Thompson Reuters, New York

May 20, 2013

In guerrilla warfare you don’t have to win every battle, or even most of them. You just have to win enough to demoralize your opponent, hoping that he (or she) will want to stop fighting and cede to your demands. That seems to be the strategy of the remaining objectors to Bank of America’s proposed $8.5 billion settlement with investors in Countrywide mortgage-backed securities. Earlier this month, the steering committee of objectors, led by AIG and several Federal Home Loan Banks, revealed that their preferred endgame for the BofA deal would be a return to the negotiating table, this time with them seated across from BofA. The various objecting AIG entities could also probably be persuaded to drop objections via a settlement of their separate securities cases. Either way, the objectors don’t necessarily have to win a ruling that BofA’s proposed settlement isn’t fair or that the Countrywide MBS trustee, Bank of New York Mellon, was unreasonable in agreeing to the deal on behalf of all certificate holders. Opponents just have to be a sufficient nuisance and distraction to wrest at least some additional money from the banks.

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Law360, New York

May 16, 2013

Law360, New York (May 16, 2013, 6:03 PM ET) — A Colorado federal judge on Wednesday allowed most claims to continue in a hedge fund’s lawsuit alleging that Wells Fargo NA breached its responsibilities as both a trustee and a servicer for certain residential mortgage-backed securities, costing the fund millions of dollars in losses.

U.S. Magistrate Judge Boyd N. Boland found Galena Street Fund LP had sufficiently alleged that when Wells Fargo took over from Washington Mutual NA as trustee for the MBS as well as servicer for many of the underlying mortgages, it failed to correct many of the mistakes WaMu had made, in part because of an inherent conflict between the two roles.

“Galena has sufficiently alleged that Wells Fargo labored under a conflict of interest when it purchased WaMu’s servicing portfolio and then functioned as both trustee for the trusts and servicer for many of the loans in the trusts,” Judge Boland said.

Michael Rollin, a Reilly Pozner LLP partner representing Galena, said the ruling was a boon for investors who rely on trustees of MBS to look out for their interests.

“I think this ruling is a good step forward,” he said.

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Law360, New York

May 3, 2013

The Federal Housing Finance Agency and the attorneys general of New York and Delaware dropped their opposition Friday to a proposed $8.5 billion Bank of America Corp. mortgage-backed securities settlement, the same day that objecting investors said a jury, not a New York state judge, should decide if the deal is fair.

The FHFA, which oversees the housing giants Fannie Mae and Freddie Mac, said in a brief statement that it was withdrawing its opposition, joining several pension funds and others who bowed out earlier this week. The attorneys general of New York and Delaware, who had intervened in the litigation, also indicated Friday that they have decided to neither object to nor endorse the proposed settlement.

Bank of America’s proposed $8.5 billion payment to all the securities’ investors would resolve robosigning and other home loan servicing issues in $424 billion worth of Countrywide Financial Corp. mortgage-backed securities held in 530 trusts. The deal was negotiated by 22 institutional investors, including the Federal Reserve Bank of New York and BlackRock Inc.

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Law360, New York

March 1, 2013

An $8.5 billion Bank of America Corp. settlement over claims related to Countrywide Financial Corp. mortgage-backed securities was flawed, and the deal must be given a thorough examination before approval, two American International Group Inc. expert witnesses told a New York judge on Thursday.

Tamar Frankel, a law professor at Boston University and an experienced securities law practitioner, said the Countrywide securities’ trustee had gone beyond its authority in negotiating the settlement. The trustee, Bank of New York Mellon Corp., had wrongfully expected Judge Barbara R. Kapnick to approve the deal without a thorough exploration of how non-negotiating parties — including AIG — would be affected, Frankel claims.

“This case is replete with sufficient ‘red flags’ to raise the court’s full and detailed inquiry before approving this settlement,” Frankel said. “The case involves outsiders that were not a party to negotiations but who will be bound by the settlement and the court’s approval of the settlement.”

AIG is one of a number of owners of the Countrywide MBS who were not involved in negotiation of the settlement and who have raised objections to the deal and BNY Mellon’s role as trustee for the securities.

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Law360, New York

February 25, 2013

Plaintiffs suing over an alleged $600 million funeral contract insurance scam won the chance Friday to take their claims to a jury trial after a Missouri federal judge rejected a request from trustee banks linked to the scheme to have the case heard without a jury.

U.S. District Judge E. Richard Webber ruled that the plaintiffs’ two remaining claims of breach of fiduciary duty and negligence against the banks constituted matters at law that were appropriate for a jury to hear.

The banks, including Bank of America Corp., Bremen Bank & Trust Co., National City Bank and PNC Bank NA, had argued that the remaining claims fell “exclusively within equity’s jurisdiction.” But Judge Webber found that the construction of the claims against the banks backed a jury trial.

“The court finds that the claims brought by plaintiffs allege breaches of fiduciary duties predicated upon underlying negligence, which is actionable at law,” the opinion said.

The plaintiffs’ demand for money damages also supported holding a trial before a jury.

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Law360, New York

February 07, 2013

An exasperated New York state judge scolded attorneys snipping at each other Thursday as she gave investors more access to documents about the negotiations of a proposed $8.5 billion settlement over Bank of America Corp.’s Countrywide Financial Corp. mortgage-backed securities.

At one point during a hearing, Judge Barbara R. Kapnick cut off two attorneys — an attorney for investors trying to get more information about the settlement and another attorney who represented the 22 institutional investors that negotiated the deal — who’d accused each other of interrupting.

“I’m not going to listen to your little quips. If you don’t like each other, that’s your problem,” she said to the attorneys in her downtown Manhattan courtroom.

The Bank of New York Mellon Corp., the Countrywide securities’ trustee, has asked the judge to give her stamp of approval to the deal, in which Bank of America would pay $8.5 billion to resolve issues with the $424 billion worth of Countrywide mortgage-backed securities in 530 trusts.

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The Subprime Shakeout, California

August 29, 2012

With Judge Barbara Kapnick announcing earlier this month that the approval hearing in Bank of New York Mellon’s (BNYM) proposed $8.5 billion Article 77 settlement over Countrywide bonds will take place in May 2013, this next year will be truly one of reckoning for mortgage investors and the U.S. mortgage market as a whole. Though Her Honor’s proposed timetable may be a bit ambitious, what is clear is that the window of opportunity for investors be made whole for the toxic waste they were sold is finite and rapidly shrinking.

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Law 360, New York

August 22, 2012

Investors challenging Bank of America Corp.’s proposed $8.5 billion mortgage-backed securities settlement questioned why other investors have resisted allowing greater access to the bank’s documents in another suit brought by MBIA Inc., asking a New York state judge Tuesday what there was to hide.

The dispute concerns two interrelated cases in New York Supreme Court in New York County. In a case before Judge Eileen Bransten, MBIA has accused Bank of America of making its Countrywide Financial Corp. mortgage-backed securities look more creditworthy than they were to induce MBIA into insuring them.

In a second case before Judge Barbara R. Kapnick known as an Article 77 proceeding, investors have sought more information about the $8.5 billion settlement of certain Countrywide mortgage-backed securities that the bank and the securities’ trustee Bank of New York Mellon Corp. negotiated with a host of institutional investors, including BlackRock Inc., the Federal Reserve Bank of New York, Allianz SE’s Pacific Investment Management Co. LLC and others.

In a letter Tuesday, Daniel Reilly of Reilly Pozner LLP, who represents American International Group Inc. as a challenger to the $8.5 billion settlement pending before Judge Kapnick, said it was “deeply troubling” that the 22 institutional investors who negotiated the settlement want to block access to Bank of America’s documents.

“Their opposition in this regard raises a fundamental question — what possibly is there to hide? One would think that the inside institutional investors (who supposedly negotiated the $8.5 billion settlement they support in the Article 77 case) would be acutely interested in having access to information that might shed light on whether the $8.5 billion settlement is either fair and reasonable or not,” Reilly wrote in a letter to Judge Bransten on behalf of the steering committee of objecting investors.

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Reilly Pozner LLP serves clients nationwide and is engaged in complex commercial and intellectual property litigation, class actions, civil and criminal litigation, mass torts, personal injury and appellate law.

Law360, New York

August 16, 2012

Investors challenging Bank of America Corp.’s proposed $8.5 billion mortgage-backed securities settlement have joined MBIA Inc. in urging a New York state judge to lift confidentiality restrictions on bank documents, but the settlement’s supporters said Thursday that the request circumvents another court.

The dispute concerns two interrelated lawsuits in New York Supreme Court in New York County. In a case before Judge Eileen Bransten, MBIA has accused Bank of America of making its Countrywide Financial Corp. mortgage-backed securities look more creditworthy than they were to induce MBIA into insuring them.

In a second case before Judge Barbara R. Kapnick, investors have sought more information about the $8.5 billion settlement of certain Countrywide mortgage-backed securities that the bank and the securities’ trustee Bank of New York Mellon Corp. negotiated with a group of 22 institutional investors.

In a letter Wednesday, Daniel Reilly of Reilly Pozner LLP, who represents American International Group Inc. as a challenger to the $8.5 billion settlement pending before Judge Kapnick, urged Judge Bransten to grant MBIA’s request that confidentiality restrictions be lifted on party deposition transcripts and their exhibits, expert reports and their exhibits, and expert reliance materials in the MBIA case.

“In light of the number of investors implicated by the proposed settlement, there is a clear public interest in the disclosure of additional facts that will allow those investors to evaluate the reasonableness of the proposed settlement amount,” Reilly wrote.

The additional documents from the MBIA case could shed light on issues the objecting investors are concerned about, including “loan file integrity, putback liability, successor liability, servicing deficiencies and resulting losses,” the letter said.

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Denver Post, Denver, Colo.

Maybe James Holmes will enter an insanity plea. We deserve to know what role mental illness played in this unfathomable tragedy. Truth be told, we should all want that to happen.

Should Holmes or any other defendant enter an insanity plea, a substantial set of legal requirements will kick in, shredding any notions of physician-patient privacy, attorney work-product, or the right against self-incrimination as it relates to his mental illness.

I do not seek to challenge those consequences. But prosecutors are also bound by the law, and they cannot skirt Colorado’s insanity examination procedures because they fear what a fair and independent evaluation by the state’s own doctors will show.

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Reilly Pozner LLP serves clients nationwide and is engaged in complex commercial and intellectual property litigation, class actions, civil and criminal litigation, mass torts, personal injury and appellate law.