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Lehman Brothers International (Europe) v AG Financial Products, Inc.: Difference between revisions
Lehman Brothers International (Europe) v AG Financial Products, Inc. (view source)
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{{cn}}{{casenote|Lehman Brothers International (Europe)|AG Financial Products, Inc.}} | {{cn}}{{casenote|Lehman Brothers International (Europe)|AG Financial Products, Inc.}} | ||
A case that came to the Supreme Court, New York County<ref>This is a state, not federal, court: Civil Branch of the Supreme Court of the State of New York, New York County. Our court is the highest trial-level court for civil cases in the state court system in New York County</ref> and which concermed our old friends [[Lehman]] horcrux and the {{1992ma}} and, in particular, its {{isda92prov|Loss}} method of determining an {{isda92prov|Early Termination Amount}}. | A case that came to the Supreme Court, New York County<ref>This is a state, not federal, court: Civil Branch of the Supreme Court of the State of New York, New York County. Our court is the highest trial-level court for civil cases in the state court system in New York County</ref> and which concermed our old friends [[Lehman]] horcrux and the {{1992ma}} and, in particular, its {{isda92prov|Loss}} method of determining an {{isda92prov|Early Termination Amount}}. | ||
While there is no Loss concept in the {{2002ma}} this case is relevant in that a 2002-style “{{isdaprov|Close-out Amount}}” is ''broadly'' the same thing as a {{isdaprov|Loss}} calculation. | While there is no {{isda92prov|Loss}} concept in the {{2002ma}} this case is relevant in that a 2002-style “{{isdaprov|Close-out Amount}}” is ''broadly'' the same thing as a {{isdaprov|Loss}} calculation. | ||
The case concerns a portfolio of credit derivatives between LBIE and [[monoline insurer]] AG Financial Products, which the judgment confusingly labels “Assured” — AG once stood for “Assured Guaranty” — even though AG was ''writing'' credit protection, not benefiting from it. | The case concerns a portfolio of credit derivatives between LBIE and [[monoline insurer]] AG Financial Products, which the judgment confusingly labels “Assured” — AG once stood for “Assured Guaranty” — even though AG was ''writing'' credit protection, not benefiting from it. | ||
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The first question, resolved in an earlier trial, was who had the burden of proving what. Crane J put this, as she put much in her judgment, drily: | The first question, resolved in an earlier trial, was who had the burden of proving what. Crane J put this, as she put much in her judgment, drily: | ||
{{ | {{quote|When this trial first started, the court was skeptical about how, given such a large discrepancy, [AGFP]’s calculation could ever be reasonable. As the trial progressed, however, there was a growing realization that the marriage of catastrophic, historical financial circumstances with bespoke contractual terms, along with strong structural protections in the Securities, lent itself to the conclusion that at least LBIE’s calculations were not reasonable. ... Now, even with the benefit of that rebuttal case, and extensive post trial briefing, the court’s growing realization has crystallized to conclusion. LBIE’s valuation, that relied entirely on market prices its experts constructed for this litigation, was insufficient to meet LBIE’s burden to prove its own calculations were reasonable. }} | ||
What can we learn from this: | What can we learn from this: | ||