Compliance December 22, 2006

Deutsche Asset Management Settles Alleged Market Timing Accusations

Deutsche Asset Management (DeAM) confirmed Thursday that it has settled proceedings with the Securities and Exchange Commission (SEC) and New York Attorney General Eliot Spitzer related to alleged improper market timing accusations against Deutsche Asset Management Inc. and Deutsche Investment Management Americas Inc., the investment adviser to many of the DWS Scudder Funds.
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According to a Deutsche news release, the firm is settling with Spitzer and the SEC under two separate proceedings. Under the terms of the settlement with Spitzer, Deutsche has consented, without admitting or denying any wrongdoing, to a payment of approximately $122 million, including approximately $102 million in disgorgement and/or restitution and a civil money penalty in the amount of $20 million. Under the SEC settlement, Deutsche has consented, without admitting or denying any wrongdoing, to disgorgement and/or restitution and a civil money penalty in the amount of $17 million, which will be deemed to be paid through the payments made under the Spitzer settlement.

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Deutsche said approximately the entire $122 million will be distributed for the benefit of shareholders of the affected funds in accordance with a plan to be developed by a distribution consultant. The announcement pointed out the alleged arrangements originated in businesses that existed prior to the current Deutsche organization and were terminated prior to the investigations, which began in the summer of 2003.

In addition to the payments, Deutsche has agreed to certain business changes, including, among other things, maintaining existing management fee reductions for certain funds for a five year period and the formation of Code of Ethics Oversight and Internal Compliance Controls Committees, the release said. Deutsche also said it continues to discuss a settlement with the Illinois Secretary of State regarding market timing matters and expects the settlement to provide for investor education contributions totaling approximately $4 million and a payment in the amount of $2 million to the Securities Audit and Enforcement Fund.

In January, Deutsche announced it was close to a settlement with Spitzer and the SEC and predicted the settlement would cost $134 million. The companies involved were accused of allowing market timing in the Scudder Funds and not using sufficiently strong measures to prevent the abusive trading practices during the 1999 to 2001 period.

Compliance December 22, 2006

Chubb to Discontinue Contingent Commissions to Agents and Brokers

Chubb Corporation announced on Thursday it will discontinue paying contingent commissions on all insurance lines in the United States beginning in 2007 as part of a settlement agreement with the Attorneys General of New York, Connecticut and Illinois that resolves all issues arising out of investigations of property-casualty insurance market illegal bid-rigging practices.
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Contingent commissions will be replaced with a supplemental compensation program that will reward Chubb’s agents and brokers for superior performance in a manner consistent with evolving marketplace standards and reforms urged by the Attorneys General.

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The company also said in a separate statement, as part of voluntary actions over the past two years, it has fully disclosed on its Web site all forms of producer compensation utilized in its business.

According to the release, the investigations did not conclude that the firm participated in a pattern or practice of illegal bid-rigging in the excess casualty insurance market. However, Chubb acknowledged it appears to have unknowingly benefited from the bid-rigging activities of others in the excess casualty market, which may have provided the firm with an advantage in retaining certain renewal business.

Due to that fact, Chubb agreed to contribute $15 million to a settlement fund established for the benefit of affected customers and to pay $2 million to help defray the costs of the investigation by the Attorneys General.

Other voluntary actions Chubb revealed in its separate statement include that the Board adopted a Legal Compliance and Ethics Charter and created a Chief Ethics Officer reporting directly to the Audit Committee, and the firm voluntarily ceased a number of practices which might appear to provide an incentive for the “steering” found objectionable by the Attorneys General, including loans to producers, funding of producer compensation, and using an entity co-owned with its producers (Mountain View Indemnity) to reinsure certain risks.

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