In a complaint filed today, AIG seeks to enjoin the New York State Department of Financial Services from any enforcement action arising from the Department’s investigation into a former AIG subsidiary called ALICO.  The Department has allegedly threatened to fine AIG based on the allegation that ALICO was conducting an unlicensed insurance business in New York.  AIG’s complaint argues it would be unconstitutional to apply the statute at issue, New York Ins. Law § 1101(b) (defining “insurance business”), to ALICO because ALICO marketed insurance products only to out-of-state customers:
Continue Reading

Today Judge Nathan largely granted a series of dismissal motions in an investor lawsuit against Harbinger Capital and certain affiliates.   She summarized the case as follows:  “At core, Plaintiffs allege that Defendants marketed the Funds as diversified, distressed-debt and credit-driven hedge funds, but in fact used the Funds to take a large ownership interest in LightSquared”—a wireless broadband company—“without adequately disclosing this shift in strategy or its attendant risks.” Judge Nathan dismissed with prejudice all or part of seven of the lawsuit’s nine causes of action, including plaintiffs’ direct claims relating to LightSquared, and all derivative claims brought on behalf of  three of the six nominal defendants.
Continue Reading

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

In an opinion issued today, a divided panel of the Second Circuit affirmed Judge Nathan’s denial of the motion for a preliminary injunction by a group of television networks against internet television provider Aereo. As we have covered in several prior posts, the networks are seeking to prevent what they claim is unauthorized infringing use of their broadcast television programming over the internet. Judge Nathan denied the motion, citing the Second Circuit’s prior opinion in Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008). The Second Circuit affirmed Judge Nathan’s ruling, holding that she “correctly concluded that Aereo’s system is not materially distinguishable from the system upheld in Cartoon Network.” In a lengthy dissent, Judge Chin disagreed, calling Aereo’s technology a “sham” to avoid the copyright laws.
Continue Reading