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United States: Sixth Circuit Lifts The Lid On Pre-Approved Filings Under Seal
Last Updated: September 19 2016
Article by John Hayworth and Valerie Diden Moore
Butler Snow LLP
Any thought that the Sixth Circuit's June decision regarding filings under seal in Shane Group, Inc. v. BlueCross Blue Shield of Michigan, 825 F.3d 299 (6th Cir. 2016) 1, might be narrowly construed based upon the nature of the case—a challenge to a class settlement where the parties' filings under seal prevented the class from knowing or reviewing key bases for the settlement—should be dispelled once and for all.
In an unpublished decision issued in July, the Sixth Circuit on its own motion vacated a district court order that allowed the parties to file any documents designated "Confidential" under seal. John W. Beauchamp et al. v. Federal Home Loan Mortgage Corp., et al., Case No. 15-6067 (July 11, 216). In Beauchamp, a couple's personal possessions were destroyed when a contractor hired by Freddie Mac to prepare a foreclosed condominium and garage for resale hit the wrong unit. The couple sued Freddie Mac, claiming vicarious liability for the contractor's actions. In the course of the case, the parties had entered a fairly standard discovery protective order allowing the parties to designate certain discovery materials as "Confidential" and providing that any party filing such materials or documents incorporating such materials must file them under seal. The parties then filed numerous documents under seal without a separate, specific motion or ruling from the district court. The district court ultimately granted summary judgment to Freddie Mac.
On appeal, the Sixth Circuit reversed the summary judgment ruling. The Court did not stop there, however, instead declaring, "[t]here remains one issue we raise on our own motion." That issue was that the parties had filed numerous documents "at the nub of this dispute" under seal and unavailable to the public. Citing its prior ruling in Shane Group, the Court explained the following:
During discovery, courts often issue blanket protective orders that empower the parties themselves to designate which documents contain confidential information. Once the parties place the document in the record, however, "very different considerations apply."
The Court then reiterated the Shane Group holding that filings under seal require (i) that the proponent overcome a very high hurdle and provide compelling reasons to seal documents and demonstrate as much with respect to each document proposed to be filed under seal, and (ii) that the district court, even when there is no objection, "set forth specific findings and conclusions which justify nondisclosure to the public."
Noting that, in this case, the filings under seal all were made in accordance with a discovery protective order and lacked both independent justifications proffered by the parties and specific findings by the district court of the kind required in Shane Group, the Court quickly determined that the record did not justify filing under seal.
Beauchamp highlights the emphasis – arguably new – that the Sixth Circuit places on filings under seal. The blanket discovery protective order of old, providing for automatic filings under seal of documents designated "Confidential," common in many cases, will no longer carry the day. Filings under seal will be heavily scrutinized and will require substantial justification in every case, whether opposed by any other party or not. Even if that fails to occur at the district court level, the Sixth Circuit will take it upon itself to remedy the situation.
Footnotes
1 This blog is Part Two of a three-part series on the Sixth Circuit's recent rulings on filings under seal and some of their potential impacts on litigants and practitioners. Part One, Sixth Circuit Denies Seal of Approval for Unjustified Filings Under Seal, addressed the Sixth Circuit's June 7, 2016, decision in Shane Group, Inc. v. Blue Cross Blue Shield of Michigan. This Part Two addresses the Sixth Circuit's subsequent, unpublished ruling on filings under seal issued in July 2016. Part Three will address the impact of these rulings on third-parties who are compelled to produce documents by subpoena.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
http://www.mondaq.com/unitedstates/x/528002/trials+appeals+compensation/Sixth+Circuit+Lifts+The+Lid+On+PreApproved+Filings+Under+Seal
"To put a more effective floor under short-term interest rates, the Federal Reserve created supplementary tools to be used as needed. For instance, the OverNight Reverse RePurchase agreement (ON RRP) facility is available" to money-market funds [like Vanguard's], government-sponsored enterprises [like Fannie Mae's], broker-dealers," as well as banks, "at a rate determined" by the Fed. Like IOER, ON RRP "discourages participating institutions from lending at a rate substantially below that offered by the Fed," which helps keep banks in business.
http://www.philly.com/philly/blogs/inq-phillydeals/Chair-Yellen-defends-the-Feds-handling-of-US-finance.html
maybe he tried to say 1.25$ ...lol..
I been waiting that many years so I not worry for few more years ...lol..Brazil's President Impeached: Could It Happen Here?
Monday 5 September 2016 at 8:05 PM ET edited by Elizabeth Dennis
http://www.jurist.org/hotline/2016/09/joseph-marren-brazil-president.php
Ackman boosts stake in Fannie, Freddie to more than 11% in each
A draft bill to wind down government-run mortgage financiers Fannie Mae and Freddie Mac would leave a decision on how to treat their private shareholders to the courts. The bill, written by South Dakota Democrat Tim Johnson and Republican Mike Crapo of Idaho, would replace the companies with a new industry-financed agency. The agency would provide a government backstop, but it would only kick in after private creditors took a hit.
http://nbr.com/2014/03/31/ackman-boosts-stake-in-fannie-freddie-to-more-than-11-in-each/
Democrats Were Wrong on Fannie Mae and Freddie Mac
The White House called for tighter regulation 17 times.
Seventeen. That's how many times, according to this White House statement (hat tip Gateway Pundit), that the Bush administration has called for tighter regulation of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. Congress has cooperated only once. In spring 2007, as House Financial Services Committee Chairman Barney Frank likes to point out, the House did pass a bill in response. The Senate did not act until 2008; Senate Banking Committee Chairman Christopher Dodd spent most of 2007 camped out in Iowa running for president. The legislation passed by Congress in 2008 enabled Treasury Secretary Henry Paulson to put Fannie and Freddie into federal conservatorship this summer when they failed. But it didn't prevent them from spewing a huge amount of toxic waste, in the form of subprime and Alt-A mortgages, into our financial institutions from 2004 to 2007. As Stephen Spruiell points out in The Corner on National Review Online, Fannie and Freddie spewed out $1 trillion worth (face value) of subprime mortgages between 2005 and 2007. That's a whole lot of toxic waste. For more detail, consult the items referred to in my previous blogpost on this subject (most of the comments seem to have been disputes about the plot line of the movie It's a Wonderful Life, which I should think could be settled by consulting a reference work).
Much if not all of that could have been prevented by a bill cosponsored by John McCain and supported by all the Republicans and opposed by all the Democrats in the Senate Banking Committee in 2005. That bill, which the Democrats stopped from passing, would have prohibited the GSEs from speculating on the mortgage-based securities they packaged. The GSEs' mission allegedly justifying their quasi-governmental status was to package or securitize such mortgages, but the lion's share of their profits—which determined top executives' bonuses—came from speculation.
John McCain has shied away from making this an issue, for reasons my U.S. News colleague Jim Pethokoukis speculates on. This National Republican Congressional Committee Web ad makes the point McCain has been avoiding. Jim Geraghty of the Campaign Spot blog at National Review Online seems exasperated by the McCain campaign's failure to exploit this issue. Excerpts:
Why can't John McCain and Sarah Palin make the points about how the crisis was built illustrated in the "Burning Down the House" (with the revised music) YouTube video? Could McCain please, please bring up some of this in Tuesday's debate?
Don't the American people deserve to know that Democrat Barney Frank, then ranking member and now chairman of the House Financial Services Committee, said, " I want to roll the dice a little bit more in this situation towards subsidized housing"? Isn't the fact that the ranking Democrat in charge of oversight of Fannie Mae was in a sexual relationship with a high-ranking Fannie Mae executive a glaring conflict of interest? Isn't it worth noting that Democratic Rep. Maxine Waters insisted, "we do not have a crisis at Freddie Mac, and in particular at Fannie Mae, under the outstanding leadership of Mr. Frank Raines"? Shouldn't the American people know that Democratic Rep. Gregory Meeks insist that "there's been nothing that was indicated that's wrong with Fannie Mae"?
If nothing else, shouldn't we salute Democratic Rep. Artur Davis for saying, "Like a lot of my Democratic colleagues I was too slow to appreciate the recklessness of Fannie and Freddie. I defended their efforts to encourage affordable homeownership when in retrospect I should have heeded the concerns raised by their regulator in 2004. Frankly, I wish my Democratic colleagues would admit when it comes to Fannie and Freddie, we were wrong."
I talked with Artur Davis in the Speaker's Lobby Friday during the vote on the financial bailout/rescue package. He reiterated what he said here, and he also makes the fair point that Republicans made some mistakes too. As for the reference Geraghty makes to the fact that Barney Frank's partner Herb Moses worked at Fannie Mae, I think we should keep in mind the fact that Frank and Moses broke up in 1998 and that Moses quit working at Fannie Mae at about the same time. As far as I'm concerned, that's ancient history. And while in retrospect it's clear that Frank was wrong about the GSEs in 2003, he did work with the administration and pushed legislation through the House in 2007, so it seemed he was open to learning from experience.
Finally, check out this Fox News Channel-Fox Business News Channel documentary by David Asman.
http://www.usnews.com/opinion/blogs/barone/2008/10/06/democrats-were-wrong-on-fannie-mae-and-freddie-mac
Eight Outrages Urge Trump To Upend Washington
......At the end of August the Fed went even further, raising the specter of its buying a “broader range of assets”–its current portfolio includes Treasury bonds, as well as complex government-guaranteed mortgage securities and the debt of Fannie Mae and Freddie Mac . This Fed trial balloon lays the groundwork for a possible Clinton Administration to reward helpful corporations with Fed bond purchases or to fund infrastructure projects boosted by investments from the Fed............http://www.forbes.com/sites/currentevents/2016/09/14/eight-outrages-urge-trumpto-upend-washington/#1a92d3296198
Relationships between business and politicians in America have always been close, with super-achievers often moving between governmental and private sector roles with ease. Remember the closeness of Texan oil interests to George W Bush? Remember Hank Paulson, Treasury Secretary under Bush and a former Goldman Sachs CEO, who told a bunch of hedge fund managers a few weeks before Lehman went bust that Uncle Sam would soon be seizing Fannie Mae and Freddie Mac, two government-backed mortgage institutions. Paulson thus gave them insider information on shorting the market before the crash. No clash of interest? Paulson was not even investigated for wrongdoing.
Why go that far? It is now well established that Hillary and Bill Clinton Foundation received huge donations from Saudi interests, but Newsweek chose to rubbish this as not a serious future conflict of interest. Rather, it said, it did not matter as all the money went to charity. Said the report: “No member of the Clinton family received any cash from the foundation, nor did it finance any political campaigns. In fact, like the Clintons, almost the entire board of directors works for free.”
To assume that there is no conflict of interest if the money goes to charity is foolish, for no charity will kick its benefactors in the butt if there is a conflict of interest at some future date. The Saudis don’t pay good money just out of the goodness of their hearts.
The Newsweek report is interesting from an Indian perspective because it reminds us of the strong linkages between politicians and land prices and property.
There is almost no major politician who has not been conflicted by property links. Starting from the top, we had Sonia Gandhi and Rahul trying to appropriate Herald House using Congress party funds. Sonia’s son-in-law Robert Vadra was a huge property speculator in Haryana and Rajasthan when the Congress ruled those states. In Maharashtra, Sharad Pawar is a byword for property dealings. Congress politicians were up to their necks in the Adarsh Society scam. YSR’s son Jagan Reddy went to jail for his property and business deals. BS Yeddyurappa lost his chief ministership when his tenure was impacted by a land scam involving his sons. Manohar Joshi of Shiv Sena and Raj Thackeray of MNS both have property interests in Mumbai. And so on. No party, national or regional, is untainted by property linkages. Worse, even the media is complicit. In Delhi, and many states, journalists have been given cheap plots of land, thus ensuring that they are compromised in their reportage.
........
http://swarajyamag.com/world/trumps-realty-links-to-india-why-we-should-be-more-worried-than-the-us
Trump will say something... coming up I think!
lol I am waiting
6mil shares trade today? maybe uplist before judes decisions?
Recap and release ... tick tack...lol
Donal Trump,
Said: wtf DOJ
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Blackstone assumes $200M Fannie Mae mortgage for Kips Bay Court buy
BY REW • AUGUST 31, 2016
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BLACKSTONE GROUPFANNIE MAEKIPS BAY COURTMORTGAGE
Blackstone Group will finance its reported $620 million purchase of Kips Bay Court by assuming the property’s existing $200.1 million Fannie Mae mortgage, according to the Real Deal.
The company, which is in contract to buy the eight-building residential complex in the east side of Manhattan, will not take on additional debt for the acquisition. Wells Fargo provided the funds for the 10-year loan. The new mortgage replaced a $90 million loan from M&T Bank.
Kips Bay Court, which covers East 26th to 29th Streets on Second Avenue, contains 894 market-rate apartments.
Blackstone reportedly agreed to a $620 million deal to buy the property in a deal brokered by CBRE’s Darcy Stacom. The purchase price comes to about $700,000 per apartment. The seller is Phipps Houses, an affordable housing development firm.
Once the deal closes, Blackstone’s residential footprint in New York City would be one of the city’s largest. The company, which claims to be the largest private equity firm in the world, has $103 billion worth of assets under management.
Out of that pool of assets is a growing number of multifamily properties.
The deal for Kips Bay Court is the second major residential investment through the firm’s Blackstone Property Partners fund. Last December, the company partnered with Canadian firm Ivanhoe Cambridge in purchasing Stuyvesant Town and Peter Cooper Village for $5.3 billion. That deal provided Blackstone with 11,000 residential units.
According to the Kips Bay Court website, the property is currently undergoing extensive renovations. The improvements cover the installation of new appliances in the apartments as well as renovations to the lobbies, elevators and laundry rooms.
Rental rates start at $2,604 for studios, $3,319 for one-bedrooms and $6,923 for three-bedroom units.
http://rew-online.com/2016/08/31/blackstone-assumes-200m-fannie-mae-mortgage-for-kips-bay-court-buy/
Fannie Mae Connecticut Avenue Securities Receives Additional Fitch Ratings
WASHINGTON, Aug. 30, 2016 /PRNewswire/ -- Fannie Mae (OTC Bulletin Board: FNMA) has sought and received additional ratings for a number of previously unrated Connecticut Avenue Securities™ (CAS) notes as part of an ongoing effort to bring increased transparency and liquidity to these securities. With these new credit ratings, these CAS notes are eligible to be purchased in the secondary market by funds that require a rating for investment and the notes are now likely to receive more favorable financing terms, further enhancing their liquidity.
"We are pleased to provide this additional transparency and liquidity to the market for the benefit of our investors," said Laurel Davis, vice president for credit risk transfer, Fannie Mae. "These new ratings reflect the strong performance of the underlying collateral of our Connecticut Avenue Securities and the strength of Fannie Mae's credit risk management processes. We are happy with the continued investor interest in our Connecticut Avenue Securities transactions and we are committed to enhancing our offerings as we lead the effort of building a strong and transparent market for credit risk sharing."
"The credit ratings on these notes reflect the strong performance to date of the loans and the structural features that reduce credit risk to investors over time," said Grant Bailey, managing director, Fitch Ratings.
Fitch Ratings has assigned ratings to the following Connecticut Avenue Securities notes:
CAS 2013-C01 Class M-2 notes – Rating: BB+sf, outlook stable
CAS 2014-C01 Class M-2 notes – Rating: BBsf, outlook stable
CAS 2014-C02 Class 1M-2 notes – Rating: BBsf, outlook stable
CAS 2014-C02 Class 2M-2 notes – Rating: BB+sf, outlook stable
CAS 2014-C03 Class 1M-2 notes – Rating: B+sf, outlook stable
CAS 2014-C03 Class 2M-2 notes – Rating: BB+sf, outlook stable
CAS 2015-C01 Class 1M-2 notes – Rating: B+sf, outlook stable
CAS 2015-C01 Class 2M-2 notes – Rating: BBsf, outlook stable
As of August 2, 2016, Fannie Mae has brought 14 CAS deals to market since the program began, issued $18.1 billion in notes, and transferred a portion of the credit risk to private investors on single-family mortgage loans with an outstanding unpaid principal balance of approximately $621.5 billion pursuant to CAS transactions. Fannie Mae has transferred a portion of the credit risk on approximately $741.8 billion in single-family mortgages through all of its risk transfer programs.
Fannie Mae is the leading manager of single-family residential credit risk in the industry and continues to drive innovation in the space through the development and employment of its proprietary underwriting and quality control tools, which are unique to the industry. Tools such as Desktop Underwriter® and Collateral Underwriter™ give Fannie Mae the ability to further manage loan quality through the delivery process and increase transparency to enable parties to evaluate risk early in the loan origination process.
In addition to its flagship CAS program, Fannie Mae continues to reduce risk to taxpayers through its Credit Insurance Risk Transfer™ (CIRT™) reinsurance program and other forms of risk transfer.
To view the full Fitch Ratings' release, visit https://www.fitchratings.com/site/pr/1010974.
About Connecticut Avenue Securities
CAS notes are bonds issued by Fannie Mae. The amount of periodic principal and ultimate principal paid by Fannie Mae is determined by the performance of a large and diverse reference pool. For more information on individual CAS transactions and Fannie Mae's approach to credit risk transfer, visit http://www.fanniemae.com/portal/funding-the-market/credit-risk/index.html. To view the periods in 2016 during which Fannie Mae may issue Connecticut Avenue Securities (CAS), please view our 2016 CAS Issuance Calendar.
Statements in this release regarding the company's future CAS transactions are forward-looking. Actual results may be materially different as a result of market conditions or other factors listed in "Risk Factors" or "Forward-Looking Statements" in the company's annual report on Form 10-K for the year ended December 31, 2015 and its quarterly report on Form 10-Q for the quarter ended June 30, 2016. This release does not constitute an offer or sale of any security. Before investing in any Fannie Mae issued security, potential investors should review the disclosure for such security and consult their own investment advisors.
Fannie Mae helps make the 30-year fixed-rate mortgage and affordable rental housing possible for millions of Americans. We partner with lenders to create housing opportunities for families across the country. We are driving positive changes in housing finance to make the home buying process easier, while reducing costs and risk. To learn more, visit fanniemae.com and follow us on twitter.com/fanniemae.
SOURCE Fannie Mae
Related Links
http://www.fanniemae.com
The unsealing of the documents casts a spotlight on a legal proceeding that has been shrouded in secrecy from the start. The court granted the government’s request for confidential treatment of thousands of pages of materials produced in the case; Justice Department lawyers have asserted presidential privilege in 45 documents.
Last year, The New York Times filed an amicus curiae brief asking that the judge unseal two of the depositions in the case. She released excerpts from one of those depositions on Monday.
Further testimony unsealed on Monday came from Mario Ugoletti, a former Treasury official who was a former special adviser to the director of the Federal Housing Finance Agency, the conservator overseeing Fannie and Freddie. In December 2013, Mr. Ugoletti signed an affidavit for the case stating unequivocally that neither the Treasury nor the Federal Housing Finance Agency envisioned that the companies’ deferred tax assets were about to be reversed in the months leading up to the profit sweep, generating huge profits. He also said that the move was not intended to “increase compensation to Treasury.”
But in the deposition in May, Mr. Ugoletti said he did not know whether the Treasury or the Federal Housing Finance Agency officials knew about the potential for the profits at Fannie and Freddie at the time of the sweep.
Mr. Ugoletti, who left government in the fall could not be reached for comment.
A document produced by Grant Thornton, the accounting firm hired by the government to do financial analysis on the companies, casts additional doubt on the government’s contention that it considered Fannie and Freddie to be in a dire financial condition in 2012, when it changed the terms of the bailout. The document, unsealed on Monday, shows Freddie’s financial results through the first quarter of 2012 alongside handwritten notes from an unknown Grant Thornton employee. That employee noted how Freddie’s profits would require that it reverse the accounting entry, known as releasing the valuation allowance.
The notes on the document state: “3 yrs. of cum. profits, you start to think about releasing the valuation allow. The valuation allow. When probably 2013, 2014.”
Since Fannie and Freddie returned to profitability in 2012, they have sent to the Treasury more than $50 billion over the amount they drew down in the bailout. Their profits continue to be funneled to the Treasury each quarter.
http://www.nytimes.com/2016/04/13/business/fannie-mae-suit-bailout.html?_r=0
The Role of Lending Institutions
by Kyle Webster
The ongoing saga of major bank settlements with the Department of Justice, Fannie Mae and Freddie Mac is mostly the result of the economic crisis of 2007-2008. Prior to this time, Bank of America and JPMorgan Chase & Co. sold billions of dollars in mortgage loans and mortgage securities to Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac are government-affiliated companies that purchase mortgages from lenders and sell them to investors. Accusations have been made that the mortgages purchased by Fannie Mae and Freddie Mac were higher risk and more problematic than BOA or JPMorgan Chase expressed.
Fannie Mae and Freddie Mac have actively pursued the repurchase of loans that did not meet their lending standards upon origination in an effort to recoup their losses. In October 2013, the Federal Housing Finance Agency, acting on behalf of Fannie Mae and Freddie Mac, reached a $5.1 billion settlement with JPMorgan Chase. The settlement resulted from accusations that JPMorgan Chase violated federal and state securities laws when misrepresenting the quality of the sub-prime mortgage loans and securities sold to the two companies, which resulted in billions in damages to the companies during the 2008 financial crisis.
In January 2013, BOA settled with Fannie Mae over faulty lending practices by one of its subsidiaries, Countrywide Financial Corporation. Fannie Mae had accused the BOA subsidiary of utilizing faulty lending practices on $1.4 trillion in mortgages sold to them as investment products. In the settlement, BOA paid Fannie Mae $3.55 billion and repurchased $6.75 billion in outstanding residential mortgage loans. This substantively resolved all outstanding disputes between BOA and Fannie Mae. In 2011, BOA settled with Freddie Mac and Fannie Mae for over $3 billion in a similar agreement. In this agreement, Freddie Mac was given roughly $1.3 billion and Fannie Mae received over $1.3 billion.
In November 2013, the Court of Appeals for the Second Circuit dismissed a case by investors against Freddie Mac accusing the company of hiding the extent of exposure it had to the sub-prime mortgage crisis saying the case lacked any real evidence.
Department of Justice Settlements
by Zachariah Rivenbark
JPMorgan Chase & Co. Settlements with the US Department of Justice
The US Department of Justice announced on November 19, 2013 that JPMorgan Chase & Co. had agreed to a record-setting $13 billion settlement over its risky mortgage practices that played a role in the 2008 financial crisis. News of the historic agreement first broke on October 21, 2013, when a source close to the talks reported a breakdown of the $13 billion figure and that criminal prosecution of JPMorgan was still on the table. The report turned out to be true, as JPMorgan settled federal and state claims to the tune of $9 billion and to provide $4 billion in relief to unspecified consumers harmed by the risky mortgage practice. In addition, JPMorgan and its employees still faced the possibility of criminal charges. On February 10, 2014, the settlement agreement came under fire after non-profit financial reform group Better Markets sued the DOJ to block the $13 billion settlement from moving forward.
In addition to the November 2013 $13 billion settlement, JPMorgan has reached another substantial settlement agreement with the DOJ. On February 4, 2014, the DOJ announced that JPMorgan agreed to a $614 million settlement for defective mortgage loans that were ineligible for insurance under federal housing programs. The DOJ was not an original party to the lawsuit, which started in January 2013 after a whistleblower, Keith Edwards, sued JPMorgan under the False Claims Act[PDF]. News of the $614 million settlement came as a surprise because Edward's suit remained secret until the DOJ announced the agreement in February 2014.
Bank of America Settlements with the US Department of Justice
In December 2011, Bank of America reached a $335 million settlement agreement with the DOJ over claims that its subsidiary, Countrywide Financial, used race instead of creditworthiness as the determinative factor in assigning minority borrowers sub-prime mortgages. As part of the agreement, BOA admitted to engaging in racially discriminatory practices from 2004 to 2008, which resulted in 200,000 minority borrowers facing a higher risk of foreclosure.
BOA faced a new lawsuit from DOJ on October 24, 2012 when US Attorney Preet Bharara filed a lawsuit against BOA alleging that BOA and Countrywide Financial committed fraudulent mortgage practices. A year later, a jury in the US District Court for the Southern District of New York found BOA liable for its fraudulent practices. The DOJ alleged similar claims in a lawsuit against BOA in the US District Court for the Western District of North Carolina from August 2013, stating that BOA misled investors about the level of risk associated with its residential mortgage-backed securities. Most recently, a New York state court validated a $8.5 billion settlement agreement between BOA and mortgage investors.
http://www.jurist.org/feature/featured/bank-settlements/detail.php
yeah they are packing for long weekend and making you wait longer! Have a nice weekends!
Court news out!
still waiting , hope tomorrow lol
maybe today after market close
Officials injected taxpayer money to stabilize Fannie and it's sibling Freddie which were conceived by Washington to promote home ownership and had helped underwrite a share of the easy-to-get subprime loans.
The SEC had accused Mudd and the five other Fannie and Freddie executives of downplaying the companies' exposure to risky loans.
The SEC said Fannie Mae concealed exposure to more than $100 billion of subprime and $341 billion of Alt-A loans - another class of mortgage offered to risky borrowers.
Former Freddie Mac chief Richard Syron as well as former executives Patricia Cook and Donald Bisenius previously settled their cases for $250,000, $50,000 and $10,000, respectively.
The case is U.S. Securities and Exchange Commission v. Mudd, U.
http://www.reuters.com/article/us-sec-fanniemae-mudd-exclusive-idUSKCN10X1ZI
--------------------------------------------Case got settled-----It's positive , because Govt will never admit their wrong doing (act)---will be more cases settled I bet-----------------
Appeals Court Rules In GSE Case But Not That GSE Case
Source: Dow Jones News
A federal appeals court finally issued a decision in a long-running dispute over actions taken by the U.S. government after it put Fannie Mae and Freddie Mac into conservatorship in September 2008.
It wasn't, however, the decision that many investors, housing-policy wonks and the government have been eagerly awaiting. That decision, reviewing a federal judge's dismissal of a case brought by Fannie and Freddie shareholders protesting the government's claim on profits, will come out of the U.S. Court of Appeals for the D.C. Circuit.
Thursday's decision came from the U.S. Court of Appeals for the Federal Circuit, the other group of federal courts based in the District of Columbia. It wasn't brought by shareholders protesting the government's claim on Fannie's and Freddie's profits, it was brought by the former chief financial officer of Freddie Mac.
Still, Investors Unite, a group that advocates for Fannie and Freddie shareholders, described the decision as a "positive sign" in a tweet.
That's half-right. There certainly are parts of the ruling that may benefit shareholders. But there are other parts that may hurt them.
The case decided Thursday was brought by Anthony Piszel, who was named Freddie's CFO in 2006. His contract said that if he was fired from the position without cause, he would get a severance package that would include a lump-sum payment equal to twice his annual salary and that his restricted stock units would continue to vest.
Shortly after Freddie was seized by the government, Mr. Piszel was fired at the behest of the director of the Federal Housing Finance Agency, which had become Freddie's conservator. The director also determined that Freddie shouldn't pay Mr. Piszel any severance payment.
Mr. Piszel sued in the U.S. Court of Federal Claims six years later, arguing that the cancellation of his severance payment was a taking by the government. Under the Fifth Amendment's "takings clause," the government must provide compensation when it deprives someone of property.
Last summer, a federal judge dismissed Mr. Piszel's case. Citing earlier cases in which federal courts held that shareholders of failed banks lacked property interests that could give rise to a takings claim, the judge ruled that Mr. Piszel's contract didn't create a property right for which he could demand compensation.
The judge said by signing a contract with a company as pervasively regulated as Freddie Mac, Mr. Piszel had assumed the risk that future regulation might change or eliminate benefits or compensation promised to him. That argument had been used to turn away suits by bank shareholders after the lenders were seized by the Federal Deposit Insurance Co.
Even though it ultimately agreed with the dismissal, the appeals court disagreed with the argument. It said that Mr. Piszel's contract did create a property right. The court pointed out that the law that authorized the FHFA to bar a severance payment to Mr. Piszel wasn't passed until the summer of 2008, after he had entered into the contract with Freddie. This is the part that is good news for Fannie and Freddie shareholders: Some of the lawsuits also make claims based on the takings clause. After this ruling, it is more likely that federal judges in those cases will hold that they also have property rights arising from ownership of shares.
But they shouldn't get too giddy. Keep in mind that the appeals court upheld the dismissal. It ruled that while Mr. Piszel's contract really did create a property right, nothing the government did took that right away from him.
That needs a bit more explanation. After all, the FHFA really did tell Freddie to fire Mr. Piszel and not to pay any severance. And Freddie did both those things. By Mr. Piszel's reckoning, the severance package would have been valued at $7 million. How could the government deny him that without taking anything from him?
The court ruled that the FHFA's instructions didn't take anything from Mr. Piszel because he still had the right to enforce his contract in a breach-of-contract lawsuit against Freddie Mac. Although he wouldn't have been able to force Freddie to live up to the contract, he could have sued for damages equal to the value of the promised severance. And since he still had that right to sue for breach of contract, he still had the property interest created by the contract.
This is a particularly tough line of reasoning for Mr. Piszel because the statute of limitations on breach-of-contract claims ran out years ago. So the appeals court is telling him that he brought the wrong kind of case to the wrong court at the wrong time.
It may also be bad news for shareholders, at least those hoping for a win on the takings claims.
Many of the investor lawsuits also make breach-of-contract claims. Holders of preferred shares of Fannie and Freddie argue that the government's claim to all of the profits of the companies denies them contractual rights to dividends and specified liquidation preferences. Common shareholders also claim their rights to dividends and to the residual value of the company has been violated.
Under the logic of the appeals court in Mr. Piszel's case, if shareholders have the right to sue for breach of contract, there may not have been a taking at all. Sure, all the value of the companies now accrues to the government but if shareholders can sue for breach of contract, the government arguably hasn't taken anything from them.This isn't necessarily awful news for shareholders. It doesn't foreclose all chances of a legal victory, but it may mean that their takings claims will get dismissed. That is a setback because many of the investors believe that this was their best line of legal argument.
Write to John Carney at john.carney@wsj.com
(END) Dow Jones Newswires
August 18, 2016 22:15 ET (02:15 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
look like 1.95$ premarket , How could some one trade OTC before market open?
Both parties agree that Freddie Mac, as a private institution, would be the appropriate counterparty in a breach of contract suit. See O’Melveny & Myers v. F.D.I.C., 512 U.S. 79, 85 (1994). According to both par- ties, the suit would have been brought in Virginia state court under Virginia law, which has a five-year statute of limitations for contract claims. See Va. Code Ann. § 8.01- 246(2) (1977).
that nice and matter of time !
wow this stock still trade ??? been years watching and still don't know why!
Breaking News : Corker said shit again!
when Coker says so ! lmao
Corker is going to say something again !
just think Corker actions and his or his friends profits!
every time Coker came out said something (fnf) drop 20c ... his act drive stocks ... think about .. profits !
Maybe 5$ on Monday!
"PricewaterhouseCoopers had a job: detect fraud. And the second thing I'm going to prove to you is that PricewaterhouseCoopers failed to do its job," Thomas said. "When you don't do your job and people get hurt, it matters."
PricewaterhouseCoopers attorney Beth Tanis countered that the lawsuit was essentially an attempt by Taylor Bean's trustee to get the accounting firm to pay for money stolen in the fraud scheme. She said the perpetrators were insiders who took elaborate steps to cover up their crimes and that other audits at the bank and mortgage company also missed it.
"The criminals were so successful at hiding these transactions that nobody found the fraud," Tanis told jurors. "You can do an audit just right and not detect a fraud."
The scheme didn't come to light until a Colonial employee went to the FBI in July 2009, she added.
The trial before Miami-Dade Circuit Judge Jacqueline Hogan Scola is expected to last about six weeks. The plaintiffs include government-backed mortgage enterprises Freddie Mac, the Federal Home Loan Mortgage Corp. and Ginnie Mae, the Government National Mortgage Association.
Taylor Bean was once one of Colonial's biggest customers but began encountering financial difficulties, according to court documents. Taylor Bean's top executive, Lee Farkas, worked out a deal with a Colonial banker to use improper overdrafts to meet expenses and payroll. That later morphed into a scheme in which Colonial was buying billions of dollars in fake, nonexistent mortgages from Taylor Bean.
"This made these falsified transactions, these fraudulent transactions, look just like legitimate transactions at Colonial Bank," Tanis aid. "Those fraudulent transactions just blended right in."
But Thomas said he would prove that PricewaterhouseCoopers didn't look hard enough to uncover the scam at Colonial. That negligence, he said, allowed the fraud to flourish for years.
"They needed the gross negligence of an accountant," he said. "The evidence will show that accountant was the defendant, PricewaterhouseCoopers."
http://www.arkansasonline.com/news/2016/aug/10/accounting-firm-on-trial-for-audit-miss/?f=business
bc i will retire very long time at 5$ lmao!
maybe 5$ tomorrow ! Judges ()
volume rise today ....I think they planed for big load !
look like court will ruling anytime
Court's ruling after market close!