the-investments-were-in-collaterized-debt-obligations

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1.
Disclosure
under SEC Rule 10B-5.
Dodona I, LLC, invested $4 million and 2 securities
offerings from Goldman Sachs & Co. The investments were in collaterized
debt obligations (CDOs). Their value depended on residential mortgage back
securities (RMDs), whose value in turn depended on the performance of subprime
residential mortgages. Before marketing the CDOs, Goldman had noticed several
“red flags” relating to investments in the subprime market, in which it had
invested heavily. To limit its risk, Goldman began betting against subprime
mortgages, RMDs, and CDOs, including the CDOs it had sold to Dodona. In an
internal email, one Goldman official commented that the company had managed to
“make some lemonade from some big old lemons.” Nevertheless, Goldman’s
marketing materials provided only boilerplate statements about the risks of
investing in the securities. The CDOs were later downgraded to junk status, and
Dodona suffered a major loss while Goldman profited. Assuming that Goldman did
not affirmatively misrepresent any facts about the CDOs, can Dodona still
recover under SEC rule 10b-5? If so, how?

2.
Tying
Arrangement.
John
Sheridan owned a Marathon gas station franchise. He sued Marathon Petroleum Co.
under section 1 of the Sherman Act and section 3 of the Clayton Act, charging
it with illegally tying the processing of credit card sales to the gas station.
As a condition of obtaining a Marathon dealership, dealers had to agree to let
the franchisor process credit cards. They could not shop around to see if
credit card processing could be obtained at a lower price from another source.
The district court dismissed the case for failure to state a claim. Sheridan appealed.
Is there a tying arrangement? If so, does it violate the laws?

3.
The
Sherman Act.
Together,
EMI, Sony BMG Music Entertainment, Universal Music Group Recordings, Inc., and
Warner Music Group Corp. produced, licensed, and distributed 80% of the digital
music sold in the US. The companies formed Musicnet to sell music to online
services that sold songs to consumers. Musicnet required all of the services to
sell the songs at the same price and subject to the same restrictions.
Digitization of music became cheaper, but Musicnet did not change its prices.
Did Musicnet violate the antitrust laws? Explain.

4.
Price
Discrimination.
Dayton Superior Court sells its products in interstate
commerce to several companies, including Spa Steel products Inc. The purchasers
often compete directly with each other for customers. From 2005 to 2007, one of
Spa Steel’s customers purchased Dayton Superior’s products from two of Spa
Steels competitors. According to the customer, Spa Steel’s prices were always
10-15% higher even though they were for the same products. As a result, Spa
Steel lost sales to at least that customer and perhaps others. Spa Steel wants
to sue Dayton Superior for price discrimination. Which requirements for such a
claim under section 2 of the Clayton Act does Spa Steel satisfy? What addition
facts will it need to prove?

5.
Duties of
Bailee.
Alicia
owns a valuable speed boat. She is going on vacation and asks her neighbor,
Maureen, to store the boat in one stall of Maureen’s double garage. Maureen
consents, and the boat is moved into the garage. Maureen needs some grocery
items for dinner and drives to the store. She leaves the garage door open while
she is gone, as is her custom, and the speed boat is stolen during that time.
Discuss the standard of care traditionally required of the Bailee, and
determine whether Maureen breeched that duty.

6.
Spotlight
on Joint Tenancy-Property Ownership.
Vincent Slavin was a partner at Cantor
Fitzgerald Securities in the World Trade Center (WTC) in New York City. In
1998, Slavin and Anna Baez became engaged and began living together. They
placed both of their names on three accounts at Chase Manhattan Bank according
to the bank’s terms, which provided that “accounts with multiple owners are
joint, payable to either owner or survivor.” Slavin arranged for the direct
deposit of his salary and commissions into one of the accounts. On Sept. 11,
2001, Slavin died when 2 planes piloted by terrorist crashed into the WTC
towers, causing their collapse. At the time, the balance in the 3 accounts was
$656,944.36. On Sept. 14, Cantor Fitzgerald deposited an additional $58,264.73
into the direct deposit account. Baez soon withdrew the entire amount from all
of the accounts. Married Jelnek, Slavin’s mother filed a suit against Baez to
determine the ownership of the funds that had been in the accounts. In what
form of ownership were the accounts held? Who is entitled to which of the funds
and why?

7.
Bad Faith
Actions.
Leo
and Mary Deters owned Deters Tower Service, Inc., in Iowa. Deters Tower
serviced TV and Radio towers and antennas in a multistate area. The firm
obtained a commercial general liability policy issued by USF Ins. Co. to
provide coverage for its officers, including Leo. One afternoon, Leo and 2
Deters Tower employees were working on a TV tower in Counsel Bluffs when they
fell from the tower to their deaths. The workers’ families filled a negligence
suit against the Deters estate. USF refused to defend estate against the suit
and pay any resulting claim and did not provide a reason for this response. Is
USF liable to the Deters estate for this refusal? If so, on what basis might
the estate recover, and how much?

8.
Sovereign
Immunity.
When
Ferdinand Marcos was president of the Philippines, he put asset into a company
called Arelma. Its holdings are in New York. A group of plaintiffs, referred to
as the Pimentel class, brought a class action suit in a US District Court for
human rights violations by Marcos. They won a judgment of $2 billion and sought
to attach Arelma’s assets to help pay the judgment period. At the same time,
the Republic of the Philippines established a commission to recover the
property wrongfully taken by Marcos. A court in the Philippines was determining
whether Marcos’ property, including Arelma, should be forfeited to the Republic
or to other parties. The Philippine government, in opposition to the Pimentel
judgement, moved to dismiss the US court proceedings. The District Court
refused, and the US Court of Appeals for the Ninth Circuit agreed that the
Pimentel class should take the assets. The Republic of the Philippines
appealed. What are the key international issues?

9.
Dumping.The fuel
for nuclear power plants is low enriched uranium (LEU). LEU consists of feed
uranium enriched by energy to a certain assay- its percentage of the isotope
necessary for a nuclear reaction. The amount of energy is described by an
industry standard as a “separative work unit” (SWU). A nuclear utility may buy
LEU from an enricher, or the utility may provide an enricher with feed uranium
and pay for the SWUs necessary to produce LEU. Under an SWU contract, the LEU
returned to the utility may not be exactly the particular uranium the utility
provided. This is because feed uranium is fungible and trades like a commodity
(such as wheat or corn), and profitable enrichment requires the constant
processing of undifferentiated stock. LEU imported from foreign enrichers,
including Eurodif, S.A., was purportedly being sold in the US for “less than
fair value.” Does this constitute dumping? Explain. If so, what could be done
to prevent it?

10.
International
Agreements and Jurisdiction.
US citizens who were descendants of
victims of the holocaust (the mass murder of 6 million Jews by the Nazi in
WWll) in Europe filled a claim for breach of contract in the US against an
Italian insurance company, Assicurazioni Generali, S.P.A. (Generali). Before
the holocaust, the plaintiffs’’ ancestors had purchased insurance policies from
Generali, but Generali refused to pay them benefits under the policies. Due to
certain agreements among nations after WWll, such lawsuits could not be filed
for many years. In 2000, however, the US agreed that Germany could establish a
foundation-The International Commission on Holocaust-Era Insurance Claims, or
ICHEIC-that would compensate victims who had suffered losses at the hands of
Germans during the war. Whenever a German company was sued in a US court based
on a Holocaust Era claim, the US govt. would inform the court that the matter
should be referred to the ICHEIC as the exclusive forum and remedy for the
resolution. There was no such agreement with Italy; however, o the Federal
District Court dismissed the suit. The plaintiffs appealed. Did the plaintiffs
have to take their claim to the ICHEIC rather than sue in a US court? Why or
why not?

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