The D&O Diary

The D&O Diary


Tag Archives: credit crisis litigation

A Closer Look at AIG’s $960 Million Credit Crisis-Related Securities Suit Settlement

Posted in Securities Litigation
AIG has agreed to pay $960 million to settle the consolidated securities class action lawsuit that had been filed against the company and certain of its directors and officers in the wake of the company’s near collapse at the peak of the credit crisis. The settlement, which AIG disclosed in its August 4, 2014 filing [&hellip… Continue Reading

E&Y Settles Lehman Brothers Securities Suit for $99 Million

Posted in Subprime Litigation
On November 27, 2013, the parties to the consolidated Lehman Brothers securities litigation filed with the court a stipulation of settlement pertaining to the securities class action lawsuit brought by Lehman investors against the bankrupt company’s former auditors, Ernst & Young. The accounting firm has agreed to settle the investors’ claims for a payment of [&hellip… Continue Reading

A Closer Look at the DoJ’s Complaint against McGraw-Hill and S&P

Posted in Subprime Litigation
By now you will have heard that the U.S. Department of Justice has filed a securities class action lawsuit against S&P and its corporate parent, McGraw-Hill, about the rating agency’s  ratings of collateralized debt obligations as the subprime meltdown unfolded. A copy of the DoJ’s complaint, filed on February 4, 2013 in the Central District of [&hellip… Continue Reading

Australian Court: S&P Liable for Negligent Misrepresentations in Complex Financial Instrument Triple-A Rating

Posted in Subprime Litigation
Though many include the rating agencies among the list of culprits that contributed to the global financial crisis, the rating agencies have up until now largely dodged attempts to hold them liable. While there have been a small number of cases (refer for example here) where courts have denied the motions of rating agencies to dismiss [&hellip… Continue Reading

About the $2.43 Billion BofA/ Merrill Lynch Merger Securities Suit Settlement

Posted in Subprime Litigation
In what is by far the largest settlement of a credit crisis-related securities class action lawsuit, Bank of America has agreed to pay $2.43 billion to settle the suit filed against the company and certain of its directors and officers in connection with the bank’s financial crisis-driven acquisition of Merrill Lynch. The settlement is subject [&hellip… Continue Reading

Second Circuit Hands Subprime Mortgage-Backed Securities Plaintiffs Substantial Standing Victory

Posted in Subprime Litigation
Many of the toxic mortgage-backed securities that were a key part of the subprime mortgage meltdown were sold in multiple separate offerings based on the same shelf registration statement but separate prospectuses. Each separate offering included multiple securities at varying tranches of seniority and subordination. In the litigation following the subprime meltdown, defendants in suits [&hellip… Continue Reading

Big Bank Litigation: Barclays Libor Scandal Securities Suit Filed and Other Financial Institution Litigation Developments

Posted in Libor Scandal, Securities Litigation
At the PLUS D&O Symposium in New York this past March, I participated on a panel entitled, “Financial Institutions Underwriting: Is it Safe to Come Out Yet?” The implication of the panel topic was that perhaps with the passage of the credit crisis, financial institutions might not be as big of a D&O underwriting risk as [&hellip… Continue Reading

Dismissal Denied in Goldman Sachs CDO Disclosure Securities Suit

Posted in Subprime Litigation
In a harsh June 21, 2012 opinion (here), Southern District of New York Judge Paul A. Crotty rejected the motion to dismiss of Goldman Sachs and three individual defendants in the securities class action lawsuit pertaining to the infamous “built to fail” Abacus CDO transaction and other ill-fated deals. Judge Crotty did, however, grant the [&hellip… Continue Reading

Bear Stearns Settles Credit Crisis Securities Suit for $275 Million

Posted in Subprime Litigation
The March 2008 collapse of Bear Stearns was, in the words of Southern District of New York Judge Robert Sweet, “an early and major event in the turmoil that has affected the financial markets and the national and world economies.” The securities class action litigation that followed the company’s collapse was among the highest profile [&hellip… Continue Reading

Though Case Previously Dismissed , Wells Fargo Settles Wachovia Investor Suit for $75 Million

Posted in Subprime Litigation
In an interesting twist on a long –running credit-crisis related securities suit, Wells Fargo has agreed to pay $75 million to settle the Wachovia equity investor securities class action lawsuit, even though their suit had been dismissed at the district court level and was on appeal at the time of the settlement. The parties’ November [&hellip… Continue Reading

Lehman Execs Seek $90 Million in D&O Insurance for Securities Suit Settlement

Posted in Class Action Settlements, Subprime Litigation
In a development that undoubtedly will attract comment and controversy, fourteen former Lehman Brothers executives – including former Lehman Chairman and CEO Dick Fuld (pictured) –have reached an agreement to settle the consolidated securities class action litigation that has been filed against them for $90 million. In a separate development, seventeen former Lehman executives have agreed [&hellip… Continue Reading

Lehman Brothers Credit Crisis-Related Securities Suit to Proceed

Posted in Subprime Litigation
In a detailed 106-page opinion dated July 27, 2011 (here), Southern District of New York Judge Lewis Kaplan granted in part and denied in part the defendants’ motions to dismiss in the consolidated Lehman Brothers Securities Litigation. Though Judge Kaplan knocked out certain of the plaintiffs’ allegations, what Judge Kaplan called the “core” of plaintiffs’ [&hellip… Continue Reading

Flash From the Past?: New Credit Crisis-Related Securities Suits Filed

Posted in Subprime Litigation
As the worst days of the financial crisis (if not their ill effects) receded into the past, the accompanying credit crisis-related litigation wave appeared to lose its momentum. By late 2010, new credit crisis-related lawsuit filings seemingly had dwindled away. But now at the midpoint of 2011, two new credit crisis related lawsuit have arisen. [&hellip… Continue Reading

Dismissal Motions Denied in Failed and Troubled Bank Securities Cases

Posted in Failed Banks, Securities Litigation
Though we are in the midst of the dog days of summer (at least in the northern hemisphere), the federal courts, at least, have been busy. In the last several days alone, several courts have issued dismissal motion rulings in lawsuits arising out of the subprime meltdown and the credit crisis.   As noted below, several [&hellip… Continue Reading

Credit Crisis Securities Suits Still Coming In

Posted in Subprime Litigation
As the dramatic events in the financial marketplace during fall 2008 recede further into the past, the wave of related litigation activity has also clearly started to slow. But a newly filed lawsuit arising directly from the financial crisis suggests that there may still be further credit crisis cases yet to come, particularly as plaintiffs’ [&hellip… Continue Reading

Credit Crisis Litigation Wave Enters Third Year

Posted in Subprime Litigation
  The credit-crisis securities litigation wave, which began with the filing of the first subprime mortgage-related lawsuits in early February 2007, is about to enter its third year. Though the wave has evolved during the intervening period, it shows no sign of slowing down. The more interesting question going forward will be whether the litigation, [&hellip… Continue Reading

Option ARMs: Bigger Problems (and More Lawsuits) Ahead

Posted in Subprime Litigation
The growing problems surrounding option adjustable-rate mortgages (Option ARMs) are a concern I have previously noted (here). But it now appears that the problems may be far worse even than previously feared. These problems not only represent a growing threat to borrowers and lenders alike, but the also present the increasing likelihood for further shareholder [&hellip… Continue Reading

The BofA/Merrill Deal: Losses, Disclosures and Lawsuits

Posted in Subprime Litigation
As has been well-publicized, within a matter of weeks of closing its acquisition of Merrill Lynch, Bank of America announced previously undisclosed 4Q08 operating losses at Merrill of $21.5 billion that required BofA to obtain an emergency $20 billion cash injection from the U.S. Treasury, as well as an additional $118 billion asset backstop. BofA’s [&hellip… Continue Reading