Free Declaration in Support - District Court of California - California

Case 3:07-cv-06198-MHP

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HOWARD RICE NEMEROVSK1 CANADY FALK RABK1N

GILBERT R. SEROTA (No. 75305) Email: [email protected] MARK A. SHEFT (No. 183732) Email: [email protected] MICHAEL L. GALLO (No. 220552) Email: [email protected] HOWARD RICE NEMEROVSKI CANADY FALK & RABKIN A Professional Corporation Three Embarcadero Center, 7th Floor San Francisco, California 94111-4024 Telephone: 415/434-1600 Facsimile- 415/217-5910 Attorneys for Plaintiffs THOMAS 'WEISEL PARTNERS LLC and THOMAS WEISEL INTERNATIONAL PRIVATE LIMITED UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

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THOMAS WEISEL PARTNERS LLC, a Delaware limited liability company, and THOMAS WEISEL INTERNATIONAL PRIVATE LIMITED, an Indian company, Plaintiffs, V. BNP PARIBAS, a French corporation, BNP PARIBAS SECURITIES (ASIA) LIMITED, a Hong Kong company, and PRAVEEN CHAKRAVARTY, an individual, Defendants.

No. C-07-6198 MHP Action Filed: December 6, 2007 DECLARATION OF DON MAHON IN SUPPORT OF PLAINTIFFS' CONSOLIDATED OPPOSITION TO DEFENDANTS' MOTIONS TO DISMISS THE FIRST AMENDED COMPLAINT Date: Time: Place: Judge: August 18, 2008 2:00p.m. Courtroom 15 Hon. Marilyn Hall Patel

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MAHON DECL. ISO OPP. TO DEFS.' MOT. TO DISMISS FIRST. AM. COMPL. C-07-16198 MHP

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HOWARD RICE NEMEROVSK1 CANADY FA1K RABK1N

I, Don Mahon, declare: 1. I am Vice President of Compliance for Thomas Weisel Partners LLC ("TWP

LLC"). I have been employed in that position since May 2007. My other securities industry experience includes five years of sales supervision in institutional sales at TWP, and additional experience in Research Editorial and Institutional Sales. At T'WP LLC, a part of my daily compliance and previous sales supervision reviews includes the review of trades and commissions for TWP LLC Institutional Clients, as well as extensive business analysis in the sales supervisory role at TWP LLC. As part of my business analysis, I periodically review reports from TWP LLC's outside consultants that show the commission rates of other broker-dealers that are TWP LLC's competitors. As a result of this experience, I am very familiar with the commissions that broker-dealers charge for executing trades for institutional clients. I am also familiar with TWP LLC's current commission structure. TWP LLC and its competitors have roughly comparable commission structures. 2. The commission rate on stock trades executed for institutional investors--for

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example, hedge funds, mutual funds, pensions or sovereign wealth funds--varies according to many factors including: the liquidity and/or price of the stock that is traded; whether the shares are manually traded or entered into a computer; the risk associated with the trades (principal versus agent), and whether the rate is pre-negotiated with a customer based on an ongoing relationship, or other factors such as general industry trends surrounding commission rates. 3. NASD rules and interpretive materials provide that, absent special circumstances,

the maximum commission rate a Financial Industry Regulatory Authority ("FINRA") member broker-dealer like TWP LLC can charge is 5 percent. 4. In my experience, however, broker-dealers generally charge their institutional

customers commissions considerably lower than five percent.

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MAHON DECL. ISO OPP. TO DEFS.' MOT. TO DISMISS FIRST. AM. COMPL. C-07-16198 MHP -1-

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HOWARD RICE NEMEROVSKI CANADY FALK I KABK1N

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5. Given knowledge of a commission rate and commission amount, one can easily determine the gross transaction value of the trade or trades. The relationship between commission rate and gross transaction value is inversely proportional--i.e., for a given dollar amount of commission revenue, the lower the commission rate, the higher the gross transaction value of the trades on which the commissions are paid (and vice versa). If a broker-dealer's commission revenue from certain trades is $1 million and its commission rate is 5%, the total transaction value of the trades is 20 times revenues, or $20 million. If a broker-dealer earns the same $1 million in commission revenue but its commission rate is only 1%, 1/5th the rate of the previous example, then the gross transaction value of the trades was five times higher-100 times revenues, or $100 million. The same inversely proportional relationship holds for the lower commission rates more typically charged by broker-dealers: a commission rate of .25%
(25 basis points) would

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mean that the

total

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transaction value of the trades was 400 times the commission revenue; a commission rate of .1% (10 basis points) would mean that the total transaction value of the trades was 1000 times the commission revenue; and a commission rate of
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comparable to the TWP LLC three month trailing average described F --would mean

MAHON DECL. ISO OPP. TO DEFS.' MOT. TO DISMISS FIRST. AM. COMPL. C-07-16198 MHP

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HOWARD RICE NEIVIEROVSKI CANADY i FALK & RASKIN

that the total transaction value of the trades was about

times the commission revenue.

I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed this day of July 2008 at , California

[EXECUTED SIGNATURE PAGE WITHOUT FORMATTING FOLLOWS]

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MAHON DECL. ISO OPP. TO DEFS.' MOT. TO DISMISS FIRST. AM. COMPL. C-07-16198 MHP

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that the total transaction value of the trades was about foregoing is true and correct. times the commission revenue. I declare under penalty of perjury under the laws of the United States of America that the

EisJay of July 2008 at

(7, California