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IN THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
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U.S. SECURITIES AND :
EXCHANGE COMMISSION, :
Plaintiff-Appellant, :
: No. 11-5227
v. :
:
CITIGROUP GLOBAL MARKETS INC., :
Defendant-Appellant :
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MOTION FOR LEAVE TO FILE AMICUS CURIAE BRIEF IN SUPPORT
OF THE PUBLIC INTEREST
Akshat Tewary, Esq.
1974 State Route 27
Edison, NJ 08817
(732) 287-0080
Attorney for Amicus Curiae
Occupy Wall Street Alternative BankingGroup
May 21, 2012
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MOTION FOR LEAVE TO FILE AMICUS CURIAE BRIEF IN SUPPORT
OF THE PUBLIC INTEREST
The Movant, Occupy Wall Street - Alternative Banking Group (OWS-
AB), hereby requests leave, pursuant to Federal Rule of Appellate Procedure
29(b) and this Courts Local Rule 29.1, to file a brief as amicus curiae in support of
the public interest doctrine in this litigation.
OWS-AB is a group within the New York-based Occupy Wall Street
movement. OWS-AB seeks specific improvements to existing and pending
financial services industry legislation and regulations, in addition to evaluating and
recommending alternative approaches to banking. OWS-AB also seeks to
understand and educate people about the current financial system.
OWS-AB files this amicus brief to express its support for Judge Rakoffs
decision to pursue the relevant facts necessary to determine the adequacy of the
settlement between the SEC and Citigroup (NAND settlement). We agree that
the public interest demands that such facts be thoroughly disclosed and examined.
As advocates for transparency and education regarding the financial crisis and the
financial system, OWS-AB believes that a full review of the facts underlying the
case is crucial to the publics understanding of the current financial environment.
In a case that turns on the public interest, we urge the Court to consider our
viewpoints, which reflect at least some of the opinions of the broader community.
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OWS-AB has no stake in any of the parties to this litigation or the result of
this case, other than an interest in seeking a just and fair development of precedent
as to the confirmation of settlements between financial regulators and the nations
financial institutions.
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CONCLUSION
For the reasons stated above, the Movant requests that the Court grant this
motion and provide standing to file the attached Proposed Brief Of Amicus
Curiae Occupy Wall Street Alternative Banking Group In Support Of The Public
Interest And Against Appellant And Appellee and any other briefs as may be
requested by the Court, including oral argument in this case.
Dated: May 21, 2012 Respectfully submitted,
/s/AKSHAT TEWARY
1974 State Route 27, Edison, NJ 08817
(732) 287-0080
Attorney for Amicus Curiae
Occupy Wall Street Alternative Banking Group
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No. 11-5227IN THEUNITED STATES COURT OFAPPEALSFOR THE SECOND CIRCUIT
UNITED STATES SECURITIES AND EXCHANGE COMMISSION,Plaintiffs-Appellant-Cross Appellee,
v.
CITIGROUP GLOBAL MARKETS INC.,Defendant-Appellee-Cross Appellant.
Appeal from the United States District Court for the Southern District
of New York in No. 1:11-CV-7387-JSR, Judge Jed S. Rakoff
PROPOSED BRIEF OF AMICUS CURIAE
OCCUPY WALL STREET ALTERNATIVE BANKING GROUPIN SUPPORT OF
THE PUBLIC INTEREST AND AGAINST APPELLANT AND APPELLEE
AKSHAT TEWARY1974 State Route 27, Edison, NJ 08817(732) 287-0080
May 21, 2012 Attorney for Amicus Curiae
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TABLE OF CONTENTS
TABLE OF AUTHORITIES................................................................................. ii
CORPORATE DISCLOSURE STATEMENT...................................................iii
STATEMENT OF INTEREST OF AMICUS CURIAE.................................... iv
SUMMARY OF ARGUMENT.............................................................................. 1
ARGUMENT........................................................................................................... 2
The Circuit Court Should Dismiss these Appeals on Procedural Grounds ...... 2
The Chevron Doctrine is Inapplicable Here ......................................................... 3
The Circuit Court Must not Undermine a District Court's Ability to Assessthe Fairness of a Proposed Settlements Underlying Facts ...................... 5
The Fairness Standard Requires an Analysis of the Underlying Facts .........5
The District Court Held that the Fairness Standard Requires a SufficientFactual Foundation, and not Necessarily Liability .............................6
The Public Interest Militates Against Confirmation of the NAND Settlement 7
The Public Interest Standard is Appropriate .................................................7
The NAND Settlement was not in the Public Interest.....................................7
The NAND Settlement Would Hurt Investors and Undercut the DeterrentEffect of SEC Actions .................................................................... 7
The NAND Settlement Would Obscure the Risky Nature of the Productsin Question in this Case..................................................................9
CONCLUSION...................................................................................................... 15
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TABLE OF AUTHORITIES
CASES
Allied Chemical Corp. v. Daiflon, Inc., 449 U.S. 33, 34 (1980). 3
Caitlin v. United States, 324 U.S. 229, 233 (1945). 2
Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.,467 U.S. 837 (1984). 3, 4, 6
Curtiss-Wright Corp. v. General Electric Co., 466 U.S. 1 (1980).. 5, 6
eBay, Inc v. MercExchange, L.L.C., 547 U.S. 388 (2006). 5, 7
In re Committee of Asbestos-Related Litigation, 748 F.2d 3 (2d Cir. 1984)... 2
U.S. Secs. and Exch. Commn v. Bank of America Corporation, 653 F. Supp. 2d.507(S.D.N.Y. 2009)..... 1
U.S. Secs. and Exch. Commn v. Citigroup Global Mkts. Inc., No. 11 Civ.7387, slip op. at 15 (S.D.N.Y. Nov. 28, 2011)............................................... passim
STATUTE
28 U.S.C. 1291 (2011)... 2
OTHER AUTHORITIES
Nelson D. Schwartz, Bank to Pay $202 Million To Settle Suit On Mortgages, N.Y.Times, May 10, 2012.,.. 8
Wall Streets Repeat Violations, Despite Repeated Promises, N.Y. Times, Nov. 7,2011.. 8
Yves Smith,ECONned(Palgrave MacMillan 2010).. 12
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CORPORATE DISCLOSURE STATEMENT
Pursuant to Federal Rules of Appellate Procedure 26.1 and 29, the Occupy
Wall Street Alternative Banking Group hereby states that it is not a corporation,
but rather an unincorporated association of individual members, and that therefore:
1. It has no parent corporation.2. There is no publicly held corporation that owns 10% of more of the
association.
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STATEMENT OF INTEREST OF AMICUS CURIAE
Alternative Banking (OWS-AB) is a group within the New York-based
Occupy Wall Street movement.1 OWS-AB seeks specific improvements to
existing and pending financial services industry legislation and regulations, in
addition to evaluating and recommending alternative approaches to banking.
OWS-AB also seeks to understand and educate people about the current financial
system.
OWS-AB files this amicus brief to express its support for Judge Rakoffs
decision to obtain the facts necessary to determine the adequacy of the settlement
between the SEC and Citigroup (NAND settlement). We agree that the public
interest demands that such facts be thoroughly disclosed and examined. As
advocates for transparency and education regarding the financial crisis and the
financial system, OWS-AB believes that a full review of the facts underlying the
case is crucial to the publics understanding of the current financial environment.
In a case that turns on the public interest, we urge the Court to consider our
viewpoint, which reflect at least some of the opinions of broader community
1 No part of this brief was authored by counsel for any party, person, ororganization besides amicus. No party, person, or organization contributed moneyto the preparation or submission of this brief.
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OWS-AB has no stake in any of the parties to this litigation or the result of
this case, other than an interest in seeking a just and fair development of precedent
as to the confirmation of settlements between financial regulators and the nations
financial institutions.
This brief is filed in conjunction with a Motion to Leave to File an Amicus
Brief pursuant to Federal Rule of Appellate Procedure 29(b).
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SUMMARY OF ARGUMENT
This case relates to S.D.N.Y. Judge Jed Rakoffs withholding of his
injunctive imprimatur on a proposed consent judgment between Citigroup and the
SEC (NAND settlement) absent a sufficient demonstration of facts. U.S. Secs.
and Exch. Commn v. Citigroup Global Mkts. Inc., No. 11 Civ. 7387, slip op. at 15
(S.D.N.Y. Nov. 28, 2011) [hereinafter Rakoff Opinion].
A chief concern for Judge Rakoff was that under the NAND settlement,
Citigroup neither admitted nor denied any culpability. This brief's primary goal is
to demonstrate that a full examination of the facts underlying this case, including
the broader impact of the actions of the parties on the financial crisis and the
economy, is a necessary condition for the granting of injunctive relief. In
adjudicating a motion for injunctive confirmation of a proposed settlement, a court
must consider whether the settlement is fair, reasonable, and in the public interest.
U.S. Secs. and Exch. Commn v. Bank of America Corporation, 653 F. Supp. 2d.
507, 508 (S.D.N.Y. 2009).
In their briefs, Citigroup and the SEC have mischaracterized the central
issue in this case as whether the District Court was correct in demanding an
absolute admission of liability as a necessary condition to confirmation, in an
attempt to destroy the hallowed practice of settlement-by-consent-decree. In
reality, this case is simply about whether a district court has the authority to
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demand the adequate production of facts to assess how a proposed consent order
would affect the public interest. A district court does have that authority, which
renders these appeals unripe for review. Further, even if the Court accepts review,
the egregious factual circumstances underlying this case militate against judicial
confirmation of the NAND settlement between Citigroup and the SEC.
ARGUMENT
I. THE CIRCUIT COURT SHOULD DISMISS THESE APPEALS ONPROCEDURAL GROUNDS
The main issue before the court is a factual one: did Citigroup and the SEC
provide sufficient information to merit a confirmation of the NAND settlement
under the applicable (and largely uncontested) standards for injunctions. This
Court has recognized that interlocutory appeals of essentially factual questions are
especially disfavored.In re Committee of Asbestos-Related Litigation, 748 F.2d 3,
5 (2d Cir. 1984). This standard would suggest that the interlocutory appeals of
Appellant and Cross-Appellant are premature.
Interlocutory appeals are furthermore restricted to final decisions of the
district courts. 28 U.S.C. 1291 (2011). A final decision is generally one that
ends the litigation on the merits and leaves nothing for the court to do but execute
the judgment. Caitlin v. United States, 324 U.S. 229, 233 (1945). In this case, the
merits of the NAND settlement have not been conclusively addressed by the
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district court. In fact, Judge Rakoff scheduled a trial on July 16, 2012 for that very
purpose. Granting interlocutory appeals in this case would allow these Appellants
(and other appellants in future cases) to circumvent the normal appeals process.
The SECs petition for a writ of mandamus is likewise inappropriate. The
remedy of mandamus is a drastic one, to be invoked only in extraordinary
situations involving gross abuses of discretion. Allied Chemical Corp. v. Daiflon,
Inc., 449 U.S. 33, 34 (1980). It is hard to argue that an abuse of discretion has
occurred when the district court has not even issued a final decision.
Accordingly, the instant appeals should be denied and the case should be
remanded back to district court for trial on the merits.
II. THE CHEVRONDOCTRINE IS INAPPLICABLE HEREIn its order granting a stay of the district court proceeding (Stay Order),
this Court suggested that Judge Rakoff failed to show deference to the
Commissions decision to settle for the NAND consent judgment. (Stay Order at
9.) The Chevron doctrine indicates that a reviewing court should avoid
substituting its judgment for that of a federal agency, particularly with respect to
discretionary and policy-based matters. Chevron, U.S.A., Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837, 866 (1984). This Court concluded
that Judge Rakoff had substituted his own judgment on the merits of the NAND
settlement for that of the Commission. Id.
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We believe that conclusion was erroneous. Chevron deference may have
applied had Judge Rakoff conclusively ruled on whether the NAND settlement was
good policy. However, he did not reach such a conclusion. The Rakoff Opinion
simply found that the standards for an injunction (which include a public policy
component) had not been met, (Rakoff Opinion at 8), while the ultimate issue of
the consent judgments merits, and the reasonableness of such a judgment, were to
be addressed at trial at the district court level. Id. at 15. In fact, in Chevron, the
Supreme Court expressly noted that it is within the purview of a court to determine
whether an agencys choice of outcome is a reasonable one. Chevron, 467 U.S. at
843. Judge Rakoff has not been given an adequate opportunity to make that
reasonableness inquiry. The Rakoff Opinion, at its core, was a simple statement
that more facts were needed, and that a trial was necessary to address that need.
The appropriateness of granting an injunction is a judicial function that is
clearly out of the purview of federal agencies. We do not believe that Chevron can
be construed to require the judicial branch to grant injunctions indiscriminately
whenever a federal agency wishes to include such provisions in a settlement.
Further, Chevron does not obviate a district court judge's power to demand more
facts. Chevron might have applied had Judge Rakoffs order invalidated the
consent judgment outright, but that hypothetical case is not before this Court.
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III. THE CIRCUIT COURT MUST NOT UNDERMINE A DISTRICTCOURTS ABILITY TO ASSESS THE FAIRNESS OF A PROPOSED
SETTLEMENTS UNDERLYING FACTS
A. The Fairness Standard Requires an Analysis of the Underlying Facts
Judge Rakoff determined that a trial was required to assess whether the facts
surrounding the proposed consent judgment met the fairness standard for
injunctive relief. The Stay Order took issue with this determination, suggesting
that a trial was not required since the court was free to assess the available
evidence [at the motion stage itself] and to ask the parties for guidance as to how
the evidence supported the proposed consent judgment. (Stay Order at 11).
However, Judge Rakoff did ask the parties for guidance as to . . . the evidence,
by ordering a trial. Moreover, as confirmed by the Supreme Court in eBay, Inc v.
MercExchange, L.L.C., 547 U.S. 388 (2006),judges must consider the fairness of a
settlement to non-party stakeholders and the public interest, and it appears that
Judge Rakoff found the evidence provided at the motion stage to be inadequate to
assess this question properly.
The Stay Order, by declaring the evidence supplied sufficient, effectively
substituted its own judgment for that of the district court. However, by doing so, it
ignored the normal demarcation of authority between district and appellate courts.
The discretionary judgment of the district court should be given substantial
deference as to factual issues. Curtiss-Wright Corp. v. General Electric Co., 466
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U.S. 1, 10 100 S. Ct. 1460, 1466 (1980). If Judge Rakoff decided that a trial was
necessary to gather sufficient factual evidence to properly assess the actual fairness
of the settlement, that decision should not be second-guessed. The SEC and
Citigroup wish to have their cake and eat it too: they ask this Circuit to deny Judge
Rakoff the requisite deference as a fact-finder, while concomitantly insisting on the
granting of deference to the Commission under the inapplicable Chevron standard.
The Rakoff Opinion posits that the judicial branch cannot assess the fairness
of an injunction to defendants without having some assurance of whether or not the
allegations have any basis in fact. (Rakoff Opinion at 9.) Against this point, the
Stay Order argues that in this particular case, Citigroup is a sophisticated litigant
that freely consented to the settlement. (Stay Order at 10.) However, we suggest
to the Court that this decision may have significant precedential force. Similar
cases in the future may involve less sophisticated litigants, and judges should be
permitted to require a thorough factual review to safeguard their interests.
B. The District Court Held that the Fairness Standard Requires a Sufficient
Factual Foundation, and not Necessarily Liability
The Stay Order appeared to misconstrue Judge Rakoffs decision to mean
that a court can never approve a settlement that represents a compromise. Id. at 12.
In actuality, his decision simply denied the request for immediate confirmation
because of an insufficient factual record. (Rakoff Opinion at 4.) The decision did
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suggest that the settlement seemed inappropriate, but delayed a final ruling on the
issue until after trial. Id. at 15. Thus, in proclaiming that Judge Rakoffs decision
would obviate the possibility of compromise, the Stay Order overstates the breadth
of the lower court decision.
IV. THE PUBLIC INTEREST MILITATES AGAINST CONFIRMATIONOF THE NAND SETTLEMENT
A. The Public Interest Standard is Appropriate
The Supreme Court has confirmed that the public interest must not be
disserved by a permanent injunction. eBay, 547 U.S. at 391. Thus, Judge Rakoff
was entirely justified in considering the public interest in his Decision. The Stay
Order itself confirms that deference to federal agencies does not require a court to
rubber stamp all arguments made by such an agency. (Stay Order at 16.)
B. The NAND Settlement was not in the Public Interest
If this Court fails to dismiss these appeals on procedural grounds, it should
nevertheless hold that the public interest standard was not met, thereby rendering
injunctive confirmation of the NAND settlement inappropriate.
1. The NAND Settlement Would Hurt Investors and Undercut theDeterrent Effect of SEC Actions
For various reasons, financial regulators are loath to pursue criminal
indictments for misconduct. If regulators resort instead to the option of civil suits,
then at the very least they should impose sanctions that have bite, in order to
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effectively deter misconduct. Unfortunately, the settlement here, and NAND
settlements generally, fail to achieve this end. Picayune monetary settlements like
the $285 million wrist-slap presented here fail to provide punishment sufficient to
deter similar conduct in the future. Typically, an injunctive order supporting an
NAND settlement is an empty promise to obey the law next time and is rarely
enforced. Not surprisingly, an analysis by the New York Times found that in the
last 15 years, there have been a minimum of 51 violations of these agreements by
major financial firms. Wall Streets Repeat Violations, Despite Repeated
Promises, N.Y. Times, Nov. 7, 2011, available athttp://tinyurl.com/84unp8e.
Citigroup, with six violations, is one of the top recidivists. See id.
Another option available to the SEC is requiring defendants to make
meaningful admissions. Earlier this year, for instance, Deutsche Bank admitted in
a $202 million settlement with HUD that it lied about the eligibility of loans for
Federal mortgage insurance and repeatedly submitted certificates that were
knowingly or recklessly false. Nelson D. Schwartz,Bank to Pay $202 Million To
Settle Suit On Mortgages, N.Y. Times, May 10, 2012. It seems that the SEC has
inhibitions not shared by other regulators. Specifically, the Commission appears to
have the view that requiring misbehaving entities to admit to wrongdoing is unduly
harsh because that could facilitate private lawsuits. It is puzzling that the SEC is
so exercised about the risk that private parties will become better informed about
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inappropriate behavior by regulated firms, or the risk that private parties might
consequently find it easier to seek redress when they are injured by such firms.
The benefits to Citigroup (avoidance of civil liability) and the SEC (reduced
workload) from this NAND settlement are clear, but the benefit to the public is not.
The NAND settlement is a private agreement that has no collateral estoppel effects
for investors seeking damages from Citigroups actions. Thus, those investors
must relitigate the very issues already before the Court, leading to needless cost
and the expenditure of spare judicial resources. Further, the SEC has admitted that
it may not pass any of the $285 million to investors who suffered losses.
The SECs interest is to settle this case quickly in order to reduce its
workload, given its limited resources. However, the publics interest goes well
beyond the SECs costs. The public has a stake in obtaining a) full transparency as
to the specifics of this case, and b) punishment sufficient to deter abusive conduct
in the future. Thus, the SEC is an imperfect proponent of the public interest, and
its assertions that it represents that interest must be viewed skeptically.
2. This NAND Settlement Would Obscure the Risky Nature of theProducts in Question in this Case
The global financial crisis has caused untold damage since its onset four
years ago. To the extent that this crisis was caused by culpable behavior, as
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opposed to simple accidents, there is a clear public interest in identifying such
behavior and in holding violators accountable in a meaningful way.
We believe that the behavior highlighted in this case was not only
destructive, but also was the tip of an iceberg of similarly destructive behavior.
This NAND settlement forecloses any chance of shedding light on such behavior
and since this case was seen as particularly egregious, the SECs failure to reach
solid conclusions about culpability here can be seen as emblematic of a general
refusal to pursue the publics interest in information and accountability.
The type of instrument at the core of this case has done far more extensive
damage than suggested in any SEC filing to date. The instrument in question was
a particular type of collateralized debt obligation (CDO). Expertise in CDOs is
held among relatively few individuals, the overwhelming majority of whom want
to continue to be employed within the financial services industry and therefore
keep market practices to themselves.
The Citigroup CDO at issue in this case is paradigmatic of the most
destructive aspects of these transactions. The SECs complaint and its related
filing against Citigroup employee Brian H. Stoker identify some of the problems,
but by no means all of them.
One such issue was highlighted in Judge Rakoffs ruling. Citigroup
intended to use the CDO as a vehicle for unloading on investors a hand-picked set
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of assets that was expected to deteriorate. (Rakoff Opinion at 2.) The CDO was
run by a firm (a CDO manager) that was presented to investors as exercising
independent judgment. E-mails cited in the Stoker complaint show that Citigroup
recognized that investors would not have been interested in the deal if they thought
that the CDO manager, far from being independent, was actually (per allegations in
the complaint) colluding with Citigroup to fill the CDO with assets likely to fail.
The SEC filing also mentions that Citigroup placed $92.5 million of risky
tranches from its own CDOs into the CDO at issue. In this way, Citigroup avoided
significant losses on these securities. However, the SEC appears to miss the
significance of this point, and provides no indication that it included this avoidance
of losses in its computation of Citigroups profits from the deal. This fact raises
further questions about the adequacy of the settlement agreed to by the SEC.
The SEC filing clearly describes a relationship (between Citigroup and the
CDO manager) that was less than arms length, and depicts this situation as an
industry practice. The clear implication is that this sort of misrepresentation was
pervasive. However, the SEC does not appear to have thought much about what
the systemic effects of these misrepresentations might be.
Misrepresentations about securities values distort market signals. In this
case, the effects were devastating. Most subprime loans were not retained by
originators, but were sold into securitizations, which in turn issued various classes
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of securities, or tranches with varying protections against losses on the
underlying mortgage loan collateral. See generally, Yves Smith,ECONned
(Palgrave MacMillan 2010). The riskiest tranche, known as the BBB or BBB-
tranche, was most difficult to sell. Since investment banks did not want to retain it,
investor refusal to buy it would constrain demand. Prior to the financial crisis,
BBB tranches were placed increasingly into CDOs, in which 65% to 75% of the
value of the deal would be rated AAA, making it easier to sell to investors.
The creation of a single CDO, by disposing of a significant quantity of
hard-to-sell BBB tranches of subprime bonds, therefore made possible the creation
of a much larger quantity of subprime bonds, and hence also of subprime
mortgages. The widespread use of CDOs sustained the housing market for a time,
but traditional AAA buyers began to back off starting in 2004. Such a drop in
demand would normally have led to a retrenchment in the housing market, causing
the housing bubble to burst at a point where it still had not reached enormous
proportions. However, the desire by investment banks to prop up the lucrative
CDO market led instead to a new innovation: synthetic CDOs.
Synthetic CDOs could be created without a full complement of underlying
subprime housing loans. The place of subprime loans within the structure was
partly taken by investors trying to short the housing market (through the technical
device of credit default swaps (CDS)). As time passed, more and more CDOs
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were expressly created to satisfy the requests of these short investors, and were
consequently packed (with the help of the investment banks and CDO managers)
with the riskiest subprime bonds. Investors were simply told that these CDOs were
faster to tee up than conventional CDOs, but were otherwise the same. The fact
that these CDOs were being created to satisfy the appetite of the shorts, and would
therefore contain the worst BBB exposures, was typically withheld from investors.
This artificially-increased demand for CDOs translated into lower, more
aggressive bids for the underlying mortgage bonds, which lowered mortgage rates
and in turn increased demand for the origination of more mortgage loans. The 2004
decline in mortgage origination reversed, and volumes rose in 2005. In the second
half of that year, demand for the very worst mortgages increased dramatically. As
time went on, the increasing size of the bubble made it certain that what would
have been a minor, if somewhat painful, adjustment in the housing market would
instead grow into a global financial crisis.
Many details of what actually happened remain in darkness. The SEC found
an important piece of the puzzle in its 2010 lawsuit concerning a Goldman
synthetic CDO. This Abacus CDO was used by Goldman to bet against
subprime mortgages more cheaply than if Goldman had had to do so overtly.
Unfortunately, Goldman and the SEC settled the litigation, effectively halting a full
probe of the 25 CDOs in the Abacus program.
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This sad history of regulatory forbearance repeats itself here. The Citigroup
CDO at issue in this case was a hybrid this meant that the CDO included cash
bonds, and simultaneously made it possible (through CDS) to bet against the
housing market. The fact that the security was also a CDO squared meant that it
was a repackaging of approximately sixty bonds issued by other CDOs, which in
turn were backed by fifty to one hundred tranches of MBS bonds, making the
leverage on the mortgage market even greater. It appears that this single CDO
transaction was backed by approximately three thousand MBS bonds which, by a
conservative estimate, were backed by approximately fifteen hundred MBS
transactions. Each MBS transaction contained, on average, over two thousand
mortgage loans, with an average balance of approximately $160,000. Therefore, in
aggregate, the Class V Funding III transaction referenced approximately three
million subprime mortgage loans with an aggregate balance ofaround five
hundred billion dollars. Thus, by allegedly creating the transaction for the
purpose of subsequently shorting it, Citigroup helped create demand for more
CDO and MBS bonds, which, in turn, fueled demand for a massive amount of
additional subprime mortgage loans at a time when the market for such loans
should have been cooling. Consequently, the public damage caused by CDO
vehicles such as Class V Funding III greatly exceeded the monetary losses incurred
by investors in these bonds.
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Obscurity surrounding the CDO market has persisted, despite its gargantuan
size. This obscurity has helped to undermine important reforms of housing
finance. For instance, in 2011 the FDIC proposed securitization reforms which
included a ban on resecuritizations (in practice, on CDOs). Public ignorance about
the role of CDOs in the housing bubble made it easier for banks to oppose this
initiative successfully. The NAND settlement here enables the continuance of this
collective ignorance, to the severe detriment of the public interest.
If there is no public interest in examining the behavior at the heart of the
current financial crisis (which has imposed tremendous costs not just on investors
in affected deals but on innocent bystanders worldwide through unemployment,
austerity, and lower global growth), then nothing meets this standard. If this Court
refuses to send this case to trial, it will have abdicated the role of the judiciary.
CONCLUSION
For the reasons stated above, the merits panel should remand this case for
consideration of the factual circumstances surrounding the NAND Settlement.
Dated: May 21, 2012 Respectfully submitted,/s/AKSHAT TEWARY
1974 State Route 27, Edison, NJ 08817(732) 287-0080
Attorney for Amicus Curiae
Occupy Wall Street Alternative Banking Group
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CERTIFICATE OF SERVICE
I, Akshat Tewary, hereby certify that on May 21, 2012, I caused theforegoing Proposed Brief of Amicus CuriaeOccupy Wall Street AlternativeBanking Group to be sent as directed by email to [email protected],and sent by email to counsel for each of the parties, as follows:
Counsel for Plaintiff/Appellant/Cross-Appellee SECMichael A. ConleyJeffrey A. BergerSecurities and Exchange Commission100 F Street, NEWashington, DC 20549-4010Tel: 202-551-5127/202-551-5112
Fax: 202-722-9362Email: [email protected], [email protected]
Counsel for Defendant/Appellee/Cross-Appellant Citigroup Global Markets Inc.Brad Scott KarpPaul, Weiss, Rifkind, Wharton & Garrison LLP (NY)1285 Avenue of the Americas
New York, NY 10019Tel: 212-373-2384Fax: 212-373-2384Email: [email protected]
Counsel for Judge RakoffJohn WingLankler Siffert & Wohl LLP500 Fifth Ave33rd Floor
New York, NY 10110Tel: 212-921-8399
Fax: 212-764-3701Email: [email protected]
__/s/____________________Akshat Tewary
7/31/2019 OWS AB Motion&AmicusBrief
27/27
CERTIFICATE OF COMPLIANCE
This brief complies with the type-volume limitation of Federal Rule of
Appellate Procedure 29(d) and 32(a)(7)(B) and Fed. Cir. Rule 32(b). The brief
contains 3533 words, excluding the parts of the brief exempted by Federal Rule of
Appellate Procedure 32(a)(7)(B)(iii).
This brief complies with the typeface requirements of Federal Rule of
Appellate Procedure 32(a)(5) and the type style requirements of Federal Rule of
Appellate Procedure 32(a)(6). The brief has been prepared in a proportionally
spaced typeface using Microsoft Word in 14-point Times New Roman font.
Dated: May 21, 2012 Respectfully submitted,
/s/
Akshat Tewary, Esq.1974 State Route 27Edison, NJ 08817
Attorney for Amicus CuriaeOccupy Wall Street Alternative Banking
Group
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