Category Archives: law

Fund of Funds Indemnification Clause of the Day

A prescient bit of CYA was inserted into the fund prospectus for Kingate Global, a Madoff feeder fund: Kingate warned in its fund prospectus “there was always the risk that the assets with the investment adviser could be misappropriated”. “In … Continue reading

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Civil Society: Falling Apart

Yesterday, the idiot was Marc Dreier; today, it’s Rod Blagojevich. Both of them powerful men near the very top of their professions; both of them sworn to uphold the law; both of them resorting to the kind of desperate criminality … Continue reading

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Good News for Monolines Wanting to Settle their CDO Obligations

Whenever a debt issuer runs into distress, it’s a safe bet that there will be legal tussles between holders of junior and senior notes. CDOs are no exception, as Aline van Duyn reports today in the FT. But it turns … Continue reading

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Legalese Datapoint of the Day

The word count for Marc Lefar’s new employment agreement with Vonage? 18,418. The document does say that Lefar will receive up to $50,000 in reimbursement for "reasonable counsel fees incurred in connection with the negotiation and documentation of this Agreement". … Continue reading

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Countrywide: California Piles On

Well, that didn’t take long. California attorney general Jerry Brown (yes, that Jerry Brown) has now joined Illinois in deciding to sue Countrywide. Brown’s rhetorical powers have not deserted him: “Countrywide exploited the American dream of homeownership and then sold … Continue reading

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Canadian Law: No Friend to LBOs

The news out of Quebec today really is quite stunning: a court has held that bondholders in Canada can effectively block a leveraged buy-out if their bonds will be downgraded to junk (as most are, in such situations). Steven Davidoff … Continue reading

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Why is Insider Trading Illegal?

The meme of the day, as admirably summed up by Paul Murphy, is the question of why exactly insider trading is illegal, and whether it should be. I seem to recall a trenchant column by Holman Jenkins in the WSJ … Continue reading

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When States Pass Laws the Banks Don’t Like

In many countries there aren’t any long-term mortgages, either because local law makes it difficult to foreclose on a house, or else because of the very real risk that local laws will change and make it difficult to foreclose on … Continue reading

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How Important is it to Jail Insider Traders?

An interesting discussion about regulators with teeth cropped up during John Gapper’s panel on financial centers. Gapper noted that the SEC was much better at jailing white-collar criminals than any of London’s financial regulators, to which Guy Saxton, the CEO … Continue reading

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The Snipes Sentence: Three Years and 65 Words

Chuck Norris can divide by zero. Chuck Norris can split the atom with his bare hands. But even Chuck Norris can’t keep Wesley Snipes out of jail. This is an acutal letter written to the judge who recently sentenced Snipes … Continue reading

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How to Respond to a Cease & Desist Letter

Kurt Denke, the president of Blue Jeans Cable, is the Andre Agassi of the audio/video cable industry: he has an absolutely devastating return of serve. You know in the movies where the bully picks a fight with the wrong guy? … Continue reading

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Bear Stearns: Let the Lawsuits Begin!

That was quick. This morning Paul Kedrosky found some Google ads by lawyers wanting to represent Bear Stearns shareholders; by this afternoon, BearStearnsInvestors.com is up and running. There doesn’t seem to be much hard information there about grounds for any … Continue reading

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CDOs and SIVs in a Legal Shambles

Arturo Cifuentes says that it’s not just the bankers and the ratings agencies who bollixed up the alphabet soup of debt products which are now imploding. It’s the lawyers, too: More than 100 collateralised debt obligations (CDOs) and structured investment … Continue reading

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Subprime Lawsuits: The Lerach Connection

Remember those subprime class-action suits? Well now Navigant Consulting has put together another league table – not of the most-sued companies but rather of the law firms filing the most suits. Amir Efrati has the lowdown: Wannabe securities class-actions brought … Continue reading

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Lawsuits as an Asset Class

Patrick Hosking has news of two new hedge funds which seek to invest in lawsuits. I don’t think this is new; in fact, I believe that US hedge fund Elliott Associates has been doing it for some time. The problem … Continue reading

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Subprime: The Class Action Suits

NERA Economic Consulting has a new report out on class-action lawsuits. They dropped a lot from 2005 to 2006, but jumped back up again in 2007, thanks in part to 38 – count ‘em – lawsuits relating to subprime lending. … Continue reading

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Was Ralph Cioffi Singlehandedly Responsible for Everything Which Went Wrong of Late?

Ralph Cioffi must be feeling pretty beleaguered at the moment. A few months ago, he was just a hedge-fund manager whose bets went horribly wrong. Recently, he learned that he’s being investigated to see whether he committed outright fraud. And … Continue reading

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The Upside of Sloppy Drafting

Good lawyers draft contracts in clear English. Bad lawyers draft contracts in dense legalese. But here’s the thing: sometimes dense legalese gets the job done, where clear English would serve only to clarify the fact that the parties to an … Continue reading

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Google Copies Everything. Is That Legal?

Noam Cohen brings up the last taboo subject in the search-engine world: The law has largely been silent on how much copying is fair use by search engines. How much copying? A search engine spiders (ie copies) everything. That’s the … Continue reading

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The Mortgage-Freeze Plan: Still Very Little Litigation Risk

Yves Smith today plays gotcha with the American Securitization Forum, the private-sector group which was instrumental in putting together the mortgage-freeze plan officially announced yesterday. It turns out that the plan is at odds with earlier ASF guidance on loan … Continue reading

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Cuomo Stalks Wall Street, Mortgage Edition

Andrew Cuomo is on a fishing expedition for mortgage-related malfeasance on Wall Street, specifically sins of omission: The inquiry raises questions about the extent to which securities firms are obligated to dig into the mortgages before slicing them up to … Continue reading

Posted in bonds and loans, housing, law | 1 Comment

Why Paulson Needn’t Worry About Litigation Risk in his Mortgage Plan

Elizabeth Warren is worried about the investor lawsuits that Hank Paulson’s mortgage-relief plan might trigger. "There is no clear legal basis for doing this kind of wholesale revision of the value of the collateral and forced revision of the mortgage … Continue reading

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The Broken State of US White-Collar Criminal Prosecutions

The case of the "NatWest 3" has been all a staple of the UK press all year, but never seems to have got much traction on this side of the pond. In a nutshell, three UK bankers were extradited to … Continue reading

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Litigation Datapoint of the Day

In the case of Jarndyce and Jarndyce Princeton and the Robertsons, the judge, Neil Shuster, has so far ruled only that Princeton should return the sum total of $62,500. So far, reports the WSJ’s John Hechinger, "the Robertsons have spent … Continue reading

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When Lawyers Deadpan

I’m a fan of lawyers with a sense of humor. In the New Yorker this week, civil-rights lawyer Clive Stafford Smith says that such a thing can even be a necessity: “If you take everything that the government does in … Continue reading

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