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 4 of 35 Page ID #:16593 • “Q. Based on your experience in the business world and your role as lead negotiator for AIG, did you believe that AIG was transferring its rights to bring fraud, or fraud claims―its rights to bring fraud claims to ML II? A. Absolutely not. I mean, it’s―we were working collaboratively, and those issues just weren’t discussed and/or transferred as far as our final document and final agreement.” 86:4–14. • “Q. Mr. Swift, based on all of the facts that you are aware of and your experience both as a businessman and lead negotiator for AIG, are you firm in your conviction that AIG did not transfer fraud claims to ML II? A. Absolutely. [Objections] A. We did not negotiate it; we did not intend to transfer it. And we were working, you know, collaboratively with the Fed and we talked about everything that was significant, we had a transparent discussion, they had their interest, we had ours. But this was never, ever discussed.” 127:4–21. Swift testified that he did not believe AIG transferred any fraud claims to ML II. • “Q. What is your understanding regarding whether or not the Asset Purchase Agreement transferred litigation claims from AIG to Maiden Lane II? [Objection] A. Again, as we―as we negotiated the tax points, as you mentioned before, or the residual equity interest, you know, that the five-sixth, one-sixth split, as we talked with, you know, the Finance Committee, the regulators, we did not talk about, you know, litigation because it really wasn’t a negotiated point. We didn’t believe we were transferring; we didn’t negotiate a transfer price. We didn’t talk about it because it just wasn’t―wasn’t part of, you know, the deal terms and conditions that we―we were trying to solve for.” 60:21–61:15. • “A. RMBS’s [are] generally made up of multiple of individual mortgages that go―that are pooled. So, I believe what we were transferring was, you know, the securities and all the rights, stuff that back-up the mortgages that make up the RMBS security. Q. Is it your understanding that AIG was transferring something more than the securities? [Objection] A. No. I―what I believe we―we negotiated on the Term Sheet and that we were primarily responsible for was the sale of securities. Q. Was there anything else besides the securities that AIG was transferring as part of the Maiden Lane II Asset Purchase Agreement? [Objection] A. It was transferring the securities and the rights of those securities. I mean, we were conveying to the Fed, in exchange, you know, for cash, the securities and the rights that securities have with―with those securities.” 64:2–65:4. • “A. [W]hen you trade a security, you’re giving up, you know, the economic rights to the underlying cash flows of it. So, whether it be in a market trade or the trade we did with the Fed, you know, the―the economics that back up the certificates, you know, the fees that you had to pay from a mortgage servicing side, the interests, the principal collections, all that is part of that security that we were selling. Q. And were there any other rights, besides that collection of rights, that you understood AIG was selling to Maiden Lane II? A. No, I’m not aware of anything else, and I probably should have been since, I mean, I was principally responsible for the Term Sheet.” 68:14–69:7. EXHIBIT 1 3
Case 2:11-cv-10549-MRP-MAN Document 254-1 Filed 03/28/13 Page 5 of 35 Page ID #:16594 • “Q. Did you intend, as lead negotiator, to assign AIG’s fraud claims to ML II? A. No. Q. Did AIG [] intend to assign its fraud claims to ML II? A. No. Q. What did AIG believe it was selling and intend to sell to ML II? A. The underlying securities.” 86:15–24. Swift testified that “Related Instruments” meant the documents and rights included in the securities. • “Q. At the time that this Agreement was signed, December 12, 2008, did you have an understanding of what was meant by the words ‘together with all right, title and interest in and to all Related Instruments’? A. As we were negotiating, you know, the deal, I had the understanding that we were transferring the security right and interest in all the underlying mortgages that were part of an RMBS package.” 63:5–15. • “Q. Did you understand the term ‘Related Instruments’ to include an assignment of AIG’s fraud claims to the Fed? A. No, I did not. Q. Why not? A. One, the word ‘fraud’ is not mentioned in this paragraph; and two, I interpreted this to mean the activities, the documents, the stuff that goes with servicing mortgages.” 80:2–11. • “Q. Okay. I believe you said you’re not a lawyer, correct? A. Yes. Q. You’re a CPA and a businessman? A. Yes. Q. And from your perspective as a CPA and a businessman, when it lists the documents under the definition of ‘Related Instruments,’ what’s your thinking about what that means? [Objection] A. I believe it means . . . this is what people understood and they would have been clear if there was other things that would have included that could have been, can be significant. Q. And when you say they would have been clear if other things are included, are fraud claims within those other things that would have needed to be spelled out specifically? [Objection] A. That would be my understanding.” 80:12–81:10. • “Q. Okay. At the time that the Asset Purchase Agreement was being negotiated, did you discuss with anyone the meaning of the term ‘RMBS Issue’ in the contract? A. I personally did not. Q. Did you discuss with anyone the meaning of the term ‘Related Instruments’ in the contract? A. I personally did not.” 128:21–129:5. Swift testified that the sale price did not include any valuation of the ability to pursue fraud claims for losses already suffered. • “Q. Do you recall how the price paid by Maiden Lane for the assets that it bought was calculated? A. Market value. Q. Do you know how that number was calculated? A. Market value is determined in a number of different means: sometimes observable third-party trades, sometimes mark-to-model trades, sometimes, I’ll call it cost is used as a basis of market value. So, the intent of the transaction was supposed to be based on the market value of the securities.” 46:13–47:2. • “Q. And can you explain in a little more detail, please, the role of BlackRock? [Objection] A. I think BlackRock’s role in this transaction, you know, they were viewed as, you know, the leading industry expert on residential mortgage-backed securities and other structured product and had very sophisticated models that would predict ultimate cash flows coming off of, you know, mortgages for ultimate valuation purposes.” 115:22–116:8. EXHIBIT 1 4
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Excerpts from the depositions - Wall Street Journal

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