Toxic Assets Task Force

In light of the current world-wide financial crisis, various government initiatives are underway to assist the nation’s largest financial houses. However, many organizations most affected by the financial environment are not included in the so-called “bail out” plan. Will they be able to receive compensation for effects of toxic assets on their fixed-income portfolios?

The answer, to put it bluntly, is maybe – if the organization hires qualified counsel to advocate on its behalf. Armstrong Teasdale’s Toxic Asset Task Force assists key management personnel in evaluating portfolios to determine whether or not clients holding toxic assets may have claims for compensation. Members work with key personnel to conduct an evaluation of assets and portfolios. The results of the evaluation can often times identify claims that may be asserted to ameliorate the effects of these “financially engineered” poisons.

Armstrong Teasdale partners Paul Kovacs, Dan Nelson and Mark Sophir recently obtained $195,000,000 in settlements from Goldman Sachs ($100,000,000) and Morgan Stanley ($95,000,000). Wall Street’s two biggest players each agreed to these settlements in a lawsuit filed by the firm on behalf of the Liquidator of General American Mutual Holding Company (“GAMHC”).

To obtain these results, the members of the Toxic Asset Task Force have immersed themselves in the financial culture for the past five years, gaining a detailed understanding of the characteristics and nuances of these toxic asset classes. GAMHC’s troubles, and the ensuing litigation, were an early precursor of the current toxic assets problems spreading throughout the economy. A GAMHC subsidiary wrote and sold a particular type of derivative asset, known as a “Floating Rate Funding Agreement,” and backed that asset by investing in now-infamous toxic assets such as Non-Agency Mortgage Backed Securities, Asset Backed Securities, Collateralized Debt Obligations, and Foreign-Asset Backed Derivative Securities.

Two of the Toxic Asset Task Force members are former Federal Prosecutors who will be able to assist with any questions regarding regulatory or criminal investigations or act promptly on behalf of the client should the authorities come knocking.

Recent Successes

Armstrong Teasdale Negotiates $100 Million Settlement Against Goldman Sachs
Policyholders of Defunct General American Life Insurance to Receive Payout

Armstrong Teasdale LLP Partners Paul E. Kovacs, Daniel C. Nelson, Mark D. Sophir, and Craig G. Moore, an Associate with the firm, negotiated a $100 million settlement against defendant Goldman Sachs in the case involving the liquidators of General American Life Insurance against Goldman Sachs. The settlement was reached Tuesday, November 4 after two days of mediation. The case was originally set for trial in early February 2009. The matter is public record after a hearing November 6 to approve the settlement in the Circuit Court of Cole County. Richard Lombardo of Shaffer Lombardo Shurin in Kansas City served as co-counsel.

The suit, filed in the 22nd Judicial Circuit state court in St. Louis, alleged Goldman Sachs and Morgan Stanley were negligent in the financial advice provided to the struggling insurance firm. General American hired the two banks in 1999 to provide financial counsel regarding a demutualization and IPO. The banks jointly advised General American to move forward with plans to go public in January 1999. General American Life Insurance filed for protection with the Missouri Department of Insurance a short seven months later, in August 1999.

Members of the Toxic Assets Task Force Practice Group

Sophir, Mark