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Lehman Brothers May 18
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Lehman's $2.4M Win Against PMC Stands Up At 9th Circ.
May 15, 2015 | Law360
By Y. Peter Kang
Lehman Brothers Holdings Inc. gets to keep its $2.4 million victory in a lawsuit over defective residential mortgage loans that PMC Bancorp sold to Lehman, the Ninth Circuit ruled Friday, finding that the lower court correctly concluded that PMC was obligated to buy back the loans. -
Trader Wrestles With Lehman Estate Over Big Bonus
May 17, 2015 | The Wall Street Journal
By James Sterngold
When Lehman Brothers Holdings Inc. abruptly filed for bankruptcy in September 2008, many stunned employees walked away with little more than boxes filled with desktop knickknacks. A little-known bond trader, Jonathan Hoffman, took something else: an IOU for $83 million in unpaid bonuses. -
Lehman Brothers Securities N.V. in Curaçao to Complete Bankruptcy Proceedings and Close Down 18 May 2015
May 15, 2015 | Curaçao Chronicle
With the final cash distribution to be executed on 19 May 2015, Lehman Brothers Securities N.V. in Curaçao (Dutch Caribbean) will be one of the first Lehman Brothers companies worldwide to finalize its bankruptcy proceedings. The final cash distribution to the creditors will be made by bankruptcy trustee Michiel Gorsira of law firm...
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
PMC Bancorp
Jonathan Hoffman
Lehman Brothers Securities N.V.- Curaçao
Full Text of Stories Below
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Lehman's $2.4M Win Against PMC Stands Up At 9th Circ.
May 15, 2015 | Law360
By Y. Peter Kang
Lehman Brothers Holdings Inc. gets to keep its $2.4 million victory in a lawsuit over defective residential mortgage loans that PMC Bancorp sold to Lehman, the Ninth Circuit ruled Friday, finding that the lower court correctly concluded that PMC was obligated to buy back the loans.
A three-judge panel said the lower court made the right call in finding that PMC was liable for damages under an indemnity agreement that remained in play despite foreclosure on the underlying properties.
“The interpretation of the agreement advanced by PMC would impermissibly render two provisions of the agreement ineffective,” the panel said in the unpublished opinion. “Accordingly, the district court properly granted summary judgment in favor of [Lehman] as to liability on the indemnity agreement.”
During oral argument this month, PMC said Lehman should not have been allowed to seek damages since it made full credit bids on six of the 11 loans in dispute, and said the district judge erred in finding the full credit bid rule didn't apply to the secondary mortgage market. PMC asserted that the full credit bid rule should limit the damages Lehman could seek.
But the appeals panel said PMC’s contention that Lehman unit Aurora Loan Services acted as its agent in placing full credit bids was not supported by the evidence.
“Because neither LBHI nor [Lehman Brothers Bank FSB] was responsible for the placement of full credit bids in the course of foreclosure proceedings on any of these four loans, the full credit bid rule is inapplicable to the calculation of LBHI’s damages,” the Ninth Circuit panel wrote.
A full credit bid, in the California Supreme Court's definition, is a lender's bid at a nonjudicial foreclosure sale "in an amount equal to the unpaid principal and interest of the mortgage debt, together with the costs, fees and other expenses of the foreclosure." If the full credit bid is successful, the lender pays the full outstanding balance of the debt and costs of foreclosure to itself and takes title to the security property. The borrower is released from further obligations.
Friday’s ruling is a win for Lehman, which sued PMC in September 2010 alleging that it discovered a set of loans PMC sold to Lehman Brothers Bank which did not conform to the terms of their deal, and that PMC refused to buy them back in violation of the purchase agreement. Lehman claimed that it suffered damages when the borrowers under the 11 loans defaulted.
The suit alleged breach of express warranty and three claims for breach of contract.
In March 2013, U.S. District Judge John A. Kronstadt granted summary judgment to Lehman, finding that PMC's full credit bid rule argument fell flat. He said the full credit bid rule does not apply when the lender purchased a loan based on misrepresentations from the originating party, or had been required to purchase it from an upstream investor, or in the secondary mortgage market, among other instances...For full story:
http://www.law360.com/articles/656821/lehman-s-2-4m-win-against-pmc-stands-up-at-9th-circ-
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Trader Wrestles With Lehman Estate Over Big Bonus
May 17, 2015 | The Wall Street Journal
By James Sterngold
When Lehman Brothers Holdings Inc. abruptly filed for bankruptcy in September 2008, many stunned employees walked away with little more than boxes filled with desktop knickknacks. A little-known bond trader, Jonathan Hoffman, took something else: an IOU for $83 million in unpaid bonuses.
More than six years later, Mr. Hoffman is still trying to collect.
As part of a continuing bankruptcy-court battle in Manhattan with the Lehman bankruptcy trustee, both sides agree that Mr. Hoffman earned profits of more than $750 million for the bank in the turmoil of 2007 and 2008 while trading government bonds as a self-described “lone wolf” in a Miami office. He is one of a handful of former Lehman employees still fighting for bonuses, though his claim is the largest.
The trustee says Mr. Hoffman was paid his $83 million by Barclays PLC, which acquired some Lehman assets and hired the star trader, and that he is trying to “double dip.”
Mr. Hoffman, 42 years old, denies this, arguing that the tens of millions of dollars he received from the bank was entirely for his success after Lehman closed. He said in interviews and emails that his legal fight has become a quest to recover profits he rightfully earned and that did a lot to help Lehman. “I did a job for Lehman Brothers and was incredibly loyal to the firm,” he said in an email. “If I am owed money by the estate, it’s not clear to me why I would not collect it.”
Mr. Hoffman’s lawsuit provides a window into a disappearing era on Wall Street, in which anonymous traders could earn tens of millions of dollars annually by placing bets that leveraged the massive balance sheets of their employers. Since the financial crisis, regulators have driven much of that type of trading from banks, and the firms have dialed back the risk taking that once generated massive profits—and occasionally large losses as well.
To some, including Lehman bankruptcy trustee James W. Giddens, Mr. Hoffman personifies the sort of Wall Street greed that led to the financial crisis. “It is no coincidence that Mr. Hoffman asked Barclays for the very same amount he was owed” by Lehman, said a spokesman for Mr. Giddens. “This attempt to double dip is neither fair nor consistent with the law.”
Mr. Hoffman doesn’t deny the payment from Barclays, but he and his lawyers say it was purely a special bonus to lure a star who would go on to produce $1.25 billion in profit for the bank and not related to the profit he had delivered at Lehman.
Barclays declined to comment, but the testimony of a bank executive only added to the ambiguity of whether Mr. Hoffman was a victim of the bankruptcy or is being greedy. In a deposition, Michael Keegan, a Barclays managing director, recalled thinking Mr. Hoffman was a “sneaky bastard” for seeking payment from the Lehman estate. “I thought he was paid for it” by Barclays, Mr. Keegan said. But then under questioning from Mr. Hoffman’s lawyer Mr. Keegan conceded that, in fact, Barclays chose to pay Mr. Hoffman and “we were under no obligation that I know to do that.”
Mr. Hoffman grew up in Philadelphia, part of a family that owned and ran a confectionary business, Frankford Candy, started by his grandfather. It manufactures sweets like lollipops, chocolates, candy canes and gummies, some of them branded with characters such as SpongeBob SquarePants and Dora the Explorer. At one time, he expected to work there, too.
He went to the University of Pennsylvania, majoring in economics, but ran into a delay, he said, when his acceptance to the Wharton School for an M.B.A. was deferred for a year. He took a job in 1994 at Lehman in New York. “I had thought I would end up taking a brief detour on Wall Street and end up in the candy business, but the detour got longer,” he said.
At Lehman, he became a specialist in trading government bonds, one of the largest and most liquid markets. Mr. Hoffman said his trading style had “quite a bit of gut in it” and was based largely on reading trading data and understanding trade flows. He paid almost no attention to traditional market forces such as economic growth rates and monetary policies.
“I have no view on interest rates, no view on the curve,” he said. “I never speak to clients. I don’t know who is on the other side of the trade. I guess I am a lone wolf.”
According to traders who worked with him, Mr. Hoffman—known as “Johnny H”—developed a reputation as astute, successful and somewhat secretive. He frequently worked longer hours than his colleagues, often staying late on trades that involved the Japanese markets.
Kaushik Amin, who supervised Mr. Hoffman at Lehman, testified last month that Mr. Hoffman was the most profitable member of his group and “was viewed as one of the best proprietary traders in the market.”
On a desk that featured several former college athletes and at times had a locker-room feel, the short, slender Mr. Hoffman wasn’t the norm but was generally sociable, one former trader said.
When the Sept. 11, 2001, terrorist attacks damaged Lehman Brothers’s New York headquarters, bond traders were told they could set up elsewhere as the firm arranged for new quarters.
Mr. Hoffman seized the opportunity to move to a home on exclusive Palm Island, just off Miami Beach. Working out of Lehman’s much smaller Miami office, occupied only by salespeople, he sat behind banks of computer screens and didn’t communicate regularly with other traders in New York or elsewhere. “I found that all that talk didn’t make us trade any better. There’s too much groupthink,” he said.
Mr. Hoffman earned $14.8 million in bonuses 2005 and $20 million in 2006 before taking in $31 million in 2007 and about $77 million in 2008, according to records released after the Lehman bankruptcy. His contract at both Lehman and Barclays allowed him to collect as much as 14% of the profits he generated. In 2008, he was the firm’s highest-paid employee.
“I never had a losing quarter, never had a losing year,” he said. He said he typically was allocated $200 million to $400 million of the firm’s capital to trade with...
For full story:
http://www.wsj.com/articles/trader-wrestles-with-lehman-estate-over-big-bonus-1431910196
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May 15, 2015 | Curaçao Chronicle
With the final cash distribution to be executed on 19 May 2015, Lehman Brothers Securities N.V. in Curaçao (Dutch Caribbean) will be one of the first Lehman Brothers companies worldwide to finalize its bankruptcy proceedings. The final cash distribution to the creditors will be made by bankruptcy trustee Michiel Gorsira of law firm VanEps Kunneman VanDoorne.
Following the worldwide collapse of Lehman Brothers in September 2008 in New York, Lehman Brothers Securities N.V. in Curaçao was declared bankrupt by the Curaçao bankruptcy court in January 2009. The main activity of LBS was the issuance of complex financial structured products – warrants and certificates. At the time of the bankruptcy LBS had only USD 400 on its local bank account. Gorsira, who co-led the international team of advisors together with co-trustee Robert van Beemen: “In January 2009, we had no funding and insufficient access to information and documents. Six and a half years later, we have settled intercompany claims of more than USD 11 billion, valued the LBS derivative portfolio of 332 securities at approximately USD 900 million, and have paid out more than a USD 1 billion to its creditors.”
In the summer of 2014, the first discussions with creditors and market participants took place to determine whether the remaining intercompany receivables against other Lehman companies could be sold, in order to make one final cash distribution...
For full story:
http://curacaochronicle.com/main/lehman-brothers-securities-n-v-in-curacao-to-complete-bankruptcy-proceedings-and-close-down-18-may-2015/
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
PMC Bancorp
Jonathan Hoffman
Lehman Brothers Securities N.V.- Curaçao
Full Text of Stories Below
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