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Lehman May 25
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Revealed: How Barclays Paid Trader £170M
May 24, 2015 | The Sunday Times (UK)
By Aimee Donnellan
Barclays paid a star trader nearly £170m in the five years after the 2008 financial crisis almost brought the banking system to its knees. Figures from a bankruptcy court battle involving trader Jonathan Hoffman give a rare insight into the colossal behind-the-scenes payments made to top performers at investment banks. -
Barclays Paid Star Trader £170M In Five Years Following Financial Crisis
May 24, 2015 | The Guardian (UK)
By Sarah Butler
Barclays paid a “lone wolf” star trader £170m in the five years following the financial crisis, a payout which dwarfed those of Bob Diamond, the bank’s former boss. Jonathan Hoffman’s earnings included an $83m (£52m) payment to the trader who previously worked for Lehman Brothers, the US bank that collapsed in 2008 kicking off the global... -
Former Trader Sues Lehman Estate
May 25, 2015 | The Times (UK)
By Martin Waller
A former bonds trader at Barclays has ratcheted up the controversy over bankers’ pay after it was revealed that he was paid £170 million over five years, 40 per cent more than Bob Diamond, his much-criticised former chief executive, over a similar period. The sums paid out to Jonathan Hoffman, a former trader with Lehman Brothers ... -
Fresh Shame For Barclays As It's Revealed That It Paid A Trader A Staggering £170million After The Global Economic Meltdown
May 25, 2015 | Daily Mail (UK)
By Louise Eccles
A trader at Barclays bank was paid £170million in the five years after the financial crisis brought the country to its knees. Jonathan Hoffman, 42, earned the vast sum at a time when banks were under pressure to reign in bonuses to avoid the risky behaviour which triggered a global economic meltdown. -
Lehman Brothers Sues Three Financial Firms Over Soured Mortgage Loans
May 22, 2015 | ValueWalk
By Marie Cabural
Lehman Brothers Holdings Inc Plan Trust (OTCMKTS:LEHMQ) Holdings filed a complaint against three financial institutions in connection with the bundles of soured mortgage loans and argued that the claims worth hundreds of millions of dollars were “grossly exaggerated and baseless.” -
Lehman Brothers Suing Over Crisis-Era Toxic Mortgages
May 22, 2015 | Housing Wire
By Ben Lane
Lehman Brothers Holdings filed suit against Syncora Holdings, U.S. Bancorp (USB) and GreenPoint Mortgage Funding in an effort to try to get “duplicate” claims filed by those three companies against Lehman Brothers thrown out because Lehman Brothers is ready to settle and move on. -
Italian Pension Fund Enasarco Wins $61.5M Payout From Lehmans
May 22, 2015 | Investments & Pensions Europe
By Gail Moss
Fondazione Enasarco, the Italian pension fund for sales representatives, has won a $61.5m (€55.3m) payout from Lehman Brothers SA (LB) for payments due to it following the terminaton of a put option when LB went bust in 2008. The case, heard in the English High Court, concerned a structured investment arranged by LB that provided Enasarco... -
Builder Buys Former SunCal Project From Lehman
May 22, 2015 | Dow Jones - Daily Bankruptcy Review
By Patrick Fitzgerald
An Arizona home builder has teamed with two investors to pick up another southern California coastal land parcel from Lehman Brothers Holdings Inc. left behind from its ill-fated partnership land developer SunCal. A partnership of Taylor Morrison Home Corp ., Oaktree Capital Management and DMB Pacific Ventures... -
Investors Will Be Watching Former Lehman Brothers CEO
May 23, 2015 | Bradenton Herald
By Tom Hudson
Dick Fuld has admitted mistakes. He has said he was wrong. He testified to Congress "bad judgments were made regarding the market." But he has never taken full-throated responsibility. Fuld was the CEO at investment bank Lehman Brothers when it collapsed in September 2008. Its bankruptcy helped ...
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Barclays - Jonathan Hoffman
Syncora Holdings, U.S. Bancorp, & GreenPoint Mortgage Holding
Enasarco
SunCal
Dick Fuld
Full Text of Stories Below
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Revealed: How Barclays Paid Trader £170M
May 24, 2015 | The Sunday Times (UK)
By Aimee Donnellan
Barclays paid a star trader nearly £170m in the five years after the 2008 financial crisis almost brought the banking system to its knees.
Figures from a bankruptcy court battle involving trader Jonathan Hoffman give a rare insight into the colossal behind-the-scenes payments made to top performers at investment banks.
The scale of the rewards is normally a closely guarded secret. Banks are required to reveal the pay and bonuses of only executive directors and a handful of other managers. Hoffman’s pay in most years dwarfed even that of Bob Diamond, Barclays’ chief executive at the time.
Revelations of excessive pay follow a week in which four banks, including Barclays, pleaded guilty to charges of rigging foreign exchange rates. The British lender was fined $2.4bn (£1.5bn) by American and UK regulators and will have to sack eight staff members.
Barclays handed Hoffman a £53m signing-on fee in 2008 — more than three times the current salary of banking titan Jamie Dimon, chief executive of JP Morgan.
Under the terms of Hoffman’s Barclays contract he received a base salary of $200,000 a year, but his package entitled him to 12% of the first $25m of profits he made from trading and 14% on anything above. This brought Hoffman, a self- described “lone wolf”, £118m from 2009 to 2013.
Hoffman, 42, was a specialist in trading American government debt. He was one of Lehman’s best-paid traders, and the American bank allowed him to move out of its New York headquarters to an office in Palm Beach, Florida.
Lehman collapsed in 2008. Barclays, having failed in an attempt to buy the bank before it went bankrupt, snapped up its investment banking operations, tying in star traders such as Hoffman with big signing-on fees.
The scale of the payments has been uncovered during Hoffman’s battle with Lehman’s bankruptcy trustee. He claims that he is owed £53m in unpaid bonuses. The trustee has accused him of “double dipping”, saying the signing-on fee was compensation for the lost bonuses.
Hoffman’s pay and bonus package was greater than that of Diamond, who was pushed out of Barclays over the Libor-rigging scandal. In the five years he led the British bank, Diamond took home about £120m.
Hoffman left Barclays in late 2013 as regulators cracked down on “casino” banking, forcing lenders to hold larger capital reserves against trading operations. Barclays declined to comment. Hoffman, who lives in Pennsylvania, was unavailable for comment...
For full story:
http://www.thesundaytimes.co.uk/sto/business/Finance/article1559936.ece
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Barclays Paid Star Trader £170M In Five Years Following Financial Crisis
May 24, 2015 | The Guardian (UK)
By Sarah Butler
Barclays paid a “lone wolf” star trader £170m in the five years following the financial crisis, a payout which dwarfed those of Bob Diamond, the bank’s former boss.
Jonathan Hoffman’s earnings included an $83m (£52m) payment to the trader who previously worked for Lehman Brothers, the US bank that collapsed in 2008 kicking off the global financial crisis.
Hoffman’s payout from Barclays has emerged in court papers relating to his battle at a New York court to secure $83m in unpaid bonuses from his days at Lehman, from the bank’s bankruptcy trustee.
Trustee James W Giddens has accused Hoffman of “double-dipping”, saying the payment from Barclays had already compensated him for the lost Lehmans bonuses.
In a deposition, Michael Keegan, a Barclays managing director, recalled thinking Hoffman was a “sneaky bastard” for seeking payment from the Lehman estate because he had assumed Barclays’ payout had been intended as compensation for the lost Lehman payouts. “I thought he was paid for it,” Keegan said. However, he conceded that Barclays chose to pay Hoffman and was under no obligation to do so.
Barclays wanted to secure the services of high-rolling Lehman traders including Hoffman after buying out the bank’s investment arm.
Hoffman has argued his payment was related to Barclays’ desire to secure his services against competing job offers from elsewhere. He said he was incredibly loyal to Lehman and did a good job for them. “If I am owed money by the estate, it’s not clear to me why I would not collect it,” he told the Wall Street Journal.
His lawyer Douglas Baumstein told the Guardian: “Hoffman was not paid for his Lehman bonus by Barclays. Rather, as the contemporaneous evidence shows, the payments made to Mr. Hoffman were retention payments, made to induce Mr. Hoffman to accept employment and to remain at Barclays for a period of years.” He said his client had earned Barclays more than $1.25bn.
The scale of the payouts offers a rare glimpse into the sky-high earnings of star traders who underpin the global banking system. Their deals are usually kept under wraps because companies are only obliged to reveal the pay and bonuses of their senior executive officers under the Project Merlin deal, in which banks promised the UK government to show restraint on pay. The deal was struck amid widespread anger at the pay of bankers in the wake of the financial crisis.
The son of a sweet manufacturer, Hoffman began working for Lehman in 1994 and became an expert in trading US government debt. By the time the bank collapsed he was working from a small Lehman office in Miami and living on the exclusive Palm Island, just off Miami Beach.
“I never had a losing quarter, never had a losing year,” he told the court. He said he was typically allocated between $200m and $400m of the Lehmans capital to trade with. Hoffman has said his style had “quite a bit of gut in it” and related to watching the way trades were flowing. “I have no view on interest rates, no view on the curve,” he told the Wall Street Journal. “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.”
It has emerged that Hoffman, who left Barclays in 2013 and now trades with his own money from his home in Philadelphia, received a base salary of $200,000 a year, but his contract with Barclays also entitled him to 12% of the first $25m of profits he made from trading and 14% on anything above. That meant that he earned $183m (£118m) from 2009 to 2013, according to his Baumstein.
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Former Trader Sues Lehman Estate
May 25, 2015 | The Times (UK)
By Martin Waller
A former bonds trader at Barclays has ratcheted up the controversy over bankers’ pay after it was revealed that he was paid £170 million over five years, 40 per cent more than Bob Diamond, his much-criticised former chief executive, over a similar period.
The sums paid out to Jonathan Hoffman, a former trader with Lehman Brothers who joined Barclays in 2008 after the collapse of the US investment bank, are revealed in a case brought by him in the Manhattan bankruptcy court.
Mr Hoffman, who was paid the equivalent of £53 million as a signing-on fee, wants the same sum...
Subscription needed for full story:
http://www.thetimes.co.uk/tto/business/industries/banking/article4450079.ece
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May 25, 2015 | Daily Mail (UK)
By Louise Eccles
A trader at Barclays bank was paid £170million in the five years after the financial crisis brought the country to its knees.
Jonathan Hoffman, 42, earned the vast sum at a time when banks were under pressure to reign in bonuses to avoid the risky behaviour which triggered a global economic meltdown.
The payment out-strips the £120million paid to the bank’s disgraced chief executive Bob Diamond over a similar period and sheds new light on the colossal sums paid to bankers even after the recession.
Traders’ pay is usually kept a closely-guarded secret, with only the top boardroom executives’ salaries publicly released.
But the enormous package was revealed during a court battle between Mr Hoffman and the now-defunct US investment bank Lehman Brothers over £53million in unpaid bonuses.
Mr Hoffman worked for investment giant Lehman Brothers until it collapsed in 2008 under the weight of its own high-risk investments – triggering the UK recession and pushing the world economy into freefall.
But six years on, Mr Hoffman is still pursuing the bankrupt firm for lost bonuses.
In doing so, details of his package at his next employer, Barclays, have emerged, revealing troubling signs that bankers continue to receive bumper bonuses despite efforts to curb this culture.
The news will cause fresh embarrassment for Barclays in the same week the bank pleaded guilty to charges of rigging foreign exchange rates.
The bank was fined £1.5billion on Wednesday for manipulating the foreign exchange market and over a scam aimed at ripping off customers.
Chat room transcripts released following the settlement quoted a cavalier Barclays employee saying: ‘If you ain’t cheating, you ain’t trying’.
The wrongdoing lasted until last September, two years after Antony Jenkins took over as chief executive with a promise to clean up the bank. He replaced disgraced Barclays boss Bob Diamond, who quit Barclays in 2012 in the middle of a rate-rigging storm.
Yesterday, Barclays refused to comment on Mr Hoffman’s huge pay package after the details emerged in a Manhattan court hearing.
Barclays handed the trader a £53million signing-on fee in 2008, followed by £118million in pay between 2009 and 2013.
Bankruptcy trustees at Lehmans claim the £53million sign-on fee with Barclays was compensation for his lost bonuses and accused Mr Hoffman of being greedy and ‘double-dipping’.
But Mr Hoffman says he was an ‘incredibly loyal’ employee for Lehmans until it collapsed and wants to ‘collect’ what is rightfully owed to him.
Described by a former Lehmans boss as ‘one of the best proprietary traders in the world’, he was one of their highest-paid bankers and was even allowed to work from Florida, instead of from the firm’s New York headquarters.
Mr Hoffman’s claim for unpaid bonuses is believed to be the biggest lodged against the bankrupt bank.
He told the Wall Street Journal: ‘I did a job for Lehman Brothers and was incredibly loyal to the firm. If I am owed money by the estate, it’s not clear to me why I would not collect it.’
But a spokesman for bankruptcy trustee James W. Giddens suggested he was being greedy, saying: ‘It is no coincidence that Mr Hoffman asked Barclays for the very same amount he was owed...
For full story:
http://www.dailymail.co.uk/news/article-3095528/Fresh-shame-Barclays-s-revealed-paid-trader-170million-global-economic-meltdown.html
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Lehman Brothers Sues Three Financial Firms Over Soured Mortgage Loans
May 22, 2015 | ValueWalk
By Marie Cabural
Lehman Brothers Holdings Inc Plan Trust (OTCMKTS:LEHMQ) Holdings filed a complaint against three financial institutions in connection with the bundles of soured mortgage loans and argued that the claims worth hundreds of millions of dollars were “grossly exaggerated and baseless.”
In a filing with the U.S. Bankruptcy Court in Manhattan, Lehman Brothers requested the court to reject the claims against it by Syncora Holdings, U.S. Bancorp and GreenPoint Mortgage Holding, the long-dormant financial services firm owned by Capital One Financial.
Lehman Brothers said GreenPoint should be liable for the claims
Lehman Brothers argued that the claims of the U.S. Bank should not be allowed by the court because its argument is with GreenPoint. On the other hand, Lehman Brothers also argued that Syncora’s claim was a duplicate of the U.S. Bank claim.
U.S. Bank and Syncora are suing GreenPoint Mortgage Holding in a separate proceeding over the same soured mortgage loans. Lehman Brothers is requesting Judge Shelley Chapman to declare that the claims against it should be estimated zero and GreenPoint Mortgage Holding is liable for the claims.
“These claims, which Lehman has been trying to resolve over the past two years, continue to impede the administration of the plan and the orderly distribution of assets,” said Lehman Brothers in its filing with the courts.
Lehman Brothers and its subsidiaries already returned approximately $100 billion to creditors. Lehman Brothers bought mortgage loans from GreenPoint
Lehman Brothers bought mortgage loans from GreenPoint Mortgage Holding in a structured finance transaction, which is the center of the case. Through a process of financial engineering, GreenPoint transferred the mortgage loans to a trust—GreenPoint Mortgage Funding Trust 2006-HEI, which issued notes backed by the loan.
Syncora sold insurance to the GreenPoint Mortgage Funding Trust 2006-HE1, guaranteed payments of principal and interest to investors. U.S. Bank is the trustee of the trust. During the latter part of the housing bubble, many of the mortgage loans were defaulted, which made Syncora responsible for payments to investors...
For full story:
http://www.valuewalk.com/2015/05/lehman-brothers-soured-mortgage-loans/
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Lehman Brothers Suing Over Crisis-Era Toxic Mortgages
May 22, 2015 | Housing Wire
By Ben Lane
Lehman Brothers Holdings filed suit against Syncora Holdings, U.S. Bancorp (USB) and GreenPoint Mortgage Funding in an effort to try to get “duplicate” claims filed by those three companies against Lehman Brothers thrown out because Lehman Brothers is ready to settle and move on.
According to a report from the Wall St. Journal, Lehman Brothers bought crisis-era mortgage loans from GreenPoint Mortgage, which is now owned by Capital One Financial (COF). Many of the loans went into default and then set off a now-familiar series of events of suits and countersuits with each party trying to get their money back.
From the WSJ:
At issue is a structured-finance transaction where Lehman bought mortgage loans made by GreenPoint, and through a process of financial engineering, transferred the loans to a trust which then issued notes backed by the loans.
Syncora, the monoline insurance subsidiary of Syncora Holdings, sold insurance to the trust, GreenPoint Mortgage Funding Trust 2006-HE1, that guaranteed payments of principal and interest to investors. U.S. Bank is the trustee for those trusts.
Many of the mortgage loans, made at the tail-end of the housing bubble, went into default, putting Syncora on the hook for the shortfall in payments to investors.
According the WSJ report, Lehman has set aside more than $600 million to pay out the initial claims...
For full story:
http://www.housingwire.com/articles/33979-lehman-brothers-suing-over-crisis-era-toxic-mortgages
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Italian Pension Fund Enasarco Wins $61.5M Payout From Lehmans
May 22, 2015 | Investments & Pensions Europe
By Gail Moss
Fondazione Enasarco, the Italian pension fund for sales representatives, has won a $61.5m (€55.3m) payout from Lehman Brothers SA (LB) for payments due to it following the terminaton of a put option when LB went bust in 2008.
The case, heard in the English High Court, concerned a structured investment arranged by LB that provided Enasarco with exposure to hedge funds within its investment portfolio, now worth €6.9bn.
The deal was structured through two special purpose vehicles (SPVs): Anthracite Rated Investments (Cayman) (ARIC) and Anthracite Balanced Company (Balco).
Enasarco’s €780m hedge fund investment was protected by a put option purchased by ARIC from Lehman Brothers Finance (LBF), a company incorporated in Switzerland.
The put option was written in London under the 1992 ISDA Master Agreement (‘master agreement’), a standard template for over-the-counter derivative transactions published by the International Swaps and Derivatives Association (ISDA).
The agreement was ended automatically on 15 September 2008 when LB first filed for formal insolvency protection.
Enasarco, under pressure from the Italian government and media, eventually found a replacement for the put option, which it purchased itself on 6 May 2009.
The master agreement sets out that, when a transaction terminates early, the non-defaulting party must calculate the termination amounts to be paid.
When they sign the deal, parties choose one of several possible methods of calculation provided for in the master agreement.
In their agreement, LBF and ARIC selected the ‘loss’ method of calculation, which allows the non-defaulting party to calculate the termination payment by reference to its loss of bargain – i.e. the cost of replacing the terminated transaction.
The master agreement provides that the non-defaulting party must calculate its loss “reasonably” and “in good faith” and that the calculation should be as of the early termination date, or as soon as reasonably practicable thereafter.
ARIC calculated its loss to be approximately $61m, based on the price Enasarco had paid for the replacement put option.
LBF disagreed with this calculation, contending instead that, had the calculation been performed correctly, it would have resulted in a payment of approximately $42m from ARIC to LBF.
However, the judge found that ARIC’s loss had been calculated reasonably and as soon as practicable following the early termination date.
He also made the following comments of particular interest to the wider market:Where an SPV is party to a derivative that is terminated under a master agreement as part of a structured product, its loss can be calculated by reference to the cost of a replacement transaction entered into by the investor. In addition, the terms of the replacement transaction do not necessarily have to be identical to those of the original.A calculation of loss made “as of” a date several months after the early termination date may still be “as soon as reasonably practicable” as stipulated by the master agreement.
In this case, although LBF contended that ARIC (or Enasarco) could have obtained a quotation for a replacement transaction earlier than Enasarco actually did, the judge was satisfied that the turmoil in the markets after LB’s bankruptcy, and the difficulties with the transaction structure, meant that no such quotation could have been obtained before at least the end of October 2008, and probably later.
Furthermore, had it been possible to obtain a quotation earlier in 2009 than 6 May, it would have made no difference to the price or the resulting loss calculation.Enasarco’s determination of the amount of loss was not “irrational”.
The judge said the requirement for the non-defaulting party’s loss to be calculated “reasonably” does not mean that it has to arrive at the most reasonable result, only that it must not arrive at a figure that no reasonable party in the same circumstances could come to...
For full story:
http://www.ipe.com/countries/italy/italian-pension-fund-enasarco-wins-615m-payout-from-lehmans/10008118.article
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Builder Buys Former SunCal Project From Lehman
May 22, 2015 | Dow Jones - Daily Bankruptcy Review
By Patrick Fitzgerald
An Arizona home builder has teamed with two investors to pick up another southern California coastal land parcel from Lehman Brothers Holdings Inc. left behind from its ill-fated partnership land developer SunCal.
A partnership of Taylor Morrison Home Corp ., Oaktree Capital Management and DMB Pacific Ventures said Friday that it purchased Lehman's Pacifica San Juan subdivision in San Juan Capistrano, Calif. Pacifica San Juan, which overlooks the cities of San Juan Capistrano and Dana Point with views of the Pacific Ocean, is among the last unbuilt tracts in Orange County, fetched $140 million...
Subscription needed for full story:
http://bankruptcynews.dowjones.com/Article?an=DJFDBR0120150522eb5miygab&cid=32135012&ctype=ts&pid=310&ReturnUrl=http%3a%2f%2fbankruptcynews.dowjones.com%2fArticle%3fan%3dDJFDBR0120150522eb5miygab%26cid%3d32135012%26ctype%3dts%26pid%3d310
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Investors Will Be Watching Former Lehman Brothers CEO
May 23, 2015 | Bradenton Herald
By Tom Hudson
Dick Fuld has admitted mistakes. He has said he was wrong. He testified to Congress "bad judgments were made regarding the market." But he has never taken full-throated responsibility.
Fuld was the CEO at investment bank Lehman Brothers when it collapsed in September 2008. Its bankruptcy helped spread the financial industry's troubles to the broader economy. It triggered an investor rush to cash, prompting the FDIC to raise its insurance for bank deposits and led the Treasury Department to temporarily guarantee money market mutual funds.
Five years ago, Fuld told The Financial Crisis Inquiry Commission the failure of the bank he led was because of "uncontrollable
market forces," "incorrect perception" and "accompanying rumors" regarding Lehman's financial resources. The financial autopsy questioned Lehman's risk-taking, its accounting and the firm's understanding of its own investments.
Unlike other financial institutions, Lehman was not rescued using taxpayers' money. Instead, it was a quick collapse causing deep harm and a messy aftermath that has taken years to clean up.
In the new week, Fuld is scheduled to make a rare public appearance. He will give a speech at an investor conference geared toward very small publicly traded companies. Organizers call it his first major public appearance since the Lehman failure. If that's true, it will be the first that isn't before a Congressional committee...
For full story:
http://www.bradenton.com/2015/05/23/5813517/investors-will-be-watching-former.html
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Barclays - Jonathan Hoffman
Syncora Holdings, U.S. Bancorp, & GreenPoint Mortgage Holding
Enasarco
SunCal
Dick Fuld
Full Text of Stories Below
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