Subprime/Credit Crisis Developments

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In this space approximately six weeks ago (click here), we reported on the failure of over $100 million in auctions concerning auction rate securities and cautioned that, “[r]egardless of the cause, the continued blossoming of the credit crisis should be of significant interest to insurers and reinsurers because failures in other areas of the debt markets could potentially lead to D&O and E&O claims similar to those seen in connection with the subprime mortgage crisis.” 

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Read More Auction Rate Securities Issues Proliferate

The first shareholder action to surface in the wake of the momentous sale of Bear Sterns & Co. Inc. to J.P. Morgan Chase & Co. was filed yesterday in the U.S. District Court for the Southern District of New York.  The complaint names as defendants Bear Stearns and certain of its officers and directors, and charges them with violations of the Securities Exchange Act of 1934. 

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Read More Bear Stearns Sale Sparks First Shareholder Action

On 12 March, the UK Chancellor of the Exchequer, Alistair Darling, delivered the Government’s 2008 Budget Report, which acknowledged the susceptibility of the UK economy to the unfolding financial credit crisis. The Report noted that the world economy was facing a more challenging environment than was apparent in 2007, with continued disruption in global financial markets, which had caused the downgrading of the UK economy growth forecast for 2009 from 2.5 – 3% to 2.25 – 2.75%. …
Read More UK 2008 Budget Report

Edwards Angell Palmer & Dodge Hosts Seminar on Directors’ Duties and Sub-prime Issues
On 6 March 2008 Edwards Angell Palmer & Dodge hosted a seminar in London for over 90 representatives from a broad cross section of the insurance and reinsurance industry. Helen Clark and Antony Woodhouse, partners in the London office, spoke about codified duties and shareholder actions in the UK following the coming into force of the Companies Act 2006, which introduces a new statutory statement of directors’ duties and reforms to shareholder derivative actions. 

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Read More Edwards Angell Palmer & Dodge Hosts Seminar on Directors’ Duties and Sub-prime Issues

As you may know, many of the major bond insurance firms in the municipal bond market have either seen their ratings down-graded or placed on negative credit watch or outlook by the leading municipal credit rating services (Moody’s Investors Service, Inc., Standard & Poor’s and Fitch Ratings).  These changes have stemmed largely from the insurers’ exposure to investment vehicles tied to subprime mortgage loans. …
Read More Bond Insurer Downgrades and Material Event Notice Filings

On February 11, 2008, Judge Colleen Kotelly of the United States District Court for the District of Columbia appointed the Lerach, Stoia, Geller, Rudman & Robbins law firm as lead plaintiffs’ counsel in a securities class action arising out of Standard & Poor’s allegedly fraudulent rating of certain bonds collateralized by subprime mortgages. 

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Read More D.C. Federal Court Names Lead Counsel in Standard & Poor’s CMO Securities Class Action

Merrill Lynch recently agreed to “make whole” the city of Springfield, Massachusetts by paying nearly $14 million in connection with subprime losses the city suffered in cash accounts held with the brokerage firm. 

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Read More Broker Agrees To Reimburse Massachusetts City for $14 Million in Subprime Losses