eFunds Securities Litigation

On January 17, 2003, Zimmerman Reed filed a derivative shareholder lawsuit* on behalf of current shareholders against members of the eFunds Board of Directors and the company's outside auditor, Deloitte & Touche. This action was filed in Superior Court in the State of Arizona for the County of Maricopa , alleging the eFunds Board of Directors breached their fiduciary duties by failing to establish and maintain adequate internal controls for the company. Plaintiffs further alleged Deloitte & Touche breached its contract with eFunds by failing to provide the company with audit services in accordance with the Generally Accepted Auditing Standards (GAAS) and that they were professionally negligent.

* A derivative action is a lawsuit brought by a corporation's shareholders, theoretically on behalf of the corporation, to protect and benefit all shareholders against the corporation for improper management.

In effect, the suing shareholder acts on behalf of the corporation seeking a recovery for the corporation. These cases occur where the company's management and/or Board of Directors refuse to initiate litigation. To bring this action, the Plaintiff must be a current shareholder of the company. Put another way, the law recognizes that the shareholder will gain an indirect benefit through higher share prices as a result of recovering money owed to the corporation.