The book mentions two white papers which are included here in their entirety. The first paper entitled “Valuation of Illiquid Securities Held By Business Development Companies” was introduced by Allied in 2002. The paper was written on fair-value accounting and Allied’s interpretation of its application. The white paper was an attempt to explain the company’s questionable accounting methods. David and Greenlight Capital noted these questionable practices in their initial analysis of Allied Capital. The white paper reflects how Allied came up with its own non-SEC sanctioned accounting methods.

The second paper is titled “An Analysis of Allied Capital: Questions of Valuation Technique”. It is Greenlight Capital’s original report written to shed light on Allied’s accounting policy and other issues with the company. The analysis includes Greenlight’s concerns over Allied’s accounting valuation white paper, controlled company transactions, specific valuations, payment-in-kind income, Greenlight’s conversation with the SEC, and the strange history of the Arthur Andersen audit letter.

We hope these materials provide a more complete understanding of the book.

February 2002: Allied’s White Paper titled “Valuation of Illiquid Securities Held by Business Development Companies”

June 17, 2002: Greenlight’s original White Paper titled ” An Analysis of Allied Capital: Questions of Valuation Technique”

June 23, 2002: BancLab Report which shows BLX’s SBA portfolio loss and default rates compared to other national lenders.

December 10, 2002: Part 1 of David’s column written for TheStreet.com, “The Joker in Allied Capital’s House of Cards, Part 1.”

December 11, 2002: Part 2 of David’s column written for TheStreet.com, “The Joker in Allied Capital’s House of Cards, Part 2.”

September 29 , 2005: USDA Audit recommending debarment of BLX from its B&I Loan Program due to significant deficiencies on a loan to Bill Russell Oil Company.

December 14, 2006: Indictment of Patrick Harrington, a former Principal with Allied Capital SBLC Corporation and Executive Vice President of BLX, for fraudulent origination of SBA loans.

March 9 , 2007: David’s testimony before the House Committee on Energy and Commerce on prevention of fraudulent access to phone records (pretexting).

June 20, 2007: SEC’s Cease and Desist Order Against Allied’s Valuation Practices.

July 11 , 2007: SBA’s Office of Inspector General audit on the SBA’s oversight of BLX including “performance and compliance issues with BLX’s lending activities and SBA’s actions to protect government funds.” (heavily redacted to conceal the problems)

October 01 , 2007: Patrick Harrington’s Guilty Plea Agreement for conspiracy to defraud the United States and for making false declarations before a grand jury.

November 13, 2007: David’s testimony before the U.S. Senate Committee on Small Business and Enterpreneurship on preventing loan fraud and improving regulations of lenders.

May 28th 2009: Press release announcing Greenlight donating to charity its profits from the Allied Capital short position.

March 23, 2010: Heavily redacted SEC OIG Report (dated January 8, 2010), first reported by the Washington Post, in which the full extent of the regulator’s failures first came to light.