securities fraud

A lesser man might be sweating the impending fraud charges against the firm that manages his money, but SAC Capital investor Ed Butowsky’s brows and underarms are bone dry. Butowsky, who has gone on record recently to say that 1) he wishes he could put more money with SAC and 2) anyone speaking ill of Steve Cohen can and should go fuck themselves, is fairly certain Team SAC will come out of this stronger than when they started. And when that day comes he’ll be there with party hats and streamers, driving the giant S-A-C-shaped float he’s been working on in his garage through the streets of downtown Stamford, accompanied by Beamers girls shooting zip-up fleeces out of stadium-style tee-shirt guns. There’ll be Zamboni rides and Facepaint, and a petting zoo for the kids. It’ll be the greatest celebration this town has ever seen and will serve as a monument to one man’s unwavering faith in another. And if that other man wants to throw some gratitude in the unwaveringly faithful guy’s direction, maybe by making him a senior adviser or giving him his own parking spot or just taking the time to say, “Ed, I couldn’t have done it without you. And I think of you like a brother,” that’d be okay too. Read more »

Florian Homm presumably saw this coming. 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 »