Operational Due Diligence

In November 2008, after Lawrence Summers was announced as President-elect Barack Obama’s top White House economics adviser, he resigned as part-time managing director of D.E. Shaw & Co. “As citizens, we’re delighted that President-elect Barack Obama has selected Larry Summers to head the National Economic Council,” said D.E. Shaw managing director Max Stone in a statement. “Larry is an enormously gifted economist, and has already made major contributions to this country as a public servant, a researcher, and an academic leader.”

In September 2008, DE Shaw hired Richard McKinney as a managing director to oversee the newly created asset backed securities unit. He will report to Max Stone.

Mr. Stone is on the board of directors at The Robin Hood Foundation and the board of trustees at The National Resources Defense Council (NRDC) and Children’s Hospital Boston.

Bloomberg News reported in January 2010 that, “Hedge-fund firms including D.E. Shaw & Co. and Harbinger Capital Partners LLC that froze client assets during the financial crisis have yet to pay back a total of about $77 billion to investors, according to estimates by Credit Suisse Tremont Index LLC”.

In January 2010 D.E. Shaw Research, LLC signed a 10-year, 75,000-square-foot lease, covering seven floors at Tower 45, located at 120 W 45th St.

It was reported in December 2009 that D.E. Shaw had filed a petition in the Supreme Court of Bermuda, seeking a change in the ownership and voting structure at Orient Express Hotels (OEH).

In December 2009 KP Singh and family bought the DLF Assets (DAL) shares owned by D.E. Shaw, for $470 million. Shaw had invested $400 million in 2006.

In September 2009 D.E. Shaw and Citadel Investment Group filed a winding-up petition in India against Venus Remedies, after the Chandigarh-based company defaulted on a foreign currency convertible bond (FCCB) issue. The companies subscribed to a $12-million FCCB issue of Venus Remedies in May 2006. The bonds came up for redemption on May 2, 2009, but company failed to pay the investors.

In June 2009 D.E. Shaw & Co. fired about 25 administrative and support staff and reassigned other employees in an effort to boost efficiency.

In June 2009 Boccardi Capital Systems filed an appeal of the decision to dismiss its case, Boccardi Capital Systems vs. D. E. Shaw Laminar Portfolios LLC, previously pending in the United States District Court for the Southern District of New York in Manhattan. The complaint was filed in 2005. In the lawsuit, Boccardi alleges that Shaw misused information that it obtained from Boccardi, pursuant to a Confidentiality and Use Restriction Agreement concerning an investment opportunity in connection with Riviera Holdings.

In April 2009 Lawrence Summers, Barack Obama’s top White House economics adviser, was criticized for receiving a salary of $5.2 million at D.E. Shaw in 2008, for what was described as a part-time job. Summers became a managing director of D.E. Shaw in October 2006.

In March 2009, in the wake of Bernie Madoff, D.E. Shaw announced plans to choose independent administrators to substantiate positions and cash balances.

In January 2009 Orient-Express Hotels Ltd. confirmed that it was served with a petition in Bermuda by D.E. Shaw and CR Intrinsic (SAC Capital). The petition alleges, among other things, that the Company’s current ownership and voting structure is unlawful under Bermuda law, and that the Board exercised its fiduciary powers for an improper purpose in causing or procuring Orient-Express Holdings 1 to acquire, hold and/or vote Class B shares of Orient-Express Hotels Ltd. CR Intrinsic Investors, operates out of Stamford, Connecticut, and focuses on using primary research to develop investment ideas.

According to a January 2009 filing, D.E. Shaw Laminar Portfolios and Goldman Sachs own 50.1% and 35% stakes in Foamex, respectively.

In December 2008 it was reported that withdrawal restrictions were accelerating, with some estimates raising the total to 80 to 100 of the larger firms. New examples included D.E. Shaw & Co., who restricted withdrawals from its Composite and Oculus funds. D.E. Shaw’s Oculus fund is believed to have had redemption applications for more than 8% of assets even though performance of the fund has increased by around 10% year to date. Investors accounting for around 6% of D.E. Shaw’s Composite fund have also sought to withdraw even though the multiple strategies fund was only down 4%.

In December 2008 Next Century Associates, LLC, a partnership between Los Angeles based real estate investor Michael Rosenfeld and an entity in the D.E. Shaw Group, unveiled plans for a $2 billion mixed-use project on the 5.75 acre Century Plaza hotel site.

In August 2008 Christopher Zaback was named chief financial officer and managing director of D.E. Shaw & Co. He replaced Stuart Steckler, a managing director and a member of the executive committee, who retains overall responsibility for the firm’s operations.

In April 2008 Endo Pharmaceuticals Holdings, Inc. and the D.E. Shaw Group, announced an agreement, under which Endo’s Board of Directors will nominate William F. Spengler at the 2008 Annual Meeting of Stockholders to serve as a member of the Company’s Board of Directors.

In February 2008 it was reported that D.E. Shaw disclosed in a regulatory filing that it had acquired a 6.6 percent stake in Alliance Data Systems, one day before the company announced that it was dropping its lawsuit against the Blackstone Group.

In July 2007 John M. Liftin joined D.E. Shaw as the firm’ s general counsel and as a managing director.

In July 2007 D.E. Shaw reported holdings of 2.79 million shares or 9.7% of The Children’s Place (PLCE). DE Shaw has taken an activist approach to several firms recently, including the Investment Technology Group (ITG) and Take Two Interactive (TTWO), and acquired an insurance firm, the James River Group.

In March 2007 Lehman Brothers purchased a 20% stake in D.E. Shaw for an undisclosed price.

D.E. Shaw’s multi-billion dollar global macro Oculus fund is lowering its “gate” to 1/12th of assets from 1/8th of assets starting Jan. 1, 2007. A gate limits the proportion of a fund’s capital that can be withdrawn by investors. By lowering its gate for Oculus, D.E. Shaw is trying to make sure the fund is not forced to sell positions if a large number of investors all want their money back at once.

Madison Dearborn put $147 million into UPC Wind, Newton, Massachusetts-based Wind Energy Company and D.E. Shaw matched it in 2006.

In November 2006, Riviera Holdings Corp received a non-binding proposal for 30-day exclusive negotiating period and confidentiality. Real estate developer Ian Bruce Eichner and the D.E. Shaw group, on behalf of an entity to be formed by them, to acquire by merger all of the outstanding shares of Riviera at a cash price of $21 per share. Their proposal is conditioned upon satisfactory completion of due diligence, negotiation of definitive transaction documents, and receipt of necessary board, stockholder, third party, and regulatory approvals. D.E. Shaw Group announced its intent to vote against Riviera’s Proposed Merger in April 2006.

David E. Shaw is listed as a board member in March 2006 announcement regarding National Medical Health Card Systems, Inc.

In January 2005 The Mountains Recreation and Conservation Authority filed a lawsuit against D.E. Shaw Laminar Portfolios to clear title to more than 4,200 acres of scrub-covered mountains, citing a 1992 development agreement between Palmdale and the original developer that called for the property to be dedicated to open space. In August 2005 the matter was settled confidentially and the case was dismissed. (Case #2005cv01257, Mountains Recreation and Conservation Authority v. D E Shaw Laminar Portfolios LLC et al)

In 2004, it was reported that D.E. Shaw was a 10% owner of Riviera Holdings Corp, parent company of the Riviera hotel-casino in Las Vegas.

In December of 2003, a D.E. Shaw subsidiary acquired FAO Schwarz and prepared it for reopening in the fall of 2004.

In February 2002 Bank of America Corp said it would pay $490 million to settle a class action lawsuit filed by shareholders after the 1998 merger of NationsBank and BankAmerica that it failed to disclose the extent of its hedge fund investment with D.E. Shaw & Co. The shareholders accused Bank of America of disguising the equity investment as a loan. For that reason, they claimed they were not fairly compensated in the merger.

In August 2001 the Securities and Exchange Commission claimed that Bank of America Corp improperly accounted for its relationship with D.E. Shaw and misled investors about risks involved in the deal.

In 1998, there were articles on a new alliance with Bank of America and DE Shaw. Yet, in late 1998, Bank of America posted a huge loss for it’s third quarter results. The loss stems from the bank’s interest in a stock and options portfolio managed by DE Shaw. One analyst stated that Shaw’s big loss was embarrassing to executives at Bank of America. In 1998 the company laid off 25% of its work force due to the fragile hedge-fund market at the time.

In May 1997 Feldman Equities, the owner, developer and manager of Tower 45 at 120 West 45th Street, announced that D.E. Shaw & Co. was increasing the space it occupies to approximately 80,000 square feet, a five-fold increase since the firm entered the building in 1990. Dan Fishbane and Stuart Steckler represented D.E. Shaw & Co.

Media sources stated that Penn National Gaming Inc. and D.E. Shaw, backed by Lehman Brothers and Wachovia, was thinking about a cash and stock offer for Harrah’s Entertainment Inc.

D.E. Shaw is Owens Corning’s largest shareholder and will be represented on the board of directors. Owens Corning is expected to emerge from Chapter 11.

San Diego County Employees Retirement Association in the summer of 2005 awarded $525 million in hedge fund mandates to Silverpoint Capital, Amaranth and D.E Shaw.

David E. Shaw, Ph. D founded D.E. Shaw in 1988. They are known for quantitative investment strategies, especially in statistical arbitrage. David Shaw was previously a computer science professor at Columbia University. David Shaw was previously a VP with Morgan Stanley and also was appointed by President Clinton to the President’s Committee of Advisors on Science and Technology.

One the more famous former D.E. Shaw employees is Jeff Bezos, founder of Amazon.com. He was previously a VP with D.E. Shaw before leaving to start Amazon. Apparently, the idea for the Internet bookseller came out of a brainstorming session at D.E. Shaw.