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Looks like they all need to pad the billing to pay for the Chrstimas bonuses.
It will be really interesting to see the November billing statements of all parties involved.
UZ -- Now that we know two more weeks, won't they immediately go into silent mode again, even as far as this hearing about what is happening in mediation? So EC may just say nothing?
If Susman, etc, have evidence the hedgies did some illegal activities, are they obligated to turn it over at this point to a US Attorney?
11 years in jail for $60 million. That's much more than I make an hour. I'm sure his jail accomodations will be better than the living conditions of many of the people he stole from.
Catz -- With all this appeal sh*t we have seen the past several days, how can this NOT end up in District and/or Appeals court?
ptolomeo -- I think this is again what makes this case so bizarre. While we have an EC reprersenting equity -- it's initial lead (Willingham) has only commons. I would then think that any settlement EC agrees to would have to profit commons. The shenanigans that are being discussed such as IT, have been perpetrated by parties possibly representing various aspects of preferred. And we still have absolute priority stuff at issue. What is fair and what is legal will be debated here for years.
Everyone wants to come out ahead on their investment. I would think that this mediation is to determine if there is any way outside of litigation to get everyone something. If I knew for sure I could take a 10% haircut and get my money in the next few months, I would, based on everything that has happened thus far.
She should just deny this and tell Rosen to let her mediation order play out.
Interersting than in 2 months, Susman himself spent 1.5 billable hours on this case. (1 hour for reviewing correspondence from EC members and .5 hours reviewing a file)
Wouldn't this appeal get thrown in behind all the other portions of this parallel case that DC already has to deal with? If not, does anyone know how denials are given an order to be dealt with?
Looks like JPM is trying to use Stern in their favor:
http://beta.finance.yahoo.com/news/jpmorgan-seeks-move-lehmans-8-011916776.html
Great Post! ----This is the type of the post that somehow needs to get relayed to other media outlets for some coverage. Anyway you can contact Nate and have him call a press conference or something and bring this up?
If it does, my wife will kill me. I told her I wanted to wait until this thing has ended, then take all the documentation I received and weigh it, to see if I could actually, literally receive a 'ton of junk mail'. Unfortunately, when the prospect of a settlement was real, she made me promise that by the end of 2011, all that crap would be gone. Bummer....
A few quick observationos from the opinion:
The Court concludes that the Stern v. Marshall decision does
not support the TPS Consortium’s contention that the Court lacks
jurisdiction over the GSA or confirmation of the Modified Plan
for several reasons. (page 8)
For all the above reasons, the Court concludes that it has
jurisdiction to decide confirmation of the Modified Plan which
incorporates the GSA resolving the disputed claims to putative
property of the Debtors’ estate. (page 16)
Unlike the Court in DeMarco, the Court declines to exercise
its discretion under Rule 8005 not to consider the Modified Plan
simply because it might render moot the TPS Consortium’s appeal
of the decision in the TPS Adversary. The TPS Consortium could
have avoided this by seeking a stay pending appeal. To do as the
TPS Consortium requests would preclude the Court from dealing
with confirmation of any plan of reorganization that implicates
the TPS and possibly stall these bankruptcy cases indefinitely. (page 22)
The Court believes that the
Liquidating Trustee must be removable at the discretion of a
majority of the Trust Advisory Board. In addition, the
composition of the Trust Advisory Board must reflect the
constituents who hold Liquidating Trust Interests. When
creditors are paid in full, their Liquidating Trust Interests
will be canceled and preferred shareholders will be issued
Liquidating Trust Interests. (Tr. 7/13/2011 at 98; D 255 at §§
6.3, 7.3, 16.3, 18.3, 19.3, 20.3, 22.1, 22.2, 23.1 & 24.1.)
Consequently, the Trust must provide that when creditors lost
their Liquidating Trust Interests, the creditors’ representatives
on the Board will be replaced by representatives selected by
equity. (page 25)
The Court disagrees. Despite the recent ANICO decision, the
likelihood of success on the Debtors’ business tort claims, the
delay and cost of pursuing them, their complexity, and the
possible difficulties of collecting all militate in favor of
approval of the GSA. (PAGE 29)
Based on all of the above, the Court concludes that the
value of the Reorganized Debtor and its NOLs is $210 million.
(PAGE 62)
Based on the record developed, the Court finds that the
conduct of the Settlement Noteholders does not mean that the Plan
was proposed in bad faith. Despite the allegations of insider
trading by the Settlement Noteholders, the Court is unconvinced
that their actions had a negative impact on the Plan or tainted
the GSA.
Rather, the actions of the Settlement Noteholders appear to
have helped increase the Debtors’ estates. (PAGE 71)
Now that all issues have been presented to the Court, the
Court concludes that the better view is that the federal judgment
rate is the appropriate rate to be applied under section
To the extent I suggested in Coram that the federal 35
judgment rate was not required by section 726(a)(5), I was wrong.
315 B.R. at 346 (applying federal judgment rate nonetheless
because of the equities of the case).
726(a)(5), rather than the contract rate. The Court’s 35
conclusion is supported by many factors.(PAGE 77)
The Court agrees with the Plan Supporters on this point.
The statute expressly provides that such interest shall be paid
“at the legal rate from the date of the filing of the petition”
suggesting that it is the interest rate effective on the petition
date that should be used. (PAGE 88)
The Court finds that the Equity Committee has made
sufficient allegations and presented enough evidence to state a
colorable claim that the Settlement Noteholders acted recklessly
in their use of material nonpublic information. (PAGE 135)
Based on all these, I find it difficult to believe anything other than this is still going to take quite a while to end and most of us are confused as to what it means.
Catz -- It's been so long ago and my memory about many part of this case has begun to fade. If I recall, didn't JMW offer EC limited authority, again using that examined to death thing possibly the EC figured that the examiner would get more leeway.
You are 1000% correct in that turned out to be a bad call. You may have already done it, but I skip in and out of the board, so I easily could have missed it, but I was wondering about one other thing? Can you offer your thoughts as to why Susman hasn't been more of a presence in this case?
Thanks.
I don't know why UZ, but I feel like I'm listening to some radio show where everyone is following a script and JMW is playing the dedvil's advocate today with her questions, and will come with some very vague ruling again -- which I cannot even begin to predict at this point.
So according to Eckstein, if I rob your house, and you happen to come to my house 2 years later and see your car in my driveway and your TV, stereo, refrigerator, etc in my house, that it's too late to call the police? Classic!
I thought I heard him say earlier that she CANNOT change the F & R.
For those experienced in legal matters such as BK hearings, can anyone comment on how much these closing arguments actually weigh on a judge, especailly in the light of her statement that is a long way towards a decision?
her tone had not meant anything in this case for the most part. i can't remember which hearing it was, but she blasted him ,then ruled in his favor for virtually everything.
If Rosen can stand there and say that the right parties weren't even at the table for the settlement talks in question and they were so far apart -- He even said they didn't have the right shape of table, doesn't that mean that he wasn't doing his fudiciary duty on behalf of the estate and that the debtors were either clueless or sinister?
UZ -- Do you how much those releases or agreements in the GSA can prevent litigation of certain aspects of this case (claims dropped, etc)? Thanks.
Plus who knows how long for her to make a ruling, write an opinion or whatever she is going to do.
If S & P gets found guilty of anything and the SNH's do not in our case, I will be the first to cry conspiracy.
As a small trader, I would never say that any information I could get was nonmaterial. I could not get the information the SNH's had. If I had that information, ,even though I'm not a market genius, I could have simply looked at the trades and said whoa, somebody is buying mucho PIERS, I may want to jump in on that one.
If they traded with non-public information, the JMW better be real careful and not blindly rule it was not material. Common sense hopefully should cause her to rule on the side of caution and assume it was material unless all trading records indicate otherwise. Since I'm sure that every trade during the questionable periods cannot be accounted for, again she better play it safe and send a message that any even slight hint of improper trading is going to be questioned very thoroughly.
Back to lurking. I really appreciate the insight so many contribute, but man, the longer this goes on, the more angry and frustrated I become with this case, our government and society as a whole that we are even still here. This thing could have been settled long ago, where the big boys would still profit and those individuals who lost so much in the takeover could at least be made partially compensated for their losses. I hope when the time comes, they can somehow be made whole.
warcton -- I don't think JMW will take, "if we would have known, we would have bought PIERS" as evidence. I believe that Fish is saying the record of who bought the PIERS and when, in connection to what else was going on behind the scenes that we did not have privy to, is the evidence. I would have to think that the judge can use some type of reasonable doubt in her rulings and think that it makes sense (what Fish is saying) and rule accordingly.
Otherwise, wouldn't every murder/rape/(add other crime here)case have to end in not guilty unless the accused basically said he/she did it? She could logic that the victim was lying, the witnesses were lying , the video was doctored, the stolen money and the murder weapon were planted, etc.
Any judge with common sense would have to be able to look at the evidence presented and determine something unethical/illegal happened and that it cannot be proven that it did not. IMO her only ruling can be to either deny POR/GSA or delay and in her delay very, very, very strongly suggest that a settlement would be wise.
I was thinking the exact same thing REAL. That in itself should be grounds for appeal. This thing (and most BK cases) take forever already, what's another month?
The thing that make me laugh (or cry) is that these fees seem to keep rising and rising, yet I don't ever hear someone like Rosen say, OK, let's settle with EC so we can stop costing the Estate money, but when EC wants to complete a task completely, he says, we need to move this along.
Why don't these BK cases simply present a list of assets that need to be dealt with. Thety can spend a few months arguing the list, then go straight to trial? Skip BK judge altogether and go to a jury.
I think most of us are even getting sick of this dragging on. Why doesn't JMW (lost her TH again) just rule this is crap and clearly state that no matter how many times you tweek this thing, without a complete assets list it will get denied, so don't bother trying?
Hopefully somehow, Susman can represent Ben.
If I'm reading this correctly, it sounds like she is ignoring Stern.
If she does the same here, I would assume again that we be appeal. Susman needs to get as much of this as possible back to DC as soon as possible.
Again, all the stuff I'm reading or listening to like today's hearing is beginning to make my head spin.
From what I gathered, I think she was trying to say that no evidence exists in Bet's presentation. Evidence was presented against certian parties during hearings and/or other submitted evidence by various parties. Nothing has been ruled on.
Now saying tha nothing has been ruled on appeared difficult for THJMW. She could not say nothing has been proven or that it has, since she hasn't tuled. IMO, if she would have said evidence has been presented but not ruled on. Your presentation doesn't have any evidence, so the motion to comply, compel or whatever is declined. And left it at that
Again, IMO, JMW tried not to step on any toes when talking to Bet, but wound up stepping on a landmine.
I guess that's why Rosen's staff can charge tens if not hundreds of millions of dollars in legal expenses. They have staff working 24/7 and Bet is trying to do it by herself.
IMO all we can hope is the THJMW finds some sliver of information from today that will ring some kind of bell in her head to realize that something must have been presented to prove what EC was trying to.
Kudos to Bet for trying.
Will the judge just get rid of Bet's motion or rule against the content of it on everything including IT, STERN, ANICO, etc?
Quite a good read!
have to love Aurelius:
From:
http://www.kccllc.net/documents/0812229/0812229110810000000000030.pdf
Isn't it the duty of the debtors to pursue the claims unless it doe not make sense? And if it does not make sense, shouldn't they have to have credible evidence as to why?
http://www.kccllc.net/documents/0812229/0812229110810000000000020.pdf
It's been a long time since I've submitted my objection to the first POR with the court. Can anyone remember if it can be done entirely online or if a physical paper has to arrive at the courthouse. (Last time I sent paper).
Also -- about material nonpublic --
If THJMW tries to find some way to consider information hedgies had as not material, that will be the worst injustice I have personally experienced. In a quick DD session:
CFA Level 1 - Ethics and Standards
Email to FriendFeedbackShare1.8 - Standard II-A: Material Nonpublic InformationStandard II: Integrity of Capital Markets
Standard II consists of two subsections:
http://www.investopedia.com/exam-guide/cfa-level-1/ethics-standards/standard-nonpublic-information.asp
•II-A: Material Nonpublic Information
•II-B: Market Manipulation
Standard II-A: Material Nonpublic Information
Members and Candidates who possess material nonpublic information that could affect the value of an investment must not act or cause others to act on the information.
Reasoning behind Standard II-A
As long as there has been a stock market, buying or selling based on an insider tip has been a common practice. Before there were Securities and Exchange Commission (SEC) guidelines prohibiting the practice - and long before there was a CFA Institute devoted to increasing public awareness of insider dealing - corporate insiders enjoyed a distinct advantage in trading their securities. This advantage has resulted in numerous scandals. On the buy side, an insider whose stock is trading at $25 a share could forge a buyout at $50, but wait to announce the merger until the insider (and a few privileged friends and family) bought the stock aggressively in order to make a quick profit. On the other side, if a company loses a major customer or a key executive, the insiders (in the absence of insider trading laws) could dump all of their shares prior to announcing the negative information, thus avoiding a big loss.
Why Is This Wrong?
In spite of the detailed regulations set out by the SEC and the CFA Institute (among others), the news stories and the public awareness campaigns, some will look at insider dealing and not really see why it should be such a big deal. After all, people know that investing comes with risk, and they assume that certain people will have advantages over others in terms of access to information. Moreover, if we know our stock is about to go down because of a yet-to-be-released news story or event, why shouldn't we avoid our loss and cash in? The issue (at its core) has to do with public confidence and a system requiring fairness. People invest in stocks and bonds because they are confident that the price they are paying reflects all public information on the stock. If the public did not have this confidence, many would not be investing in retirement funds at all, while others would refuse to pay the prices they do. Regulating the system by prohibiting insider dealing has created trillions in market value and helped millions reach their retirement goals. Yes, these laws do have unfair consequences for a few (the people who know a stock is going to go down but can't trade on this information because it's not public), but in the end, far more people benefit from a system that requires fairness.
Definition of Material Nonpublic Information
Can I trade on this? Do I have to wait to trade on that? In order to clarify what conduct is prohibited by Standard II-A, the term "material nonpublic information" has been coined to help guide Members and Candidates in certain situations.
Take each component individually:
•Material
This means the information would be considered relevant to an investor who is considering investing in this stock, or to a current shareholder wishing to sell. If a stock reflects all public information, does adding this new information significantly alter the perception of that stock?
Material information would include the following:
•Dividend increase, decrease or omission
•Quarterly earnings or sales significantly different from consensus
•Gain or loss of a major customer
•Changes in management
•Major development specific to that industry
•Government reports of economic trends (housing starts, employment etc.)
•Major acquisition or divestiture
•Offer is made to tender shares (acquisition)
•Material versus Non-Material
No statutory definition of "materiality" is available, so it is up to courts that rule on insider trading cases to rule. These cases will often cite the market price impact of the released information to establish that it was indeed material. Say a dividend is cut in half and the shares fall 10%; it was clearly a material event. However, if a company announces a new branch office in Kansas, and the stock performs in line with the market following the announcement, it was a non-material event. An insider with knowledge of the Kansas venture would not be found criminally liable if there were a purchase of shares prior to the public announcement of the Kansas office.
The source of the information also impacts its materiality. The more reliable the source, the more likely it is that the information is material. For example, if you’re riding the commuter train and overhear the CFO of an energy company tell his assistant that he’s about to announce a plunge in quarterly corporate earnings, and you immediately call your broker to sell your shares, then the information is material and non-public and standard II(A) has been violated. On the other hand, if you sell your shares based on a recommendation from your dentist, who happens to follow the energy sector as a hobby and thinks this particular company is under strain, that source of information is unreliable and therefore not material.
•Regarding Analyst Opinion on a Stock
Ask whether the information is material: i.e. will it have a market impact? If an influential Wall Street analyst is preparing to downgrade his or her investment opinion from a buy to a sell, and we know about it, that's very different from our neighborhood broker/dealer stating he doesn't like it anymore. In the first case, we are required to wait for public disclosure of the change in opinion; the second case requires no trading restrictions.
•Nonpublic
The information is yet to be disclosed to the general marketplace.
Look Out!
Selective disclosure? When information is disclosed selectively, i.e. just to a handful of investment analysts, or perhaps on a conference call, or in an email, the information may still be regarded as nonpublic. Companies are bound by specific procedures designed to make the information truly public and to ensure a system of fairness in which all market participants are given a chance to act on the information.
Did the Insider Breach a Duty?
Standard II-A includes language that prohibits use of information obtained in breach of a duty. Essentially it means that this insider should have avoided disclosing this information but failed to do so.
What was the motivation? Will the insider benefit from this breach in one of the following ways?
•Pecuniary Benefit - The insider's investment position is affected, or the insider's reputation (and future potential salary) is enhanced.
•Quid Pro Quo - The tipper expects something in return from the recipient.
•Gift - An insider wants friends and family to benefit from this information.
The Analyst's Role
In an efficient market, an analyst must retain the freedom to study a company and act on information not always contained in the public press releases. Analysts are encouraged to gather and use two forms of legal information:
Material Public Information - Annual reports can contain volumes of data and discussion that could be material and are perhaps yet to be discovered.
Non-Material Nonpublic Information - Discussions with management may reveal information that isn't obviously material but that may give valuable clues.
Applying Standard II-A
Exam questions covering this Standard are likely to test whether a CFA candidate can understand and identify violations of the Standard and understand and identify actions (e.g. the mosaic theory, firewalls) that help prevent a violation of the Standard.
We'll present each of these categories of questions separately.
•Understand/Identify Violations - Hundreds of real-life situations can touch on a possible violation of the insider trading laws, and frequently it is not obvious whether a person has acted inappropriately. As a rule, if you obtain information that is not public and it is considered material, contains a tender offer, was misappropriated, or would violate a breach of confidence you should not trade the security. If the material is already public, (or if the material is not public but contains immaterial information), you are generally free and clear of a violation.
For related reading on the legal and illegal forms of insider trading, see Uncovering Insider Tradingand Defining Illegal Insider Trading.
Conflicts to Fiduciary Duty
Questions on the exam are likely to address a CFA member's fiduciary duty to, for example, act in the best interests of pension fund holders, and whether the member is really doing his or her duty if he or she doesn't trade on insider information. Indeed, some earlier Standards require placing client interests ahead of personal interests (e.g. with personal transactions or participation in IPOs). However, the guiding principle is that a CFA member's duty to the investing public (by not acting on inside information) is greater than other duties.
Mosaic Theory
A securities analyst will be motivated to identify mispriced stocks and will be gathering information to such an extent that exposure to nonpublic information is a possibility. However, the work of an analyst depends on the free flow of information. As a defense to a charge that nonpublic information is being used to trade on a stock, the mosaic theory suggests that the analysis of a company form a mosaic; that is, by assembling small bits of nonpublic information together, large and meaningful conclusions can be drawn. The idea behind the mosaic theory is that each individual piece of information is nonmaterial by itself: an individual piece of information would not move the price of the security if disseminated in a public press release. Taken together, however, the bits of information can form a meaningful mosaic. This practice is perfectly legitimate, and it is encouraged.
Think of the mosaic theory as a way for analysts to do their jobs and use nonpublic information without feeling like they are at risk for liability under insider trading law. On the exam, hypothetical examples will carry identifying words - i.e. "material" or "nonmaterial" - to guide you to the right answer (material: trading restricted, non-material: no trading restrictions).
How to Comply
A compliance program is incomplete if all it does is create awareness of the definition of insider trading and the fines and jail sentences to which the employee could be liable. The real work of the compliance program should be to reduce and eliminate the possibility of a violation. In the real world, there will always be temptation to either profit from (or avoid loss through) knowledge of material nonpublic information.
The most sensible approach is control: prevent the information from being disseminated widely, thus removing the issue of temptation for all but a few.
Firewalls
"Firewall" is a common term applied to the barriers created to prevent sensitive information from being disseminated between departments of a firm. As applied to insider trading, the assumption is that certain departments (e.g. corporate underwriting) may have access to material nonpublic information that would be useful to those in other departments (e.g. investment management and research). The guiding principle is that only certain individuals need to know certain things, and thus no one else should have any access.
Minimum elements of a corporate firewall:
•Segregation of Personnel - Someone involved with investment banking should not be doing research and trading, and vice versa.
•Confinement of Material Nonpublic Information - Employees have access only on a need-to-know basis.
•Control of Interdepartmental Communications - The compliance or legal functions of a firm might serve as a clearing house through which all interdepartmental memoranda are sent.
•Monitoring of Employee Trading - Those with particularly sensitive jobs might be required to pre-clear, that is, to receive permission in advance.
•Restricted List - The creation and maintenance of a restricted list can help limit employee trading as needed.
•Heightened Restrictions under Certain Conditions - For example, additional restrictions might be placed when material nonpublic information is received in the course of underwriting a new preferred stock placement.
The following are some other procedures that may be adopted as part of a compliance program:
•Communicate Receipt of Information - Companies come into contact with material nonpublic information in a variety of ways. When such a situation occurs, the recipient must be obligated to inform his or her supervisor or compliance officer and not disclose any additional information to coworkers.
•Make Reasonable Efforts to Make Nonpublic Information Public - If material nonpublic information was received, particularly in breach of a duty or as a result of a misappropriation, it is possible that this information was eventually going to be made public. While Standard II-A prevents acting on that information while it is not public, the duty to client requires that investment action (should it be required) be made in light of the new information. For example, if new, nonpublic information makes it clear that a firm will be in violation of a bond covenant and its fixed-income securities will be downgraded to junk status, that security may no longer meet the investment objectives of the client. However, the bond cannot be sold until the information is made public. In such an instance, reasonable measures may involve a written request between the firm's compliance department and a legal representative of the firm that issued the bond.
•Keep Record of Research and a Rationale for Each Investment Decision - This procedure, most applicable to Standard V-A, Reasonable Basis, can help protect an analyst who has employed the mosaic theory and used several items of nonmaterial, nonpublic information to form an investment opinion.
•Watch List - Depending on the size of an organization, the placement of a company on a restricted list can have the unintended side effect of communicating to a wide audience that something is going on at that company. In this case, the firewall may be unintentionally broken, and while employees might be restricted from trading, the leak can find its way outside in a number of ways (it only takes one person to provide an insider tip). In situations where placing a firm on a restricted list is too public, a firm can adopt the use of a watch list, which means the compliance department will monitor activity on the companies on that list, perhaps making inquiries based on an individual's activities, but maintaining the confidentiality needed for a particular circumstance.
•Training/Continuing Education - Some employees will be more knowledgeable about insider trading laws (and the need to have them) than others. A comprehensive agenda needs to outline all issues related to insider trading, identify both individual and firm liability under these regulations and summarize procedures for compliance, such as the reporting of personal transactions.
Interesting piece of objection:
6. Furthermore, TPS Ex. 301-B is not relevant for three additional reasons:
a. The Modified Sixth Amended Plan does not provide for imposition of
the FJR. The issue of which FJR to choose is not before the Court. If
the Court does not approve the Contract Rate, the Plan fails and
resolicitation will be required.
Been out sick for a while. If it's not too much trouble, can someone briefly explain what this document means?
http://www.kccllc.net/documents/0812229/0812229110729000000000006.pdf
Notice Regarding Debtors' Motion Pursuant to Section 554(a) of the Bankruptcy Code for Authorization to Abandon WMI's Equity Interests in Washington Mutual Bank
Thanks.
IMO, a big question that remains is if JMW does sign-off on POS POR, then what litigation remains that can realistically be attempted? If any, what kind of information could then come out, that may be sealed now? Waht impact could that have?
Again, IMO, JMW still is desparately trying to get these parties to settle.
We shall see.
very weird way to end the questioning of Kosturos. Can anyone make sense o the last few questions? Sounds like attorney got soe answers he was not expecting.