Excerpts from the depositions - Wall Street Journal

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Case 2:11-cv-10549-MRP-MAN Document 254-1 Filed 03/28/13 Page 14 of 35 Page ID #:16603 and interest; the types of claims that an owner of the documents or an owner of the securities would have.” 57:19–58:3. • “A. If somebody had asked me, if anybody had asked me, you know, are the tort claims transferring as part of this deal? I would have told them no.” 75:3–6. • “Q. So, you thought about whether or not there would be a legal claim that AIG could pursue to recover those losses on these RMBS? [Objection] A. I knew that there was a loss. I knew it would be realized from AIG’s perspective. But whether or not it would have been actionable in the legal sense, you know, was unclear and would have required the litigators to come in, look at the facts, and figure out whether or not if it was actionable. And that analysis had not been done at that time. Q. [] So you hadn’t reached some conclusion about whether or not AIG could pursue claims? A. That’s correct. Q. But you thought about maybe we could pursue claims? A. Yes.” 77:10–78:7. • “A. [Referring to ML II Term Sheet] And so, what’s being stated here is that the securities that would be listed on Schedule A is—is what’s transferring, less principal and interest payments that accrue between October 31st and the Closing Date, which were payments that we would have collected already. So, that was being backed out of the purchase price. Q. So, according to the Term Sheet, as you understood it, what was being transferred to ML II in this deal? [Objection] A. The securities that were listed and the rights in those securities.” 134:14–135:4. • “Q. To your understanding, did the scope of what was being transferred, as you just described it, change between the Term Sheet and the execution of this final [APA]? [Objection] A. No.” 135:9–16. • “Q. Mr. Holmes, what is your understanding regarding whether the Asset Purchase Agreement transfers tort claims from AIG to Maiden Lane II? A. My understanding is it does not.” 98:20–24. • “Q. And did you have an opportunity to review the Complaint in this case before it was filed by AIG? A. Yes. Q. And did you understand that that Complaint asserted tort claims against the Defendants arising out of their sale to AIG of certain of the RMBS that were later sold to ML II? [Objection] A. They were earlier sold to ML II, yes. Q. And did you have at that point any objection to AIG filing that Complaint? A. No.” 148:2–17. • “A. My initial reaction [to BoA’s argument that AIG transferred claims to ML II] and my reaction now are the same, which is that those claims were never transferred.” 149:6–8. Holmes testified that he had prior experience with transferring tort claims, and that he would have taken different steps had he been aware the FRBNY intended to acquire such claims. • “Q. Now, you testified earlier that you were familiar with certain law relating to the transfer of tort claims at the time the Asset Purchase Agreement in ML II was negotiated and executed. A. Right. Q. What did you understand about the law on that subject back at that time? [Objection] A. It’s my understanding that in order to transfer tort claims, you need to specifically address it in the—in the assignment documents. Q. EXHIBIT 2 4
Case 2:11-cv-10549-MRP-MAN Document 254-1 Filed 03/28/13 Page 15 of 35 Page ID #:16604 And to your understanding, did that occur in the Asset Purchase Agreement? [Objection] A. No, it didn’t.” 143:5–24. • “A. I knew from work I [had] done, I felt the law was that to transfer tort claims, they have to be specifically addressed. And there are types of form documents out there that specifically addressed transferring tort claims.” 71:9–14. • “A. We had specific experiences where we had done that [transferred tort claims], and due to the misalignment of interest between the people that ultimately held them and our witnesses, and other data, we—we hassled. But really it was, you know, we would have to provide data, depositions and things whenever—we had never – and we didn’t have an interest in the outcome of the case anymore. And so, you know, had – had I known, had I known that, you know, the Fed might have wanted those claims, that would have been one of the things we would have needed to talk about. We would have needed to talk about price, enforcement, whether— you know, how we stop it whenever, whenever it’s getting out of hand for us, because of the potential misalignment of interest in previous work I’d done in that— in that regard.” 71:15–72:11. • “A. [M]y own experience and AIG’s experience in transferring those types of claims, which we had done in other context, was that you needed to deal with additional issues like the potential misalignment of interest between the party that has the claims then and can—for lack of a better way to say it, pursue, pursue those claims without regard to the cost to AIG in providing data, depositions and other materials necessary in order to pursue those claims.” 144:7–18. • “A. So, you can be put in a position where you’re doing a whole lot of work to support the claims and, yet, at the same time, you’re not getting any of the value out and you can’t stop the other party from continuing to pursue them. We had had a problem with that, you know, previously that I was involved in. Q. And are there any provisions in the final version of the Asset Purchase Agreement that deal with that potential problem that can arise when tort claims are assigned? [Objection] A. No . . . [there are] not.” 144:19–145:11. • “A. I knew at the time, under New York law, that you needed to specifically refer to them [tort claims]. I knew that we would have needed to deal with making data available to the Fed to allow them to pursue those claims if they were to have received them. We needed to think about limiting the scope of data. If we wanted to, we needed to think about if the price being paid made sense. If there is no additional compensation in terms of the security, we needed to think about whether or not the one-sixth remainder would justify some of the potential lawsuits that might have been filed. There were a number of things that needed to be thought through and dealt with in order to—to transfer those claims in a meaningful way.” 149:9–150:3. • “Q. And was that your only other prior experience with the transfer of litigation claims that you were referencing in your earlier testimony? A. No. . . . There were others, both in the context of—of an assignment, and then separately having to deal with the misalignment of interests that occurred in one case whenever we transferred the EXHIBIT 2 5
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Excerpts from the depositions - Wall Street Journal

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