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Name and title: Thomas A. Franko, managing director and general counsel Age: 57 The company: Jersey City, N.J.’s Pershing LLC provides brokerage, clearance, data processing and other investment services and products to financial organizations and broker- dealers. Working behind the scenes, Pershing is the “back office” for more than 1,100 clients and currently handles 6 million customer accounts worldwide. Among its services are processing transactions, providing custody and cashiering, issuing statements, collecting dividends and protecting assets. Its customers include Credit Suisse First Boston, Metropolitan Life Insurance Co. and American International Group Inc. The company was founded in 1939 by the son of World War I hero General “Black Jack” Pershing, ultimately becoming a wholly owned subsidiary of the Bank of New York in May 2003. Four thousand employees man its home base and regional branches in Boston; Baltimore; Charlotte, N.C.; suburban Chicago; Los Angeles; San Francisco; Phoenix; Liverpool, England; Singapore; and Melbourne, Australia, along with a computer programming center in India. It also operates European affiliates in London and Dublin, Ireland. Pershing’s general counsel declined to disclose annual revenues. “Highly regulated”: Franko expends energy and time on the regulatory process that governs the “complex relationship” between Pershing and its customers. His is a “highly regulated” industry overseen by the U.S. Securities and Exchange Commission (SEC), the New York Stock Exchange (NYSE), the National Association of Securities Dealers, the Federal Reserve, the United Kingdom’s Financial Services Authority and the 50 states in which Pershing is registered. Franko has been active on the SEC’s self-regulation committee, the NYSE’s Compliance Advisory Committee, and has served on the governor of New Jersey’s Special Advisory Committee to the Bureau of Securities. His team is also well represented in trade groups such as the Securities Industry Association, the industry’s lobbying arm. The pace of regulatory change has hastened, Franko said, with new regulations arising “seemingly hourly.” Privacy has become a hot issue, with a new regulatory aspect to maintaining confidentiality. Diverse duties: Franko’s specialty is the clearing business-that is, providing all the back office services for the customers of a broker-dealer and the related systems and facilities-but he also deals with anti-money laundering tactics, bookkeeping and records. He handles areas such as employment law, real estate, immigration, Sarbanes-Oxley duties-”you name it”-and manages litigation as well. Most Pershing-related litigation is of a “derivative nature,” Franko said, meaning that since its name appears on disclosures and the company is in the line of trade processing, it is sometimes named in actions, even though its role is a background one. In a typical case of this kind, a customer may claim that his broker placed him in an unsuitable security or “churned”-traded too actively-his account. Franko said that sometimes Pershing is named because “we are the deep pocket,” or that the plaintiff simply misunderstands his company’s role, or “variations of those themes.” Pershing monitors and works with the broker in resolving such claims. As a broker-dealer, Pershing is required to have fidelity coverage for employee malfeasance. It also offers excess, unlimited Security Investors Protectors Corp. insurance to cover every dollar in clients’ brokerage accounts. Since the World Trade Center attacks, Pershing has also developed elaborate plans for business continuity and disaster recovery, as mandated by industry regulators. The cost of building top-notch contingency plans can be prohibitive for a small broker but, because of its scale, Pershing can offer this safety net at cost-effective rates. Career highlights: Franko was “very much involved in” the transaction that brought Pershing to the Bank of New York from Credit Suisse First Boston. He helped organize the London affiliate and assisted in the creation of affiliate Pershing Trading Co., a specialist in regional exchanges. In 1998, in response to a number of regulatory problems in the clearing industry (none involving Pershing), Franko chaired a Securities Industry Association committee to create amendments to NYSE Rule 382, the rule that governs the clearing business. Legal team: Pershing’s legal group consists of Franko and nine other attorneys, one of whom is based in London. Six paralegals and assorted other professionals provide support. Franko reports to Chief Operating Officer Brian Shea and has a “dotted line” responsibility to the Bank of New York’s acting general counsel, Raymond Dorado. An important responsibility is for him to align the legal department’s goals with the business aims of the firm. Franko estimated a 60/40 split in legal work done in-house v. outside, with regulatory work handled inside and most contracts, litigation matters and arbitration farmed out. He utilizes attorneys from New York-based Sullivan & Cromwell and Proskauer Rose; Bingham McCutchen; and Florham Park, N.J.’s Bressler, Amery & Ross, and relies upon local counsel when operating in foreign jurisdictions. Pershing is “very active” in intellectual property, and two attorneys handle patent, trademark and related issues on a full-time basis. Brokers “push the [IP] envelop constantly” as they seek processes and systems that will allow them to compete with full-service competitors. Route to the top: A 1969 graduate of Fairfield University, Franko became a teacher and subsequently decided to attend law school. While matriculating at Fordham University School of Law, he landed a part-time job in the legal department of Shearson Hayden Stone, now part of Citigroup. A career mentor was its general counsel, Phil Hoblin, who exposed Franko to the securities and brokerage realm, including regulatory matters, litigation and routine aspects of the field. After attaining a law degree in 1978, Franko plied his trade at EF Hutton, LF Rothschild and the New York Stock Exchange before moving to Pershing, where his arrival doubled the size of its fledgling legal department. He became managing director in 2000 and general counsel the following year. Personal: The Bridgeport, Conn., native is married to Bethany Franko. He describes himself as “an avid, but poor, golfer.” Last book: Alexander Hamilton, by Ron Chernow.

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