The 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 recent indictments of two executives and a director of Commerce Bank/Pennsylvania, it is alleged that such practices were used to procure over $50 million in government deposits and $1.7 million in fees from the City of Philadelphia alone. The indictments indicate that the practices included the direct participation of Commerce's chairman and chief executive officer.

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

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, who is the Director of Commerce Bank/Pennsylvania, on October 16, 2003. Thereafter, the attorneys representing Holck, the president of Commerce Bank/Pennsylvania, and Umbrell, the 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 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 $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 the information was never disclosed to investors during the applicable period and only became known on or about June 29, 2004.

On June 29, 2004, US Attorney Patrick Meehan announced that a Commerce director and two executives had been indicted. White 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 $8.25 million fine. Holck is charged with conspiracy to commit honest services fraud, eight counts of wire fraud, and one count of mail fraud. Umbrell 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 $2.5 million fine. Since the day of the announcement, the price of Commerce's common stock has declined by approximately 20%.

If you purchased securities issued by Commerce Bancorp during the applicable period, you may request appointment by the court as a lead plaintiff if you do so by August 31, 2004. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that your claim is typical of the claims of other class members, and that you will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiffs. Your ability to share in any recovery is not affected by the decision whether or not to serve as a lead plaintiff. You may retain any counsel of your choice to serve as you in this action, or you may choose to do nothing, and remain in the class as a silent member.