The proliferation of technology that enables monitoring of computer users’ actions online and collection of their personal information has given rise to public concerns about protecting individuals’ privacy rights. At the center of the debate about such technology is software that is pejoratively referred to as "spyware," though there is vast disagreement on what "spyware" means.

Legislators and government regulators typically use the term "spyware" to refer generally to that broad category of software that often resides on an end user’s computer without his or her knowledge and is capable of everything from annoyances such as slowing system performance and delivering unwanted pop-up advertisements to genuine dangers such as collecting credit-card numbers or passwords. During the first half of 2004, Internet service provider EarthLink convincingly demonstrated the pervasiveness of spyware by scanning the PCs of almost 2.1 million Internet users. Among the more startling facts revealed by their surveys was the existence of nearly 54.8 million applications deemed to be spyware on the users’ computers, almost all of which had been reportedly installed without their knowledge.

Besides the risks to individuals’ privacy rights, spyware can also impose added economic costs on corporations. For example, a lengthy service call from a customer frustrated by excessive spyware-generated pop-up ads on her computer reduces an ISP’s profit margin for that account. Computer software and hardware companies may suffer harm to their brands when customers mistakenly blame their equipment for decreases in download and processing speeds that are actually caused by spyware programs on their computers. Finally, corporations can incur increased costs and reductions in productivity arising out of the need to regularly clean hundreds of unwanted spyware programs from their employees’ hard drives and the resultant slow-down in their computing speed.

Companies engaged heavily in e-commerce, such as L.L. Bean, have also alleged harm to their brands from software programs which deliver pop-up advertisements based upon an end user’s search engine habits by alleging trademark and copyright infringement and unfair competition in lawsuits against competitors and adware distributors.1 Such suits have sought penalties and injunctions for the delivery of a competitor’s pop-up advertisement or web site to an end user originally searching for the plaintiff’s product or service. Many of these cases have settled out of court before any legal precedent was established. Where courts have ruled, their decisions have been inconsistent which has also fueled the growing interest from policymakers in crafting a legislative solution to the consumer and business objections to spyware. Utah, as discussed below, expressly outlawed software which permits a competitor to display its advertisement or Web site over the Web site of the company whose trademarked brand was searched by the end user.

Motivated by these revelations, privacy advocacy groups, corporations and individuals have begun demanding that actions be taken to protect Internet users and companies from the potential harms of spyware. Whether these actions are ultimately taken through industry self-regulation, private lawsuits, or government regulation, or some combination of these approaches, remains to be seen. Certainly regulators at both the federal and state levels have recently proposed multiple pieces of legislation targeting spyware that could significantly impact a wide range of companies, including those that use or provide software that could be regulated as spyware as well as those who have been adversely impacted by such software. Only one piece of anti-spyware legislation has been signed into law, that being Utah’s Spyware Control Act, which is currently on hold pending judicial review. This Client Alert provides an overview of the policy debate surrounding spyware as well as summarizes the current anti-spyware legislative landscape.

Policy Debate: Self Regulation or Government Regulation
An ardent policy debate exists regarding how best to remedy the adverse effects of spyware. Some of the industry participants in this policy debate have advocated for self-regulation, including improved consumer education, private technology solutions and collaborative efforts between industry and the government, to address the problems associated with misused computer monitoring technology.

With support from leading consumer and privacy groups such as the Center for Democracy and Technology, industry leaders in the adware business have proposed key principles for self-regulation, which such companies already claim to be following voluntarily, including: (1) end user license and consent must be clearly visible to the end user; (2) the EULA itself must be clear and understandable; (3) ads delivered via the adware should be labeled to show the source, e.g., the brand name of the adware supplier is displayed; (4) the uninstall process should be easy; and (5) applications should protect end user privacy by avoiding practices such as keystroke logging or collecting personal information about end users. Federal regulators, such as the Federal Trade Commission, have professed optimism that the combination of such voluntary actions and enforcement based upon existing laws prohibiting consumer deception are sufficient.

However, the unpopularity of spyware among consumers generally has caused some key federal lawmakers, and numerous state legislatures, to reject any self-regulatory approach. Consequently, legislation continues to advance at both the federal and state level. The chart set forth below shows the current state of each piece of federal and state anti-spyware legislation as of September 3, 2004.

Legislature

Bill

Status

U.S. Senate

S. 2145 "SPYBLOCK Act"

Pending before Senate Committee on Commerce,
Science and Transportation.

U.S. House of Representatives

H.R. 2929 "SPY Act"

Placed on the Union Calendar.

U.S. House of Representatives

H.R. 4255 "Computer Software rivacy and Control Act"

Pending before House Subcommittee on Crime, Terrorism and Homeland Security.

U.S. House of Representatives

H.R. 4661 "Internet Spyware Prevention Act"

Pending before House Committee on the Judiciary.

Utah State Legislature

Utah Code § 13-39 "Spyware
Control Act"

Signed into law on March 23, 2004; temporarily enjoined by Utah state district court on June 22, 2004.

California State Senate

S.B. 1436 "Consumer Protection Against Computer Spyware Act"

Passed in Senate and pending before Assembly.

California State Assembly

A.B. 2787 "Protection Against
Computer Spyware Act"

Passed in Assembly and pending before Senate.

Michigan State Senate

S.B. 1315 and S.B. 1316

Pending before Senate Committee on Technology and Energy.

Pennsylvania House of Representatives.

H.B. 2788

Pending before House Committee on Consumer Affairs.

New York State Senate

S.B. 7141

Passed in Senate and pending before Assembly.

Iowa State Senate

S.F. 2200

Legislature adjourned, bill will be taken up again in 2005.

At the core of the policy debate is the feasibility of adequately regulating a class of software known as "spyware." Legislators are grappling with the issue of: (1) whether they should define a distinct category of software as "spyware" that is subject to regulation; or (2) whether it is more appropriate to try to regulate specific "bad acts" made possible by such software.

Challenges of Defining Spyware

The difficulty of defining a regulated category of software as "spyware" arises from the fact that there are various types of software programs that provide the same basic set of core functionalities but which can be used for dramatically different purposes. For example, there are a number of software tools that offer functionality similar to that typically associated with spyware but which are designed to enhance an Internet user’s online experience, such as cookies, onscreen pop-up reminders, program update utilities, and Internet browser security features. Each of these popular tools, recently termed "supportware," may require a computer program to monitor the use of the computer and to collect some information about the user or his or her computer. By contrast, an objectionable spyware program could employ similar monitoring and information collection abilities for malicious purposes, such as stealing a user’s Social Security or bank account numbers, or sending them pop-up advertisements without their actual knowledge or consent. Consequently, it is possible that any legislative attempt to create precise boundaries for the term "spyware" would either be over-broad or under-inclusive and could also have the unintended consequence of stifling innovation among companies using and distributing software that is otherwise beneficial.2

Despite the difficulty of defining "spyware," lawmakers at the state level have introduced five new pieces of legislation within the last year that attempt to create a distinct class of software called "spyware" that is significantly regulated or prohibited altogether as described in more detail below.

"Bad Acts Approach"

Other lawmakers have opted to take a slightly different approach to this issue, namely by prohibiting specific "bad acts" that are made possible by such interactive software capabilities instead. By creating new criminal and civil penalties for acts such as the deceptive distribution of an individual’s personal information or online movements to third parties, lawmakers are seeking to protect corporations and individuals without impeding the potential benefits associated with the use of computer monitoring software.

Set forth below is a brief summary of recently proposed legislation intended to regulate spyware.

Legislative Summary

State Legislation

On March 23, 2004, Utah enacted the "Spyware Control Act" and became the first state to pass a law geared towards prohibiting spyware.

Several other states, including California, New York, Michigan, Pennsylvania and Iowa have proposed similar, though not nearly as aggressive, prohibitions on spyware.3 The Utah law and the other pending state proposals are summarized below.

Utah
"Spyware Control Act"
Utah’s Spyware Control Act, enacted as Utah Code §13-39, enables Web site owners, owners of intellectual property, and authorized online advertisers that are adversely affected by spyware to bring a private right of action against anyone who installs spyware on another person’s computer without prior consent.4

The law defines "spyware" as software residing on a computer that: (1) monitors the computer’s usage; (2) sends information about the computer’s usage to a remote computer or server or displays advertising in response to the computer’s usage; and (3) does not obtain the consent of the user and does not provide a method of disabling or uninstalling the software from the computer.

The law also makes it illegal to "use a context based triggering mechanism to display an advertisement that... covers or obscures paid advertising or other content on an Internet Web site." This aspect of the law would effectively make software by adware companies such as WhenU.com and Claria illegal in Utah, and perhaps elsewhere. The statute includes limited exemptions for software such as operating systems, diagnostic and repair utilities and cookies. In addition, ISPs cannot be prosecuted for apparent violations of the statute to the extent that the violations occur as part of the routine transmission of security-related information or information containing advertisements. Consistent with the sponsors’ primary focus on protecting the rights of trademark owners, the law lacks any public enforcement component. The only enforcement mechanism is through private actions by any of the following who are adversely affected by a violation of this chapter: an Internet Web site owner or registrant, a trademark or copyright owner, or an authorized advertiser on an Internet Web site. Such plaintiffs can either seek an injunction or file a lawsuit for the greater of their actual damages or $10,000 for each infraction, with the possibility of recovering treble damages for willful violations.

On June 22, 2004, a Utah state court judge granted adware provider WhenU.com’s motion for preliminary injunction against enforcement of the Spyware Control Act in its entirety. WhenU sought the injunction on the grounds that the Act violated both the Utah and the United States Constitutions. Consequently, concerns regarding the ultimate impact of Utah’s anti-spyware law on corporations doing business in Utah, as well as questions of whether the law could be preempted by federal laws, will remain unsettled pending a judicial determination as to its constitutionality.

California
The California legislature is evaluating two anti-spyware bills, each of which has already passed in their respective houses and is currently awaiting approval by the full legislature.

S.B. 1436: "Consumer Protection Against Computer Spyware Act"
California Senate bill S.B. 1436, called the "Consumer Protection Against Computer Spyware Act," seeks to protect state residents from the harmful effects of spyware and malware, as well as other deceptive software, while simultaneously acknowledging the evolving nature of the technology used to perpetrate those harms. S.B. 1436 achieves this goal not by targeting spyware per se, but rather by prohibiting anyone who knowingly, willfully, or with conscious avoidance of actual knowledge, causes software to be loaded onto an individual’s computer and then uses that software to commit one of an enumerated list of "bad acts," each one of which is defined in great detail in the bill. Examples of such acts include "taking control" of a user’s computer," collecting personally identifiable information about the user, modifying settings related to their use of the Internet, or removing, disabling or rendering inoperative any security, anti-spyware or anti-virus software. "Personally identifiable information" includes a person’s name, credit/debit card information, passwords, and social security number as well as several other elements that could be used to personally identify a user (e.g., Internet Web sites visited, home address, purchase records). The bill also contains fairly broad carve-outs from liability for a number of entities, including telecommunications carriers, cable operators, and ISPs, who would otherwise be subject to regulation to the extent that they monitor or interact with individuals’ computers or Internet or network connections in the ordinary course of their business. Interestingly, the bill leaves open the question whether any penalties or remedies are available for persons that either violate these provisions or that are harmed by them, respectively.

A.B. 2787: "Protection Against Computer Spyware Act"
California Assembly bill A.B. 2787, called the "Protection Against Computer Spyware Act," proposes to prohibit anyone from providing and using a computer program to deceptively alter or manipulate a user’s computer or online experience.5 The state’s Attorney General would enforce this law by bringing civil actions or instituting equity proceedings to obtain injunctive relief or the lesser of actual damages or fines of up to $1 million for knowing and willful violations of the law.

New York
S.B. 7141: Act to Amend the Penal Law and General Business Law.
S.B. 7141, currently under review in the New York State Senate, seeks to amend the state’s Penal Law and General Business Law by making it a criminal act to disseminate spyware.6 Spyware is broadly defined as any computer program, including keystroke logging programs, that employs a user’s Internet connection to gather and transmit their "personal information" to a third party without their prior knowledge and consent. "Personal information" is not defined in the bill, however, and thus is left open to interpretation. The New York bill would also impose additional disclosure requirements for any kind of downloaded software that transmits data, generates advertising, or in any way alters the performance of the user’s computer. Penalties for violations of the statute could range from up to $10,000 in fines or four years imprisonment.

Michigan
S.B. 1315 and S.B. 1316: Acts to Amend the Michigan Compiled Laws and the Code of Criminal Procedure.
Michigan Senate bill S.B. 1315, which was introduced on June 22, 2004, would make it a criminal offense for anyone to install or attempt to install spyware onto another person’s computer program, system or network without their consent and without also providing: (1) their own contact information; (2) notice of intent to install the software; (3) notice of any fees or sexually explicit material associated with the installation; and (4) a mechanism by which the user can refuse the installation and all future contact from that person or entity.7 S.B. 1315 would also outlaw the manufacture, creation, distribution or possession of spyware for use in violation of the above restrictions. "Spyware" is defined under S.B. 1315 as any "computer instructions or software" that monitors the use of computers, programs, systems or networks and sends that information to an offsite collection point or uses it to generate advertisements. Excluded from this definition are "cookies" and software that is installed by computer manufacturers, maintainers and ISPs acting in their ordinary course of business, as well as law enforcement. Both S.B. 1315 and a companion bill, S.B. 1316, which was introduced by the same group of senators,8 establish strict sentencing guidelines of up to $10,000 and 4 years imprisonment for each violation of S.B. 1315.

Pennsylvania
H.B. 2788: Act to Amend Title 18 (Crimes and Offenses) of Pennsylvania Consolidated Statutes.
H.B. 2788, introduced on July 1, 2004, would amend Title 18 (Crimes and Offenses) of the Pennsylvania Consolidated Statutes by making it a criminal offense to "misuse" "spyware" or "adware."9 This misuse occurs any time a person or entity provides, or contracts with third parties for the delivery of, spyware or adware software to users via emails, the World Wide Web, online forms, or bundled together with other downloadable software, without also providing them with clear notice and consent, descriptions of the software and uninstall mechanisms. "Spyware" and "adware" are defined as computer programs that gather and transmit a user’s "personal information" (e.g., Social Security number, account balances) and/or their movements on the Web, or that generate advertisements unrelated to the user’s actions, respectively, and in both cases without the user’s control. These definitions would not apply to ISPs whose services are used without their knowledge by a person to violate the bill’s restrictions. Violations of the statute would be punishable by penalties ranging from $10,000 in fines and five years in prison for a first offense to $15,000 and seven years in prison for a second or subsequent offense.

Iowa
S.F. 2200: Act to Amend Iowa Criminal Code.
Iowa’s anti-spyware legislation, S.F. 2200, was introduced in the Iowa General Assembly in March 2004.10 However, further discussion on the bill has been postponed until January 2005 when the legislature is scheduled to reconvene. Without referring to "spyware" explicitly, the Iowa statute would create criminal and civil causes of action for "aggrieved persons" against any company or person who engages in the "unauthorized collection and disclosure of personal information by computer" without the user’s prior notice and consent. Unlike every other bill, however, this bill contains an explicit exemption for employers who use software to monitor their employee’s computer usage within the scope of their employment.

Federal Legislation

The Senate and the House are presently considering slightly different spyware bills. The House bill, H.R. 2929, or the "SPY Act" was reported to the floor for placement on the calendar earlier this summer. The bill’s sponsor, Rep. Joe Barton, who is chairman of the Energy & Commerce Committee, is seeking to have it voted on before the end of the year. (While at least two other bills, H.R. 4661, the "Internet Spyware Prevention Act"11 and H.R. 4225, "Computer Software Privacy and Control Act"12 are pending in the House, they are not discussed in detail below because H.R. 2929 is the vehicle that is expected to move to the floor for a vote.) The Chairman of the Senate Commerce Committee, Sen. Conrad Burns, has introduced a slightly different anti-spyware bill. Neither proposal includes the sort of trademark protections prohibiting the use of context-based triggering mechanisms which fueled the legal debate regarding the constitutionality of the Utah law.

H.R. 2929: "SPY Act"

The most extensive of the federal bills is House bill H.R. 2929, which was originally introduced in July 2003.13 Called the "Securely Protect Yourself Against Cyber Trespass Act" (or the "SPY Act"), the bill contains two key prohibitions:

Section 2 of the bill would prohibit any party from engaging in any one of a specific list of deceptive or malicious acts, including logging a user’s keystrokes or generating pop-up ads that cannot be closed.

Section 3 of the bill would require all software programs that collect and use personally identifiable information, including a person’s name, email address, or bank account numbers, to first include an affirmative opt-in step with a descriptive notice, including one of three prescribed identity statements.

Exempted from these requirements are acts by telecommunications carriers, ISPs, and cable operators as well as law enforcement agents and network security providers that would otherwise be violations of Section 3.

Reflecting a clear intention to preempt the Utah Spyware Control Act’s ban on the use of context-based triggering mechanisms, all state anti-spyware laws – apart from those regulating fraud, trespass, contract, or tort – would be preempted by the SPY Act. The FTC would be given the exclusive authority to enforce the statute and to impose fines of up to $3 million for each violation of Section 2 and up to $1 million for each violation of Section 3.

S. 2145: "SPYBLOCK Act"
A separate proposal, known as the S. 2145 "Software Principles Yielding Better Levels of Consumer Knowledge Act" or "SPYBLOCK Act", is currently pending before the Senate Commerce Committee."14 Hearings were held on the bill in March, but at this time it seems much less likely than the House bill to receive a floor vote this year.

S. 2145 would affect any entity who provides software that: (1) collects personal information or monitors the activities of an Internet user; (2) modifies a computer user’s computer settings; or (3) generates pop-up advertisements if the software does not first provide notice to and obtain the consent of the computer user according to statutorily-prescribed standards. Furthermore, it would exempt Internet search providers, ISPs and data storage companies who did not receive a direct economic benefit from the transgression. S. 2145 also contains specific exemptions for certain types of preinstalled software, browser, email and instant messaging software, and software used to provide technical support and to validate the existence of a license. The bill empowers the FTC and state attorneys general to enforce its provisions, and would impose punishments including fines and possible prison sentences for violations.

Conclusion

Given this range of activity, and the continuing unpopularity of spyware among consumers and as a result, certain key legislators, the consensus in Congress appears to be not whether spyware legislation will pass this year, but rather what provisions such legislation will contain. Absent express federal preemption, these and other states are likely to act quickly as well. These fast-moving events at the state and federal levels suggest that companies which distribute—or advertise their own products by means of—software that monitors computer users’ actions online and/or collects their personal information, as well as companies that might be negatively impacted by such software, should consider taking the following actions, as applicable:

  • Ensure that privacy policies and end user license agreements are easily understood by a layperson and contain clear, conspicuous policies regarding notice, disclosure and consent, particularly with regard to the collection and distribution of behavioral or personal information.
  • Establish internal procedures to monitor and assure compliance with the terms of any such privacy policy.
  • Conduct an inventory and legal review regarding the company’s search engine advertising practices, particularly with regard to contractual or other means for protecting the company’s brands. Develop and adopt sound practices for the use of interactive advertising software.
  • Be judicious in the use of the term "spyware" or "adware" when referring to or describing third party software providers in company documents or Web sites.

We will continue to track legislative efforts relating to spyware in the United States and abroad and will report on any significant developments in this area as they occur.

Endnotes
1 A sample of the trademark-related lawsuits filed include the following: United Parcel Service of Am. v. The Gator Corp., No. 1:02-CV-2639-BBM (N.D. Ga. Sept. 26, 2002); Washingtonpost v. Gator, No. 02-00909 (E.D. Va. settled Jan. 23, 2003); 1-800 Contacts v. WhenU.com, No. 02-8043 (S.D. N.Y. dismissed Jul. 22, 2004); Weightwatchers.com v. Ediets.com, No. 03-08868 (S.D. N.Y. dismissed Aug. 4, 2004); and LL Bean v. Nordstrom, No. 04-00101 (D. Me. filed May 17, 2004). One digital brand protection and Internet intelligence company has analyzed paid search engine listings which include textual advertisements within standard search engine results for BusinessWeek’s Top 100 Brands. This company reported that the overwhelming majority of third party paid listings included the Top 100 Brands in the text (title or description) of the advertisement. Failure to take steps to protect against such paid search practices dilutes the overall visibility these companies have with their customers in the online world, if not the strength of the trademark from a legal standpoint.
2 The desire to protect individual users while still encouraging innovation by industry, at least in part, has propelled a large number of industry players to participate in the ongoing debate over spyware and the new legislation designed to limit it. In a letter addressed to the sponsors of Utah’s anti-spyware bill, companies including eBay, Google, and Yahoo!, as well as industry trade groups like the Business Software Alliance and the Information Technology Association of America, stated that they supported the bill’s general intent. They nevertheless opposed the legislation on the grounds that its definition of "spyware," among other things, was so broad that they claimed it could have "serious unintended consequences on everyday, legitimate activities on the Internet." Letter from Google, et al. to John Valentine, Senator, Utah State Senate and Steve Urquhart, Representative, Utah State House of Representatives (Mar. 1, 2004) (On file at the Utah State Legislature).
3 State legislators in Virginia have also indicated in proposed bill H.B. 1304 their intent to conduct an analysis of regulations regarding spyware by 2006. See H.B. 1304, 2004 Gen. Assem., Reg. Sess., (Va. 2004).
4 H.B. 323, 56th Leg., Gen. Sess. (Ut. 2004). Enacted as Spyware Control Act, Utah Code § 13-39-101 through §13-39-401.
5 A.B. 2787, 2003-2004 Reg. Sess., (Ca. 2004).
6 S.B. 7141, 227th Ann. Leg. Sess., (Ny. 2004).
7 S.B. 1315, 2004 Leg., 92nd Sess. (Mich. 2004).
8 S.B. 1316, 2004 Leg., 92nd Sess. (Mich. 2004).
9 H.B. 2788, 2003-04 Leg., 187th Sess. (Pa. 2004).
10 S.F., 2200, 80th Gen. Assem., 2nd Reg. Sess., (Ia. 2004).
11 Internet Spyware Prevent Act of 2004, H.R. 4255, 108th Cong. (2004).
12 Computer Software Privacy and Control Act, H.R. 4255, 108th Cong. (2004).
13 Securely Protect Yourself Against Cyber Trespass Act, H.R. 2929, 108th Cong. (2003). The short title of this bill as originally introduced was the "Safeguard Against Privacy Invasions Act."
14 Software Principles Yielding Better Levels of Consumer Knowledge Act, S. 2145, 108th Cong. (2004). This proposal is currently pending before the Senate Committee on Commerce, Science and Transportation. As of the publication of this Client Alert, the committee was considering a number of
possible changes to the bill but had not yet issued any official amendments to it. Therefore it is possible that a revised version of S. 2145 could come out of this committee in the near future.

******************************************************************

BREAKING NEWS: SEMINAR - OUTSOURCING FUND MANAGEMENT ADMINISTRATION - 20TH OCTOBER - TO REGISTER VIA EMAIL PLEASE CLICK ON LATHAM & WATKINS FIRM LOGO

Outsourcing is the topic of conversation everywhere — and the world of fund management is no exception. Fund Managers are looking to outsource to reduce operational risk, to focus on supporting the business more effectively and to reduce costs.

Leading global law firm Latham & Watkins, in conjunction with Putnam Lovell, an investment banking firm focused on the financial services industry, will bring together industry specialists to debate the outsourcing trend, and its impact and influence on the future shape of the fund management industry. Aimed at CEOs, COOs and CFOs of fund management firms, as well as the heads of procurement and the in-house lawyers, the seminar will provide a strategic overview as well as explore implementation and regulatory issues. The event will take place in London on 20 October 2004.

Background

As recently as 18 months ago, Schroders, the UK's second largest listed fund management company, Merrill Lynch Investment Managers and Scottish Widows Investment Partnership, part of Lloyds TSB, the UK bank, were among the few to have signed outsourcing deals that handed considerable administrative functions to the leading custody banks.

Last year, however, there was a sudden surge of business. It began when Standard Life Investments, the Edinburgh-based subsidiary of Europe's biggest mutual, entered exclusive talks with Citigroup, the world's fourth largest custody bank. Within weeks, F&C Management, a London-based subsidiary of Eureko, a pan-European financial services group, had forged a link with Mellon Financial, another leading US bank. Since then there has been a host of significant lift-out deals.

Earlier in May, the first continental European fund management outsourcing was announced: ABN Amro Asset Management outsourced their €75 billion fund administration and investment operations services to State Street. The outsourcing trend continues unabated within the sector.

In addition to the complexity of conducting a major outsourcing transaction—people, contractors, negotiations, vendors, etc.— Fund Managers also need to focus on the regulatory implications of the business process change.

Putnam Lovell and Latham & Watkins are running a half-day seminar, specifically designed for the Fund Management sector, on the strategic role of outsourcing and the best approach to implementation. The event will include insights into the transactions already completed through the panel contribution of both vendors and fund management customers.

Program Agenda [For more information, please call Anine Leakey on +44 207 710 1865.]

Welcome and Introduction
Martin Saywell (Latham & Watkins) and Darlene DeRemer (Putnam Lovell)

The Role of Outsourcing in Fund Management: A Strategic Overview
This panel session moderated by Andrew Moyle (Latham & Watkins, London), speakers Don Putnam (Putnam Lovell) and Jeff Conway (State Street) will cover:

  • driving forces behind fund management outsourcing;
  • norms of fund management outsourcing; and
  • 10 things a fund management CEO needs to know about outsourcing

Key Things to Consider from the Regulatory Side
Chaired by Nigel Campion-Smith (Latham & Watkins, London)

Implementation: A Case Study
A panel discussion moderated by Putnam Lovell, speakers Dan Kramer (COO, Deutsche Asset Management), Darren Pearce (Managing Director, Bank of New York) and Nick Wright (Senior Vice President, Northern Trust) will discuss the life cycle of a real case study.

Implementation: Process, Process, Proccess
Alex Hamilton (Latham & Watkins, London) and Scott Sullivan (In-house Counsel, Deutsche Asset Management) will cover the five stages of an outsourcing.

Lunch with guest speaker, Mike Foster (Associate Editor, Financial News)

Sponsors

Latham & Watkins is a leader in corporate finance, capital markets transactions, mergers and acquisitions, and complex business litigation. With over 1,500 lawyers practicing in 21 offices, Latham is one of the few law firms capable of working seamlessly across geographic and practice boundaries to deliver top quality representation worldwide. For more information, visit us on our Web site at www.lw.com.

Putnam Lovell NBF Securities Inc. ("Putnam Lovell NBF") is an investment banking firm focused on the financial services industry. It offers merger and acquisition advice, equity capital markets, fixed income trading, and general corporate finance advisory services. It serves a global client base comprised of diversified financial services firms, institutional asset managers, mutual fund managers, banks, broker-dealers, insurers, and financial technology firms. Putnam Lovell NBF was founded in 1987 and operates from offices in Boston, London, New York and San Francisco. Putnam Lovell NBF Securities Inc. is regulated by the FSA and is an affiliate of NBC Financial (UK) Ltd. For more information on Putnam Lovell NBF, please visit: www.putnamlovellnbf.com.

Latham & Watkins operates as a limited liability partnership worldwide with an affiliate in the United Kingdom and Italy, where the practice is conducted through an affiliated multinational partnership. © Copyright 2003 Latham & Watkins. All Rights Reserved.

Latham & Watkins is an international law firm of more than 1,500 attorneys in 21 offices worldwide, including Boston, Brussels, Chicago, Frankfurt, Hamburg, Hong Kong, London, Los Angeles, Milan, Moscow, New Jersey, New York, Northern Virginia, Orange County, Paris, San Diego, San Francisco, Silicon Valley, Singapore, Tokyo, and Washington, D.C.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances

******************************************************************

BREAKING NEWS: SEMINAR - OUTSOURCING FUND MANAGEMENT ADMINISTRATION - 20TH OCTOBER - TO REGISTER VIA EMAIL PLEASE CLICK ON THE LATHAM & WATKINS FIRM LOGO AT TOP OF PAGE.

Outsourcing is the topic of conversation everywhere — and the world of fund management is no exception. Fund Managers are looking to outsource to reduce operational risk, to focus on supporting the business more effectively and to reduce costs.

Leading global law firm Latham & Watkins, in conjunction with Putnam Lovell, an investment banking firm focused on the financial services industry, will bring together industry specialists to debate the outsourcing trend, and its impact and influence on the future shape of the fund management industry. Aimed at CEOs, COOs and CFOs of fund management firms, as well as the heads of procurement and the in-house lawyers, the seminar will provide a strategic overview as well as explore implementation and regulatory issues. The event will take place in London on 20 October 2004.

Background

As recently as 18 months ago, Schroders, the UK's second largest listed fund management company, Merrill Lynch Investment Managers and Scottish Widows Investment Partnership, part of Lloyds TSB, the UK bank, were among the few to have signed outsourcing deals that handed considerable administrative functions to the leading custody banks.

Last year, however, there was a sudden surge of business. It began when Standard Life Investments, the Edinburgh-based subsidiary of Europe's biggest mutual, entered exclusive talks with Citigroup, the world's fourth largest custody bank. Within weeks, F&C Management, a London-based subsidiary of Eureko, a pan-European financial services group, had forged a link with Mellon Financial, another leading US bank. Since then there has been a host of significant lift-out deals.

Earlier in May, the first continental European fund management outsourcing was announced: ABN Amro Asset Management outsourced their €75 billion fund administration and investment operations services to State Street. The outsourcing trend continues unabated within the sector.

In addition to the complexity of conducting a major outsourcing transaction—people, contractors, negotiations, vendors, etc.— Fund Managers also need to focus on the regulatory implications of the business process change.

Putnam Lovell and Latham & Watkins are running a half-day seminar, specifically designed for the Fund Management sector, on the strategic role of outsourcing and the best approach to implementation. The event will include insights into the transactions already completed through the panel contribution of both vendors and fund management customers.

Program Agenda [For more information, please call Anine Leakey on +44 207 710 1865.]

Welcome and Introduction
Martin Saywell (Latham & Watkins) and Darlene DeRemer (Putnam Lovell)

The Role of Outsourcing in Fund Management: A Strategic Overview
This panel session moderated by Andrew Moyle (Latham & Watkins, London), speakers Don Putnam (Putnam Lovell) and Jeff Conway (State Street) will cover:

  • driving forces behind fund management outsourcing;
  • norms of fund management outsourcing; and
  • 10 things a fund management CEO needs to know about outsourcing

Key Things to Consider from the Regulatory Side
Chaired by Nigel Campion-Smith (Latham & Watkins, London)

Implementation: A Case Study
A panel discussion moderated by Putnam Lovell, speakers Dan Kramer (COO, Deutsche Asset Management), Darren Pearce (Managing Director, Bank of New York) and Nick Wright (Senior Vice President, Northern Trust) will discuss the life cycle of a real case study.

Implementation: Process, Process, Proccess
Alex Hamilton (Latham & Watkins, London) and Scott Sullivan (In-house Counsel, Deutsche Asset Management) will cover the five stages of an outsourcing.

Lunch with guest speaker, Mike Foster (Associate Editor, Financial News)

Sponsors

Latham & Watkins is a leader in corporate finance, capital markets transactions, mergers and acquisitions, and complex business litigation. With over 1,500 lawyers practicing in 21 offices, Latham is one of the few law firms capable of working seamlessly across geographic and practice boundaries to deliver top quality representation worldwide. For more information, visit us on our Web site at www.lw.com.

Putnam Lovell NBF Securities Inc. ("Putnam Lovell NBF") is an investment banking firm focused on the financial services industry. It offers merger and acquisition advice, equity capital markets, fixed income trading, and general corporate finance advisory services. It serves a global client base comprised of diversified financial services firms, institutional asset managers, mutual fund managers, banks, broker-dealers, insurers, and financial technology firms. Putnam Lovell NBF was founded in 1987 and operates from offices in Boston, London, New York and San Francisco. Putnam Lovell NBF Securities Inc. is regulated by the FSA and is an affiliate of NBC Financial (UK) Ltd. For more information on Putnam Lovell NBF, please visit: www.putnamlovellnbf.com.

Latham & Watkins operates as a limited liability partnership worldwide with an affiliate in the United Kingdom and Italy, where the practice is conducted through an affiliated multinational partnership. © Copyright 2003 Latham & Watkins. All Rights Reserved.

Latham & Watkins is an international law firm of more than 1,500 attorneys in 21 offices worldwide, including Boston, Brussels, Chicago, Frankfurt, Hamburg, Hong Kong, London, Los Angeles, Milan, Moscow, New Jersey, New York, Northern Virginia, Orange County, Paris, San Diego, San Francisco, Silicon Valley, Singapore, Tokyo, and Washington, D.C.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances