merkhet

Did he say anything interesting?

The main problem is that, so far, the government has been unwilling to take that approach. It's possible that a legal outcome hanging over their head still wouldn't change things, but who knows...

Took a quick look at the last two months opinions. Looks like the median time from argument to decision seems to be two to three months. There are some that come in at one month and some that come in at six months, but those seem to be outliers.

@cherzeca, yes, it probably creates a conflict of interest -- which, again, brings up the thought... these lawyers are likely being paid by Perry Capital, Fairholme Capital and Paulson & Co. As far as I know, those guys are predominantly in the preferreds -- so... from an incentives point of view re damages, don't get thrown under the bus.

My other thought is that the D.C. Circuit probably also finds the APA claims more interesting because... well, they're the administrative court. But, again, possibly colored by bias.

@cherzeca, not sure if I've posted my response to you yet, but I've given it continual thought, and my sense is that any non-affirmance of the lower court would, by necessity, reject the government's view of 4617(f) -- because there'd be no point to asking for a full and complete record if 4617(f) is interpreted to be jurisdiction-stripping instead of remedy stripping & constrained by acts that are ultra vires. Again, I'm hoping that it comes out prior to the MDL proceedings because then we will see whether the government drops that attempt and allows the Jacobs case to go forward in Delaware.

Again, re biases, I'm only in the junior preferred, and I've been pretty vocal about the idea that junior preferred stands in a different (better) situation than common stock, so keep that in mind when I'm arguing re breach of K versus APA claims. But I don't know that it's true that the court spent all of its time on APA versus breach of K. From the transcript, we have 40 pages of APA versus 25 pages of breach of K -- eyeballing the transcript, it looks like the judges were similarly engaged on both. (Olson talks a bit faster than Hume.) Moreover, the audio transcript seems to indicate about 40 minutes on APA versus 30 minutes on breach of K. What's interesting to me is that Stern, during his arguments, doesn't even attempt to engage in any meaningful way on breach of K claims. See transcript pages 110 to 115.

@Steve_Berk, I suspect that some of the optimism that you're seeing is coming from bias due to being long either the preferreds or the common stock. (Myself included.) This is actually why it's helpful to have someone like yourself take a look -- because you're newer to the situation and likely less biased than most of us. FWIW, I think a remand for a full and complete record is the option that has the most support on the panel, followed by breach of K and/or implied convenant, and then reversal on the APA claims. The main optimism from the APA claims is likely coming from (page 109 of the transcript) the idea that Ginsburg at one point says to Mr. Stern, "Well, I think [FHFA] had two alternatives: to act as a conservator, which they didn't want to do, or to act as a receiver, and move towards liquidation." That seems indicative of the idea that Ginsburg specifically does not think that the FHFA is acting as a conservator. From there, you have to decide whether (A) Brown might agree w/ Ginsburg & (B) whether they might back off anyway because they don't have unanimity and/or they don't want to rule aggressively.

Hume hinted at it at least twice during the Q&A when discussing opt-in/opt-out options. I must have missed that. What'd he say? I thought he was just talking about the mechanics of breach of K class versus Takings class. I'm probably reading it wrong (I'm biased, after all) but he mentioned one would only want to opt-out of receiving funds directly if, for example, a settlement were reached and you as the shareholder thought you could do better on your own with your own attorney(s). Yea, I didn't take that as hinting towards anything. He was just explaining how the mechanics work.

Hume hinted at it at least twice during the Q&A when discussing opt-in/opt-out options. I must have missed that. What'd he say? I thought he was just talking about the mechanics of breach of K class versus Takings class.

Guess I was too far back in the queue, but how is it that no one on the Q&A list bothered to ask if there have been any settlement negotiations? That's like the first question you should ask!

It is rather odd that this comes from the court rather than from the pleadings. In any case, I think the idea that establishing a minimum is in no way inapposite with also putting the companies towards a sound and solvent condition was a clever way to interpret the statute.

Investors Unite Amicus Curiae on 4623 & Olson's Institutional Plaintiffs' Supplemental Brief on 4623 2016-04-22_Investors_Unite_Supplemental_Brief_of_Amicus_Curiae_on_4623.pdf 2016-04-22_Perry_Institutional_Plaintiffs_Supplemental_Brief_on_4623.pdf

@Steve_Berk & @hardincap, the section detailing additional powers is there because the conservator does not have the ability to liquidate the companies. Even FHFA & Treasury would accede to that limitation. As for the issue of notice, it's not a situation where notice might cure the issue because there weren't any adverse effects to the shareholders -- the adverse effect is that under a receivership, the shareholders would have various statutory protections (similar to bankruptcy court) under which they could have made claims on their liquidation preference, etc. Currently, there is not framework under which that can happen in a conservatorship, which is why Olson calls it a shell game. In any case, having finished my review of the transcript, my sense is still that the breach of K claim is a very clear claim on which the court can rule and on which Stern didn't put up much of a fight. It's not barred by 4617(f) because that would bring up constitutional avoidance issues, and it has nothing to do with the designation of capital requirements under 4623. The breach of implied convenant is a little harder because it's less clear that they directly brought up the issue and the damages are harder to ascertain for common shareholders. I know people have brought up the Treasury consent issue, and I'm not sure if this is explained as well through the transcript and/or whether the judges view it his way -- but my sense is that Hume was trying to say that the Treasury consent was not the thing that prevented them from getting either dividends or liquidation preference -- that was the Third Amendment. Now, pre-NWS if Treasury wanted to receive dividends above or in excess of their 10%, then they would have to exercise their common warrants for a nominal amount and share in the amount that remained after the senior preferred's 10% and the junior preferrer's X% with the common shareholders 80/20. But it would have been impossible for Treasury to get more than the 10% unless they agreed FIRST to pay out the junior preferreds -- because they wouldn't get the residual from their 80% common otherwise.

Goes the other way as well - one interprets the tone in a manner conforming to his biases I think it's a little harder to interpret tone in a way that it wasn't meant versus doing so reading just the words. While biases play into all data interpretation, I think the danger is more acute with the transcript.

I'm doing a read through of the transcript right now, and it crossed my mind that we have to be careful about the transcript. You lose a lot of the nuance/tone from just reading the transcript, and the mind naturally wants to backfill the nuance/tone favorably towards whatever biases you have.

Um, footnote 13 & 14 from the Class Plaintiffs' brief seem dispositive. So, if FHFA conceded that §4617 does not bar direct claims, and Ginsburg + Brown and/or Millett decide that a receivership (in everything but name) has occurred, then that's the end of the game right there. The only way Lamberth avoided this was to say that no liquidation had begun. (In the back of my mind, though, there's a nagging question about whether an appeals court can make that seemingly factual and/or fact-specific determination...) Not sure what you mean by finding that a receivership had occurred. You suggesting that court will order receivership remedies? IIRC, Lamberth said that there was no liquidation and therefore no breach of K on the junior preferreds. However, if the appeals court decides a liquidation has already begun, without the benefit of receivership protections, then it would seem like breach of K is then in play.

Um, footnote 13 & 14 from the Class Plaintiffs' brief seem dispositive. So, if FHFA conceded that §4617 does not bar direct claims, and Ginsburg + Brown and/or Millett decide that a receivership (in everything but name) has occurred, then that's the end of the game right there. The only way Lamberth avoided this was to say that no liquidation had begun. (In the back of my mind, though, there's a nagging question about whether an appeals court can make that seemingly factual and/or fact-specific determination...)

Perry Oral Arguments Transcript (attached) Edit: My bad. I'm not sure what happened. Download it from @doughishere's attachment.

Americans... ::) :o Supersize me baby. Have you been to an Indian wedding? Went to my first one in New Delhi last July. 200 is indeed medium compared to an Indian wedding.

Did you click through to the archive?

Welcome to the rabbit hole. :) You can find the briefs on http://GSELinks.com

+1

Yes, it'll depend on how the opinion is structured. If appellants lose, then they can appeal to the Supreme Court, but it's not guaranteed that they will take the case. And, no, the Supreme Court would not be more or less likely to grant certiorari just because the government loses. That's... not how that works.

Consolidation or no consolidation, a favorable decision by perry appeals re: 4617f should be huge for those cases, no? It would be persuasive elsewhere, but if cases were consolidated in DC, then it would be binding.