Doomsday estimates of subprime related write-downs of as much as $400 billion, at a time when current Wall Street losses are “only” around $120 billion, beg the question of where the rest of these losses are. Undoubtedly, some part of these as yet unannounced losses will be revealed in many financial institutions’ upcoming earnings releases, as
Subprime Securities Class Action Lawsuit Filed against Mortgage Securitizers
The subprime meltdown has already provoked a wave of shareholder lawsuits (as detailed here), in which public company shareholders have alleged subprime-related misrepresentations or omissions that shareholders contend inflated the companies’ share price. But the plaintiffs in an unusual class action securities lawsuit recently filed in Massachusetts state court are not public company shareholders
More Problems with Foreign Securities Litigants
As courts have wrestled with the issue whether certain foreign shareholders can act as lead plaintiffs, or indeed can even be included in the plaintiff shareholder class, they have faced an ever-broader array of questions and challenges. The kinds of issues that foreign shareholder litigants present are illustrated in the February 13, 2008 lead plaintiff
First-Filed Subprime Lawsuit Dismissed (Without Prejudice)
On February 7, 2007, New Century Financial Corp. became the first company to be named in subprime-related securities lawsuit. On January 31, 2008, just short of one year later, Judge Dean Pregerson of the United States District Court for the Central District of California, granted the defendants’ motions to dismiss, but without prejudice and
Subprime Litigation Wave Hits Morgan Stanley
On February 12, 2008, a plaintiff initiated a securities class action lawsuit in the United States District Court for the Central District of California relating to Morgan Stanley’s subprime-related woes. The complaint (here) purports to be filed on behalf of a class of persons who purchased Morgan Stanley’s shares between July 10, 2007
Auction Rate Securities: The Next Subprime Litigation Wave?
A developing breakdown in an obscure corner of the credit-market involving debt instruments called “auction rate securities” could represent the latest threat to emerge from the credit crisis. According to news reports (here and here), the absence of buyers for these securities has caused several recent auctions to fail, forced isuers
Welcome to The D & O Diary’s New Site!
After nearly two years publishing at its original site on Blogger, The D & O Diary is proud to move into its new home on LexBlog. I hope that all of my readers will welcome and enjoy the new site’s features. The new site should be easier to navigate, and has some added functionality, such
About Those Subprime D & O Loss Estimates
Over the past several weeks, several industry observers and analysts have tried to put a number on the insurance industry’s aggregate subprime-related loss exposure. At one end, Bear Stearns on January 24, 2008 estimated the industry’s exposure at $8-9 billion (refer here). By contrast, on February 8, 2008, Lehman Brothers estimated (here)
Don’t Forget About Options Backdating
Amidst all the subprime hoopla, it would be easy to forget that only a year ago, options backdating was the hot topic. Options backdating might now seem passé, but several considerations suggest that options backdating remains important and that we still have a long way to go before we can be sure we have seen
Subprime Litigation Risk: Outside the Financial Sector?
As I have previously noted (here), securities backed by subprime and other residential mortgages are not just held by financial companies. A wide variety of companies invested in these securities in order to try to improve their return on cash and short-term investments. As the credit markets have deteriorated, many of these investments