United Western Bancorp Inc (fka UWBKQ)

[imawswami]

2nd Letter to E*trade Re: non-transferable security removal

Thank you moderators for everything! This is the 2nd letter.
[Note: shares remain in the E*Trade account as of 6-1]

Recipients:
Michael A. Pizzi Chief Executive Officer
Lauren Carney V.P. Customer Service
E*Trade Securities LLC. (Customer Service)

May 21, 2023

Peter
Accounts 1&2:. United Western Bancorp Cusip #913201109
& United Western Bancorp Cusip #913201109

Paul (brother)
Account: United Western Bancorp Cusip #913201109

Dear E*Trade,
In previous correspondence (dated May 11) our focus of discussion was entrenched in the issue of removal of United
Western Bancorp (UWBI) as a non-transferable security (Cusip #913201109) from shareholder accounts.

I would like now to expand on the unique valuation of this investment (lightly touched on in the May 11 letter).
Appraisement of UWBI is an extremely complex issue, and one which persuasively conveys the merit of retention for UWBI
within our accounts -versus share destruction by-way-of the DTC.

We begin with a bank holding company (UWBI), whose main asset (bank) was seized by the FDIC in 2011. Soon after, UWBI launched a wrongful seizure suit (UWBI vs. FDIC et al), dropping the appeal in 2013, satisfied with the outcome. Concurrently,
with the loss of its primary asset, UWBI files for bankruptcy in 2012.

A peculiar twist begins in 2016-2017 (as recorded in UWBI BK documents) when the FDIC, in direct violation of stated policies
on depositor recoveries (enclosed document), begins transferring depositor recoveries to UWBI a non-depositor (filing #696 enclosed).
[below was included as a document in the E*Trade packet. Pay particular attention to the bold type. -swami]
Priority of Payments and Timing
How quickly will the Receiver make payments on Receiver's Certificates?

By law, after insured depositors are paid, uninsured depositors are paid next, followed by general creditors and then stockholders. In most cases, general creditors and stockholders realize little or no recovery. Payments of uninsured funds only, called dividends, depend on the net recovered proceeds from the liquidation of the bank's assets and the payment of bank liabilities according to federal statute. While fully insured deposits are paid promptly after the failure of the bank, the disbursements of uninsured funds may take place over several years based on the timing in the liquidation of the failed bank assets. The dividend payment history for all failed banks closed since October 1, 2000 is available at https://closedbanks.fdic.gov/dividends/.]

The IRS naturally seeks to garner taxes on such gains by UWBI, but by way of a novel defense, IRS Code Sec. 7507 (depositor recoveries collected are not taxed), the holding company avoids a tax on income (recognized as such in the filing).

Though UWBI is not the original depositor in question, it appears that if the FDIC (the Recoverer) is compelled to compensate another related party, with depositor recoveries, they may do so without imparting taxation on such income.....How clever.

Though never discussed within the BK documents, this arrangement between UWBI and FDIC would appear to spring forth from the 2011 litigation. Thus, this agreement, without explanation within the BK documents expresses the existence of a confidential settlement.

Which begs the question: Why would UWBI be owed these recoveries collected by the FDIC?

In 2013-2014 the DOJ (along with the FDIC) received settlement monies from 2 major RMBS lawsuits involving JPM Chase (FDIC collected $515.4 million from JPM) and Bank of America (a portion of DOJ settlement of $16.7 Billion settlement). United Western Bank, along with other receivership banks were plaintiffs represented by the FDIC. Further, in 2016, Morgan Stanley agreed to pay $63 million to the FDIC who again represented UWB and other receivership banks in the suit (documentation included).

And again, in 2021 Royal Bank of Scotland settled with the FDIC for $16 million solely for damages to UWB from their RMBS. Finally, the BK docs. clearly show the FDIC representing UWB and other receivership banks in the colossal LIBOR suit currently ongoing. Recoveries are mentioned as possible in UWBI docs. This is an understatement (doc. included).

UWBI, while in operation, recorded losses of over $500 million due to defective RMBS securities. The holding company was in the process of suing BofA for over $100 million on defective RMBS, but the FDIC placed the bank in receivership. Thus, we can see that the potential dollar recoveries for the holding company are....outsized for a non-transferable security (doc. included).

Based on past wrongful seizure compensations, an estimate can be conservatively made. Meritor bank (assets of 2.4 Billion as compared to UWB 2.3 Billion) received $276 Million from the FDIC in 2011 for wrongful seizure. A comparable amount would roughly equal $10 share price for United Western Bancorp. This is conservative though, as Meritor lacked the RMBS & LIBOR macro events which would only magnify the dollars recovered. With over ****** shares held by my brother and myself, this would represent over $******* in value.

Again, this is an oversimplification of a truly historic event. Please refer to the enclosed supporting documentation.
Thank you for your time and I trust that we may both be enriched by these shares remaining in their respective accounts.