Lawsuits

  • 28 Feb 2012 at 3:24 PM

Does George Soros Really Want The Ex-Girlfriend Who He Promised An Apartment To Go Away?

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Remember Adriana Ferreyr? To recap, she’s a woman with whom George Soros either conducted “a serious meaningful relationship” that lasted five years or had an “on-again, off-again and non-exclusive intimate relationship,” depending on who you ask. Last August, Ferreyr sued the billionaire for $50 million based on the promise he allegedly made to buy her a “dream home” at 30 East 85th Street, before “heartlessly” dumping her a few days after the contract was signed. Ferreyr was pretty pissed about the situation but, as these things go, the duo “briefly reconciled for a romantic night together” during which Jorge supposedly had the Soroses to “whisper in her ear” that he’d given the keys to her dream house to another one of his gal-pals. Adriana also claimed that after she aired her displeasure with Soros’ decision to give away her apartment, he slapped her across the face and ”proceeded to put his hands around her neck in an attempt to choke her…then allegedly tempted to strike her with a glass lamp narrowly missing though cutting her foot.” From the beginning, Soros’s lawyers have denied almost all of Ferreyr’s account, from the characterization of their relationship to the bit about him assaulting her with his hands and furniture. They did admit that there was a promise of an apartment but 1) the couple broke up so no deal and 2) the way they see it, Ferreyr’s “baseless” lawsuit  is simply the manifestation of her “disappointment that Soros moved onto other women.”

Now, one would think Soros would want all of this to go away, as, true or not, most individuals prefer not to be publicly accused of pelting people with lamps, etc. And yet today we were given a hint that GS is actually enjoying all this and, on the contrary, doesn’t want it to go away quietly but rather get real bad, real fast, as evidenced by his attorneys’ latest statement. Read more »

Former Paulson And Co Investor Isn’t Buying The “Oops, I Invested In A Horrible Stock” Act

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Remember the Paulson & Co Sino-Forest investment? Turned out to be one of the fund’s less than stellar ideas? Will get you an hour in the office hole for mentioning it? Most people  affected by the trade have so far been willing to let it slide, perhaps preferring to focus their energies on bigger beefs with JP (such as why only the Platinum Level P&C Members got a check to cover their 2012 losses), and probably also chalking it up to Paulson having an unfortunate brain freeze for the majority of last year.  Hugh F. Culverhouse, not so much. The former investor, who filed suit against the hedge fund today, senses something more nefarious at play, the basis for his reasoning being that he doubts Paulson could be that stupid. Read more »

  • 21 Feb 2012 at 11:57 AM

Ex-Mrs. SAC Capital Isn’t Finished Here

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The U.S. Court of Appeals for the Second Circuit will hear oral arguments at 10 a.m. Tuesday in a lawsuit filed by the ex-wife of SAC Capital Advisors founder Steven A. Cohen. Patricia Cohen alleges he hid assets during their divorce proceedings. A lower court dismissed the case in March 2011. [WSJ]

  • 16 Dec 2011 at 5:42 PM

Maybe The SEC Decided To Throw A Trial So It Can Go Back To Settling Everything

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I try to be honest when telling you that a court complaint or SEC filing or research paper is a fun read, just in case you might go read it, though of course there’s no accounting for tastes and I may enjoy many things that you don’t.* And that’s okay. In any case I doubt anyone will find the SEC’s fraud complaints against Fannie Mae and Freddie Mac filed today all that fun to read. “Very, very boring” would be more like it. The only bits that I enjoyed were the names of some of the loan programs, including Freddie’s “Touch More Loans” and the Fannie/Countrywide joint effort “Fast and Easy” which, boy, different times.

But there are some fascinating things about the case. A small one: I was kidding when I said “complaints against Fannie Mae and Freddie Mac.” They’re complaints against former Fannie CEO Daniel Mudd, former Freddie CEO Richard Syron, and a handful of their executives. The SEC signed weird neither-admit nonprosecution agreements with Fannie and Freddie themselves, in which the GSEs agree to help the SEC make its case against their former bosses.

This all seems like very good PR. You are learning, SEC. The neither-admit-nor-deny thing might be awkies, but slapping a big fine on the taxpayer-funded GSEs wouldn’t make a whole lot of sense. And the people who are upset that the SEC are not going after big names connected to the financial crisis have to be happy about the fact that the SEC here is going after the CEOs of big entities that in most people’s minds are intimately connected to the cause of the financial crisis. Suing them is not quite as good as throwing them in jail, but the SEC can’t do that, and this is a start anyway.

The bad news is that the SEC’s case sounds just absolutely terrible. Here it is: Read more »

  • 15 Dec 2011 at 3:28 PM

Don’t Even Entertain The Thought Of Serving Jon Corzine With A Lawsuit While He’s On His Break

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As you may have heard, today is Jon Corzine’s third day testifying in Washington about the whole MF Global thing. All morning and this afternoon have been devoted to questioning by the House Financial Services Committee, with a couple of the standard 15 minute recesses sprinkled in. In fact, there was one not too long ago. You know what Corzine uses his break time for?  Grabbing a snack. Shooting the breeze.  Taking a piss. Watching YouTube clips. Telling himself “You, got this, Jon,” in the bathroom mirror. You know what he doesn’t use it for? Being served with papers from some messenger boy on behalf of some jerk trying to sue him. Thinking about testing him on this? DO SO AT YOUR OWN RISK. Read more »

  • 02 Dec 2011 at 2:55 PM

And Now, Blech, Mortgage Lawsuits

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It’s difficult to keep track of all the things that all the people are suing all the banks for regarding mortgages. A place to start is by remembering that banks stood in the middle of originating loans to people who didn’t pay them and selling them to people who are now sad that they didn’t get paid. So the flow of money was kind of Investor -> Bank -> Homeowner -> Incinerator. If you think of that flow of money, it makes sense that the people are are doing the most suing are the investors and GSEs who bought mortgages, and regulators who sort of kind of represent the investors, and so in fact there are a lot of big numbers sloshing around in pretty normal securities-fraud-y lawsuits of exactly that sort.

But there are also lawsuits, with quite large dollar numbers attached to them, that go the other way. In these, homeowners, and regulators who sort of kind of purport to speak on behalf of the homeowners, are suing the banks for really quite stonking amounts of money.

It’s analytically helpful for me to separate those suits into two further buckets: Read more »

  • 28 Nov 2011 at 3:11 PM

Surely The SEC Is Sick Of Going To Court By Now?

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A lot of legal issues look like substantive things but are actually things about what institutions can and want to do. Obviously more people want to think about questions like “should the U.S. have universal health insurance?” than about questions like “does the Anti-Injunction Act bar lower federal courts from reviewing the individual mandate until taxes are collected in 2014?,” but judges tend to get into the latter question. That’s why they’re judges. That difference can make judicial decisions sort of hard to interpret.

Today everyone’s favorite federal judge, Jed Rakoff, surprised few but pleased many by beating the ever-loving crap out of the SEC’s settlement with Citigroup, in which Citi had agreed to pay the SEC $285 million in exchange for the SEC not asking too many questions about its synthetic CDO deals that were maybe not so hot. Here’s the gist of it:

Applying these standards to the case in hand, the Court concludes, regretfully, that the proposed Consent Judgment is neither fair, nor reasonable, nor adequate, nor in the public interest. Most fundamentally, this is because it does not provide the Court with a sufficient evidentiary basis to know whether the requested relief is justified under any of these standards. Purely private parties can settle a case without ever agreeing on the facts, for all that is required is that a plaintiff dismiss his complaint. But when a public agency asks a court to become its partner in enforcement by imposing wide-ranging injunctive remedies on a defendant, enforced by the formidable judicial power of contempt, the court, and the public, need some knowledge of what the underlying facts are: for otherwise, the court becomes a mere handmaiden to a settlement privately negotiated on the basis of unknown facts, while the public is deprived of ever knowing the truth in a matter of obvious public importance.

Here, the S.E.C.’s long-standing policy – hallowed by history, but not by reason – of allowing defendants to enter into Consent Judgments without admitting or denying the underlying allegations, deprives the Court of even the most minimal assurance that the substantial injunctive relieve it is being asked to impose has any basis in fact.

Right on! But also maybe just a little disingenuous. Judge Rakoff was not being asked for “substantial injunctive relief,” not really. It looks like that on the surface, in the sense that (1) the SEC and Citi worked out a deal where Citi gives the SEC money, promises not to violate the securities laws again, and agrees to do some remedial stuff like telling its salespeople to stop peddling synthetic CDOs structured by the protection buyer without telling anyone because somehow that is still a problem; and in the sense that (2) the SEC was asking Judge Rakoff to enshrine that agreement in an injunction. And then, if Citi didn’t keep its agreement – by not doing the remedial things, say, or by violating the securities laws again – the SEC could go back to court and say “hey, Citi violated the injunction” and Judge Rakoff could hold Citi in contempt and fuck. it. up. Read more »

  • 21 Nov 2011 at 4:26 PM

Hank Greenberg Wants To Know Why His Bailout Was So Much Crappier Than Everyone Else’s

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The complaint in Hank Greenberg’s lawsuit against America is now online, and strange and entertaining in equal measures. I’m pretty sure Occupy Wall Street will be interested to hear his theory that the Constitution allows Fed bailouts of struggling financial institutions, but requires those bailouts to be much gentler than the one handed to AIG.

There is some sensible stuff here. Greenberg’s suit makes good use of the SIGTARP report finding that the government didn’t exactly conduct hard-nosed negotiations with AIG’s CDS counterparties. Instead, it bought off the assets covered by CDS at par (even though some of the counterparties might have accepted a haircut), tore up the CDS contracts, and waived any claims AIG might have against those counterparties. And the description of how the government avoided and ignored legal requirements to get a shareholder vote to authorize new shares for the government, and kind of maybe lied about it a bit in disclosure documents, is kind of interesting for shareholder-voting nerds, of whom there are about five and I am one.

But that’s all just a political smoke screen: lots of people are good and mad that the government funneled too much money through AIG to Goldman Sachs or Deutsche Bank or whatever, but pretty much zero of them think that money should have gone to Hank Greenberg instead. And lying in disclosure documents, like insider trading, isn’t a crime if the government does it.

Greenberg’s case really boils down to two claims. First is the constitutional argument that the bailout-in-exchange-for-equity was unconstitutional because “everyone else got a no strings attached bailout, so we should have gotten one too.” And “everyone” included “Libya”:

Throughout the global financial crisis, the Government allowed many domestic and foreign institutions access to the discount window. … [D]iscount window loans peaked at about $110 billion at the end of October 2008. Foreign banks borrowed approximately 70% of that amount; for example Dexia SA of Belgium borrowed about $33 billion; Dublin-based Depfa Bank, Plc, subsequently taken over by the German government, received approximately $25 billion; Bank of Scotland borrowed $11 billion; and Arab Banking Corp., 29% owned by the Libyan Central Bank at the time, received 73 different loans. Wachovia also borrowed $15 billion, and numerous investment banks were also granted access. At no time did the Federal Reserve Board require that it be given control of, or an equity stake in, these institutions. … If AIG had been given similar access to the Federal Reserve’s discount window or other sources of liquidity like these other institutions, AIG would easily have met its liquidity needs.

Well, okay. Maybe! The legal theory of “the constitution requires that anything you give to Libyans you have to give to me” is a bit untested – if true, I am planning to assert my Constitutional right to call down air strikes on my enemies (who are legion). Read more »

  • 21 Nov 2011 at 11:47 AM

Hank Greenberg Estimates If The Government Had Minded Its Own Damn Business Back In ’08, AIG Would’ve Been At Least $25 Billion Ahead Right Now

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Remember September 2008? Remember how American International Group was doing in September 2008? Kind of not so hot? Maybe needed the government to front it some cash to the tune of $85 billion? Maybe needed even more money after that, even though they swore they just needed that one hit, just to get them by? Maybe would’ve been- how to say this?- fucked, if not thrown a bone? Well Hank Greenberg’s been thinking about September 2008, for a while now, and what he’s concluded is that as an AIG shareholder, he was screwed, big time. And, the window of opportunity for apologies being long closed, he figures the only way he can be made to feel better about the situation is for the US to cough up $25 billion. At least. Read more »

  • 14 Nov 2011 at 4:30 PM

MF Global Employees Not Going Down Without A Fight

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They see your firing and raise you a $25 million lawsuit. Read more »

  • 07 Nov 2011 at 10:23 AM

Hedge Fund Founder Sued For Telling Employees How He Really Feels

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One of the most difficult and important part of being a hedge fund manger is the constant need to come up with new, outside the box ideas. This is, of course, crucial specifically with regard to investment ideas but also just generally, there is the never-ending pressure to maintain freshness in all matters of business. For instance, keeping employees motivated, hungry and on their toes. If you’re Don Brownstein, you (allegedly) “walk around a crowded conference room table while slapping the palm of [your] hand with a baseball bat, stopping behind traders while stating ‘The only way you can leave this firm is in a body bag.’” If you’re another luminary of the investing world, you go with white board markers as a means of positive or negative reinforcement, one marker good, two markers bad, respectively. If you’re John Duffield, who is being sued by a former employee for bullying, you suggest that the staff you employ does not act in compliance with the law and wonder aloud a) how they can look themselves in the mirror and b) whether or not they have any remorse for disappointing you, ’cause they should. Read more »