. "The court is far from convinced," based on evidence presented, "that any wrongdoing actually did occur at Countrywide," Judge John Noble in Wilmington said in an opinion last week granting limited inspection rights to the pension fund. delawareonline.com Brocade case: alleging that the two routinely backdated stock option grants to give employees favorably priced options without recording necessary compensation expenses. regularly caused Brocade to grant “in-the-money” options (i.e., the exercise price is below the stock’s market price on the day of grant, giving the recipient an immediate paper gain) to both new and current employees between 2000 and 2004, sec.gov