Judge Rakoff

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In an opinion yesterday, Judge Rakoff rejected a motion from the trustee of Bernard Madoff’s securities firm to void a $410 million settlement between the New York Attorney General and certain Madoff feeder funds associated with Ezra Merkin. Judge Rakoff found that the trustee had simply waited too long:
Continue Reading Judge Rakoff Denies Madoff Trustee’s Attempt to Halt NYAG Settlement With Feeder Fund

Judge Rakoff yesterday issued one of his short “bottom line” Orders — with full opinion to follow — granting JP Morgan near complete summary judgment in a case in which the European bank Dexia and its former subsidiary accused Bear Stearns (later acquired by JP Morgan) of failing to comply with its stated underwriting guidelines for certain mortgage-backed securities.  Reuters’ Alison Frankel is reporting that the win reduces JP Morgan’s exposure by $770 million, to about $5.7 million.  The motion papers are here: motion; opposition; reply. Based on the transcript (here and here), it appears Judge Rakoff was likely persuaded by the fact that the plaintiffs did not read the offering documents referencing the underwriting guidelines that the complaint alleged were ignored, and, instead, the plaintiffs appeared to try to switch theories for summary judgment:
Continue Reading Judge Rakoff Grants JP Morgan Near Complete Win in Dexia MBS Suit Where Plaintiffs Did Not Read Offering Documents

Last Friday, Judge Crotty denied the attempt of three former Fannie Mae executives to dismiss the SEC’s charges that they mislead investors about the company’s exposure to subprime mortgages. Judge Crotty found that the SEC had adequately alleged that Fannie Mae’s “quantitative subprime disclosures were misleading” because “they failed to include all loans that fell within [Fannie Mae’s] subprime and Alt-A description.” In allowing the SEC’s civil fraud suit to proceed, Judge Crotty rejected the defendants’ argument that they were exempt from liability because the Securities Exchange Act of 1934 does not apply to employees of any “independent establishment of the United States,” and Fannie Mae, as a government-sponsored enterprise chartered by the federal government, qualifies as such an establishment. Although Judge Crotty held that Fannie Mae is a government instrumentality, he concluded that it is not an “independent establishment” within the meaning of the Act given that it is a publicly-traded corporation managed and controlled by a Board of Directors elected by its shareholders.
Continue Reading Judge Crotty Rejects Ex-Fannie Mae Executives’ Bid to Dismiss SEC Charges