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Corporate & Securities Law

Wall Street Law Blog

Straight talk on current issues in securities litigation, financial fraud, and risk management.
By Brett D. Sherman

Post Frequency: 0.3/day

Last Entry: March 30, 2011 at 01:29:00

Financial Crisis Litigation: Testing "Tsunami" Defense

Posted on December 09, 2009
THE PERFECT STORM / TSUNAMI DEFENSE TO SUBPRIME-BASED CLAIMS CANNOT WITHSTAND SCRUTINY... Former Wall Street Executive Jones: "It was just the perfect storm. A financial Tsunami if you will. Everything went wrong at the same time. I feel terrible for...

Would Bear Stearns sales have exposed "mark to market" fraud? (encore)

Posted on December 08, 2009
Did Bear Stearns maintain a massive mortgage-related securities portfolio to avoid huge write-downs, cover fraud, or even hide insolvency? We'd sure like to know. After the subprime crisis began in 2007, senior managing directors at Bear Stearns reportedly urged the...

A JEDI APPROACH TO RISK MANAGEMENT

Posted on December 08, 2009
THESE ARE NOT THE RISKS YOU'RE LOOKING FOR... By Brett Sherman, The Sherman Law Firm RISK MANAGEMENT the financial services industry is part art, part science. But there is one axiom all organizations must accept before they can exercise true...

CHECK OUT our new group on LINKED

Posted on December 03, 2009
CHECK OUT our new group on LINKED IN - "Litigation: The Financial Crisis Court & Arbitration" Please feel free to join and contribute...

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On Housing, Highly Leveraged Assets, and Interest Rate Changes

Posted on July 06, 2009
A brief bit of common sense. Warning. We are not about to offer any earth shattering insights in this short post. However, when the world of finance reaches levels of complexity and duplicity capable of causing the most significant financial...

Fallout on Main Street: Sherman Law Firm Featured on Video; in Print

Posted on July 04, 2009
McClatchy The landmark "Fallout on Main Street" project - a pioneering Multimedia collaberation between senior reporters from McClatchy Newspapersand an Emmy award winning producer from the American News Project- recently crossed the country to get a first hand look at...

But officer, everyone shoplifts - the they did it too defense to securities fraud claims...

Posted on July 04, 2009
Misconduct by executives and directors at Merrill Lynch, Lehman Brothers, AIG, CITI does not excuse misconduct at Bear Stearns. The everyone was doing it defense doesn't fly in American jurisprudence. Nearly every client we represent in securities fraud cases based...

A Rare Confluence - Finance, Foreseeability, and Frankenstein's Monster

Posted on July 03, 2009
My title Mortgage securities rise and fall, a Story Mary Shelley would love... Part 1 of 2. Confluence is a great word. It means, in essence, a "coming together." Most often, the term confluence is used in connection with rivers....

Foreseeability: Crucial to proving everything from securities fraud to breach of fiduciary duty...

Posted on June 20, 2009
"These aren't simply the comments of some junior level analysts" Lee Sherman, securities litigation consultant the question of foreseeability asks at what point in time senior management at these investment banks should have foreseen the possibility of the disasters that...

Radio Interview of Brett Sherman about the fall of Bear Stearns and Wall St. litigation

Posted on June 13, 2009
Listen to the interview Topics discussed on the show included- executive compensation at Bear Stearns, the firing/resignation of Warren Spector, responsibility of the officers and directors for the fall of Bear Stearns, the implosion of Bear Stearns subprime hedge funds,...

"GUESS WHO SERIES" - In 2006, they predicted bad times ahead for housing, mortgages, global liquidity

Posted on June 11, 2009
First installment in The Wall Street Law Blog's "Guess Who" Series THE HARD-HITTING INTERVIEW THAT FOLLOWS IS SCRIPTED (part of our forthcoming screenplay), BUT THE UNDERLYING FACTS AND CONCLUSIONS ARE 100% GENUINE. Q: OK, I can't stand the suspense. So...

J'accuse Wall Street: con men in corner offices

Posted on June 09, 2009
Subprime's fate was sealed from the start * * * By Brett D. Sherman; The Sherman Law Firm Subprime lending on a massive scale always had a limited shelf life. The only reason it worked at all was an unprecented...

DID BEAR'S ACE GREENBERG PLAY WITH MONOPOLY MONEY and GET OUT OF JAIL FREE CARD?

Posted on June 07, 2009
QuickPost | TypePad. ACE GREENBERG, CHAIR OF THE BEAR STEARNS RISK COMMITTEE, HAD ALMOST NOTHING TO LOSE WHEN THE BEAR STEARNS EXPRESS CRASHED INTO THE SUBPRIME CRISIS. Alan C. Greenberg, former Bear Steans CEO, sold huge volumes of stock at...

PERFORMANCE-BASED INCENTIVES ARE BAD BUSINESS

Posted on June 07, 2009
By Brett Sherman and Phyllis Barrack Our just completed and admittedly informal study of incentive-based compensation to corporate management yielded some expected results, and some surprises too. Our main finding pretty much confirmed what we have long believed: Over the...

DID ACE GREENBERG SELL OUT BEAR STEARNS' SHAREHOLDERS?

Hey, Hey Jimmy (and Alan too)... Between you and me, would you keep your respective millions in a bank if you weren't totally confident that your money was safe? I didn't think so.

Posted on June 04, 2009
WHEN YOU ARE HOLDING OTHER PEOPLE'S MONEY - YOU CAN'T BLAME THEM FOR WITHDRAWING IT NOW AND ASKING QUESTIONS LATER... More than any other business, financial institutions are vulnerable to crises of confidence. Former investment bank Bear Stearns had a...

"End of Wall Street" Series - A 'Leading Question'...

Posted on June 04, 2009
Q: Mr. Cayne - Between you and me, would you keep your respective millions in a bank if you weren't totally confident that your money was safe? A: Puffs Cigar. Flicks ashes. Shrugs shoulders. *** WHEN YOU ARE HOLDING OTHER...

Credit, Confidence, and Liquidity: The Not Necessarily Holy Trinity

Posted on June 03, 2009
CREDIT, CONFIDENCE, and LIQUIDITY ISSUES AT BEAR STEARNS; A LOOK BACK - 2007-2008. Introduction Well before the week Bear finally fell in March 2008, most mortgage-backed securities (including securities backed by subprime, alt-A and prime residential mortgages) already were toxic...

Subprime Summary, Twitter Style

Posted on June 01, 2009
Subprime Crisis Cheat Sheet (A stream of consciousness recital of issues that caused the subprime crisis) By Brett Sherman; The Sherman Law Firm Housing market hot since late 1990s; Tech-Wreck; September 11; Federal Reserve Board cuts fed funds rate aggressively,...

The Subprime Story - How it worked (the short, short version)

Posted on May 27, 2009
INTRODUCTION In order to function, the subprime securities market required (1) lenders - funded or owned by Wall Street investment banks - to find and make home loans to an endless stream of borrowers with bad-credit, and (2) subprime borrowers...

Self-interested gross negligence cannot be protected by the business judgement rule.

Posted on May 21, 2009
Guest blogger Phyllis Barrack The Sherman Law Firm Repeated decisions by Jimmy Cayne and Alan Schwartz not to seek an equity investment after the onset of the subprime crisis are not protected by the business judgement rule. Bear Stearns' CEO...

Identical securities fraud by every firm on Wall Street would mean one thing: A lot of liability...

Posted on May 15, 2009
The "they did it too defense" has no place in Wall Street securities fraud litigation. By Brett D. Sherman, Esq. Misconduct by executives and directors at Merrill Lynch, Lehman Brothers, AIG, CITI does not excuse misconduct at Bear Stearns. The...

They Can't Handle The Truth: Cause and effect in stock loss litigation...

Posted on May 15, 2009
By Brett Sherman, Esq. What follows is a pretty accurate recreation of a conversation from this morning with my friend Hillary. Hillary: "Isn't it going to be tough proving Bear Stearns caused your clients' losses?" Me: "Well, nothing is easy...

The foreseeability of subprime disaster

Posted on May 04, 2009
Subprime's fate was sealed from the start * * * By Brett D. Sherman; The Sherman Law Firm Subprime lending on a massive scale always had a limited shelf life. The only reason it worked at all was an unprecented...

Christopher Columbus, Wall Street CEOs, and the benefits of risk management.

Posted on May 02, 2009
(Updated for 2009) By Brett Sherman First in a series... Introduction (a slight bit of revisionist history is ok now and then...) 1492: The Italian explorer sailed his three ships from island to island, staking claims for the Spanish King...

They mix like Oil and Water: Wall Street CEO's and Risk Managers

Posted on May 01, 2009
By Brett Sherman, The Sherman Law Firm As the housing bubble expanded, Wall Street Role of Risk Managers Clashed with Interests of Executives. The Result was disaster for shareholders of Citigroup, Lehman, Bear Stearns, Merrill Lynch, Goldman Sachs and others...

Risky Business - Like Crossing the Street With a Don't Walk Signal Flashing.

Posted on April 30, 2009
By Brett Sherman, The Sherman Law Firm I know this 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 Super Bowl, The World Series and The Collapse of Bear Stearns...

Posted on April 29, 2009
A closer look at Executive Compensation By Brett D. Sherman In 2006, total compensation for five Bear Stearns senior executives, including CEO Jimmy Cayne, exceeded the payrolls of the NFL's New York Giants and MLB's Philadelphia Phillies. The payrolls of...

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