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Subprime Securities Litigation: Investor Recovery Solutions

Explore expert insights on pursuing subprime securities litigation to recover losses. Learn about conflicts of interest, fraud allegations, and insurance considerations in the aftermath of the subprime meltdown.

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Subprime Securities Litigation: Investor Recovery Solutions

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  1. Investors have been feeling the pain of the enormous losses in mortgage-backed securities, many of which were heavily exposed to subprime mortgage defaults. The worst may be yet to come.Coughlin Stoia intends to aggressively pursue litigation on behalf of defrauded investors. (Coughlin website 3/26/08)

  2. The inherent conflict of interest that exists when credit agencies grade their clients’ securities is all too reminiscent of the conflicts that led to the debacles of Enron and WorldCom,” said Coughlin, noting the disturbing similarities between the roots of the subprime meltdown and previous corporate looting.  Coughlin and his firm have launched a task force to investigate the subprime disaster. (Coughlin website 9/25/07)

  3. Congressman Gary Ackerman (D-NY) was also critical of the relationship between the credit agencies and the banks: “Essentially, the originators and credit raters shoved enough pigs and laying hens in with the beef herd that investors expecting prime ribs on their silver platter and money in their pocket ended up with pork ribs on their paper plate and egg on their face.” Another quote attributed to him: “The credit raters helped put the Spam in the can, made it sizzle, then they helped sell it as steak. As I noted at a hearing earlier this month, that's not the free market at work.  That's fraud.  And fraud is a crime, not a correction.”

  4. Coughlin Stoia is working with experts in this area to be uniquely prepared to help institutional investors recover losses from those involved in packaging, promoting and selling these CDOs, based on their deception, breach of fiduciary duties and unjust enrichment. (Coughlin website 9/25/07)

  5. Grant Eisenhofer recently held a seminar for fiduciaries and institutional investors and was touted as “one of the first programs designed to show investors how to take up arms” Eisenhofer said: “in addition to targeting rating agencies for rating manipulation, investors could name the senior executives of the broker/dealers and charge them with violating Rule 10b-5.”

  6. Prominent policyholder firm Anderson Kill & Olick on insuring against the costs associated with subprime related litigation and investigations, identifying D&O and E&O coverages. Discussed importance of notice and warned of insurance company attempts to preclude coverage based on “bad acts” exclusion, rescission/misrepresentations, and “prior acts” exclusion. AKO says: “CONCLUSION: SEEK HELP” “Insurance may be the last bastion against the plaintiff hoards.”

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