Stock Broker Fraud Blog

Scottrade Inc. agreed to pay a $950,000 civil penalty to settle Securities and Exchange Commission charges that it made fraudulent misrepresentations to clients related to the execution of Nasdaq pre-open orders. The brokerage firm is not admitting to or denying wrongdoing by settling the charges. Scottrade is, however, agreeing to cease and desist from committing future violations.

Pre-open orders are normally placed after the market closes for execution when the market opens next. The SEC alleges that Scottrade made fraudulent misrepresentations when Scottrade told customers it would direct their orders based on a number of factors, including liquidity at market opening.

The SEC says that when a broker-dealer accepts customer orders, the firm is impliedly representing that it will make sure to review the quality of execution on orders. SEC Enforcement Director Linda Thomsen says that Scottrade not only failed to regularly and properly review the execution process but it neglected to consider the way technological advances were impacting the orders.

In 2000, The SEC reported that certain market makers that were trading Nasdaq market securities were offering investors the chance to not have to pay a liquidity premium at the market opening. The SEC told broker-dealers to consider specific pricing options when looking for the best execution for their customers’ orders: 1) Midpoint pricing—a midpoint price between the national best bid and offer (NBBO) used to buy and sell orders and 2) Single Price—one price for buying or selling.

The SEC however, alleges that rather than adhere to this advice, Scottrade misrepresented in customer account opening documents and statements that it would direct customers’ orders based on liquidity at market opening to allow its customers to get executions that were “superior to any one market center.”

The SEC says that Scottrade did not have the policies and procedures to evaluate liquidity at market openings that market centers provided between 2001 and 2004, which is the time period under scrutiny. The broker-dealer consequently failed to consider executions that may have been superior to NBBO, including midpoint and single pricing, when executing Nasdaq pre-open orders.

If you are an investor that has lost money because of the fraudulent actions of a broker-dealer, Shepherd Smith Edwards and Kantas, LLP would like to talk to you. Contact our stockbroker fraud law firm and ask for your free consultation.

Related Web Resources:

Scottrade to Pay $950,000 to Settle SEC Charges, BusinessFirst.com, June 24, 2008

SEC Charges Scottrade for Misrepresentations to Customers, SEC.gov, June 24, 2008

Scottrade

At a Security Traders Association conference in Washington DC earlier this month, the Securities and Exchange Commission’s Division of Trading and Markets Director Erik Sirri told broker-dealers to “look for guidance” when using direct access systems when making trades.

The announcement that direct access systems guidance was pending comes after Goldman Sachs Execution and Clearing L.P., a prime broker and clearing affiliate of Goldman Sachs Group Inc., settled SEC charges over its alleged involvement in a customer fraud scheme that involved the use of direct access trading systems.

Also called sponsored access systems, direct access trading systems lets brokers quickly and efficiently handle large quantities of trades for clients. Sirri says that the guidance would help broker-dealers determine what controls need to be implemented to determine when customers are engaging in illegal trades. He says that the SEC and the Financial Industry Regulatory Authority have been in dialogues with direct access systems users.

Following the case involving the Goldman Sachs unit, SEC's Enforcement Division Director Linda Chatman Thomsen says that brokerage firms should be held responsible when their customers engage in illegal activities.

On March 31, the Treasury Department recommended merging the SEC with the Commodity Futures Trading Commission. The recommendation was part of a regulatory reform blueprint. Sirri said the SEC would support this decision if implemented but that the major differences between the equities markets and the Commodities would have to be addressed.

The stockbroker fraud law firm of Shepherd Smith and Edwards represents clients that have lost investments because of the negligence of broker-dealers or others in the securities industry.

Contact Shepherd Smith and Edwards today.

Related Web Resources:

SEC and NYSE Settle Enforcement Actions Against Goldman Sachs Unit for Role in Customers' Illegal Trading Scheme, SEC.gov, March 14, 2007

Direct Access Trading Systems, Investopedia.com

The Securities and Exchange Commission is conducting three dozen open investigations into misconduct in the subprime mortgage industry. The probe is taking a look at possible misconduct involving:

• The origination process
• Insider trading
• Securitization and sales of mortgage-backed securities

According to SEC Division of Enforcement Associate Director Cheryl Scarboro, the SEC wants to know who may have been involved, who knew about any misconduct, and who acted inappropriately. Scarboro also directs the SEC Subprime Working Group, which coordinates these probes with other SEC divisions.

In SEC v. Doral Financial Corp., Doral settled claims that it overstated income on nonconforming loans for $25 million. The primary issues pertaining to this case included valuation of the future income stream, valuation of interest-only STRP’s, and applying a flat rate to value investments.

These issues are of major significance in pending cases involving the subprime mortgage industry. Other issues of focus in the SEC investigations include ownership transfer and booking the gain on sale.

The SEC has met with the companies it is investigating is helping to streamline the process.

In a recent TIME.com article, Keefe, Bruyette & Woods Inc. Bose George estimated potential losses from the subprime mortgage crisis at around $250 billion. Columbia University professor Charles Calomiris estimates the losses at over $300 billion but under $400 billion. $1 trillion outstanding subprime mortgages currently exist.

Please contact Shepherd Smith and Edwards to discuss your case. We have helped thousands of investors recoup their losses.

Related Web Resources:

How Bad Will the Mortgage Crisis Get?, TIME.com, February 19, 2008

SEC probing three dozen subprime cases, Reuters, December 21, 2007

Why a U.S. Subprime Mortgage Crisis Is Felt Around the World, New York Times, August 21, 2007

The Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission (SEC), and the North American Securities Administrators Association (NASAA) have announced a new group initiative to protect senior investors from becoming the victims of investment scams.

SEC, NASAA, and FINRA will work with investment advisers and broker-dealer companies to identify effective compliance and supervisory practices involving senior investors. Areas of exploration will include:

• Opening accounts
• Training company employees
• Marketing practices
• Advertising practices
• Review of products and accounts
• Fulfilling the evolving needs of aging investors
• Regularly reviewing products

Discoveries will be published so that all firms can learn how to implement the most effective and cutting edge practices to better serve senior investors and combat senior investment fraud.

These latest steps are part of a broader initiative, started by SEC, FINRA (previously NYSE and NASD), and NASAA in 2006 to protect elderly investors from fraud. Efforts have included enforcing securities laws, targeted exams, and actively educating elderly investors.

Since 2006, there have been a number of enforcement actions brought against firms and their employees who have taken advantage of senior investors. Our stockbroker fraud law firm is committed to helping elderly investors recoup their losses. We have helped thousands of fraud victims recover their money.

Contact Shepherd Smith and Edwards today.

Related Web Resources:

SEC, NASAA and FINRA Announce New Steps to Help Protect Senior Investors, February 8, 2008

Protecting Senior Investors: Report of Examinations of Securities Firms Providing "Free Lunch" Sales Seminars, SEC.gov (PDF)

What was the role of the Securities and Exchange Commission in the collapse of the subprime mortgage bubble? Although mortgage brokers, investment banks, and ratings agencies are frequently held responsible for the demise, little is said about the roles of the Financial Industry Regulatory Industry (FINRA) and the SEC—both watchdog agencies that are responsible for monitoring complex credit derivatives and their suitability requirements for investors.

Yet where was the SEC when it was time to oversee investment banks and determine whether they had sufficient capital for their balance sheets, trading positions, and the appropriate risk management systems so that major losses could be avoided?

One notable problem is that there is not enough clear data available about the credit derivatives market. Structured finance products, including collateralized debt obligations (CDOs) are traded over-the-counter in the United States. This means that price information for these products is not easily accessible.

It wasn’t until 2007 that the SEC, the Commodities Futures Trading Commission (CFTC), and other members of the President’s Working Group recommended that stricter oversight of the over-the-counter market be implemented.

While regulators are now examining the way banks structured, priced, and sold mortgage-laden securities, some industry insiders feel that these steps were taken too late. Should the SEC have noticed the warning signs?

In 2006, Merrill Lynch senior executive Jeff Kronthal was fired when he responded reluctantly to former Chief Executive Stanley O’Neal’s mandate that firms be more aggressive about taking risks with mortgage securities. Morgan Stanley’s new Chief Executive John Thain rehired Kronthal last December.

In 2005, Bear Stearns reported in its 2005 financial disclosure that it was threatened by a possible civil enforcement action related to pricing, analysis, and valuation of $63 billion in CDOs. Bear Stearns also reported that then-New York Attorney General Eliot Spitzer had contacted the firm about $16 billion in CDOs it had sold to an undisclosed client.

Former SEC attorney Gary Aguirre says that while aggressively pursuing Pequote Capital and its alleged involvement in an insider trading case in 2005, he was fired when he tried to interview Morgan Stanley Chief Executive John Mack. Aguirre claims that the SEC is too closely associated with the industry it regulates.

Earlier this month, securities regulators in Massachusetts filed a civil fraud lawsuit against Merrill Lynch over $14 million in CDOs that the firm sold to the town of Springfield. Regulators say they were unsuitable for and sold without the town’s permission. Merrill has admitted to the town’s lack of consent and paid its investment back in full—although it now has little value.

The Federal Bureau of Investigation says it is conducting criminal investigations into 14 firms regarding their involvement in mortgage securitization activities.

Morgan Stanley, Merrill Lynch, Bear Stearns, and Goldman Sachs all admit that different regulators have asked them about their handling of subprime mortgage securities.

If you are an investor who has lost money because of the misconduct or negligence of someone in the securities industry, please contact Shepherd Smith and Edwards today. Your first consultation with one of our stockbroker fraud lawyers is free.

Related Web Resources:

SEC

Collateralized Debt Obligation (CDO), Investopedia

Subprime Mortgage, Investopedia

Heartland Advisors Inc. and several of the investment adviser’s employees have agreed to pay $3.9 Million to settle Securities and Exchange Commission charges that they allegedly violated the Federal Securities Act.

The SEC case stems from incidents that allegedly took place from March through October 2000, when Heartland “negligently mispriced certain bonds owned by two high-yield municipal bond funds." Because the funds were mispriced during that time period, net asset values for the funds were incorrect and so were the prices for funds’ shares.

Redeeming investors therefore benefited at the expense of new and remaining investors when investors bought and redeemed fund shares at these incorrect prices.

Heartland devalued the bonds in October 2000. Shareholders lost some $60 million. The SEC has ordered cease-and-desist proceedings. The order also imposed cease-and-desist actions and remedial sanctions.

Heartland Advisors President William Nasgovitz, Senior VP Kevin Clark, COO Paul Beste, and former employees Greg Winston, Thomas Conlin, Hugh Denison, and Kenneth Della are also named as respondents in the SEC case.

As part of the settlement agreement, all respondents agreed to cease and decease from violating certain federal securities laws. None of them are admitting to or denying the allegations.

Investors who lose money because of the misconduct of broker-dealers or investment advisers are entitled to civil remedies to recover their losses. Please contact the stockbroker fraud law firm of Shepherd Smith and Edwards today to schedule your free consultation. We have helped thousands of investors get their money back.

Related Web Resources:

Heartland to pay $3.9M fine in securities case, Bizjournals.com, January 29, 2008

Read the SEC Order (PDF)

Heartland Advisors

The director of the Securities and Exchange Commission’s Investment Management Division is calling for mutual funds to rename their 75 basis point “distribution fee” and call it a “sales charge”—regardless of whether the sales charge is deducted right away or over a period of time.

At the Investment Company Institute's 2007 Securities Law Developments Conference in Washington, Donohue issued a call out for “truth in labeling.” He said that financial advisers should notify investors about the sales charge and the information about the charge should also be in the prospectus and the confirmation.

Last year, the mutual fund industry collected 12b-1 fees totally $11.8 billion. These fees are authorized under the 1940 Investment Company Act Rule 12b-1 in 1980.

12b-1 fees were originally intended to cover marketing and distribution costs. However, they are now used to pay consultants and financial advisers, 401k administrators, and fund supermarkets (such as Fidelity and Charles Schwab). The fees are also used to cover a company’s internal expenses.

The Investment Management Division staff wants Class A, Class B, and Class C investors to be treated fairly, rather than having distribution costs be unfairly divided between the three groups. Donohue said the current discrepancy could lead to conflicts of interests for people charged with selling the funds.

Donohue also wants to the industry to look at whether investors are paying over what the NASD rule has set for 12b-1 fees and beyond the maximum sales load. His SEC division staff will suggest reforms that update the 12B-1 factors, which fund boards evaluate when examining 12b-1 plans.

The division will also look at ICA Section 22(d), which mandates that a fund’s public offering price be included in the prospectus. He and his division want to approach the issues from the point of view of a fund investor.

The stockbroker fraud law firm of Shepherd Smith and Edwards represents investors who have lost money because of the negligence or misconduct of security industry members. Contact Shepherd Smith and Edwards today.

Related Web Resources:

Remarks Before the ICI 2007 Securities Law Developments Conference, by Andrew J. Donohue, SEC.gov, December 6, 2007

Division of Investment Management, SEC.gov

The Financial Industry Regulatory Authority (FINRA) says that Senate Majority Leader Harry Reid has sent to the White House the Democrats’ choices to fill their two slots on the Securities and Exchange Commission.

The two names put forward are Luis Aguilar, a partner at the Atlanta law firm of McKenna, Long & Aldridge and Elisse Walter, a senior FINRA official.

The SEC is under pressure to not act on a controversial proxy initiative until all members are appointed. SEC Chairman Christopher Cox and SEC Commissioners Annette Lazareth, Paul Atkins, and Kathleen Casey are currently on the commission. Lazareth is the only Democrat on the panel. She plans to step down. Another commissioner, Roel Campos, left the SEC in August.

Aguilar specializes in investment companies, investment advisers, corporate and securities law, and international transactions. He also worked as an SEC staff attorney, practiced law with several national law firms prior to working with McKenna, Long & Aldridge, and served as general counsel to UNESCO.

Walter is Senior Executive Vice President, Regulatory Policy & Programs at FINRA. She served in the same role at NASD. Walter supervises a number of departments, including Corporate Finance, Investment Company Regulation, Advertising Regulation, and Member Education and Training, and the Offices of Disciplinary Affairs, Emerging Regulatory Issues and Economic Analysis. She is in charge of FINRA’s investor education initiatives.

Despite the regulations that are in place to protect investors from fraud, there are times when investors are the victims of broker fraud or misconduct. These instances are when the stockbroker fraud law firm of Shepherd Smith and Edwards steps in. We have helped thousands of investors get their money back.

Contact Shepherd Smith and Edwards today and ask for your free consultation with one of our experienced broker fraud lawyers.

Related Web Resources:

Democrats Nominate 2 for SEC Vacancies, Washington Post, November 14, 2007

SEC

McKenna Long and Aldridge, LLP

The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) have introduced an initiative that will assist broker-dealer chief compliance officers in maintaining compliance controls that work, creating effective communications about compliance risks, and implementing solid compliance programs at brokerage firms.

Regional and national seminars will be designed to focus on increased compliance practices at brokerage firms to increase investor protection. FINRA and SEC said that this new initiative is similar to the SEC’s current CCOutreach Program for investment company chief compliance officers and investment advisers.

A national compliance seminar is tentatively scheduled for March 2008 at the SEC headquarters in Washington D.C. Regional seminars will be held in cities across the United States.

Potential topics include sales practices, debt securities issues, new products, CCOs and compliance programs within the organization, The CCO’s Role in Businesses that are constantly changing, business continuity / pandemic planning, trading issues, conflicts of interest, protecting customer data and non-public information, annual compliance report, regulatory compliance examinations, and Reg NMS.

The plan is sponsored by FINRA, the Division of Market Regulation, and the SEC’s Office of Compliance Inspections and Examinations.

SEC Chairman Christopher called the initiative an opportunity for regulators and broker-dealers to learn from each other the best ways to ensure that security laws are abided by.

Even when there are investor protections in place, there are still incidents that occur where an investor loses money because of broker misconduct. If you are a victim of investor fraud, you should speak with an experienced stockbroker fraud attorney who can help you.

Contact Shepherd Smith and Edwards today to schedule your free case evaluation.

Related Web Resources:

Regulators roll out CCOutreach Program, Investment News, November 7, 2007

Broker-Dealer CCOutreach Program, SEC.gov

Annette Nazareth, the only Democratic commissioner left on the Security and Exchange Commission’s five-member panel is leaving her post for the private sector.

Her departure is the second one in the past month and leaves the panel with three members—all of them Republicans. Roel Campos, also a Democrat, left in September. The remaining panel members are SEC Chairman Christopher Cox and Commissioners Paul Atkins and Kathleen Casey.

The SEC released a statement saying that Nazareth had requested that she not be renominated for the position. Nazareth has been a member of the SEC panel for nine years. The SEC cited her contributions to include modernizing national market system regulations and working on issues affecting the securities markets and investor protection.

The vacancies left by the departure of the two panel members could further complicate a shareholder rights initiative. One proposal could allow for board seat elections at U.S. public companies. The other proposal would keep the issue of electing company board members from proxies shareholder proposals.

Although Nazareth’s term expired in June, she could have to stay in her position for up to a year and a half unless someone else is nominated. The Senate has to confirm anyone chosen by the White House.

Prior to joining the commission, Nazareth served as SEC Market Regulation Division director. She also worked for investment firms Lehman Brothers and Smith Barney.

Shepherd Smith and Edwards is a securities litigation law firm committed to helping institutional and individual investors recover losses incurred because investment firms or their employees acted inappropriately. To schedule your free consultation with one of our stockbroker fraud attorneys, contact Shepherd Smith and Edwards today.

Related Web Resources:

SEC's Nazareth Leaving Agency, AP, October 2, 2007

SEC Biography: Commissioner Annette L. Nazareth, SEC.gov

SEC Commissioners

As discussed in earlier postings, after a court overturned the "Merrill Rule," which exempted brokerage firms from duties of Investment Advisors Act of 1940, brokerage firms say they will cease "fee based" accounts rather than assume duties to clients mandated my that legislation. However, as predicted, regulators and legislators will instead come to their rescue.

The Securities and Exchange Commission fought hard to exempt brokerage frims from the advisors act, but lost, and is now busily helping Wall Street with new enforcement loop holes. For example, the SEC has now decided to permit non-discretionary advisory accounts to be exempt from certain principal trading restrictions. A principal trade is an order a broker-dealer executes for its own account rather than one it simply executes in the market for its client.

Under the new rule, brokerage firms must first provide written notice and obtain blanket consent from these clients. They are then exempt from breach of fiduciary duty for self-serving actions as they profit on sales of securities to these clients sold from the firms' inventories.

The firms must notify investors in writing that the firm may engage in principal trading and describe possible conflicts of interest, as well as the way it will address those problems. ("Just a note to tell you that, although you are paying me to look out for you, I am instead selling you stuff for more than I paid for it. Have a nice day.")

SIFMA, the securities trade group, applauded the rule. "This decision provides important flexibility to these consumers and delivers increased consumer choice within the constraints set by the court," said Marc Lackritz, president and CEO of SIFMA.

Thanks to Marc and the rest of the securities industry for persuading their puppets at the SEC to provide investors with such "flexibility" and "choice." What would they do without you?

Shepherd Smith and Edwards represents investors nationwide in claims against members of the securities industry. We have represented investors in more than 1,000 securities cases. To learn whether we are able to assist you with a claim contact us to arrange a free consultation with one of our attorneys.

FINRA, SEC, and state regulators are saying that the “free lunch” investment seminars for senior citizens are actually high-pressure sales pitches, involving fraud and misleading claims about financial products that are not suitable for its elderly audience. A report of these findings will be issued to the public this week.

Alabama, California, North Carolina, Florida, Texas, Arizona and South Carolina are the U.S. states with the largest numbers of retirees. All seven states were included in the probe. The investigation took place from April 2006 to 2007 and concentrated on 110 investment firms and branch offices that held “free lunch” seminars for seniors.
The report blames investment firms for failing to properly supervise the employees that conducted the senior seminars.

The law states that sales pitches and materials at the seminars have to be approved by investment firm supervisors or brokerages. SEC Chairman Christopher Cox affirmed his agency’s commitment to stop anyone attempting to take advantage of senior investors.

Findings from the year long investigation included the following:

• “Free lunch” seminars were promoted as workshops or sessions where no products would be sold. However, sales presentations too place, and attendees were pressured to make investments or open accounts. Follow up sales calls were then conducted. The seminars took place at upscale locations, such as restaurants, hotels, and golf courses.

• More than half of the 110 firms and offices investigated seemed to provide weak supervision to the employees that were overseeing the seminars. Seminar materials were not reviewed properly.

• Misleading and exaggerated claims were heard at many of the seminars.
• Unsuitable recommendations were found at 23 of the inspections.

Senior investors make up 30% of fraud victims. Since 2005, the SEC has brought more than 40 cases involving senior fraud schemes. FINRA has also filed cases against employees and brokerage firms involved in senior investment scams.

FINRA is also investigating a number of other senior-related areas, including pitches persuading seniors to retire early and cash out their 401(K)’s, high-risk mortgage securities investments, collateralized mortgage obligations sales, and life settlements.

If you are a senior investor—or any kind of investor—that has lost money because you were the victim of an investment scam, contact Shepherd Smith and Edwards. You did not work your entire life to have your retirement pulled from under you. We have helped many investors get their money back.

Your first consultation with us is free. Contact Shepherd Smith and Edwards today.

Probe of Seminar for Seniors Finds Fraud, ABC News, September 10, 2007

Seniors — Beware of Investment Seminars No Free Lunches, SEC.gov

"Mr. Chairman, there is no doubt financial fraud aimed at older Americans is real."

This astounding statement was made at the SEC's Senior Summit by Mary L. Schapiro, the Chief Executive Officer of the Financial Industry Regulatory Authority (FINRA), the regulatory body formed by the merger of the National Association of Securities Dealers and the regulatory arm of the New York Stock Exchange.

Ms. Schapiro backed her statement with the results of a recent FINRA survey which found that, of the 55 percent of respondents who said they lost money on an investment, 19 percent—almost one in five—attribute that loss to being misled or defrauded. While this is cause for concern, she added, it's also an opportunity for creative collaboration by regulators.

With the financial well-being of millions of seniors at stake, she added, FINRA is dedicated to tackling this issue on multiple fronts. As I speak to you today, FINRA, in addition to participating in the "free lunch seminar" sweep, is conducting sweeps in four separate issue areas.

However, Ms. Schapiro and the other regulators must recognize their limitations. There are simply not enough "securities police" to oversee trillions in investments being sold to millions of investors by hundreds of thousands of salespersons at thousands of firms. Only a fraction of violations are found resulting in almost meaningless fines compared to profits being made. In short: Investment crime pays!

Thus, millions of retirees have collectively lost billions of dollars because of investment fraud. And, despite tough talk by regulators, the problem grows worse on a daily basis. Yet, rather than rely on their government to protect them, seniors must take action themselves! The best solution is to contact an attorney who specializes in investment fraud to go after those who have defrauded them and seek recovery of their losses.

Shepherd Smith and Edwards represents investors nationwide in claims against members of the securities industry. We have represented investors in more than 1,000 securities cases. To learn whether we are able to assist you with a claim contact us to arrange a free consultation with one of our attorneys.

Sentinel Management Group, the Chicago-based money manager that the Securities and Exchange Commission has accused of misappropriating client assets and defrauding clients, is reportedly missing $505 million in its accounts. The National Futures Association found the shortfall during a recent investigation.

The missing funds could bring up questions regarding a settlement that Sentinel made to creditors and Citadel Investment Group.

According to the SEC, the money manager allegedly mixed up funds from clients with its own funds. The Financial Times says that creditors from one account were given their money back after Citadel bought a number of assets. The SEC was opposed to the transfer, however, saying that the refunded assets likely belonged to creditors from a different account.

The FTA, however, says that there is currently no hard evidence to support the SEC’s conclusion that the assets that were refunded came from another account. The investigation will continue and the assets could still be found.

NFA president Daniel Roth says that customers of future traders have not lost any money due to Sentinel. He cited the $321 million that the Bank of New York lent to Sentinel as the main source of the missing funds.

The NFA is the in-house agency of the futures industry that examines trading practices. The Commodity Futures Trading Commission, the futures market overseer of the U.S. government, is also conducting its own probe of Sentinel.

Roth says that investigators are focusing on commingled accounts, rather than accounts that were kept separate.

If you are an investor that has lost money because of the wrongful or illegal actions of any individual or company within the securities industry, do not hesitate to call Shepherd Smith and Edwards and ask to speak with one of our securities fraud attorneys. We can represent you and protect your interests and we will do everything to recover your lost funds for you.

Related Web Resources:

Sentinel missing $505M, says NFA, Investment News, September 5, 2007

Investigator: Sentinel missing $500 mil., Chicago-Sun Times, September 1, 2007

Citadel removed from Penson suit, Chicagotribune.com, September 5, 2007