NIKKI GREENBERG, et al v.

Los Angeles Superior Court

E*TRADE FINANCIAL CORPORATION Case No. BC 360152

NOTICE OF PENDENCY AND

SETTLEMENT OF CLASS ACTION

NOTICE OF CLASS ACTION SETTLEMENT

ATTENTION ALL PERSONS IN CALIFORNIA, FLORIDA, MARYLAND,

MASSACHUSETTS, NEVADA, NEW HAMPSHIRE, PENNSYLVANIA, AND
WASHINGTON WHO HAD TELEPHONE CALLS WITH E*TRADE. YOU
MAY BE ENTITLED TO FILE A CLAIM FOR MONETARY RECOVERY.

If you reside in California, Florida, Maryland, Massachusetts, Nevada, New Hampshire,

Pennsylvania, or Washington and (1) received a telephone call from E*TRADE
FINANCIAL Corporation or its related entities (“E*TRADE”) during the period from
September 3, 2003, to May 22, 2009, and/ or (2) you made a call to E*TRADE’s Beverly
Hills, California branch office on August 15 or 16, 2006, and your telephone call was
recorded without notice or consent (hereinafter, the “Settlement Class”), you are a Class
Member and a proposed class action settlement (“Settlement”) could affect your legal
rights.

PLEASE TAKE NOTICE that if you qualify to be in the Settlement Class, you are a
Settlement Class Member (hereinafter, “Class Member”) and may be entitled to payment
of money from the Settlement Funds.

There is now pending in the Los Angeles County Superior Court a lawsuit entitled
Greenberg, et al. v. E*TRADE FINANCIAL Corporation, case no. BC 360152, which
involves allegations that Defendant E*TRADE FINANCIAL Corporation (“Defendant”)
recorded telephone communications without the knowledge or consent of all of the
parties to the communication. Defendant has denied and continues to deny any liability
and there has been no finding that Defendant has violated any laws.

THE ACTION AND THE SETTLEMENT

This class action arose out of allegations regarding Defendant recording telephone calls
without always giving notification at the beginning of every call that the call may be
recorded and/or obtaining consent to recording. Representative Plaintiff’s allegations in
the Complaint are that Defendant recorded telephone calls without the knowledge or
consent of the parties to the telephone call, in violation of applicable privacy and/or
recording statutes. Representative Plaintiff sought fixed damages under the applicable
privacy and/or recording statutes, injunctive relief, and an award of attorneys’ fees and
costs.

Defendant has denied liability and maintains that its recording policy and practices
provided notice of, and obtained consent to, the recording of telephone calls, that its
automated notice of recording on all incoming calls and the notice provisions in its
account agreements gave the parties a reasonable expectation that the call may be
recorded, that the telephone calls were not private confidential communications under the
applicable recording statutes, and that it complied with all statutory provisions. As such,
Defendant disputes all allegations and claims set forth in the Complaint.
However, both parties have nonetheless decided to negotiate a settlement of this action in

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order to avoid the burden, expense and uncertainty of further litigation. Further, both
parties, after a thorough investigation of the facts and applicable law concerning all
claims and defenses, have agreed that the proposed settlement is in the best interest of all
Class Members and that the proposed settlement is fair, reasonable and adequate.

Without admitting liability, the Defendant has agreed to pay a total amount of seven
million five hundred thousand dollars ($7,500,000) in settlement (the “Common Fund”).
The Common Fund, less any attorneys’ fees and costs awarded by the Court to Class
Counsel, will be the Settlement Funds. Subject to approval by the Court, eighty thousand
dollars ($80,000) from the Settlement Funds will be paid to Representative Plaintiff. If
any of the Settlement Funds remain after payment of all claims of Class Members and
Representative Plaintiff, such funds will be paid to a charitable organization(s) qualified
under 501(c)(3) of the Internal Revenue Code as more fully set forth in the Settlement
Agreement and Release.

Subject to approval of the settlement by the Court, each member of the Settlement Class
who does not request exclusion from the class as described below shall be entitled to an
individual settlement amount. The maximum individual settlement amount for a Class
Member who was residing in California during the class period is $5,000 and the
maximum individual settlement amount for a Class Member who was residing in Florida,
Maryland, Massachusetts, Nevada, New Hampshire, Pennsylvania, or Washington during
the class period is $1,000. If there are insufficient Settlement Funds to pay all claimants
the maximum amount, payments to the Class Members will be prorated by: (1) dividing
the Settlement Funds less $80,000 by the sum of five times the number of authorized
claimants from California plus the number of authorized claimants from states other than
California (“Base Settlement Amount”), and (2) distributing five times the Base
Settlement Amount to each Class Member who was residing in California during the
class period, and distributing the Base Settlement Amount to each Class Member who
was residing in Florida, Maryland, Massachusetts, Nevada, New Hampshire,
Pennsylvania, or Washington during the class period.

FINAL JUDGMENT AND RELEASE OF ALL CLAIMS

If the Court approves the proposed settlement, it will enter a final judgment in the action
on the merits as to all Class Members who do not request to be excluded from the
Settlement Class. All Class Members who submit claims, and all Class Members who do
not validly and timely request to be excluded from the proposed settlement, shall be
subject to a binding judgment in favor of the Defendant under res judicata. All such
Class Members shall be forever barred from prosecuting their own lawsuits and shall be
deemed to have released Defendant and its agents from all claims, causes of action or
losses of any kind whatsoever relating to privacy rights or the recording of telephone
calls which any Class Member has or may claim to have against such persons which are
based upon, arising out of, or in any way relating to any of the acts, omissions or other
conduct that have or could have been alleged or otherwise referred to in the action.

FINAL FAIRNESS AND APPROVAL HEARING

On October 16, 2009, at 9:00 a.m., a hearing will be held on the fairness of the proposed
settlement. At the hearing, the Court will be available to hear any objections and
arguments concerning the fairness of the proposed settlement. The hearing will take
place before Judge Carolyn B. Kuhl in Department 323 of the Los Angeles Superior
Court, Central Civil West Courthouse, located at 600 S. Commonwealth Ave., Los
Angeles, California, 90005 (hereinafter, the “Court”).

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 HOW TO MAKE A CLAIM

Subject to the approval of the settlement by the Court, if you want to participate in the
settlement, you must complete and submit online the Claim Form that is available on the
Internet at the following web address: www.GreenbergClassActionSettlement.com no
later than September 25, 2009.

If you choose to participate in the settlement by submitting a Claim Form, you will be
bound by all of the provisions of the Settlement Agreement and Release, including a full
release of claims that will prevent you from separately suing Defendant and its agents.

TO EXCLUDE YOURSELF FROM THE SETTLEMENT

You have the right to exclude yourself from the Settlement Class and the settlement. If
you wish to be excluded, you must complete and send a written Request for Exclusion,
containing your name, address, signature, and a statement that you meet the criteria of the
Settlement Class but wish to be excluded from the Settlement Class, postmarked no later
than September 25, 2009, to the Claims Administrator at the following address, with
copies sent to Class Counsel and Defendant’s Counsel:

Claims Administrator:

Greenberg Settlement Administrator

PO Box 6659
Portland, OR 97228-6659

Class Counsel:

Paul R. Kiesel, Esq.

Kiesel, Boucher, & Larson LLP
8648 Wilshire Boulevard
Beverly Hills, California 90211

Neville Johnson, Esq.

Johnson & Johnson LLP,
439 North Canon Drive, Suite 200
Beverly Hills, California 90210
Defendant’s Counsel:

Perrie M. Weiner, Esq.

Edward T. Totino, Esq.
DLA Piper LLP (US)
1999 Avenue of the Stars, Suite 400
Los Angeles, California 90067

A short statement of your reason for wanting to be excluded from the Settlement Class is
also requested, but it is not required for your request to be valid. If you timely and
validly request exclusion from the Settlement Class, you will be excluded from the
Settlement Class, and you will not be bound by the judgment entered in the action.
TO OBJECT TO THE SETTLEMENT

If you wish to object to the settlement, you must file a written objection and/or a Notice

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of Intention to Appear with the Court, and serve such objection and/or notice upon Class
Counsel and Defendant’s Counsel at the addresses set forth below. Any written
objections and/or Notice of Intention to Appear must state, in clear and concise terms, the
legal and factual arguments supporting the objection, and must include proof of
membership in the Settlement Class. If your objection is rejected, you will be bound by
the final judgment as if you had not objected.

To be considered, the notice and objection papers must be received by the Court and
delivered or postmarked to Class Counsel and Defendants’ Counsel no later than
September 16, 2009. Settlement Class Members who do not timely make their objections
in this manner will be deemed to have waived all objections and will not be entitled to be
heard at the settlement approval hearing. You may, but need not, enter an appearance
through counsel of your choice. If you do, you will be responsible for your personal
attorney’s fees and costs.

ADDITIONAL INFORMATION
The full terms of the settlement we describe are in the Settlement Agreement and
Release, and Amendment to Settlement Agreement and Release, on file with the Clerk of
the Court. The Settlement Agreement and Release, as amended, shall govern where there
is any conflict between it and this Notice.

This description of the action is general and does not cover all of the issues and
proceedings thus far. In order to see the complete file including the individual terms of
the settlement, you should visit the office of the Clerk of the Court. The Clerk will
inform you as to how to obtain the file relating to this lawsuit for inspection and copying
at your own expense.

THE FINAL APPROVAL HEARING

The Settlement is subject to final Court approval and a hearing for that purpose has been
scheduled for October 16, 2009 at 9:00 a.m. in Department 323 of the Superior Court of
the State of California, for the County of Los Angeles, Central Civil West Courthouse,
600 S. Commonwealth Ave., Los Angeles, California, 90005 (“the Final Approval
Hearing”). You are currently represented by Representative Plaintiff’s counsel, Paul R.
Kiesel, Esq., Kiesel, Boucher, & Larson LLP, telephone (310) 854-4444; and Neville
Johnson, Esq., Johnson & Johnson LLP, telephone (310) 975-1080 (“Class Counsel”),
but may retain your own counsel, if you choose, at your own expense. At the Final
Approval Hearing, Class Counsel will ask the Court to enter an Order finally approving
the settlement and entering judgment. Class Counsel will also apply for an award of
attorney’s fees not to exceed twenty-five percent (25%) of the Common Fund plus
reimbursement of costs paid.

YOU MAY CONTACT THE CLAIMS ADMINISTRATOR WITH ANY QUESTIONS

AT 1-888-236-1260. YOU MAY REQUEST A COPY OF THE COMPLAINT, THE
SETTLEMENT AGREEMENT AND RELEASE, OR ANY OTHER FILING IN THE
LAWSUIT. YOU MAY ALSO VIEW THE FILES FOR THE CASE BY VISITING
THE COURT CLERK’S OFFICE.

PLEASE DO NOT CONTACT THE COURT

OR DEFENSE COUNSEL WITH ANY QUESTIONS

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