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Case Status:    DISMISSED    
On or around 03/29/2007 (Date of order of final judgment)

Filing Date: July 02, 2004

Commerce Bancorp, Inc. ("Commerce" or the Company), along with its subsidiaries, operates as a full service bank in the United States.

The original Complaint alleges that Commerce and certain of its officers and directors engaged in improper, inherently unsustainable, and potentially criminal bribery and bid-rigging in order to win underwriting awards and gain government deposits. In indictments of two executives and a director of Commerce Bank/Pennsylvania, it is alleged that such practices were used to procure over USD$50 million in government deposits and USD$1.7 million in fees from the City of Philadelphia alone. Moreover, the indictments indicate that the practices included the direct participation of Commerce's chairman and chief executive officer. Others involved have been indicted as well.

The Complaint further alleges that Commerce, through massive political campaign contributions to politicians in Pennsylvania and New Jersey, regularly violated Municipal Securities Rulemaking Board's rule G-37. This rule prevents banks from underwriting bond offerings for issuers if they have contributed more than USD$250 to the political campaigns of the officials of the issuer. These violations, as well as the bribery and bid-rigging, were illegal, inherently unsustainable, and not disclosed to investors during the Class Period. Had they been disclosed, they would have called into question the massive growth in municipal underwriting and government deposits repeatedly touted by Commerce during the Class Period.

The Complaint further alleges that the individual Defendants, who include officers and directors of Commerce, had intimate knowledge of FBI investigations and grand jury proceedings delving into the actions of Defendants Commerce, Ronald White, Glenn Holck, and Stephen Umbrell. The FBI raided the law offices of White, Director of Commerce Bank/Pennsylvania, on October 16, 2003. Thereafter, the attorneys representing Holck, president of Commerce Bank/Pennsylvania, and Umbrell, regional vice-president of Commerce Bank/Pennsylvania, had access to the telephone tapes that were at the center of the eventual criminal indictments. It is alleged that these tapes clearly establish the culpability of the three Commerce Bank/Pennsylvania Defendants.

During the grand jury proceedings, various Commerce officers testified, many of them with representation from attorneys from the law firm of a member of the Board of Directors of Commerce. In December 2003 and January 2004, a few months after the raid on White's law offices, the Chairman and CEO sold Commerce shares for insider sale proceeds of USD$5.9 million. Despite the intimate knowledge of Commerce senior executives, including its Chairman and CEO, of the investigation and criminal grand jury proceedings, it is alleged that such information was never disclosed to investors during the Class Period and only became known on or about June 29, 2004.

On that, US Attorney Patrick Meehan announced that a Commerce director and two executives had been indicted. White, Director of CommerceBank/Pennsylvania until October 2003, has been charged with conspiracy to commit honest services fraud, 22 counts of wire fraud, four counts of mail fraud, two counts of extortion, and five counts of making false statements to the FBI. If convicted on all counts, he faces a maximum sentence of 555 years imprisonment and an USD$8.25 million fine. Holck, president of CommerceBank/Pennsylvania, is charged with conspiracy to commit honest services fraud, eight counts of wire fraud, and one count of mail fraud. Umbrell, regional vice-president of Commerce Bank/Pennsylvania, is charged with conspiracy to commit honest services fraud, eight counts of wire fraud, and one count of mail fraud. If convicted on all counts, he faces a maximum sentence of 185 years imprisonment and a USD$2.5 million fine.

Currently, 18% of Commerce's deposits are from municipalities, more than any of its rivals. Analysts have expressed concern that such government deposits may shrink as a result of the indictments. One analyst, Gerald Cassidy of RBC Capital Markets, stated, "[The concern is that] those municipal treasurers and county clerks may sit back and reassess, 'Are we all going to be tainted with any kind of brush?'" The price of Commerce's common stock declined by approximately 20% since the day before the indictments were officially announced.

According to the Company’s FORM 10-K for the fiscal year ended December 31, 2005, during July and August 2004, six class action Complaints were filed in the United States District Court for the District of New Jersey and the Eastern District of Pennsylvania against the Company and certain Company (or subsidiary) current and former officers and directors. All class action complaints were consolidated in the United States District Court for the District of New Jersey, Camden Division. As a result of the consolidation, a single consolidated Complaint was filed. The Company believed these class action Complaints were without merit and moved to dismiss the Complaints. The motion to dismiss was granted on November 7, 2005. Plaintiffs have appealed the dismissal to the Third U.S. Court of Appeals.

As reported in the court docket, on March 29, 2007 the US Court of Appeals affirmed the lower courts November 2005 decision to dismiss the case with prejudice.

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