Archive for the “Bear Stearns Hedge Funds” Category

Ralph R. Cioffi and Matthew Tannin, the two former Bear Stearns executives who managed ill-fated hedge funds that cost investors billions of dollars, are scheduled to go to trial in September. Cioffi and Tannin are accused of deceiving investors about the financial status of the High Grade Structured Credit Strategies Master Fund and the Enhanced Master Fund, which were heavily invested in mortgaged-backed securities and losing substantial amounts of money. Both funds eventually collapsed.

Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses. 

Ralph R. Cioffi and Matthew Tannin, the two former Bear Stearns executives who managed ill-fated hedge funds that cost investors billions of dollars, are scheduled to go to trial in September. Cioffi and Tannin are accused of deceiving investors about the financial status of the High Grade Structured Credit Strategies Master Fund and the Enhanced Master Fund, which were heavily invested in mortgaged-backed securities and losing substantial amounts of money. Both funds eventually collapsed.

Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses. 

The past 12 months may well be remembered as the year in which losses connected to hard-to-value securities reached unheard-of levels, as investment firms and financial institutions disclosed nearly $700 billion in write-downs for mortgage-backed securities, leveraged loans and other assets that plunged in value. Still, the coming new year could give 2008 a run for its money. That’s because of something called off-balance sheet financing.

For some time now, financial institutions have made profits hand over fist by financing business deals with off-balance sheet entities. In simple terms, off-balance sheet refers to when companies transfer certain projects, investments or underperforming assets such as collateral debt obligations (CDOs), subprime-mortgage securities or credit default swaps from the parent company to an off-balance-sheet subsidiary.

Once the assets have been removed from a company’s primary balance sheet, it gives the appearance that the parent is carrying less debt - and thereby less risk. And, because off-balance sheet entities are largely unregulated, there is no one to question otherwise.

As the concept of off-balance sheet financing gained favor with Wall Street, so too did massive leveraging. Collateral debt obligations, subprime securities, credit default swap contracts - all have increased exponentially in recent years. What Wall Street failed to consider as it took on these added risks was the possibility of failure, not to mention the systemic damage that the failure potentially could unleash on the nation’s financial system as a whole.

Case in point: Credit default swaps. Credit default swaps are privately negotiated contracts between two parties - a buyer and a seller. The buyer of a credit default swap pays a fee to the seller. In exchange for that fee, the seller agrees to cover the buyer’s losses in the event that the underlying financial instrument defaults. The problem is the credit-default swap market itself. It is a $60 trillion unregulated market where contracts are traded without any federal oversight to ensure buyers actually are capable of covering losses.

When credit markets began to freeze up this year, that’s exactly what happened to institutions like Bear Stearns, Lehman Brothers, American Insurance Group and Citigroup. At the time, all of the firms were holding high concentrations of mortgage-backed securities - the same assets they once used as collateral to get credit and had to now significantly mark down in value.

A domino effect ultimately took hold, as creditor institutions turned up the heat via margin calls on the institutions that wrote the credit default swap contracts. Unable to meet those calls, Bear Stearns, Lehman, AIG, Citigroup and others quickly found themselves in trouble. Some of the companies like Lehman filed for bankruptcy protection; others were forced into a firesale; and some turned to the federal government for a bail-out to the tune of billions of dollars.

Now, countless other financial institutions are holding their breath, hoping they won’t meet a similar fate. Unfortunately, off-balance-sheet excesses already may have put them on a path to failure. There are literally trillions upon trillions of dollars of outstanding debt obligations residing “off-balance sheet” today for nearly every Wall Street institution around. When reality finally sets in, and the off-balance-sheet assets come back on balance sheet, watch out. It could make the nation’s current fiscal crisis look like child’s play.

Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses. 

First there were auction-rate securities, then collateral debt obligations (CDOs). Now, credit-default swaps are making news. On Oct. 20, U.S. federal prosecutors and New York Attorney General Andrew Cuomo jointly announced that their two agencies had launched an investigation into the $58 trillion credit-default swaps market and whether Wall Street investment firms manipulated the instruments for their own financial gain.

Among other things, regulators are looking to determine if traders used the credit swaps to artificially lower share prices of various financial companies, which then resulted in large sell-offs and a downward spiral of company stock.

According to an Oct. 20 article in the New York Times, the New York Attorney General’s office issued subpoenas to stock exchanges, investment firms and three companies involved in processing trades in swaps and stocks. The firms are: the Depository Trust Clearing Corporation, Markit and Bloomberg.

Credit-default swaps have been the source of problems for several high-profile companies recently, including Bear Stearns, Lehman Brothers, American International Group (AIG), Morgan Stanley and others.

A credit-default swap is a contract for insurance on certain types of debt. Buyers of credit swaps pay a fee in exchange for having their losses covered in the event the debt defaults. The problem is the credit-default swap market itself. It is unregulated. That means contracts are regularly traded without any oversight to ensure buyers actually can cover losses.

That may be changing in the future, however. Joint investigations between federal prosecutors and the New York attorney general are a rarity. That fact alone suggests the investigation into credit-default swaps is going to be a big one - and that fundamental changes involving transparency and oversight could be coming sooner rather than later.

Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses. 

The web of lies continues to grow for former Bear Stearns executives Ralph Cioffi and Matthew Tannin. At a recent court hearing in Brooklyn, New York, prosecutors claim that one of the two disgraced hedge fund managers tried to influence potential witnesses last summer during an internal investigation of the Wall Street institution. Prosecutors would not say which of the two men attempted to interfere with witness statements.

The collapse of 85-year-old Bear Stearns in March 2008 has been referred to as the trigger that propelled the nation’s credit crunch and ignited the onset of what continues to be a financial mess for banks and investment firms whose losses on investments in subprime mortgage-related securities now total $500 billion and counting.

Cioffi and Tannin were at the center of Bear Stearns’ downfall when the hedge funds they managed collapsed in June 2007, leaving investors with $1.4 billion in losses. Prior to shutting down the funds, both men continued to extol their solid financial state to investors, while privately stating the funds’ collapse was imminent. On June 19, 2008, Cioffi, 52, and Tannin, 46, were both arrested by the Federal Bureau of Investigations (FBI) and charged with conspiracy, securities fraud, insider trading and wire fraud. If convicted, the two men could be sentenced for up to 20 years or more in prison.

By the time Bear Stearns assets were taken over by JP Morgan Chase in March 2008, the company had lost more than 90% of its market value.

Conflicts of Interest

Meanwhile, H. David Kotz, the inspector general of the Securities and Exchange Commission (SEC), is blasting the Miami office of the SEC for its role in dropping a three-year-old investigation into whether Bear Stearns improperly valued some $60 million worth of collateralized bond obligations sold to W. Holding Co.’s Puerto Rico bank unit.

After months of legal wrangling, Bear Stearns agreed to pay $500,000 to settle the matter. Before that could happen, however, the SEC suddenly abandoned the case.

According to testimony given by Michael Trager, the lawyer representing Bear Stearns, the head of the SEC’s Miami office, David Nelson, told Trager in a telephone call that “Christmas is coming early this year,” and that “Bear Stearns can keep their money.”

Underlying the events is the fact that Trager, the Bear Stearns lawyer, once worked at the SEC with Nelson in the 1980s.

Kotz is now calling for disciplinary actions against Nelson for his decision to close the investigation.

The SEC’s report, “Failure to Vigorously Enforce Action Against W. Holding and Bear Stearns at the Miami Regional Office,” was issued on Sept. 30, 2008. It has yet to be posted on the SEC’s Web site. A copy can, however, be viewed at the Miami Herald: http://media.miamiherald.com/smedia/2008/10/14/20/Report_of_Investigation.source.prod_affiliate.56.pdf.

Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

The basic principle of investing relies on it: diversification. In almost every instance, but especially during times of market turmoil, a diversified investment portfolio serves as a prerequisite to help limit risks and mitigate potential losses for investors. Unfortunately for those who have gone the other investing route, the lesson learned can be costly - and one that many investors are now discovering as they face severe financial losses as a result of portfolios overly concentrated in one type of investment.

A prime example is an investor’s whose portfolio is heavy in preferred stocks only. Bought and sold like common stocks, preferred stocks actually are more similar to bonds. Investors who hold preferred shares means the issuing company pays them any dividends before paying common stock shareholders. In the event a company goes bankrupt, preferred shareholders again move to the front of the line and have first rights to claim the liquidation proceeds of a company’s assets.

At the same time, investors with investment portfolios solely concentrated in preferred shares can open themselves up to significant financial risks. If a portfolio includes investments in several asset sectors versus a single one, the chances that all of those sectors will sustain losses simultaneously is relatively slim. On the other hand, the likelihood an investor might encounter financial losses by holding only one type of security or asset class certainly is not hard to fathom.

In addition, many preferred stocks come with their own set of rules and regulations - both of which can translate into more profits or extra risks.

Stories involving investors who have suffered sizeable financial losses because their brokerage firm over-concentrated their accounts with preferred stocks are becoming more and more visible. Case in point: Freddie Mac and Fannie Mae. On Sept. 8, when the federal government took control of the two mortgage giants to prevent them from going under, investors who had been sold various series of the companies’ preferred shares as “safe, stable fixed-income investments” were shocked to learn the truth. In the week following the takeover by the government, Fannie Mae’s 8.25% preferred stock dropped to $2.65 from $13.70, while Freddie Mac’s 5.57% preferred stock fell to $1.50 from $9.15.

As of late September, investors holding certain series of preferred shares in Freddie Mac and Fannie Mae have seen their investments decline in value by more than 90%. Many of these investors say they were never advised of the risks associated with preferred shares by their brokers. Moreover, some investors were holding preferred shares of Freddie Mac and Fannie Mae as their sole investment, thus leaving the doors of their portfolios wide open for potential financial disaster.

To make matters worse, some investors believed that because Fannie Mae and Freddie Mac were considered “quasi-governmental enterprises,” any defaults on their preferred shares in the companies would be covered by Uncle Sam. They came to that conclusion because that’s what they were told by their brokerage firm.

The fact of the matter is that holders of preferred shares in Fannie Mae or Freddie Mac are in no way covered or protected by the U.S. federal government. Any financial losses these investors sustain are theirs alone.

There are other examples, as well, documenting what can happen to investors whose portfolios are overly concentrated with preferred shares in a single sector or company - from Lehman Brothers’ bankruptcy filing, to the bailout of American International Group Inc. (AIG), to the acquisition of Bears Stearns by JP Morgan Chase at a fire-sale price. As in these and other cases that are coming to light this year, investors who took the advice of their investment bank and bought preferred shares as a “sure bet” and a safe, fixed-income investment are learning an entirely different story as they watch their life savings literally vanish before them.

Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

One more bank has bitten the dust. In yet another deal orchestrated by the U.S. federal government, Wachovia Corp. will be bought by Citigroup for approximately $2.1 billion. According to a statement issued by the Federal Deposit Insurance Corporation (FDIC) on Sept. 29, Citigroup will absorb up to $42 billion in losses on Wachovia’s most risky mortgages, with the FDIC taking on any losses beyond that amount. In exchange, Citigroup will hand over $12 billion in preferred stock and warrants to the FDIC.

The government’s deal with Citigroup is similar in structure to the agreement that it put together in March, when the Federal Reserve provided financial backing to JPMorgan Chase for the takeover of the 85-year-old investment firm of Bear Stearns.

For months, Wachovia’s financial picture has been in a downward spiral, the root of which was connected to its 2006 purchase of Golden West Financial. California-based Golden West specialized in optional adjustable-rate mortgages (ARMs) - mortgages that offered low payments at the beginning of a borrower’s home loan, followed by much higher payments later on.

With its portfolio burdened from massive losses on these optional ARMs, Wachovia’s stock plummeted more than 80% in value this year.

The final outcome for Wachovia illustrates the increasing toll that subprime problems have levied on the nation’s banking industry. In July, there was the collapse of IndyMac Bank. And, just last week, Washington Mutual - the country’s largest savings and loan – had been teetering on the brink of bankruptcy before its seizure by the government and subsequent sale to JPMorgan Chase.

In order to buy Wachovia, Citigroup must sell $10 billion in common stock, as well as slash its quarterly dividend - the second time it has done so this year - in half to 16 cents.

Once the deal with Citigroup has been finalized, Wachovia will remain a public company, with two main divisions: its brokerage arm, Wachovia Securities, and its investment management business, Evergreen Asset Management.

Interestingly, it was just two years ago that the Federal Reserve had imposed a ban on Citigroup from making any major acquisitions because of the bank’s inadequate risk-management controls and regulatory problems. Earlier this summer, Citigroup agreed to buy back some $7.3 billion in illiquid auction-rate securities from individual investors, charities and businesses, as well as pay a hefty fine of $100 million to settle potential fraud charges by New York Attorney General Andrew Cuomo over auction-rate securities sales and destruction of subpoenaed documents.

Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

The Great Wall Street Swindle: The Canada ConnectionWith Canada’s national election set for Oct. 14, the cross-border implications of the U.S. subprime debacle are taking stage, as financial institutions there post record losses this year related to subprime mortgage debt in the United States. Now, with those losses totaling in the billions of dollars - and potentially could become even higher - Canadian investors are crying foul, claiming they were blatantly lied to by Canadian banks and brokers about investments exposed to U.S. subprime loans.

Before the 1980s, commercial banks were required to have reserves of funds on hand in order to make a mortgage. When those regulatory requirements were lifted, the banks then “sold” the mortgage to a Wall Street investment bank, which turned around and sold stock in that mortgage to investors - i.e. a mortgage-backed securities. Soon, trillions of dollars had been poured into these securities. Over time, as Wall Street’s appetite for mortgage-backed securities grew, they needed more people to buy homes.

Enter subprime mortgages. Enticed by lenders’ NINJ loans - no income, no job - potential home buyers eagerly jumped on board. Only later, when the interest rates on those loans skyrocketed after a couple of years did homeowners realize they were in over their head. As a result, 3 to 4 million people will lose their homes because of subprime loans.

Now, what happens to this toxic debt - the pools of funds filled with these mortgage- backed securities?

On Sept. 14, Canada’s CBC Sunday news show provided the answer in an in-depth documentary titled The Great Wall Street Swindle. Among other things, the piece drew obvious parallels between the greed, corruption and mismanagement of many investment banks in the United States and the trickery and deception displayed by a number of Canadian banks and brokerages that sold nearly $35 billion worth of something called asset-backed commercial paper, or ABCP, to unsuspecting Canadian investors.

Steven Caruso, partner in the New York City office of Maddox Hargett & Caruso, P.C., compares the circumstances leading to the meltdown of Canada’s investment community to much like what occurred in the case of former Bears Stearns executives Ralph Cioffi and Matthew Tannin. The two men were the masterminds behind the creation and eventual collapse of two hedge funds loaded with toxic subprime mortgages. When the funds headed down the tube, Cioffi and Tannin simultaneously sang their virtues to investors.

“It was very similar to a pyramid scene,” said Caruso on CBC Sunday. “I don’t want to say they were cooking the books, it was more like grilling the books.”

In the case of Canada, banks apparently did some cooking of their own with asset-backed commercial paper. ABCP is an investment structure based on commercial mortgages that are bundled together and sold to banks. ABCP was supposed to be a safe, short-term investment, much like cash in the bank, according to Canadian banks and brokers. Better still, investors were told that ABCP was guaranteed by Canada’s big banks, an insurance policy of sorts.

Investors soon learned the reality of their brokers’ promises, however, when they began to hear about the burst of the U.S. housing bubble and later discovered their own investments in ABCP was connected to those American subprime mortgages.

By Aug. 27, the gig was up, and investors stopped buying ABCP altogether. As in what happened when the auction-rate securities market seized up in February 2008, Canada’s $34 billion ABCP market froze. Investors had no way of accessing their cash.

Much of the $34 billion in unredeemable ABCP is held by Canadian pension plans. Smaller amounts are held by companies and individuals.

As for the banks’ guarantee to honor investors’ ABCP investments? Most refused, reported the CBC show.

Iris Pierce, 65, is one of individuals who, on the advice of her Toronto brokerage firm, put her life savings in ABCP. Formerly retired, she is now forced to return to the workforce.

“I have no where to turn,” she says.

Meanwhile, Canadian banks, including the Bank of Nova Scotia, are being accused by retail and institutional investors alike of dumping their own inventory in asset-backed commercial paper while continuing to promote the investment to clients.

Sound familiar?

After months of wrangling, the Pan-Canadian Investors Committee - a group overseeing a controversial restructuring plan to rescue the $34 billion market of frozen asset-backed commercial paper - was given the go ahead to move forth with their proposal. Several Canadian activists groups had tried to block the plan because it will all but remove investors’ ability to sue those who were involved in selling them the debt securities, except in cases of fraud. And apparently there are many of those cases.

The plan itself will convert the insolvent 30- to 90-day ABCP debt into new notes maturing within nine years for some investors. That means those investors, who initially thought their investment was short term, will be able to retrieve their cash in nine years.

The bottom line: In the end, whether Wall Street or Canada, the corrupt actions taken by those in charge puts Main Street on the line to pay the ultimate price.

To view the CBC’s show, The Great Wall Street Swindle, in its entirety, target="_blank">Watch CBC Interview with Steven Caruso

Our affiliation of lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

There will be no more curtain calls for Wall Street. On Sunday night, the era of investment banking came to a stunning and dramatic conclusion as investment icons Goldman Sachs and Morgan Stanley - Wall Street’s two remaining independent investment firms - agreed to become bank holding companies regulated by the Federal Reserve.

Abandoning their investment banking status means Goldman and Morgan Stanley will no longer rely on leveraged money and instead have access to more stable funding avenues in the future, including bank deposits from retail customers and the Federal Reserve’s Discount Lending Window. It also means they will face much stricter oversight and regulation by the federal government.

Prior to announcing the changeover, Goldman Sachs and Morgan Stanley had been submerged with massive losses on subprime mortgages and other risky real estate holdings. Shares in the two companies have lost nearly half of their value this year.

Last week’s chaos in the financial markets only added to Goldman and Morgan Stanley’s troubles. After 158 years, Lehman Brothers Holdings was forced to file for bankruptcy; Merrill Lynch, fearing a similar fate for its future, was purchased by Bank of America; and the federal government announced an $88 billion bailout of insurance giant American International Group (AIG).

Then, in a meeting that began at 9 p.m. on a Sunday night, the Federal Reserve and the U.S. Treasury laid out the most sweeping - and expensive - rescue plan for the country’s financial system since the Great Depression. The centerpiece of the plan focuses on cleaning up the balance sheets of financial institutions with the U.S. Treasury taking on hundreds of billions of dollars in toxic mortgages. The price tag to taxpayers could be as high as $1 trillion.

U.S. Treasury Secretary Henry Paulson is urging Congress to pass the bailout plan this week.

Meanwhile, the immediate future of Goldman Sachs and Morgan Stanley is a bit brighter today, as the move to shed their investment bank status lets them steer clear of the road to disaster that overtook many of their counterparts recently - including Bear Stearns, Lehman Brothers and Merrill Lynch. Goldman and Morgan Stanley appear to be safe - for now, anyway.

Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.

Years of egregious actions on the part of Wall Street - from corporate arrogance, to incompetent accounting principles, to lax regulatory rules and oversight, to blatant criminality - are now taking their toll on the nation’s financial markets, and it’s Main Street paying the ultimate price. With the bankruptcy of Lehman Brothers Holdings, the fall of Fannie Mae and Freddie Mac, the IndyMac Bank failure, and now an $85 billion government bailout for insurance giant American International Group (AIG), investors and consumers alike are growing increasingly concerned about what lies ahead.

And they have good reason. The insanity happening on Wall Street means borrowing just went up in price. Financing a new car, paying for college, starting a business, building a hospital - all are likely to become more challenging in the months, even years, ahead.

Then there’s the psychological effect of Wall Street’s meltdown. As the financial crisis deepens and taxpayer-supported bailouts apparently becoming more commonplace, more investors - already distrustful of Wall Street and whose very existence they deem synonymous with greed and excess - will be prone to jump ship entirely, dumping their stocks, halting contributions to 401Ks and liquating mutual funds and other securities for safer investment vehicles.

Investors’ need to “do something,” anything, in the face of a crisis is warranted. At the same time, the ramifications of letting emotions guide decisions can often lead to even more uncertainty - in this case, for individual investors and the economy at large, say a number of financial experts.

“It’s like planning a road trip to California but then jumping in a car and heading east,” says one UBS broker, who requested anonymity. “Everyone is running to do something - which is understandable given the state of the markets and the 24/7 media coverage on the subject. Clearly, though, the ‘something’ that people need to do should be given much more forethought.”

Surprisingly, it’s not retirees who seem to be panicking, but rather younger 40-somethings, according to this UBS broker. “The older investors have been through this before,” she explains. “They remember the events of the past.”

Cases in point: On Oct. 19, 1987 - otherwise known as “Black Monday” - the Dow Jones Industrial Average was down 22.61% in a single day. On Oct. 26, 1987, it fell 8.04%; Oct. 13, 1989, 6.91%; Sept. 17, 2001, 7.13%.

By comparison, the Dow fell 4.4% on Sept. 16, 2008.

Still, when news that 158-year-old Lehman Brothers, one of the most established and respected investment firms on Wall Street, has filed for bankruptcy or that major money market funds - long considered to the safest of investments – are breaking the buck and falling below $1 a share, it’s almost impossible for investors not to feel powerless.

What’s Next?

Now the question on everyone’s mind is how do we get out of this mess? As reported Sept. 19 in a Wall Street Journal commentary by William Isaac, former chairman of the Federal Deposit Insurance Corporation, fixing the current financial crisis obviously will be a long-term process, but nonetheless contingent on a radical facelift for Wall Street.

Isaac contends that the financial problems gripping the country today are a direct result of something called Fair Value Accounting practices. Simply put, Fair Value Accounting means financial institutions that have financial instruments to sell - i.e. mortgage-backed securities - must mark those assets to market. “But what do we do when the already thin market for those assets freezes up and only a handful of transactions occur at extremely depressed prices,?” writes Isaac.

So far, says Isaac, the answer from the Securities and Exchange Commission (SEC) and the federal government has been to mark the assets to market even though no meaningful market exits.

Indeed, in his speech to the National Black MBA Association on Sept. 19, Bank of America CEO Kenneth Lewis strongly urged federal regulators to radically restructure the operating environment of Wall Street investment banks, instituting more of the oversight, capital requirements and business restrictions that are imposed on commercial banks today.

Short Selling

Another culprit behind the nation’s financial crisis: short selling, an act that until recently, the federal government has been exceedingly lax in regulating.

Short sellers make money when a company’s shares go down in price. They “borrow” shares from brokers and then resell them. When the share price on the stock becomes lower, short sellers give back the shares at the lower price and keep the difference.

While legal, critics of short selling say the method is at least partially to blame for the downfall and financial troubles of several Wall Street mavericks and other banking heavyweights in recent months, including Bear Stearns, Lehman Brothers, Merrill Lynch, Washington Mutual and Morgan Stanley.

On Sept. 18, New York Attorney General Andrew Cuomo announced that his office would be launching an investigation into the practice of short selling and, specifically, into the activities of short sellers regarding shares of Lehman Brothers and American International Group (AIG).

The SEC is cracking down on short sellers, as well. On Friday, Sept. 19, the regulatory agency issued a temporary ban on short selling in shares of 799 financial institutions. The ban will be in effect until Oct. 2, and could be extended pending market conditions.

Meanwhile, also on Friday morning, Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke unveiled a series of billion-dollar rescue plans aimed at salvaging the nation’s financial markets. Among the initiatives: creating a temporary asset relief program that would remove illiquid mortgage securities from the balance sheets of financial institutions and a federal guarantee on assets in money-market mutual funds whose values fall below $1 a share.

Officials are still working out details of the overall plan, and expect to meet with various members of Congress this weekend.

Keep in mind that Paulson’s plan - while no doubt a much-needed move in light of the current financial crisis - is a taxpayer-funded plan. Its cost doesn’t come cheap. The anticipated price tag: a whopping $1 trillion.

Our affiliation of securities lawyers is actively involved in advising individual and institutional investors in evaluating their legal options when confronted with subprime and other mortgage-related investment losses.