KACHROO LEGAL SERVICES UPDATE TO STANFORD CLIENTS

KACHROO LEGAL SERVICES, P.C.

October 25, 2011

UPDATE TO STANFORD CLIENTS

Dear Stanford clients:

On Thursday, October 13, 2011, the judge overseeing all the Stanford-related cases held a status conference with all the parties to discuss several matters. First, the parties discussed the Antiguan Liquidator’s Chapter 15 petition for U.S. recognition of the Antiguan Liquidation. The discussion centered on whether the issue should be sent to mediation. The judge did not address the merits of whether the Chapter 15 proceeding would recognize the Antiguan Liquidation as the “main” or “non-main” proceeding. A trial in this matter is set for December 2011.

Second, Kevin Sadler of Baker Botts, lead counsel for the Receiver, updated the parties on several of the larger pending actions. Mr. Sadler stated that the former Stanford employee litigation is now pending in the appellate court, the Fifth Circuit, and therefore, there is nothing to do in that action at this time, although some of the former employees have filed for bankruptcy. Concerning the net winner litigation (the clawback actions), Mr. Sadler stated that summary judgment motions were fully briefed and awaiting a ruling from the judge. As to the efforts to get certain documents from Switzerland, Mr. Sadler stated that the Receiver is still waiting for a ruling from the Swiss authority.

Throughout the conference, the judge asked Mr. Sadler to disclose where all the money went that was lost in this Ponzi scheme. The judge could not understand how billions of dollars went missing and neither the Receiver nor the Examiner (nor the Investor Committee) could trace the funds. Mr. Sadler stated that the Antiguan liquidators had failed to cooperate and disclose documents that would aid them in the search for assets. The Receiver, he stated, has not been able to review any documents in the possession of the Antiguan liquidators or the European authorities. In addition, the Department of Justice has not allowed the Receiver to speak with any of the cooperating witnesses in the criminal case. In response, the judge informed Mr. Sadler that if Mr. Stanford is found to be incompetent to stand trial in the criminal case, he will lift the stay in the civil case and allow the SEC to proceed with its claims against the Stanford entities.

Mr. Sadler continued to express that they have done everything they could to recover assets in the United States. They liquidated 95% of all real estate assets, wound down nearly all of the 140 Stanford entities, and are involved in litigation to recover more assets, but this will likely take several more years to resolve. Mr. Sadler stated his belief that if there is some trail that leads to more assets, it would be in Antiguan records.

Third, the Judge inquired why Mr. Sadler had not initiated the claims process, even if there were insufficient funds in the estate to make a distribution at this time. Mr. Sadler stated that the EDICIÓN BILINGÜE

Receiver agrees with the judge and wants to initiate a claims process and distribution to investors, but the Committee and Examiner are blocking the process. In response, the Investor Committee explained that setting up a claims process is costly and there is only $100 million in current assets for investors. The Investor Committee also explained that they prefer to set up one claims process for both Dallas and Antigua, which requires cooperation between the two, which has yet to occur.

An attorney for investors, Stephen Malouf, expressed the frustration of thousands of investors who believe the Receivership has spent over $100 million and still cannot cooperate with the Antiguan liquidators and still cannot explain where all the money went.

Fifth, the parties discussed the impact of the SLUSA decision on the proceedings. The SLUSA decision limits class action lawsuits on behalf of investors based on state law in certain circumstances. The parties discussed whether the single class action case addressed in the judge’s decision was a sufficient test case of the issues or whether additional cases should be decided before an appeal. The judge is considering deciding several other test cases so that they may appeal to the Fifth Circuit as a group. (KLS previously sent an update discussing the SLUSA decision and its potential impact on investors’ recovery.)For more information, please see the attached articles discussing the conference, the role of the Investors Committee and the Receiver’s management of the Stanford entities.

We also note that KLS is in the process of preparing a complaint against the United States for the negligence of the SEC in its investigation of Stanford, and expect to provide an update regarding that action shortly.

Best,

The KLS Stanford Team.