Corporate & Securities Law

Risk, reward and investments: The Harder They Come, the Harder they Fall...

Posted on March 30, 2011
When it comes to risk, it pays to remember the warnings of the great Jimmy Cliff (and the late great Jerry Garcia): The harder the come, the harder they fall, one and all...

Bear Stearns Old Subsidiary Loses Mortgage Securitization Case Brought by Bond Insurer

Posted on March 29, 2011
Lawsuit Against EMC Mortgage Over Bad Loans In Mortgage Securitization. EMC Mortgage, a former subsidiary of Bear Stearns, is now owned by JP Morgan Chase.

Why is Securities Fraud The Crime That Pays?

Posted on March 19, 2011
The absence of consequences other than window-dressing prosecutions and other cosmetic fixes from the tech-wreck and early 2000s corporate scandals emboldened the kind of over the top fraud that led to the financial crisis. If this is true, we are on a very slippery slope...

Disproving the Big Lie: Bear Stearns

Posted on March 14, 2011
Only a short post is necessary here - A picture, after all, tells a thousand words. According to the "official story" from Bear Stearns top executives -- Jimmy Cayne, Alan Schwartz, Warren Spector, Sam Molinaro -- almost no one (and...

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What happened to the Bully Pulpit? FDR & the Federal Securities Laws.

Posted on March 03, 2011
"[T]here must be a strict supervision of all banking and credits and investments, so that there will be an end to speculation with other people's money..."

No One Foresaw The Chance of a Subprime Meltdown, right?

Posted on January 22, 2011
In a flight to quality, markets for complex investments like MBS often run dry in periods of market turmoil, because frightened investors move their money to higher quality investments like US Treasuries and highly rated corporate bonds.

Derivatives and Financial Risk Management: Wikipedia "books"

Posted on December 31, 2010
Derivatives and Financial Risk Management: Wikipedia "books"

Predatory Subprime Lending Nothing New - Familiar Abuses an Issue in 1998

Posted on December 03, 2010
10 years to the day before Bear Stearns collapsed, the FTC highlighted serious problems in the subprime lending industry.

Securities fraud at Bear Stearns and the back-story of the global financial crisis, part 1...

Posted on November 08, 2010
"Fraud by complexity" is very dangerous. Until Main Street has a far better understanding of what happened on Wall Street, then the corrupt rigged game that senior management for the old investment banks played so well for so long will resurface in slightly different form sooner rather than later.

Why Prosecute Former MLB Star Roger Clemens?

Posted on October 19, 2010
How many times did disgraced Yankees, Astros, Blue Jays and Red Sox pitcher Roger Clemens deny taking performance enhancing drugs? At least one time too many.

"Industry Standards" - The they did it too defense and securities fraud claims...

Posted on August 24, 2010
And "a whole lot of fraud" is not an acceptable defense in any jurisdiction (for reference, you may want to call up Henry Blodget and the rest of the pay for play analysts from the IPO boom)

WSLB asks: Doesn't the liar loan thing scream out FRAUD?

Posted on August 21, 2010
The whole point of liar loans / Ninja loans was to provide applicants (and by applicants we mean mortgage brokers who filled out applications) with the opportunity to pay for the privilege of making sure nobody checked out their story.

WSLB TIME MACHINE: 9/26/07 - Greenspan says there is U.S. housing bubble (per FT)

Posted on August 10, 2010
"US house prices are likely to fall significantly from their present levels, Alan Greenspan has told the Financial Times, admitting that there was a bubble in the US housing market."

The Fight Was Fixed - Risk Managers had no chance v. CEO's

Posted on August 05, 2010
I know it may be hard to remember at this point, but it wasn't so long ago that the sight of drywall and the sound of hammer stiking nail was as common as the ubiquitous "For Sale" signs are today. The economy was was moving forward so quickly that it was sweating.

Fed says paper profit on Maiden Lane I - so why not sell?

Posted on July 30, 2010
If the old Bear Stearns mortgage assets are truly profitable, then sell it all and book the profit.

Investment Banks in Moving Business? Not quite.

Posted on July 20, 2010
For the majority of its successful run, the Wall Street investment banking model was based on a simple rule. Investment banks were NOT investors. They were intermediaries. They brought sellers and buyers together. This means that investment banks did not hold risky securities on their balance sheets any longer than was absolutely necessary.

Mortgage Meltdown: Teaser-rates, & Ponzi Schemes

Posted on June 28, 2010
Citi and Merill and Lehman and and Bear knew that these teaser-rate mortgages, chiefly 2/28 ARMs and 3/27 ARMs, were never meant to be 30 year mortgages. Instead, such "affordability loans" were more like leases that had to be renewed every two to three years...

Mortgage Meltdown: Teaser-rates, & Ponzi Schemes (encore)

Posted on June 28, 2010
The incurable - and very foreseeable -flaw in a business model predicated on turning nonprime mortgages into securities is that the well of borrowers who can actually afford to own a home must eventually run dry.

Tons of fraud at Bear Stearns? (Pt. 1- risk management)

Posted on June 23, 2010
Bottom line - Bear Stearns deliberately promoted a supposed commitment to high quality risk management that, during the 2000's at least, was a total fiction. In other words, Bear Stearns constant touting of its risk management prowess was material and false.

A Catch-22: Fraud and Financial Risk Management (update-1)

Posted on June 18, 2010
How can you - as an outsider - really confirm that a company practices sound risk management? Or even that the company gives risk management a second thought?

Ace Greenberg's book - Wow!

Posted on June 16, 2010
New memoir by Ace Greenberg absolutely eviscerates the character and management capabilities of former Bear Stearns CEO Jimmy Cayne. But - to our eye at Wall Street Law Blog - Greenberg's book is also an indictment of his own conduct.

What are the two most important words in risk management?

Posted on June 01, 2010
By Brett Sherman, The Sherman Law Firm Worst Case Scenario Analysis - Management of low frequency / high magnitude risks. Companies must have methods for controlling risks inherent in activities with - (a) a high probability of success, but (b)...

What are the two most important words in risk management?

Posted on May 28, 2010
Worst Case Scenario Analysis - Management of low frequency / high magnitude risks. It is impossible to manage against the risk of high loss magnitude events unless corporate risk managers and senior management agree to start all risk analysis with two words - what AND if...

The harder they come... a reminder about risk and reward

Posted on May 24, 2010
When it comes to risk, it pays to remember the warnings of the great Jimmy Cliff (and the late great Jerry Garcia): The harder the come, the harder they fall, one and all...

The great enabler: AAA Credit Ratings and securities fraud (from earlier today)

Posted on May 21, 2010
The point - it appears - was that most investors wouldn't think twice once they saw the AAA rating. Investors simply looked at a AAA rated mortgage security and assume that a mortgage bond was in fact as safe as a bond issued by the United States Treasury (which has never defaulted on its debts).

SEC Shocker? Purpose of securities laws is to prevent fraud.

Posted on May 18, 2010
The idea is that companies commit securities fraud when they deprive investors of the information needed to make informed investment decisions.

Years before collapsing: Bear Stearns (and Merrill) Predicted Dire end to Bubble

Posted on May 14, 2010
UPDATE: Because Bear Stearns Execs' FCIC testimony largely focused on allegedly unforeseeable, "unprecedented" market forces to defend their lack of competent management, Wall Street Law Blog decided to re-post one of our favorites.

Bear Stearns hired risk consultant prior to collapse- read the report!

Posted on May 07, 2010
Report Assessment of gaps in risk management (and the report notes quite a few) and recommendations for new risk and economic capital management structures... http://scr.bi/cCjxQb

Wall Street Must Explain these Subprime Issues, right?

Posted on May 03, 2010
Aren't decisions to predicate the success or failure of trillion dollar securities and home loan markets on the reliability (or unreliability) of timely mortgage payments from bad-credit, subprime borrowers with established track records of already failing to pay bills and/or meet other financial obligations pretty similar (in terms of stupidity) to hiring a diamond thief to guard a jewelry store?

Bear Stearns Executive Committee (minus Ace Greenberg) to Testify Next Week

Posted on April 29, 2010
By Brett Sherman The Sherman Law Firm This should be very interesting- The Financial Crisis Inquiry Commission, a bipartisan group examining the causes of the credit crisis, will hear testimony from four of the former big five members of the...

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