I believe that this probe represents a terrible problem for Tannenbaum, et al.
It began March 23 and continues to this day. The SEC appears to be seeking detailed info about every aspect of the way in which FSAM has run FSC and FSFR. Note that is in addition to the documents filed with the SEC on a regular basis as required by law. This suggests that the probe is expanding and becoming
more punitive in nature rather than contracting and leading to no action on the part of the Division of Enforcement.
I read an article that was published in The Miami Herald a couple days ago. The article indicates that the Fairholme Funds have a prominent position in the GSE preferred shares, but says nothing at all about the common shares. Could it be that the Fairholme Funds liquidated all of their GSE common shares in the second quarter but retained their preferred share holdings?
It is hard to see what these lawsuits have actually accomplished!
The good news is that the SEC is now taking a very, very detailed look at Fifth Street management. Cooper
claimed that the plaintiffs had "devastating" evidence that could be used against the defendants if necessary.
Presumably, the SEC will now gain access to these documents.
I am waiting for an update from Jim Cooper as to what kind of settlement, if any, was reached between the plaintiffs and FSAM. Last month, there was supposed to be extensive negotiations in this respect going on.