Upload
david-fiderer
View
35
Download
0
Tags:
Embed Size (px)
DESCRIPTION
deposition
Citation preview
Joshua Rosner - Confidential
Page 1
I
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
IN RE:
FEDERAL NATIONAL MORTGAGE
ASSOCIATION SECURITIES
DERIVATIVE, and "ERISAn
LITIGATION
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
IN RE:
FANNIE MAE SECURITIES
LITIGATION
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
* ** CONFIDENTIAL PURSUANT TO ORDER
Videotaped Deposition of JOSHUA ROSNER
Tuesday, May 6, 2008
New York, New York
Job No.: 186576
Pages 1 through 342
Reported by: Patricia Mulligan Carruthers, CSR
Esquire Deposition Services MD - 1-800-539-6398 D.C. - 1-800-441-3376 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 2
Tuesday, May 6, 2008
10:30 a.m.
Videotaped Deposition of JOSHUA ROSNER, held at
the offices of:
O'Melveny & Myers
7 Times Square
New York, New York 10036
Pursuant to notice, before Patricia Mulligan
Carruthers, Certified Shorthand Reporter and
Notary Public of the State of New Jersey and
Notary Public of the State of New York.
I I '
A P P E A R A N C E S
ON BEHALF OF LEAD PLAINTIFFS
IN DERIVATIVE CASE
ON BEHALF OF J. TIMOTHY HOWARD:
LAURA E. NEISH, ESQUIRE
ZUCKERMAN SPAEDER, LLP
1540 Broadway
Suite 1540
New York, New York 10036-4039
(212) 704-9600
ON BBHALF OF PLAINTIFF:
FRANCIS P. KARAM, ESQUIRE
EMILY KERN, ESQUIRE
Page 3
BERNSTEIN LIEBHARD & LIFSHITZ, LLP
10 East 40th Street
22nd Floor
New York, New York 10016
(212) 779-1414
Esquire Deposition Services D.C. - 1-800-441-3376
Page 4
1
2 A P P E A R A N C E S C O N T I N U E D
3
4 ON BEHALF OF KPMG
5 CLAUDIA OSORIO, ESQUIRE
6 GIBSON, DUNN & CRUTCHER LLP
7 1050 Connecticut Avenue, N.S.
8 Washington, D.C. 20036-5306
9 (202) 955-8500
Ll
L 2
L 3 ON BEHALF OF LEANNE SPENCER:
L 4 LAUREN R. RANDELL, ESQUIRE
L5 MAYER, BROWN, ROWE & MAW, LLP
L6 1909 K Street, N.W.
L 7 Washington, D.C. 20006-1101
18 (202) 263-3000
19 1randellmayerbrown.com
2 0
2 1
22
2 3
24
25
Page 5
A P P E A R A N C E S C O N T I N U E D
ON BEHALF OF FRANKLIN RAINES:
JOSEPH M. TERRY, ESQUIRE
JOHN E. CLABBY, ESQUIRE
WILLIAMS & CONNOLLY, LLP
725 Twelfth Street, N.W.
Washington, D.C. 20005
(202) 434-5000
j terry@wc . com j clabbyawc . com
ON BEHALF OF FANNIE MAE:
MICHAEL WALSH, ESQUIRE
ROBERT STERN, ESQUIRE
O'MELVENY & MYERS, LLP
1625 Eye Street, N.W.
Washington, D.C. 20006-4001
(202) 383-5300
2 (Pages 2 to 5 )
Joshua Rosner - Confidential
Page 6
A P P E A R A N C E S C O N T I N U E D
ON BEHALF OF THE WITNESS:
MARK D. CAHILL, ESQUIRE
CHOATE HALL & STEWART, LLP
Two International Place
Boston, Massachusetts 02110
(617) 248-5000
mcahillchoate.com
ALSO PRESENT:
Terry Carruthers, Videographer
C O N T E N T S
EXAMINATION OF JOSHUA ROSNER
BY Mr. Terry
By Ms. Randell
By Ms. Neish
By Mr. Walsh
By Ms. Osorio
E X H I B I T S
ROSNER DEPOSITION EXHIBIT
1 Medley Global Advisors Background
MGA 01937
2 Medley Global Advisors GSEs Update
Dated 6-9-03
MGA 02036 -37
3 Medley Global Advisors Background
Dated 6-12-03
MGA 02071 -75
4 Medley Global Advisors Background
Dated 8-1-03
MGA 02317 -18
5 Contact Call Report, 8-27-03
P. Brereton
MGA 02420
Page 7
PAGE
16
267
269
273
317
PAGE
44
5 2
5 9
62
6 3
Lquire Deposition Services 1.C. - 1-800-441-3376
Page 8
1
2 E X H I B I T S C O N T I N U E D ; 3 ROSNER DEPOSITION EXHIBIT 'PAGE
4 6 Contact Call Report, 9-8-03 7 6
5 S. Blumenthal
6 MGA 02417 - 19
7 7 Contact Call Report 11-9-03 111
8 S. Blumenthal
9 MGA 02494 - 496 10 8 E Mail datedll-18-03 from S. 120
11 Blumenthal to J. Rosner
12 OFHEO-BLU-00058770
13 9 E Mail dated 2-27-04 from R. Seiler 121
14 To P. Lawler
15 OFHEO-LAW-00021348
16 10 White Paper, Fannie Mae's Abusive 123
17 Accounting
18 FMCIV 04 05026960 - 989
19 11 Contact Call Report 1-15-04 125
2 0 S. Blumenthal
21 MGA 02656 - 57 22 12 Equity Brief dated 1-29-04 132
2 3 MGA 09059 - 61
2 4
2 5
E X H I B I T S C O N T I N U E D
ROSNER DEPOSITION EXHIBIT
13 Contact Call Report 2-2-04
S. Blumenthal
MGA 02768
14 Contact Call Report 2-3-04
S. Blumenthal
MGA 0276
15 Contact Call Report 02-06-04
P. Brereton
MGA 02784
16 Contact Call Report 03-02-04
S. Blumenthal
MGA 02866
17 Contact Call Report 4-19-04
S. Blumenthal
MGA 03033
18 E Mail dated 5-14-04 from J. Reston
To S. Blumenthal
OFHEO-BLU-00036921
19 Equity Brief dated 5-17-04
MGA 09100 - 101
Page 9 t
PAGE
14 1
143
150
155
161
163
171
3 (Pages 6 to 9)
Joshua Rosner - Confidential
1
2 E X H I B f T S C O N T I N U E D
3 ROSNER DEPOSITI0N;EXHIBIT
Contact Call Report 5-18-04
S. Blumenthal
MGA 03108
E Mail dated 5-19-04 from J. Rosner
To S. Blumenthal
MGA 03109
Contact Call Report 6-9-04
B. Imperatore
MGA 03174
Contact Call Report 11-30-04
B. Imperatore
MGA 04091
E Mail dated 9-30-04 from K. Muehring
TO J. Rosner
MGA 09767 - 68
Medley Global Advisors GSE Update
Dated 12-2-04
MGA 03647 - 48
contact call Report 9-17-04
Fin Man
MGA 03414 - 15
Page 10
PAGE
179
186
188
192
192
205
213
E X H I B I T S C O N T I N U E D
ROSNER DEPOSITION EXHIBIT
27 Contact Call Report 9-17-04
Bob H
MGA 03409
28 Medley Global Advisors Background
Dated 9-17-04
MGA 03410
29 Medley Global Advisors Special Report
Dated 9-28-04
MGA 03587 - 589 30 E Mail and Contact Call Report
Dated 9-28-04
MGX 03608 - 609
31 E Mail and Contact Call Report
Dated 1-19-05
MGA03776 - 77 32 Medley Global Advisors Background
Dated 1-19-05
MGA 03779 - 80 33 E Mail and Contact Call Report
Dated 8-17-04
MGA 03308
Page 11
PAGE
215
218
225
229
233
239
248
Page 12
1
2 E X H I B I T S C O N T I N U E D
3 ROSNER DEPOSITION EXHIBIT PAGE
E Mail dated 3-11-05 from A. Canfield 245
TO J. Rosner
MGA 04202 - 204
E Mail dated 4-27-06 from J. Rosner 261
To A. Heiskell
MGA 05462 - 65 E Mail dated 12-22-04 from R. Medley 265
TO J. Rosner
MGA 03735 - 41 E Mail dated 10-30-03 from J. Rosner 292
To K. Medley
MGA 02578
E Mail dated 12-12-03 from Medley 303
TO TT
MGA 09054 - 57
E Mail dated 2-2-04 from Medley 307
TO TT
MGA 09062 - 64
E Mail dated 5-26-04 from J. Rosner . 309
MGA 03131 - 32
Page 13
1
2 E X H I B I T S C O N T I N U E D
3 ROSNER DEPOSITION EXHIBIT PAGE
4 41 E Mail and Contact Call Report 327
5 Dated 7-27-05
6 MGA 04420 - 21 7
4 (Pages 10 to 13)
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 14
J. ROSNER - CONFIDENTIAL P R O C E E D I N G S
THE VIDEOGRAPHER: Good morning.
We're going on the record. Here begins Videotape
Number 1 in the deposition of Mr. Joshua Rosner
in the matter of In Re Federal National Mortgage
Association Securities Derivatives and ERISA
Litigation, and In Re the F a ~ i e Mae Securities
Litigation, Case Number MDL 1668.
Today is May the 6th. 2008. The
time is 10:03 a.m. This deposition is being held
at the offices of OIMelveny & Myers, Seven Times
Square, New York. It was made at the request of
Kimberly Newman of the law offices of O'Melveny &
Myers.
I am the videographer. My name is
Terry Carruthers, here on behalf of Esquire
Deposition Services, located at 1020 19th Street,
Washington, D.C.
Will all counsel and all present
please state their appearances for the record,
after which the court reporter, Patricia
Mulligan, will swear in the witness and we can
proceed.
MR. TERRY: Joe Terry with Williams
Page 15
J. ROSNER - CONFIDENTIAL & Connolly for defendant Frank Raines.
MR. CLABBY: John Clabby with
Williams & Co~olly for defendant Frank Raines.
MR. WALSH: Michael Walsh, OtMelveny
& Myers for Fannie Mae.
MR. STERN: Robert Stern, O'Melveny
& Myers for Fannie Mae.
MS. RANDELL: Laura Randell; Mayer,
Brown for Leanne Spencer.
MS. NEISH: Laura Neish, Zuckerman
Spaeder for Tim Howard.
MS. OSORIO: Claudia Osorio; Gibson,
Dunn & Crutcher for KPMG.
MS. KERN: Emily Kern, Bernstein
Liebhard & Lifshitz for the plaintiff.
MR. K A W : Francis Karam, of the
same firm for the plaintiffs.
MR. CAHILL: Mark Cahill, Choate
Hall & Stewart for Mr. Rosner.
JOSHUA ROSNER
4 Stuyvesant Oval, 4E
New York, New York, 10009,
A witness called for examination, having been
first duly sworn, was examined and testifies as
Esquire Deposition Services DOCo - 1-800-441-3376
Page 16
J. ROSNER - CONFIDENTIAL
follows : I
EXAMINATION BY COUNSEL FOR DEFENDANT RAINES
BY MR. TERRY:
Q. Hi, Mr. Rosner. My name is Joe
Terry. I represent Frank Raines, who's a
defendant in this litigation.
The deposition is being both
transcribed and it's being videotaped. In the
event that your deposition will be played before
the jury, we'll have a videotape to show them.
Because it's being transcribed,
however, I want to ask you questions. It's
important that you answer them verbally rather
than with a nod or a shake of the head so the
court reporter can transcribe it. It's also
important that we don't talk over each other, so
that the court reporter will be able to
transcribe what we're both saying.
Do you understand that?
A. Uh-huh.
Q. Okay. If you need a break at any
time, just let me know and I'll be happy to
accommodate you.
Mr. Rosner, have you ever been
Page 17
1 J. ROSNER - CONFIDENTIAL 2 deposed before?
3 A. NO.
4 Q. Is your primary residence the New
5 York, New York, residence?
6 A. Uh-huh.
7 MR. CAHILL: YOU need to answer yes
8 or no instead of uh-huh.
9 A. yes.
10 Q. Thank you.
11 Can you briefly describe your
12 educational background, starting with college.
13 A. Sure. Undergrad mass. Actually
14 comp. lit., and beyond that professional Series
15 7, 63 license.
16 Q. And Series 7 and 63 are both
17 securities professional?
18 A. correct.
19 Q. Do you have any formal training in
20 accounting?
21 A. Formal training, no.
2 2 Q. Do you have any formal training in
23 economics?
24 A. NO.
2 5 Q. Okay. And your undergraduate course
5 (Pages 14 to 17)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 18
J. ROSNER - CONFIDENTIAL
of study was comparative literature?
A. Right. And social thought, and
political economy. Correct.
Q. Okay. Aside from your Series 7 and
your Series 6 3 , do you have any other
professional certifications?
A. NO.
Q. Are you a CPA?
A. NO.
Q. Are you a CFA?
A. NO.
Q. Have you ever - - Have you ever testified as an expert witness in any proceeding?
A. NO.
Q. Have you ever published any papers
in peer-reviewed journals?
A. Peer-reviewed, no.
Q. Do you consider yourself to be an
expert interpreting accounting standards?
A. That's-- That's a subjective. Do I
consider myself to? No.
Q. Do you consider yourself to be an
expert in evaluating corporate internal control
environments for accounting purposes?
Page 19
J. ROSNER - CONFIDENTIAL A. NO.
Q. Do you consider yourself to be an
expert in the bank examination process?
A. NO.
Q. Are you familiar with the term
"CAMELS " ?
A. Yes.
Q. Do you consider yourself to be an
expert in the CAMELS process?
A. Could you actually clarify expert
for all of these because, frankly, that's a term
of art that I'm not sure I'm comfortable with
answering yes or no.
Q. Okay. Well, how would you define
the term "expert"?
A. I'm not sure. You're the one asking
the question.
Q. Have you ever held yourself out to
anyone as an expert in the CAMELS process?
A. NO.
Q. Okay. Do you have any formal
training in what's known as event studies?
A. NO.
Q. Have you ever held yourself out as
Esquire Deposition Services D.C. - 1-800-441-3376
Page 20
J. ROSNER - CONFIDENTIAL
an expert in event studies?
A. I'm not even sure -- Again, the term "event studiesn is sort of a term of art, so 1'm
going to say no, but I - - You know, if you want
to get more specific in that question we could
answer it, but have I held myself out as an
expert, no.
Q. Have you ever met before today with
anyone that you understood to be a representative
of the plaintiffs in this lawsuit?
A. As a representative of the
plaintiffs. Yes.
Q. And who was that?
A. Jim Cummings . Q. When did you first meet with
Mr. Cummings?
A. I'm not sure I remember the date. I
would guess it was sometime midyear 2006.
Q. And did you first communicate with
Mr. Cummings in person, or via a phone call or
E mail?
A. I don't remember.
Q. Okay. What was the subject matter
of your first meeting with Mr. Cummings?
Page 21
J. ROSNER - CONFIDENTIAL MR. KARAM: I'm going to object on
the basis of privilege. And without a waiver of
any assertion of privilege I'll allow you - - that question to go forward as long as it doesn't
address the subject matter of the conversation.
Q. Okay. What was the substance of
your first conversation with Mr. Cummings?
A. That--
MR. KARAM: Once again, my objection
is to any - - anything substantive. You can
generally describe the subject matter.
THE WITNESS: Absolutely.
A. That - - as I remember it, it was
essentially that they were anticipating or
already had taken action in this matter and were
interested in talking to me about it.
Q. Okay. And at the time of this
conversation had you been formally retained by
the plaintiffs in any capacity?
A. At the time of that? No.
Q. Okay. What else did you discuss in
that first meeting?
MR. KARAM: I object on the grounds
of privilege.
6 (Pages 18 to 21)
Joshua Rosner - Confidential
Page 22
J. ROSNER - CONFIDENTIAL Q. Who first contacted who; did
Mr. Cummings reach out to you?
A. Again, I believe so, but I don't
remember. I certainly didn't make the phone
call.
Q. Okay. So it was Mr. Cummings or
someone acting on his behalf.
A. Correct.
Q. Did you agree at some point to
provide consulting advice to the plaintiffs in
this litigation?
A. On a limited basis.
Q. Okay. And what was -- What was the limited basis?
MR. KARAM: I object, but I will
allow the witness to describe the broad terms of
his consulting agreement as long as he doesn't go
into the substance of any communications.
A. It was as a consulting expert, I
guess. I don't even know if that's the term that
was used, nontestifying in this matter, to help
them understand background and parties.
Q. Was there a general subject area of
your consulting advice, general topic?
Page 2:
J. ROSNER - CONFIDENTIAL A. NO.
Q. Did you enter into a written
agreement at any point with the plaintiffs?
A. Yes.
Q. And when did you enter into a
written agreement?
A. Again, sometime in I believe
midyear, '06.
Q. Okay. How many times did you meet
with Mr. Cummings or someone else you understood
to be a representative of the plaintiffs?
A. In regard to this matter?
Q. In regard to this matter.
A. Less than - - Less than a handful. Q. And did you have E-mail
communications with anyone you understood to be a
representative of the plaintiffs?
A. Not to my - - Not to my recollection. Q. Okay. You said that you only had a
handful of communications with individuals you
understood to represent the plaintiffs with
respect to this matter.
A. Uh-huh.
Q. Have you had conversations with
Page 24
1 J. ROSNER - CONFIDENTIAL
2 Mr. Cummings about consulting on other matters?
3 A. I'm not sure I understand how that's
4 relevant. Not on any matter outside of - - Not on
5 any matter that would be related to Fannie or
6 Freddie, or any of the individuals named.
7 Q. Okay. My question is, have you
8 provided consulting services to Mr. Cummings and
9 his firm for other matters?
10 MR. CAHILL: You can answer that yes
11 orno.
12 A. yes.
13 Q. And I won't ask you about the
14 subject matter of this.
15 You mentioned you entered into a
16 written agreement, correct, with the plaintiffs?
17 A. Correct.
18 Q. What were the terms of that
19 agreement?
20 A. I don't recall off the top of my
21 head.
2 2 Q. Did it establish a rate by which you
23 would be paid for your services?
24 A. It did.
2 5 Q. And what was that rate?
Page 25
J. ROSNER - CONFIDENTIAL
A. Again - - I believe that it was 500
an hour.
Q. Okay. Did you create any written
work product through your consulting work?
MR. KARAM: I'm going to object, and
I'm going to assert privilege on that.
Q. Did Mr. Cummings explain to you why
he wanted to retain you?
MR. KARAM: I object to any
communications, a direct - - the substance of any
communications between Mr. Rosner and
Mr. Cumrnings.
Q. Are you still providing consulting
services to plaintiffs?
A. Have I spoken to them about the
matter or provided them with any information
regarding the matter at any time over the past
nine months to a year? No.
Q. Did your relationship formally
terminate or did you --
A. Itdidn't.
Q. Okay. So as far as you know, as of
today you still have a consulting relationship
with the plaintiffs?
7 (Pages 22 to 25)
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 26
J. ROSNER - CONFIDENTIAL A. AS far as I understand.
Q. Are the plaintiffs compensating you
for your appearance today?
A. NO.
Q. Did they compensate you for the time
you spent preparing for this deposition?
A. NO.
Q. How much time did you spend
preparing for this deposition?
A. I met with Mr. Cahill on I guess one
occasion and had a handful of conversations
beyond that.
Q. In preparing for this deposition did
you meet with anybody that you understood to be
representing the plaintiffs?
A. No. I've had no contact with them
in several months. I can't remember the last
time I did.
Q. Do you recall how much in total
compensation you received for the work that you
performed for the plaintiffs?
MR. KARAM: Mr. Rosner is looking at
me. I don't know, so I can't help him.
THE WITNESS: Oh, no. I'm wondering
Page 27
J. ROSNER - CONFIDENTIAL if that's - -
MR. KARAM: Look. I will assert my
objection, but 1'11 allow him to answer it as
long as it's not considered a waiver. Our idea
here is to be as forthcoming as possible so that
there's no inferences to be drawn of any
impropriety.
MR. STERN: For the same time, for
the record, the amount he's received is obviously
not privileged.
A. I mean, I can give you a range,
because I honestly don't remember off the top of
my head. I would guess it's between 5,000 and
$7500.
Q. Do they still owe you anything, or
are you all square at this point?
A. No, they don't.
Q. Setting aside the - - Setting aside the consulting work you performed for the
plaintiffs, what - - where else have you worked
during the past ten years?
A. During the past ten years I've
worked at Oppenheimer. It's the firm that - - it
was purchased by CIBC. Graham Fisher & Company,
Page 28
J. ROSNER - CONFIDENTIAL Medley Advisors.
Q. Okay. And what is Oppenheimer?
A. Non - - Well, nonexistent at this point. Oppenheimer was an investment bank.
Q. And what did you do at Oppenheimer?
A. I was in institutional research
sales. I was on their stock selection committee,
and I founded a specialty practice in financial
service research sales and analysis for them.
Q. During your time at Oppenheimer did
you cover Fannie Mae at all?
A. I didn't. Well, did I cover them.
Was I the publishing analyst on it? No. Did I
cover them? Yes.
Q. Is that because you were responsible
for all financial services - - A. Right.
Q. And Fannie Mae fell - - A. Correct. I - -
MR. CAHILL: Let me caution you to
slow down. Let him finish his question before
you start your answer.
Q. Did you, yourself, perform any work
while you were at Oppenheimer relating to Fannie
Page 29
J. ROSNER - CONFIDENTIAL Mae?
A. Could you be more specific?
Q. Sure. Did you, yourself, write any
research reports concerning Fannie Mae?
A. NO.
Q. Okay. Did you oversee the
preparation of any research reports - -
A. NO.
Q. - - concerning Fannie Mae? Just going back to your consulting
work with the plaintiffs, how much time total
would you estimate you spent providing consulting
advice to the plaintiffs?
A. Oh, I think I answered that with the
reimbursement rate of between 5,000 7500, and I
gave you a billing.
Q. Okay. I can probably do that math.
SO maybe ten to 12 hours - - A. Probably.
Q. - - somewhere in that range.
You mentioned you also worked at a
firm named Graham Fisher?
A. Correct.
Q. What is Graham Fisher?
Esquire Deposition Services D.C. - 1-800-441-3376
8 (Pages 26 to 29)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 30
J. ROSNER - CONFIDENTIAL A. It's an independent financial
service consulting and advisory firm.
Q. m d when did you work at Graham
Fisher?
A. Two different periods. 2001 to
early 2000 - - well, late 2002, and then again from May of 2006 to the present.
Q. And what is your current position at
Graham Fisher?
A. Managing director and sole
proprietor.
Q. So you own Graham Fisher.
A. Correct.
Q. What was your position from 2001 to
late 2002?
A. TO late 2002.
Q. I'm sorry. During your first stint
at Graham Fisher.
A. Managing director.
Q. And what did you do as managing
director?
A. I actually - - I was a partner,
actually. So the work title was managing
director. I was also a partner of the firm.
Page 3 1
J. ROSNER - CONFIDENTIAL
I actually did research and analysis
on housing and financial-service-related issues.
Q. Did your work relate at all to
Fannie Mae?
A. Relate? Yes.
Q. Did you cover Fannie Mae?
A. My partners and I actually covered
it from a joint perspective.
Q. Okay. And did Graham Fisher publish
research reports?
A. We actually published one large
research report on Fannie Mae and Freddie Mac,
which was - - which was someone else's work product.
Q. Another individual at Graham Fisher?
A. Correct.
Q. You said that you published a single
publication on Fannie Mae on Freddie Mac.
A. Correct.
Q. Is that a single one per year or -- A. No. It was one large published
piece. Correct.
Q. During what period of time did you
work at Medley Global Advisors?
9 (Pages 30 to 33)
Page 32
J. ROSNER - CONFIDENTIAL A. From - - I can't give you the precise
date, but it was March of 2003 until May of 2006.
Q. And what line of business is Medley
Global Advisors in?
A. Advisory to institutional investors
on regulatory, legislative, and policy issues
domestically and abroad.
Q. And what type of services does - - does Medley provide to its clients?
A. What type of services. Reports and
advisory on likely policy outcomes, central bank
activities, legislative movement on proposed
bills, regulatory issues, and that's really the
essence of it.
Q. Did Medley sell its - - sell reports
to its clients?
A. Didn't sell - - I wasn't on that side
of the business, on the administrative side, so
I'm not sure that I'm the best person to actually
give you the clear answer as to how the services
were sold. It's my understanding that the
reports were not sold on a report-by-report basis
but it was client subscriptions to Medley.
Q. And would the clients subscribe to a
Page 33
J. ROSNER - CONFIDENTIAL particular report, or would they just subscribe
to Medley services and Medley would provide them
with --
A. Again, I can only give you my
understanding. I can't give you an authoritative
answer. My understanding is that they had
different subscription areas; central banks, as
example, regulatory, legislative and policy,
et cetera.
Q. Is it fair to say that Medley
provided its clients with advice regarding the
political and regulatory risks that faced various
sectors of the economy or various companies?
MR. CAHILL: Object to the form.
YOU can answer.
A. Could you repeat it?
Q. Sure. Is it fair to say that Medley
provided its clients with advice regarding the
political or regulatory risks facing different
companies or sectors of the economy?
A. I wouldn't - - I wouldn't acknowledge or say that it's fair to say that it was advice
as opposed to information. Advice would suggest
a particular actionable event or approach, and it
Esquire Deposition Services DOCo - 1-800-441-3376
Joshua Rosner - Confidential
Page 34
J. ROSNER - CONFIDENTIAL was very clearly not the intent of the firm to
advise as much as inform.
Q. Understood. And did you provide - - Did Medley provide information regarding
particular companies, or just sectors of the
economy?
A. For the most part it was - - Well, it was sectors, and often times where regulatory,
legislative, or policy issues came down to
specific companies it was at times mentioning of
specific companies.
Q. And was one of the specific
companies that you provided information to your
investors about Famie Mae?
A. Yes.
Q. Did you develop any understanding as
to why Medley's clients were interested in
information about political and regulatory risks?
A. That was the substance of the entire
firm's business.
Q. Okay. And did you develop an
understanding as to why that was something that
your clients were interested in?
A. Well, of course. You know, I think
Page 35
J. ROSNER - CONFIDENTIAL that for the most part institutional investors
rely on traditional sell-side research for
specific financial analysis, but for the most
part sell-side research coming out of the
investment banks does a - - This is an opinion. - - a fair at best job on understanding regulatory legislative and policy issues.
Q. Did you develop an understanding as
to why your clients felt that political and
regulatory issues were important to them?
MR. CAHILL: Objection.
YOU can answer.
A. Did I develop an understanding?
Q:- - Did you ever --- Did.you ever talk to clients trying to sell Medley services to those
clients?
A. I never sold Medley services.
Q. Who would be the person at Medley
who was responsible for bringing in clients?
MR. CAHILL: During what time frame?
Q. During the time period you worked
there?
A. There were - - There were a whole host of people. You know, there was a head of
10 (Pages 34 to 37)
Page 36
J. ROSNER - CONFIDENTIAL
sales.
Q. Did Medley employ any financial
analysts?
A. No. You know, again, to my - - Well, no. To my understanding, no, but I also - - I wasn't running the firm and I didn't really know
the backgrounds of everyone there, so I can't
actually answer that question authoritatively.
, THE VIDEOGRAPHER: Excuse me for
interrupting, counsel. Someone's BlackBerry is
still on, and it's actually drowning out. Can
you just check again?
Q. Did you have any interaction with
Medley's clients during the period you worked
there?
A. Some of them, yes.
Q. What would be the - - sort of the nature of your interaction?
A. Again, it depends on the particular
day, the particular client. Different clients
find different things of differing importance and
interest, so I'm not sure that there's a standard
answer.
Q. What types of clients did Medley
Page 37
1 J. ROSNER - CONFIDENTIAL
2 have during the period you worked there that you
3 were aware of?
4 A. Institutional investors.
5 Q. What do you mean by "institutional
6 investors"?
7 A. Large pension plans, fund complexes,
8 hedge funds.
9 Q. Do you know if the Ohio State
10 Teachers Pension Fund was one of the clients?
11 A. I don't know. I don't believe so,
12 though.
13 Q. Did you ever during your time at
14 Medley ever interact with any of the plaintiffs
15 in this litigation?
16 A. To be honest, I don't know who the
17 plaintiffs are per se specifically.
18 Q. We've got OPERS, which is the
19 Ohio - - 20 A. I'm fairly certain the answer is no
21 on that.
2 2 Q. Okay. And do you know whether the
23 Ohio State Teachers Fund - - Ohio State Teachers 24 Retirement System was a client of Medley?
2 5 A. I don't believe so.
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 38
J. ROSNER - CONFIDENTIAL Q. Who - - During the period you were at
Medley, who owned Medley?
A. Again, in terms of the - - In terms of the structure, I know that Richard Medley was
the - - the managing partner. I don't know the
partnership structure in terms of other ownership
interests, but functionally Richard Medley - -
Q. Okay.
A. - - during the time I was there.
Richard sold the firm somewhere, I
want to say probably second or third quarter of
2005.
Q. And going back to Medley's clients,
do you know whether an individual name Alan
Warner was a client or a client contact?
A. I don't know. I don't recognize the
name, and I don't believe that I've ever had
contact with him.
Q. How about John Emboden (phonetic) ?
A. Same.
Q. Kathy Dodd?
A. What firm?
Q. She was with STRS, I believe.
A. I don't believe so.
Page 39
J. ROSNER - CONFIDENTIAL
Q. Steve Huber?
A. Not to my knowledge.
Q. Steve Mitchell?
A. Could you give me the names of the
firms?
Q. I believe all of these individuals
were individuals who worked with STRS.
A. I don't believe so.
Q. Bill Katrell (phonetic) ?
A. As I said, I don't believe I had any
interaction to my knowledge, to my recollection,
with that firm. And instead of the acronym could
you give me the name?
Q. Yes. I believe it is the State
Teachers Retirement System?
A. All right. So as I said before, I
don't believe that they were a client, and I
don't believe I had any interaction with them
whatsoever.
MR. KARAM: Of Ohio. Because many
states refer to their state teacher's retirement
system.
MR. TERRY: Appreciate it.
Q. How about the Ohio Bureau of
Esquire Deposition Services D.C. - 1-800-441-3376
Page 40
J. ROSNER - CONFIDENTIAL Worker's Compensation?
A. That's a bureau. That's not an
institutional investor, to my knowledge. No.
Q. Okay. What was your position at
Medley?
A. Managing director of financial
service practice.
Q. What were your job duties?
A. Advise - - Well, research, remain informed on significant regulatory legislative
policy issues domestically and globally as they
were impacting the financial sector.
Q. And did your sector include Fannie
Mae?
A. My sector included housing and
mortgage finance which, obviously, includes
Fannie Mae.
Q. How long did you cover the financial
services sector while you were at Medley?
A. The entire time. Well, that's not
quite correct. I was really responsible for what
they called the - - the regulatory legislative side of it, from probably mid-2003 - - Now, there
were other people who had been involved with it
Page 41
1 J. ROSNER - CONFIDENTIAL 2 prior to my time there. So, you know,
3 functionally it was my area from mid-2003.
4 Q. And who was your predecessor in that
5 area?
6 A. I think it was a number of people.
7 I don't think it was one specific person.
8 Q. Can you give me their names, please?
9 A. I would - - Again, I believe that 10 involved in it were Kevin Muehring and Richard
11 Medley. I'm not sure if anyone else.
12 Q. Is Kevin Muehring still at Medley?
13 A. To my knowledge.
14 Q. Is Mr. Medley still involved with
15 Medley?
16 A. No to my knowledge.
17 Q. How many people worked at Medley
18 during the time you were there?
19 A. Again, I can only give you a - - a 20 guess. I would guess that it was somewhere
21 around 60.
2 2 Q. Was there an individual who was
23 specifically assigned to Fannie Mae?
2 4 A. NO.
2 5 Q. How many individuals at Medley while
11 (Pages 38 to 41)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 42
J. ROSNER - CONFIDENTIAL you were there worked on getting information
about Fannie Mae?
A. The way the firm works is - - I don't think that it's specifically tasked with working
on a particular name, a particular issue. So in
the course of gathering information, frankly,
there were a lot of people who were able to feed
information in, but for the most part I was the
primary. Did occasionally other people provide
information to me? Yes.
Q. And who are the other individuals,
if you recall?
A. I gave you - - I gave you Kevin, and
beyond that it was, you know - - I can't give you a specific recollection, but there were probably
others.
Q. Did you prepare research reports for
your clients on Fannie Mae?
A. Research reports. In the - - On the
regulatory, legislative, and policy issues I did.
Q. Did Medley have a number of
publications that it would offer to its clients
somewhat?
A. Could you be more specific?
Page 43
J. ROSNER - CONFIDENTIAL Q. Sure. Did Medley provide some sort
of research product to its clients?
A. Several, as I said before.
Q. Did those different publications
have names?
A. Yeah. Remember, it's - - or not
remember. It's not per se in the publications.
They had different tags, different titles that
were put on them. I can't really recall what
they were.
Q. Okay. We'll go through some
specific examples later, which will make it
easier. . - Do you know how - - how wide your "
readership was for the documents that you sent to
clients?
A. Idonlt.
Q. Do you have any sense of how large
your client base was?
A. I don't.
MR. CAHILL: By "your" you mean
Medley s . MR. TERRY: Medley's, yes.
A. I don't.
Esquire Deposition Services D.C. - 1-800-441-3376
Page 44
J. ROSNER - CONFIDENTIAL Q. Do you know if a firm name Sonic
Capital was a client of Medley?
A. Idonttknow.
Q. I'm going to show you a document
which will be Rosner Exhibit 1, which is dated
March 11, 2003, and it has the Bates stamp at the
bottom MGA 01937.
(Whereupon, Exhibit Rosner-1 is
marked for identification by the reporter.)
Q. Mr. Rosner, do you recognize this
document?
A. I actually don't.
Q. Okay. Looking at it, can you tell
me what it is?
A. It looks like it's a note titled
Background. I don't know whether it's internal,
external. It has Sassan Ghahramani's name at the
top of it, and it seems to be some background on
the Washington regulatory legislative issues
surrounding Fannie Mae and its regulator.
Q. Okay. Looking at the line at the
top that has Mr. Ghahramani's name on it?
A. Yes.
Q. What does that line there indicate?
Page 45
J. ROSNER - CONFIDENTIAL
A. Probably - - MR. CAHILL: Let me caution you not
to speculate. If you know the answer, you should
give it.
A. Yeah, I don't know.
Q , Do you know if that indicates
whether Mr. Ghahramani was the author of this
document?
A. Idon'tknow.
Q. You see the date at the top says
March 11, 2003. Was that before or after you
joined Medley?
A. Again, it was probably within a week
or two weeks one-side-or the other of my joining.
And I don't know - - I don't remember the exact date.
Q. When you joined Medley, what did you
do to familiarize yourself with the tasks you
would be carrying out there?
A. What did I do to familiarize myself.
Q. Did you go through old Medley
research reports?
A. Actually, I did not:
Q. Have you had a chance to read this
12 (Pages 42 to 45)
Joshua Rosner - Confidential
Page 47
1 J. ROSNER - CONFIDENTIAL
2 his current title is.
3 Q. But he's still with Medley.
4 A. He is.
5 Q. If you could take a look at the
6 first line, it says, "In the post LTCM days of
7 the NASDAQ bubble, MGA got involved in a web of
8 powerful forces in Washington jockeying to reign
9 in the GSEs out of concern that they were growing
10 far too fast for comfort, and could pose systemic
11 risk."
12 Do you see that line refers to a
13 "web of powerful forces in Washington"?
14 Do you see that?
15 A. yes.
16 Q. Do you know what that's referring
17 to?
18 A. I don't.
19 MR. CAHILL: Objection. Form and
2 0 foundation.
21 Q. Did you have a concern when you
22 joined Medley that Freddie Mac and Fannie Mae
23 were growing too fast?
2 4 MR. CAHILL: Did he, personally,
25 have a concern?
Page 46
J. ROSNER - CONFIDENTIAL document?
A. I have - - just now? Q. Yes.
A. No. I skimmed it.
Q. If you could just take a look at it,
and when you're done let me know whether you
think this is something that you would have
received as your background when you started at
Medley.
A. Okay. I've read it.
Q. Okay. Having read it, do you
believe that this is something that would have
been provided to you for your background when you
started at Medley?
A. I have no recollection.
Q. Okay. And do you know whether this
was something that would have been provided to
Medley's clients?
A. Again, Idon'tknow.
Substantively - - Again, I don't know.
Q. Okay. And who is Mr. Ghahramani?
A. At the time he was a - - one of the managing directors. Today he is - - holds an executive position. I'm not actually sure what
Esquire Deposition Services D.C. - 1-800-441-3376
Page 48
J. ROSNER - CONFIDENTIAL
Q. Did you, personally, have a concern?
A. Have a concern? No. I didn't have
a concern.
Q. Was it your view that Fannie Mae
posed systemic risk?
A. It was not my view that they posed
systemic risk. It was my view that the entire
housing market was rapidly becoming at risk, and
it was my view that the company - - the company - - both Fannie and Freddie and many of the mortgage
market players had become increasingly willing to
take risks that - - that historically they might not have.
Q. During your time at Medley Advisors
was there ever a point that you believed that
Fannie Mae was a good investment?
A. That actually was never part of my
job function to have such a view one way or the
other, a good or bad investment.
Q. Okay. What was your job function?
A. To advise institutional investors on
regulatory, legislative, and policy issues that
were confronting the financial service sector and
participants.
Page 49
1 J. ROSNER - CONFIDENTIAL 2 Q. Okay. Did your view of the
3 political and regulatory risks facing Fannie Mae
4 change during the period you were covering the
5 firm?
6 A. Did my view of the political,
7 regulatory - -
8 MR. KARAM: I'm going to object.
9 It's a compound question.
10 A. Yeah. Could you actually rephrase
11 it?
12 Q. Sure. Did your view of the
13 political risks facing Fannie Mae change over
14 time while you were at Medley?
15 A. I don't believe they really did.
16 Q. Okay. Does that mean in your view
17 that the political risks facing Fannie Mae in
18 your view were constant between the March, 2003,
19 through 2006 period?
20 MR. KARAM: Objection. No
2 1 foundation.
MR. CAHILL: Objection.
You can answer if you - - Do you
24 understand the question?
2 5 THE WITNESS: NO. Actually, I would
13 (Pages 46 to 49)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 50
1 J. ROSNER - CONFIDENTIAL
2 love it rephrased.
3 Q. Okay. I believe you testified that
4 you did not believe that the political risks
5 facing Fannie Mae changed over the time when you
6 were at Medley. Let me ask first, did you
7 believe that the intensity of the political risks
8 facing Fannie Mae - - 9 A. of course.
10 Q. - - changed? 11 Okay. And when did that begin to
12 change?
13 A. Significantly at about the time of
14 Freddie Mac's accounting scandal.
15 Q. And how did it change?
16 MR. CAHILL: Just SO we're clear,
17 you're asking Mr. Rosner for his - - 18 MR. TERRY: For his view. Yeah.
19 A. It seemed rather clear that the
20 regulatory and policy issues presented in the
21 Freddie Mac accounting scandal were likely to
22 result in increased risk to Fannie Mae.
23 Q. Increased risk how?
2 4 A. From a policy perspective, that
25 Fannie is one of two housing - - private housing
Page 5 1
J. ROSNER - CONFIDENTIAL GSEs and, therefore, what was a negative for one
of them was likely to become a negative event for
the other from a policy perspective.
Q. And by that do you mean that it
increased the likelihood of negative legislative
outcomes for Fannie Mae?
A. It increased the chances of negative
legislative outcomes, I wouldn't say that. I
would say that it increased the risk of movement
of legislation that might be negative for them.
Q. And was it your view that the
Freddie Mac report also increased the risk of
adverse regulatory action against Fannie Mae?
A. - It increased my view that there was likely to be a similar investigation of Fannie
Mae.
Q. And was it your view that that
investigation would pose substantial risks to
Fannie Mae?
MR. CAHILL: Objection.
A. I'm not sure I understand the
question.
Q. Well, did you have a view as to what
the result of that investigation would be?
Page 52
J. ROSNER - CONFIDENTIAL A. Did I - - Did I have a particular
view? No. Did I believe that once we saw the
output from the Freddie investigation in the form
of a report, that it might actually create a
context and a sense of what the regulator might
be considering or looking at or concerned with or
interested in with regard to Fannie Mae.
Q. I'm going to show you another
document.
Why did you believe that the Freddie
Mac investigation meant that Fannie Mae would
also be investigated?
A. The investigation - - Again, the investigation report became the basis for that
view; but more specifically, they're one of two
entities regulated by the same regulator.
Q. I'm going to show you a document
which is dated June 9, 2003. It's Bates-stamped
MGA 02036. And this will be Rosner Exhibit 2.
(Whereupon, Exhibit Rosner-2 is
marked for identification by the reporter.)
Q. Mr. Rosner, do you recognize this
document?
MR. CAHILL: Do you want him to read
Page 53
J. ROSNER - CONFIDENTIAL the document or just want - -
Q. Yes. Take as much time as you need
to familiarize yourself with it. I'll ask you
about specific parts.
Okay. Mr. Rosner, do you recognize
this document?
A. Honestly, I don't recall. I don't
believe that it's mine.
Q. Looking at the format, do you know
whether this is something that would have been
provided to investors?
A. In my view it very well might have,
but I don't - - I can't say for certain.
Q. Okay. Who in your view is the
person at Medley most likely to know that?
A. Currently at Medley, I don't know.
Q. Taking a look at the top line, it
says, "Richard Medley, Medley Investment Group."
Does that indicate to you whether
Mr. Medley was the author of this report?
A. It doesn't.
Q. Was this report authored after you
had begun at Medley?
A. Itwas.
14 (Pages 50 to 53)
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 54
J. ROSNER - CONFIDENTIAL
Q. Take a look at the top. There's a
title that says, "Medley Global Advisors GSEs
Update. "
Is the GSEs update a regular
publication that Medley would provide to its
customers?
A. Could you define "regular"?
Q. Sure. It says "update." I assume
that's updating something. Did Medley provide
GSEs updates on some periodic basis to its
clients?
A. Not with any specific periodicity.
Q. Okay. Do you have a sense of how
often GSE updates would be provided to Medley's
clients?
A. It depended on the regulatory,
legislative, and policy issues at hand.
Q. It would be driven by what was going
on in the world.
A. correct.
Q. If you could take a look at the top
line. It says, "From a wide range of calls
today, we are now certain that Freddie Mac's
stunning announcement took the White House,
Page 55
J. ROSNER - CONFIDENTIAL Treasury, and OFHEO by surprise."
Does that mean that this report was
issued after the announcement by Freddie Mac of
its earnings restatement?
MR. CAHILL: Objection. Foundation.
If you know - -
A. Idon'tknow.
Q. Okay. Taking a look at that first
line, does that provide you with any context for
when this document was written?
A. Other than speculation, no.
Q. Okay. It's referring to Freddie
Mac's "stunning announcement." Do you know what
it means by that?
A. Again, it would be speculation.
Q. At some point did Freddie Mac
announce an earnings restatement?
A. At some point they announced a
earning restatement. At some point they
announced an accounting pxoblem was uncovered.
There were a number of announcements this could
refer to.
Q. Okay. Do you know the time of
Freddie Mac's announcement of an earnings
Esquire Deposition Services D.C. - 1-800-441-3376
Page 56
1 J. ROSNER - CONFIDENTIAL 2 restatement?
3 A. Off the top of my head I don't.
4 Q. Okay. Looking at this document,
5 this document is dated June 9, 2003. Does that
6 refresh your recollection that Freddie Mac's
7 restatement was around that day?
8 A. It doesn't refresh my recollection.
9 Does it intuitively make sense that that is what
10 it's referring to? Yes.
11 Q. Can you take a look, there are a
12 bunch of points on the first page, 1, 2, 3, 4 ?
13 A. Uh-huh.
14 Q. Take a look at Point 3, it says
15 ''OFHE0 has one last chance to prove itself before
16 being dismantled and replaced by a super
17 regulator. The Freddie blow-up could not have
18 come at a better time for Treasury officials, who
19 have been directing an internal working group
20 that will recommend folding the regulatory
21 jurisdiction of OFHEO and FHFB together into one
22 significantly empowered regulator housed directly
23 in the Treasury Department."
24 Looking at that, do you recall if
25 you wrote that?
Page 57
J. ROSNER - CONFIDENTIAL A. I did not write that.
Q. Do you know who did?
A. Idon't.
Q. Do you know what it's referring to?
A. Again, I could speculate.
Q. Well, did you ever talk to anyone at
the time about what effect the Freddie
announcement would have on OFHEO?
A. Well, "would have on OFHEO' is a
certain statement. I would actually never have
had a certain view of what was going to happen as
opposed to possible, probable, or potentially
could happen.
Q. Okay. Was it your view that Freddie
Mac's announcement of the earnings restatement
provided OFHEO with one last chance to prove
itself before being dismantled?
MR. CAHILL: Objection.
Q. YOU can answer.
A. It was not.
Q. Okay. You see Point 4? It says,
"OFHEO will become proctologically inclined"?
A. I do.
Q. It's fair to say that you would
15 (Pages 54 to 57)
Joshua Rosner - Confidential
Page 58
1 J. ROSNER - CONFIDENTIAL 2 recall if you had authored that line?
3 A. I think I believe - - I believe I
4 would recall. I don't believe I did.
5 Q. Have you ever heard that expression
6 before?
7 A. Ido. Ihave.
8 Q. Who did you hear it from?
9 A. Oh, I mean, it became sort of a
10 catch phrase that was not only within Medley but
11 used outside of Medley.
12 Q. As a result of this report?
13 A. Which report?
14 Q. That we're looking at now.
15 A. No. No. As a result of a regulator
16 who has an increased need to actually look at
17 companies that perhaps it hadn't had.
18 Q. Okay. What does that sentence mean?
19 I'm not asking for the literal definition, but as
20 used in context? Do you - - 2 1 MR. CAHILL: What does it mean in
22 this document?
2 3 Q. In the context of this document, do
24 you have an understanding of what it means?
2 5 MR. CAHILL: Objection. Foundation.
Page 59 1 J. ROSNER - CONFIDENTIAL 2 He didn't write it, Joe.
3 Q. Well, you said you've used the
4 phrase "proctologically inclinedn - - 5 A. Absolutely.
6 Q. - - in your time at Medley.
7 And what does that mean?
8 A. To me?
9 Q . yes.
10 A. It means that you have an increased
11 interest in doing detailed regulatory and
12 examination work.
13 Q. Was it your view that as a result of
14 the Freddie Mac announcement of earnings
15 restatement-'OFHEO would become proctologically
16 inclined?
17 A. Based on my understanding or my use
18 of that term, yes.
19 Q. I'm going to show you another
20 document, which is dated June 12, 2003.
21 ~ates-stamped MGA 02017.
2 2 (Whereupon, Exhibit Rosner-3 is
23 marked for identification by the reporter.)
2 4 Q. Do you recognize this document?
2 5 A. Let me review it.
Esquire Deposition Services D.C. - 1-800-441-3376
Page 60 J. ROSNER - CONFIDENTIAL
Q . sure.
A. I don't specifically recognize it.
Q. Going back for one second to that
last document, specifically back to the phrase
"proctologically inclined,' you mentioned it had
been used a number of times throughout Medley.
Have you ever used it in connection with a
regulator other than OFHEO?
A. Absolutely.
Q. And which regulator?
A. Many. I would say I've probably
even used it in relation to recent events with
the Financial Service Authority in the Northern
Rock situation. I think it's typically a term
that would be used when a regulator has not
actually been as aggressive in its execution of
its authority as it probably or regulatorily is
expected to.
Q. Okay. Looking at the document which
I just provided you, which is Rosner Exhibit 3,
looking at the format, it says, "Medley global
advisors background."
Does that indicate to you what this
document is?
Page 61
J. ROSNER - CONFIDENTIAL A. Where does it say "backgroundn? I'm
sorry. I pulled the - - I was still on the - -
Q. Proctologically inclined?
A. Yes. I'm sorry. Could you repeat
the question?
Q. Sure. Taking a look at the title of
this document, does that indicate to you what
this document is?
A. To my recollection, background was
internal only.
Q. Okay. Do you know whether you were
the author of this?
A. I am fairly certain that I was not.
Q. You see Mr. Muehring's name at the
top?
A. Uh-huh.
Q. Does that indicate he was the
author?
A. It indicates he might have been the
author, but - - but I don't know. Q. You don't have any recollection of
whether he was the author?
A. Idonlt.
Q. Let me show you another document,
16 (Pages 58 to 6 1)
Joshua Rosner - Confidential
Page 62
J. ROSNER - CONFIDENTIAL which is dated August lst, 2003, to be marked as
Rosner Exhibit 4. Bates stamp is MGA 02317.
(Whereupon, Exhibit Rosner-4 is
marked for identification by the reporter.)
Q. Can you identify this document?
A. DO you want me to - - Q. You can take whatever time you need
to make yourself comfortable that you know what
it is.
A. Uh-huh.
Q. Okay. Can you identify this
document?
A. I believe that it's a call report.
Q. What's a call report?
A. In other words, it's an internal
background. It's not a specific call - - I should
correct myself. I don't believe it's a call
report; I believe that it's an internal
background note.
Q. IS this a document that you
authored?
A. It's a document that I don't recall
authoring. It may well have been.
Q. And the fact that your name appears
Page 63
J. ROSNER - CONFIDENTIAL at the top, does that give you any indication as
to whether you were the author?
A. Again, the way their internal
systems worked, you could actually put something
in background and others could edit it, which
would just switch the name at the top. So it
doesn't give any clear indication.
Q. Okay. If you could take a look at
the second paragraph?
A. Uh-huh.
Q. Well, first let me ask: You said
this not a call report but this a background.
A. Uh-huh.
Q. Were these - - Let's take a look at a
call report first.
I'm going to show you a document
which is Bates-stamped MGA 02420, marked as
Rosner Exhibit 5, and why don't we keep these two
documents both together. Hopefully it will help
out in context.
(Whereupon, Exhibit Rosner-5 is
marked for identification by the reporter.)
Q. Okay. Mr. Rosner, can you identify
this document?
Page 64
J. ROSNER - CONFIDENTIAL A. Yeah. Well, I can tell you that it
appears to be a call report.
Q. Okay. Is it a call report authored
by you?
A. I don't specifically recall. It may
well be.
Q. Do you see at the bottom it says,
"Author Josh Rosner"?
A. Then it probably was.
Q. What is a call report?
A. The firm had a policy that - - which was loosely followed, that when you had
conversations you filed call reports.
Q. Did you regularly prepare these in
connection with your job at Medley?
A. Regularly. Did I often? Yes.
Q. Okay. Why did you prepare them?
A. Firm policy.
Q. Okay. Did you use them at all in
drafting reports for clients?
A. The call reports specifically? No.
Q. Okay. Did you distribute the call
reports to others at Medley?
A. The - - I did not specifically
Page 65 J. ROSNER - CONFIDENTIAL
distribute them.
Q. Was there some system that
distributed them?
A. Yes.
Q. How did that system work?
A. My understanding is at the time most
of the content and client-facing folks had access
to them.
Q. And what was the purpose of these
call reports?
A. I can't answer. I mean, it's - - That was not my - - It was not my decision. It
was not my system. It was not my ... Q. Okay. In terms of the timing of
when you prepared them, would you prepare them
contemporaneously while you were on the call,
after the call?
A. Depends.
Q. Typically would you do it shortly
after the call?
A. I don't know if there was a typical.
Q. On average when would you prepare
them?
MR. CAHILL: Objection.
Esquire Deposition Services D.C. - 1-800-441-3376
17 (Pages 62 to 65)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 66
1 J. ROSNER - CONFIDENTIAL 2 A. mean-- 3 Q. Well, did you ever prepare them a
4 week after a call?
5 A. yes.
6 Q. Okay. Is there any time stamp on
7 this that would indicate when it was prepared?
8 A. There's a time stamp that would
9 indicate when it was filed, not necessarily when
10 it was prepared.
11 Q. Okay. You see the box that says,
12 Date, 8-27-03?
13 A. correct.
14 Q. What date is that referring to?
15 A. That merely means the last time it
16 was edited in the system.
17 Q. Okay. So that's not necessarily the
18 date of meeting.
19 A. correct.
2 0 Q. Okay. When you drafted these, did
21 you try and make sure these were accurate?
2 2 A. That's - - The system was one that
23 many of us at the firm didn't agree with, and
24 different - - people at the firm used them 25 differently.
Page 67
J. ROSNER - CONFIDENTIAL They were in some sense used
initially, at about this time I would guess, as a
benchmark of a number of calls out that - - that a
salesperson made or an analyst made, and so the
context of them were by and large correct.
Different people actually used different - - different approaches to, you know, specific
quoting and, you know, specific context.
Q. Well, what was your approach?
A. It depended on the - - on the report.
Again, did I rely on the reports to write - - the call reports to write my reports? No. So quite
often they were really just, from my perspective,
more done because of a requirement that they be
done rather than a focus on the content.
Q. Okay. Was there a requirement that
they be done accurately?
MR. CAHILL: Objection.
Q. Well, did you view that you had any
responsibility to accurately reflect your - - A. Generally yes.
Q. And did you do your best to make
sure the call reports were accurate?
A. Most of the time.
Esquire Deposition Services DOCo - 1-800-441-3376
Page 68
J. ROSNER - CONFIDENTIAL
Q. Did you ever put anything in a call
report that you believed to be false?
A. NO.
Q. And did you know that others at
Medley would be looking at these call reports?
A. Yes.
Q. And they might be relying on these
call reports in some aspect.
MR. CAHILL: Objection.
A. I can't answer whether they would be
relying on them. It was a small enough
organization that for the most part there were
iterative discussions with people, and I think we
all had the same view of call reports or
generally the same view of call reports.
Q. Did you take notes during your
calls?
A. I don't believe I did, actually.
Q. Did you tape-record them or
anything?
A. NO.
Q. At the top it says, "Outbound call
to Peter Brereton of OFHEO."
A. Uh-huh.
Page 69
J. ROSNER - CONFIDENTIAL Q. What does that mean?
A. That would mean that that was who
the call was to.
Q. And you made the call to
Mr. Brereton.
A. Yes.
Q. Who was Mr. Brereton?
A. He was - - I don't know his specific title. He was an information officer at OFHEO.
Q. During your time at Medley how
frequently did you talk to Mr. Brereton?
A. Itdepends.
Q. Dozens of times?
A. I don't know if I would say dozens,
plural. Probably - - probably somewhere - - I can't even guess because of, you know, I mean,
you're talking about three years ago. was it - -
Was it as information came out of OFHEO that made
sense to verify or dig in deeper on or - - Yes. Q. Did you have a preexisting
relationship with Mr. Brereton from your previous
employment?
A. NO.
Q. Do you recall when you first
18 (Pages 66 to 69)
Joshua Rosner - Confidential
Page 70
1 J. ROSNER - CONFIDENTIAL 2 contacted Mr. Brereton?
3 A. Idon't.
4 Q. How did you - - When you had 5 discussions with Mr. Brereton, were they always
6 by phone?
7 A. NO.
8 Q. Did you ever meet with him for
9 drinks or anything like that?
10 A. yes.
11 Q. HOW frequently?
12 A. Occasionally.
13 Q. Did you ever meet with Mr. Brereton
14 for dinner?
15 A. I don't believe so.
16 Q. If you could take a look at the
17 summary, what is the summary section of the
18 contact call report in general terms? Not this
19 specific summary, but what role does that play in
20 the document?
21 A. Again, for my purposes or for other
22 people - -
23 Q. For your - - Under your practices. 24 A. ~t was a general recapping of some
25 of the points of a discussion or inferences drawn
Page 7 1
J. ROSNER - CONFIDENTIAL from a discussion.
Q. Do you see on the first line it
says, "he saidu and then there's quotes, which I
guess goes on to the end of the document?
A. Uh-huh.
Q. What does your use of quotes in your
practice mean?
A. Again, in call reports it's not a
literal verbatim. It is a general and
substantive recap.
Q. Is it an attempt by you to reflect
the substance of the conversation?
A. To reflect the substance.
Q. m d is your attempt to reflect the
substance of that conversation accurately?
A. In this specific case I have no
recollection.
Q. Do you recall any instance where you
tried to inaccurately capture what someone said?
A. No, but, you know, we all know that
at times the accent is on different syllables.
Q. Okay. If you take a look at the
second clause in the section that appears in
quotes, it says, "I got a call, I cannot confirm
Esquire Deposition Services D.C. - 1-800-441-3376
Page 72
J. ROSNER - CONFIDENTIAL the info is right, telling me the Federal
Elections Commission is doing an investigation of
Freddie's and perhaps Fannie's fundraising based
on lobbyists restaurant deal and anything that
comes up in the search. The FEC is not
particularly strong, but if they turn up
something they can hand it over to the U.S.
Attorney.
Do you recall having a discussion
with Mr. Brereton about that?
A. I recall not specifically having a
conversation with Mr. Brereton about that.
Q. Okay. Does that mean you recall
having a conversation about that subject matter?
A. I recall there being numerous
conversations with people outside of OFHEO about
that subject matter.
Q. Who else did you have conversations
with?
A. I can't recall with specificity.
This is a - - This was a rumor that was actually circulating fairly broadly around the Washington
community at the time.
Q. Was it accurate?
Page 7!
J. ROSNER - CONFIDENTIAL
A. I have no idea.
Q. Do you have any idea why
Mr. Brereton was providing you with this
information?
A. I don't.
Q. Is election law part of OFHEO1s
regulatory duties, as far as you know?
A. NO.
Q. Do you have any understanding as to
why Mr. Brereton would ever agree to provide you
with information?
A. Would ever agree to provide me with
information?
Q. Yes.
MR. CAHILL: Objection. Calls for
speculation.
Q. Did you ever talk to Mr. Brereton
about why he was providing you with information?
A. Mr. Brereton was an information
officer . Q. Okay. Do you know if he met for
drinks with all the analysts covering Fannie - -
A. Idon'tknow.
Q. The information that you provided in
19 (Pages 70 to 73)
Joshua Rosner - Confidential
Page 74
J. ROSNER - CONFIDENTIAL
your Medley reports, was that exclusive
information that was already in the public realm?
MR. CAHILL: That's a very broad
question. Objection.
A. Yeah. That wasn't "yes," yeah.
That was yes, it was a broad question. So could
you make it more specific?
Q. Do you have any sense of how much a
subscription to Medley services costs clients?
A. Idon't.
Q. Do you have any sense of whether it
was in the six figures or seven figures?
A. Subscription annually, weekly?
Q. Annually.
A. Depends on which services they took,
but I don't know the specific pricing on any, and
my understanding is there was - - there were different prices for different services or
clients or - - and I don't know how that was
defined.
Q. Okay. Do you know whether the
information that Mr. Brereton was providing you
about the federal elections commission was public
at that time?
Page 75
J. ROSNER - CONFIDENTIAL
A. I don't know. I doubt that that
information was information that I hadn't heard
elsewhere.
Q. Did you ever have any discussions
with Mr. Brereton about why he ought to provide
you with information?
A. No. Not to my recollection. No.
Q. Okay. Did you find that
Mr. Brereton was open in his communications with
you from the beginning, or did you have to
persuade him to provide you with information?
A. I don't recall. What I will tell
you, just to clarify, is quite often - - And it probably was the case in this situation, but I
can't recall specifically. - - he would
distinguish between his official views and his
personal views, and he would explicitly do so in
the call.
Q. Did you ever get a sense of what
made that distinction?
MR. CAHILL: Objection.
A. Did I ever get a sense - - Q. Of how he distinguished what was
official OFHEO views and what were his views?
Esquire Deposition Services DOCo - 1-800-441-3376
Page 76
J. ROSNER - CONFIDENTIAL
MR. CAHILL: Objection. Calls for
speculation.
Q. YOU can answer.
A. I always assumed that they were
whether it was specifically on things of OFHEO's
purview.
Q. Okay. You can put away Exhibit 5.
Keep out Exhibit 4 for a minute. I'm going to
show you another exhibit which we'll mark as
Exhibit 6, which is a document dated September
8th. 2003, Bates-stamped MGA 02417.
(Whereupon, Exhibit Rosner-6 is
marked for identification by the reporter.)
Q. Can you take a look at the very last
page of this document.
Okay. This document appears to have
two Bates numbers. At the top it says MGA 09704
on the first page. At the bottom it says MGA
02417.
Mr. Rosner, can you take a look at
the last page of this document?
A. Uh-huh.
Q. Do you see where it says "author"?
MR. KARAM: Which page?
Page 77
J. ROSNER - CONFIDENTIAL MR. TERRY: The last page. I'm
sorry.
A. Yes.
Q. And is that your name?
A. That is my name.
Q. Does that indicate to you that you
were the author of this call report?
A. Again, it may - - if it - - It's possible that it doesn't indicate that, based on
the way their systems worked. Because if I was
the last one to go into the document and edit any
of it, it would have made me the author of all of
it in the system, whether that was, in fact, the
case or not.
Q. Would you - - Did you ever edit other
people's call reports?
A. For - - For factual issues of record,
at times other people did. Do I think - - Do I
remember specifically doing so myself? I don't.
Q. Okay. Do you have any reason to
doubt that you were the author of this document?
A. I don't have any specific reason,
because I don't specifically recollect this
document.
20 (Pages 74 to 77)
Joshua Rosner - Confidential
Page 78
J. ROSNER - CONFIDENTIAL Q. You see the top says, "Outbound call
to Steven Blumenthal of OFHEO1'?
A. Yes.
Q. Who is Mr. Blumenthal?
A. Mr. Blumenthal was the deputy
director and then the acting director at OFHEO,
and prior to that I think was counsel to the then
director.
Q. And do you know what he did before
that?
A. Well, it states it here in the - - in the background.
Q. Okay. And looking at the
background, does that refresh your recollection
as to what Mr. Blumenthal did prior to that?
A. It does.
Q. Okay. And he was, himself, a
political analyst for Schwab Capital Markets?
A. correct.
Q. Did you know Mr. Blumenthal when he
was an analysts -- A. I didn't.
Q. - - for Schwab? And I guess prior to that he served
Page 79
J. ROSNER - CONFIDENTIAL as finance counsel for the House Commerce
Committee, and was vice president and director of
regulatory relations at the Securities Industry
Association.
Did you know Mr. Blumenthal when he
was with the House Commerce Committee?
A. I didn't.
Q. Do you know which - - which party he was serving when he was with the finance
committee?
A. If my recollection is correct, I
believe he was a republican.
Q. If you could take a look at the
summary line at the top, it says, "Great call,
great sourceu?
A. Uh-huh.
Q. Did you write that?
A. I don't recollect.
Q. Did you view Mr. Blumenthal as being
a great source?
A. Yes, but not on all matters.
Q. Okay. Do you have any reason to
doubt that you wrote this document?
A. Do I have any reason to doubt it? I
Esquire Deposition Services D.C. - 1-800-441-3376
Page 80
J. ROSNER - CONFIDENTIAL haven't read it in its entirety. As I said, I
don't have reason to doubt that I wrote much of
it. I don't know whether anyone else edited it
at any point.
Q. Okay. Did you have a number of
conversations with Mr. Blumenthal while you were
at Medley?
A. I did.
Q. Do you recall if you had
conversations with him in September of 2003?
A. I don't specifically recall.
Q. If you could take a look at the
first line on that, it says, "Great conversation
with Steve, a major source."
A. Uh-huh.
Q , The word "major" is in all caps.
Did you have a practice of using all
caps to emphasize something?
A. Did I have a practice of it? No.
Did it - - Did I occasionally do it? I guess at
times . Q. You see the - - At the end of the
first paragraph it says, "All of this is
currently off the record"?
Page 81
J. ROSNER - CONFIDENTIAL
A. Uh-huh.
Q. Underlined? What does that mean,
"All of this is currently off the record"?
A. That is to say that I did not want
anyone discussing any of this, and that his views
were not to be discussed and were - - my understanding were largely his views.
Q. What -- What was your understanding
of matters that were off the record? Could you
report on them at all, or just without
attribution?
A. I don't believe that I could report
on them at all, but I don't think there was a
specific practice. It was - - It was not a specific term that was used with any regularity.
Q. If you take a look at the first
line, it says, "The FRA investigation."
A. Uh-huh.
Q. "People are going to be shocked by
what is in the report. We took a lot of flak
about the Parsegian thing. But as the person
heading up the investigations, I can tell you
that the things that we were told under oath by
Parsegian and others made it very clear that we
21 (Pages 78 to 81)
Joshua Rosner - Confidential
Page 82
J. ROSNER - CONFIDENTIAL
needed to clean house. The board was asleep at
the switch. If we were the SEC, based on what we
found we would have forced the company into
bankruptcy. I don't think the stocks will get
crushed because the investigation will be looked
at, memorialized in the past, but it is
important. "
Do you recall Mr. Blumenthal making
comments along those lines to you?
A. Not specifically. Is it possible?
Yes.
Q. And the fact that quotes are used
there, under your practice does that mean you
were trying to reflect - -
A. Correct.
Q. - - the substance of what
Mr. Blumenthal - -
A. Correct.
Q. If you take a look at Point 3, it
says, "Legislation and the treasury." And there
appear to be quotes at the beginning of that
point and then at the end?
A. Uh-huh.
Q. Again, does that purport to capture
Page 83
J. ROSNER - CONFIDENTIAL
the substance of what Mr. Blumenthal said?
A. Again, not with specificity, but I
would not be surprised if those were his
personal, not necessarily professional, opinions
in our conversation.
Q. If you take a look, sir, in the
middle of that paragraph, it says, "As we speak,
F&M is working with Treasury to draft the
administration's bill. There will be a five-year
moratorium preventing Treasury from increasing
capital requirements of the agencies as part of
the trade with F&M. Thatps like a
get-out-of-jail-free card. I will tell you,
especially having seen what I have seen during
the investigation, that this is a rat's nest. I
can't tell you when or how, but I, Steve
Blumenthal, personally would never own a single
share of either stock. At some point these
companies will get crushed under their own
weight. "
DO you see that?
A. I do see that.
Q. And do you recall Mr. Blumenthal
making comments along those lines?
Esquire Deposition Services D.C. - 1-800-441-3376
Page 84
J. ROSNER - CONFIDENTIAL
A. I don't specifically. It
wouldn't - - It wouldn't surprise me, but neither would it surprise me to have had him make
comments to the contrary of that at other times.
Q. Okay. Do you recall Mr. Blumenthal
ever describing Fannie Mae in September of 2003
as a rat's nest?
A. Idon't.
Q . Do you recall Mr. Blumenthal in
September of 2003 telling you that he would
personally never own a single share of either
Fannie Mae of Freddie Mac stock?
A. I don't specifically recall that.
Q. Okay. Is that consistent with what
he was telling in September of 2003?
A. My recollection of September, 2003,
specifically is obviously not terrific, so I - - I really can't answer that. I think that - -
MR. CAHILL: Let me caution you not
to speculate.
THE WITNESS: Right.
MR. CAHILL: If you know the answer,
give the answer.
A. SO no.
Page 85 1 J. ROSNER - CONFIDENTIAL 2 Q. September, 2003, was that before or
3 after OFHEO had issued its report on Fannie Mae?
4 A. I don't recall off the top of my
5 head.
6 Q . Okay. Is that in September of 2004?
7 A. I think it - - I think it was.
8 Q. Okay. Do you know when OFHEO began
9 its special investigation of Fannie Mae?
10 A. I don't recall. I recall that it
11 was sometime after the Freddie investigation was
12 completed.
13 Q. Do you know if it was before or
14 after September, 2003?
15 A. I don't recall.
16 Q. Can you take a look at Point 5 on
17 this document. Middle of that paragraph it says,
18 "These companies" - - all caps - - "will fail at
19 some point, and no one is acting responsibly
20 now."
21 Do you recall Mr. Blumenthal making
22 comments along those lines to you?
2 3 A. I don't.
2 4 Q. Okay. Do you see that paragraph
25 appears in quotation marks?
22 (Pages 82 to 85)
Joshua Rosner - Confidential
Page 86
J. ROSNER - CONFIDENTIAL
A. Yes.
Q. Does that mean you're attempting to
reflect Mr. Blumenthal's comments?
A. In all likelihood. But, again, not
verbatim, so it may have been in tone.
Q. By "in tone" you mean the substance
of the comments?
A. The sentiment, or what I inferred.
Q. Can you take a look at Point 6?
A. Yes.
Q. It says, "1 tell Steve that I've
been concerned about these issues and that I
would be interested in knowing anything that may
help embarrass officials into doing the right
thing or give me pressure to exert through
investors on the agencies. Steve tells me that I
should expect him to help me in that way."
A. Uh-huh.
Q. Do you recall making those comments
to Mr. Blumenthal?
A. I don't.
Q. Okay. That paragraph doesn't
appear - - That sentence doesn't appear in quotes,
does it?
Page 87
J. ROSNER - CONFIDENTIAL A. Itdoesnot.
Q. Does that indicate to you that these
are comments that you are making rather than
Mr. Blumenthal?
A. It doesn't. You know, again, the
value of the call reports was more a functionary
requirement, a functional requirement at Medley
than necessarily reflective of the specific
substance. Most of us hated doing them. Some of
us did do them. Some of us didn't do them, you
know, so it doesn't necessarily mean anything.
Q. Well, you didn't make these things
up, did you?
A. NO.
Q. If you wrote in your report, "1 tell
Steve that I've been concerned about these issues
and that I would be interested in knowing
anything that may help embarrass officials into
doing the right thing or give me pressure to
exert through investors on the agencies," would
that be something that you, in fact, said?
A. Perhaps if you go back to the date,
this is at a point where there were internal
issues within Medley which may actually have
Esquire Deposition Services D.C. - 1-800-441-3376
Page 88
J. ROSNER - CONFIDENTIAL caused more color to be put into reports than
actually reflected my view. And as I said, I
didn't use the reports as the basis of my
published reports.
Q. So what you wrote down in this
report might not actually be true.
A. Correct.
MR. TERRY: Why don't we take a
short break. They need to change the tape, but
take time to refresh ourselves.
THE VIDEOGRAPHER: The time is
11:21. We're going off the record. This is the
end of Tape 1.
(Whereupon, a recess is taken.)
THE VIDEOGRAPHER: We are now back
on the record. The time is 11:33 a.m. This
marks the beginning of Tape 2 in the deposition
of Mr. Joshua Rosner, which is being taken at
OtMelveny & Myers. The videographer is Terry
Carruthers, here on behalf of Esquire Deposition
Services, located at 1020 19th Street, Northwest,
Washington, D.C.
Counsel may proceed.
Q. Mr. Rosner, you understand you're
Page 89
J. ROSNER - CONFIDENTIAL still under oath?
A. Uh-huh. Ido.
Q. Did you tell Mr. Blumenthal that you
would be interested in knowing anything that
might help embarrass the officials into doing the
right thing regarding Fannie Mae?
A. I don't recall.
Q. Did you write that in this memo?
A. I don't recall.
Q. Did you ever tell Mr. Blumenthal
that you would be interested in knowing anything
that might give you pressure to exert through
investors on the agencies?
A. Through - - Absolutely not. Q. Did you write that?
A. Through investors? I don't recall.
Q. If you could take a look at Point 6.
Do you see the first line? It says, "I tell
Steve that I have been concerned about these
issues and that I would be interested in knowing
anything that may help embarrass officials into
doing the right thing or give me pressure to
exert through investors on the agencies."
A. I don't recall saying that.
23 (Pages 86 to 89)
Joshua Rosner - Confidential
Page 90
1 J. ROSNER - CONFIDENTIAL 2 Q. Did you write that?
3 A. I don't recall. I already said that
4 I don't recall writing this.
5 Q. Do you have any reason to think that
6 anyone else wrote that?
7 A. Do I have any reason to believe?
8 NO.
9 Q. Who was the primary contact, during
10 your time at Medley, with Mr. Blumenthal?
11 A. I believe I was.
12 Q. Do you recall Mr. Blumenthal ever
13 telling you that, quote, "I should expect him to
14 help me in that way?
15 A. Idon't.
16 Q. Do you recall Mr. Blumenthal ever
17 telling you he would provide you with
18 embarrassing information regarding Fannie Mae so
19 you could put pressure on their investors?
20 A. Absolutely not.
2 1 Q. You mentioned earlier that there
22 were some internal issues at Medley that may have
23 colored what you wrote in these call reports?
2 4 A. Correct.
2 5 Q. What are those issues?
Page 91
J. ROSNER - CONFIDENTIAL A. The issues were that the firm
historically had a view that everything had to be
viewed as exclusive information whether it was or
it wasn't and, therefore, had to be supported by
sources which quite often could have been public
documents, but that wouldn't have satisfied the
internal pressure.
Q. So sometimes you relied on public
documents but claimed in your call reports that
you had spoken to individuals?
A. NO.
MR. CAHILL: Objection.
.Q. Okay. Can you explain a little .more
what you mean by that?
A. That the pressure was to have
everything sourced to a person.
Q. Did that pressure cause you to alter
your call reports?
A. NO.
Q. Did that pressure cause you to
include information in your call reports that was
false?
A. No. Typically it caused me to seek
to confirm information that was already in the
Esquire Deposition Services D.C. - 1-800-441-3376
Page 92
1 J. ROSNER - CONFIDENTIAL
2 public domain.
3 Q. Did you ever write anything in your
4 call reports that was false?
5 A. Did I - - I wrote things in my call 6 reports only that I believed to be correct. That
7 doesn't mean that they were fact.
8 Q. Okay. Did you ever claim in your
9 call reports that somebody had said something
10 which they had not said?
11 A. Again, in the call reports, as we
12 say and we discussed earlier, the - - It's the 13 interpretation. It was my understanding. It was
14 my inference. It was often the tone and the
15 accent as opposed to a specific statement.
16 Q. Did you ever intentionally
17 mischaracterize the substance of anyone's
18 comments, or the tone?
19 A. Intentionally, no.
20 Q. Did you ever make up things in these
21 call reports that you said to other people?
2 2 A. Not to my knowledge. Not to my
23 recollection I should say.
2 4 Q. If you wrote in the call report that
25 you told Mr. Blumenthal something, did that, in
Page 93
J. ROSNER - CONFIDENTIAL
fact, happen?
A. It may, it may not have.
Q. Okay. Are there any instances where
you claimed in your call reports that you said
something that you had not said?
MR. CAHILL: Objection.
A. I don't recall.
Q. Do you recall ever making up in your
call reports something that you had said?
A. I don't recall.
Q. Sitting here today, can you deny
that you wrote in your call report that you told
Mr. Blumenthal that you wo.uld be interested .in
knowing anything that might give you pressure to
exert through investors on the agencies? Can you
deny writing that?
A. No, but I can't affirm writing it
either, as I said before.
Q. Okay. So sitting here today, can
you deny that you, in fact, told that to
Mr. Blumenthal?
A. I can't deny it, but neither can I
affirm it.
Q. Sitting here today, can you deny
24 (Pages 90 to 93)
Joshua Rosner - Confidential
Page 95
1 J. ROSNER - CONFIDENTIAL 2 reports if you didn't think that anyone was going
3 to read them?
4 MR. CAHILL: Objection to form.
5 Q. Why would you feel pressured to
6 write your call reports in a certain way if you
7 didn't think that anyone would read them?
8 A. Anyone other than management.
9 Q. Okay. So you thought that
10 management was reading the call reports.
11 A. I -- I probably believed that. Yes.
12 Q. And by "management" you mean
13 Mr. Medley.
14 A. Probably, yes.
15 Q. DO you recall any instances where
16 you invented something on a call report that
17 didn't happen in order to make Mr. Medley happy?
18 MR. CAHILL: Objection.
19 A. A, I don't recall; and, B, it was
20 never to make Mr. Medley happy in writing any of
21 the call reports. There's nothing about it that
22 was to make Mr. Medley happy.
2 3 Q. Okay. Did you ever write a call
24 report in a way designed to avoid incurring
25 Mr. Medley's wrath?
Page 94
J. ROSNER - CONFIDENTIAL Mr. Blumenthal told you that, quote, "I should
expect him to help me in that way"?
A. I don't recall, but I actually would
doubt that he said that.
Q. Okay. So you think that's something
that you just made up.
MR. CAHILL: Objection.
A. I don't recall. Again, tone,
substance and internal pressures. The call
reports, you have to understand the internal use
utility of them, which for most people was
insignificant.
Q. Did these internal pressures affect
how you wrote your call reports?
A. I think I said at times they did,
yes.
Q. Why?
A. Because that was a functional
requirement put in place by the firm and had
outlived its practice.
Q. Did you think anyone was going to
read this?
A. ldonltknow.
Q. Well, why would you alter your call
Esquire Deposition Services D.C. - 1-800-441-3376
Page 96 J. ROSNER - CONFIDENTIAL MR. CAHILL: Objection.
A. Nor was it wrath.
Q. Okay. If you could take a look at
the next sentence on this Section 6. It says,
"He also urges me to continue down the road on
the loan modification issue, delinquency skewing,
and the seller contribution issue, and to
continue to point out that by moving them to
treasury there will be a larger implicit
guaranty."
Now, do you see that?
A. I do see that.
Q. Do you know what that's referring
to?
A. Id0.
Q. What is that?
A. It's actually sort of incongruous,
because it's referring to different issues, I
would believe. I have long had concerns about
the loan modification issue, long before I knew
Steve Blumenthal or anyone else in the regulatory
or policy world impacting the GSEs regarding the
manner in which they modified and reported
modification of loans.
Page 97
J. ROSNER - CONFIDENTIAL And so I don't specifically
recollect it in regard to this report, but I
would assume that it's regarding that concern
having been expressed to the regulator, that they
look into it.
On the treasury side, I would assume
that that actually is referring not to
modification or delinquency skewing, but I would
assume that that is the moving them to treasury
in the legislative process.
Q. Okay. And the "he" in that
sentence, is that referring to Mr. Blumenthal?
A. Again, I don't specifically recall.
I would assume so.
Q. Okay. Do you recall Mr. Blumenthal
ever urging you to look into certain research
issues?
A. NO. And I think that actually
that's not the context of that comment.
Q. What is the content of the comment?
A. I think the context of that comment
is that I had actually raised the issue with the
regulator. I had raised the issue separately
with many others in the policy world and
25 (Pages 94 to 97)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 98
J. ROSNER - CONFIDENTIAL otherwise, and I think that he was encouraging me
on a personal level to actually, if I felt it was
an issue, raise it and continue to raise it as an
issue. I don't think it was a directive or
encouragement of ... Q. Do you recall whether Mr. Blumenthal
urged you to continue to point out that by moving
OFHEO to treasury there would be a larger
implicit guaranty?
A. I don't remember that specifically.
Q. What does that mean by moving them
to treasury there will be a larger implicit
guaranty?
A. Well, again, there were
conversations, just as with Mr. Brereton and just
as with other sources. There were conversations
that were explicitly stated or understood to be
personal opinion as opposed to professional
judgement or opinion by the source. And part of
the value that I had was - - with them was on
their legislative understanding.
We had discussed the legislative
process, and I would expect that that was his
personal view on - - on what would happen if he
Page 99
1 J. ROSNER - CONFIDENTIAL
2 moved the regulator.
3 Q. Was it your understanding that it
4 was Mr. Blumenthal's personal understanding that
5 moving the regulator to the Treasury Department
6 would mean there was a larger implicit guaranty?
7 A. Again, I don't specifically recall.
8 But that's what it says, and that's probably
9 correct.
10 Q. Okay. What does that mean, "a
11 larger implicit guaranty"? What does that phrase
12 mean?
13 A. Implicit - - well, guaranty or larger 14 implicit guaranty?
15 Q. Larger implicit guaranty.
16 A. That it would enhance the market
17 perception that if Fannie or Freddie ended up
18 with a financial problem they would become a
19 bigger risk to the government.
20 Q. And in Mr. Blumenthal's opinion,
21 based on what you knew, was that a good thing or
22 a bad thing?
23 A. I couldn't speak to that. I don't
24 know.
2 5 Q. Did you have a view as to whether a
Esquire Deposition Services D.C. - 1-800-441-3376
Page 100
J. ROSNER - CONFIDENTIAL larger implicit guaranty was good or bad?
A. A personal view?
Q. Uh-huh.
A. Did I? Yes.
Q. What was your view?
A. That a larger implicit guaranty of a
private corporation is not a good thing.
Q. Okay. And did you ever make that
known to Mr. Blumenthal?
A. I don't know if I did specifically.
I have no reason to believe I did not.
Q. Do you know if subsequent to this
conversation you did point out in your - - any of
your published work that moving OFHEO to treasury
would increase the implicit guaranty?
A. I don't recall. I probably would
have said that not based on a single source if I
did but based on the views of multiple sources
and based on, more specifically, my own analysis.
Q. Could you go back to Exhibit 4,
which I previously provided you with?
A. Uh-huh.
Q. Why don't you take a look at the
first line. It says, "Fredo Macs concession.
Page 101
J. ROSNER - CONFIDENTIAL The early 1970s were an interesting time in the
American culture. They gave us both The
Godfather, a story about small-time cheats
growing into a sophisticated group of bullies and
crooks, and they gave us Freddie Mac, whose older
brother, Fannie, was born during prohibition."
A. Uh-huh.
Q. Taking a look at that line, does
that refresh your recollection of whether or not
you were the author of that?
A. I don't believe I was.
Q. Do you know who was?
A. Idon'tknow.
Q. Take a look at the second paragraph.
Well, first, do you know whether
this is a - - this document was created by a single author, or was it a conglomeration of - -
A. I don't recall. I don't know.
Q. Take a look at the second paragraph?
A. Uh-huh.
Q. It says, "I have had conversations
with FM Watch, OFHEOts counsel, Famie Mae, Brian
Gardner, Brant Imperatore."
During the Fall, 2003, time frame
26 (Pages 98 to 101)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 102
1 J. ROSNER - CONFIDENTIAL
2 were you having conversations with those
3 individuals?
4 A. I would expect I was. I'm not sure
5 that I was the only one.
6 Q. If you take a look at towards the
7 middle there's a sentence with a lot of
8 capitalization. "I heard from a GREATn - - all
9 caps - - "source that OFHEO is turning their 10 microscopes on Fannie and KNOWS" - - all caps - -
11 "they will find something."
12 A. Uh-huh.
13 Q. DO you know whether you wrote that?
14 A. I might have. But, you know, again,
15 I don't specifically recall the document, so I
16 very well could have.
17 Q. Who were your sources at OFHEO?
18 A. Well, that doesn't say a source from
19 OFHEO, and I would suspect that I never would
20 have gotten that from OFHEO.
21 ' Q. Who else was providing you with
22 information on the OFHEO investigation?
2 3 A. It Wasn't on the OFHEO
24 investigation. It was the regarding the
25 goings-on with the housing market, legislation,
Page 103
1 J. ROSNER - CONFIDENTIAL 2 regulatory, policy issues surrounding any number
3 of issues, including the GSEs. And my sources
4 included everything from large shareholders of
5 the enterprises who were trying to give me their
6 views and their information, lobbyists from both
7 sides. You know, None of - - No one particular 8 view was viewed as sacrosanct.
9 Q. Why don't you take a look at the
10 next paragraph. It says, "I had a good call with
11 the chief counsel of OFHEO who was leading the
12 investigation, he was a repub chief counsel, and
13 prior to that an analyst for Schwab Washington
14 Group. He told me the investigation would be
15 completed by mid- September."
16 Is that referring to Mr.
17 Blumenthal?
18 A. I would assume so.
19 Q. Do you know whether you wrote that?
2 0 A. I don't recall.
2 1 Q. Taking a look at that, does that
22 refresh your recollection, the second paragraph
23 that refers to a great source about the OFHE08s
24 investigation was, in fact, Mr. Blumenthal?
2 5 A. I would actually, if this was my
Esquire Deposition Services D.C. - 1-800-441-3376
Page 104
J. ROSNER - CONFIDENTIAL authorship, I would doubt that it would have
actually referred back to Mr. Blumenthal.
Q. Why is that?
A. Because I think I probably would
have actually included Mr. Blumenthal in that
prior paragraph if he was the source.
Q. Who were your other great sources on
the - -
A. Anynumberofthings.
a . Who?
A. F a ~ i e and Freddie shareholders who
seemed to have better information coming out of
the company than - - than the broader markets.
Q. Okay.
A. Lobbyists on both sides who felt
they were going to try to spin us. Policy folks,
trade associations. I mean, it was a myriad. It
was pretty much anyone that anyone would talk to
who seemed to have a degree of knowledge or basis
for knowledge.
Q. And you viewed all those sources as,
all caps, a - - great sources about the OFHEO
investigation?
MR. CAHILL: Objection.
Page 105
J. ROSNER - CONFIDENTIAL A. Actually, no. I didn't.
Q. Which of those did you consider to
be great, all caps, sources of - - A. Again, I think - - On the OFHEO
investigation?
Q. Yes.
A. I don't know if I really had a
specific view of one as being a great source. I
would guess that the - - the better sources would not have been within OFHEO. I'm fairly certain
of that.
Q. Why don't we take another look at
Paragraph 3. Towards the bottom it says - - Let's
look in the middle. It says, "I offered him
details of the conversation I had with an
internal audit employee at FRE on 3-20-02, see
below, in which the employee admitted to earnings
manipulation, questionable derivatives
transactions, and bad internal accounting
practices, and he' - - all caps - - "loved me and offered me a meeting, even though he said I can't
talk now.
A. Uh-huh.
Q. Did you ever provide Mr. Blumenthal
27 (Pages 102 to 105)
Joshua Rosner - Confidential
Page 106
1 J. ROSNER - CONFIDENTIAL
2 with information about a conversation you had
3 with a Freddie Mac employee?
4 A. I don't know if I specifically did.
5 Q. Do you know whether you wrote that
6 sentence?
7 A. I believe that I did. But you know,
8 I don't specifically recall, but I believe that I
9 probably did.
10 Q. The next sentence says, "He said (we
11 can't use it in this form or with any attribution
12 as to where it same from.)"
13 What does that mean, We can't use it
14 with any attribution as to where it came from?
15 A. I assume that it means just what it
16 says, that we can't use it with any attribution,
17 and we can't use it specifically.
18 Q. Does that mean - - What does - - IS 19 there a difference in saying you can't use it or
20 saying you can't use it with attribution?
2 1 A. Is there a difference between saying
22 you can't use it and saying you can't use it as
23 attribution. Not necessarily.
2 4 Q. What does - - In your practice do 25 people ever provide you with information and tell
Page 107
1 J. ROSNER - CONFIDENTIAL 2 you, You can use this, but not with attribution?
3 A. NO.
4 Q. So whenever anyone's provided with
5 information, they've told you that it's okay to
6 use their name?
7 MR. CAHILL: Objection.
8 A. If you notice, we actually - - As by
9 practice Medley never sources or never details
10 sources in any of its reports.
11 Q. Okay. So it's implicit, whenever
12 anyone is talking to you, that you can't use
1 3 attribution.
14 A. COTEC~.
1 5 Q. And it's fair to say it doesn't say
1 6 in this sentence that you can't use this
1 7 information.
18 MR. CAHILL: Objection.
1 9 Q. Well, does it say anywhere that you
20 can't use that information?
2 1 MR. CAHILL: Same objection. The
22 document speaks for itself.
23 A. I'm not sure I understand the
24 question.
25 Q. Okay. Take a look at the rest of
Page 108
J. ROSNER - CONFIDENTIAL the sentence. It says, "I'm going to be one
shocked boy if we go into Fannie with the same
set of microscopes that we were using on Freddie
and don't find significant things. They will not
be the same things that we have done at Freddie,
but I'm confident that Raines is not the angel he
purports to be."
Do you recall Mr. Blumenthal telling
you that?
A. I don't specifically.
Q. Do you recall him making comments
along those lines?
A. I don't. I would say that that
wouldn't surprise me, because I think that was
many people's view at that point.
Q. A n d t h a t ' s b a c k i n A u g u s t o f 2 0 0 3 ?
A. Correct.
Q. And that would be more than a year
before OFHEO had issued the results of its
special examination?
A. Correct.
Q. Do you know if Mr. Blumenthal was
telling that to other analysts as well?
A. Idon'tknow.
Page 109
1 J. ROSNER - CONFIDENTIAL 2 Q. Did you have any sense as to whether
3 or not you had a closer relationship with
4 Mr. Blumenthal than did other analysts?
5 A. I don't believe I did.
6 Q. What other analysts did you believe
7 that Mr. Blumenthal was regularly communicating
8 with?
9 A. I believed that there were a number
10 of firms -- And I can't recall specifically. - - 11 that actually had better access to him than I
12 did, and that he hosted or OFHEO hosted meetings
13 with clients and with the analysts for.
14 Q. Setting aside formal meetings, do
15 you believe there were any analysts that had
16 greater informal contact with Mr. Blumenthal that
1 7 you did?
18 A. I would assume there were.
19 Q. DO you know who?
2 0 A. Idon'tknow.
2 1 So - - andby - - 2 2 MR. KARAM: Wait for the next
23 question.
2 4 Q. Why don't we take a look at the very
25 bottom of the document.
28 (Pages 106 to 109)
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 110
J. ROSNER - CONFIDENTIAL
A. Uh-huh.
Q. It's in a different text?
A. Correct.
Q. You see, if you refer back to the
last paragraph on the first page, it says, "I
offered him details of the conversation I had
with an internal audit employee at FRE on
3-20-02, see below"?
A. Uh-huh.
Q. Is this -- Is that what it's
referencing on the top, see below?
A. Again, I don't specifically recall
this document, so all I can do is infer, as you
are.
Q. Okay. And see the very bottom it
says, "Will not be disclosed to any third parties
without my express written consent, as
technically belongs to Graham Fisher & Company"?
A. correct.
Q. Does that refresh you recollection
that you were the person who wrote this?
A. I believe that I'm the person who
wrote that bottom piece. Correct.
Q. Okay. And does that also mean that
Page 1 1 1
1 J. ROSNER - CONFIDENTIAL
2 you are the person who wrote the last paragraph
3 on the first page of this document?
4 A. As I said, I don't recall. So you
5 could infer that, but I can't - - I can't recall 6 that.
7 Q. Okay. And you don't have any reason
8 to doubt that you were that person?
9 A. I don't have reason to doubt that.
10 Q. Okay. Let's look take a look at
11 another document.
12 This document is dated October 9,
13 2003, and its Bates number is MGA 02494.
14 Oh. And at the top it's
15 Bates-stamped MGA 09241.
16 (Whereupon, Exhibit Rosner-7 is
17 marked for identification by the reporter.)
18 Q. Mr. Rosner, can you take a look at
19 the last page of this document?
20 A. yes.
2 1 Q. It says "author, Josh Rosner. " 2 2 Do you see that?
2 3 A. Uh-huh.
2 4 Q. Do you have any reason to doubt you
25 were the author of this document?
Esquire Deposition Services D.C. - 1-800-441-3376
Page 112
J. ROSNER - CONFIDENTIAL A. Again, I keep repeating this, but
the way the systems work, that fact that it says
"author Josh Rosneru merely means that I was the
last person in it before it was filed. There may
have been others who actually accessed it prior
to that point.
Q. Do you know if this is a report of a
Call you had with Mr. Blumenthal?
A. I don't - - Specifically I don't have
reason to doubt that it was.
Q. Okay. And you see the date is
October 9th, 2003?
A. Uh-huh.
Q. Did you prepare your own contact
call reports, or did you have a support person do
it for you?
A. Typically I did.
Q. Okay. Would you take a look at Page
2.
A. Uh-huh.
Q. Sort of in - - There's a long paragraph at the top?
A. Uh-huh.
Q. And - - let's see. It says, "He goes
Page 1 13
1 J. ROSNER - CONFIDENTIAL 2 on to say that after OFHEO is done with their FRE
3 investigation, wants me to sit down with a senior
4 member of his research and analysis group, Forest
5 Pfaffenburg, to explain this to him and help
6 OFHEO draft a demand for information from the
7 GSEs. "
8 DO you see that?
9 A. NO.
10 Q. Okay. It's a little hard to find.
11 MR. CAHILL: It starts there.
12 A. Okay. I see that.
13 Q. Did you write that?
14 A. I don't recall, but I probably did.
15 Q. Do you recall Mr. Blumenthal ever
16 asking you to sit down with Forest Pfaffenburg
17 with his research and analysis group?
18 A. I don't specifically recall. It
19 wouldn't surprise me.
20 Q. Did you ever meet with OFHEOrs
21 research and analysis group?
22 A. Ididn't.
23 Q. Do you recall Mr. Blumenthal ever
24 asking you to help draft a demand for information
25 from the GSEs?
29 (Pages 1 10 to 1 13)
Joshua Rosner - Confidential
Page 114
J. ROSNER - CONFIDENTIAL A. I don't, but - - I don't, but this is
actually referring to not something that OFHEO
was bringing to my attention but something that I
was concerned about.
Q. Okay. For the part of the sentence
where it says "help draft a demand for
information from the GSEs," is that referring to
something that Mr. Blumenthal was asking you to
do?
A. Again, I don't recall. That's what
this implies or states.
Q. Did you ever draft a demand for
information from the GSEs - -
A. Ididn't.
Q. - - on behalf of - -
Did you ever draft any documents on
behalf of OFHEO?
A. Ididn't.
Q. Did you ever provide OFHEO with any
assistance in connection with its investigations
of either Fannie Mae Freddie Mac?
A. Could you be more specific?
Q. Sure. Did you ever tell OFHEO what
they should be looking for in their
Page 115
J. ROSNER - CONFIDENTIAL
investigations of Fannie Mae and Freddie Mac?
A. I told actually in written reports
everyone who read the reports things that should
be looked at. So in that sense, yes.
Q. Aside from that sense, are there any
other instances where you provided OFHEO with
advice as to what they should be looking for in
their investigations?
A. Not other than issues that I had
actually brought up in written reports.
Q. And did your written reports bring
up certain accounting issues at Famie Mae from
time to time?
A. They did.
Q. And those reports were written well
before OFHEO's special investigation was
completed?
A. On Fannie Mae.
Q. On Fannie Mae?
A. At times.
Q. If you take a look at the last
sentence of Page 2 of this document?
A. Uh-huh.
Q. It says quote - - It says, "As he
Esquire Deposition Services D.C. - 1-800-441-3376
Page 116
1 J. ROSNER - CONFIDENTIAL
2 walks me to the elevator he quitely whispers, I1
3 know I shouldn't utter this, and I will deny ever
4 saying it, but the guys running these GSEs are
5 really evil. ' "
6 First, does your use of quotes here
7 purport to sum up the substance of what
8 Mr. Blumenthal had said?
9 A. Again, I would assume so. I don't
10 have a specific recollection.
11 Q. Okay. Looking at this, do you
12 recall Mr. Blumenthal having made a comment that
13 the guys running the GSEs are really evil?
14 A. I don't recall that.
15 Q. Okay. Do you have any reason to
16 doubt that he made that comment?
17 A. Idon't.
18 Q. Is that something you would have
19 made up in your report?
20 A. Made - - Made up? No.
21 Q. If you wrote it in your report, it
22 was true. Right?
2 3 A. Not necessarily. It was - - it was 24 my perception.
2 5 Q. It was your perception - -
Page 117
1 J. ROSNER - CONFIDENTIAL 2 A. Right. It was - - 3 Q. -- that as Mr. Blumenthal walked to 4 the elevator he quietly whispered, I know I
5 shouldn't utter this, and I will deny ever saying
6 it, but the guys running these GSEs are really
7 evil?
8 A. Correct. In tone, in substance, in
9 inference, that is actually the - - the overall 10 feeling I got. As I said to you before, the
11 quotes doesn't necessarily mean that it was a
12 direct, exact quote.
13 Q. So your testimony is where it says,
14 quotations, "I know I shouldn't utter this and I
15 will deny ever saying it, but the guys running
16 these GSEs are really evil' is something you just
17 inferred?
18 MR. CAHILL: Objection. You
19 mischaracterized his testimony.
20 Q. You can answer.
21 A. As I said, I don't specifically
22 recall this, so I can't even answer the question.
2 3 Q. Sitting here today, do you think
24 it's likely that you are just describing an
25 inference you got from a conversation with
30 (Pages 1 14 to 1 17)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
A. From personal experience and from
other information, from various sources.
Q. Did Mr. Blumenthal ever tell you he
thought the companies were trying to assassinate
his character?
Page 1 19
1 J. ROSNER - CONFIDENTIAL 2 A. NO.
3 Q. Did you ever hear that it was
4 Mr. Blumenthalts view that companies were trying
5 to assassinate his character?
6 A. I don't believe so.
7 Q. Whose - - Whose characters are you
8 referring to?
9 A. I am including Mr. Blumenthalls
10 character. I don't believe I ever heard him say
11 it.
12 Q. Who else?
13 A. I had - - Really, anyone who was of a 14 different view than the company's.
15 Q. Company ever try and assassinate
16 your character?
17 A. I believe possibly more recently.
18 Q. Okay. In what way?
19 A. I was recently told by a
20 congressional staffer that the company had told
21 them they should ignore my views because I'm
22 being paid by FM Watch.
2 3 Q. Are you being paid by FM Watch?
2 4 A. Never have and am not.
2 5 Q. Do you know if Medley is being paid
Page 118
J. ROSNER - CONFIDENTIAL
Mr. Blumenthal?
A. I think that it would not be tied to
a specific or isolated view. I do think that
there was a sense at times that the companies
were effectively trying to assassinate
characters.
Q. Okay. Do you recall Mr. Blumenthal
ever saying that he thought Mr. Brenzel
(phonetic) was evil?
A. Idonlt.
Q. DO you recall Mr. Blumenthal ever
saying that he thought Mr. Raines was evil?
A. I don't recall so.
Q. Okay. You mentioned that you
thought there was a sense at times that companies
were effectively trying to assassinate
characters?
A. Correct.
Q. Where did you get that sense?
Esquire Deposition Services D.C. - 1-800-441-3376
Page 120
J. ROSNER - CONFIDENTIAL
by FM Watch?
A. To my knowledge, never have and are
not.
Q. I'm going to show you another
document, which is Bates-stamped
OFHEO-DLU-00058770. I'm just going to ask you to
identify that document for me.
(Whereupon, Exhibit Rosner-8 is
marked for identification by the reporter.)
A. Uh-huh.
Q. What is it?
A. It appears to be an E mail.
Q. Okay. An E mail from who?
A. It appears to be an E mail from Josh
Rosner to Steve Blumenthal and a response from
Steve Blumenthal.
Q. And it says [email protected]? Is
that your e-mail address?
A. It isn't, actually. I was just
looking at that, trying to remember if it ever
was, but I have no reason to believe that it
wasn't . Q. Okay. Sitting here today, you have
no reason to think this is not, in fact, an - -
Page 121
J. ROSNER - CONFIDENTIAL A. Correct.
Q. - - E mail exchange between you and
Mr. Blumenthal?
MR. CAHILL: Let me just interrupt,
because the court reporter is giving me a look,
deservedly.
THE WITNESS: I'm sorry.
MR. CAHILL: Let him finish. She
can't take two people talking at the same time.
Q. I'm going to show you another
document, which is Bates-stamped
OFHEO-LAW-00021348.
(Whereupon, Exhibit Rosner-9 is
marked for identification by the reporter.)
Q. You see the bottom E mail is from
someone named Anne Canfield?
A. Yes.
Q. Who is Anne Canfield?
A. Anne Canfield is, my understanding,
with FM Watch and has a private consultancy.
Q. Does she work for FM Watch?
A. I don't know if she officially works
for FM Watch. I know that many of her clients
are members of FM Watch.
31 (Pages 118 to 121)
Joshua Rosner - Confidential
Page 123
1 J. ROSNER - CONFIDENTIAL
2 picture. I heard through the grapevine that
3 people at OFHEO thought that Burt Ely had written
4 the paper. Burt had nothing to do with the
5 paper. The paper was written by a group on Wall
6 Street, sophisticated analysts and accountants."
7 Do you know what white paper that's
8 referring to?
9 A. Idon't.
10 Q. Let me show you another document
11 that's Bates-stamped FM SIF 0405026960.
12 (Whereupon, Exhibit Rosner-10 is
13 marked for identification by the reporter.)
14 Q. Have you ever seen this document
15 before?
16 A. I don't specifically recall. I can
17 say that I've never read it.
18 Q. Do you recall that a white paper was
19 published in 2003 that was highly critical of
20 Fannie Mae's accounting?
2 1 A. Other than - - Not specifically,
22 other than recollecting as a result of this
23 E mail that there was a white paper, yes. I
24 don't know if I ever saw the white paper.
2 5 Q. Okay.
Page 122
J. ROSNER - CONFIDENTIAL Q. What is FM Watch?
A. FM Watch, I don't know how to define
it. It's a group of mortgage market institutions
who have viewed it as their role as to take a
stance on the GSE's policies.
Q. What is - - Is their stance pro GSE's
policies?
A. I don't know if it's particularly
pro or anti. I think that it views itself as a
watchdog group.
Q. Is it fair to say that the members
of FM Watch are largely competitors of Fannie Mae
and Freddie Mac?
A. It is.
Q. Okay. Did you ever refer to Miss
Canfield in your call reports or other documents
as Annie Fannie?
A. I - - I believe I probably did.
Q. Okay. If you could take a look at
the text of her E mail?
A. Uh-huh.
Q. It says, "Rob, awhile ago I
forwarded to you a copy of a white paper that had
been written reviewing Fannie Mae's financial
Esquire Deposition Services D.C. - 1-800-441-3376
Page 124
J. ROSNER - CONFIDENTIAL Does this E mail refresh your
recollection that there was a white paper
critical of Fannie Mae's accounting policies
being circled - - circulated around this time?
A. I don't know whether it was being
circulated, but that there was a white paper that
was critical, yes.
Q. Did you receive that white paper?
A. I don't - - I don't recall receiving
that white paper.
Q. Do you know who authored it?
A. Idon't.
Q. Do you recall ever discussing that
white paper with anyone?
A. I don't recall.
Q. Do you recall ever referencing that
white paper in your reports?
A. In my published reports? I don't
recall.
Q. I'm going to show you another
document, which is dated January 15th, 2004,
Bates-stamped on the top MGA 09715 and on the
bottom MGA 02656.
(Whereupon, Exhibit Rosner-11 is
Page 125
J. ROSNER - CONFIDENTIAL marked for identification by the reporter.)
MR. TERRY: And it's Rosner Exhibit
11.
Q. Do you see on the last page it says,
"Author, J O S ~ Rosner"?
A. Uh-huh.
Q. Any reason to think you were not, in
fact, the author of this document?
A. There is no reason to believe that I
wasn't at least one of the authors.
Q. Okay. And looking at this document,
do you believe that you were, in fact, one of the
authors of this document?
A. There's no reason to believe that I
wasn' t . Q. Okay. And does this document appear
to be a contact call report that you drafted, at
least a part of - - A. ~t appears - -
Q. - - outbound call with Steven Blumenthal of OFHEO?
A. It appears to be.
Q. Any reason to think it is not, in
fact, that?
32 (Pages 122 to 125)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 126
1 J. ROSNER - CONFIDENTIAL 2 A. While I don't recall, there is no
3 reason not to believe that that's the case.
4 Q. Okay. If you could take a look
5 under the Call Notes section, it says, "Well, we
6 have reorganized the infamous office of
7 examinations, created an office of compliance,
8 and an office of the chief accountant. You can
9 guess which senior person who was in the GSE's
10 pocket will be leaving soon (Scott Calhoun). We
11 have changed the incentive structure for
12 advancement here. Now you make your bones by
13 being an aggressive regulator."
14 Do you recall Mr. Blumenthal telling
15 you that OFHEO had changed its incentive
16 structure for its regulators?
17 A. I don't specifically. I do recall
18 the general period, and I do believe that that
19 actually is - - is what happened. 2 0 Q. Okay. And you see that section I
21 just read you is in quotations?
2 2 A. Uh-huh.
2 3 Q . Does that mean you're trying to
24 reflect the substance of Mr. Blumenthal's
25 comments?
Page 127
1 J. ROSNER - CONFIDENTIAL 2 A. Correct.
3 Q. Did Mr. Blumenthal ever make any
4 comments about Scott Calhoun?
5 A. You know, again, that's in
6 parenthesis, so I don't know whether that was a
7 specific - - hidden referencing Scott Calhoun or 8 my understanding that that's who he was referring
9 to.
10 Q. That could be an inference?
11 A. Correct.
12 Q. Did he ever suggest to you that
13 Mr. Calhoun was in the GSEts pocket?
14 A. Again, he suggested that someone
15 was. It was my understanding that that was Scott
16 Calhoun.
17 Q. Did he suggest they were being paid
18 by the GSEs?
19 A. I don't believe that anyone ever
20 suggested - - it was ever being suggested they 21 were paid by the GSEs.
2 2 Q. Well, you wrote the phrase in here
23 that you can guess which person who was in the
24 GSE's pocket will be leaving soon. Right?
2 5 A. Right.
Esquire Deposition Services D.C. - 1-800-441-3376
Page 128
J. ROSNER - CONFIDENTIAL Q. What did you mean by that?
A. DO you know what the term
"regulatory capture' is?
Q. Well, why don't you explain it.
A. Regulatory capture is when an
examiner works so close with an institution that
they actually form a relationship that is not - - is more comfortable than necessarily a regulator
should have, and it's not necessarily a result of
anything tawdry but, rather, a result of - - of
comfort as opposed to the traditional strict
regulatory relationship with an overseeing
institution.
Q. Did Mr. Blumenthal ever comment to
you that OFHEO needed to change its regulatory
incentive structure?
A. I don't specifically remember that.
I do remember the general view that it had not
been as distanced a regulator from the
institutions that it regulated as a strong
regulator should be.
Q. And Mr. Blumenthal was trying to
change that?
A. That's my understanding.
Page 129
J. ROSNER - CONFIDENTIAL
Q. If you could take a look at the next
paragraph, at the very bottom last sentence, it
says, "Steve says that he wishes the conversation
would turn to the P word (privatization) as that
would ultimately eliminate the need for
regulatoru - - A. Hold on. Could - - Okay.
Q. - - (other than the SEC) and would reduce the government's risk. (Steve again says,
I will tell you I have zero doubt that these
things will ultimately blow up. I can't tell you
when, but we need to get them out of the
government. ) '' Do you recall Mr. Blumenthal ever
expressing sentiment to you that he believed that
F a ~ i e Mae and Freddie Mac should be privatized?
A. I don't specifically recall that.
Q. Okay. Seeing it there in writing,
can you deny that Mr. Blumenthal said that?
A. I can tell you that the inference
that I received was certainly of that.
Q. So your testimony is you received
the inference from Mr. Blumenthal that he was in
favor of privatization of Fannie Mae?
33 (Pages 126 to 129)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential --
Page 13C
J. ROSNER - CONFIDENTIAL A. That - - that - - again, on a
personal, not necessarily professional basis,
it's my understanding that that was his view.
Q. Do you ever recall Mr. Blumenthal
ever telling you something along the lines, I
have zero doubt these thing will ultimately blow
up, I can't tell you when, but we need to get
them out of the government?
A. I don't specifically recall that.
Q. Is that in line with comments that
he made about Freddie Mac and Fannie Mae?
MR. CAHILL: Objection.
A. Yeah, I don't recall - - I don't recall that being specifically ...
Q. You see that part is the quotations
in your document here?
A. Uh-huh.
Q. And again, that's your attempt to
reflect what the substance of Mr. Blumenthalls
comments were?
A. Correct. But the piece that's
missing which - - and I posit this as a possibility is, that may have been a response to
my comment of, you know, I think these will
Page 13 1
J. ROSNER - CONFIDENTIAL
ultimately blow up, and he may have actually just
responded in the affirmative whether that was his
view or not or he was responding to my view.
Q. Either way, is it fair to say that
the view, whether he was merely agreeing with
your view or expressing his own, was that he
thought Fannie Mae and Freddie Mac would
ultimately blow up?
A. That certainly is what's inferred
there.
Q. Okay. And do you have any reason to
doubt that that's, in fact, what he said?
A. NO, but I guess I'm not sure what
"ultimately blow up" means his view as opposed to
my view.
Q. Sure. And would you have written
that in quotations if Mr. Blumenthal had not said
something along those lines?
A. Again, I would have written if that
was what I walked away with as a perception of
his intent or his view.
Q. Okay. The next exhibit is
Bates-stamped MGA 09059. It's dated January
29th, 2004.
Esquire Deposition Services D.C. - 1-800-441-3376
Page 132 1 J. ROSNER - CONFIDENTIAL
2 (Whereupon, Exhibit Rosner-12 is
3 marked for identification by the reporter.)
4 Q. What is this document?
5 A. It appears to be an equity brief.
6 Q. What's an equity brief?
7 A. It was a note put out by Medley to
8 its clients.
9 Q. Do you know whether you were the
10 author for this?
11 A. I believe that I was the author not
12 of the final edited version but certainly of '
13 the - - of the - - the general report. 14 Q. Can you take a look at the middle
15 section.
16 A. Okay. Middle section - - 17 Q. Of the first page, I'm sorry, with
18 the subheading "White House to play Texas hard
19 ball with GSE"? Do you know if that's a section
20 that you drafted?
2 1 A. I'm sure that it probably was.
2 2 Q. OKAY. Take a look at the first full
23 paragraph under that section. It says, "Besides
24 the announcements, we have met with several key
25 sources who have suggested that both Fannie and
Page 133
J. ROSNER - CONFIDENTIAL Freddie are now playing against a different kind
of White House, a Texas team with pro hard-ball
experience. Furthermore, sources suggest that
White House ace Andrew Card, chief of staff, is
pitching for the home team. For a White House
player of Card's stature to be pitching against
the GSEs is highly unusual, and highlights how
important this game is to the White House team."
First, what did you mean by Andrew
card is pitching for the home team?
A. Well, again, I don't believe - - I believe that someone actually, in editing my
report, changed the actual metaphor, but the
overall substance of it is probably my writing.
Andrew Card was chief of staff, and
for the chief of staff in the White House to
become so deeply involved in an issue affecting a
specific company or industry was - - seemed unusual. "The home team" meaning the government.
Q. Okay. What do you mean that
Mr. Card became involved in - - issue? What
issue, first of all, is this discussing?
A. Administration's official
perspective and policy on the need for a stronger
34 (Pages 130 to 133)
Joshua Rosner - Confidential
Page 134
J. ROSNER - CONFIDENTIAL regulator.
Q. And what do you mean by Mr. Card
became involved in that effort?
A. It was my understanding that the
White House actually had formed an internal
working group to discuss and come up with a plan
for approaching the overall GSE issue.
Q. And what was the overall GSE issue?
A. Questions ranging from what the
legislation should look like to the systemic risk
posed by the enterprises to whether they should
become privatized companies or otherwise.
Q. Take a look at the last sentence?
A. Uh-huh.
Q. The last paragraph on this page. It
says, "One person close to the situation
commented, the White House is clearly willing to
play hard. If Famie and Freddie don't give on
these three issues next year, it promises to
become even more difficult for them, as a larger
issue of subsidiaries tied to government and
mission will become increasingly discussed
issues. "
A. Uh-huh.
Page 135
J. ROSNER - CONFIDENTIAL Q. Did you write that paragraph?
A. Again, I probably did. I don't
specifically recall, but I probably did.
Q. Do you know who you're referring to
when you say "one person close to the situation"?
A. Idon't.
Q. What do you mean by the "White House
is clearly willing to play hard"?
A. The White House had actually made
its views known that it had a very strong view on
the GSEs and the risks that they posed and that
they were actually not willing to just accept
legislation that they felt would create a
regulator that was weaker than one they viewed as
necessary.
Q. What were they going to do?
A. I'mnotsure.
Q. If you take a look at the end of
this sentence I just read, it says, "tied to the
government and mission will become increasingly
discussed issues. 'I
What did you mean by that?
A. Just what it says.
Q. Well, discussed by who?
Page 136
J. ROSNER - CONFIDENTIAL A. Broadly. I mean, we saw any number
of discussions of that in policy circles, in
think tanks, in the press, in statements from the
administration.
Q. Was it your view that the White
House was going to try and increase the public
discussion about Fannie Mae's mission and ties to
the government if it was not willing to give on
issues related to where it would be housed and
its regulation?
A. Well, it was my view that, in
connection with the investigations of the two
companies, those issues were going to become more
and more important issues, and that the
administration would not shy away from making
sure that people understood that there were
significant policy considerations regarding the
enterprise's risk to the government.
Q. And the administration would
continue to give those issues visibility until
F a ~ i e Mae and Freddie Mac gave up on the issues
the government - - A. Right. But the administration,
remember, is not a specific monolith. Even as we
Page 137
J. ROSNER - CONFIDENTIAL see in various housing issues today, treasury
will have a different view than HUD. And I
think, therefore, when I spoke to the
administration I really am specifically speaking
to my understanding of the White House's view.
Q. The Bush administration?
A. The White House's view.
Q. The White House's.
YOU mentioned there was a White
House working group.
A. That's my understanding.
Q. What do you mean by a working group?
A. White House staff, legislative
staff, policy staff, economic staff who were
assessing the GSE's situation, financial
situation, and the risks or view of the risks
that they posed, as well as the administration's
view that the regulator was a - - was a weak regulator and an underpowered regulator.
Q. Who is a member of the White House
working group?
A. Andrew Card. I'm not sure who else.
I believe Kevin Warsh. Current Governor Warsh.
Beyond that I don't know.
35 (Pages 134 to 137)
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 138
J. ROSNER - CONFIDENTIAL Q. Have you ever heard the phrase,
"Project Noriega"?
A. Ihaventt.
Q. Can you take a look at the last page
of this document. It says, "While the bulk of
the Freddie specific problems are behind them,
accepting more board turnover, the result of SEC
and DOJ investigations and other small issues" - -
end parenthesis - - "we expect that Fannie is just now entering the spotlight."
Did you write that?
A. I probably did.
Q. What did you mean by that?
A. I - - I probably am among the only
two, three, maybe four people on Wall Street who
actually read the entirety of the Baker Botts
report and the OFHEO report. And it became clear
in reading it that there were significant issues
raised in the Freddie reports that had relation
and suggested that - - that there was likely to be
an investigation of Fannie Mae.
Q. And the Baker Botts report at that
time was publicly available?
A. I believe it was.
Page 139
J. ROSNER - CONFIDENTIAL Q. And just by reading the Baker Botts
report you were able to come to the conclusion
that Fannie Mae would be subjected to a similar
investigation?
A. Absolutely.
Q. And were you able to form the
conclusion as to whether or not Fannie Mae would
be found to have committed some of the same types
of errors as - - A. Insomeofthe - - Q. - - as Freddie Mac? A. - - areas, absolutely.
Q. And that was back in January, 2004?
A. If I recollect the release of the
Baker Botts report correctly, yes.
Q. What specific accounting errors did
you believe that OFHEO would also find out about
or rule on when they were reviewing Fannie Mae?
That was kind of awkwardly phrased.
What other accounting errors do you
think would be raised in OFHEO1s investigation of
Fannie Mae?
A. There were - - You know, I don't specifically recall. I recall a number of areas
Esquire Deposition Services D.C. - 1-800-441-3376
Page 140
J. ROSNER - CONFIDENTIAL
that highlighted the manner in which OFHEO was
looking at the issues, including portfolio growth
relative to G&A expenditures, relating to
treatment of other than temporary impairments,
relating to the various internal control issues.
I don't remember the specific
substance of it, but there was actually a passage
in which I believe board members of Freddie
specifically highlighted their view of their
conservatism relative to Fannie's.
Q. And what do you mean by that last
part?
A. There was excerpts in the report of
a conversation that was - - that existed within
Famie, board members or between Fannie - -
Freddie board members, on their view that they
were conservative and especially relative to
Fannie . Q. And so reading that, was it your
view that it was even more likely that some of
these things would turn up at Fannie May than - -
A. Absolutely.
Q. And did one of those issues include
accounting for derivatives?
Page 141
1 J. ROSNER - CONFIDENTIAL
2 A. As I recollect, yes.
3 Q. That would be accounting for
4 derivatives under FAS 133?
5 A. Correct.
6 Q. I'm going to show you another
7 document, which is Bates-stamped MGA 02768, dated
8 February 2nd, 2004.
9 (Whereupon, Exhibit Rosner-13 is
10 marked for identification by the reporter.)
11 Q. Can you identify this document for
12 me?
13 A. It's a call report dated February
14 2nd, 2004, outbound call to Steve Blumenthal,
15 appears to be written by me.
16 Q. You see the top it says, "Monday
17 morn, check in Steve"?
18 A. Uh-huh.
19 Q. Did you regularly check in with
20 Mr. Blumenthal on Mondays?
2 1 A. I did not.
2 2 Q. How often did you speak to
23 Mr. Blumenthal during the period you were at
24 Medley?
2 5 A. Typically every few weeks to a
36 (Pages 138 to 141)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 142
1 J. ROSNER - CONFIDENTIAL
2 month.
3 Q. And let's take the 2004 time frame.
4 This would be the time frame after the Baker
5 Botts report has been issued, up through I guess
6 the end of 2004, when the SEC made a
7 determination about some of F a ~ i e Mae's
8 accounting.
9 During that period did you talk to
10 Mr. Blumenthal more frequently?
11 A. Less frequently.
12 Q. Okay. And when was the period where
13 you would say you had the most frequent
14 communication with Mr. Blumenthal?
15 A. I don't recall specifically. I
16 recall at that point him making it very clear
17 that we - - we really couldn't talk, and where we 18 could talk it was really more on legislative
19 issues, in his opinion, as opposed to OFHEO
20 business.
2 1 Q. Okay. You see the second sentence,
22 the first line, it says, "He told me that OFHEO
23 will propose and publish comments for new
24 corporate governance regulations for Fannie Mae
25 and Freddie this week!"?
Page 143
J. ROSNER - CONFIDENTIAL A. Uh-huh.
Q. Do you recall Mr. Blumenthal telling
you that then?
A. I don't specifically.
Q. Do you see there's an exclamation
point at the end?
A. Uh-huh.
Q. Do you have any reason why you would
have used an exclamation point for that?
A. Because I think that would have been
an important thing to try and follow up with
other sources.
Q. Was that public at that time?
A. Idonrtknow.
MR. TERRY: The next document is
Bates-stamped MGA 02776. It's dated February
3rd, 2004.
(Whereupon, Exhibit Rosner-14 is
marked for identification by the reporter.)
Q. Can you identify this document for
me?
A. It similarly seems to be outbound
call report between Steve Blumenthal and myself.
Q. And does it appear to be authored by
Esquire Deposition Services D.C. - 1-800-441-3376
Page 144
J. ROSNER - CONFIDENTIAL
YOU?
A. It appears to be so.
Q. Appears to have taken place around
February 3rd. 2004?
A. Correct.
Q. Is this a report of a call you had
with Mr. Blumenthal on February 2nd?
A. It appears to be.
Oh. It appears to be so.
Q. And that would be your second call
that day with Mr. Blumenthal about the OFHEO
regulations?
A. Correct.
Q. Okay. Take a look at what looks
like the second paragraph. It says, "He also
told me that Fannie is telling people that the
OFHEO investigation is just about accounting, but
he said that this is wrong, '1 will never say
this on the record, and you can never say it, but
we are going top to bottom. I'm comfortable that
we have looked at every issue that could spark a
surprise at Freddie and I will stake my
reputation there are no new surprises there. I
cannot say that about Fannie, and our
Page 145
J. ROSNER - CONFIDENTIAL investigation's goal is to make sure we can
ultimately say that. We have specific
nonaccounting leads to go after."
Do you see in the middle there
there's these quotations right before "I will
never say that on the record"?
A. Uh-huh.
Q. Does that mean you're attempting to
capture the substance of Mr. Blumenthalls
comments?
A. Yeah. I mean, as I read it, it
really is reflection of the public stance of the
regulator during that period.
Q. So it's your testimony that the
quote that begins with "I will never say this on
the record and you can never say it,' is a
reflection of OFHEO's public commentary?
A. I believe that not that particular
line but, obviously, that - - I believe that the director was not going to say it specifically,
but the - - My understanding of what seems to have
been said there was that they had finished and
were comfortable there were no new surprises at
Freddie and that they would not actually conclude
37 (Pages 142 to 145)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 147
1 J. ROSNER - CONFIDENTIAL 2 A. No. The Baker Botts report made it
3 clear that OFHEO was interested in things other
4 than accounting issues, including internal risk
5 issues and operational risk issues, and,
6 therefore, it, to anyone who read that, would
7 have been clear that they weren't limiting their
8 investigation. And my understanding is that
9 Fannie had specifically been telling its larger
10 shareholders that its investigation really only
11 related to financial accounting issues.
12 Q. Okay. You see it says, "We have
13 specific nonaccounting leads to go after"?
14 A. Uh-huh.
15 Q. Was it your understanding after
16 reading the Baker Botts report that OFHEO would
17 have nonaccounting leads - - 18 A. Yes.
19 Q. - - regarding Fannie Mae? 20 A. Absolutely.
21 Q. And that was evident to you just
22 from reading the - - 23 A. Correct.
2 4 Q. - - Baker Botts report. 2 5 And you think that would have been
Page 146
J. ROSNER - CONFIDENTIAL the investigation of Freddie until they could say
the same. Of Fannie until they could say the
same.
Q. Do you see where it say, "we have
specific nonaccounting leads to go after"?
A. Uh-huh.
Q. Is that referring to Fannie Mae or
Freddie Mac?
A. Idon'tknow.
Q. Do you see the sentence before, it
says, "I cannot say that about Fannie, and our
investigation's goal is to make sure we can
ultimately say that"?
A. Uh-huh.
Q. Does that inform you that the next
sentence - - A. It does appear that there are
nonaccounting leads to go after, but again, in
reading the Baker Botts report, that information
was already out there. There's no particular
value to me of that comment.
Q. Did the Baker Botts report say that
Fannie Mae had engaged in nonaccounting
wrongdoing?
Esquire Deposition Services D.C. - 1-800-441-3376
Page 148
J. ROSNER - CONFIDENTIAL evident to anyone reading the Baker Botts report?
A. Correct.
MR. CAHILL: Would you slow down.
Let him finish.
Q. Including any shareholder who wanted
to read the Baker Botts report.
A. correct.
Q. The next part it says, skipping down
a little ways, "By the way, Medley had been on my
shit list for a long time because of a report you
put on February 3rd, 2003.''
IS that before or after you were at
Medley?
A. I believe that's before I was at
Medley.
Q. It goes on to say, "You guys said
that we're sitting on the systematic risk report
for over a year. That is bullshit! The report
that we were sitting on was a freelance tirade by
one of our former research staff. It was poorly
sourced, full of inaccuracies, and he chose to
leak without approval. It nothing to do with our
risk report. By the way, that employee has been
disciplined under the Civil Services Act."
Page 149
J. ROSNER - CONFIDENTIAL
What is that referring to?
A. My understanding is - - And, again, I'm recollecting. I don't have specific memory
of this, but my understanding is - - or my
recollection is there was a report on the
systemic risk that Fannie and Freddie posed to
the federal government that was put out as a
white paper by an OFHEO employee and that that
report actually highlighted significant risks
that the GSEs posed.
And Steve was actually disavowing
that as an official report that they were sitting
on; rather, he was suggesting that the report was
a reckless report by someone who had a personal
view on the GSEs.
Q. And that personal view was negative?
A. Correct.
Q. And that was - - That was leaked by somebody at OFHEO?
A. Idon'tknow.
Q. That's what Mr. Blumenthal was
telling you, anyway?
A. That's what it appears to be.
Q. Okay.
38 (Pages 146 to 149)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 150
J. ROSNER - CONFIDENTIAL MR. TERRY: The next document is
dated February 6, 2004. It's Bates-stamped MGA
07284, and on the top it's Bates-stamped MGA
09726. It's Exhibit 15.
(Whereupon, Exhibit Rosner-15 is
marked for identification by the reporter.)
Q. Can you identify this document for
me?
A. Let me look at it.
It appears to be a call report that
I am identified as writing.
Q. And it's a call report with Peter
Brereton of OFHEO?
A. Correct.
Q. And the report is dated February 6,
2004?
A. That's the date on it.
Q. If you take a look towards the
bottom it says, "1 explained to Peter that I had
put out a report and had, based on the hints
dropped, ascertained that these would be two big
changes. "
What is that referring to?
A. Where are you?
Page 151
1 J. ROSNER - CONFIDENTIAL 2 Oh. Okay.
3 MR. KARAM: Counsel, would you
4 direct me in the document.
5 MR. TERRY: Yeah, it's maybe six
6 lines from the bottom. It starts, "I explained
7 to Peter."
8 MR. KARAM: Thank you.
9 Q. Is this referring to proposed
10 corporate governance rules from OFHEO?
11 A. It appears to be.
12 Q. If you take a look at the next line,
13 it says, "I told him that I had just assumed they
14 would follow from the 16 points in the Freddie
15 recommendations.
16 And it goes on to say, "Good
17 reasoning, but you could have just called me and
18 asked."
19 "I explained that I would rather
20 have been be slightly off than have the world
21 know that my source was obviously inside OFHEO,
22 because that wouldn't be good for either OFHEO or
23 Medley."
2 4 What did you mean by that?
2 5 A. Well, I meant by that that every
Esquire Deposition Services D.C. - 1-800-441-3376
Page 152
J. ROSNER - CONFIDENTIAL conversation I have -- and it's not my duty to, but every conversation I ever have with an
official source, I start with or at some point
make it known that I do not want them to give me
any information that I shouldn't have or can't
have. And that's generally an understanding that
goes both ways.
And so I could have actually called
the information officer and asked him if that
actually was what was likely to be in the rules,
the proposed rules and regs. I chose not to. He
would have either typically in another matter
said, I can't talk about it or, you know, Give me
the - - the official position. Q. So was it your view that it would
not have been good for Medley for the world to
know that you had a source inside of OFHEO?
MR. CAHILL: Objection.
A. It's my view that Medley by practice
doesn't disclose its sources.
Q. Would it have been bad for Medley if
the world found out that you had a source inside
OFHEO?
A. Idonltknow.
Page 153
J. ROSNER - CONFIDENTIAL
Q. But you wrote that, didn't you?
A. I did write that.
Q. Would it have been bad for OFHEO if
the world knew that you had a source inside of
OFHEO?
MR. CAWILL: Objection.
A. Again, depending on what the
information from the source is.
Q. Do you believe that the information
that Mr. Brereton was suggesting he would have
provided to you was information that it was
somehow inappropriate for you to have?
A. I don't believe that I ever received
any information from any source within OFHEO that
was not public domain or was information that I
shouldn't have had.
Q. So it's your view that all of the
information that you received from OFHEO that's
contained in these call reports we've been going
through was accessible in the public domain?
A. Or affirmation or - - Or affirmation of information that was accessible in the public
domain. Correct.
Q. Okay. In your view it was
39 (Pages 150 to 153)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 154
J. ROSNER - CONFIDENTIAL
information that was all accessible to investors
somewhere.
A. Correct.
Q. And it wasn't anything secret that
OFHEO was just telling you.
A. Correct.
Q. If that's the case, why do your
clients pay Medley for your research reports if
it's just out there in the public domain?
A. I think you, A, should ask clients
rather than ask me that question; and, B, because
historically Wall Street investors don't
necessarily understand how to contextualize
information that's in the public domain and often
don't have the time to read 500-page documents
that are released into the public domain.
Q. But in your reports you condense
that information and make it available to
investors?
A. Absolutely.
MR. TERRY: The next document is
dated March 2nd, 2004. It's Bates-stamped at top
MGA 09729 and at the bottom MGA 02866, and it's
Rosner Exhibit 16.
Page 155
J. ROSNER - CONFIDENTIAL (Whereupon, Exhibit Rosner-16 is
marked for identification by the reporter.)
Q. Can you identify this document for
me?
A. Again, it appears to be a call
report from me detailing a conversation with
Steve Blumenthal at OFHEO.
Q. And that was around March 2nd of
2004?
A. Uh-huh.
Q. Why would you call Mr. Blumenthal?
A. For the most part, actually I -- I
called Mr. Blumenthal. I called folks from
various policy circles. I called folks on the
hill on both sides to try and
actually triangulate information that I was
hearing or had read in the public domain or was
hearing through sort of the Washington grapevine.
He was one of the hundreds of people that I spoke
to.
Q. So is it your testimony that you
called Mr. Blumenthal to confirm publicly
available information?
A. Quite often. Or my interpretation
Esquire Deposition Services DOCo - 1-800-441-3376
Page 156
J. ROSNER - CONFIDENTIAL of that publicly available information.
Q. Did you ever hope, in your
conversation with Mr. Blumenthal, to learn
information that was not publicly available?
A. Actually, as I said before, I quite
expressly made it clear and continued to, in
other source relationships, that I don't want
information that's not publicly available.
Q. And it's your view that you were
not, in fact, receiving - - A. Correct.
Q. - - nonpublic information from
Mr. Blumenthal?
A. It's my understanding that I never
received nonpublic information.
Q. Take a look at the first line. It
says, "Called to check in and ask a few
questions. Steve tells me that there's a working
paper that they are completing and reviewing,
that I would be interested in manufactured
housing and Fannie Mae."
Do you know what that's referring
to?
A. Idon'trecall.
Page 157
J. ROSNER - CONFIDENTIAL Q. Did OFHEO in Spring of 2004 release
findings about Fannie Mae's manufactured housing
accounting?
A. I don't recall.
Q. Take a look at the last paragraph.
It says, "We have been working on a manufactured
housing working paper that was based on an
inquiry into these F W portfolios. What our
initial findings are is that there are no major
flaws in their modeling for these assets. There
are - - They are too large in this area." Is that referring to a working paper
that -you were .working.on or OFHEO was working on?
A. You know, I don't know.
Q. Take a look at the last sentence on
this paragraph. It says, "1 tell Steve that
senior accounting staff at FASB and SEC have told
me the accounting for credit losses under
temporary impairments is improper accounting and
asked if he would refer it. He responds, Perhaps
will you write on it, too."
Did you ask Mr. Blumenthal to refer
Fannie Mae's accounting to the SEC or FASB?
A. No. I had actually spoken to both
40 (Pages 154 to 157)
Joshua Rosner - Confidential
Page 158
J. ROSNER - CONFIDENTIAL
the SEC and FASB about concerns that I had found
on differing language that they used for their
analysis of other than temporary impairments
relative to information that Freddie Mac got
nailed for in the OFHEO investigation of Freddie
Mac.
And the treatments were so visibly
different between the acceptable treatment that
OFHEO and the SEC had found relative to the
stated treatment that Fannie Mae actually told
investors it used.
Q. And that was evident to you from
public documents?
A. That was evident to me from public
documents.
Q. You laugh. Is that because it was
easily - - A. It was quite easily. You know, I
mean, frankly, that's a lot of what really exists
here is investors - - just seemed many investors seemed to want to turn a blind eye and not do the
work or read the public documents.
Q. where it says "and asked if he would
refer it," what does that mean?
Page 159
1 J. ROSNER - CONFIDENTIAL 2 A. I don't know, actually.
3 Q. Did you write that?
4 A. well, I mean, it says it. I have no
5 reason to believe I didn't. I don't know what I
6 intended by it.
7 Q. But your testimony is that you did
8 not ask Mr. Blumenthal to refer Fannie Mae's
9 accounting to the FASB or SEC?
10 A. AS I recall it, that was not - - That 11 was not something I asked him to or directed him
12 to.
13 Q. And it says, "He responds, Perhaps
14 will you write on it, too."
15 What does that mean?
16 A. I don't know. Again, I believe by
17 this time I had already spoken to - - Actually,
18 I'm fairly certain that by this time I had
19 already spoken to both FASB and the SEC to see if
20 the accounting treatment that Fannie made public
21 in terms of its major remember accounting
22 principles jived with the interpretation by the
23 SEC and FASB.
2 4 Q. was Mr. Blumenthal asking you to
25 write a research paper on that as well?
Esquire Deposition Services D.C. - 1-800-441-3376
Page 160
J. ROSNER - CONFIDENTIAL
A. I don't believe so.
Q. Did Mr. Blumenthal ever ask you to
write on certain topics?
A. Absolutely not.
MR. TERRY: Let me take a quick
survey. You think we should take a break for
lunch pretty soon or ... general sentiment. I
think this is probably a good time, if this works
for you or if you want - -
THE WITNESS: I would almost rather
keep going.
MR. TERRY: It's going to be awhile.
MR. CAHILL: AS in how much?
MR. TERRY: Probably - - Probably
have at least another hour and a half.
Okay. Let's go off the record.
THE VIDEOGRAPHER: The time is
12:47. We're going off the record, end of Tape
2.
(Whereupon, a luncheon recess is
taken. )
THE VIDEOGRAPHER: We are going back
on the record. The time is 1:23 p.m.
This is the beginning of Tape Number
Page 161
1 J. ROSNER - CONFIDENTIAL 2 3 in the deposition of Mr. Joshua Resner - - 3 Rosner, excuse me, which is being taken at
4 OIMelveny & Myers, New York. The videographer is
5 Terry Carruthers, here on behalf of Esquire
6 Deposition Services, located at 1020 19th Street,
7 Northwest, Washington, D.C.
8 Counsel may proceed.
9 Q. Good afternoon, Mr. Rosner. You
10 understand you're still under oath?
11 A. I do.
12 Q. During the break did you have any
13 conversations with anyone who represented the
14 plaintiffs in this matter?
15 A. NO.
16 Q. Did you have conversations with
17 anyone about this matter other than your own
18 counsel?
19 A. NO.
2 0 MR. TERRY: The next document is
21 Bates-stamped MGA 03033, and at the top it's
22 Bates MGA 09736. It is Rosner Exhibit 17, it's
23 dated April 19th, 2004.
24 (Whereupon, Exhibit Rosner-17 is
25 marked for identification by the reporter.)
41 (Pages 158 to 161)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 162
J. ROSNER - CONFIDENTIAL
Q. Can you identify this document for
me?
A. Appears to be a call report from
myself to Steve Blumenthal.
Q. And the date is April 19th, 2004?
A. correct. - Q. If you take a look at the last line,
Point 4. It says, "He hints that the
manufactured housing resolution of the FNM
investigation will come off in the next few
weeks. He also says that the CFRA estimate of
the FNM problems is probably way off the mark.
'They show 1.2 billion here and 1.5 billion
there.
DO you know what that section is
referring to?
A. I don't specifically.
Q. DO you know what the manufactured
housing resolution is referring to?
A. I assume that it related to
questions about the accounting for their
manufactured housing exposures.
Q. And was that an issue that OFHEO was
looking into in this time period?
Page 163
J. ROSNER - CONFIDENTIAL A. You know, I don't really remember
specifically. I don't remember it as a major
issue, and I really don't recall the time frame.
Q. Do you know what it's referring to
when it says, "The CFRA estimate of the FNM
problems is probably way off the mark"?
A. Again, I don't specifically
recollect, but I would assume that it's the
Center for Financial Accounting, CFRA is an
analytic firm, and so I assume it relates to a
report they put out.
Q. They issue research reports for
investors as well?
A. Correct.
Q. And do you think the Numbers 1.2
billion and 1.5 billion are referring to the
amount - - A. I have no idea.
MR. TERRY: We will move on to
another document then. This one is Bates-stamped
OFHEO-BLU-00036921. It's Rosner Exhibit 18.
(Whereupon, Exhibit Rosner-18 is
marked for identification by the reporter.)
Q. Can you identify this for me?
Esquire Deposition Services D.C. - 1-800-441-3376
Page 164
J. ROSNER - CONFIDENTIAL A. Again, appears to be an E mail from
me to Steve Blumenthal.
Q. Dated May 14th, 2004?
A. Right.
Q. Do you see the E mail references a
Piper Report?
A. correct.
Q. Do you recall sending Mr. Blumenthal
a report from Piper?
A. I don't specifically recall. I do
somewhat recall the - - a conversation about a research report.
Q. What is Piper?
A. I assume that we're talking about
Piper Jaffray here.
Q. That's another firm that offers - -
A. Correct.
Q. - - analyst reports to investors.
Do you recall the context of this
E mail?
A. To the best of my recollection, I
believe that Mr. Blumenthal had told me that
there was an analyst meeting where - - I think it was Piper it may not be the same instance. I
Page 165
1 J. ROSNER - CONFIDENTIAL 2 think it was. - - where they had had analysts
3 in - - well, a sell-side analyst with clients in
4 to OFHEO for an update meeting, and that the
5 report that Piper put out after was not only
6 inaccurate but very strongly distorted things
7 that Mr. Blumenthal had said, and he was
8 disturbed by that and concerned that the conflict
9 of interest that may have arisen between the
10 analyst and the investment banking business might
11 have actually had something to do with it.
12 Q . Is that incident you're referring
13 to, did that involve Piper or was that Freeman,
14 Billings & Ramsay?
15 A. I don't - - I don't remember 16 specifically.
17 Q. Okay. If you take a look at this
18 E mail, it says, "They are disturbed that OFHEO
19 would cause such a market disruption over a
20 disputable and immaterial amount."
2 1 A. Uh-huh.
2 2 Q. Is that referring to OFHEO's
23 published findings about Fannie Mae's
24 manufactured housing?
25 A. I don't recall. So I could
42 (Pages 162 to 165)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 166
J. ROSNER - CONFIDENTIAL speculate, but I don't recall specifically.
Q. okay. And does the timing of this
E mail provide you with any context for - - A. Not off the top of my head. Sorry.
Q. Take a look at the last sentence.
It says, "I'm doing my best to help investors
gain correct perspective on the legislative,
regulatory, and policy goings-on.''
Did you write that?
A. I probably did.
Q. And why did you write that to
Mr. Blumenthal?
A. Because I had been given what I
believed ample reason to believe that the
sell-side research community was either, for lack
of understanding, lack of sophistication, or,
frankly, being spun by a very large investment
banking client, not understanding the - - the correct exposures and risks.
Q. What do you mean by "not
understanding the correct exposures and risks"?
A. There was a lot of cheerleading
going on, quite frankly, from the sell-side
community for Fannie, and by, frankly, its
Page 167
1 J. ROSNER - CONFIDENTIAL 2 largest shareholders, several of whom were making
3 very aggressive statements that seemed to have
4 been fairly clear distortions given other
5 statements that were made in the public record.
6 Q. And it was your view that your
7 reports corrected that?
8 A. It's my view that my responsibility
9 was to be independent, to be unconflicted and not
10 to rely on any particular source as the basis for
11 judgement but, rather, on information in its
12 entirety and public record.
13 Q. And do you think that the reports
14 you released provided a correct perspective on
15 the legislative, regulatory, and policy risks
16 that faced Fannie Mae?
17 A. By and large, I think that the
18 history has demonstrated that they are and have
19 been more accurate and - - and more insightful 20 than those of most of the sell side.
2 1 Q. Was there information that you are
22 somehow privy to that sell-side analysts were
23 not - -
24 A. NO.
2 5 Q. - - that led you to those
Esquire Deposition Services D.C. - 1-800-441-3376
1 J. ROSNER - CONFIDENTIAL 2 conclusions?
3 A. NO.
4 Q. So it was the same public
5 in£ ormation.
6 A. Absolutely.
7 Q. Why did you want Mr. Blumenthal to
8 know that you were doing your best to help
9 investors get a correct perspective of the risk
10 facing Fannie Mae?
11 A. Because I wanted him to understand
12 that I took my role seriously as an independent
13 voice, unconflicted from any pressures.
14 Q. Why did you want him to know that?
15 A. Because I think that given some of
16 the information that was being put out there, I
17 felt it important for there to be some
18 understanding of that.
19 Q. Are there any specific distortions
20 of perspective that you were discussing?
21 A. That I was discussing ... 22 Q. In your testimony. We were talking
23 about part of the document that says, I'm doing
24 my best to help investors gain correct
25 perspective on the legislative, regulatory,
Page 169
J. ROSNER - CONFIDENTIAL policy goings-on, and I believe you stated you
were trying to correct some distortions?
A. Absolutely.
Q. What were the specific distortions
you were trying to correct?
A. The distortions were, you know, many
and frequent, ranging from, the OFHEO
investigation is about nothing but financial
accounting issues, which is one of the
distortions we talked about earlier, to, frankly,
what I believe was information that was provided
to several of Fannie and Freddie's largest
shareholders but not publicly provided to
investors, on the HUD internal audit
investigation of OFHEO that was commenced at the
direction of Kip Bond. And Dwayne Duncan has
acknowledged that he had actually asked Kip Bond
to actually request that HUD do a audit of OFHEO.
There was information, there were
market rumors flying around about how the
internal audit of OFHEO by HUD was going to
essentially shut down or slap down or disembowel
the regulator. And I received phone calls from
some of the largest shareholders, sharing
43 (Pages 166 to 169)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 170
J. ROSNER - CONFIDENTIAL information that apparently was in that report
though never made it into the public domain
because ultimately that report was released in a
redacted version.
And so it became very clear to me
that some of the largest shareholders were
working essentially to protect their positions by
advancing statements that the company was making.
Q. Who were those shareholders?
A. The one that stands out most in my
mind is Taylor Hinshaw, who as I recall, and I
can't put a date to it, but I actually believe it
was somewhere around this time, called me and
gave me information about specific items in that
HUD Inspector General report which have never
come out in the public light and implied that he
got that information directly from the company.
Q. What were the specific items?
A. Sexual harassment issues regarding
Steve Blumenthal, a myriad of personal
allegations against Steve Blumenthal that
Fannie - - or I should say that Taylor Hinshaw told me were in the report.
Ultimately Barney Frank released a
Page 171
J. ROSNER - CONFIDENTIAL redacted version of the report and many of those
personal issues were pulled out of it, so it was
apparent, given public record at the time, that
the only people who had access to that report
were Kip Bond's office and other members of the
house financial services committee.
Q. Okay. Any other -- Any other sources of - -
A. Many.
MR. TERRY: The next document is
dated May 17, 2004, and it's Bates-stamped MGA
09100. It's Rosner Exhibit 19.
(Whereupon, Exhibit Rosner-19 is
marked for identification by the reporter.)
Q. Just to be clear, to go back to
something we just discussed, did you have any
personal knowledge that Fannie Mae was providing
investors with information that was in the OFHEO
report, or was it all secondhand?
A. It was from the investors. So to
the degree that the investors said it, that was
the only information I had, but I found it
credible, given the fact that it, as in that
case, was information that apparently was correct
Esquire Deposition Services D.C. - 1-800-441-3376
Page 172
1 J. ROSNER - CONFIDENTIAL
2 and wasn't available to other investors or in the
3 market.
4 Q. Did you ever report, yourself, that
5 the HUD IG report would contain allegations about
6 sexual harassment by Mr. Blumenthal?
7 A. I don't believe that I reported it,
8 to my recollection. I do remember, obviously, as
9 I said, getting a phone call, and actually I
10 can't put a date to it, but getting that phone
11 call on a specific night from Taylor Hinshaw
12 telling me that the report had just actually been
13 released and he had just gotten ahold of it.
14 Q. Why didn't you report that?
15 A. Because it was speculation, and my
16 job was to actually triangulate information to
17 make sure it was based in some credible sourcing.
18 Q. And you did not believe you had
19 credible sourcing to say that the report would
20 contain allegations of sexual harassment?
21 A. Right. Considering the fact that I
22 felt that Taylor Hinshaw was exceptionally
23 biased, had been proven incorrect, and was
24 continually trying to feed information to me to
25 advance his cause. I discounted the veracity of
Page 173
J. ROSNER - CONFIDENTIAL
it. Historic, you know, information proves that
he was actually truthful on that issue.
Q. What historic information is that?
A. That the only version that - - that there was a battle over the information and the
information having to be redacted for personal
matters. The fact that Barney Frank ultimately
agreed to release it with personal information
about officials involved in allegations was
redacted, that none of those officials, according
to public record, agreed to sign waivers allowing
that part of the HUD IG report to be released.
Q. Did-you ever.talk to Mr. Blumenthal
about the HUE IG report?
A. I'm sure that I must have. I don't
remember with any specificity. I think that I
did after it came out and after I had gotten this
phone call from Taylor Hinshaw.
Q. Did you ever talk to him about
specifically the allegations that you testified
were redacted from the report?
A. Thatwhat?
Q. The allegations of a personal nature
that were redacted from the report?
44 (Pages 170 to 173)
Joshua Rosner - Confidential
Page 174
J. ROSNER - CONFIDENTIAL
A. I don't believe I did.
Q. Did you ever speak to anyone other
than Mr. Hinshaw about these allegations?
A. Yes.
Q , Who else did you speak with?
A. There were a number of clients who
had called me with similar information a couple
of days later - - I'm trying to remember who off
the top of my head. - - and they had informed me that they were all seeming to get the same
information from the same couple of institutional
investors, Fidelity and Taylor Hinshaw.
Q. Did you view information about
whether the HUD IG report contained allegations
of sexual harassment to be material to investors
in Fannie Mae?
A. No, I viewed it as immaterial, which
is why I felt it was inappropriate and, frankly,
uncomfortable to even bring that matter up with
Mr. Blumenthal.
Q. Let's take a look at Rosner Exhibit
19. Can you identify this document for me?
A. ~t's a Medley report. I'm not sure
of whether it went out, but given the format of
Page 175 1 J. ROSNER - CONFIDENTIAL 2 it, I would assume it did go out to clients.
3 Q. Did you draft this?
4 A. I believe I probably did. Again,
5 that doesn't mean that it wasn't edited and it
6 was my final product.
7 Q. But it's your belief you provided
8 substantive - -
9 A. Absolutely. I believe I did.
10 Q. Can you look at the second
11 paragraph? The last sentence says, "As one
12 regulatory source points out to us, 'Fanniels
13 accounting can be GAAP compliant, but that
14 doesn't necessarily mean anything to a safety and
15 soundness regulator, nor should it.'"
16 Was the source for that comment
17 Mr. Blumenthal?
18 A. I actually don't remember, but I
19 actually think I had that conversation with
20 someone within the fed.
2 1 Q. And who would that be?
2 2 A. I don't remember. I had so many
23 sources within the fed. I believe that that
24 conversation happened as a result of me again
25 trying to triangulate information.
Page 176
J. ROSNER - CONFIDENTIAL Q. What does that mean, Fannie's
accounting could be GAAP-compliant, but that
doesn't necessarily mean anything to a safety and
soundness regulator, nor should it?
A. That the SEC has a different level
or burden than the regulator. The regulator's
primary charge is safety and soundness. The
SEC's is the materiality and the accuracy of the
accounting treatment. And the safety and
soundness regulator in some sense has a higher
burden to meet in terms of the safety and
soundness of examined institutions.
Q. Take a look -- There's a subheading
that says, "OFHEO likely to review additional
practices." And the third paragraph down says,
"Contrary to the belief of most investors, the
investigation is not merely a reaudit of Fannie's
finances. The OFHEO investigation will certainly
include a forensic review of their accounting,
but it also includes a review of their systems,
operational risks, executive compensation, board
independence and oversights and market risks."
Was that something that
Mr. Blumenthal told you?
Page 177
J. ROSNER - CONFIDENTIAL A. That was something that was - - Again
you're missing a report here, but that was
something that was made fairly clear from the
Freddie examination report.
Q. And that would have been clear back
in the Fall of 2003?
A. That would have been clear in the
Fall of 2003. Correct.
Q. Okay. Can we go back and take a
look at Exhibit 4, which is the August lst, 2003,
Medley report.
A. What number?
Q. Four.
A. Okay.
Q. And if you take a look at the last
paragraph, the last sentence on that page spills
over to the next page, says, "He said we can't
use it in this form or with any attribution as to
where it came from. I'm going to be one shocked
boy if we go into Famie with the same set of
microscopes that we were using on Freddie and
don't find significant things. They will not be
the same things that have been found out at
Freddie, but I am confident that Raines is not
45 (Pages 174 to 177)
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 178
J. ROSNER - CONFIDENTIAL the angel he purports to be."
And that was something that
Mr. Blumenthal told you back in August of 2003?
A. correct.
Q. Is it your view that was not
nonpublic information?
A. Is it -- is it - - Q. Was it your view that that was
public or nonpublic information?
A. I think - - I think that the accounting problems at Freddie were largely
known, by Freddie's own admission, prior to the
creation of an examination report. And I think
that it was clearly known that they had issues,
that F a ~ i e likely had issues before even the
release of the OFHEO Freddie report. And, in
fact, I had been highlighting and drawing concern
about many of those issues for the better part of
three years, having not spoken to Steve
Blumenthal prior to that, you know, Medley
experience.
Q. And you believe that those issues
were - - Knowledge of those issues was available
in the public domain as far back as August of
Page 179
J. ROSNER - CONFIDENTIAL 2003 if - -
A. I do.
MR. TERRY: Okay. The next document
is Bates MGA 03108. It's Rosner Exhibit 20. At
the top it's Bates-stamped MGA 09783. I'm sorry.
738.
(Whereupon, Exhibit Rosner-20 is
marked for identification by the reporter.)
Q. Can you identify this document for
me?
A. Appears to be a call report outbound
from me to Steve Blumenthal, May 18, 2004.
Q. Is it a call report. you drafted?
A. ~t appears so.
Q. Okay. If you look at the first
line, it says, "I called SB immediately after
hanging up with Vincent"?
A. Uh-huh.
Q. Who is Vincent?
A. Vincent Daniel.
Q. who is Vincent Daniel?
A. He was a client, and prior to that
he was a partner at Graham Fisher.
Q. The next line says, "Steve answers
Page 180
J. ROSNER - CONFIDENTIAL the phone and I say, Hi, Steve. I thought we
were friends. Steve responds, Josh, how are you?
I just finished reading your report. You are so
spun on the analysis it's scary:
First of all, do you know what
that's referring to when it says, "Hi, Steve, I
thought we were friends"?
A. I don't recall.
Q. Take a look at the next line. It
says, "I continue, Steve, I just got a call from
a client, and he commented that, as usual, my
view is so far out of sync with the other
sell-side folks and then told me that FBR is
taking him to see you."
Were you explaining to Mr.
Blumenthal that you were unhappy that he was
meeting with FBR and not you?
A. Not that he was meeting with FBR and
not me, but that I had actually made prior
requests to bring clients into OFHEO and was
rebuffed. And I assume that actually my "I
thought we were friends'' was based on the fact
that I seemed to have not even the same level of
access as others.
Page 181
J. ROSNER - CONFIDENTIAL Q. And you were complaining about that.
MR. KARAM: I object. Counsel, can
we clarify who FBR is?
Q. Who is FBR?
A. Friedman, Billings & Ramsay.
Q , And what is Friedman, Billings &
Ramsay?
A. It's an investment bank.
Q. In this E mail were you complaining
to Mr. Blumenthal that he was going to FBR and he
hadn't done the same thing for you?
A. Not for me. For Medley's clients,
yes.
Q. And then it goes on to say, "Steve
says that if you want to set something up all you
need to do is ask. I can get anyone you want
from this organization to come and would be happy
to do so. "
Do you see that?
A. Uh-huh.
Q. Do you recall Mr. Blumenthal making
comments along those lines?
A. I do. Not this specific, but I do
remember that.
Esquire Deposition Services D.C. - 1-800-441-3376
46 (Pages 178 to 181)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 182
J. ROSNER - CONFIDENTIAL Q. If you take a look at the next line,
it says, "As for your client, why don't you tell
him to ask me during that FBR meeting why
Medley's view is so far out of the mainstream. I
ask why? What will you say? Steve says, 1'11
tell the truth, that I read a lot of what the
street says, not that I care, and that Medley is
the only firm that gets it."
Do you recall that conversation with
Mr. Blumenthal?
A. Not that specific, but that was a
theme that came up quite often.
Q. Do you recall Mr. Blumenthal
offering to tell one of your clients his view of
Medley's research?
A. Yeah. I - - I - - Again, not specifically, but I don't think that - - I don't
think there's any reason for me to doubt that
that was a comment.
Q. Did Mr. Blumenthal ever comment to
you that he regularly read research reports?
A. Yes.
Q. And he said that he did, in fact,
read them?
Page 183
J. ROSNER - CONFIDENTIAL A. I believe so.
Q. Did he ever tell you if he followed
Fannie Mae stock price?
A. He - - He didn't. Q. That's what he told you?
A. No, he didn't - - He didn't ever say
whether he followed.
Q. Oh. So you don't know one way or
another.
A. Right.
Q. Going back to the first line, he
says, "Josh, how are you, I just finished reading
your report. You are so spun on the analysis it
is scary."
A. Uh-huh.
Q. Is he referring to the May 17th
report we just looked at?
A. I don't - - I don't remember specifically. I think that might be a fair - -
fair comment.
Q. And this call was around May 18,
2004?
A. Correct.
Q. Any reason to doubt he wasn't
Esquire Deposition Services D.C. - 1-800-441-3376
Page 184
J. ROSNER - CONFIDENTIAL referring to - -
A. NO.
Q. - - this report? Going back to the conversation about
your client, at the end it says, "I ask if you
would really say that, and he said, Yes, if he
asks, I would. The client won't be invited to
too many FBR functions."
What is that referring to?
A. That many of the sell-side firms had
very, very, very large investment banking
relationships with Fannie Mae, and Fannie Mae
quite clearly exerted some influence over the
analysts and their views, and so to publicly
stand out as a client at an FBR-sponsored event,
raising questions and concerns about either
Fannie or FBR coverage would not bode well for
the relationship or the ability of that client to
get invited to other FBR events.
Q. Was it Mr. Blumenthal's view that
Wall Street firms were excessively positive in
their analysis of F a ~ i e Mae and the risks it
faced?
MR. KARAM: Objection.
Page 185
J. ROSNER - CONFIDENTIAL A. I don't know.
Q. Did he ever express that to you?
A. Not that they were positive, but
that they seem not to be reading public
documents.
Q. Mr. Blumenthal was, however, happy
with your coverage. Right?
A. Yeah. He was - - I think at times he
was confused by it. At times he was concerned by
it.
Q. But at least with respect to the May
17, 2004, report, his view was that it was so
spun on the analysis that it's scary. Right?
A. That's what it says. I mean,
there's a lot in that report. So whether he's
speaking to a specific issue or the report in its
entirety I can't say.
Q. Do you recall any other
conversations where he made statements along the
lines of, Medley's the only firm that gets it?
A. I remember him repeatedly making
comments about the fact that he was concerned
that my analysis was so good and making comments,
including comments that I believe I put in other
47 (Pages 182 to 185)
Joshua Rosner - Confidential
Page 187
1 J. ROSNER - CONFIDENTIAL 2 A. It appears to be an E mail
3 between - - from me to Steve Blumenthal.
4 Q. And it's dated May 19th, 2004?
5 A. Uh-huh.
6 Q. ~ n d that's one day after the call
7 report we just looked at?
8 A. Uh-huh.
9 Q. If you take a look at the last line,
10 it says, "In the mean time, I do expect the
11 client to ask your view on the veracity of my
12 work during the FBR meeting"?
13 A. Uh-huh.
14 Q. Is that referring to
15 Mr. Blumenthal's offer on May 18th to tell your
16 client what he thinks of your work?
17 A. I don't know whether it's referring
18 to Mr. Blumenthal's offer or whether it's
19 referring to the fact that my client, who we
20 spoke about as being Vincent Daniel, who was a
21 client of mine and a former partner of mine, was
22 frustrated because he felt that Friedman,
23 Billings' work was not up to par. So I don't
24 know if it had anything to do with Steve offering
25 or Vincent just asking.
Page 186
J. ROSNER - CONFIDENTIAL
call reports, that he was concerned that if there
was - - that there may have been a leak within
OFHEO, giving me information, and if there was he
was going to have to shut it down, and he was
fuming. But I think that he made it very clear
to me that - - that my analysis and my triangulation of publicly available information
was - - was clearly differentiated from the rest of the street.
Q , Do you recall if you, in fact, asked
Mr. Blumenthal to give your client his view of
your research?
A. No. I don't believe I did.
MR. TERRY: The next document is
~ates-stamped MGA 03109. ~ t ' s dated May 19,
2004.
(Whereupon, Exhibit Rosner-21 is
marked for identification by the reporter.)
Q. Can you identify this document for
me?
A. Let me look at it, please.
Q . sure.
A. Uh-huh.
Q. Can you identify this document?
Page 188
J. ROSNER - CONFIDENTIAL
Q. Nevertheless, you were telling
Mr. Blumenthal that you did expect one of your
clients to ask him about the veracity of your
work. correct?
A. correct.
Q. And that was in connection with the
FBR meeting. Right?
A. I assume so.
Q. And that's the same meeting in
which - - with respect to which Mr. Blumenthal
said that if your client asks he would tell your
client what he thought about your work, that
you're the only one on the street that gets it.
A. I assume that's correct.
MR. TERRY: The next document is
dated June 9, 2004. It's Bates stamped on the
bottom MGA 03174, and on the top it's Bates stamp
MGA 09741. It's Rosner Exhibit 22.
(Whereupon, Exhibit Rosner-22 is
marked for identification by the reporter.)
Q. Can you identify this document for
me?
A. It appears to be a call report of a
conversation between myself and Brant Imperatore.
Page 189
1 J. ROSNER - CONFIDENTIAL 2 Q. Is it a call report written by you?
3 A. Appears to be.
4 Q. Who is Brant Imperatore?
5 A. Brant Imperatore is a Washington
6 lobbyist.
7 Q. And he works for the firm of Barbour
8 Griffith & Rogers Inc.?
9 A. Correct.
10 Q. What is Barbour Griffith & Rogers,
11 Inc.?
12 A. A lobbying firm.
13 Q. Do you know who the Mr. Barbour in
14 the name is?
15 A. Hailey Barbour.
16 Q. What is Hailey Barbour's - - what did 17 he do before he was a lobbyist?
18 A. Idon'tknow.
19 Q. Was he the head of the RNC at some
20 point?
21 A. I believe he was.
2 2 Q. Is Barbour Griffith & Rogers a
23 partisan firm?
24 A. I believe it is.
2 5 Q. Were they close to the
48 (Pages 186 to 189)
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 190
J. ROSNER - CONFIDENTIAL administration?
A. I don8 t know.
Q. Did you view them as being close to
the Bush administration?
A. I - - I didn't view them as being
close to the Bush administration. I viewed them
as having actually insights on the GSE issues
legislatively.
Q. Have you ever described them to
anyone as having close ties to the Bush
administration?
A. Idon'trecall.
Q. If you take a look at the first
line, it says, "Brant and I speak about the
Fannie Freddie, quote, proposal stuffM?
A. Uh-huh.
Q. Do you know what that's referring
to?
A. I don't specifically, but reading
this, I would assume that it refers to the
legislative proposals.
Q. Legislative proposals as to what to
do with F a ~ i e May and Freddie?
A. No. As what to do with the creation
Page 19 1
J. ROSNER - CONFIDENTIAL of a new regulator overseeing the Fannie and
Freddie.
Q. He goes on to say, "He tells me that
his admin sources say that, yes, Syron has been
having discussions with the Fed and Treas. He
asked for the meetings, and he threw out ideas to
end the impasse but that the WH saw these as
ideas, not proposals, and did not and will not
agree to anything (informally or otherwise) until
after the elections."
When you write "WH" in here, is that
referring to White House?
A. I assume so.
Q. Do you know the identity of
Mr. Imperatore's administration sources?
A. Idonlt.
Q. Did he appear to you to have pretty
good inside sources within the administration?
A. You know, it's spotty. Sometimes
yes, sometimes no. Didn't rely on him as being
completely accurate.
Q. Did you ever describe Mr. Imperatore
as being a reliable source?
A. I may have. I don't know.
Page 19;
J. ROSNER - CONFIDENTIAL Q. Did you ever describe him as someone
who is conservative and has never given me bad or
false info?
A. I have no idea.
Q. Would that statement be accurate?
A. NO. YOU know, as I'm sure you know
from your personal and professional business,
there are people who you talk to who may be
spot-on in their insights, in their informed view
on certain issues, and completely off-base on
other issues. I would view every one of my
sources as actually being great in some areas and
terrible in some, and none are infallible on any.
(Whereupon, Exhibit Rosner-23 and
Rosner-24 are marked for identification by the
reporter. )
Q. I'll give you two documents, Rosner
Exhibit 23, which is Bates-stamped at the bottom
MGA 04091, and Rosner 24, which is Bates-stamped
at the top MGA 0967.
Can you identify Exhibit 23 for me?
A. It appears to be a call report from
Brant Imperatore dated November 30th, 2004.
Q. And written by you?
Page 19?
J. ROSNER - CONFIDENTIAL A. Appears so.
Q. And what is Exhibit 24?
A. What is Exhibit 24?
Q. Can you identify it for me?
A. It appears to be compounded. It's
an E mail from Kevin Muehring to me to - -
actually to RJ, commenting on a call report from
me, dated September 30th, 2004, with Brant
Imperatore.
Q. And Exhibit 24 includes a call
report authored by you?
A. Correct. That's what I just said.
Q. If you take a look at the bottom of
24, it says, in all caps, "I understand these are
outrageously seriously allegations. I also know
Brant as someone who is conservative and has
never given me bad or false info.''
Did you write that?
A. Imaywellhave.
Q. was it true?
A. I don't know. As you see at the
top, as happened on several other occasions, in
the summary it says "radio silence, need to
confirm," so I don't think that I actually relied
49 (Pages 190 to 193)
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 194
J. ROSNER - CONFIDENTIAL
on it as true at the time.
Q. I'm sorry. My question was whether
or not your statement at the bottom that "Brant
is someone who is conservative and has never
given me bad or false info," was that true when
you wrote it?
A. I can't recall whether that's true
when I wrote it. I have - - You know, it probably
was substantively true.
Q. Would you have written it in all
caps at the bottom of your E mail if it was
false?
A. I dont t know.
Q. Okay. Take a look at Exhibit 23,
please?
A. Uh-huh.
Q. Under Summary it says, "Ouch,
background, Brantts shop is an unabashedly
partisan firm with close ties to the
administration. 'I
Did you write that?
A. Probably.
Q. Was that true when you wrote it?
A. Again, I believe that it probably
Page 195
J. ROSNER - CONFIDENTIAL was true.
Q. Going back to Exhibit 22, in the
call note section it says "They believe that six
months from now Freddie's stock price will not
have gone up and that shareholder pressure may
get FNM and FRE to be more willing to cut a
deal. 'I
Is that something that you wrote?
A. Again, I don't specifically recall,
but it appears so.
Q. And that's something you wrote based
on information that was given to you by Brant
Imperatore?
A. In that instance, correct.
Q. Is the "they" referring to the White
House?
A. I don't know. I would assume so.
Q. In the context of this E mail?
A. In the context of this E mail it
would seem so.
Q. Do you recall Mr. Imperatore telling
you that the White House believed that
shareholder pressure would get Fannie Mae and
Freddie Mac to be willing to cut a deal?
Esquire Deposition Services DeCe - 1-800-441-3376
Page 197
J. ROSNER - CONFIDENTIAL Griffith & Rogers had been retained by the Bush
administration?
A. That's a silly question. I have no
knowledge of who their clients were.
Q. Well, is that - - Reading this, is that what you read Mr. Imperatore to be telling
YOU?
MR. CAHILL: Objection. Calls for
speculation.
Q. Did Mr. Imperatore ever tell you
that he had been hired by the Bush
administration?
A. No. He hadn't. .
Q. But it was your understanding that
his firm had been tasked by the Bush
administration to perform -- A. No. It was merely my understanding
that he actually suggested that they were asked
to, not whether they actually were asked to and
not what that actually meant.
Q. Okay. Let's go through 23 a little
bit more.
It says, "The administration has
tasked me with a new assignment which my firm has
Page 196
1 J. ROSNER - CONFIDENTIAL 2 A. I don't specifically recall that.
3 It may have been. I never really assumed that
4 Brant was working for the administration, so I'm
5 not sure how much faith I put in that statement.
6 Q. Could you take a look at Exhibit 23
7 real quickly. Keep all three in front of you.
8 Under Call Notes it says, "The
9 administration has tasked me with a new
10 assignment which my firm has directed me to
11 pursue.
12 Does that quote reflect this is - -
13 you're attempting to reflect the sum or substance
14 of Mr. Imperatore's comments to you?
15 A. I would assume that that is what I
16 was trying to reflect. Yes.
17 Q. And you were trying - - And
18 Mr. Imperatore was telling you that he was
19 getting an assignment from the administration?
20 A. Yeah. I don't know what
21 "assignment" means, but yes.
2 2 Q. And the administration, does that
23 refer to the Bush administration?
24 A. I don't know, but I would assume so.
2 5 Q. Was your understanding that Barbour
50 (Pages 194 to 197)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 198
J. ROSNER - CONFIDENTIAL directed me to pursue. I am expected to get a
letter drafted by a member of congress in the
next week requesting HUD to release the
investigation/study of Fannie Mae's regional
partnership offices."
Was it your understanding, based on
your conversation with Mr. Imperatore, that the
Bush administration had requested that Barbour
Griffith & Rogers get a member of congress to
request HUD to release a study on Fannie Mae's
partnership offices?
A. It was my understanding that Brant
Imperatore stated that. It isn't my
understanding that the administration had
actually tasked him or asked him to do so.
Q. On September 30th, 2004, did you
still consider Mr. Imperatore to be a person who
has never given me bad or false info?
A. Again, on specific matters and
specific subjects. I said that before. There
isn't - - There isn't a single source who I could rely on across the board. On the areas where I
did rely on Brantls information, he had never
given me bad information.
Page 199
J. ROSNER - CONFIDENTIAL
Q. What areas did you rely on
Mr. Imperatore's information?
A. Primarily what was going to be
important on both sides in the legislative
wranglings and how far the dems would be willing
to bend and the republicans on the other side
would be willing to bend on what would be
required to pass legislation.
Q. Okay. Exhibit 22. That's dealing
with Mr. Imperatore's views of what the
administration will do. Correct?
A. I'm sorry?
Q. Exhibit 22, is that talking about
what congress wants to do or what the
administration is saying?
A. Twenty-two is what - - Brant's understanding of what the administration is
saying.
Q. And 23, is that also dealing with
the administration?
A. Apparently.
Q. What is 24 dealing with?
A. Again, HUD administration issues.
Q. And Exhibit 24, which deals with
Page 200
J. ROSNER - CONFIDENTIAL administration issues, meaning dealing with the
Bush administration, at the bottom of that you
write, "I also know Brant as someone who is
conservative and has never given me bad or false
info." Right?
A. Uh-huh.
Q. And that's in the context of
administrative issues.
A. NO. That's actually in a broader
context, and I think you're mischaracterizing the
document, because if you see at the top, "We need
to confirm this before we can do anything."
Okay? And next he comments at the end, I write,
"He's obviously relying on a source he says is a
good source. Unless we can get confirmation from
other sources we can't even begin to consider
doing anything with this."
Which, obviously, highlights my
skepticism about the nature of the information he
was providing or its credibility.
Q. But up to that point your view was
that he was someone who had not yet given you any
bad or false info.
A. Again--
Page 201
J. ROSNER - CONFIDENTIAL MR. CAHILL: Objection.
A. Again, as it related to legislative
matters.
Q. But you didn't write that, did you?
MR. CAHILL: Objection.
Argumentative, form.
A. I didn't write that because ... Q. Well, you were passing along
Mr. Imperatore's comments about what the
administration was doing, and in that E mail you
say that he has never given you bad or false
information. Correct?
MR. CAHILL: Objection.
A. In the literal terms of what you're
seeing here, yes. As I've said to you repeatedly
during this process, a lot of information
actually was inference, had color that was either
added or not in the reports, and I said to you
repeatedly during this line of questioning I
relied on Brant not solely or exclusively, but as
a good source of information on legislative
issues, not administrative issues, which is why
if you notice in that call report, at the top I
say "radio silence." At the bottom I actually
5 1 (Pages 198 to 201)
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 202
1 J. ROSNER - CONFIDENTIAL 2 raise questions as to his veracity and my
3 confidence in the quality of his information.
4 Q. Okay. Exhibit 22 you don't tell
5 anyone they should use radio silence for that
6 information, do you?
7 A. No. This is actually - - There's
8 nothing particularly interesting in it. There's
9 nothing particularly surprising in it, and this
10 is a perception of information that, frankly, was
11 circling around Wall Street and anyone would have
12 given you at that time.
13 Q. So it's your testimony it was
14 well-known in May of 2004 that the White House's
15 view was that six months from then, meaning
16 through December, 2004, Fannie Mae and Freddie
17 stock price will not have gone up?
18 MR. CAHILL: Objection.
19 A. First of all, it doesn't say
20 anything about Fannie's stock price in that
21 report, either inferred or otherwise. It says
22 Freddie stock price.
2 3 Q. Okay. It says, "Shareholder
24 pressure may get FNM and FRE to be more willing
25 to cut a deal."
Page 203
1 J. ROSNER - CONFIDENTIAL 2 What is that referring to?
3 A. That's referring to the fact that
4 for the past five years at that point, or four
5 years at that point, there had been a massive
6 legislative overhang on the GSEs concerns that
7 there was going to be legislative change for a
8 stronger new regulator, and that investors were
9 becoming very weary of it, and actually
10 increasingly making it known that they were weary
11 of it.
12 Q. And was it widely known that the
13 administration's view was that pressure on the
14 stock price of Fannie Mae would make Fannie Mae
15 more willing to cut a deal with the
16 administration?
17 MR. CAHILL: Objection.
18 A. Again, I'm not sure that this is
19 Brant's view or this is the administration's
20 view. I don't think that it was reliable as the
21 administration's view, given the fact that, as I
22 said, I have reasons to repeatedly doubt the
23 accuracy or the credibility of Brant's
24 information on administrative issues,
25 administration issues.
Esquire Deposition Services D.C. - 1-800-441-3376
Page 204
J. ROSNER - CONFIDENTIAL Q. On Exhibit 24, what is the - - What
is the general topic of the allegations that
Mr. Imperatore is discussing?
A. That HUD had actually done
investigations on Fannie's conforming loan
limit - - I'm sorry. - - affordable housing
purchases and also on the partnership offices of
Fannie.
Q. And if you take a look at Exhibit
23, is that also referring to the same issue?
A. I would assume so.
Q. At least according to this contact
call report, Mr. Imperatore describes the
allegations as "explosive"?
A. Correct.
Q. Was that report ever released by the
HUD Inspector General?
A. I don't recall.
Q. Do you know if there ever was such a
report by the HUD Inspector General?
A. I believe there were.
Q. And what were the findings?
A. Idon'tknow.
Q. Were they explosive?
Page 205
J. ROSNER - CONFIDENTIAL A. I have no idea.
MR. TERRY: Here's Exhibit 25. It's
Bates-Stamped MGA 03647.
(Whereupon, Exhibit Rosner-25 is
marked for identification by the reporter.)
Q. Can you identify this document?
A. Yes. It appears to be a F a ~ i e Mae
report or a GSE update.
Q. Did you write this?
A. I probably did. I don't
specifically recall.
Q. Can you take a look at the top
paragraph?
A. Uh-huh.
Q. It says, "We are now hearing from
Several sources that another non-OFHEO and
non-SEC report on Fannie Mae's practices may soon
emerge. Our sources have characterized the
alleged reports as 'explosive.' These sources
have claimed that the HUD Inspector General's
office has recently completed an investigation,
though they did not say whether it was a formal
or informal investigation of Fannie Mae's
partnership offices."
52 (Pages 202 to 205)
Joshua Rosner - Confidential
Page 206
1 J. ROSNER - CONFIDENTIAL
2 Is that referring to the information
3 that Mr. Imperatore provided you?
4 A. I assumed that that's part of it.
5 Q. And, in fact, your report uses the
6 very word "explosive" that Mr. Imperatore used.
7 A. Correct.
8 Q. Now, despite your skepticism about
9 Mr. Imperatore's source, you nevertheless
10 published his comments?
11 MR. CAHILL: Objection.
12 A. Well, let's -- Let's look at the
13 date of that. That's December 2nd, 2004.
14 Q. Uh-huh.
15 A. The call report was dated September
16 30th, 2004. If you look at the end of that
17 September - - of Exhibit 24, it comments that
18 unless we can get confirmation from other
19 sources, we cannot even begin to consider doing
20 anything with this.
2 1 And I would assume, although I don't
22 specifically recollect, that during those three
23 months I probably got confirmation from other
24 sources.
2 5 Q. And so for at least - - for this
Page 207
J. ROSNER - CONFIDENTIAL report dealing with the administrative matters,
it turns out you viewed Mr. Brant as being a good
source?
A. No, it turned out that I viewed him,
his views in combination with triangulation of
information with other sources, as actually
forming the basis to believe to some degree what
I - - or to believe what I wrote, to believe to
some degree what he had stated.
Q. Could you take a look back at
Exhibit 23.
NOW, that's the contact call report
for your conversation with Mr. Imperatore.
Right?
A. Uh-huh.
Q. What's the date of that report?
A. That is dated 11-30.
Q. 2004?
A. Yes.
Q. And then the - - Exhibit 25 is dated December 2nd, 2004. Right?
A. The - - Correct. And Exhibit 24,
which is the one in which this HUD partnership
office is specifically raised, which suggested
Page 208
J. ROSNER - CONFIDENTIAL that there was a - - an investigation ongoing that was potentially explosive, is dated, as I said,
September 30th.
Q. Well, actually, could you take a
look at Exhibit 23 again?
A. Okay.
Q. This is a document, is it not, that
refers to the investigation as being, quote,
"explosive"?
A. Okay.
Q. And that's written just two days
before your December 2nd. 2004, report. Correct?
A. correct.
If you look at the ~eptember 30th
report, that's the one where they talk about
specifically the investigation of the partnership
offices, the fact that I don't think we can do
anything with any of this information until we
get other sourcing.
Q. Do you know if by November 30th,
2004, you had developed a view as to whether or
not the information Mr. Imperatore was providing
you with was reliable?
A. I believe that I had gathered a view
Page 209
J. ROSNER - CONFIDENTIAL that there were parts of his information that
were reliable. That which was was triangulated
with others; that which wasn't was discarded.
Q. Can you take a look at the last line
of Exhibit 23?
A. Uh-huh.
Q. It says, "Why is it that I'm a
soldier, and everyone else gets the glory? I
reply, No, Brant, you are the puppeteer's
puppeteer. "
What is that referring to?
A. That's referring to the fact that - -
I don't specifically recall. I assume that it's
referring to the fact that Brant was feeling as
though he was doing a lot of the education of
various parties as to the GSEs, various parties
in the administration, various parties in his
firm and elsewhere, and was feeling down about
the fact that he was essentially being treated as
a foot soldier, and I assume that my "you're the
puppeteer's puppeteer" was merely an attempt to
actually make him feel okay.
Q. That he was, in fact, being
effective in his assignment of pulling the
53 (Pages 206 to 209)
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 210
J. ROSNER - CONFIDENTIAL strings?
A. No. That I was trying to make him
feel okay. You nurture sources.
Q. What did you do to nurture
Mr. Blumenthal?
A. I'm not sure. Could you be more
specific?
Q. Well, you just said, "you nurture
sources. 'I
A. Absolutely.
Q. Was Mr. Blumenthal one of your
sources?
A. Yes.
Q. What did you do to nurture him?
A. Actually, I helped to - - I helped him to understand that I actually represented a
unconflicted, unbiased policy analysis that
didn't exist elsewhere on the street, that unlike
most of those who actually wrote on the GSEs or
the OFHEO process. I had no investment banking.
I had absolutely zero financial investments in
any of these companies, and that I was free from
most of the pressures that most of sell-side
firms were burdened by.
Page 21 1
J. ROSNER - CONFIDENTIAL Q. Did you feel pressures to maintain
your sources?
A. NO.
Q. Did you feel you would be able to
perform your duties just as effectively if
Mr. Blumenthal stopped talking to you?
A. Absolutely.
Q. Do you feel you could have performed
your duties just as effectively if Mr. Brereton
stopped talking to you?
A. Absolutely.
Q. Was it your view that you didn't
need to talk to Mr. Blumenthal or Mr. Brereton in
order to reach conclusions about the likely
outcome of the OFHEO investigation?
A. Absolutely.
MR. KARAM: Objection, compound.
Q. I'll break it up.
Did you feel you needed to talk to
Mr. Blumenthal in order to know what the likely
result of the OFHEO investigation of Fannie Mae
would be?
A. NO. AS I said, I actually got to my
conclusions through publicly available
Page 212
J. ROSNER - CONFIDENTIAL
information and made sure that Mr. Blumenthal
actually understood that I did not want any
information that was nonpublic, and I don't
believe he ever gave me any that was nonpublic.
Q. And the same goes for Mr. Brereton?
A. Absolutely.
Q. What about Mr. Imperatore?
A. I don't think Mr. Imperatore had any
information that was privileged, confidential. I
don't think he was a government official, and so
I treated his information as suspect because, to
my understanding, he wasn't a direct party to any
information that was proprietary.
Q. Do you know where Mr. Imperatore
works today?
A. I assume he's still with Barbour
Griffith.
Q. When was the last time you spoke
with him?
A. I had sort of a touch-base hello
conversation with him probably a month, two
months ago. Not talking about anything
specifically, just I haven't seen you in forever,
you've got a baby now, how are you. And prior to
Page 2 13
J. ROSNER - CONFIDENTIAL probably it had been almost a year.
Q. Was he still at Hailey Barbour's
firm?
A. At that point he was.
Q. I'm going to show you another
document and move on. It's Bates-stamped on the
bottom MGA - - A. Actually, I should correct that,
because I think I spoke to him on his cell phone,
SO I assumed that he was.
Q. YOU assume that he was what?
A. Still at Barbour Griffith when we
last spoke.
Q. But you didn't discuss it?
A. We didn't discuss it.
MR. TERRY: This is Rosner Exhibit
26. It's Bates-stamped MGA 03414.
(Whereupon, Exhibit Rosner-26 is
marked for identification by the reporter.)
Q. Have you ever seen this document
before?
A. I believe I have.
Q. What is it?
A. It's an inbound call report.
Esquire Deposition Services D.C. - 1-800-441-3376
54 (Pages 21 0 to 21 3)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 214
1 J. ROSNER - CONFIDENTIAL 2 Q. Who's it from?
3 A. Fin man.
4 Q. Sounds like a mystery novel, but who
5 is the Fin man?
6 A. I have no idea.
7 Q. It says at the bottom, "Author
8 Regina Schleiger"?
9 A. Correct.
10 Q. Who is Regina Schleiger?
11 A. She at that time was in the contact
12 area at Medley, really focused on central bank,
13 fed, and G-7 G-10 central bank issues.
14 Q. Based on that, do you believe the
15 Fin man was somebody with the fed?
16 A. You know, I honestly don't know.
17 Q. Is Regina still at Medley?
18 A. I believe so.
19 Q. Did you ever ask her who the Fin man
20 was?
2 1 A. No. To be honest, this was - - I
22 didn't, and we tended to actually try and keep
23 our sources where we put a pseudonym on them
24 confidential.
2 5 Q. Why?
Page 215
J. ROSNER - CONFIDENTIAL A. She obviously didn't feel
comfortable sharing the source name.
Q. If you take a look at the summary.
Well, first of all, is this
something that you - - you read during the time you were working at Medley?
A. I remember reading the beginning of
it and actually deciding that, given the fact
that Regina had little, if any, involvement or
understanding of GSE-related issues, I don't
remember making it to the end of it, sort of
remember actually finding it useless.
Q. Let me show you the next document,
which will be Rosner-27, which is Bates-stamped
MGA 03409.
(Whereupon, Exhibit Rosner-27 is
marked for identification by the reporter.)
Q. What is this document?
A. It appears to be a call report on a
call between Josh Rosner and Bob H. of the Wall
Street Journal.
Q. Is it authored by you?
A. Appears to be.
Q. Bob H. is the Wall Street
Esquire Deposition Services D.C. - 1-800-441-3376
Page 216
1 J. ROSNER - CONFIDENTIAL 2 Journalist. Is that Bob Haggerty?
3 A. I would guess so.
4 Q. Does he write under the name James
5 Haggerty?
6 A. yes.
7 Q. If you could take a look under
8 Comments it says, "Bob (James) tells me that he,
9 too, is hearing that Frank Raines is gone by
10 January. He also tells me that OFHEO will make
11 an FMN announcement in the next week or so, and
12 one of his sources is saying that Fannie was
13 using earnings management (manipulation,
14 smoothing) to protect the executive compensation
15 pool. Explosive if true, and puts together my
16 assumptions from my last two reports on earnings
17 management from what Regina's source was saying
18 on going after Raines on executive compensation."
19 Is that something that you wrote?
20 A. Probably. I mean, it says it. I
21 have no reason to believe no.
2 2 Q. And your report, your call report,
23 ties what you were hearing from Bob Haggerty with
24 what Regina was saying about her source going
25 after Mr. Raines?
Page 217
J. ROSNER - CONFIDENTIAL A. Uh-huh.
Q. And is that what Regina was saying
in the inbound call report from Fin man?
MR. CAHILL: Objection.
A. Yeah, again, I mean, I didn't author
the report.
Q. Well, you did author Exhibit 27.
Correct?
A. Apparently.
Q. And in your report you reference
what Regina's source was saying and Armando going
after Raines on executive compensation?
A. Correct.
Q. And that's what Regina wrote in
Exhibit 26?
A. That is what Regina wrote in Exhibit
26, as I said at the beginning of the report.
I don't think I read to the rest - - to the end of the report, but as I said, I didn't
really credit the - - the Regina call note.
Q. And that's because you did not
believe she had good sources?
A. Well, because when you have a source
who you don't even know the name or where they
55 (Pages 214 to 217)
Joshua Rosner - Confidential
Page 2 18
J. ROSNER - CONFIDENTIAL are, you have no reason or comfort with relying
on that source.
MR. TERRY: Next document is Rosner
Exhibit 28, which is Bates-stamped MGA 03410.
(Whereupon, Exhibit Rosner-28 is
marked for identification by the reporter.)
Q. And if you could identify this
document for me?
A. It is a Medley report, background
report, so I don't believe that it was published,
apparently last -- last updated by me, dated September 17, 2004.
Q. Did you write a portion of this?
A. I believe so.
Q. I just noticed, a lot of Medley
reports seem to use baseball analogies.
A. I know. And I'm not even a baseball
fan.
Q. So is there someone who did the
narrative-type editing, just to add in the punchy
metaphors?
A. You know, I don't specifically
remember. I certainly wasn't editing my own
pieces. And in terms of the punchy, yes. I
Page 219
J. ROSNER - CONFIDENTIAL certainly wasn't the guy who added the
punchiness.
Q. Who was the person who did the final
edit?
A. Well, the final edit was Bob Medley.
But that was really again more for a grammatical
and accuracy perspective. In terms of the more
literary edit, it depended. Sometimes it was
Kevin Muehring; sometimes it was Robert Johnston.
At the beginning it was the hyperbolic - - some of the hyperbolic comments were Richard Medley.
Q. Was there any process where
individuals who edited the reports before they
became final ever pushed back on you as to the
quality of your sources?
A. Absolutely.
Q. And was that sort of an iterative
process where they would ask if you were
confident in your source and - - A. Absolutely.
Q. And were you required to give them
some kind of comfort that you were comfortable
yourself with the source before being published?
A. Uh-huh.
Esquire Deposition Services D.C. - 1-800-441-3376
Page 220
1 J. ROSNER - CONFIDENTIAL 2 MR. KARAM: We have to have a word
3 answer.
4 A. Oh. The word is "yes. "
5 Q. Okay. Now, what are these Medley
6 Global Advisory background documents? Are those
7 sent to investors or not?
8 A. No, to my understanding.
9 Q. Who are they distributed to?
10 A. Well, the background - - And again, I
11 haven't been there in almost three years, so. Is
12 that right? A little over two.
13 The background report, as I remember
14 the systems there, were reports in process. So
15 they would sit in the background. Other people
16 could actually step in to the document and make
17 changes, make edits, during that process. They
18 didn't go out until - - to clients until sometime
19 later. It wouldn't say "backgroundn on it if it
20 went out in this form.
21 Q. If you could take a look at the
22 third paragraph on this Fannie Mae document, it
23 says, "Several sources in Washington have
24 recently been suggesting that if OFHEO finds
25 Fannie Mae has been improperly managing earnings,
Page 221
1 J. ROSNER - CONFIDENTIAL
2 they may have done so in a manner that protected
3 executive bonus pools. "
4 Did you write that?
5 A. I don't recall specifically.
6 Q. Do you know, is that referring to - - 7 The several sources, is that referring to Bob
8 Haggerty and the source quoted by Regina?
9 A. I would assume so, but I would also
10 guess not exclusively.
11 Q. Were there any other sources that
12 were telling you that at the time?
13 A. I don't recall.
14 . Q. IS this before OFHEO had actually
15 issued its interim report of the special
16 examination of Fannie Mae?
17 A. Don't recall.
18 Q. Could you take a look at the first
19 paragraph. It says, "As we have said previously,
20 we expect that sometime in next few weeks OFHEO
21 will likely make an announcement in regard to
22 their ongoing investigation of Fannie Mae's
23 accounting and governance practices."
24 Does that indicate to you this was
25 before the OFHEO report was released?
56 (Pages 218 to 221)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 222
1 J. ROSNER - CONFIDENTIAL 2 A. yes.
3 Q. And before the OFHEO report was
4 released, you were being informed by a number of
5 sources in Washington that OFHEO may find that
6 F a ~ i e Mae had been improperly managing earnings
7 to protect executive bonus pools?
8 A. Actually, I had, again from public
9 information in reports that Fannie had put out
10 there, reports that had been put out there by the
11 regulator as per Freddie, ascertained largely
12 those findings myself and corroborated the view
13 with others.
14 Q. So prior to the release of the OFHEO
15 report, you were able to determine, based upon
16 what was in the public arena, that the OFHEO
17 report would likely conclude that F a ~ i e Mae had
18 managed earnings in order to protect executive
19 bonuses?
2 0 A. Yes. Well, hold on. Not
21 specifically to particularly protect bonuses.
22 That basis of it or that assertion or that
23 assumption of it was something that had been
24 floating around. and it didn't seem very
25 farfetched to me.
Page 223
J. ROSNER - CONFIDENTIAL Q. That was - - The part tying it to
executive bonuses, that was something that was
being told to you by sources in Washington prior
to the release of the OFHEO report?
A. Well, Bob Haggerty is not in
Washington. That was something that was being
mentioned by I think various sources. And as I
remember - - And I really don't recall, so I'm not trying to be cagey. But as I remember, there had
been a prior issue in terms of the executive
compensation issues at one of the companies. And
so it certainly wasn't farfetched. And,
actually, in the Freddie report they raised
questions about executive compensation as a
driver.
Q. So is it your testimony that prior
to the release of the OFHEO report, from public
sources you were able to at least determine that
the OFHEO report would likely find that F a ~ i e
Mae had engaged in earnings management?
A. Yes.
Q. And is it also your testimony that
based on public sources you were able to predict
that very well may be tied to earnings management
Page 224
J. ROSNER - CONFIDENTIAL in order to maximize compensation?
A. Not predict but to believe that
there was a strong possibility Chat earnings --
that executive compensation would have been one
of the motivations.
Q. Based on public information, were
you able to learn that that was a risk that the
OFHEO report Could find, that earnings management
had been done to maximize bonuses?
A. Could you restate the question?
Q. Sure. Based on your review of
public information prior to the release of OFHEO
report, was it your view that there was a risk
that the OFHEO could find that earnings
management was done in order to maximize - - A. Yes.
Q. And is it your view that was readily
apparent in the public record?
MR. CAHILL: Objection.
A. In the public record? Again - -
Q. Tn the public domain?
A. In the public domain, yes. Was it a
contrarian view juxtaposed with the majority of
sell-side financial analysts? It was, but I also
Page 222
1 J. ROSNER - CONFIDENTIAL
2 recognized the conflicts of interest that most of
3 them were subject to.
4 Q. And is it your testimony that you
5 did not need confidential sources to reach that
6 conclusion?
7 A. Absolutely.
8 MR. TERRY: Okay. The next document
9 is dated Septemher 28th. 2004. It's a Medley
10 Global Advisors report. Its Bates stamp is MGA
11 03587.
12 (Whereupon, Exhibit Rosner-29 is
13 marked for identification by the reporter.)
14 Q. If you want to take a break at some
15 point, just let me know.
16 MR. CAHILL: How are you doing on
17 time, counsel?
18 MR. TERRY: Getting towards the end.
19 Q. Can you identify this document for
20 me?
21 A. It says "G-7 special report, GSEs:
22 Where Fannie sits."
2 3 It does not look like it went out,
24 because it has Kevin Muehringls name on it.
2 5 Q. Does this appear to be a draft - -
57 (Pages 222 to 225)
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 226
J. ROSNER - CONFIDENTIAL A. Itdoes.
Q. - - of a report? Do you know if you drafted it?
A. The fact that it's a G-7 special
report, if you let me look.
Yeah. I don't specifically recall,
but I would - - I don't see what - - why it wouldn't have been in part written by me.
Although G-7 special report was typically the
core area, which is Kevin's group. So I would - - I would guess that this may have been
collaborative or something of that nature.
Q. Take a look at the first sentence.
It says, "The long saga of successive government
efforts by the Clinton Administration and then
the Bush Administration - - both quietly supported by the Federal Reserve - - to reign in the
frenetic, low-capitalized balance sheet growth
and market assumptions of government backing for
Freddie Mac and Fannie Mae seems to be finally
coming to a final showdown."
Did you write that?
A. Actually, I don't think I did.
Q. Do you know what it is referring to?
Page 227
J. ROSNER - CONFIDENTIAL A. I don't. Well, let's continue on.
Q. Why don't we look at the next
paragraph. It says, "Fannie Mae, of course,
remains an extremely powerful corporation, but it
has suffered its biggest setback since the early
1990s. The damning interim report a few days ago
by OFHEO sharply criticizing Fannie Mae's
accounting practices and corporate governance,
internal controls, and senior executive
compensation, has significant implications. The
OFHEO report is only one in what may be viewed as
an ongoing series of such releases by OFHEO."
I'll stop there.
Does that give you some context as
to what it's referring to?
A. Uh-huh.
Q. What is it referring to?
A. The interim report of OFHEO on the
Fannie Mae investigation.
Q. And was Medley expressing the view
in this report that the OFHEO report would
somehow affect the legislative fight over Fannie
Mae?
MR. CAHILL: Objection.
Esquire Deposition Services D.C. - 1-800-441-3376
Page 228
1 J. ROSNER - CONFIDENTIAL 2 A. I think that it was a view that
3 legislators on both sides were going to be
4 polarized by the accounting problems now having
5 been shown at both Fannie and Freddie, and there
6 would be a recognition that the current regulator
7 was not strong enough to actually regulate.
8 Q. And is this report expressing the
9 view that the OFHEO report provided ammunition,
10 if you will, to combatants on the sides of the
11 legislative debate over Fannie Mae?
12 A. In part. It also, if you continue,
13 highlights Kip Bond's approach, which was to
14 battle back.
15 Q. Let's take a look at that paragraph.
16 It says, "Sources are now suggesting to us," and
17 it gross through a number of things.
18 Was that source Steve Blumenthal?
19 A. I don't believe so. Let me read
20 that.
2 1 MR. CAHILL: Let me caution you,
22 while you're reading, not to speculate. If you
23 know - - 2 4 THE WITNESS: Absolutely.
2 5 A. I don't really know, and I don't
Page 229
1 J. ROSNER - CONFIDENTIAL
2 specifically recall.
3 Q. Okay. Let me show you something.
4 Keep Exhibit 29 in front of you, and take a look
5 at 30, which is Bates-stamped at the top MGA
6 09762.
7 (Whereupon, Exhibit Rosner-30 is
8 marked for identification by the reporter.)
9 Q. Can you identify Exhibit 30 for me?
10 A. Uh-huh.
11 Q. What is it?
12 A. An outbound call report.
13 Q. Between you and Mr. Blumenthal?
14 - A. correct.
15 Q. And drafted by you?
16 A. Apparently.
17 Q. If you take a look at the call
18 notes, it says, "Steve indicates several
19 important issues mostly around the belief that
20 Fannie Mae is not going willingly. These are his
21 personal views. Fannie appears to be up to their
22 old lobbying tricks, though it was unclear
23 whether the independent board members know this,"
24 and then it makes a number of points.
2 5 Do you see that?
58 (Pages 226 to 229)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 230
J. ROSNER - CONFIDENTIAL A. Uh-hum.
Q. And does that reflect comments that
Mr. Blumenthal made to you?
A. I would gather.
Q. Could you compare that to the third
paragraph of the G-7 special report, which is
Exhibit 29?
A. Uh-huh.
Q. And does that paragraph appear to be
encapsulating a number of the points made to you
by Mr. Blumenthal on this call?
A. Yes, although most of those points
were actually available in Beltway circles and
were reiterations of conversations I had with
lobbyists on both sides, with Senate and
legislative staff.
Q. And what's the date of your call
report with Mr. Blumenthal?
A. September28th.
Q. And the date of the G-7 special
report is also September 28th, 2004?
A. Correct.
Q. So it appears the G-7, at least this
draft report, was written the same day you had
Page 231
J. ROSNER - CONFIDENTIAL
your call with Mr. Blumenthal.
A. It appears so. Which actually makes
me even - - And again, I don't recall specifically, but makes me even more of the
belief that the report would not have been
written on that call report but that call report
would have actually been to try and triangulate
and confirm information that I already heard.
Q. Who else did you hear that
information from?
A. All over the place. The Kip Bond
thing you would hear from people on both sides of
the aisle in the Senate Banking Committee.
Q. Why did you feel it necessary to
triangulate this information?
A. Because that's actually what my
responsibility was, was not to put out
information from a single source.
Q. Well, why didn't you feel you
couldn't just trust a single source?
A. Because that would be, frankly,
irresponsible and derelict of my
responsibilities.
Q. So are you saying that for anything
Esquire Deposition Services D.C. - 1-800-441-3376
Page 232
1 J. ROSNER - CONFIDENTIAL
2 that would appear on a G-7 special report or any
3 other document that was distributed to investors,
4 anything that refers to sources would be
5 multisourced?
6 A. Unless it was sourced from an
7 official document that was public record, yes.
8 MR. TERRY: Why don't we take a
9 quick break.
10 A. Can I correct that?
11 Q. yes.
12 A. Unless it was sourced from a public
13 document. Not related to; sourced from.
14 MR. TERRY: We'll take a quick break
15 to change the tape.
16 THE VIDEOGRAPHER: The time is 2:43.
17 We're going off the tape. This is the end of
18 Tape 3.
19 (Whereupon, a recess is taken.)
20 THE VIDEOGRAPHER: We are going back
21 on the record. The time is 2:51. This marks the
22 begi~ing of Tape Number 4 in the deposition of
23 Mr. Joshua Rosner, being held at OIMelveny &
24 Myers in New York City. The videographer is
25 Terry Carruthers, here on behalf of Esquire
Page 233
J. ROSNER - CONFIDENTIAL
Deposition Services at 1020 19th Street,
Washington, D.C.
Counsel may proceed.
Q. Mr. Rosner, you understand you're
still under oath?
A. I do.
(Whereupon, Exhibit Rosner-31 is
marked for identification by the reporter.)
Q. I'm going to hand you what's been
marked as Rosner Exhibit 31. Bates stamp at the
top is MGA 09772.
Can you identify this document for
me, please?
A. Appears to be a call report to Steve
Blumenthal.
Q. Is it a report of a call you had
with Mr. Blumenthal?
A. It appears so.
Q. And is it authored by you?
A. Appears so.
Q. If you could take a look at the
first paragraph, it says, "Steve views the cut in
dividend as a positive indication that Famie
Mae's management and board are trying to make
59 (Pages 230 to 233)
Joshua Rosner - Confidential
Page 234
J. ROSNER - CONFIDENTIAL good-faith efforts toward the regulator. He is,
however, surprised that investors have no issue
with the uncertainty this presents on an ongoing
hasis, as the dividend payment will have to be
approved each quarter, and it is conceivable that
it could be cut fully at some point (though he's
not implying that OFHEO will have say or ability
to require such action, it would be the company's
choice). If they cut it, at some point there
will be lots of dividend growth share holders who
will be forced to sell the stock."
Do you know what event this
paragraph is referring to?
A. I assume that it was the first
aM0unCed cut in Fannie's dividend, but I don't
specifically recall the dates.
Q. Sometime around January, 2005, did
Famie Mae announce it was going to cut its
dividend?
A. Again, I don't remember specific
dates.
Q. Was it generally in that time
period?
A. I believe so.
Page 235
J. ROSNER - CONFIDENTIAL Q. Was it some period after the OFHEO
report had been released?
A. I believe so.
Q. Do you know what Mr. Blumenthal is
referring to in the second paragraph, where he
expresses surprise that investors have no issue
with the uncertainty this presents?
MR. CAHILL: YOU mean the second
sentence?
MR. TERRY: I'm sorry. The second
sentence.
A. Yeah, again, I'm not sure that - - I'm not sure whether that came out of something
that he put out there or whether I had first
commented on my surprise with the uncertainty and
he actually agreed.
Q. What was your surprise?
A. The fact that you actually have a
situation where the regulator would ultimately
have to approve the changes to the dividend and
investors didn't seem to appreciate or care that
you had two companies who - - or you had a company who was increasingly at the exposure of the
regulator.
Page 236
J. ROSNER - CONFIDENTIAL Q. Were you surprised that cutting the
dividend didn't do more to negatively affect
Fannie Mae's share price?
A. I didn't have a view in terms of its
share price.
Q. Well, what do you mean by "affect
shareholders"?
A. Where do you - - Where is affect shareholders?
Q. Well, when it says, "he is, however,
surprised that the investors have no issue with
the uncertainty this presents," what is that
referring to?
A. I would assume that refers to his
personal view that you haven't heard investors
expressing outrage. I'm not sure that it relates
in any way to share price as much as it relates
to surprise that investors didn't seem to
highlight, to talk about. There was quite a lot
of news reports at the time, and you really
hadn't heard much by way of outrage. Everyone
was continuing to try to spin everything as good
news.
Q. And Mr. Blumenthal was expressing
Page 237
J. ROSNER - CONFIDENTIAL
surprise that he hadn't heard outrage from Famie
Mae's investors.
A. Well, again, I can't characterize.
Outrage would be his view. Surprise. It sounds
like he was - - Again, I don't specifically recall it, but it sounds like he was surprised that
investors weren't recognizing that there had been
a change.
You have to remember, these
companies had been - - this company specifically
had been telling everyone that everything was all
right for a very long time.
Q. Would you take-a look-at the fourth
paragraph, which begins with, "With Huron"? It
says, "With Huron Doing the internal accounting
review for the Board's examination, (two former
Anderson partners firm) at a time when the new
audit firm, Deloitte, will being a serious
reaudit it becomes harder for Huron to give a
puff report to the Board. So they may have to
not only come close to concurring with OFHEO's
findings, but will have to probably highlight any
other internal control and operational problems
they find."
Esquire Deposition Services D.C. - 1-800-441-3376
60 (Pages 234 to 237)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 239
1 J. ROSNER - CONFIDENTIAL 2 A. I don't think - - Again, I think that 3 the context, as I remember it, was that he was
4 commenting not specifically on findings but on
5 the fact that I had cynical view on the work that
6 someone hired by the company would be able to
7 provide, given my view on the company's
8 strong-arm tactics in some areas. And I think
9 that his comment, as I understand it, and I
10 believe I understood it at the time, was that
11 they actually would be doing credible work.
12 MR. TERRY: The next document will
13 be marked as Exhibit 32, Bates-stamped MGA 03779.
14 (Whereupon, Exhibit ~osner-32 is
15 marked for identification by the reporter.)
16 Q. And first, can you identify this for
17 me?
18 A. Again, appears to be a background
19 report; in other words, not a report in this form
20 it was sent out, but a report in process.
21 Q. Is it a report drafted by you?
2 2 A. At least in part it appears so.
2 3 Q. And there's a date both at the top
24 and the bottom. It's January 19th, 2005, 10:32
25 a.m.?
Page 238
J. ROSNER - CONFIDENTIAL
Is that paragraph expressing in sum
or substance what Mr. Blumenthal said to you?
A. Again, I don't specifically recall,
but perhaps, in all likelihood.
Q. And based on where that language
appears in the report, is that language coming
from something you were saying or something that
Mr. Blumenthal was saying?
A. I don't know. I do remember
actually having skepticism that a reaudit that
was done at the request of the board would
actually be honest in its findings. And so,
actually, I think Steve's comments were actually
supportive of the company and its board in the
sense that he was - - seems to have been suggesting that the - - given that OFHEO felt they had done an exhaustive and credible job in their
work, that Huron would also be doing an
exhaustive and credible job in their review.
Q. And did Mr. Blumenthal express the
view to you that Huron's findings would have to
not only come close to concurring with OFHEO's
but would have to highlight anything else
additional?
Esquire Deposition Services D.C. - 1-800-441-3376
Page 240
J. ROSNER - CONFIDENTIAL A. Uh-huh.
Q. Do you see that?
A. Uh-huh.
Q. Does that reflect the date when the
last edits were made to this document?
A. That would reflect - - Trying to remember how the systems worked. That should
reflect the date that the last edits were made.
Yes.
Q. Okay. And that's the same date of
the last exhibit we just looked at, which was
your call with Mr. Blumenthal?
A. Correct.
Q. And if you take a look back at
Exhibit 31, there's a date of an E mail on the
top. It says 10:21. First, is that E mail
automatically generated when you put the contact
call report into the system, or did you have to
actually send it to people?
A. You know, I don't remember.
Q. The date of that, is January 19th
also correct?
A. Uh-huh.
Q. And is it 10:21?
Page 241
J. ROSNER - CONFIDENTIAL A. Uh-huh.
Q. And this draft report is about ten
minutes later?
A. Uh-huh.
Q. If you take a look at the first
paragraph of this report, it says, "The
announcement last evening that Fannie Mae will
cut its current dividend by 50 percent comes as
some surprise to us because it does not
materially address their capital shortfall and,
while debt-holder friendly, is shareholder
unfriendly."
A. Uh-huh.
Q. Is that the same topic you discussed
that same day with Mr. Blumenthal?
A. ~t appears so.
Q. what does that sentence means?
A. Could you be more - - Q. Did you write that sentence?
A. YOU know, I don't recall. I may
well have.
Q. Sitting here today, do you have any
understanding as what it means by "the
announcement, while debt-holder friendly, is
6 1 (Pages 238 to 241)
Joshua Rosner - Confidential
Page 242
J. ROSNER - CONFIDENTIAL
shareholder unfriendly"?
A. Yeah. In other words, it actually
strengthens the claim on assets that debt-holders
would ultimately have by retaining capital as
opposed to paying it out to the benefit of the
shareholders.
Q. So is it your view that the dividend
cut was a negative for shareholders?
A. Well, I don't think that even in and
of itself it necessarily was. I think in
conjunction with other things on which I wasn't
commenting it may or may not have been.
Q. If you look the next sentence, it
says, "While it does send a signal that the new
management team is interested in demonstrating
their seriousness in addressing regulatory
concerns' - - Let's pause on that for a second. Is that something that
Mr. Blumenthal had said to you on the call on
that same day?
A. I don't - - I assume so. You know, I
don't remember - - recall specifically that call report, so I would have to read it and tell you,
which isn't recollection. It's reading it.
Page 243
1 J. ROSNER - CONFIDENTIAL
2 Q. Okay. Take a look back, why don't
3 you, at Exhibit 31.
4 A. Uh-huh.
5 Q. At the top it says, "Steve views the
6 cut in dividend as a positive indication that
7 Fannie's management and board are trying to make
8 good-faith efforts toward the regulator."
9 DO you see that?
10 A. Right.
11 Q. Is that the - - Is that the same
12 comment that appears in your report as, "While it
13 does send a signal that the new management team
14 is interested in demonstrating their seriousness
15 in addressing regulatory concerns"?
16 A. Yeah, although I don't think that
17 there's anything particularly insightful or
18 unique from Steve's view. I think there are a
19 lot of people who actually were of that view at
20 the moment.
21 Q. That is what Mr. Blumenthal said to
22 you.
2 3 A. Yeah. That is also what
24 Mr. Blumenthal seems to have said.
2 5 Q. And it's what you wrote ten minutes
Esquire Deposition Services D.C. - 1-800-441-3376
Page 244
1 J. ROSNER - CONFIDENTIAL
2 later in this background section, is it not?
3 A. Well, it seems to be. I'm not sure
4 that it was based on, again, a triangulation of
5 views rather than a singular view. I happen to
6 think that it was probably informed by other
7 conversations.
8 Q. You think you had those
9 conversations in the ten minutes between the
10 E mail and - - 11 A. NO.
12 MR. CAHILL: Objection.
13 A. No. I think I probably would have
14 had those conversations in the hours before I
15 spoke to Steve, because it also strikes me as
16 fairly strange to have that much completed within
17 ten minutes of a call.
18 Q. Whoelse --Whoelsewouldyouspeak
19 with besides Mr. Blumenthal about what the
20 regulator felt about Fannie Mae's action?
21 A. But I don't think that I actually
22 comment in that background report on the
23 regulator's opinion in that. Right? While it
24 does - - If you go back to 32 at the top? It does
25 not materially address capital shortfall, and
Page 245
1 J. ROSNER - CONFIDENTIAL 2 while debt-holder friendly, shareholder
3 unfriendly, while it does send a signal new
4 management team is interested, I don't think in
5 there you - - you hear me mention OFHEO as the 6 basis or it as being a sign that OFHEO approved
7 or disapproved or had an opinion on as opposed to
8 it being a broader opinion that may actually have
9 been nothing but my opinion.
10 Q. Could you take a look at the bottom
11 of this page?
12 MR. CAHILL: Which page?
13 Q. I'm sorry. Of Exhibit 31?
14 . A. 31?
15 Q. The background. It says, "The
16 engagement of Deloitte to do a complete reaudit
17 may also increase the" - - 18 A. Thirty-two.
19 Q. I1msorry, 32.
20 "The engagement of Deloitte to do a
21 complete reaudit may also increase the pressure
22 on Huron, hired to do the board investigation of
23 the interim OFHEO allegations, to be particularly
24 conservative in their approach and presentation
25 of findings. "
62 (Pages 242 to 245)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 246
J. ROSNER - CONFIDENTIAL A. Uh-huh.
Q. "The result may drive them to not
only come close to concurring with OFHEOPs
findings, but, should they find any, expose any
other internal control and operational issues."
A. Uh-huh.
Q. Did you write that?
A. Again, I don't particularly
recollect that. I have no reason to believe that
I didn't.
Q. And that very opinion was something
that was expressed to you by Mr. Blumenthal on
that same day, was it not?
A. Uh-huh. Again, I don't think that
that's a particularly unique or - - unique view or proprietary view of OFHEO. I think there were
others who were probably of that view as well.
By way of context, Huron came out of
the Enron scandal and the breakup of an
accounting firm, and as I recall speaking to many
clients about my concern about the integrity of a
reaudit and, you know, investors and reporters
and others, there were a lot of people who were
saying, Don't be so cynical about the quality of
Page 247
J. ROSNER - CONFIDENTIAL
an audit firm to actually have to do the right
thing in this day and age.
Q. Can you take a look back at Exhibit
31 at the third paragraph?
A. Thirty-one. Uh-huh.
Q. It says, "OFHEO will now focus the
exam on who was responsible for the problems
uncovered in the interim investigation and what
they kneww?
A. Uh-huh.
Q. And that appears, does it not, in
the background in Paragraph 3 of the background
in the middle, where it says, "Instead, OFHEO
will probably focus the examination on who was
responsible for the problems uncovered in the
interim investigation" - - A. Uh-huh.
Q. - - "what they knew, didn't know, or
should have known"?
That is based, is it not, on what
Mr. Blumenthal told you?
A. NO.
MR. CAHILL: Objection.
Sorry.
Esquire Deposition Services DOCo - 1-800-441-3376
Page 249
J. ROSNER - CONFIDENTIAL A. Appears to be a call report.
Q. Is it a call report between you and
Mr. James Moynihan, III?
A. It appears to be.
Q. And he worked for Evergreen
Investments Equity?
A. Uh-huh.
Q. They were a client of yours?
A. I don't think they actually ever
were. I think they were a prospect.
Q. Is this a report that you drafted?
A. I would assume so.
Q. The summary says, "Want to be on
FASB call. Great meeting that ended with 'as I
find places to put money to work I am getting out
of Fannie ' " ?
A. Uh-huh.
Q. Did you write that?
A. I don't recall, but possible.
Probably.
Q. Any reason to doubt that - - A. NO.
Q. - - since your name appears to the author?
Page 248 1 J. ROSNER - CONFIDENTIAL 2 Q. It's not based on what
3 Mr. Blumenthal told you?
4 A. It's based, again, on a guideline
5 and a guide map of information that was put in
6 place as a contextual approach used in the
7 Freddie examination, in other public comments
8 that were made and, you know, resupported and
9 informed.
10 Q. Was that information that you were
11 aware of in advance of the release of the OFHEO
12 report on Pannie Mae?
13 A. Absolutely. We saw the same process
14 occur in Freddie, except it didn't happen as part
15 of an interim process. It was a one-step
16 process, the back half of the paper, the Baker
17 Botts or the Freddie exam was where that
18 information showed up.
19 Q. I'm going to show you another
20 document, which will be Exhibit be 33, which is
21 an ~ugust 17th. 2004, contact call report
22 Bates-stamped MGA 09745.
2 3 (Whereupon, Exhibit Rosner-33 is
24 marked for identification by the reporter.)
2 5 Q. Can you identify that for me?
63 (Pages 246 to 249)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 250
J. ROSNER - CONFIDENTIAL A. NO.
Q. Did you have calls periodically with
Mr. Moynihan?
A. I probably did.
Q. Why on a two-line contact call
report did you put, "as I find places to put
money to work I am getting out of Fannie"?
A. I don't remember the broader
context. I don't specifically recall.
I remember there being an issue with
a number of Boston institutional investors where
one of the analysts who had covered Fannie had
actually done a group lunch for some of the large
institutional investors in Boston, and the
analyst expressed that, although he had a
positive rating on it, he was increasingly
concerned and wary. And one of the large
shareholders called the company and, essentially,
the analyst was strong-armed is at least what I
was told by other Boston accounts, into changing
his view or having his coverage of F a ~ i e and
Freddie taken away, which I think was seen as
distasteful by many of the institutional
investors in Boston, who increasingly came to
Page 25 1
J. ROSNER - CONFIDENTIAL have concerns about Fannie and Freddie.
Q. Were you happy that Evergreen was
taking its money out of Fannie May?
A. I didn't care. I have no conflict.
Q. But you saw fit to include it in
your call report.
A. I saw fit to include in the call
report. Yeah.
Q. Why was that relevant?
A. I have no idea.
Q. Aside from this E mail, did you ever
come to learn the stockholdings of your clients?
A. NO. Not typically.
Q. On some events did you?
A. Well, I mean in the sense that you
knew who the largest shareholders were by the
fact that they were the ones who were essentially
calling and trying to encourage you to change
your views, sometimes w'th the threat of - - of either not becoming clients, if they were
prospects, or reducing the amount of business
that they would pay.
MR. CAHILL: I'm sorry. Please note
my objection to the form of that last question,
Esquire Deposition Services D.C. - 1-800-441-3376
Page 252
1 J. ROSNER - CONFIDENTIAL
2 because I think there was testimony that
3 Mr. Moynihan was not a client.
4 THE WITNESS : Correct.
5 Q. Did you ever find out if any of your
6 clients were short F a ~ i e Mae shares?
7 A. Notparticularly. Notby fact.
8 Perhaps by circumstance, but not specifically.
9 Q. Sitting here today, can you tell me
10 if any of your clients had a short position of
11 Fannie Mae in 2003, 2004?
12 A. From recollection, not specifically.
13 Q. Generally do you recall that some of
14 your clients had short positions in Fannie Mae?
15 A. I'm sure there were some clients who
16 were short, as I'm sure there were some clients
17 who were long or prospects.
18 Q. Do you know which were greater,
19 whether there were more short clients or long
20 clients?
21 MR. CAHILL: I caution you not to
22 speculate. If you know you - -
2 3 A. Yeah, I don't know.
24 Q. Do you know which clients were short
25 F a ~ i e Mae in 2003 and 2004? - ,, Page 253
1 J. ROSNER - CONFIDENTIAL
2 A. Not off the top of my head. I don't
3 recollect.
4 Q. Did Medley itself own any shares in
5 Fannie Mae?
6 A. The firm?
7 Q. Yeah.
8 A. Not to my knowledge. To my
9 knowledge we don't own any shares in any
10 securities.
11 Q. Did you own any shares in
12 securities?
13 A. Not of Fannie or Freddie or any
14 related issues.
15 Q. Did you ever have any position,
16 whether long or short, in Fannie Mae during that
17 time period?
18 A. Never.
19 Q. Did you ever hold any Fannie Mae
20 debt?
21 A. Never. You know, not unless it's
22 through a mutual fund or something I'm unaware
23 of.
2 4 Q. I won't ask about your house.
2 5 A. Yeah, exactly.
64 (Pages 250 to 253)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 254
J. ROSNER - CONFIDENTIAL Actually, it's on the record
already. I'm a renter.
Q. Do you still speak to
Mr. Blumenthal?
A. I haven't spoken to him in a very
long time. I think the last time I spoke - - I don't remember whether it was phone or
E mail. - - he informed me that he was going to
work for - - I'm trying to remember, a buy-side
firm. I don't remember doing what.
Q. Have you ever, personally, met with
Mr. Raines?
A. On one occasion.
Q. Was that on a train?
A. NO.
Q. Tell me about the occasion when you
met Mr. Raines.
A. It was at American Enterprise
Institute.
Q. And tell me a little bit about the
event.
A. What would you like to know?
Q. Who was speaking?
A. Frank Raines was speaking.
1 J. ROSNER - CONFIDENTIAL
Page 256
Page 252
J. ROSNER - CONFIDENTIAL Q. He was giving a speech at the
American Enterprise Institute?
A. Correct.
Q. Brave man.
A. It was sort of entering the enemy
camp, and he presented, made a presentation. I
asked a question, because I had real concerns
that they were understating their delinquency and
default numbers. I asked him a specific question
about their application of loss mitigation and
what those numbers would look like had they
reported without the loss mitigation, because I
felt that they were, if not intentionally,
functionally deceptive, and he refused to answer
the question. Frankly, several people at that
meeting noted to me that it was interesting how
cagey he became.
And after his official speech and
Q&A, I approached him to try and again get an
answer to the question.
Q. I'm going to show you a document
which is Bates-stamped MGA 04202, which is dated
March 11, 2005.
(Whereupon, Exhibit Rosner-34 is
65 (Pages 254 to 257)
2 marked for identification by the reporter.)
3 Q. Can you identify this document for
4 me?
5 A. yes.
6 Q. What is it?
7 A. It is an E mail from Anne Canfield
8 to me, from Jason Thomas to Anne Canfield.
9 Q. Do you know who Jason Thomas was?
10 A. Yeah. I'm trying to remember
11 whether it was the RSC, republican study
12 committee or republican policy committee. He was
13 involved in that.
14 Q. It says RPC on it. Do you know - -
15 A. Oh. There you go. Republican
16 policy committee.
17 Q. What was the republican policy
18 committee?
19 A. Just that. That policy committee.
20 They - - They developed positions for the -
21 for - - for the republican members. 22 Q. Of the US Senate?
2 3 A. correct.
2 4 Q. So Mr. Thomas was affiliated in some
25 way with the US Senate as an aid?
Page 257
J. ROSNER - CONFIDENTIAL
A. Correct,
Q. If you take a look at his E mail, it
says, "Please give this as wide a circulation as
possible" - - A. Absolutely.
Q. - - "please do not attribute it to
me. The word is that the use of the q-spes to
move MBS off balance is going to blow a $20
billion hole in Fannie Mae's capital. This is
already bigger than Enron."
A. Yeah. I remember this fairly
specifically.
Q. Did you ever report that, publish it
in your reports?
A. No. Actually, I don't believe I
did. I remember getting a phone call shortly
after I received this from a reporter who, you
know, essentially said, Did you see this? And
it's funny. I had actually thought - - Oh, yeah, it does. It was bullshit, the second that I
received it.
I'm sorry for that being on the
record. But I didn't give it much credit when I
saw it, dismissed it out of hand. I know a
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 258
J. ROSNER - CONFIDENTIAL reporter actually called me, thinking that it was
credible, and I said to her - - to that reporter that I didn't find it credible.
Q. Was that reporter Donna Kapeki?
A. ~ t w a s .
Q. Do you know if she reported on it?
A. I believe she did.
Q. Did you ever learn why Jason Thomas
was forwarding this to Anne Canfield?
A. No. I mean, I assumed that Jason
was a - - you know, had some other motivations. I
didn't really give it much credit. And, frankly,
I think other than meeting him at a - - a
public - - I don't remember whether it was AYAI or Hudson, at a public event after this, I don't
think I had ever met him or spoken to him, so I
didn't really give it much merit.
Q. Was this E mail forwarded to you by
Anne Canfield?
A. ~t appears so.
Q. At the time was Ms. Canfield working
for FM Watch?
A. Again, I don't know. I believe so.
I think it's interesting, actually,
Page 259
J. ROSNER - CONFIDENTIAL
that Jason Thomas in his E mail to Anne Canfield
says, "Please give this as wide a circulation as
possible," and in Anne's E mail to me she said,
"Please do not forward this or say where you
received this information."
So it seems that Anne was actually
also somewhat dubious of the information.
Q. Well, if you had forwarded the
E mail, it would make apparent who the source of
the E mail was, would it not?
A. Uh-huh.
Q. And that would countermand his
request, "do not attribute it to me"?
A. Absolutely.
Q. And she also asks you not to source
Jason on anything. Correct?
A. Uh-huh.
Q. Ms. Canfield wasn't asking you to
not to share this information with anyone, was
she?
A. Well, she is.
Q. HOW?
A. "Please do not forward this."
Q. Well, forwarding it would reveal not
Page 260
J. ROSNER - CONFIDENTIAL
only the information but the source of the
information, would it not?
MR. CAHILL: Objection. Form.
Q . Would forwarding this information
reveal details as to the source of the
information?
MR. CAHILL: Objection.
YOU can answer.
A. Yes.
Q. And that would have contradicted his
request not to be sourced. Correct?
MR. CAHILL: Objection.
Q. You can answer.
A. Yes.
Q. And when Ms. Canfield provided this
information to you, was she aware that you were
an analyst covering Fannie Mae?
MR. CAHILL: Objection. Foundation.
A. I actually have issues with the
"analyst covering Fannie Mae. "
Q. During the period that Ms. Canfield
forwarded this to you, you were working at
Medley. correct?
A. correct.
Page 261
J. ROSNER - CONFIDENTIAL
Q . And did you periodically publish
reports talking about Famie Mae?
A. Talking about regulatory,
legislative, and policy issues regarding Fannie
Mae. Yes.
Q. One more document.
(Whereupon, Exhibit Rosner-35 is
marked for identification by the reporter.)
MR. TERRY: Actually - - Yeah. We'll
do this.
Q. Can you identify this document for
me?
A. I'm sorry?
Q. Can you identify this for me?
A. Appears to be an E mail - - I don't know whether it's a series of -- back-and-forth E mail between Andrew Heiskell and Josh Rosner.
Q. Who is Mr. Heiskell?
A. At Wellington. Analyst or portfolio
manager at Wellington.
Q , Is that a buy-side analyst?
A. It is.
Q. So Mr. Heiskell is someone who made
recommendations as to what Wellington should
66 (Pages 258 to 261)
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 262
J. ROSNER - CONFIDENTIAL purchase?
A. I don't know if he made
recommendations or he had the authority to make
the decision.
Q. Your E mail references a report.
What report is that referring to?
A. Where are you talking about?
Q. The first line, "Good. I do have
some interesting tidbits on what could be in the
report of a salacious naturen?
What report is that referring to?
A. I don't know. I don't recall.
Q. If you take a look at the second
part of the first page of the E mail from you to
Mr. Heiskell, the original one? It says, "We
continue to believe that the OFHEO special
examination of Fannie Mae report will be released
by the end of May"?
A. Uh-huh.
Q. Does that refresh your recollection
that the E mail at the top is referring to the
OFHEO special report of Fannie Mae?
MR. CAHILL: Objection.
A. I don't know, because - - I really
Page 263
J. ROSNER - CONFIDENTIAL don't know. Because you've got a - - You've got a report that was actually attached that was
already out and available and, yet, I'm referring
to "interesting tidbits." So I would suspect
that it was not related to that. I'm not sure
what it was related to.
Q. How many special reports of Fannie
Mae did OFHEO release?
A. But where does it say special report
at the top? You just asked me if that report at
the top refers to the special report, and I'm not
sure if it reports - - reflects the special report or a different report.
Q. Does it refer to a report by OFHEO?
A. I assume so, but it could also be
Hun.
Q. Okay. And looking at the second
E mail, dated April 26, 2006, where it says, "We
continue to believe that the OFHEO special
examination of Fannie Mae reports will be
released before the end of May."
A. Uh-hum.
Q. Doyouseethat?
A. Uh-huh.
67 (Pages 262 to 265)
Page 264
1 J. ROSNER - CONFIDENTIAL 2 Q. Does that give you any indication as
3 to whether the top E mail is referring to the
4 OFHEO special examination report?
5 A. No. That's my point. The fact that
6 actually that was the 26th and that report went
7 out to clients on the 26th leads me to believe
8 that there would not necessarily be anything
9 particularly new to report to him on the 27th.
10 Q. Okay. How about the subject line
11 which says, "Re GSE update: Announcement of a
12 new OFHEO director and juicy OFHEO reports."
13 Reading that, combined with your
14 language saying, "I have some interesting tidbits
15 on what could be in the report of a salacious
16 nature," does that suggest to you whether the
17 report you're discussing is the OFHEO report?
18 A. As I said, I don't really remember,
19 and the timing may have been related to one of
20 the internal inspector general reports at Hun.
21 I'm not sure, and I don't remember the timing.
2 2 Q. Do you recall what tidbits this is
23 referring to?
2 4 A. No. If I remembered what tidbits
25 it's referring to I would probably remember what
Page 265
J. ROSNER - CONFIDENTIAL report it is.
Q. Were you aware of any nonpublic
tidbits of a salacious nature as to what would be
in the OFHEO report release May, 2006?
A. Not to my knowledge.
MR. TERRY: This is actually the
final document.
(Whereupon, Exhibit Rosner-36 is
marked for identification by the reporter.)
MR. TERRY: This document is
Bates-stamped MGA 03735. At the top it's dated
December 22nd, 2004.
Q. Could you take a look at the top
E mail there?
A. Uh-huh.
Q. Is that an E mail from Mr. Medley to
YOU?
A. Uh-huh.
Q. And some others at Medley?
A. Uh-huh.
Q. Could you read that, read the text
of Mr. Medley's E mail, into the record?
If you could just read aloud that - - A. You could read it.
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 266 1 J. ROSNER - CONFIDENTIAL 2 Q. Well, I'm asking you to.
3 MR. CAHILL: YOU can go ahead. I'm
4 not sure what the point is, but.
5 A. Ityeah, yeah, you could never resist
6 dancing on Raines' grave. We've all come to love
7 and respect you for the very scary focus. ~ n d
8 who would have thought three years ago Josh
9 Rosner would be supervising and choreographing
10 the rise of Freddie and the humbling of Fannie?
11 Oh. That's right. We did."
12 Q. And that was something that
13 Mr. Medley had written to you on December 22nd,
14 2004?
15 A. I guess so.
16 Q. And was it your understanding he was
17 referring to the fact that you had previously
18 written, substantially prior to this, that Fannie
19 Mae would have some significant accounting
20 errors?
21 A. I can't really speak to the basis of
22 Richard Medley's view. I think I would
23 characterize my relationship with Richard Medley
24 this entire - - that entire period as - - How would
25 I put it? - - peculiar, to say the least, and
Page 267
1 J. ROSNER - CONFIDENTIAL 2 would point out that I walked in the door at
3 Medley without many of the sources that you're
4 asking about and had substantially the same views
5 as early as mid-2001.
6 And so for Richard, who had been
7 a - - a strong democratic operative before 8 actually entering into private enterprise, having
9 been chief economist to House - - I think House 10 Financial Services and a major democratic
11 fundraiser, I think he had reasons to question
12 whether there was anything ever wrong with Fannie
13 and Freddie.
14 MR. TERRY: T don't have any more
15 questions. Thanks.
16 THE VIDEOGRAPHER: The time is 3:26.
17 We're going off the record.
18 (Whereupon, a recess is taken.)
19 THE VIDEOGRAPHER: The time is 3:40.
20 We're back on the record.
21 EXAMINATION BY COUNSEL FOR LEANNE SPENCER
22 MS. RANDELL:
2 3 Q. Good afternoon, Mr. Rosner. My name
24 is Lauren Randall, and I represent Leanne Spencer
25 in this matter, and I have just a few very brief
Page 268
J. ROSNER - CONFIDENTIAL questions.
Have you ever had any communications
with Leanne Spencer?
A. Off the top of my head I don't
recall. I don't recall.
Q. Do you recall ever attending any
presentations that she spoke at?
A. I don't recall. I don't believe so,
but I don't recall.
Q. Did you ever listen in on analyst
earning calls?
A. Idid.
Q. How frequently?
A. AS often as I could. Time
constraints.
Q. Do you recall ever hearing
Ms. Spencer speak on any of those calls?
A. Yes. Not - - Again, not specific in
terms of - - in terms of statements or substance.
Q. So you don't remember anything she
specifically said.
A. Not specifically.
MS. RANDELL: That's all I have.
EXAMINATION BY COUNSEL FOR TIM HOWARD
Page 269
J. ROSNER - CONFIDENTIAL BY MS. NEISH:
Q. Good afternoon, Mr. Rosner.
A. Good afternoon.
Q. I'm Laura Neish, and I represent Tim
Howard. I'll start off by asking you a very
similar question to what Ms. Spencer's counsel
just asked you.
Did you have any interactions with
Tim Howard?
A. Not that I recall directly.
Q. Any conversations with him?
A. Not directly.
Q. Do you recall hearing any statements
by Mr. Howard on analyst calls?
A. Of course. Not specifically, but
yes.
Q. You don't reoall any specific
statements by Mr. Howard.
A. NO.
Q. I would like to follow up a little
bit about testimony you gave earlier today about
your contacts at OFHEO.
You mentioned that you spoke with
Steve Blumenthal?
68 (Pages 266 to 269)
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 270
1 J. ROSNER - CONFIDENTIAL 2 A. Uh-huh.
3 Q. And could you just reiterate about
4 how often you speak with him?
5 A. Again, different - - At different
6 times it would differ in amounts, from
7 frequently, you know, I don't know, once or twice
8 a week to, you know, not for a month or two at a
9 time.
10 Q. And in the 2003/2004 period?
11 A. I don't specifically recall. I
12 would guess that it was once every three, four
13 weeks.
14 Q. And I think you also testified that
15 you met with him for drinks on occasion?
16 A. I met with him for drinks on one or
17 two occasions.
18 Q. And what about Mr. Brereton?
19 A. Same.
2 0 Q. The frequency would be about the
21 same with Mr. - - 2 2 A. No, the frequency was somewhat more,
23 because as the information officer at OFHEO he
24 was really the person who was able to tell me
25 what - - or answer questions about things that
Page 27 1
1 J. ROSNER - CONFIDENTIAL 2 OFHEO had said - - or publicly.
3 Q. How often did you speak with
4 Mr. Brereton?
5 A. The same. Usually when I had a
6 question regarding interpretation of something
7 that OFHEO had done or said, or rumors that were
8 running around the market.
9 Q. So once every few weeks?
10 A. Yeah.
11 Q. And did you ever meet with him
12 personally?
13 A. same.
14 Personally? You mean
15 face-to-face - - 16 Q. Yes.
17 A. - - you don't mean - - Yeah. Had
18 drinks with him a few times or lunch or drinks
19 with him a couple times.
20 Q. And when you had drinks with him,
21 how long were these interactions?
2 2 A. Oh. Half-hour, hour.
2 3 Q. Did you speak with anyone else at
24 OFHEO?
25 A. Yeah, of course. I spoke with their
Esquire Deposition Services D.C. - 1-800-441-3376
Page 272
J. ROSNER - CONFIDENTIAL chief economist at times. I spoke to Stephanie
Mullin at times. I think I spoke to Forest
Pfaffenburg once or twice. I think that's about
it.
Q. Who was the chief economist?
A. Hold on. I had spoken to their
chief counsel, but that was back in 2001, I
guess.
Q. That would have been when you
were - - before you were employed at Medley.
A. correct.
Q. And the chief economist, who was
that?
A. I don't know why I'm drawing a blank
on his name. He's still the chief economist. I
just don't remember his name.
Q. Do you recall the frequency of your
interactions with him?
A. No. It was really related to
macroeconomic issues, not company-specific. My
concerns about the housing market.
Q. And what about Stephanie Mullin?
A. Same clarification of press
releases. Infrequent.
Page 273
J. ROSNER - CONFIDENTIAL Q. Did you ever speak with Mr. Falcone?
A. Not - - I don't believe other than a
hello during his time at OFHEO. I did meet him
for - - I don't remember whether it was lunch or a snack after he left, to find out what he was
planning on doing.
Q. You never spoke with him during his
term at -- A. I don't believe so. Certainly not
of substance.
MS. NEISH: Okay. Thanks. That's
all I have.
THE VIDEOGRAPHER: The time is 3:46.
We're going off the record.
(Whereupon, a recess is taken.)
THE VIDEOGRAPHER: The time is 3:47.
We're back on the record.
EXAMINATION BY COUNSEL FOR FANNIE MAE
BY MR. WALSH:
Q. Good afternoon, Mr. Rosner. My name
is Michael Walsh. I represent Fannie Mae in this
matter.
You understand that you are still
under oath. Is that correct?
69 (Pages 270 to 273)
Joshua Rosner - Confidential
Page 274
1 J. ROSNER - CONFIDENTIAL 2 A. yes.
3 Q. You previously testify that you and
4 Mr. Medley had a peculiar relationship, and you
5 mentioned that Mr. Medley was a democrat, and
6 that you also had your views when you joined
7 Medley's group.
8 Can you elaborate on that, please?
9 A. On which specific part?
10 Q. On the fact that you had one set of
11 views and Mr. Medley had another?
12 A. Yeah. I mean, the set of views was
13 not from - - was not - - that I referred to is not
14 a partisan set of views. It was rather that
15 Richard was uninformed about housing and mortgage
16 markets and GSE-related matters and, yet, had a
17 somewhat hyperbolic view of the Washington
18 landscape for the enterprises. And so when I had
19 first arrived at Medley there was this clear
20 difference. I think my views were much more
21 reasoned, and his were much more off the cuff.
2 2 Q. To be clear, what were your views?
2 3 A. My views was that the companies had
24 significant issues, that they - - there was a - - a
25 real discussion worth having in Washington
Page 275
1 J. ROSNER - CONFIDENTIAL
2 circles on the political and economic issues
3 surrounding the enterprises. Richard's was much
4 more focused on hyperbole and - - Excuse me for 5 the choice or use of the term. - - I think making 6 a sexy story as opposed to a necessarily reasoned
7 and fully informed view.
8 Q , And who shared your views generally?
9 A. Who shared my views. Could you be
10 more specific?
11 Q. Did the GSE have any typical folks
12 who believed that the story was not sexy and
13 needed further examination, besides yourself?
14 A. I think there's across the board any
15 number of people, from conservative and liberal
16 regulators and policymakers in central banking
17 communities domestically and overseas, to sort of
18 ideologically driven partisan politicians who
19 believed either in the government support of the
20 enterprises or, conversely, that they should be
21 privatized. I think there was a myriad of people
22 who shared some of my views, but not necessarily
23 with the same motivations or reasoning.
2 4 Q. And you previously testified that
25 when Frank Raines spoke at an AEI dinner that he
Esquire Deposition Services D.C. - 1-800-441-3376
Page 276
J. ROSNER - CONFIDENTIAL
was going into enemy territory?
A. Absolutely.
Q. What did you mean by that?
A. I meant that AEI had historically
taken a view in favor of the privatization of the
enterprises.
Q. Would you categorize the diverging
views as an ideological divide?
MR. CAHILL: Objection.
A. For some I would view it as such.
You know, I, personally, have - - It's not terribly different than my views on
another current controversial issue, which just
to use as an example, which are issues
surrounding the rating agencies, where there are
those who actually would have agreed with me on
my views on the GSEs, but their view were - - their views were very strongly that the
government should actually not be involved, we
don't need regulation, we need them privatized.
On the rating agencies I published
an editorial in the Times in which I called for
greater regulation, and I got calls from many of
those same folks who had previously seen me as
Page 277
1 J. ROSNER - CONFIDENTIAL 2 their ally and friend and, yet, my view again was
3 distinct. My attitude is I'm agnostic as to
4 whether the enterprises should be public or
5 private, whether the rating agencies should be
6 given governmental powers or not. If there is a
7 government involvement, you just need to make
8 sure that there's safe and sound oversight.
9 And so that was the basis of my view
10 on the enterprises. There were those who had an
11 ideological view; mine was not ideological.
12 Q. What was the basis for on your view
13 Fannie Mae prior to joining Medley?
14 A. Work I had done over the prior 12
15 years, including work that my partners and I had
16 done at Graham Fisher originally, really in two
17 large pieces, and analysis and recognition that
18 the - - many of the housing market risks, lower 19 underwriting standards, reduced down payment
20 requirements, obliteration of appraisal
21 standards, move to automated underwriting and
22 automated appraisal would lead to significant
23 problems, and that those changes were driven
24 first and foremost by the enterprises.
2 5 Q. Speaking of your time at Graham
70 (Pages 274 to 277)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 278
1 J. ROSNER - CONFIDENTIAL
2 Fisher, I think you previously testified in the
3 2001/2002 time frame that you and some of your
4 partners created one large research report?
5 IS that correct?
6 A. On Fannie and Freddie.
7 Q. On Fannie and Freddie. Yes. What
8 specifically was the subject of the research?
9 A. It was - - I'm trying to remember. 10 It was fairly comprehensive in its view, but it
11 was really addressing some of the regulatory,
12 legislative, and policy issues coupled with the
13 fact that, you know, many seem to ignore the
14 off-balance-sheet liabilities of the enterprises.
15 Q. And - - So there are political and 16 regulatory issues that surround Fannie May.
17 Is that safe to say generally?
18 MR. CAHILL: Objection. There are?
19 What time frame are you talking about and what - - 20 MR. WALSH: I'll clean it up.
21 Q. So before you joined Medley Global
22 Advisors, you believed that there were a variety
23 of political issues that surrounded Fannie May
24 generally. Is that correct?
25 A. It wasn't my belief. Those were
Page 279
J. ROSNER - CONFIDENTIAL actually reported on in the press upon a
continual basis.
Q. And the same with regulatory issues.
IS that correct?
A. correct.
Q. Did those issues - - Start with the political. Did the political issues surrounding
Fannie Mae ever move Fannie Mae stock price, to
your knowledge?
A. You know, I don't really know. I
would assume so, but I don't really know.
Q. And the regulatory issues
surrounding Fannie Mae, to your knowledge did
they move F a ~ i e Mae's stock price?
A. well, the regulatory issues prior
to - - really prior to Freddie's mea culpa on
their accounting, the regulatory issues were just
issues of oversight. There weren't any specific
regulatory issues that came out that I think were
dramatic.
Q. What about after Freddie's mea
culpa?
A. Whataboutit?
Q. Did the regulatory issues
Page 280
J. ROSNER - CONFIDENTIAL surrounding Fannie Mae then move Fannie Mae
stock, to the best of your knowledge?
A. You know, to my knowledge I would
think that it was largely the accounting issues
of F a ~ i e Mae that moved the stock price.
Q. Largely but not - - A. Not in its entirety.
Q. You previously testified, I believe
in response to Exhibit Number 2, which referenced
OFHEO becoming proctologically inclined? I think
you previously testified that was a somewhat
common phrase and that you used it with respect
to the FHA and the Northern Rock issue?
A. Yes.
Q. And I believe you stated it was
often used when a regulator had not been as
aggressive as it could have been. Is that - - A. Or not - - I wouldn't characterize it
as it could have been. And if I said, used that
phrase before, let me correct it. As it's
regulatorily mandated to be.
Q. As it's regulatorily mandated to be.
Was it your view that in 2003 OFHEO
had not been as aggressive as it was regulatorily
Page 281
J. ROSNER - CONFIDENTIAL mandated to be?
A. You have to pick a point in 2003.
Q. Letts start at the beginning.
January, 2003, prior to Freddie's mea culpa.
A. Yeah. I think by and large, again
if you go back to work that I had done in 2001, I
had significant concerns about failings of the
regulator.
Q. And would you say that OFHEO did
become aggressive as it was regulatorily mandated
to be at the time it became proctologically
inclined, as referenced in Exhibit 2?
A. I think it was actually a process of
actually essentially corrective action and a
change of - - change of culture at the regulator and a recognition that the regulator needed to
become a more credible regulator.
So to that end, I think that they - -
They became increasingly concerned that they had
perhaps become somewhat of a captive regulator in
the past and wanted to correct that.
Q. In your view has that process played
itself out?
MR. CAHILL: Objection.
71 (Pages 278 to 281)
Esquire Deposition Services DOCo - 1-800-441-3376
Joshua Rosner - Confidential
Page 282
J. ROSNER - CONFIDENTIAL A. Which process?
Q. The process of becoming - - I apologize.
In your view, is OFHEO now as
aggressive a regulator as it is mandated to be?
A. Diligent. I'm going to use the word
"diligent" as opposed to the word "aggressive."
And I think that - - Remember, I'm not inside OFHEO. To my understanding, OFHEO is actually
executing its legal authority as required.
Q. In Exhibit 2, Number 4, it says,
"OFHEO officials hope they will now get to take
the gloves off and show they're able to reign in
those forces of nature."
Is that - - Would you characterize that as being a diligent regulator?
MR. CAHILL: Objection.
A. I would characterize that as being
the words of Richard Medley and not of me.
Q. And how did you interpret the words
of Richard Medley at the time?
A. You know, frankly, as I said a few
moments ago, you asked about my relationship with
Richard, and I thought that his view was quite
Page 283
J. ROSNER - CONFIDENTIAL often not an informed view.
Q. So you did not share this view at
the time, to the best of your knowledge?
A. I don't recall. I don't recall. I
think that there was a view, a fairly broad view,
that the regulator was seen as weak and derelict
in its responsibilities at that time.
Q. I believe that you previously
testified this morning - - and I'll quote it. "I
think it's typically a term that would be used
when a regulator has not actually been as
aggressive in its execution of its authority as
it probably or regulatorily is expected to."
MR. CAHILL: Talking again about
proctologically inclined?
MR. WALSH: Talking about
proctologically.
Q. And this is in your testimony about
proctologically inclined.
So is it your testimony right now
that OFHEO had not been as aggressive in its
execution as it was - - A. AS I said, if I used the word
"aggressive," I think the more appropriate word
Esquire Deposition Services D.C. - 1-800-441-3376
Page 284
1 J. ROSNER - CONFIDENTIAL
2 is - - I think "aggressive" is not really the 3 appropriate word. I think they probably had not
4 been fully carrying out their responsibilities as
5 mandated by congress.
6 Q. And I believe you previously
7 testified that Mr. Blumenthal was a good source
8 on some matters but not other. What matters was
9 he not a good source?
10 A. Matters surrounding OFHEO and what
11 it was intending to do and thinking of doing, and
12 he wasn't a good source because they didn't seek
13 him out as a source, and I get the sense that he
14 never would have actually offered me information
15 in that regard. In fact, I would suspect - - And 16 it's interesting that none of those documents
17 have been brought forward, but Steve repeatedly,
18 as I told you, I often started conversations with
19 "I don't want to know anything I can't or
20 shouldn't know.' Steve often actually would
21 comment on my reports being great and highlight
22 the fact that he was concerned that if there was
23 a quote, "fucking leak" in OFHEO, he was going to
24 have to chase it down and execute someone.
2 5 So for the most part, the value I
Page 285
J. ROSNER - CONFIDENTIAL had in Steve was, again, was triangulating
information. And, frankly, the greater value
that he provided to me was his experience as a
former hill staffer in the way legislative
process and vote counts were likely to fall - - fall away.
Q. I believe you previously testified
that your job at Medley was to assess and advise
clients on political and regulatory risk.
Is that correct?
A. Political, regulatory, and
legislative risk.
Q. Political, regulatory, and
legislative.
Did you analyze financial statements
while you were at Medley?
A. Did I analyze them as part of the
official duty? No.
Q. Did you analyze them unofficially?
A. Did I analyze them for my own
personal use? Yes.
Q . Did you perform any balance-sheet
analyses during your time at Medley?
A. Again, for my personal use to inform
72 (Pages 282 to 285)
Joshua Rosner - Confidential
Page 286
J. ROSNER - CONFIDENTIAL
my view of the credibility of information that
was being given to me by various sides of - - of issues? Yes.
Q. Did you analyze price targets during
your time - -
A. NO.
Q. - - at Medley? Did you take any steps to or - - I'm
sorry. Withdraw that.
Are you familiar with FAS 133
generally?
A. Uh-huh.
MR. KARAM: Remember to answer
audibly.
A. Oh. Yes.
Q. Did you take any steps to
familiarize yourself with FAS 133 prior to its
implementation?
A. Yes.
Q. What steps did you take?
A. I spent quite a good deal reading
the accounting literature, working with FASB
staff on understanding the implications, working
with FASB staff on potential implementation
Page 287
J. ROSNER - CONFIDENTIAL issues, reading prior accounting pronouncements
and the effective changes as discussed in
academic literature.
Q. What was your understanding of FAS
133 up to its time of implementation. So we'll
say immediately prior to its time of
implementation.
A. Can you be more specific?
Q. YOU just described the steps that
you took prior to FAS 133 implementation to
familiarize yourself with FAS 133.
A. Uh-huh.
Q. What was the end result of those
steps?
A. An understanding of FAS 133. I'm
not - -
Q. That's fine. And what was that
understanding?
MR. CAHILL: Generally?
Q. Generally. At the time.
A. That it would have differing impacts
on different institutions and -- You know, I'm
not sure I really - -
Q. Thatusfine.
73 (Pages 286 to 289)
Page 288
J. ROSNER - CONFIDENTIAL Did you have a view as to the impact
it would have on Fannie Mae?
A. Not specifically.
Q. Did you take any additional steps to
familiarize yourself with FAS 133 after its
implementation?
A. Not that I recall.
Q. Did you read analyst reports
relating to Fannie Mae's implementation of FAS
133?
A. Relating to Fannie Mae? Yes. So
where it specifically went into it, at times.
Q. Did you attend any specific
presentations about Fannie Mae's implementation
of FAS 133?
A. Just their - - They had - - As I
remember, I think they had a specific investor
call that I was on. I'm trying to remember
whether that was - - who was running IR at that point, but yes.
Q. That was my next question. Do you
remember who was hosting that call?
A. I don't. I remember having
significant follow-up questions. I believe it
Page 289 1 J. ROSNER - CONFIDENTIAL 2 was Jane Shontell, who I had had prior less than
3 productive conversations with.
4 Q. What were your significant follow-up
5 questions, if you remember?
6 A. I don't specifically remember.
7 Q. Why were the conversations less than
8 productive, as you testified?
9 A. When we put out that first report in
10 2001, within probably 15 or 20 minutes of the
11 report going out we got a phone call, my partners
12 and I. We listened to it on speaker phone, from
13 Jane Shontell, who asked why we hadn't sent her a
14 copy of it before it went out. We highlighted
15 the fact that we left the traditional street
16 because we were tired of being pressured by
17 investment banking clients and felt no obligation
18 to offer it up to anyone, and highlighted and
19 specifically said to her that we found it
20 inappropriate that she would even ask to have an
21 advance copy of an analyst report, to which she
22 responded, Well, I could have prevented you from
23 having mistakes in the report, to which my
24 partners and I laughed and said, We appreciate
25 your concern for our reputation, but if there's
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 290
J. ROSNER - CONFIDENTIAL
any mistakes we would be happy to correct them.
She responded that that would be
very embarrassing to us. We responded that we
found that - - We found her concern for us to
be - - to be, you know, thoughtful, but we were not above issuing a correction, so if she had
specific issues or there were mistakes we would
like to hear them.
She responded - - And we asked her whether there were specific issues and mistakes,
to which she started in with "I disagree," and I
said, "Of course you disagree." And she said,
Well, we think that - - I said - - my partner
actually I remember saying, We understand that
you're going to disagree with a lot of the
report. Are there mistakes.
It was - - it was, frankly, a fairly hostile conversation where she was obviously
trying to get information out of us in advance of
a report going out, as she had said, actually,
You know, you guys have been on the street long
enough. You know the way it works. Which we all
considered to be more than offensive, and perhaps
not only demonstrating impropriety on her part
Page 291
J. ROSNER - CONFIDENTIAL but a corporate cultural problem at Fannie.
Q. Just to be clear, this was a report
in 2001. Is this the same report that we talked
about earlier from your Graham Fisher days?
A. Yeah. Yes. So she was reluctant to
ever take my phone calls when I was at Medley,
though I tried repeatedly to speak to her.
Q. She never took them?
A. Once or twice. And that's why I was
trying to remember, going back to the 133
conference call. I don't remember whether it was
Jane or who it was after that call, but I spoke
to someone because I had significant follow-up
concerns - - And I don't remember specifically what they were. - - and got off of the follow-up
call feeling, once again I had been sort of spun
and not really given answers.
Q. Is FAS 133 an easy rule to apply, to
your knowledge?
MR. CAHILL: Objection. Counsel,
This is way - - easy? He's told you he's not a
CPA. He's not here to testify as an expert.
MR. WALSH: I'm not asking for his
expert opinion. He also testified that he took
Page 292
J. ROSNER - CONFIDENTIAL substantial steps to familiarize - -
MR. CAHILL: I object to the form.
A. Repeat the question?
Q. Is FAS 133 an easy rule to apply, to
the best of your knowledge?
A. Is it an easy rule to apply. It
depends on whether your intent is to actually
apply it with any degree of credibility, in which
case it's complex; and if you're seeking to
circumvent it, it's easy.
In other words, if you go back and
look at the comment letters that were sent to
FASB as they were considering changes to FAS 133,
the most notable comment letters are coming from
two companies who objected strongly to the
changes that were proposed by FASB for clearly
self-interested purposes, and one of those
companies was Fannie Mae.
Q. I'm going to hand you what we marked
as Exhibit 37.
(Whereupon, Exhibit Rosner-37 is
marked for identification by the reporter.)
Q. Do you recognize this document?
A. Need to look at it.
Page 293
J. ROSNER - CONFIDENTIAL
Q. Sure. Take whatever time you need.
A. Uh-huh. I don't recognize it, but.
Q. First, going back to your last
answer, you testified notable comment letters
coming from two companies who objected strongly
to the changes. Can you just - - A. AS I recall, it was F a ~ i e and
Freddie.
Q. Okay. You don't - - You say you don't recognize - -
A. I don't recognize it but ... Q. But does this appear to be an E mail
from -- an E-mail exchange between you and Kevin Muehring?
A. Uh-huh.
Q. Dated 10-30, 2003?
A. Uh-huh.
Q. The bottom E mail, does that appear
to be an E mail from you?
A. The bottom E mail - - Q. The 12:03 a.m.?
A. NO. That appears to be forwarded - -
24 It's definitely not from me.
2 5 Q. That's definitely not from you.
Esquire Deposition Services D.C. - 1-800-441-3376
74 (Pages 290 to 293)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 294
J. ROSNER - CONFIDENTIAL A. Yes.
Q. Can you tell who it might be from?
A. I can't, actually.
Q. It references - - Kevin in his middle E mail, the 6:38 a.m. chain, references a Burt P.
Do you recognize the name Burt?
A. Where are you?
Q. This is the middle chain. "Burt
suspects it is no big deal other than looking
bad. "
It's right above the globe, the
globe icon?
A. Right above the globe icon.
Oh. I would guess, therefore, that
that must be Burt that authored the bottom.
Q. Do you know who Burt - - A. I would gather one of Kevin's
sources.
Q. The second sentence of the E mail
from one of Kevin's sources says, "People I know
who know about FASB 133 say it is the most
complicated and confusing ruling in the whole
canon. 133 itself is about 200 pages of very
dense reading (the Bible) and even worse is
Page 295
J. ROSNER - CONFIDENTIAL another several hundred pages of interpretation
(the Talmud). Very few people are experts on
this, and mistakes are made all the time."
When you received this E mail from
Kevin, did you have any opinion on its content?
MR. CAHILL: Objection. Form.
Foundation.
MR. WALSH: I'll withdraw the
question.
Q. Do you agree with that?
A. That it is certainly one of the two
or three most complicated I'll agree with.
Q . And your E mail at the top and sent
at 8:31 a.m. said, "Is right, even FASB itself
has acknowledged the need to ultimately change
133. "
What did you mean by that?
A. That it is way too complex and, as
we're seeing in the current macroeconomic
environment, has created other problems in terms
of valuation of instruments in terms of
illiquidity and subjectivity to the
implementation and assumptions.
Q. The next sentence says, "The real
Page 296 J. ROSNER - CONFIDENTIAL
issue, however, is that FNM has been suspected of
smoothing earnings (actually a few years ago they
would brag about the number of pockets that they
had) and OFHEO will correctly ask how good their
systems and controls are if this could happen."
What did you mean by that?
A. I'm sorry. Maybe I - -
MR. CAHILL: Which part?
Q. You could start with the suspicion
of smoothing earnings.
A. That the company has been suspected
of smoothing earnings. It's self-evident, isn't
it?
Q. By whom?
A. Generally.
Q. Generally by - - A. By all of its critics, by anyone who
actually had any questions about their
accounting, by obviously folks within the
academic world, within the fed policy world,
within other circles.
Q. And was this suspicion that they
were smoothing earnings inappropriately?
A. The suspicion was that they were
Page 297
J. ROSNER - CONFIDENTIAL smoothing earnings inappropriately. But, you
know, this is sort of a fumy line of
questioning, because we're talking about an
ambiguous and amorphous "they," which I'm not
very comfortable with.
Q. Well, let's explore that. Who to
you is "they"?
A. Well, anyone who disagreed with
Fanniels assertion that they were fully in
compliance is "they."
Q. Is all earnings - - Is all smoothing of earnings inappropriate to you?
MR. CAHILL: Objection. Form,
foundation.
A. Is all smoothing of earnings
inappropriate.
MR. WALSH: Let me withdraw the
question.
A. The answer is no.
Q. Do you believe that there are proper
ways to smooth earnings?
A. Do I believe that there are proper
ways to smooth earnings?
MR. WALSH: Let me withdraw the
Esquire Deposition Services D.C. - 1-800-441-3376
75 (Pages 294 to 297)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 298
J. ROSNER - CONFIDENTIAL
question one more time.
Q. Do you believe that all earnings
smoothing is inappropriate?
MR. CAHILL: Objection. Form and
foundation.
You can answer.
A. The smoothing of earnings for
nonbusiness purposes are more a concern than
economic business decisions to manage earnings.
Q. Do you know if FAS 133 adjustments
reflect the underlying economics of a company?
MR. CAHILL: Objection. Form,
foundation, and possibly broad. Beyond the
scope.
I mean, come on, counsel. What is
that supposed to mean, that question?
Q. You can answer it if you understand
it.
A. Restate it and I'll - - Q. Do FAS 133 adjustments - - Do
earnings - -
MR. WALSH: Let me withdraw the
question.
Q. Do earnings reported under FAS 133
Page 299
J. ROSNER - CONFIDENTIAL reflect the underlying economics of a company?
MR. CAHILL: Objection. Form.
Foundation. No context.
A. Arguably no and arguably yes. And I
don't mean to be pedantic with that, but
certainly the companies would argue that they
don't . Q. What would the other side argue?
A. There are those that would argue
that they do.
Q. Why?
MR. CAHILL: Objection. Calls for
speculation. Lacks foundation.
MR. WALSH: I'll withdraw it.
Q. Did Fannie Mae's ultimately
incorrect application of FAS 133 affect your
analysis of Fannie Mae?
MS. OSORIO: Objection.
A. Repeat the question?
MR. CAHILL: Could you read it back,
Madam Court Reporter.
(Whereupon, the following was read
back by the reporter:
QUESTION: Did Fannie Mae's
Page 30C
J. ROSNER - CONFIDENTIAL ultimately incorrect application of") - -
THE COURT REPORTER: And there was
the objection. I'm not sure I caught the end of
your question.
Q. Famie Mae?
A. Well, remember my analysis was
regulatory, legislative, and policy driven. So
it affected my analysis in the sense that they
were apparently not off by a little bit or
arguably in - - in line with the SEC guidance but
apparently were a mile apart from the correct
application.
MR. WALSH: The videographer needs
to change the tape.
THE VIDEOGRAPHER: The time is 4:21.
We're going off the record. End of Tape 4.
(Whereupon, a recess is taken.)
THE VIDEOGRAPHER: We're going back
on the record. The time is 4:26.
This marks the beginning of Tape
Number 5 in the deposition of Mr. Joshua Rosner
being held at OrMelveny & Myers, New York City.
The videographer is Terry Carruthers, here on
behalf of Esquire Deposition Services, located
Page 301
1 J. ROSNER - CONFIDENTIAL
2 1020 19th Street, Washington, D.C.
3 Counsel may proceed.
4 Q . Mr. Rosner, you're aware you're
5 still under oath? Correct?
6 A. I am.
7 Q. Are you aware that - - Are you aware
8 that at all points - - Are you aware that KPMG - -
9 You just testified that your analysis - - You were 10 a mile apart on the correct application - - 11 A. NO.
12 Q. -- of FASB 133. Is that correct?
13 A. NO.
14 MS. OSORIO: Objection.
15 MR. CAHILL: Objection.
16 Q. You just testified that Famie Mae
17 and the SEC were a mile apart on the correct
18 application of PAS 133.
19 MS. OSORIO: Objection.
20 Mischaracterizes his testimony.
21 A. Would I be able to ask the court
22 reporter to read back the question that led to
23 that answer?
2 4 Q. Absolutely.
2 5 (Whereupon, the requested portion of
76 (Pages 298 to 301)
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 302
1 J. ROSNER - CONFIDENTIAL
2 the record is read back by the reporter.)
3 A. So your question following is -- 4 MR. CAHILL: I don't think there was
5 a question. I think he was trying to remind you
6 what you said, which you now just heard.
7 So now, counsel, I assume you have a
8 question?
9 Q. Are you aware that KPMG at all times
10 signed off on Fannie Mae's interpretation of FAS
11 133?
12 MR. CAHILL: Objection. Form and
13 foundation.
14 MS. OSORIO: Objection.
15 A. It's my understanding they did.
16 Q. And is it also your understanding
17 that OFHEO looked into Fannie Mae's application
18 of FAS 133?
19 A. That's not my understanding. I
20 would have no reason to know that.
21 Q. You never came across that during
22 your research - -
2 3 A. That OFHEO had blessed the
24 accounting? No.
25 Q. Did you read - - I'm going to pass
Page 303
1 J. ROSNER - CONFIDENTIAL 2 you a document that is marked as Rosner Exhibit
3 38.
4 MR. WALSH: For those in the room,
5 this one was predesignated, and the Bates number
6 is MGA 09054.
7 (Whereupon, Exhibit ~osner-38 is
8 marked for identification by the reporter.)
9 Q. I'm going to ask you, after you've
10 had a chance to read it, if you recognize the
11 document.
12 A. Not with specificity, but I recall
13 it.
14 Q. This appears to be an E mail dated
15 12-12, 2003, to TT. Do you know who is on the
16 distribution list that is called TT?
17 A. Idon't.
18 Q. So you weren't responsible for the
19 distribution - - Is it - - Would it be fair to say 20 that you believe this to be an E mail to Medley's
21 clients?
2 2 MR. CAHILL: Objection.
23 I caution you not to speculate,
24 Mr. Rosner.
25 A. Yeah. That would be speculation. I
Esquire Deposition Services D.C. - 1-800-441-3376
Page 304
J. ROSNER - CONFIDENTIAL don't know.
Q. So you don't know who this E mail - -
A. Well, in other words, it may be
clients. It may be clients and sources. It may
be - - It may be any number of groups of people, and I'm not really sure of specifically who.
Q. Can you take a quick look at the
bottom of the E mail. It says, "Warning,
significant personal liability, up to $250,000
per work infringed plus other possible damages,
and criminal prosecution can result from any
copying or unauthorized disclosure of these
materials."
In light of that, is it safe to say
that this E mail would not have gone to people
that someone at Medley did not want it to go to?
MR. CAHILL: Objection. Calls for
speculation.
A. Although I can, within a range,
address that. If - - I know that the firm had had
significant problems, certainly after this
towards the end of my tenure at the firm,
where - - and actually before this, which is why this ended up on there, where people were without
Page 305
J. ROSNER - CONFIDENTIAL
authorization forwarding it, and we couldn't
figure out who or where or what. Not this
specific reports, but reports broadly,
essentially stealing Medley's intellectual value.
Q. So TT is some distribution list, to
your knowledge.
A. To my speculation.
Q. Can you look at the last sentence of
the first paragraph, which reads, "As we explain
in the report, OFHEO has also created a roadmap
for their investigation into Fannie Mae
especially in light of conversations between two
Freddie board members who specifically discuss
earnings management at Fannie Mae."
A. Uh-huh.
Q. The report referenced is the report
that is attached, dated December 12, 2003?
A. Uh-huh.
Q. Did you write that report?
A. I believe I did.
Q. Do you know - - Did you write the cover E mail?
A. That I don't remember. It may have
been me. It may have actually been one of the
77 (Pages 302 to 305)
Joshua Rosner - Confidential
Page 306
1 J. ROSNER - CONFIDENTIAL
2 editors.
3 Q. Is it customary for you to have some
4 input into the cover E mails for reports that
5 you've authored?
6 A. I don't know if I would actually be
7 able to characterize anything as customary over a
8 three-year period.
9 Q. Do you have any reason to believe
10 that you did not have any input into this cover
11 E mail for the report that you authored?
12 A. "Enough of the games camp" doesn't
13 sound like my language, but at the same time - -
14 So I don't think it would actually have been my
15 writing. I think that whoever wrote it obviously
16 had wrote it in - - essentially informed by the 17 context of the report.
18 Q. DO you know what the last sentence
19 meant?
2 0 A. Absolutely.
21 Q. What did it mean?
2 2 A. That the OFHEO report on - - on
23 Freddie, the Baker Botts report as well, created
24 a fairly clear roadmap that investors should be
25 using to get a sense of how OFHEO was likely to
Page 307
1 J. ROSNER - CONFIDENTIAL 2 choose to investigate Fannie and the process by
3 which they would do so.
4 As a matter of fact - - 5 Q. What was the process?
6 A. I think if you read this and if you
7 read other reports that Medley had put out, we
8 specifically actually I believe in other reports
9 referred to it as the road map, the Freddie
10 report as the road map for a Fannie
11 investigation.
12 (Whereupon, Exhibit Rosner-39 is
13 marked for identification by the reporter.)
14 Q. I'm going to hand you what's been
15 marked as Exhibit 39.
16 MR. WALSH: This one has been
17 predesignated. It's Bates Number MGA 09062.
18 Q. And after you've had a chance to
19 read it, I'm going to ask if you've recognized
20 the document.
21 A. I don't specifically, but I, you
22 know, generally in looking at it, recall it. I
23 don't remember it.
2 4 Q. Let's start with the attachment this
25 time, the equity brief, "Medley Global Advisors
Esquire Deposition Services D.C. - 1-800-441-3376
Page 308
J. ROSNER - CONFIDENTIAL equity brief, GSEs: New corporate governance
regulations near, February 2nd. 2004."
Did you author this brief?
A. Again, I don't specifically
remember. I don't see a reason to believe that
it was not me.
Q. And did you author the cover E mail
dated February 2nd, 2004?
A. Again, you know, that's - - That would even be less likely that I would
specifically recall.
Q. Do you have any reason to believe
that you did not have input into the cover - -
A. No. I don't have any reason to
believe that.
Q. Again, this goes to TT. Is that a
distribution list?
MR. CAHILL: Objection.
A. As I said, I would assume so.
Q. The second paragraph of the cover
E mail says, "While Freddie has already agreed to
institute several of the changes proposed, Fannie
Mae has not. If Fannie is required to make
similar changes to those by Freddie, we could see
Page 309
J. ROSNER - CONFIDENTIAL a change of auditor, separation of the chairman
and CEO positions and, if applicable, changes in
executive compensation structures to support
long-term corporate goals and not short-term
earnings goals."
A. Uh-huh.
Q. DO you know what that means?
A. Yeah. It means that that analysis
was ultimately proved correct.
Q. How SO?
A. It means that ultimately you ended
up with a similar set of agreements made between
Fannie and the regulator as. you had between
Freddie and the regulator.
(Whereupon, Exhibit Rosner-40 is
marked for identification by the reporter.)
Q. I'm going to hand you what's been
marked as Exhibit 40.
MR. WALSH: It's also been
predesignated, Bates Number MGA 03131.
Q. And when you've had a chance to read
it I'm going to ask if you recognize it.
MS. KERN: Sorry to interrupt, but
did somebody say in the cover letter that there
78 (Pages 306 to 309)
Joshua Rosner - Confidential
Page 310
J. ROSNER - CONFIDENTIAL were going to be enough documents even for
provided, even for the predesignated one?
MR. WALSH: I believe so.
MS. KERN: Sorry to interrupt.
A. Okay.
Q. Do you recognize this document?
A. I recognize it. I don't
specifically remember it.
Q. Does it appear to be an E mail that
you authored?
A. It does.
Q. The "to" line is blank here. Does
that have any significance to you?
A. Not particularly.
Q. Did you have any practice of bcc'ing
a distribution list?
A. No. This, as you see down in the
subject line, this looks like it was a
confirmation of a report sent. So, therefore,
the "to" line might well be a default blank on a
report that was already sent out. As you see, it
says "sent flag group including equity financial
services, equity general, excluding" blah blah
blah. So I assume this is just a report that had
Page 3 1 1
J. ROSNER - CONFIDENTIAL
already gone out.
Q. And subject lines that are similar
to that sent flag are confirmations, you said?
A. I believe so.
Q. An automatic response that something
went out?
A. I believe so. I believe so.
Q. If you look at the first paragraph,
it says, "While investors are increasingly
convinced that Fannie Mae will not be found to
have significant operational or financial control
issues during the remainder of OFHEO's
investigation, these views may not fully account
for the way a safety and soundness regulator
executes an examination process."
What did you mean by that?
MR. CAHILL: Objection.
A. Could you be more specific?
Q. How does a safety and soundness
regulator execute an examination process?
A. Depending on which one. They don't
particularly care about accounting, and they
don't particularly care about reported earnings
in terms of compliance with SEC requirements or
Esquire Deposition Services D.C. - 1-800-441-3376
Page 3 12
J. ROSNER - CONFIDENTIAL accounting requirements. FASB direction.
A safety and soundness regulator's
sole mission is to make sure that a company that
it regulates operates in a safe and sound
condition, including reputational risk, market
risk, credit risk, liquidity risk, and as a
result that its capital assets management
earnings liquidity and sensitivity are all
managed appropriately. That's the CAMELS
process.
Prior to the changes at OFHEO, OFHEO
did not have a CAMELS process. They brought in
new heads of examination for both companies,
whose job was to make sure that they were
operating in a safe and sound condition, manner.
SO that's actually - - I don't know
if that's your answer or answers your question,
but I guess what we specifically mean is that the
market view was that there weren't issues in
terms of - - or that OFHEO's bottom line was a
restatement, and OFHEOts bottom line isn't a
restatement of safety and soundness.
And I think there's a broad
misunderstanding in New York Wall Street
Page 313
J. ROSNER - CONFIDENTIAL investment investor minds as to what a regulator
does, which is part of the reason that I think
there was a very strange misunderstanding that
regulators can ever be out to get a company that
they regulate.
By definition, a safety and
soundness regulator actually, by seeing the
failure of one of its institutions, actually sees
its own authorities diminished. So I've never
heard of a financial regulator actually seeking
the destruction or a safety and soundness control
issue at a company it actually regulates.
Q. As of May 26, 2004, when you sent
this, you believed that the investment community,
or at least your specific clients, did not
understand this. Is that correct?
MR. CAHILL: Objection.
A. I wouldn't say my specific clients.
I would say that if you opened up the papers and
you heard this, the company actually claim that
it was in full compliance with all applicable
accounting guidelines, given the fact that, as I
remember, there were 22 analysts at the time, all
of whom had buy ratings on the stock, yet, none
79 (Pages 3 10 to 3 13)
Joshua Rosner - Confidential
Page 3 14 J. ROSNER - CONFIDENTIAL
of whom understood how regulatory, legislative,
and policy issues in Washington worked, yes, it
was the general view that there were not these
issues out there.
Q. Skipping down on the fourth
paragraph, third sentence. "We expect that OFHEO
must still review issues such as Fannie's
application of FASB Statements 91 and 133,
accounting for derivatives generally, their
contingency and reserve accounting, their
executive compensation and incentive structures,
the allocation of capital to G&A relative to the
growth of the portfolio, their accounting for
beneficial interest in securitized financial
assets, board independence, and management lines
of reporting."
To your knowledge did OFHEO
ultimately opine on all of those issues?
A. To my recollection they didn't on
all of those issues.
Q. They did not on - - A. On all of those issues.
Q. Do you know which ones that they did
not opine on?
Page 3 15
J. ROSNER - CONFIDENTIAL A. I don't recall off the top of my
head. I could probably guess.
Q. NO need.
What was your source for this
information?
A. The Freddie Mac investigation
report.
Q. So based on the Freddie
investigation report?
A. That was largely actually spelled
out in the Freddie report and in the consent
decree.
Q. It was spelled out in the Freddie
report and the consent decree that that's what
OFHEO would look at the Fannie Mae?
A. No. That it created - - My analysis, remember my job is to analyze, to triangulate
information and risk manage and assess priorities
of risk. And if you read the Baker Botts report
and OFHEO's responses to the report and the
follow-up agreements that they had, those were
the key issues. Many of which actually also
existed within Fannie.
I remember quite specifically
Esquire Deposition Services D.C. - 1-800-441-3376
Page 3 16
1 J. ROSNER - CONFIDENTIAL
2 looking at the - - the SG&A relative to the growth 3 of Fannie's portfolio after the Freddie report
4 came out and recognizing and realizing that
5 Fannie had underspent on G&A in a very similar
6 manner to Freddie.
7 Well, again, a safety and soundness
8 regulator, that's a critical issue. And so I
9 found it peculiar that I would - - I should say I
10 would find it impossible to believe that they
11 wouldn't look at those same issues, as well as
12 many of the other issues that I have.
13 MR. WALSH: Can we go off the record
14 for about five minutes.
15 THE VIDEOGRAPHER: The time is 4:48.
16 We're going off the record.
17 (Whereupon, a recess is taken.)
18 THE VIDEOGRAPHER: The time is 4:53.
19 We're back on the record.
20 Q. Mr. Rosner, you previously testified
21 that you were a consultant to the plaintiffs.
22 Did you have an agreement with the plaintiffs, a
23 written agreement?
24 MR. CAHILL: Asked and answered.
2 5 A. I think we - -
Page 317
1 J. ROSNER - CONFIDENTIAL 2 Q. So the answer is yes, you did have a
3 written agreement?
4 A. yes.
5 Q. Can you please provide copies of
6 that written agreement?
7 MR. KARAM: I will object to that,
8 and I will take it under advisement whether we'll
9 waive privilege on that issue.
10 Q. Did you create billing records in
11 your capacity as a consultant?
12 MR. KARAM: I object, but I will not
13 request the witness not answer.
14 A. .I believe so.
15 Q. Would you please provide copies of
16 that those - -
17 A. If I still have them.
18 MR. KARAM: I will make the same
19 objection and state the same provision.
20 MR. WALSH: Okay. That's all I
21 have.
22 EXAMINATION BY COUNSEL FOR KPMG
23 BY MS. OSORIO:
24 Q. Hi, Mr. Rosner. My name is Claudio
25 Osorio, and I represent KPMG.
80 (Pages 314 to 317)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 318
J. ROSNER - CONFIDENTIAL And I guess first I want to start,
earlier today several times you explained how
your work revolves around looking at regulatory,
legislative, and policy issues and analyzing risk
in relation to those three areas.
IS that correct?
A. Broadly.
Q. And as part of your work did you
ever have occasion to learn about Fannie Mae's
lobbying activities?
A. Yes.
Q. And who did you discuss - - Did you discuss Fannie Mae's efforts, lobbying efforts,
with anybody that you could recall?
A. That's a broad question. Yes.
Q. Was that something that you
discussed with Mr. Blumenthal?
A. I don't - - I don't specifically - - I
mean, not in substance, perhaps in passing, that
I recall.
Q. If I could refer you to Exhibit l?
A. Uh-huh.
Q. If you look, I think it's the middle
of the paragraph. It's a long sentence, but the
Page 3 19
J. ROSNER - CONFIDENTIAL middle of the paragraph refers to a concrete wall
of F a ~ i e political clout. DO you see that?
Do you have any recollection what
that refers to?
A. If you remember, I'm not sure that I
was even at the firm at the time that document
was authored.
Q. I understand. But do you have any
memory or any knowledge of what that might refer
to?
A. I would be speculating to actually
answer specifically to that document.
Q. Okay. Based on your knowledge of
Fannie Mae's lobbying efforts, do you believe
that Fannie Mae was active in its lobbying
efforts?
MR. WALSH: Objection.
MR. CAHILL: Objection to form.
Q. You can answer.
A. Well, by definition they were active
in their lobbying efforts. Were they aggressive
in their lobbying efforts? Yes.
Q. What do you mean by "aggressive"?
A. It was my understanding that they
81 (Pages 318 to 321)
Page 320
1 J. ROSNER - CONFIDENTIAL
2 had essentially conflicted out all but a handful
3 of lobbying firms in Washington.
4 Q. Do you have an understanding as to
5 why they had done that?
6 MR. KARAM: Objection.
7 A. I have a belief as to why they may
8 have done that.
9 Q. And what was that belief?
10 A. So they would be continue to be able
11 to advance their - - their political goals on 12 Capital Hill against the regulator and -- in 13 regard to policy issues.
14 Q. And do you believe that they had
15 conflicted out firms in order to not have
16 opposition to their efforts?
1 7 MR. WALSH: Objection. Calls for
18 speculation.
19 Q. Your belief
2 0 A. My belief is absolutely.
21 Q. I f 1 c o u l d r e f e r y o u t o E x h i b i t 1 7 ,
22 please?
2 3 A. Okay.
2 4 Q. If you look at the second paragraph
25 it says, "Look. I told you legislation would
Page 321
J. ROSNER - CONFIDENTIAL die, and once again, Fannie and Freddie are the
last standing. They made a mockery and beat the
Senate, the House, and the White House."
Do you have any recollection of the
context in which Mr. Blumenthal might have
communicated the substance of this paragraph to
you?
MR. WALSH: Objection. Calls for
speculation.
A. Can you clarify the question?
Q. From earlier testimony - - And correct me if I'm wrong. - - I understood that when you have a call report and you have quotes
in the call report that that means that it's not
necessarily a direct quote but the sum and
substance of what he communicated to you.
A. Correct.
Q. So I'm asking if in Paragraph 2 if
you have a recollection of what context
Mr. Blumenthal might have communicated the
substance of this sentence.
MR. WALSH: Same objection.
A. I think that my understanding was
that Mr. Blumenthal was of the view that Fannie
Esquire Deposition Services D.C. - 1-800-441-3376
Joshua Rosner - Confidential
Page 322
J. ROSNER - CONFIDENTIAL
and Freddie could move or stall any legislation
that they so desired.
Q. And why did you believe - - Did you ever get an understanding from Mr. Blumenthal as
to why he might have thought that?
MR. WALSH: Objection.
A. I think that was not just
Mr. Blumenthalls view. I think that was a fairly
broad bipartisan view in Washington at the time.
Certainly that was the view that
investors relied upon.
Q. I'm sorry? The view - - A. That seems to be a view that Fannie
investors relied on.
Q. That Fannie could stall - - A. Absolutely.
Q. - - any legislation it wanted to? A. Or, as a result, policy.
Q. If you would look at Exhibit 7,
please.
A. Okay.
Q. On the first page if you look, maybe
almost halfway but not quite, it starts, "Steve
goes on to say that FNM's/FRE's power increases
Page 323
J. ROSNER - CONFIDENTIAL at the end of a session, so I rush to get
something done when their power is at its peak.
I would expect that this will continue to be
worked on but that the original push has
subsided. Come January we may see a new bill or
a reintroduction of the Treasure/Baker bill, but
we will have the same issue. Fannie has been
fighting every issue."
Do you have a recollection of this
part of the conversation with Mr. Blumenthal?
A. Generally.
Q. What do you recall about that part
of the conversation?
A. Well, as I said before, the value
that I saw in Steve was for his legislative
understanding, and this was largely personal
opinion. It was understood, and so I think that
he was actually pointing not to either an OFHEO
involved or understood position but that Fannie
does have the ability to actually stand up and
move legislation, and while Treasury and Richard
Baker wanted to move tougher legislation, they
wouldn't have the ability to do so unless they
waited a bit.
Page 324
1 J. ROSNER - CONFIDENTIAL
2 Q. Because Fannie Mae would have
3 stalled the legislation due to their power.
4 A. Correct.
5 Q. If you could look at Exhibit 6,
6 please?
7 If you look at the paragraph that
8 starts with 3 at the bottom. It says,
9 Legislation and Treasury. It says, "This whole
10 thing stinks. All three of the existing bills
11 have FNM fingerprints all over them."
12 Does this again - - To your
13 understanding, does this again refer to the
14 legislation that was trying to get passed with
15 regards to moving Fannie Mae to treasury?
16 A. Not moving Fannie Mae to treasury
17 but to - - 18 Q. I'm sorry. OFHEO to treasury?
19 A. Not moving OFHEO to treasury, to
20 come up with a solution, a new regulator,
21 regardless of where it was. There were competing
22 bills out there. It reflects a view that - - And
23 again, it wasn't really his view. It reflects a
24 view that all three of the proposals out there
25 were crafted in some sense with Fannie and
Page 325
J. ROSNER - CONFIDENTIAL Freddie's involvement. Really more Fannie
because they were more aggressive in their
lobbying efforts.
Q. So when it says "all three of the
existing bills have FNM fingerprints all over
them," that means they basically had input into
the writing of the bills?
A. That's the suggestion.
Q. If you look a little bit further
down, about seven lines down it says, "As we
speak, FNM is working with Treasury to draft the
administration's bill. There will be a five-year
moratorium preventing Treasury from increasing
capital requirements of the agency as part of the
trade with FNM. That's like a
get-out-of-jail-free card."
Do you have any understanding as to
what the get-out-of-jail-free-card statement
meant here?
MR. WALSH: Objection.
A. What do you mean?
Q. Do you have any -- Well, let me back
UP.
IS this - - the statement, "That's
Esquire Deposition Services D.C. - 1-800-441-3376
82 (Pages 322 to 325)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 326
J. ROSNER - CONFIDENTIAL like a get-out-of-jail-free card,' do you know
whether those are your words or Mr. Blumenthalls
words?
A. I don't specifically remember. And,
you know, I don't think it - - it is really material, because I think there are a lot of
people who were uttering similar words at that
time . There were, you know, the position
on the enterprises is, A, that their capital
requirements are significantly lower than a
similar bank institutions and, therefore, the
regulators should have the ability to increase
capital requirements as necessary, and what was
being discussed in that sentence was the
suggestion that there would be an agreement cut
by which the new regulator wouldn't have the
authorities to change the capital requirements
for five years.
Q. Right, but the agreement - -
A. This is legislative proposal.
MR. CAHILL: Wait for the question.
Q. The agreement that is being
discussed here appears, at least from this
Page 327
J. ROSNER - CONFIDENTIAL statement, from this document, to say that Fannie
Mae was the one making this proposal to not have
to increase their capital requirements.
MR. WALSH: Objection.
MR. CAHILL: IS that a question?
MS. OSORIO: I thought it was.
MR. CAHILL: I don't think so.
Q. I think you answered the question I
was trying to ask. Okay.
MS. OSORIO: I would like to - - Can I have an exhibit sticker?
(Whereupon, Exhibit Rosner-41 is
marked for identification by the reporter.)
Q. Mr. Rosner, this is Exhibit 41. Do
you recognize this document?
A. I think I've got - - Not specifically.
Q. If you look at Page 2 where it says
author, it says Josh Rosner?
A. Uh-huh.
Q. Do you have any reason to believe
that you did not author this document?
A. Let me actually read the document,
if I could.
Esquire Deposition Services DOCo - 1-800-441-3376
Page 328
J. ROSNER - CONFIDENTIAL
Q. Okay.
A. I don't recall it specifically. I
don't have reason to believe that it wasn't mine.
Q. Okay. We have several copies of
this in the production from Medley, but they're
all redacted. Just looking at this now, do you
have any idea who this call might have been from,
this inbound call from - - and then blank? A. I don't recall.
Q. Okay.
A. There's actually nothing in here
that would lead me to an understanding.
Q. If you look about two-thirds of the
way down on the first page, it says, "I called
one of my sources who called me back and said
that Fannie has been spreading these rumors" - - Let me back up a little bit.
At the top where it says Call Notes,
it says, "She said that she is hearing" - - she being the unnamed source - - "that she is hearing
that Shelby may have to postpone the vote as he
may lose a member. When she called Shelby's
staff, their silence made her think there was
some truth to it. I did not know there was such
Page 329
J. ROSNER - CONFIDENTIAL
a meeting so I made a couple of calls to a few
good sources (but did not tell this to' - - blank - - "other than to say she is being spun ... period. )
"I called one of my sources who
called me back and said that Fannie has been
spreading these rumors out of desperation trying
to create chaos (as usual FNM lobbying tactic) . I 1
Do you have any recollection what
this refers to?
A. Idon't.
Q. The sentence that talks about Fannie
spreading rumors out of desperation, trying to
create chaos, are you familiar with Fannie May
trying to creat chaos in the past with lobbying
efforts?
MR. WALSH: Objection to form.
MR. '%ARAM: Objection to form.
A. It has been my personal view that
they at times have done - - sought to actually do that.
Q. In what way?
A. Disinformation campaigns.
Q. What kind of disinformation
83 (Pages 326 to 329)
Joshua Rosner - Confidential
Page 330
J. ROSNER - CONFIDENTIAL campaigns?
A. Well, trying to change the subject
matter, trying to actually assassinate
characters, trying to actually make sure that
certain members of the house or senate remember
that they are - - their constituents are obligated to, using the groups, some of the public interest
groups that - - and line-standers to fill the committee hearings.
They're fairly aggressive in
stacking the deck such that when I would go to
committee hearings, quite frequently - - actually,
usually you couldn't get in. It was among the
only hearings in Washington that you couldn't get
actually into the hearing rooms because Fannie
and Freddie would pay line-standers to take up
all of the room seats so that they could actually
have their nonprofit groups and lobbying
interests show up and be represented, you know,
Lorraza, ACOR, some of the alliances, and often
actually sought to lobby through some of the
public interest groups, coordinating them
aggressively.
Q. By lobbying through some of these
Page 33 1 1 J. ROSNER - CONFIDENTIAL
2 public interest groups, do you have any specific
3 examples of which groups they might have used?
4 A. I think if you take a look at
5 comment letters on any piece of potential
6 regulation or legislation affecting - - 7 potentially affecting either Famie or Freddie
8 you'll see any number of - - of shell nonprofits
9 that were used and shell lobbying groups or shell
10 groups that were used to lobby of their behalf.
11 Q. And do you think that Famie Mae
12 used these tactics when there were bills being
13 worked on that related to creating a stronger
14 regulator?
15 A. Absolutely. And you have to
16 remember, there were also relationships that
17 existed with certain members. So family members
18 of certain senators and congressmen who happened
19 to have worked for Famie's partnership offices,
20 et cetera, they - - They really aligned various
21 interests with their own.
2 2 Q. Who would that have been? Do you
23 know who - -
2 4 A. Off the top of my head, I think it
25 was Bennett. And I think Burning had a similar
Esquire Deposition Services D.C. - 1-800-441-3376
Page 332
J. ROSNER - CONFIDENTIAL relationship somewhere.
Q. From your conversations with
Mr. Blumenthal or Mr. - - From your conversations with anyone at OFHEO, did you have any
understanding about OFHEO's reactions to Famie
Mae's legislative efforts?
A. I1msorry?
MR. CAHILL: Other than as
previously described?
MS. OSORIO: I'm sorry?
MR. CAHILL: Other than he's
.previously testified? This is a very broad
question.
Q. OFHEO's reaction. I'm interested in
knowing if you had any understanding as to what
OFHEO's position was to Fannie Mae's lobbying
efforts.
A. Well, not to Fannie Mae's lobbying
efforts. Remember, the interactions I had on
these subjects were largely personal, not
professional views of the people I was talking to
and understood as such. OFHEO had a public view
on legislation, which has been out there visible
and consistent, which is they support the move to . ..
Page 333
J. ROSNER - CONFIDENTIAL create a stronger, more well-empowered regulator.
Q. Did you have any understanding,
though, of an opinion held by OFHEO with regard
to specifically F a ~ i e Mae's effort to stop a
stronger regulator from being created?
MR. WALSH: Objection to form.
A. Yeah, I mean, I'm not sure I really
understand - - Could you flesh that out a little
bit?
Q. Well, what I'm trying to find out
is, we've talked about Fannie Mae's lobbying
efforts, and you told me about some of the
tactics..theylve employed, and I'm trying to
understand if you have any knowledge of OFHEO or
Mr. Blumenthal or anybody that you spoke to at
OFHEO having any reaction to those tactics used
by F a ~ i e Mae.
A. Any reaction. Again, on a personal
level I think that - - I think that most people would have personal views that would find, you
know, sort of aggressive interference with the
public - - the public work of elected officials to
be somewhat distasteful. But I should clarify,
that is not an institutional view, as I
84 (Pages 330 to 333)
Joshua Rosner - Confidential
Page 334
J. ROSNER - CONFIDENTIAL
understood it, at OFHEO.
Q. So did you have any idea whether
there was any antagonism between OFHEO and Fannie
Mae because of Fannie Mae's legislative efforts?
MR. WALSH: Objection.
A. Lobbying efforts, yes. Not
necessarily legislative issues.
Q. So you believe there was antagonism
between OFHEO and Fannie Mae because of Fannie's
lobbying efforts.
A. In certain specific areas, yes.
Q. What would those areas be?
A. Well, I mean, as example, as I
discussed earlier, you know, one significant
example is, it's a matter of public record that
Fannie Mae's top lobbyist, Dwayne Duncan,
approached Kip Bond and asked him to send a
letter to HUD demanding an inspector general
investigation of OFHEO. a d , in fact, HUD
actually responded to that pressure from Senator
Kip Bond and came up with an investigation report
that really I think people viewed as an attempt
to stifle the regulator from doing its job.
Similarly, there was language put in
Page 335
J. ROSNER - CONFIDENTIAL in appropriations bill that sought to actually
reduce the budget of OFHEO unless Armando Falcone
was let go. So there was some pretty significant
attempts by Fannie to interfere with the
legislative process and, as a result, stifle the
ability or hobble the ability of OFHEO to carry
out its work.
Q. Do you believe that Fannie Mae's
efforts to stifle OFHEO1s ability to carry out
its work had an impact on OFHEO's special
examination of Fannie Mae?
A. Idon't.
Q. You don't think - -
A. Well, I mean, I think it probably
was undercapitalized.
Q. Okay.
A. I think they had been a - - you know,
unlike most regulators in Washington, they have
been subject to an appropriations process. And
so, frankly, if congress wants to make them
operate on a shoestring budget, that's what
happens, unlike the FDIC or the fed who has the
ability to charge those institutions that it
regulates for its overhead, being subject to
Esquire Deposition Services D.C. - 1-800-441-3376
Page 336
J. ROSNER - CONFIDENTIAL
the - - the appropriations process definitionally impacted OFHEO, because they were woefully
undercapitalized as a regulator.
Q. Have you ever heard Fannie Mae
described as arrogant?
A. Quite frequently.
Q. And do you share that view?
A. Current or past?
Q. Let's start with past. Did you
share that - -
A. Not across all issues, but I
certainly did share that view in many instances.
Q. And why is that?
A. I found it, you know, such
behaviors, as I talked about before, of an IR
person calling and demanding a research report
before it's published, to be an arrogant move. I
find it to be wholly inappropriate, arrogant, and
verging on unethical, if not illegal.
Q. And what about now?
A. It seems to be a somewhat changed
culture.
Q. You don't think Fannie Mae is
arrogant anymore?
Page 337 1 J. ROSNER - CONFIDENTIAL 2 A. Well, I think in their lobbying
3 efforts they can still be aggressive, and I think
4 in terms of their lack of transparency and
5 disclosure I've got concerns. I wouldn't - - I 6 wouldn't really characterize them as arrogant in
7 the same way today.
8 Q. Okay. Just one more.
9 Would you say that if Fannie Mae had
10 behaved differently with OFHEO that there might
11 have been a different outcome to the special
12 examination?
13 MR. CAHILL: Objection. Form,
14 foundation. Calls for speculation. You name it.
15 Q. TO the best of your knowledge.
16 A. well--
17 MR. WALSH: Same objection.
18 A. To the best of my knowledge? It is
19 speculation.
20 Q. I'm asking for your opinion. Yes.
21 MR. CAHILL: Objection.
2 2 MR. WALSH: Objection.
23 MR. CABILL: YOU can answer.
24 A. Yeah, I mean, it's my opinion that
25 Fannie actually, just as Freddie, got in trouble
85 (Pages 334 to 337)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 338
J. ROSNER - CONFIDENTIAL for their actions. And I think that the
regulator woke up a little too late and,
therefore, the actions were of a much larger
scale by the time they were found.
And so, no, I actually - - it's my opinion that Fannie's misbehaviors were what
ended up in Fannie's problems.
Q. Okay.
MS. OSORIO: I have no more - - Oh.
I'm sorry.
Q. Just to confirm, I think you - - Just
want to confirm, you said you were not an
accountant?
A. Correct.
Q. And you were not a CPA.
A. correct.
MS. OSORIO: Okay. That's it. No
more questions. Thank you very much.
MR. CAHILL: Anybody else?
We want to note for the record that
we intend to designate portions, probably
significant portions, of this transcript as
confidential or highly confidential pursuant to
the PO in your case. We'll do that within the
Page 339
1 J. ROSNER - CONFIDENTIAL
2 designated time frame, which I understand is 21
3 days from today, unless I've got a different
4 version of the protective order, but please be on
5 notice.
6 We're concluded.
7 THE VIDEOGRAPHER: This concludes
8 today's proceeding in the deposition of Joshua
9 Rosner. The total number of videotapes used is
10 five. We're going off the record. The time is
11 5:21.
12 (The exhibits are retained by the
13 court reporter.)
14 (Whereupon, signature not having
15 been waived, the deposition concluded at 5:21
16 p.m.)
17
18
19
20
21
2 2
23
2 4
2 5
Esquire Deposition Services D.C. - 1-800-441-3376
Page 340
* * * ACKNOWLEDGEMENT OF DEPONENT
I, JOSHUA ROSNER, do hereby acknowledge I have
read and examined the foregoing pages of
testimony, and the same is a true, correct, and
complete testimony given by me, and any changes
or corrections, if any, appear in the attached
errata sheet signed by me.
Joshua Rosner Date
Page 341
C E R T I F I C A T I O N
I, PATRICIA MULLIGAN CARRUTHERS, a Certified
Shorthand Reporter and Notary Public of the State
of New Jersey and a Notary Public of the State of
New York, do hereby certify that prior to the
commencement of the examination the witness was
sworn by me to testify as to the truth, the whole
truth, and nothing but the truth.
I do further certify that the foregoing is a
true and accurate transcript of the testimony as
taken stenographically by and before me at the
time, place, and on the date hereinbefore set
forth.
I.do further certify that I am neither of
counsel nor attorney for any party in this action
and that I am not interested in the event nor
outcome of this litigation.
Patricia Mulligan Carruthers, CSR
Certificate No. XI00780
Notary Public of the State of New York
Notary Public of the State of New Jersey
Dated:
My commission expires October 23, 2010 (N.J.)
86 (Pages 338 to 341)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential
Page 342
May 7, 2007 JOSHUA ROSNER C/O MARK D. CAHILL, ESQUIRE CHOATE HALL & STEWART, LLP Two International Place Boston. Massachusetts 02110
Re: FANNIE MAE SECURITIES LITIGATION Witness: JOSHUA ROSNER Date taken: May 6, 2008
Dear Mr. Rosner,
We enclose for your review and signature a copy of the above-referenced transcript. We ask that you read the transcript carefully. If it is necessary to make any corrections, please do so on the enclosed errata sheet, and reason for such correction. The errata sheet must be signed and dated. Also, you must sign the certificate of deponent enclosed in the transcript. If you do not complete the reading and signing within 30 days, you will be deemed to have waived your right to make corrections. Please return the certificate of deponent and errata sheet to Esquire Deposition Services, 1020 19th Street, N.W., Suite 620, Washington, D.C. 20036. Very truly yours, Esquire Deposition Services
2 5
Page 343
1
2 ESQUIRE DEPOSITION SERVICES 1020 19TH STREET, N.W., SUITE 620
3 WASHINGTON, D.C. 20006
(202) 429-0014
4
5 ERRATA SHEET
6 Case: IN RE FANNIE MAE SECURITIES LITIGATION Witness: JOSHUA ROSNER
7 Date Taken: May 6, 2008
Job No.: 186576
8
Page No. Line No. Change
9 10
11
12
13
14
15
16
17
18
19
20
21
2 2
23
2 4
25 Joshua Rosner . Date
A
Esquire Deposition Services 1.C. - 1-800-441-3376
87 (Pages 342 to 343)
MD - 1-800-539-6398 VA - 1-800-752-8979
Joshua Rosner - Confidential Paee 344
A ability 184: 19
234:8 323:21,24 326: 14 335:7,7,10 335:24
able 16:18 42:8 139:3,7 211:5 222: 15 223: l9,24 224:8 239:6 270:24 282: 14 301:21 306:7 320: 10
above-referenced 342: 10
abroad 32:8 absolutely 2 1 : 13
59:5 60:lO 89:15 90:20 139:6,13 140:23 147:20 154:21 160:5 168:6 169:4 175:9 210: 11,22 21 l:8 21 1: l2,l7 212:7 219:17,21 225:7 228:24 248: 13 257:6 259: 15 276:3 301:24 306:20 320:20 322:17 331:15
Abusive 8: 16 academic 287:4
296:21 accent 7 1:22 92: 15 accept 135: 13 acceptable 158:9 accepting 138:8 access 65: 8 109: 1 1
171:5 180:25 accessed 1 l2:6 accessible l53:2 1
153:23 154:2 accommodate
16:24 account 3ll : l4
accountant 126: 8 338: 14
accountants 123 : 6 accounting 8: 17
17:20 18:20,25 50:14,21 55:21 105:20 115:13 123:20 124:4 139:17,21 140:25 141:3 142:8 144: 18 l47:4,ll 157:4,18,19,20,24 159:9,20,2l 162:22 163:lO 169:lO 175:13 176:3,10,20 178:12 221:23 227:9 228:4 237: 16 246:2 1 266: 19 279: 18 280:5 286:23 287:2 296:20 302:24 311:23 312:2 313:23 314:10,11,14
accounts 250:2 1 accuracy 176:9
203:23 219:8 accurate 66:21
67:24 72:25 167:19 191:22 192:6 341:ll
accurately 67: 18,2 1 71:16
ace 133:5 acknowledge 33:22
340:4 acknowledged
169:18 295:16 ACKNOWLED...
340:3 ACOR 330:21 acronym 39: 13 Act 148:25
acting 22:8 78:7 85: 19
action21:16 51:14 234:9 244:20 281:15 341:16
actionable 33 :25 actions 338:2,4 active 3 19: l6,2l activities 32: 13
318:ll actual 133: 14 add 218:21 added 201: 19 219:2 additional 176: 15
238:25 288:5 address 2 1 : 6
120:19 241:11 244:25 3O4:2 1
addressing 242: 17 243: 15 278: 11
adjustments 298: 1 1,21
admin 191:5 administration
136:5,16,20,24 137:5,7 190:2,5,7 190:12 191:16,19 194:21 196:4,9,19 196:22,23 197:3 197:13,17,24 198:9,15 199:12 199:16,18,21,24 200:2,3 201 : 1 1 203: l6 ,Z 209: 18
. 226:16,17 administration's
83:lO 133:24 137:18 203:13,19 203:21 325:13
administrative 32: 19 200:9 201:23 203:24 207:2
admission 178: 13
admitted 105: 18 advance 172:25
248: 11 289:21 290:20 320: 1 1
advancement 126:12
advancing 170:9 adverse 5 1 : 14 advice 22: 1 l,25
29: 14 33: l2,19,23 33:24 115:8
advise 34: 3 40: 10 48:22 285:9
advisement 3 17: 8 advisors 7: 12,14,17
7:20 10:19 11:7 11:10,19 28:2 31:25 32:5 48:15 54:3 60:23 225: 10 278:22 307:25
advisory 30:3 32:6 32: 12 220:6
AEI 275:25 276:5 affect 94: 14 227:23
236:3,7,9 299: 17 affiliated 256:24 affirm 93: l8,24 affirmation 153:22
153:22 affirmative 1 3 1 : 3 affordable 204:7 afternoon 16 1 :9
267:23 269:3,4 273:21
age 247: 3 agencies 83: 12
86: 17 87:21 89: 14 89:24 93: 16 276: 16,22 277:5
agency 325: 15 aggressive 60: 17
126:13 167:3 280:18,25 281:ll 282:6,8 283: l3,22
283:25 284:2 319:22,24 325:3 330: 11 333:22 337:3
aggressively 330: 24 agnostic 277:3 ago 69: 18 122:23
212:23 227:7 266:8 282:24 296: 3
agree 22: 10 66:23 73:11,13 191:lO 295:11,13
agreed 173:9,12 235: 17 276: 17 308:22
agreeing 13 1 :6 agreement 22: 18
23:4,7 24: 16,19 3 l6:22,23 317:3,6 326: l7,21,24
agreements 309: 13 315:22
ahead 266:3 ahold 172: 13 aid 256:25 aisle 23 1 : 14 Alan 38: 15 aligned 33 1 :20 allegations 170: 22
172:5,20 173: 10 173:21,24 174:4 174: 15 193: 16 204:3,15 245:23
alleged 205:20 alliances 33O:2 1 allocation 3 14: 13 allow 21 :4 22: 17
27:4 allowing 173: 12 ally 277:2 aloud 265:24 alter 9 1 : 1 8 94:25 ambiguous 297:5
Esquire Deposition Services D.C. - 1-800-441-3376