Mr Cooper Group Inc (COOP)

[Chyn3s3boi]

http://newsandinsight.thomsonreuters.com/Securities/News/2011/07_-_July/Factbox__Insider-trading_allegations_in_WaMu_bankruptcy/

In a worst-case scenario for the funds and other creditors, the judge could determine that Washington Mutual's bankruptcy plan was not negotiated in good faith and reject the plan.

Shareholders also want to be allowed to pursue litigation against the funds to disallow their $2 billion in claims, which if successful would make it much more likely the shareholders will recover money in the bankruptcy.

However, more likely would be a finding that the funds engaged in "inequitable conduct" and the judge could cut the amount of interest they could collect on their Washington Mutual securities. Such a finding could cost the funds hundreds of millions of dollars, but it might not be enough to produce any recovery for common stockholders.

The case is In re Washington Mutual, U.S. Bankruptcy Court, District of Delaware, No. 08-12229.