Lawsuits

According to the police, they found Brian Mulligan high on bath salts after “several” calls had been placed about a man in the area “trying to break into cars” that fit Mulligan’s description. He supposedly told them he was “tired,” which they say is why they drove him to a motel to get some shuteye. When he (allegedly) emerged hours later and started running through traffic despite officers’ orders to get out of the street, later assuming a “fight stance,” they decided it was necessary to deal with him in an aggressive manner. Didn’t want to, felt they owed it to him. According to Mulligan, it was more like this: Read more »

The Dell deal documents are out and they are short of juicy details; we’ll have to wait for the proxy for details on things like just how much of a discount Michael Dell is taking on his shares or what exactly the terms of Microsoft’s loan are. There is, though, the information that that loan will take the form of $2 billion of subordinated debt, and that the total cash equity investments from Silver Lake, Michael Dell and MSD will total $2.25bn. This seems pretty sensible; Microsoft is effectively writing half of the equity check, though for a fixed-but-subordinated return, plus emotional benefits or what have you. And if you’re worried about how easily debt markets will swallow some $3.25bn of bonds, $5.5bn of Term B/C, and billions of assorted other secured financing,1 which with $4bn of existing bonds brings Dell to around 4x total leverage, making $2 billion – almost half a turn – of the debt subordinated, long-term, and emotionally committed can’t hurt.

But for most of the fun stuff we’ll have to look forward to the proxy. And that isn’t good enough for some people. Reuters reports that the first shareholder lawsuit over the deal has already been filed, one day after announcement, which I assume means it was in the works before the deal was announced. This sort of amazed me: Read more »

There’s a lot to choose from but I’m going to say that the very best thing about AIG’s pretending it might sue the government last week, and then not doing it, is that then it actually sued the government:

American International Group Inc. filed a lawsuit against a Federal Reserve vehicle created during AIG’s bailout that held some of its troubled mortgage bonds, in a dispute over rights to sue over the bonds. … At issue is whether AIG, in selling billions of dollars in troubled mortgage bonds to the New York Fed in late 2008, transferred its rights to sue for losses it incurred on the securities.

So it’s not quite as big as the Hank Greenberg give-me-back-my-$25-billion lawsuit that AIG opted out of, but it’s pretty big; AIG thinks it has over $7 billion in damages against Bank of America/Countrywide alone. If it’s right, either AIG or the Fed should be entitled to about $7bn of BofA’s cash. So call this 1/4 as big as joining the Greenberg suit, though considerably less than 1/4 as offensive.

One way to resolve this dispute amicably might be to conclude that both AIG and the Fed should be entitled to $7bn of BofA’s cash. After all, who decided that only one investor gets to sue BofA per mortgage? We’ve talked before about the fact that BofA’s liability for Countrywide mortgages does not seem to be limited by the amount of mortgages that Countrywide wrote; several lawsuits now cover overlapping pools of mortgages. How much BofA ends up paying for those mortgages will depend on political and PR factors, on the existence of embarrassing emails, on technicalities of contract drafting and legal doctrines, and on how much money BofA, y’know, has, but it seems unlikely that it will depend on some sort of one-mortgage-one-lawsuit principle. You write enough bad mortgages and you give up your expectations of tidiness. Read more »

Is AIG going to sue the government for bailing it out? Hahaha no of course not, come on, that would be nuts. So what is this?

The board of A.I.G. will meet on Wednesday to consider joining a $25 billion shareholder lawsuit against the government, court records show. The lawsuit does not argue that government help was not needed. It contends that the onerous nature of the rescue — the taking of what became a 92 percent stake in the company, the deal’s high interest rates and the funneling of billions to the insurer’s Wall Street clients — deprived shareholders of tens of billions of dollars and violated the Fifth Amendment, which prohibits the taking of private property for “public use, without just compensation.”

I say unto you that this meeting is not for “consider[ing] joining” that lawsuit, which is one part of former AIG CEO Hank Greenberg’s so-far-not-particularly-successful campaign to get his $25 billion back from the government. (This part, in the Court of Federal Claims, is still going, unlike the part in a New York federal court that was dismissed.) Rather, it is for humoring Hank Greenberg, and the way you humor people who have lots of high-priced lawyers is by giving their high-priced lawyers a chance to talk to other high-priced lawyers for a long time, with PowerPoint. This paragraph in AIG’s court filing is less “we may join the suit” and more “see Hank we are listening to you really carefully and care deeply about what you have to say now, please, go on, this is a safe space”: Read more »

  • 07 Jan 2013 at 11:09 AM

Fannie Mae And Bank Of America Are Friends Again

Who won the Bank of America / Fannie feud? I want the answer to be “all of us,” but I guess it isn’t. Unlike Bank of America’s multi-front battle of deviousness with MBIA, which has spawned some genuine entertainment, BofA’s battle with Fannie has been conducted almost entirely in the boring trenches of actually flinging mortgages at each other. The story so far: back in the bad old days of “January 1, 2000 to December 31, 2008,” BofA/Countrywide sold approximately $1.4 trillion of mortgages to Fannie; in recent years Fannie has been figuring out that lots of those mortgages were badly underwritten, came with false reps and warranties, etc., and so it can demand that BofA repurchase them at par. It’s tried to do so on around $11bn of loans, and BofA’s reaction has been along the lines of (1) no and (2) “we’re so mad we’re going to stop selling you more mortgages,” which somewhat surprisingly to the casual observer actually seems to have been interpreted by both sides as a threat rather than a reward.

But today Fannie and BofA announced a settlement that would resolve all of those claims, as well as almost all future claims on the $297 billion of unpaid principal that remains on those $1.4 trillion of ’00-to-’08 mortgages.

The math here is a little funny. Let’s try to parse it: Read more »

  • 18 Dec 2012 at 1:46 PM

Should Banks Be Protected From Homeowner Lawsuits?

Here’s a little nugget that should make the handful of remaining Wall Street Occupiers’ heads explode: Read more »

It’s easy to make fun of the SEC for wanting to sue Netflix over a Facebook post. Netflix, Facebook, and the SEC are all a little funny, and bring them all together and you get a delightful orgy of hip-five-years-ago clumsiness. Also, like, olds, get over yourselves, everyone is on Facebook, why should I call Grandma on her birthday, or 8-K my operational stats? Social! 2.0!

And yet I’m a little sympathetic to the SEC here, mostly because I am old and afraid of Facebook. The agency notified Netflix yesterday that it’s planning to bring a civil action claiming that Netflix violated Reg FD by posting operational numbers – that Netflix viewing had exceeded 1 billion hours of Netflix June – on CEO Reed Hasting’s Facebook wall without press releasing or 8-King those numbers. Reg FD prohibits an issuer from “disclos[ing] any material nonpublic information regarding that issuer or its securities” to any investor or analyst without simultaneously disclosing that information through a “method (or combination of methods) of disclosure that is reasonably designed to provide broad, non-exclusionary distribution of the information to the public.”

So if you’re Netflix you have two ways to win this: either the information was not material, or it was disclosed publicly in compliance with Reg FD. Perhaps strangely, Netflix is taking both angles. From its response yesterday: Read more »