Christopher Cox Joins Bingham

bingham-cox

Christopher Cox, former Chairman of the U.S. Securities and Exchange Commission, is going to join Bingham McCutchen LLP in their Orange County office.

From 1977 to 1986, Cox worked out of the Orange County office Latham & Watkins. At the time of his retirement in 1986 he was the Partner in Charge of the Corporate Department in that office. Cox was elected to Congress in 1988 from a Congressional District based around Orange County and served for 17 years.

Cox will be part of Bingham’s corporate, mergers and acquisitions, and securities practice.

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California IOUs

California

California started issuing IOUs instead of checks. I know some people that got an IOU instead of their tax refund. They are not alone. In the last week, State Controller John Chiang’s office issued 91,000 IOUs worth $354 million to people expecting tax refunds, to state vendors and to local governments.

Banks have been willing to accept the IOUs and redeem them for cash. However, some major banks are getting ready to stop cashing them, although credit unions appear to be willing to continue redeeming the IOUs.

Since an IOU doesn’t work for anyone who needs cash, markets have opened for buying and selling these IOUs. There have been some sitings on eBay and Craigslist. It looks like eBay has been vigilant about pulling down listings. Craigslist has dozens of listings.

It should be so surprise that the IOUs are securities and subject to securities laws. The SEC has issued an Investor Alert on State of California IOUs.

While the IOUs are “securities” for purposes of the federal securities laws, as obligations of the State of California they are “municipal securities.” This means that sales of the IOUs are not required to be registered with the Commission. Also, as municipal securities, the IOUs are subject to the rules issued by the Municipal Securities Rulemaking Board, which include a requirement that the securities sold are suitable for the purchaser.

In addition, persons engaged in the business of buying and selling the IOUs may need to be registered as market intermediaries, such as brokers, dealers, or municipal securities dealers, alternative trading systems, or national securities exchanges.

Meanwhile, California’s bind debt rating has been lower to BBB from A minus, with another downgrade to junk status possible next week.

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Now Available on the Kindle

kindle-blogCompliance Building is now available on the Kindle from Amazon: Compliance Building (Kindle Edition).

I have added the Kindle subscription as a third choice on the Subscribe page.

(Amazon sets the Kindle subscription price. I would have made it available free if it were an option.)

Buy a Kindle or the bigger (and more expensive) Kindle DX.

Corresponding with Cornelius – My Comments Elsewhere

Here are some of my recent comments on some other blogs or other websites that allow comments. Part of web 2.0 and social media is the ability for readers to engage writers and other readers of their stories.

I am happy to have you leave comments here at Compliance Building. But if not here, take a look at what other people are saying. Join me in the conversations over there.

The Great Man Theory and Executive Compensation by Mike O’Sullivan on ; Provided, however

Mike wonders if we are overpaying CEOs for success that is not attributed to them. (And blaming them for failures that are not their own.) I point out that it is the nature of leadership. I also point out that we should think about tying compensation to beating peers instead of absolute value.

A “Refreshing” Approach to Alternative Fees by Toby Brown on 3 Geeks and a Law Blog

Toby picks up on my story about Coca-Cola’s alternative billing for marketing. I point out that there is a value in controlling costs and that hourly billing is a cap on profitability.

R.I.P. Bank United by Michelle Leder of Footnoted.org

Michelle notes her prior discovery of the huge percentage of stated income and no doc loans underwritten by the bank. I point out that this kind of poor underwriting is a sign of bank death.

Ethics in CEO Compensation by Chris MacDonald of the Business Ethics Blog

I like to call it the Lake Wobegon Effect where everyone is above average.

Subprime Lending Settlement in Massachusetts

Attorney General Martha Coakley

Massachusetts Attorney General Martha Coakley’s Office announced that it has reached a settlement agreement with Goldman Sachs & Co stemming from the office’s investigation of subprime lending and securitization markets. The Attorney General’s Office has been investigating the role of investment banks in the origination and securitization of subprime loans in Massachusetts.

The Attorney General’s Office began its investigation into the securitization of subprime loans in December 2007, investigating whether securitizers may have:

  • facilitated the origination of “unfair” loans under Massachusetts law;
  • failed to ascertain whether loans purchased from originators complied with the originators’ stated underwriting guidelines;
  • failed to take sufficient steps to avoid placing problem loans in securitization pools;
  • been aware of allegedly unfair or problem loans;
  • failed to correct inaccurate information in securitization trustee reports concerning repurchases of loans; and
  • failed to make available to potential investors certain information concerning allegedly unfair or problem loans, including information obtained during loan diligence and the pre-securitization process, as well as information concerning their practices in making repurchase claims relating to loans both in and out of securitizations.

The settlement didn’t involve court action and Goldman didn’t acknowledge wrongdoing.

Under the agreement, Goldman will restructure loans for borrowers whose loans it holds. The Attorney General said there are about 714 of those borrowers. Goldman’s borrowers with first mortgages could see their principal reduced 25% to 35%, and those with second mortgages held  could see principal reduced 50% or more. Reducing those loan amounts will cost Goldman $50 million. It has also agreed to have its subsidiary, Litton Loan Servicing LP, help qualified borrowers who are in trouble on their loans to avoid foreclosure. Goldman will also pay the state $10 million. Delinquent borrowers will be required to make a “reasonable monthly payment” while trying to sell or refinance their homes.

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Weekend Book Review – The Nine

the-nine

You would  expect a book about the inner workings of the United States Supreme Court to be dry and boring. I did, which is why this book has been sitting unread in my book pile for months.

Surprise! I found this book to be very interesting and entertaining.

The Nine: Inside the Secret World of the Supreme Court was written by Jeffrey Tobin, a staff writer for The New Yorker and a senior legal analyst at CNN. Toobin guides us through the last twenty years of court history by focusing on individual justices and their roles in some of the most controversial cases.

It is not an unbiased view of the justices. Tobin paints a very flattering picture of the centrist Justice O’Connor.  In Toobin’s view Rehnquist has little interest in the reasoning even of his own opinions. He paints Antonin Scalia as the brilliant but pugnacious. Stephen Breyer is portayed as an optimist with an unrealistic belief in his powers of persuasion. Justice Kennedy comes across as pompous. Thomas seems bitter and angry. Ginsburg is charming and briliant. Stevens stands as the last bastion of liberalism on the court. Souter is a hermit living in the woods of New Hampshire who has never plugged in his television.

Toobin also portrays a bumbling Clinton administration putting its appointees on the Court. In comparison, the Bush White House ran its candidates past the religious right for their approval on social issues.

I am lawyer, so I may find the working of the Supreme Court more interesting than non-lawyers. Maybe my view is tainted, but this is one of the best books I have read in many months. I think you should add The Nine to your reading list.

Corresponding with Cornelius

Boston from the Charles

Here are some of my recent comments on some other blogs or other websites that allow comments. Part of the new changes in the internet is the ability for readers to engage writers and other readers of their stories.

I am happy to have you leave comments at Compliance Building. But if not here, take a look at what other people are saying. Join me in the conversation over there.

The WSGR Term Sheet Generator: The Inexorable Creep of Document Assembly by Ken Adams of Adams Drafting

Ken heaps praise on the the online term sheet generator from Wilson Sonsini.

Alternative Billing, Alternative Lawyering at Above and Beyond KM

Discussing the effect of Richard Susskind’s take on lawyers, law firms, and knowledge management.

Fair Use and Freeriding by Scott Greenfield on Simple Justice

Scott takes on the theft of blog comment and fair use.

Alternate Ways to Cover the News by Bill Pollak on Bill’s Blog for Incisive Media

Bill contemplates how to use amateur bloggers in the coverage my mainstream legal media

Image is by Brian Corr and from Wikimedia Commons: Boston 2004 03 07.

New Look, Printing, and Mobile Viewing

For those of you who get updates through email updates or RSS, you may not have seen the new look for the Compliance Building website. Please come back and take a look.

I have also made some structural changes. The pages and posts are now printer friendly, making it easy to print and take the content with you.

Lastly the site is now mobile friendly. It looks great on the iPhone, so-so on a Blackberry. When I have some free time I will see what I can do about the blackberry browser.

Please let me know if something is not working.