ALI-ABA Telephone Seminar Navigating the Credit Crisis--Litigation Issues for Lawyers Friday, April 25, 2008 Telephone Seminar/Audio Webcast PROGRAM SCHEDULE FACULTY PARTICIPANTS FACULTY BIOGRAPHIES STUDY MATERIALS TABLE OF CONTENTS 1. Some Structured Finance Products Are Needed, Now More Than Ever By H. Sean Mathis 2. The Subprime Mortgage Crisis By Michael L. Rugen Page ix 3. Subprime Securities Litigation Chart 17 4. Stoneridge and Enron Are Secondary Actors Free From Liability for Securities Fraud? By Michael L. Rugen 5. Stoneridge: What Does It Mean? By Michael L. Rugen 6. Insolvency Concerns: Who are the Major Parties & What Are their Goals? By Lorraine S. McGowen 7. Insurance Coverage for Subprime Lending Losses: Credit Risk, E & O, and D & O Insurance Issues By David B. Goodwin 8. Policyholder Perspective: D&O, E&O and Credit Risk Insurance Policies Are Likely to Play a Big Role in the Mortgage Industry Crisis By Timothy W. Burns xi xiii 1 5 25 31 37 45 55 vii
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PROGRAM SCHEDULE April 25, 2008 Program Schedule Eastern Central Mountain Pacific/Arizona Alaska Hawaii National Webcast Begins 12:00 p.m. 11:00 a.m. 10:00 a.m. 9:00 a.m. 8:00 a.m. 6:00 a.m. Adjournment 2:00p.m. 1:00 p.m. 12:00 p.m. 11:00 a.m. 10:00 a.m. 8:00 a.m. * Subject to minor adjustment. Should you need to log off during intermission for any reason, allow yourself enough time to reconnect. Scope and Purpose: The current structured finance and credit crisis has severely affected participants in the mortgage and other asset-backed securities sector. Financial institutions tackle myriad business and legal issues as claims increase against underwriters, sponsors, accountants, loan originators, trustees, servicers, and credit guarantors and insurers. Participants in this seminar discuss the challenges of the new market realities as well as the trends that are emerging in litigation, business bankruptcy, and insurance practice. The program affords the opportunity to submit questions for faculty discussion during the event. Suggested Prerequisite: Limited experience in practice areas covered Educational Objective: Provision of information on recent legal developments; maintenance of professional competence as a practitioner. Level of Instruction: Intermediate Total 60-minute hours of instruction: 2.0 substantive 60-minute hours; 2.4 50-minute hours 12:00 noon Program Begins PROGRAM All Times Eastern Standard [Daylight] Background and Structure of the Market H. Sean Mathis Status of litigation Steven J. Fink & Matthew Gluck Regulatory Response Sara Brody Bankruptcy and Creditors Rights Issues Affecting Trustees, Servicers, and Other Participants Lorraine S. McGowen Implications for Insurers David B. Goodwin 2:00 p.m. Program ends ix
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ALI-ABA Telephone Seminar Navigating the Credit Crisis--Litigation Issues for Lawyers Friday, April 25, 2008 Telephone Seminar/Audio Webcast PLANNING CHAIRS Joseph T. McLaughlin, Esquire Times Square Tower Seven Times Square New York, NY 10036 Sol Schreiber, Esquire Milberg LLP One Pennsylvania Plaza, 49th Floor New York, NY 10119 FACULTY Sara Brody, Esquire 333 Bush Street, Suite 3000 San Francisco, CA 94104-2834 Steven J. Fink, Esquire Orrick, Herrington & Sutcliffe LLP 666 5th Avenue New York, NY 10103-1798 Matthew Gluck, Esquire Milberg LLP One Pennsylvania Plaza, 49th Floor New York, NY 10119-4899 David B. Goodwin, Esquire 333 Bush Street, Suite 3000 San Francisco, CA 94104-2834 H. Sean Mathis, Esquire Miller Mathis & Co., LLC 675 3rd Avenue New York, NY 10017-5700 Lorraine S. McGowen, Esquire Orrick, Herrington & Sutcliffe LLP 666 5th Avenue New York, NY 10103-1798 xi
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Planning Co-Chairs FACULTY BIOGRAPHIES Joseph T. McLaughlin, New York, New York Joseph McLaughlin, an experienced litigator, mediator, and arbitrator, is a fellow at JAMS, The Resolution Experts, the nation s largest private provider of ADR services. Mr. McLaughlin previously served as Chair of Heller Ehrman in New York and as Co-head of Heller Ehrman s international arbitration and ADR practice group. He is based in the JAMS New York Resolution Center where he continues to resolve a wide variety of commercial disputes, including international, investment, banking, securities, corporate governance, and employment matters. Mr. McLaughlin also served as Executive Vice President of Legal and Regulatory Affairs at Credit Suisse First Boston, overseeing international legal and compliance issues in 60 countries. Mr. McLaughlin has managed multi-party complex disputes in the U.S., Europe, Asia, North Africa, and Scandinavia. He is the author of numerous articles on ADR, international arbitration, securities issues, and ethics. He currently serves on the board of Directors of CPR International Institute for Dispute Resolution and Prevention in New York, and is an Adjunct Professor at Fordham Law School where he teaches ADR domestic and international. Sol Schreiber, New York, New York Milberg LLP B.A., City College of New York; LL.B., Yale University Adjunct Professor, Fordham Law School (1972-86) Government and Public Service: United States Magistrate, Southern District of New York (1971-78); Court-Appointed Special Master: In Re Pan Am Air Disaster (Lockerbie) (1995-97), Marcos Human Rights Litigation (1994- ), Agent Orange Litigation (1982-84); Anglo-American Exchange on Civil Procedure (Judicial Member) (1974); Hearing Officer, New York State Master Energy Plan (1979); Member, Judicial Conference of the United States Standing Committee on Rules of Practice and Procedure (1993-99, Liaison to the Advisory Committee on Civil Rules, 1996-99); Founder, Ovarian Cancer Research Fund Honors: Francis Rawle Award (ALI-ABA 1985); Presidential Award (Legal Aid Society 1984) Memberships: American Law Institute (Members Consultative Group, Complex Litigation Project); American Bar Association (Chair, Federal Asbestos Legislation Committee, Tort and Insurance Practice Section, 1986-87) Publications Include: Resource Materials: Civil Practice and Litigation in Federal and State Courts (ALI-ABA 8th Ed. 1998, 7th Ed. 1996, 6th Ed. 1994); Moore's Federal Practice (3d Ed.) (General Editor, 1996- ) xiii
Faculty Sara Brody, San Francisco, California Sara Brody joined Heller Ehrman in 2004 and is the Chair of the Securities Litigation Practice Group. Her practice focuses on complex securities litigation, including class actions and derivative litigation. Ms. Brody has extensive experience in securities litigation, defending issuers, officers, directors, underwriters and venture capital firms in shareholder class actions and derivative actions in state and federal courts throughout the United States. Ms. Brody won one of the Top Ten Defense Verdicts of 2002, as selected by The National Law Journal. She is listed as one of the leading California litigators in the 2005 and 2006 editions of Chambers & Partners' America s Leading Business Lawyers and by the Daily Journal as one of the Top Thirty Securities Litigators in California. She has extensive experience representing companies and individuals in matters involving Securities and Exchange Commission and self-regulatory organizations such as the National Association of Securities Dealers. She has written articles and lectures on a wide range of securities litigation topics in legal and business forums across the country. Ms. Brody also has extensive experience in conducting internal investigations and counseling clients on disclosure issues. Steven J. Fink, New York, New York Orrick, Herrington & Sutcliffe LLP Steve Fink, a partner in the New York office of Orrick, Herrington & Sutcliffe, practices in the area of securities litigation. He is a seasoned defense counsel and has represented companies from accounting firms like PricewaterhouseCoopers LLP to major public pension plans, investment partnerships, and the charitable foundation of the ice cream king, Thomas Carvel. Mr. Fink received his J.D., cum laude, from the University of Michigan Law School and was a member of the Michigan Law Review. He is admitted to practice in the State of New York, the United States Court of Appeals, Second Circuit; the United States District Court, Eastern District of New York and Southern District of New York. He is also a member of the New York State Bar Association and the American Bar Association. Matthew Gluck, New York, New York Milberg LLP Prior to joining Milberg, Matthew Gluck was a litigation partner in Fried, Frank, Harris, Shriver & Jacobson LLP, where he frequently represented U.S. and foreign businesses and individuals in major litigation cases and other complex matters. He has also assisted clients in both formal bankruptcies and out-of-court restructurings of financially troubled companies. Mr. Gluck served as adviser to the court in the restructuring of the Manville Trust in In re Johns-Manville Corp., No. 85-8922 (S.D.N.Y.) and as the legal representative for future claimants in the Chapter 11 filing of Keene Corporation in In re Keene Corp., No. 93-46090 (Bankr. S.D.N.Y.). Mr. Gluck is admitted to the New York State Bar. He received his law degree from Harvard University. xiv
David B. Goodwin, San Francisco, California David B. Goodwin joined Heller Ehrman in 1986. Mr. Goodwin is a litigator whose practices focus on insurance coverage, appellate law and complex commercial disputes. He is one of the founders and former co-chair of the firm s Insurance Recovery Group and also is a founder and former co-chair of its Appeals & Strategy Group. Mr. Goodwin has represented numerous corporate and individual policyholders in insurance coverage litigation, negotiation and counseling involving both first-party property damage and business interruption losses and third-party liability claims. He provides insurance counseling to risk managers and in-house attorneys at businesses such as BP and Pacific Gas & Electric Company, as well as at numerous high technology, industrial, hospitality, and financial services organizations. He has been the lead attorney in numerous insurance coverage engagements and has been the "first chair" trial attorney in trials and arbitrations involving insurance coverage for business interruption, errors and omissions, directors and officers, products liability and environmental claims. Mr. Goodwin has appeared as counsel for the parties or for amici curiae in dozens of appellate proceedings, including many of the major California insurance coverage appeals in the past 20 years. He also has substantial experience in antitrust and general business litigation. Mr. Goodwin is listed in the highest tier of leading California insurance coverage attorneys in the Chambers & Partners' America's Leading Business Lawyers. He was also selected by his peers as one of Woodward/White Inc.'s 2006 Best Lawyers in America" and is on the list of the World's Leading Insurance and Reinsurance Lawyers in the Legal Media Group Guide. Mr. Goodwin has an AV peer review rating from Martindale-Hubbell. Mr. Goodwin also served as an adjunct professor at Boalt Hall, University of California at Berkeley, where he taught courses on insurance law. H. Sean Mathis, New York, New York Miller Mathis & Co., LLC Sean Mathis has over 25 years of advisory and principal-side investing experience. From June 2002 until January 2004, Mr. Mathis was a Managing Director at Finance and then at Morgan Joseph. Mr. Mathis was Chairman of Universal Gym Equipment from 1996 to 1997 and Chairman of Allis Chalmers, Inc., from 1996 to 1999. From 1991 to 1993, Mr. Mathis was President of RCL, a predecessor of Allied Digital Technologies, and from 1993 to 1995 he was President of RCL Capital Corporation until it merged with DISC Graphics. From 1989 to 1993, He was president of Ameriscribe Corp., and NYSE-listed company. In the 1980s Mr. Mathis was instrumental in realizing value for equity holders in restructuring situations, serving as Chairman of the Official Equity Committees in the restructurings of A.H. Robins Co., Salant Corporation, Allis-Chalmers, and Revere Copper and Brass. Mr. Mathis started his career at Lehman Brothers, and is former president of Litchfield Asset Holdings, Inc., an investment advisory company which he founded in 1983. Mr. Mathis received his MBA from Wharton Graduate School of Business. xv
Lorraine S. McGowen, New York, New York Orrick, Herrington & Sutcliffe LLP Lorraine McGowen, a partner in the New York office of Orrick, Herrington & Sutcliffe LLP, is a member of the Executive Committee and a former co-chair of the Creditors' Rights and Bankruptcy Group. Ms. McGowen represents creditors' committees, bondholder committees and creditors in complex bankruptcy cases, corporate restructurings and recapitalizations, receivership and other insolvency matters, as well as purchasers of assets from distressed companies. Ms. McGowen also provides counseling and opinions on the structure, as well as the bankruptcy, and commercial law implications, of proposed transactions, including mergers and acquisitions, project and structured financings, leveraged leases, securitizations and other transactional work. She has represented various bank and secured bondholders in each of the major airline bankruptcy cases and the Refco bankruptcy case; power purchasers against Enron; and the Official Committee of Unsecured Creditors in the Chapter 11 cases of Stone & Webster and its 72 direct and indirect subsidiaries, part of an international engineering and construction enterprise. Ms. McGowen is admitted to practice in New York and the District of Columbia, She also has been admitted to practice before the United States Court of Appeals, Second Circuit; and the United States District Court, Eastern District of New York and Southern District of New York. She received her J.D. from Columbia Law School, and she is a member of the American Bankruptcy Institute; the American Bar Association, Business Law Committee; the American College of Investment Counsel; The Association of the Bar of the City of New York; and the District of Columbia Bar. xvi