In an opinion today, Judge Nathan granted summary judgment and dismissed a $500 million suit brought by Bank of America against Bear Stearns Asset Management and three of its executives.  The suit concerned Bank of America’s underwriting of a “CDO squared” that included substantial mortgage-related assets from two Bear Stearns hedge funds.  Bank of America alleged it was not timely told of redemption requests from the hedge funds’ investors that, shortly after the CDO squared closed, led to those funds liquidating and allegedly driving down the price of the type of mortgage assets in the CDO squared. Judge Nathan’s decision was based on (among other things) the fact that Bank of America’s damages expert, Dr. Mukesh Bajaj, improperly measured its losses by comparing the price Bank of America paid for assets to the “fire sale” prices for similar assets that the hedge funds were forced to swiftly liquidate:
Continue Reading Judge Nathan Dismisses Bank of America’s $500 Million Suit Against Bear Stearns Over “CDO Squared”