According to HSBC USA Inc.’s Form 10-Q/A for the quarterly period ended March 31, 2003, on January 16, 2003, the Court denied plaintiff's motion for class certification and also denied a motion by the plaintiff to provide notice to the proposed class that the named plaintiff wished to withdraw from the case. The Court required plaintiff's counsel to provide a substitute plaintiff by February 15, 2003. When plaintiff's counsel failed to do so, the Company moved to dismiss for this and other reasons. Plaintiff's counsel then agreed to stipulate to dismiss the action with prejudice; and the Court entered an order to that effect on April 7, 2003.

As previously reported by HSBC USA Inc.’s Form 10-K for the fiscal year ended December 31, 2002, a purported class action entitled Ravens v. Republic New York Corporation, et al., was filed in the United States District Court for the Eastern District of Pennsylvania on October 7, 1999 on behalf of former shareholders of Republic New York Corporation (Republic) who acquired common stock between May 10, 1999 (when the signing of the merger agreement between Republic and HSBC was announced) and September 15,1999. On October 16, 2000, the plaintiff in that action filed an amended complaint, alleging that the defendants violated the federal securities laws in the merger transaction between Republic and HSBC by failing to disclose certain facts relating to potential liabilities with respect to the Princeton Note Matter in a timely manner. The amended complaint seeks unspecified damages on behalf of the class. On January 16, 2001, defendants filed a motion to dismiss the Ravens action. On April 24, 2002, the court denied in part the Company's motion to dismiss. On May 24, 2002, the plaintiff filed a motion for class certification, which the Company opposed. Following a refusal by the plaintiff to produce documents to the Company and disclosure by the plaintiff that she desired to cease being a named plaintiff in the action, the Company moved on October 21, 2002 to dismiss the action. The counsel for the proposed class opposed that motion and sought leave to provide notice to the class. The plaintiff's motion for class certification and the Company's motion to dismiss both remain pending.

The original lawsuit alleges that the defendants violated the federal securities laws by, among other things: failing to disclose the participation of Republic Securities and Rogers in a massive fraud spearheaded by recently-indicted investment advisor Martin Armstrong; misrepresenting the liabilities to which the defendants were exposed; and failing to disclose the threat that the defendants' fraudulent activities posed to the consummation of the pending merger between Republic Corp. and HSBC Holdings PLC.