Should people who illegally download music be subject to more severe punishment for their sins than, say, tobacco companies that lied about the dangers of their products? Or how about companies that colluded to fix prices or engaged in civil racketeering? Or patent thieves who deliberately infringed competitors’ intellectual property?
In July, not long after the Economist dubbed Baupost’s revered founder Seth Klarman “The Oracle of Boston,” the hedge fund abruptly dropped out of the litigation challenging Bank of America’s proposed $8.5 billion settlement with investors in Countrywide mortgage-backed securities. Baupost also sold off at least some of its Countrywide notes, signaling that after battling fruitlessly to get Countrywide and BofA to buy back allegedly deficient underlying loans, the hedge fund had decided to cut its MBS losses and run.
Late Friday, Kinder Morgan announced a $110 million settlement with El Paso Corp shareholders who asserted that Kinder’s $21.1 billion acquisition of El Paso was tainted by Goldman Sachs’s involvement on both sides of the deal. You remember the case: As Chancellor Leo Strine of Delaware Chancery Court detailed in a scathing opinion in March, Goldman served as a financial adviser to El Paso even though it simultaneously held a $4 billion investment (a 19 percent ownership stake) at Kinder Morgan. Strine refused to enjoin a shareholder vote on the merger but encouraged plaintiffs’ lawyers to press on with claims for money damages, finding “a reasonable likelihood of success in proving that the merger was tainted by disloyalty.”
Now they tell us? More than four years after investors in mortgage-backed securities began filing class actions accusing MBS issuers of deceiving them in offering documents — and at least three years after federal judges began tossing class claims because name plaintiffs didn’t have the requisite standing — the 2nd Circuit Court of Appeals has redefined standing in MBS class actions. In a 38-page opinion that revives a class action against Goldman Sachs, the appeals court rejected what had been conventional wisdom, finding that a union healthcare fund represented by Robbins Geller Rudman & Dowd isn’t limited to claims based on specific offerings it invested in. Instead, wrote Judge Barrington Parker for a panel that also included judges Reena Raggi and Raymond Lohier, the union fund has standing to assert claims related to every certificate backed by mortgages originated by the same lenders that originated the loans backing the notes purchased by the fund.
If you hate the current state of campaign finance, in which corporations and non-profits exert influence through trade associations, political action committees and so-called super PACs, you can’t lay all of the blame at the doorstep of the U.S. Supreme Court’s 2010 ruling in Citizens United v. Federal Election Commission, which held that corporations and labor unions have the same First Amendment rights to free speech as individuals.