, , , , , , ,


The Oversight Committee is currently conducting an investigation into the financial crisis and is interested in any information that may help further the investigation.

The Oversight Committee has the highest respect for confidentiality. As such, we respect your need to remain confidential and will use your contact information only to follow up with you regarding your submission. If you do not wish to provide contact information, you may leave the contact fields blank.



Japan Banks, Insurers Have $2.4 Billion Lehman Risk (Update3)

By Takahiko Hyuga, Shingo Kawamoto and Komaki Ito

Sept. 17 (Bloomberg) — Japan’s banks and insurers, including Mitsubishi UFJ Financial Group Inc., announced a combined 249 billion yen ($2.4 billion) of potential losses tied to the collapse of Lehman Brothers Holdings Inc.

Banks from Tokyo-based Mitsubishi UFJ, Japan’s largest, to Bank of the Ryukyus Ltd., a lender based in Okinawa, disclosed assets that might become worthless following Lehman’s filing for bankruptcy protection. Mizuho Trust & Banking Co. cut its profit forecast by more than half, citing 11.8 billion yen of losses on bonds and loans linked to Lehman.

Japanese bank stocks had their worst drop in four years yesterday in Tokyo. The upheaval on Wall Street that saw Lehman fail, Merrill Lynch & Co. sell itself to Bank of America Corp., and American International Group Inc. agree to a government takeover prompted at least one Japanese bank executive to rule out U.S. acquisitions.

“We won’t be investing in U.S. banks under current circumstances,” Mitsubishi UFJ Chairman Ryosuke Tamakoshi said yesterday in an interview in Tokyo.

Mitsubishi UFJ has about $235 million at risk related to Lehman’s collapse, the company said. The total for 40 banks was 202.5 billion yen, compared with a combined 46.8 billion yen at seven Japanese insurers, according to data compiled by Bloomberg based on announcements made yesterday and today.

“Most lending to Lehman Brothers was made by major Japanese banks, and their possible losses seem to be within the levels that can be covered by their profits,” Bank of Japan Governor Masaaki Shirakawa told reporters in Tokyo today. “There is no concern that the latest events will threaten the stability of Japan’s financial system.”

Biggest Creditors

The 84-stock Topix Banks Index shed 8.1 percent yesterday to 222.70, close to a five-year low. It fell 0.2 percent today.

Mizuho Financial Group Inc., Japan’s second-largest bank by revenue, may book as much as 20 billion yen of losses related to Lehman, spokeswoman Masako Shiono said in an interview. The bank isn’t planning to reduce earnings forecasts, she said.

Most of the announced assets tied to Lehman are in the form of bonds or loans. Lehman’s bankruptcy filing listed Japanese banks as some of its biggest creditors with a combined $1.6 billion, led by Aozora Bank Ltd. at $463 million. Aozora later said it has the equivalent of $575 million in loans to Lehman.

The Tokyo-based lender, controlled by Cerberus Capital Management LP, said its actual losses may total $25 million.

“We expect the net loss to be about $25 million after hedge transactions, collateral and recoveries on loans,” Richard Layton, Aozora’s chief financial officer, said in a phone interview.

`Plenty of Skepticism’

Aozora fell 5.3 percent in Tokyo trading, after tumbling 16 percent to a record yesterday.

“There is plenty of skepticism about the level of disclosure by affected banks,” said Eiichiro Kuwana, president of Greenwich, Connecticut-based Cook Pine Capital LLC. “Aozora’s assertion that it had hedged out a good portion of the Lehman exposure was not taken at face value by the market.”

Lehman’s implosion caps a turbulent year for Japanese banks, which have stumbled as losses on subprime mortgage investments mounted and the domestic economy edged closer to a recession. The Topix Banks Index has lost 25 percent during the past 12 months.

Some bank executives downplayed the risks posed by Lehman’s bankruptcy.

“There may be some impact, but it should be limited,” said Resona Holdings Inc. Chairman Eiji Hosoya. Resona, Japan’s fourth-largest bank, holds 20 billion yen of Lehman debt. The stock rose 3.1 percent, after slumping 13 percent yesterday.

Largest Failure

New York-based Lehman has operated a Tokyo office since 1974 and employs about 1,300 people in Japan. The firm’s main units in Japan filed for bankruptcy yesterday in the country’s biggest corporate collapse.

Lehman Brothers Japan Inc. and three other affiliates sought bankruptcy protection in Tokyo District Court with about 4.7 trillion yen in combined liabilities, according to Teikoku Databank Ltd.

Japan’s seven largest banks have 252.7 billion yen of combined “exposure” to Lehman, compared with 60.5 billion yen for regional lenders, Credit Suisse Group analyst Shinichi Ina said in a note to clients yesterday. The former group mainly holds loans to Lehman, while the regional banks primarily own its bonds, according to Ina.

“Major banks have considerable protection in the form of collateral and hedging, so the actual impact is likely to be less significant than the stated amounts,” Ina wrote. Lehman’s collapse “could be rubbing salt into the wounds for the regional banking sector.”

Japanese Banks, Insurers' Possible Loss on Lehman Brothers

                                                 POTENTIAL LOSS
                                                 (Billion Yen)
Shinsei Bank Ltd.                                 38.0
Mitsubishi UFJ Financial Group Inc.               25.0
Mizuho Financial Group Inc.                       20.0
Resona Holdings Inc.                              20.0
Chuo Mitsui Trust Holdings Inc.                   15.0
Sumitomo Mitsui Financial Group Inc.              10.0
Kiyo Holdings Inc.                                 7.1
Sumitomo Trust & Banking Co.                       6.0
Sapporo Hokuyo Holdings Inc.                       5.1
Chiba Bank Ltd.                                    5.0
Joyo Bank Ltd.                                     4.2
Fukuoka Financial Group Inc.                       4.0
Hyakugo Bank Ltd.                                  4.0
Iyo Bank Ltd.                                      3.5
Shiga Bank Ltd.                                    3.5
Bank of Iwate Ltd.                                 3.0
Yamagata Bank Ltd.                                 3.0
Aozora Bank Ltd.                                   2.7
Chiba Kogyo Bank Ltd.                              2.0
Hokkoku Bank Ltd.                                  2.0
Hokuetsu Bank Ltd.                                 2.0
77 Bank Ltd.                                       2.0
Toho Bank Ltd.                                     1.5
Hokuhoku Financial Group Inc.                      1.4
Minami-Nippon Bank Ltd.                            1.3
Awa Bank Ltd.                                      1.2
Aichi Bank Ltd.                                    1.0
Bank of the Ryukyus Ltd.                           1.0
Daisan Bank Ltd.                                   1.0
Fukushima Bank Ltd.                                1.0
Hachijuni Bank Ltd.                                1.0
Juroku Bank Ltd.                                   1.0
Tokushima Bank Ltd.                                0.8
Bank of Kyoto Ltd.                                 0.5
Daito Bank Ltd.                                    0.5
Hyakujushi Bank Ltd.                               0.5
Shikoku Bank Ltd.                                  0.5
Shonai Bank Ltd.                                   0.5
Yachiyo Bank Ltd.                                  0.5
Kita-Nippon Bank Ltd.                              0.2
40 BANKS                                         202.5

Mitsui Sumitomo Insurance Group Holdings Inc.     14.7
Asahi Mutual Life Insurance Co.                   10.0
Nippon Life Insurance Co.                         10.0
Dai-ichi Mutual Life Insurance Co.                 8.1
Meiji Yasuda Life Insurance Co.                    2.0
Mitsui Life Insurance Co.                          2.0
6 INSURERS                                        46.8
TOTAL (BANKS AND INSURERS)                       249.3
SOURCES: Company Disclosures

To contact the reporters on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net; Shingo Kawamoto in Tokyo at skawamoto2@bloomberg.net; Komaki Ito in Tokyo at kito@bloomberg.net

Last Updated: September 17, 2008 04:33 EDT



SEC-FINRA Investor Alert on Old GM Stock

SEC Seeks Public Comments on Measures to Improve Corporate Governance

SEC Seeks
Public Comments on
Money Market Fund

SEC Seeks
Public Comments on
Proposal to Facilitate
Rights of Shareholders
to Nominate

Information for
Reserve Primary Fund

Spotlight on Current SEC Topics

from SEC sidebar – look for public comments being sought –



SEC Enforcement Conference earlier this year – March 2009

Home | Previous Page
Modified: 11/26/2008


Securities and Exchange Commission – Enforcement Manual



U.S. Securities and Exchange Commission
March 23-24, 2009, Washington D.C.

Securities Enforcement Coordination Conference

United States
Securities and Exchange Commission
100 F Street, NE
Washington, DC 20549
Division of Enforcement
Securities Enforcement Coordination Conference
March 23-24, 2009, Washington D.C.

The Division of Enforcement of the Securities and Exchange Commission is sponsoring a two-day conference on coordinating civil and criminal securities enforcement actions. I am pleased to invite your agency to send delegates who work in this area to the conference.

As you know, prosecutions of securities violations have become an increasingly visible and important part of maintaining and restoring investor confidence in the securities markets. This program will review major types of securities violations, analyze current trends, and discuss legal, policy and practical issues related to the coordination of securities cases. We believe the opportunity to meet and discuss these topics with all of you who work in this area will benefit us all.

Enclosed is a list of proposed topics for the conference, along with instructions for registration. If there is a topic or an issue of particular interest to your agency that you would like covered at the conference, please note it on your registration. We will make every effort to make the conference meaningful and useful to everyone. I look forward to seeing your delegates in Washington in March.

The deadline for registration is February 27, 2009.
Proposed Topics
Overview of the Commission

* Organization of the Commission
* The Roles of the SEC’s various Divisions and Offices
* Enforcement Contacts in the SEC’s Regional and District offices

Review of major securities violations and recent cases and schemes

* Investment Adviser Violations
* Financial Fraud
* Insider Trading
* Broker-Dealer Violations
* Offering Fraud
* Market Manipulation

Coordinating civil and criminal cases

* Civil v. Criminal Cases: What makes a good criminal case
* Parallel Civil and Criminal Cases
* The SEC as a Resource
* Working Together: Now and in the Future




Enforcement Manual – SEC Communications With Employees of Broker-Dealers

While the Exchange Act requires brokerage firms to produce certain information upon request from the SEC and without an investigative subpoena, the Exchange Act does not require employees of brokerage firms to cooperate with inquiries into the employee’s individual conduct.

Therefore, an employee of a brokerage firm may or may not cooperate voluntarily with the Division’s inquiries into the employee’s individual
conduct. When the scope of an investigation touches upon an employee’s duties at his orher current brokerage firm, the staff typically should communicate with the employee through the firm’s general counsel or compliance officer.


My Note –

It means they can’t get the information they need nor confirm it directly according to the guidelines from the enforcement manual above – SEC.



Congressional Oversight Panel



The Oversight Committee is currently conducting an investigation into the financial crisis and is interested in any information that may help further the investigation.

The Oversight Committee has the highest respect for confidentiality. As such, we respect your need to remain confidential and will use your contact information only to follow up with you regarding your submission. If you do not wish to provide contact information, you may leave the contact fields blank.



[from SEC Enforcement Manual concerning international witnesses -]

Memoranda of Understanding (“MOUs”)
MOUs are regulator-to-regulator arrangements regarding information sharing and cooperation in securities matters. The SEC has entered into over 30 such sharing arrangements with its foreign counterparts. The SEC is also a signatory to the 88 International Organization of Securities Commissions Multilateral MOU. This MOU is the first global information sharing arrangement among securities regulators.
The scope of information that the SEC can obtain pursuant to an MOU varies
depending on the legal abilities of the particular foreign authority. Some, but not all, MOUs allow for the SEC to obtain witness statements.
• Mutual Legal Assistance Treaties (“MLATs”) (Criminal Matters)
Generally, MLATs are designed for the exchange of information in criminal
matters and are administered by the Department of Justice (“DOJ”).

Despite the fact that MLATs are primarily arrangements to facilitate cross-border criminal investigations and prosecutions, the SEC may be able to use this mechanism in certain cases. Some jurisdictions permit the SEC to obtain information, including sworn testimony, through MLATs. U.S. criminal interest in the matter may be a prerequisite to the ability of the SEC to obtain information through MLATs.

DOJ has signed numerous MLATs through foreign criminal authorities. MLATs may be an effective mechanism to obtain assistance when an MOU with a particular country either does not exist or does not permit the type of information sought from a witness residing overseas.
• Letters Rogatory
A Letter Rogatory is a formal request from a court in one country to the
appropriate judicial authority in another county. Generally, a Letter Rogatory is used in litigation to request compulsion of testimony or other evidence, or to serve process on a person located abroad.

The execution of a request for judicial assistance by the foreign court is based on comity between nations, absent a specific treaty such as the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters. Because a Letter Rogatory generally can only be used to gather evidence in litigation, a Letter Rogatory may have limited utility where a case is in the investigative stage.
• Ad Hoc Arrangements
Even if no formal information sharing mechanism exists with respect to a
particular jurisdiction, the SEC nevertheless may be able to secure assistance in contacting a witness overseas by working on an ad hoc basis with foreign authorities. Such ad hoc arrangements often prove particularly helpful with emerging markets, whose securities legislation continues to develop.

(pp. 88)



Thursday, July 16, 2009 |

Opening Statement, Witness Testimony and Webcast of the Joint Oversight Hearing titled: “Bank of America and Merrill Lynch: How Did a Private Deal Turn Into a Federal Bailout? Part III”

On Thursday, July 16, 2009, at 10:00 a.m., The House Oversight and Government Reform Committee and Subcommittee on Domestic Policy continued its joint investigation of the Bank of America – Merrill Lynch merger with a hearing titled: “Bank of America and Merrill Lynch: How Did a Private Deal Turn Into a Federal Bailout? Part III.”

Wednesday, July 15, 2009 |

Towns Calls on BofA CEO to Compensate Government for Providing Protection Against Toxic Assets

Chairman Edolphus “Ed” Towns (D-NY) sent a letter to Bank of America (BofA) CEO Kenneth D. Lewis regarding recent reports that BofA is not planning to pay the Federal government for financial protection it provided BofA against the bank’s toxic assets.


2/5/08 – February 5, 2008 High 12631.85 Low 12234.97 Close 12265.13
2/4/08 – February 4, 2008 High 12810.34 Low 12557.61 Close 12635.16
2/1/08 – February 1, 2008 High 12767.74 Low 12602.32 Close 12743.19




1/22/08 – January 22, 2008 High 12092.72 Low 11634.82 Close 11971.19

1/3/08 – January 3, 2008 High 13197.43 Low 12968.44 Close 13056.72



Lehman Brothers – agreement to abide by protocols established for swaps by ISDA 2008

14 February 2008

see letter – (send to)

Dear Sirs –

ISDA European Variance Swap Protocol – Adherence

The purpose of this letter is to confirm our adherence to the ISDA European Variance Swap Protocol as published by the International Swaps and Derivatives Association, Inc. On February 5, 2008 (the “Protocol”). This letter constitutes an Adherence Letter as referred to in the Protocol. The definitions and provisions contained in the Protocol are incorporated into this Adherence Letter, which will supplement and form part of any ISDA Master Agreement entered into prior to the Implementation Date between us and each other Adhering Party.

(Etc. – see letter pdf)



The ISDA European Variance Swap Protocol (the “Protocol”) is a tool to upgrade either the Interdealer European Variance Swap Master Confirmation Agreement as developed in 2005 (the “Interdealer MCA”) or the 2007 ISDA European Variance Swap Master Confirmation Agreement (the “March 2007 MCA”) to the terms of the Revised 2007 ISDA European Variance Swap Master Confirmation Agreement (“Revised 2007 MCA”).

Adhering to the Protocol will provide that all future variance swap transactions will be documented under the terms of the Revised 2007 MCA as well as upgrading existing transactions under the Interdealer MCA or the March 2007 MCA to the new standards. For parties using the standard Interdealer MCA or March 2007 MCA, there is no need to execute a Side Letter – only submission of an adherence letter is necessary. Existing Calculation Agent and Determining Party designations under the Interdealer MCA or the March 2007 MCA will be migrated over to the Revised 2007 MCA and be in place going forward.

In the case of parties using long-form confirmations (“Non ISDA Documentation”), the Protocol provides a mechanism, via the use of a Side Agreement, for parties to specify how the terms of Outstanding Transactions done under Non-ISDA Documentation would be amended and restated as Transaction Supplements under the Revised 2007 MCA.





International Swaps and Derivatives Association



(click tab on sidebar titled ISDA Protocols)

The purpose of the LCDS Protocol (the “Protocol”) is to facilitate the amendment of documentation for loan CDS transactions that reference the Syndicated Secured Loan Credit Default Swap Standard Terms Supplement published by ISDA on June 8, 2006 (the “Old LCDS Terms”). The Old LCDS Terms were replaced by the Syndicated Secured Loan Credit Default Swap Standard Terms Supplement published on May 22, 2007 (the “New LCDS Terms”). The amendments effected by the Protocol will update loan CDS transactions documented under the Old LCDS Terms by migrating them to the New LCDS Terms.

The update is in two parts: (1) incorporating the New LCDS Terms in place of the Old LCDS Terms; and (2) adopting the new form of Syndicated Secured Loan Credit Default Swap Physical Settlement Rider published by The Loan Syndications and Trading Association, Inc. as of June 18, 2007.

The Protocol will apply to all transactions that incorporate the Old LCDS Terms, regardless of the date such transaction is entered into (unless the relevant Confirmation contains sufficient language to exclude the effect of the Protocol in accordance with Section 5(b) of the Protocol). The Protocol will also apply to any when-issued loan CDS transaction having a Trade Date prior to May 22, 2007. These transactions are separately included to ensure that if the parties did not expressly state which version of the standard terms would apply, then the New LCDS Terms will apply to that transaction.

Some of the substantive changes between the Old LCDS Terms and the New LCDS Terms that will be effected by the Protocol are as follows:

  • If the LCDX members of CDS IndexCo LLC vote to hold an auction under the LCDS Auction Rules in relation to a Reference Entity and Designated Priority, all single name LCDS transactions governed by the New LCDS Terms that are triggered within a specified time frame will be cash-settled based on a price determined by an auction similar to recent unsecured CDS protocols (an “Auction”). Parties must independently declare a Credit Event and provide Publicly Available Information to be eligible for settlement under the Auction.

  • If an Auction fails or is abandoned, Physical Settlement will apply to LCDS transactions under the revised LSTA Physical Settlement Rider, with an extended period to deliver a Notice of Physical Settlement.

  • Buyer is prohibited from delivering a Notice of Physical Settlement for 21 calendar days after the Event Determination Date. This standstill is intended to ensure that as many transactions as possible are captured by any Auction, since transactions for which a NOPS Fixing Date has occurred prior to the announcement that an Auction will occur are not included in the Auction.

  • If there is a Relevant Secured List with respect to a Reference Entity that is withdrawn by the Secured List Publisher, the Calculation Agent will automatically commence a search for a Substitute Reference Obligation. Under the Old LCDS Terms, such a search began only upon request from either party or the delivery of a Credit Event Notice. This change is expected to streamline the operation of the optional termination provisions (applicable when there is no Relevant Secured List of the Reference Entity for 30 Business Days).

  • The Secured List Publisher is the Polling Agent if there was a Relevant Secured List within the 30 Business Day period prior to the date being tested under the poll.

It should be noted that there is no adherence fee required for ISDA members or non-ISDA members submitting Adherence Letters in connection with the LCDS Protocol.

The LCDS Protocol is open to ISDA members and non-members. The Protocol was originally open between July 24, 2007 and August 24, 2007. This period has been extended until September 14, 2007, in order to maximize the number of adherents to the Protocol.