Judge Questions SEC Settlement

Manhattan Federal District Judge Victor Marrero today questioned a hedge fund paying the government $600 million in penalties to settle insider trading accusations while not having to admit doing anything illegal. Reserving judgment on approving the settlement during a hearing on the landmark deal between the Securities and Exchange Commission and SAC Capital Advisors, the judge found it incongruous when told the client merely made a business decision in agreeing to pay such a large fine. Allegations included illegally trading pharmaceutical stocks after a former portfolio manager obtained secret information from a doctor about clinical drug trials. The hearing focused heavily on “neither admit nor deny wrongdoing” language in the agreement. Reportedly, federal judges across the country have expressed concerns over whether government agencies are letting defendants off too easy by not forcing them to admit liability. Last year, District Judge Jed S. Rakoff rejected the settlement in a fraud case brought against Citigroup by the SEC that let the bank avoid acknowledgment that it did anything wrong. That decision and whether he exceeded his authority in rejecting the settlement is now under review by a Federal Appeals Court. As such, Judge Marerro hinted that he might condition any approval of the SAC settlement on the outcome of the Citigroup appeal. Though the United States Court of Appeals for the Second Circuit is likely limited to Judge Rakoff’s ruling within the context of the specific facts of the Citigroup case relating to the bank’s sale of a complex $1 billion mortgage bond deal, it could impact other cases. Judge Marerro noted that other federal judges across the country had recently followed Judge Rakoff’s lead and cast skepticism on the “neither admit nor deny language,” in some cases demanding greater accountability before approving settlements. SEC counsel urged Judge Marerro to approve the settlement with SAC, despite the pending appeals court decision, acknowledging risk of a shifting legal landscape. “But the ground is shaking,” said Judge Marerro,“there are tremors.” See full story here-- http://nyti.ms/11TD9G0

Fairly Illegal

So I finally watched some of season two of television's hot mediator show, Fairly Legal, on USA. Last year, the show debuted with a coffee shop hold-up mediation on the fly which was cute and effective, much like its snarky mediator, Kate Reed. I actually posted a few of California's ethical rules on the Facebook fan page last year (hoping writers or producers would notice) when things went a little far afield, which is most of the time. From the get-go this year, Kate inserts herself into a case tampering with a juror, threatening a witness and playing advocate, investigator and counselor at law. Oh well, just another day at the fictional law office. Though the acting is decent and the truth seeking protagonist fun and unpredictable, the mediation has become a backdrop to a dram-com. Now that Kate's boat is blown up, she's living in the law firm that fired her and her rocky marriage to the would-be DA appears finally over. The disputes she resolves remain eclectic as ever. Her partners continue to push the boundaries, like pushing conflicts of interest to the curb for the almighty dollar. So why do lawyers' reputations continue to suffer in the eyes of the public?? At least there is some light shed on the benefit of moving on with life by settling in favor of protracted litigation. http://www.usanetwork.com/series/fairlylegal/index.html

$25B Settlement on Foreclosure Abuses

Today, federal officials announced a $25 billion settlement with the five largest mortgage lenders over foreclosure abuses. The deal requires the banks to reduce some loans, send out small checks to foreclosed folks, and refinance mortgages for underwater borrowers. Its being billed as the largest settlement involving a single industry since big tobacco in the late '90s. Under the agreement, which was reportedly negotiated for 16 months, B of A, Chase, Wells Fargo, Citigroup, and Ally will reduce loans for nearly a million households. They will also send checks for two grand to about 750,000 Americans who were improperly foreclosed upon. All but one state agreed to the deal-- Oklahoma, whose AG opposed the deal. Lenders that violate the deal could face $1 million penalties per violation and up to $5 million for repeat violators. Interestingly, homeowners can still sue lenders in civil court on their own, and federal and state authorities can pursue criminal charges. The settlement only applies to privately held mortgages issued from 2008 through 2011. Loans owned by Fannie Mae or Freddie Mac are not impacted by this settlement. See news item from Fox here-- http://fxn.ws/yN8oVo and website for the public here-- http://www.nationalmortgagesettlement.com/

Mandatory Federal ADR Program Reduces Case Pendency and Encourages Early Settlement

The U.S. District Court for the Western District of Pennsylvania was once in the bottom of district courts for length of time to resolve civil cases and the amount of time to decide motions. However, that court now places in the top five percent due to the implementation of mandatory alternative dispute resolution (ADR). While the number of civil trials in the has not significantly decreased since mandatory ADR was initiated, what has decreased is time between filing and trial-- now less than a year. The program is judge directed, as opposed to being run out of the clerk's office or a separate staff. Under the procedure, lawyers have a duty to "meet and confer" prior to the initial case-management conference and to choose the form of ADR and a neutral. Litigants and lawyers are encouraged to reasonable, thoughtful and analytical in assessing cases rather than just digging into positions. According to the article below by Karen Engro, designer of the ADR program that was implemented there, cases are settling much earlier, before the deluge of discovery and motion practice. By requiring litigants to enter ADR prior to substantial discovery and the filing of summary judgments motions, the court has shifted the settlement time line substantially earlier in the litigation process. Engro reports mandatory ADR program is changing the settlement culture from settling on the courthouse steps to early resolution. More here, including statistics: http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202524627002&A_changing_paradigm&slreturn=1

Nationally, not many Foreclosure Mediation programs succeeding

Approximately 25 foreclosure mediation programs now exist in 14 states, but it is believed by some that they are not be as helpful to troubled owners as originally touted, such as in Maryland.

Unlike here in Orange County, FL, Prince George’s County, MD had only 56 successful home loan modifications before this summer through that state’s mediation program in an area devastated by the foreclosure crisis. A majority Black area heavily targeted by sub prime lenders in the boom years, that county is now staggering under the weight of abandoned homes and plummeting prices. One borrower reports to NBC that the mediation process there was a "gimmick" just to go through the formalities before desiring to foreclose.

Fortunately, here in Orlando under the program administered by the Orange County Bar Association, the lenders have been more serious on the whole about negotiating work-outs with owners who have demonstrable income and seek to stay in the home. Some HAMP modifications have been seen in the mediations conducted locally with qualified loans.

On the whole, however, there are troubled areas as mentioned above in Maryland and in diverse states like Nevada and New Hampshire (where in more than 100 cases, only 14 have reached settlements: http://bit.ly/oB7usW ).


http://today.msnbc.msn.com/id/43811197/ns/business-real_estate/