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 16 of 35 Page ID #:16605 litigation claims, and didn’t retain any rights to the proceeds as a result of the litigation. So—so, there were multiple times that I dealt with transferring litigation rights . . . .” 157:17–158:12. Holmes testified that the “Related Instruments” language was meant to clarify what ML II was acquiring from AIG. • “A. I don’t recall any specific discussion on ‘Related Instruments’. Q. Did you have any written communication with anyone regarding the definition of ‘Related Instruments’? A. I don’t think so. Q. . . . I want you to focus on specifically the phrase ‘all right, title, interest in and to all Related Instruments.’ Do you see that language? A. Yes. Q. Prior to the execution of the Asset Purchase Agreement, do you recall discussing that language with anyone? A. No. Q. Prior to the execution of the Asset Purchase Agreement, do you recall any written communications with anyone regarding that language in this definition? A. No.” 85:10–86:13. • “Q. Did you have any discussions about whether breach of contract claims would be transferred from AIG to Maiden Lane II? A. I don’t remember that specifically. What was clear to me was that the Fed wanted to control the securities, and—and so they were interested in making sure that they got the right to have full control of the securities, you know, while they were owned by Maiden Lane II.” 62:5–14. • “A. [T]he point of the sections that we talked about [definitions of ‘Related Instruments’ and ‘RMBS Issue’] is to ensure or to clarify exactly what’s being assigned. And the ‘Related Instruments’ definition adds to or creates additional clarity around exactly what it is ‘RMBS Issue’ includes. So, you got the main— main securities listed on Schedule A, and then, you know, together with ancillary rights in the related instruments; and then you’ve got—you’ve got the other types of deal documents here listed that you might have in a mortgage-backed security.” 107:9–22. • “Q. So, in your understanding, the—what the language ‘together with all right, title and interest in and to all Related Instruments’ does, is to say that you get all the rights you would have gotten in a market sale of these securities? A. Basically. Q. Is there anything else that that language does? A. No.” 108:22–109:7. • “Q. Is it your understanding that the Maiden Lane II received exactly the same rights it would have received if it purchased the securities in the open market? A. Yes.” 109:8– 12. • “Q. Okay. And so, in your understanding, there were contract rights that were transferred to Maiden Lane II? A. That’s correct. Q. But if AIG was harmed while it owned the security and had a legal cause of action it could pursue regarding that harm, that was not transferred? A. That’s correct. Q. And that doesn’t matter whether it’s a tort claim or a breach of contract claim or a statutory claim? A. That’s correct.” 120:7–19. • “Q. And in this instance, why was it—why was an Asset Purchase Agreement necessary? Why not simply transfer all these securities electronically? [Objection] A. Among other things, the—so—so, the exhibit to the Asset Purchase Agreement, which lists out all the securities and the pricing, needed to be agreed ahead of time; we needed to know how much money would go from Maiden Lane II to the AIG companies; the Fed EXHIBIT 2 6
Case 2:11-cv-10549-MRP-MAN Document 254-1 Filed 03/28/13 Page 17 of 35 Page ID #:16606 and Maiden Lane II needed to know the CUSIPs that were transferring; we needed to deal with the purchase price mechanics and principal and interest payments afterward. So we’ll call those operational reasons. And we would have needed to go through that exercise regardless. In addition to that, the Fed was, for instance, interested in receiving ‘true sale’ opinions, that we talked about earlier, to ensure that—that Maiden Lane II was getting the true sale of the securities. And, in addition, the Fed got some—some representations from the sellers that they wouldn’t have otherwise received. Q. Do you know whether all of the securities that were transferred through the ML II deal were publicly traded? A. I believe some of them were private. Q. And with respect to residential matter—residential mortgage-backed securities that are not publicly traded, can those be transferred, to your understanding, without some sort of asset purchase agreement? A. Typically you’d have an assignment document that goes with them.” 141:13–143:4. Holmes testified that AIG did not sell its RMBS into the market in order to avoid depressing already depressed prices for those securities. • “Q. Why didn’t AIG just sell them in the open market then? A. Because you can’t sell the mark—the volume in the market was such that you couldn’t sell that volume of securities in any reasonable period of time. And so we didn’t want to further depress the market by selling into it, and the Fed didn’t want us to do that. Q. Is it your testimony that if AIG took all of these securities to market on, say, October 31, 2008, it could not have sold them? A. That’s correct.” 109:22–110:15. EXHIBIT 2 7
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Excerpts from the depositions - Wall Street Journal

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