Here is the initial complaint. http://securities.stanford.edu/1037/RAS_01/200814_r01c_0703148.pdf
And the judge's ruling:
"DA made so many other mistakes with his legal posts it is not even worth pointing them out anymore."
Good, it was only making you look ignorant and immature in equal measure.
"and shareholders will get back a little once a settlement is made. Yeah, I know it will be five cents on the dollar at best, but it is something."
They are paying themselves a dividend, while giving a big cut to the lawyers.
Break out the champagne!!
"Rush Limbaugh spouted off .."
LOL, anyone quoting Rush Limbaugh to support an argument has conceded whatever point is in dispute.
"The stock market is back to 1997 or so levels. The only people on average who have made money in the market over the last twelve years have been corporate and financial managers. "
I dunno, if you hang out with the right crowd, you do ok.
What you are describing seems to suggest that if you want to make the big money you follow the "corporate and financial managers".
"That should tell anyone how badly broken the market really is."
What exactly is broken here?
"So I won't invest in a stock until the laws governing the market are changed."
Good, that leaves more shares for the rest of us.
"With bonds and other debt instruments, if management doesn't pay you, their head is on the chopping block."
Remember, limited liability?
Worst case, they lose their jobs. Best case they make tons of money.
"With stocks, a manager can legally steal you blind."
You should see what management does to debt holders.
Huge principal agent conflict between maximising the value of equity vs maximising the value of debt.
Since the return to bond holders is fixed and limited, while the return to equity holders is unlimited.
Management is highly incentivised to adopt risky business strategies, and shift the risk to bond holders.
E.g RAS hoovered up all the risky assets it could find so as to issue more senior debt (while keeping the equity tranches for the benefit of RAS shareholders).
Of course now the ungrateful and selfish RAS shareholders are bitching that their scheme didn't work out.
But do any of them shed a tear for the fools who bought the taberna and alesco bonds?
And you want to know what is a real tragedy? Darfur.
All your losses in RAS/AFN etc are meaningless compared to what is going on in Sudan right now.
"Unlike stocks, the worst you can do realistically with gold is lose 50%.
Let's see how wide was the peak to trough, if you bought gold in 1982?
"In the long run, the only way any of us are going to make money in the market is if corporations are truly run for the benefit of shareholders."
The only reason you are whining is because Danny's efforts on your behalf didn't work out.
The trick to investing is to pick the right company, in the right industry, and then hold on!
This could have been you.
<DA,The standard of review on a motion to dismiss is not stated directly in the applicable Federal Rule of Civil Procedure, Rule 12(b)>
DA made so many other mistakes with his legal posts it is not even worth pointing them out anymore. The irony about his crying about the RAS lawsuit is that he has been bashing the Cohens for doing what they are being sued for. In his dream world, he wishes he were Daniel Cohen and was immune from lawsuits.
Corporate America has so demonized lawsuits that I don't think people understand that there are good suits and bad ones. IMO, the RAS suit is a good one.
The price of RAS didn't move at all with the judge's ruling on Dec. 22, and shareholders will get back a little once a settlement is made. Yeah, I know it will be five cents on the dollar at best, but it is something.
But I think there is a larger point to this suit that has been missed and that has to do with the integrity of the market. The stock market never would have recovered from the Great Depression and been the huge money maker it was if not for the laws passed in 1933 and 1934. In the late 20s, the market was pretty much a scam, and I think we have come back to that point. Board of Directors, who are supposed to represent shareholders, are much like QE2 in England, nothing more than a figurehead.
The notion that the BOD reigns in management has gotten to be a joke. The Cohens have been able to do whatever the hell they have wanted and with Daniel in charge that has meant him stuffing his own pockets with shareholder money.
Rush Limbaugh spouted off to Washington when Congress was raising taxes, "Hands off, Washington! It's not your money!" But these same blowhards would never say, "Hands off, management! It's not your money!" Merrill Lynch management stole $4 billion from shareholders on the eve of its BofA takeover. The fact that it was legal makes it all the more disgusting.
Worse than that, at least with Congress, your vote matters. You don't get one with corporate management.
The stock market is back to 1997 or so levels. The only people on average who have made money in the market over the last twelve years have been corporate and financial managers. That should tell anyone how badly broken the market really is.
So I won't invest in a stock until the laws governing the market are changed. With bonds and other debt instruments, if management doesn't pay you, their head is on the chopping block. With stocks, a manager can legally steal you blind.
And though I disagree with Ghost about now being the time to buy gold, I would much rather see people buy gold than stocks. Unlike stocks, the worst you can do realistically with gold is lose 50%.
Is the RAS lawsuit going to bring down the wall separating corporate management from responsibility? I doubt it. No one knows what will cause that wall to fall, but I am cheering every time one of the bricks is removed.
In the long run, the only way any of us are going to make money in the market is if corporations are truly run for the benefit of shareholders.
The standard of review on a motion to dismiss is not stated directly in the applicable Federal Rule of Civil Procedure, Rule 12(b). Rather, it is stated in interpretive case law. The most recent standard from the U.S. Supreme Court is set forth in BELL ATLANTIC CORP. v. TWOMBLY, 127 S.Ct. 1955 (2007):
"To survive a motion to dismiss for failure to state a claim upon which relief can be granted, factual allegations must be enough to raise a right to relief above the speculative level, ON THE ASSUMPTION THAT ALL THE ALLEGATIONS IN THE COMPLAINT ARE TRUE EVEN IF DOUBTFUL IN FACT." (emphasis mine)
See, even 2 years ago I wasn't positive on RAS, and I continue to believe that shareholder litigation is stupid.
Risks were spelled out, and IMHO it will ultimately lead no where.
"DA, if you are going to be so GD arrogant, don't you have to be right like once in a while?"
Show me where I'm wrong about RAS.
August 2007, would be right around the time that LUM collapsed, after pulling the switcheroo on if the dividend was going to be paid or not.
That was **the warning call*** to get the hell away from anything related to, or dependant on RMBS or repo finacing.
Of course not everyone (including myself) fully understood the significance of the AHM/LUM collapse.
Since at the time the thinking was that all this nonsense with low-quality loans was contained.
It was justice that NEW/NFI and AHM should collapse, but that only the guilty would be punished. Later on we would relise how far the foolishness spread.
Pretty soon it became clear that all assets starting with the letter "M" were untenable, and so I bailed out of the last of my Commercial MREITs in Jan/Feb of 2008.
The 2005-2007 CMBS were too thin, and could withstand any pressure. JRT/CRZ would be exposed to the first loss on a first loss, and that was no place to be.
I'd been warning people about RAS/AFN and CMBS ever since.
<Perhaps, but I'm 100% on predicting when you don't know what you are talking about.>
I was having fun doing a walk through memory lane, and you posted some beauties in 2007.
See the link: http://messages.finance.yahoo.com/Business_%26_Finance/Investments/Stocks_(A_to_Z)/Stocks_R/threadview?bn=15171&tid=8699&mid=9076
"Anyone who could read the merger documents/presentation knew what they were getting into. Most of New RAS's growth would be from Taberna type activities, and not from growing the old commercial lending business.
Shareholder litigation is stupid, and its not going to go anywhere. All the risks were spelled out in the S-11, and no one had a clue that AHM was going to so badly missmanage it self."
DA, if you are going to be so GD arrogant, don't you have to be right like once in a while?
Hint: "No one is going to bring a case against Cohen & Co + the BoD, unless they can get pass the first hurdle with such strenghs as to be comfortable with not get overturned on appeal."
Not at all, no one has won a case against RAS *yet*, so there can be no case decided with such strength that it will withstand appeal.
So far the plaintiff's have sustained minor losses (having the claims about the preferred stock thrown out) in a pre-trial phase which is **by design** most favorable to them.
IMHO the fact that preferred stock claims got thrown out means that one strategy for RAS is to claim that the current court is not the appropriate venue for claims which are more appropriate for the Delaware court of Chancery.
The litigants are now exclusively people who purchased common stock (which has voting rights) and thus they are more like owners.
Claims about corporate missmanagement, have nothing to do with claims about making false statements in securities filings, are however the proper subject for a derivative lawsuit.
"Forward looking statements" are protected by PSLRA, and so the plaintiff's will have to prove that RAS made false statements about historical events/conditions.
Also, claims about the taberna merger are weak, since it was approved by the independant directors (and thier financial advisors) as well as a majority of RAS share holders.
That makes arguing about the wisdom of it kind of silly.
Net/net, RAS's strategy is to try to narrow the case down it's weakest points, while the plaintiff's lawyers will try to make it as broad and vague as possible.
Personally, I think this case will get narrowed down after the derivative matters are thrown out, and then RAS's risk disclosures etc will cover them.
Many of the allegations (such as RAS's credit oversight process), are matters of opinion and not things that the court (and a jury) can decide.
There is still plenty of pre-trial wrangling left to be done.
"Your record on predicting legal cases is as bad as your record predicting stocks."
Perhaps, but I'm 100% on predicting when you don't know what you are talking about.
So Again, you keep thinking this is some episode of Judge Judy. It is not.
<Again, you keep thinking this is some episode of Judge Judy.>
Your arrogance masks how wrong you have been, DA.
<Me: What appears to be the biggest hurdle is going to be getting a judge to not dismiss the case. If it gets to a jury, then no one knows what would happen.
You: It will be appealed and then an appellant court will dismiss/modify the case.
No one is going to bring a case against Cohen & Co + the BoD, unless they can get pass the first hurdle with such strenghs as to be comfortable with not get overturned on appeal.
That's a waste of time and effort for everyone, and it makes the first judge look stupid.>
Your record on predicting legal cases is as bad as your record predicting stocks.