In response to the developing credit crisis, politicians have proposed legislative fixes and, more recently, advocated the need for fiscal stimuli. Some politicians of a more aggressive cast have launched investigations (about which refer here). In this environment, it is hardly surprising that other politicians are also resorting to litigation – and not merely
Subprime Litigation Wave Hits Ambac Financial Group
On January 16, 2008, plaintiffs’ lawyers filed a securities lawsuit in the Southern District of New York against Ambac Financial Group and certain of its directors and officers, raising allegations in connection with the company’s disclosures concerning its provision of insurance for collateralized debt obligations. A copy of the plaintiff’s counsel’s January 16 press
“CDO Squared” Securities Lawsuit Hits MBIA
On January 11, 2008, MBIA became the latest bond insurer to be named as a defendant in a subprime-related securities class action lawsuit. Bond insurers ACA Capital Holdings (about which refer here), Security Capital Assurance (refer here) and Radian Group (refer here) have previously been named in subprime-related securities lawsuits. MBIA is
Subprime Litigation Wave Hits State Street
On January 3, 2008, State Street Corporation announced (here) that for the fourth quarter of 2007, it will be establishing a reserve of $618 million, on a pre-tax basis, "to address legal exposure and other costs associated with the underperformance of … fixed-income strategies managed by… the company’s investment management arm." The net
A Closer Look at the 2007 Subprime-Related Securities Lawsuits
In its 2007 year-end study of securities class action trends (here), NERA Economic Consulting noted that the "sharp increase" in 2007 securities lawsuit filings was "driven in part by litigation related to subprime lending," an observation I have also noted elsewhere. Given the importance of the subprime lawsuit filings to the overall
Subprime: The Truth-Telling (and the Lawsuits) Yet to Come
The various central banks’ efforts to improve short-term liquidity in the global financial system have dominated the headlines the business pages in recent days, most recently with respect to the news that the European Central Bank has injected an astonishing $501.7 billion of lending capacity into the banking system, an amount that the Wall Street
Subprime Litigation Wave Hits UBS – and Other Web Notes
In a prior post (here), I compared the similarity of the piecemeal way that UBS, Merrill Lynch and Citibank have disclosed their subprime-related asset valuation write-downs. Now UBS has one more thing in common with the other two banks – it has been named as a defendant in a securities class action lawsuit.
Subprime Disclosures and Accounting
Among the more disconcerting aspects of the unfolding subprime crisis has been the unseemly spectacle of major financial institutions taking dramatically increased asset value write-downs shortly after having disclosed smaller write-downs on the same assets. UBS became the latest company to follow this pattern earlier this week when it announced (refer here) an increased
Subprime Litigation Wave Hits Another Financial Guarantor
In an earlier post (here), I noted how the subprime related securities litigation wave has reached the bond insurance sector. The forces creating turmoil for the bond insurers have now reached another company in the credit enhancement business, leading to a further subprime-related litigation.
According to its December 7, 2007 press release (
Dismissal Granted in Subprime-Related Securities Lawsuit
As I have previously detailed (refer here), the subprime meltdown has led to a flood of new securities lawsuits. The extent to which many of these subprime-related lawsuits will withstand judicial scrutiny still remains to be seen. A recent opinion from the Central District of California — which is as far as I know