Testimony: Willie Pest (CPA at PWC) - Sarbanes Oxley Violations

C of CP, Philadelphia County
July Term, 2006, No. 1225
Miller v. Santilli, et al.

Videotape Deposition of Victor Hong
Friday
June 27, 2008
Page 1
COURT OF COMMON PLEAS

PHILADELPHIA COUNTY
JULY TERM, 2006
NO. 1225
GEORGE L. MILLER, Chapter 7 Trustee
of the bankruptcy estates of American
Business Financial Services, Inc. and
subsidiaries,
Plaintiff,
v.
ANTHONY J. SANTILLI, et al.,
Defendants.
-----------Friday, June 27, 2008
-----------Oral sworn videotape deposition of
VICTOR HONG, taken at the law offices of Wilmer,
Cutler, Pickering, Hale & Dorr, LLP, 399 Park
Avenue, New York, New York, on the above date,
commencing at 8:12 a.m., there being present:
KAUFMAN, COREN & RESS, P.C.
1717 Arch Street, Suite 3710
Philadelphia, PA 19103
BY: STEVEN M. COREN, ESQ.
DAVID DORMONT, ESQ.
PAMELA ELCHERT THURMOND, ESQ.
Attorneys for Plaintiff
and
OBERMAYER, REBMANN, MAXWELL & HIPPEL, LLP
1617 JFK Boulevard, 19th Floor
Philadelphia, PA 19103-1895
BY: JOSEPH P. DOUGHER, ESQ.
Attorneys for Plaintiff
TATE & TATE
The Lexington Building, Suite 5
180 Tuckerton Road
Medford, New Jersey 08055
(856) 983-8484 - (800) 636-8283
(856) 983-8484
Tate & Tate, Inc.

180 Tuckerton Road, Suite 5, Medford, NJ 08055
(800) 636-8283


Friday
June 27, 2008
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1 APPEARANCES CONTINUED:
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MORGAN, LEWIS & BOCKIUS, LLP
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1701 Market Street
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BY: ANDREW C. WHITNEY, ESQ.
Attorneys for Leonard Becker,
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Michael R. DeLuca, Harold E. Sussman,
Jerome Miller, Warren Palitz,
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Jeffrey Steinberg
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SAUL EWING, LLP
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1500 Market Street, 38th Floor
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BY: GREGORY G. SCHWAB, ESQ.
Attorneys for BDO Seidman, LLP
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DECHERT, LLP
Cira Center
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2929 Arch Street
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BY: MICHAEL L. KICHLINE, ESQ.
Attorneys for J.P. Morgan Chase Bank; J.P.
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Morgan Securities, Inc.; J.P. Morgan
Chase & Co.; Bear Stearns & Co., Inc.;
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Bear Stearns Financial Products, Inc.;
Bear Stearns Asset Backed Securities, Inc.;
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Morgan Stanley & Co., Incorporated; Morgan
Stanley Dean Witter & Co.; Morgan Stanley
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ABS Capital I, Inc.; and Morgan Stanley
Mortgage Capital, Inc.
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HARKINS CUNNINGHAM, LLP
2800 One Commerce Square
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2005 Market Street
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BY: ELIZABETH M. CHACHIS, ESQ.
(Via Telephone)
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Attorneys for Blank Rome, LLP
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INDEX
WITNESS
PAGE
VICTOR HONG
EXAMINATION BY MR. COREN.............5, 161
EXAMINATION BY MR. SCHWAB...............154
EXAMINATION BY MR. CURTIS...............154
E X H IB ITS
EXHIBIT
PAGE
Exhibit S-74.....................................141
Exhibit S-75.....................................141
11 Exhibit S-76.....................................145
Exhibit S-77.....................................146
12 Exhibit S-78.....................................147
13 Exhibit S-79.....................................148
14
15 EXHIBITS PREVIOUSLY MARKED AND REFERRED TO:
16 Exhibit S-1.......................................67
Exhibit S-3.......................................79
17 Exhibit S-17......................................83
Exhibit S-18......................................84
18 Exhibit S-19.....................................132
Exhibit S-20.....................................139
19 Exhibit S-52.....................................121
Exhibit S-53.....................................123
20 Exhibit S-54.....................................128
Exhibit S-55.....................................139
21 Exhibit S-61.....................................150
Exhibit S-62.....................................152
22
23 REQUESTS TO PRODUCE:
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WILMER, CUTLER, PICKERING, HALE & DORR, LLP

399 Park Avenue
New York, NY 10022
BY: DOUGLAS F. CURTIS, ESQ.
MICHELLE GOLDIS, ESQ.
SANKET J. BULSARA, ESQ.
Attorneys for Credit Suisse (USA), Inc.;
Credit Suisse First Boston; Credit Suisse
First Boston Mortgage Securities Corp.;
and Credit Suisse First Boston Mortgage
Capital, LLC
CREDIT SUISSE SECURITIES (USA), LLC
1 Madison Avenue
New York, NY 10010
BY: DEBORAH BURSTEIN, ESQ.
Attorneys for Credit Suisse (USA), Inc.;
Credit Suisse First Boston; Credit Suisse
First Boston Mortgage Securities Corp.;
and Credit Suisse First Boston Mortgage
Capital, LLC
MORVILLO, ABRAMOWITZ, GRAND, IASON,
ANELLO & BOHRER, P.C.
565 Fifth Avenue
New York, NY 10017
BY: RICHARD D. WEINBERG, ESQ.
Attorneys for Victor Hong
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17 ALSO PRESENT:
18
Mr. Lee Bitman
19
Expert Legal Video Productions
6 East Kings Highw ay
20
Haddonfield, NJ 08033
(856) 354-6000
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THE VIDEOGRAPHER: Your Honor, we are

now on the video record. My name is Lee Bitman and
I represent Expert Legal Video Productions. Today's
date is June 27th, year 2008. We're at the law
offices of Wilmer Hale, located at 399 Park Avenue
in New York, New York.
We are here in the matter of George L.
Miller, Trustee of the Bankruptcy Estate of American
Business Financial Services, Inc., verse Anthony J.
Santilli, et al, which is filed in the Court of
Common Pleas, Philadelphia County, Pennsylvania. It
is a July term, 2006, and the case number is 1225.
Present for videotape deposition is the
witness, Victor Hong.
Our court reporter today is Robert Tate of
Tate & Tate Reporting of Medford, New Jersey. At
this point will the court reporter kindly swear in
the witness.
VICTOR HONG, having been duly sworn,
was examined and testified as follows:
THE VIDEOGRAPHER: It is now 8:13 a.m.
and we will begin with questioning.
BY MR. COREN:
Q.
Good morning, Mr. Hong. Would you please
state your full name and spell your last name for
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the record.
A.
Victor Hong, H-O-N-G.
Q.
And, Mr. Hong, my name is Steve Coren. I
represent the Trustee, George Miller, in connection
with litigation pending in the Court of Common Pleas
of Philadelphia County, Pennsylvania.
THE VIDEOGRAPHER: We're now going off
the video record, 8:13.
(Brief pause.)
THE VIDEOGRAPHER: 8:14, back on the
video record.
BY MR. COREN:
Q.
Before the phone rang, I introduced myself
as counsel for the Trustee. You are here today to
give testimony under oath in connection with
litigation brought by Trustee Miller against your
former employer and others. If at any time you
don't understand a question, you want me to repeat
it, please tell me. It's important that you
understand the question and that you are in fact
attempting to honestly answer the question that I
have posed.
If at any time during the day you recall
something that you hadn't remembered earlier, please
feel free to tell me. You can go back at any time
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A.
Price verification.
Q.
And when you say price verification, what
does that mean?
A.
Providing independent opinion about the
market representativeness of trading inventory
valuations.
Q.
And what types of -- when you say trading
inventory, what do you mean?
A.
Mortgage and asset-backed securities.
Q.
And when you say price evaluation, what do
you mean?
A.
Valuation by -- by whom? It would be -there are various parties that are involved in
valuation of any given trading position. Are you
talking about my role or somebody else's role?
Q.
Yes, your role, please.
A.
My role is to assess independently if
trader marks are at fair market value.
Q.
And a trader mark is the value of a
particular asset that is set by the trader?
A.
Yes.
Q.
Have you ever testified before?
A.
Not that I can recall. Not that I can
recall.
Q.
And can you tell me what preparation, if
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that you would like and correct any answer you made
or supplement any testimony that you gave. If you
think it appropriate, please feel free to tell us
and we'll give you that opportunity. Is that fair,
sir?
A.
Yes.
Q.
Where do you currently reside?
A.
222 East 34th Street, New York City.
Q.
And by whom are you presently employed?
A.
J.P. Morgan.
Q.
And for how long have you been employed by
J.P. Morgan?
A.
Since June of '06.
Q.
And what is your position with J.P. Morgan?
A.
Valuation risk management.
Q.
And are you an officer at J.P. Morgan?
A.
Can you be more -- can you define that?
Q.
Well, do you have a title, vice president,
something like -A.
Executive director.
Q.
Executive director? And so, you are the
executive director of risk management or valuation
risk management?
A.
Valuation risk.
Q.
And what does that department do?
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June 27, 2008
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any, you've done for this deposition?

A.
Meeting with counsel.
Q.
And with whom did you meet?
A.
Richard Weinberg and Wilmer Hale.
Q.
Anyone else?
A.
No.
Q.
And when did you meet?
A.
During the last few weeks.
Q.
And for how long did you meet?
A.
About three or four times, I believe, about
three-hour sessions each.
Q.
So, you met for more than 10 hours with
counsel to prepare for this deposition; is that
correct?
A.
I believe so.
Q.
And did you review any materials?
A.
Yes.
Q.
Do you recall what you reviewed?
MR. CURTIS: Objection.
Q.
You can answer the question.
A.
Yes.
Q.
And what did you review?
MR. CURTIS: Objection. That's work
product.
MR. COREN: Are you instructing him
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not to answer?
MR. CURTIS: I would instruct him not
to answer.
Q.
But for the instruction of counsel, could
you identify the documents that you reviewed in
preparation?
A.
I believe so.
Q.
Do you recall the quantity of documents?
A.
Not specifically.
Q.
More than 10?
A.
As I can recall, likely more than 10.
Q.
Okay. Did you speak with any of your
former colleagues at Credit Suisse in connection
with this deposition?
A.
Yes.
Q.
And with whom did you speak?
A.
Jane Tang, Steve Kelly, Michael Sopher, Dan
Ezra.
Q.
What was Dan's last name?
A.
Ezra. Gail Lee. Those are names that I
can recall.
Q.
And when did you have these discussions
with those five former colleagues who were at Credit
Suisse?
MR. WEINBERG: That's a discussion
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A.
No.
Q.
Do you recall anything they said about your
name having been in that Wall Street Journal
article?
A.
Nothing specific.
Q.
Did you speak with the Wall Street Journal
reporter?
A.
I received a phone call from the Wall
Street Journal reporter.
Q.
And did you speak to him?
A.
Yes.
Q.
And what did you tell him?
A.
I said that I had nothing to say regarding
the article.
Q.
Did he call you before it was published?
A.
Yes, he did.
Q.
And did he ask you to comment on what was
about to be published?
A.
Yes, he did.
Q.
Do you recall what he asked you?
A.
He asked, if I recall correctly, if I had
any knowledge this year regarding an article that he
was going to write.
Q.
And you told him you had no comment?
A.
Yes.
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about the deposition you are asking about?

MR. COREN: Yes.
A.
What was the question again?
Q.
Yes. I had asked you whether you had
consulted or discussed your upcoming deposition with
any of your former colleagues at Credit Suisse and
you gave me five names.
A.
Oh. I'm mistaken. I didn't discuss the
deposition. I discussed, because they asked me,
because I was in the paper.
Q.
Okay. You're referring to the article in
the Wall Street Journal?
A.
Yes.
Q.
And did they contact you after seeing your
name in the Wall Street Journal?
A.
I don't recall specifically. I may have
contacted them or they may have contacted me.
Q.
Tell me what you recall having discussed
with those individuals as a result of your name
having appeared in the Wall Street Journal article.
A.
I acknowledged that I was in the article,
but I didn't discuss anything of substance, as I
recall.
Q.
With any of the five people you have
identified, did you discuss anything of substance?
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June 27, 2008
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Q.
Would you please give me your educational
background.
A.
University of Chicago, MBA, 1985;
University of Wisconsin, BA, 1981; and then Lane
Technical High School, 1977.
Q.
How old are you?
A.
49 and a half.
Q.
Any degrees beyond your MBA?
A.
CFA and then, that's a designation, plus
FRM, which is financial risk management.
Q.
CFA is what?
A.
Chartered financial analyst.
Q.
And when did you receive that designation?
A.
I believe in 1992.
Q.
And the other one you identified?
A.
I believe it was 2006.
Q.
Would you please give us your employment
experience after you received your MBA from
University of Chicago.
A.
Sure. I came out of the University of
Chicago in June of 1985, started in a training
program at Chemical Bank, resigned that to take a
job at Salomon Brothers in 1985.
Q.
Would you just briefly describe what your
positions were at Chemical Bank and Salomon
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Brothers.
A.
At Chemical Bank, I was just a trainee. 2
3
Q.
Training for what?
4
A.
Sales and trading.
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Q.
And at Salomon Brothers?
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A.
Government bond trader.
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Q.
Were you actually a trader for Salomon
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Brothers?
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A.
Yes.
Q.
And you were trading government bonds? 10
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A.
Yes.
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Q.
Were you trading any other types of
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securities?
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A.
No.
Q.
And for how long did you hold your position15
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as a bond trader at Salomon Brothers?
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A.
Until the beginning of 1988.
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Q.
And what did you do next?
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A.
I joined Security Pacific out in Los
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Angeles, California.
Q.
And what was your position with Security 21
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Pacific?
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A.
Government bond trader.
Q.
For how long did you hold that position? 24
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A.
I believe until October of 1988.
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A.
Not of which I knew.
Q.
Well, what was the purpose of structuring
those financings?
A.
For sale to institutional investors.
Q.
And for how long did you do that?
A.
I did that for about a year.
Q.
A.
I joined Kidder Peabody in 1991.
Q.
And what did you do at Kidder Peabody?
A.
A government bond salesperson.
Q.
And for how long did you hold that
position?
A.
Until I believe August of 1992.
Q.
And what did you do after that?
A.
Bear Stearns recruited me at the end of
1992.
Q.
And what was your position at Bear Stearns?
A.
Fixed income research.
Q.
And what did the -- what did your position
involving fixed income research entail while at Bear
Stearns?
A.
Covering the treasury mortgage-backed
securities markets.
Q.
And what did you do, when you say covering,
what do you mean?
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1
Q.
2
A.
I took a position at Continental Bank in
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Chicago to be a government bond trader.
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Q.
And how long did you hold that position?
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A.
Until I believe, I think it was September
6
of 1989.
7
Q.
And what did you do after that?
A.
I decided to make a career change and took 8
9
a position with a lease finance firm to be a lease
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finance analyst.
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Q.
What firm was that?
12
A.
Forsythe MacArthur.
13
Q.
Located where?
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A.
Skokie, Illinois.
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Q.
And tell me what the nature of that
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position was.
A.
It was structuring, analyzing and marketing 17
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lease finance transactions.
19
Q.
And what type of lease finance transactions
were being structured and marketed, leases of what? 20
A.
Typically computer and telecom equipment. 21
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Q.
And were they being securitized and
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securities marketed and sold?
24
A.
Not of which I knew.
25
Q.
I'm sorry?
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A.
Identify relative value trade opportunities
and publish research.
Q.
And were these mortgage-backed securities
conventional mortgages, subprime mortgages or both?
A.
Typically, they would be agency mortgages,
Fannie Mae, Freddie Mac, Ginnie Mae.
Q.
And were you involved in structuring pools
of those mortgages and valuing the securities that
resulted?
A.
I was not involved in structuring. When
you say valuing, what do you mean, in what sense?
Q.
Well, you were involved in pricing of those
securities?
A.
No. I was a price taker, not a price
maker.
Q.
And what does that mean, price taker?
A.
I was not assigning values for any books
and records or any other purposes. I was -- part of
my role was to determine if some securities offer
particular relative value opportunities that would
enable trade ideas to be marketed to clients.
Q.
For how long did you hold that position?
A.
Four years.
Q.
Now, in that position while you were at
Bear Stearns, did you become familiar with how
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mortgage-backed securities were valued?

A.
Yes.
Q.
And what did you learn about that?
A.
Can you more specific?
Q.
Yes. Prior to joining Bear Stearns, had
you had any opportunity to become familiar with the
valuation process as relates to mortgage-backed
securities?
MR. WEINBERG: I'm sorry. That was
prior to joining Bear Stearns?
MR. COREN: Yes, right.
A.
Yes.
Q.
Tell me when was the first time you first
became familiar with the methodologies used to value
mortgage-backed securities.
A.
In graduate school.
Q.
And what did you learn in graduate school
about the methodologies used to value
mortgage-backed securities?
A.
The valuation was based on evaluating the
prepayment opportunities of the underlying home
borrowers.
Q.
Anything else you learned in graduate
school?
A.
That's what I recall.
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because they are moving or because they have found

cheaper loans as replacements.
Q.
And how did the prepayment of the
underlying mortgage loans affect the value of a
mortgage-backed security?
A.
If homeowners would prepay with greater
propensity, then the underlying loans would have
shorter effective maturities.
Q.
And how does that impact the value of a
security which is an interest in a pool of
underlying mortgages?
A.
Can you be more specific?
Q.
Well, you were not valuing the underlying
mortgages, as I understand it. The model is valuing
securities which constitute an interest in a pool of
underlying mortgages. Is that correct?
A.
I'm valuing the securities that are based
off of the cash flows from the mortgage pools.
Q.
Right. And how does the prepayment of the
underlying mortgage pool impact the cash flows from
that pool and the ultimate value of the security?
A.
It accelerates the timing of the cash
flows.
Q.
And does that have an inverse relationship;
the higher the prepayment speed, the lower the value
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Q.
Let me dial forward to 1992 and then the
four years you spent at Bear Stearns. Tell me what
you learned about the methodologies used to value
mortgage-backed securities while you were in that
position for four years.
A.
I learned about prepayment modeling and
also the types of securities that could be
structured from mortgage loan pools.
Q.
Anything else that you can recall?
A.
No, not right now.
Q.
While you were at Bear Stearns, did you
have familiarity with the valuation of subprime
A.
Not that I recall.
Q.
When was the first time that you had some
familiarity or involvement with valuation issues
involving subprime mortgage-backed securities?
A.
At CS First Boston.
Q.
Let me back up while you're still at Bear
Stearns and talk a little bit about the
methodologies that you learned for the valuation of
mortgage-backed securities. You identified
prepayment modeling. What did you mean by that?
A.
Understanding how underlying home borrowers
may elect to refinance their mortgages either
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of the security?
A.
Not necessarily.
Q.
When the security is an interest-only strip
and no interest and principal repayment, would my
statement be correct?
A.
Could you repeat that?
Q.
Yes. If the security, if the security that
we are addressing is a right only to receive
interest, can we agree that the -- there is an
inverse relationship between the prepayment speed
and the value of that security in the sense that the
faster the prepayment speed, the lower the value of
the interest-only mortgage-backed security?
A.
Yes.
Q.
Did you actually work with models while you
were at Bear Stearns, valuation models?
A.
Yes, we applied valuation models.
Q.
Was there a standard type model that was
used at Bear Stearns, or was this something that
Bear Stearns had prepared on its own?
MR. CURTIS: Objection to form.
Q.
A.
Could you repeat that, please?
Q.
Sure. Do you know who developed the models
that you utilized while at Bear Stearns on issues of
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valuing mortgage-backed securities?

1
2
A.
The financial analytic and structured
3
transactions group developed the models, and also,
4
as alternative, we would use models on Bloomberg.
5
Q.
And did you have an opportunity to actually
input assumptions into the models and see how that
6
7
affected the derived values?
A.
Yes.
8
Q.
Were these models run on Excel
9
spreadsheets?
10
A.
Not that I recall.
11
Q.
Do you recall whether the models had names
12
13
or identifying marks?
A.
There was Bloomberg and then there were the 14
Bear Stearns models from the financial analysts and 15
16
structured transactions group.
Q.
Were you aware of any, when you were at
17
18
Bear Stearns, were there any recognized authorities
in the field of valuing mortgage-backed securities?
19
A.
20
Q.
Yes. Were there any publications or books
21
that, in connection with your position at Bear
22
Stearns, you believed to have been recognized
23
24
authorities in the valuation of mortgage-backed
25
securities?
Page 24
was at CS First Boston?
A.
Yes.
Q.
When did you start at CS First Boston?
A.
In late 1996.
Q.
October 3, 1996 ring a bell?
A.
Yes.
Q.
Was that your start date?
A.
Yes.
Q.
And is it correct that you were employed by
CS First Boston from October 3, 1996, through June
30, 2004?
A.
Yes.
Q.
Now, what CS or Credit Suisse entity did
you work for? And if there was more than one, tell
me which ones you worked for.
A.
Q.
Yes. As I understand it, there are a
number of legal entities that are operated by Credit
Suisse. Do you know which ones you worked for?
A.
I wouldn't know the details of it.
Q.
So, as far as you were concerned, it was
just Credit Suisse First Boston?
A.
(Witness nods head in the affirmative.)
Q.
Yes?
A.
Yes.
Page 23
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A.
A book that was a compilation of articles 1
and various contributors, and the coordinator of 2
3
that book is Frank Fabozzi.
4
Q.
Do you recall the name of that book?
5
A.
Not specifically.
Q.
Was that a book coauthor by Steve Mann? 6
7
A.
Don't recall.
8
Q.
Did you read Mr. Fabozzi's book?
9
A.
Yes.
10
Q.
Do you still use that book today?
11
A.
No.
Q.
Are there any other books or publications 12
that you have used in your career concerning the 13
valuation of mortgage-backed securities that you 14
15
considered authoritative?
16
A.
There are so many articles that are written
17
that nothing stands out in my mind.
Q.
Have you read any books on the subject 18
other than the one you identified that Mr. Fabozzi 19
20
authored?
21
A.
Not that I recall.
Q.
Now, I think you indicated you were at Bear22
23
Stearns for four years; is that correct?
24
A.
Yes.
25
Q.
And am I correct that your next position
Friday
June 27, 2008
Page 25
Q.
And where did you physically work during
the period of time you were employed by Credit
Suisse First Boston?
A.
Initially at Park Avenue Plaza, and then at
11 Madison Avenue.
Q.
Always in Manhattan?
A.
Yes, but I did do some work in London.
Q.
And for how long were you at Credit Suisse
in London?
A.
During 2000, 2001, I was making regular
trips to London, but not specifically domiciled out
of there.
Q.
All right. Did you hold the same position
during your entire tenure at Credit Suisse First
Boston?
A.
No.
Q.
What was the first position you held?
A.
I was the head of the mortgage price
verification group.
Q.
And how many employees were in the mortgage
price verification group?
A.
It varied over time.
Q.
Give me an estimate.
A.
I believe it got to as large as like about
six to eight people, six to eight persons.
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Q.
Six to eight?
1
A.
Yes.
2
Q.
Okay. And what did that group do?
3
A.
Assisted me in the valuation review of the
4
firm's fixed income trading positions.
5
Q.
And when you say fixed income trading
6
positions, what do you mean?
7
A.
RMBS, ABS, CMBS, CDO, leverage loans, high 8
yield debt, investment grade corporate debt, repo
9
finance, interest rate derivatives.
10
Q.
Now, were you valuing these various
11
investments that were held or owned by Credit
12
Suisse?
13
A.
Yes.
14
Q.
So, the investments that you have
15
identified that you were valuing were in the
16
inventory of Credit Suisse and maintained on its
17
balance sheet; is that correct?
18
A.
Yes.
19
Q.
All right. Let me back up and you gave us
20
a bunch of initials. We need to further describe
21
them for the record. RMBS, residential
22
23
A.
Yes.
24
Q.
ABS, asset-backed securities?
25
one month?
A.
Yes.
Q.
And what was your position for that one
month?
A.
Analyst in CMBS research.
Q.
CM?
A.
BS.
Q.
Was that considered a promotion?
A.
No.
Q.
Why did you change positions from the head
of the mortgage price verification group to an
analyst?
A.
I was asked to consider a role back in
research.
Q.
And who asked you to consider that?
A.
Gail Lee and -- yeah, that was it, yeah.
Q.
Did you consider that a demotion?
A.
No.
Q.
Did your salary change in connection with
that change in position?
A.
No, no.
Q.
Were you still heading up a group of
individuals in connection with that change of
position?
A.
No.
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A.
Yes.
Q.
CMBS, what did that stand for?
A.
Customer mortgage-backed securities.
Q.
CDO?
A.
Collateralized debt obligations.
Q.
Leveraged loans?
A.
Loans to corporations.
Q.
Investment grade corporate debt?
A.
Investment grade bonds which corporations
issued.
Q.
Repo finance?
A.
Facilities where we would finance
securities for customers.
Q.
And I think you said interest rate
derivatives?
A.
Yes. Could be interest rate swaps, could
be some exotic credit derivatives.
Q.
Now, for how long were you the head of the
mortgage price verification group of Credit Suisse
First Boston?
A.
Until I believe the end of May of '04.
Q.
Well, you left the company a month later,
correct?
A.
Uh-huh.
Q.
Did you have a different position for that
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June 27, 2008
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Q.
Did some event occur which resulted in that
change of position to your knowledge?
A.
Could you be more specific?
Q.
Yes. I'm wondering why it was, after
spending a number of years as the head of a group
involving mortgage price verification, that you
moved to an analyst position. Did something happen
to cause that move?
A.
I was unhappy with Willy Pest and Ed
Valencia, my managers.
Q.
And why is that?
A.
Whenever I raised valuation concerns, they
tended to criticize the work by my team and me.
Q.
Give me those names again.
A.
Ed Valencia, Willy Pest.
Q.
Spell Valencia.
A.
V-A-L-E-N-C-I-A.
Q.
And the other individual?
A.
Willy Pest.
Q.
Willy P-E-S-T?
A.
Yes.
Q.
And what was Mr. Valencia's position at CS
First Boston?
A.
He was the head of mortgage product
control.
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25
Q.
And how about Willy Pest, what was his
position?
A.
He was the manager for product controllers
in product control.
Q.
Now, you had indicated that whenever you
raised valuation questions or concerns, you were
criticized by Mr. Valencia and Mr. Pest. Do you
recall that testimony?
A.
Do I recall saying that just now?
Q.
Yes.
A.
Yes, I do.
Q.
And tell me if you could more specific in
terms of what types of valuations that you would
make that would be criticized by Mr. Valencia or Mr.
Pest.
A.
Could you repeat the question?
Q.
Yes. I'm trying to get a further
amplification of the valuations that your group
derived that were then criticized by Mr. Valencia
and Mr. Pest which caused you to want to leave your
director position in that group.
A.
Yes.
Q.
Go ahead.
THE WITNESS: Pardon? Never mind.
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Q.
CMBS positions which who held?
A.
Andy Kimura.
Q.
And is that an employee of Credit Suisse?
A.
Yes.
Q.
And what CMBS positions did Andy Kimura
hold?
A.
I believe some positions in a deal, it was
CSFB 97-C1.
Q.
And what was that?
A.
It was a commercial mortgage transaction
that First Boston had created in 1997.
Q.
And did that in any way involve
A.
Yes.
Q.
And did it involve subprime mortgage-backed
securities?
A.
No.
Q.
And tell me what that was about where you
derived values that were lower than Mr. Kimura and
you were criticized as a result.
A.
I came up with an estimated value which I
believed to be -- which was lower than where the
trader was marking.
Q.
How much lower?
A.
Approximately 40 percent lower.
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Q.
A.
Yes, go ahead.
I'm sorry. Could you repeat the question?
MR. COREN: Mr. Court reporter.
(The reporter read the pending
question.)
A.
My price verification of mortgage trading
positions.
Q.
And is it correct that you were coming up
with prices that were lower than what others in the
organization were pricing mortgage-backed securities
at?
A.
Yes.
Q.
And is it also correct that you were
pointing out that your group disagreed with the
pricing determinations made by others within Credit
Suisse and it was your disagreement that was
criticized by your superiors?
Q.
You may answer.
A.
Yes.
Q.
Give me some examples that you can recall
where your group had determined that mortgage-backed
securities should have been priced lower than what
others at Credit Suisse were pricing them at.
A.
CMBS positions which Andy Kimura held.
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June 27, 2008
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Q.
And did you detail your valuation
disagreements in any writing?
A.
Yes, I did.
Q.
And if I were to try to find that writing,
what would I look for?
A.
Communications to Andy Kimura, the CMBS
traders.
Q.
Do you recall the date?
A.
No, not exactly.
Q.
Can you recall the month or the year?
A.
Most likely, March or April of 2004.
Q.
All right. And when you criticized the
valuations and derived a value which was 40 percent
lower, what was the reaction of your superiors?
A.
They questioned my work.
Q.
A.
They asked if I knew if my valuation was
accurate.
Q.
And did you believe your valuation was
accurate?
A.
Yes.
Q.
And did you defend your valuation to your
superiors?
A.
Yes.
Q.
And then what, if any, response did you get
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Page 36
from your superiors after defending the value -- the 1

2
accuracy of your valuation?
A.
They asked me to sign off on the trader 3
4
valuation being correct.
5
Q.
And what did you say?
6
A.
I said I was not comfortable with that.
7
Q.
And what was their response?
A.
They said they would try to take care of 8
9
the matter.
Q.
What did you understand that to mean?
10
A.
I don't -- you would have to ask them. I 11
12
mean, I -- that was what they said to me.
Q.
Did you feel that you were being threatened13
14
or pressured in connection with arriving at a
15
different value than the trader had set for a
particular security?
16
17
A.
Yes.
Q.
And why did you feel you were being
18
19
pressured or threatened?
20
A.
I was told not to let auditors or
21
regulators discuss the matter.
Q.
You were told to keep it a secret from
22
23
auditors or regulators; is that correct?
A.
I don't recall that specific word "secret" 24
25
being used.
A.
Let me think. It's difficult to recall
exactly what he said.
Q.
Give me your impression or best sense of
what he said.
MR. WEINBERG: Objection to form.
Q.
You can answer.
MR. WEINBERG: You want in substance
his best recollection?
MR. COREN: Yes.
A.
To leave the matter alone.
Q.
He told you to leave it alone?
A.
As I recall.
Q.
Did you feel as though he was threatening
or pressuring you?
A.
Yes.
Q.
And did you leave the matter alone?
A.
Q.
Well, when you elevated your disagreements
about valuation and the fact that you were told not
to share those disagreements with regulators or
auditors and then you were told by Valencia's boss
to leave it alone, did you feel as though Mr.
Valencia's boss was also threatening or pressuring
you not to disclose your valuation disagreements
with auditors or regulators?
Page 35
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Q.
Were you told not to discuss it with
auditors or regulators?
A.
Yes.
Q.
And who told you that?
A.
Willy Pest and Ed Valencia.
Q.
And did they tell you that on more than one
occasion?
A.
Yes.
Q.
On how many occasions?
A.
I recall more than one.
Q.
And when they -- when you felt threatened
or pressured not to disclose your disagreements as
to value with auditors or regulators, did you
communicate that to anyone else within CS First
Boston?
A.
I elevated to Dan McHugh.
Q.
Spell that.
A.
Dan and then M-C capital H-U-G-H.
Q.
And what position did Dan McHugh have at CS
First Boston?
A.
He was Ed Valencia's manager.
Q.
And what did Mr. McHugh say in response
when you told him that you were being threatened or
pressured not to disclose valuation disagreements
with auditors or regulators?
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June 27, 2008
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A.
I'm sorry. Just there were so many layers
that I perceive in your question.
Q.
Let me try it again. You elevated to Mr.
Valencia's boss the fact that you were being
threatened or pressured not to discuss disagreements
over valuation with auditors or regulators, correct?
A.
Yes.
Q.
And you felt as though Mr. McHugh, who was
Mr. Valencia's boss, was also pressuring you or
threatening you not to disclose those valuation
disagreements with auditors or regulators, correct?
A.
Yes.
Q.
And in light of that what you perceived to
be threat or pressure from Mr. McHugh, what if
anything did you do?
A.
I recall discussing my wish to take a
sabbatical or to leave the firm and to find a
different position with HR.
Q.
Who did you discuss that with at HR?
A.
Stephanie Diamond.
Q.
Diamond?
A.
Yes. And I believe Liarne Edmunds.
Q.
I'm sorry. The last?
A.
Liarne Edmunds.
Q.
Liarne Edmunds?
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A.
Spelled L-I-A-R-N-E.
Q.
And what did -- they were in the HR
department?
A.
Yes.
Q.
And what did they say?
A.
They said that they perceived that Willy
and Ed were not being supportive of the work that I
did.
Q.
Well, did they say it was okay to take a
leave of absence or a sabbatical?
A.
I don't recall them saying yes or no, but
they knew that I wanted to discuss the matter with
HR.
Q.
And was that close in time to when you left
your director position and moved over to being an
analyst about a month before you left the company?
A.
Yes.
Q.
Did you share your valuation concerns and
the threats and pressure that had been made against
you with any other individuals at the company?
A.
Can you repeat the question?
Q.
Sure. You have identified the fact that
you felt threatened and pressured by Valencia, Pest,
Valencia's boss, Dan McHugh, and that you then went
to the HR department, expressed your dissatisfaction
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A.
Not that I recall specifically.
Q.
Well, did you understand from what he said
that if you disclosed disagreements about
valuations, that you would be fired; is that what
you understood?
A.
Yes.
THE WITNESS: Can I take a break?
MR. WEINBERG: Sure.
MR. COREN: Take five.
the video record. It's now 9:01.
(Brief recess.)
THE VIDEOGRAPHER: We're now back on
BY MR. COREN:
Q.
Mr. Hong, before our break, you were
providing some testimony concerning your group's
disagreements with valuation determinations made by
a particular trader that you identified as Andy
Kimura. In what group was Mr. Kimura?
A.
Mortgage trading.
Q.
And did Mr. Kimura trade subprime
mortgages?
A.
Not that I recall.
Q.
And you I think had indicated at one point
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and suggested perhaps you needed a sabbatical or you

were going to leave the company, correct?
A.
Yes.
Q.
Did you go to anyone else, any person in a
higher position than Mr. McHugh and express your
concerns that you were being pressured or threatened
not to discuss valuation disagreements with
regulators or auditors?
A.
Not that I recall.
Q.
Did Mr. McHugh or anyone else tell you what
they would do to you if you discussed your valuation
disagreements with regulators or auditors?
A.
Q.
Yes. Did Mr. Valencia, Mr. Pest or Mr.
McHugh tell you what they would do to you if you
discussed your valuation disagreements with auditors
or regulators?
A.
Yes.
Q.
What did they tell you would happen?
A.
We were told that if we uncovered
additional behavior that seemed inappropriate,
inappropriate trader behavior, that might damage the
firm reputationally, that our careers and our
reputations would be in jeopardy.
Q.
Threatened to fire you?
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June 27, 2008
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that you were criticized, meaning more than just

you. Was the criticism directed to the entire group
that you directed?
A.
Q.
Yes. I think in one of your questions
about being criticized about the disagreements that
you had over value, you referred to it as "we"
rather than just you, and I'm trying to see whether
or not there were other members of your team that
were either pressured or threatened or criticized as
a result of having determined that the values that
your group placed on assets were substantially lower
than the values that the traders had placed on those
assets.
A.
I was not the only one to get criticism
within my group.
Q.
Yes. Who else was criticized within your
group?
A.
We were referred to as a group in terms of
price verification.
Q.
Right. But can you identify the other
individuals within your group who was -- who were
criticized, the names of those individuals?
Q.
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A.
I interpreted it as to the other people who
were then at -- within my group, Amir Suja, Jane
Tang, Franklin Yap, Usman Babar, Michael Sopher,
Stephen Kelly. Those names come to mind as a group
reference.
Q.
And did you speak with the members of your
group relating the criticism that you received and
the threats and the pressure that you received?
MR. WEINBERG: Objection to form. You
can answer.
A.
Yes.
Q.
And tell me what you recall telling the
members of your group on those subjects.
A.
I recall telling them that we just have to
do our work correctly and be able to defend our
work.
Q.
And did you tell your group that you were
told that if you discovered any additional problems
with respect to values, that you were going to be
fired?
MR. WEINBERG: Objection to form. No
foundation.
Q.
A.
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A.
Q.
And your group?
A.
Q.
What did you -- yes, yes?
A.
Yes.
Q.
A.
That our careers were under scrutiny.
Q.
When did that conversation take place?
A.
I believe in March of '04.
Q.
And there were three of you present during
that conversation?
A.
Ed Valencia and I were in, in our office,
and we had dialed into Amir Suja on his cell phone,
who was traveling.
Q.
Did you make any notes of that
conversation?
A.
Not that I recall.
Q.
Now, when he said your -- what did you
understand when you said your careers were under
scrutiny; what did you mean by that?
A.
That we were being held accountable if we
were to uncover additional valuation concerns.
Q.
And did you understand that to mean that if
you uncovered additional valuation concerns, that
you or other members of your group would be fired?
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Q.
Sure. Did you tell your group that you
were told that if you discovered any additional
problems with respect to values that you were going
to be fired?
A.
Not in those specific terms.
Q.
Well, tell me in general what you told your
group on that subject.
A.
My group had approached me to say that they
did not feel as if their work was being supported.
Q.
Did they tell you that they felt pressured?
A.
Yes.
Q.
And who in your group approached you and
told you that they were feeling pressured on
questions of valuation?
A.
Amir Suja, that's one I recall.
Q.
And can you tell me what you recall about
that?
A.
Ed Valencia had a conversation with Amir
Suja and me expressing his unhappiness with the
discovery of valuation concerns.
Q.
And what did Mr. Valencia say in that
conversation with you and your colleague?
A.
That if we were to uncover additional
valuation issues, that we would be held responsible.
Q.
That you would be held responsible?
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A.
Yes.
Q.
Did you take any memos or notes with you
when you left Credit Suisse?
A.
Yes.
Q.
What did you take with you?
A.
I sent some copies of some e-mails to my
personal e-mail account regarding my elevation of
the Andy Kimura valuations.
Q.
And do you still have those e-mails?
A.
I believe so.
Q.
Where are they?
A.
I may have them printed out somewhere.
MR. COREN: Would you please save
those and not destroy them from this point forward.
MR. WEINBERG: We'll consider the
request.
Q.
Anything else that you took with you?
A.
Let me think here right now.
Q.
I'm sorry?
A.
Let me think here.
THE WITNESS: Can I talk to you one
second? Is that okay?
MR. WEINBERG: He wants to consult
with me for a second.
MR. COREN: Off the record.
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(Discussion held between the witness
and his counsel.)
the video record. It's now 9:36. This begins tape
number 2 of the videotape deposition of Victor Hong.
BY MR. COREN:
Q.
Are you able to answer my last question?
A.
Could you repeat it?
Q.
Yes. You had identified having taken with
you copies of some of the e-mails that you had sent
regarding elevating the issues involving the trader
Mr. Kimura. I asked you whether there was anything
else that you took with you. You wanted to consult
with your counsel. You have done so. Can you
please answer my question?
A.
Not that I recall.
Q.
Nothing else you recall. Do you recall
what you left there in terms of files?
A.
Just my, all of my work was done
electronically, so just my work, work files and my
e-mails.
Q.
Did you ever make any notes or memos of the
events that we've covered so far where you were
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K:\quantgroup.
Q.
Quantgroup?
A.
Yes.
Q.
Quantity group or just quant?
A.
Quant.
Q.
Q-U-A-N-T?
A.
Uh-huh.
Q.
Now, you had identified disagreements with
values between your group and the trader Andy
Kimura. Did you have any disagreements with any
other traders on the subject of valuation?
A.
Yes.
Q.
What other traders?
A.
Mitch Levine.
Q.
Spell the last name.
A.
L-E-V-I-N-E.
Q.
Anyone else?
A.
Michael Flannelly.
Q.
How do you spell Flannelly?
A.
F-L-A-N-N-L -- I'm sorry,
F-L-A-N-N-E-L-L-Y, I believe.
Q.
Any other traders?
A.
Aamer Abdullah.
Q.
Could you -- I'm sorry. I'm having a hard
time hearing you.
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discovering pricing problems that you were bringing

to the attention of superiors and being either
pressured or threatened; did you make any notes of
any of that?
A.
I was just -- I was -Q.
No?
A.
No.
Q.
Did you ever bring it to the attention of
any attorneys within Credit Suisse?
A.
I don't recall.
Q.
Did you maintain a computer or a directory
within a network that had your files and e-mails on
it?
A.
Q.
Yes.
MR. WEINBERG: I don't understand -I'm not sure what you're asking either.
Q.
Yes. If I wanted to make a request for all
of your computer files and e-mails during the period
of time you were at Credit Suisse, what would I ask
for, other than just all of your files and e-mails?
Is there some directory, some network, some location
I should direct people to to find that information?
A.
The -- my team kept our work on a shared
drive. It was I believe the address is
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A.
Aamer Abdullah.
Q.
Spell the last name.
A.
A-A-M-E-R, A-B-D-U-L-L-A-H.
Q.
Any other traders?
A.
Not that I recall.
Q.
How about Gary Richter?
A.
I -- I don't recall a Gary Richter.
Q.
Let's start with Mitch Levine. What did he
trade, what types of securities?
A.
Mortgage-backed securities.
Q.
And were they subprime mortgage-backed
securities?
A.
Not that I recall.
Q.
And what was your disagreement with trader
Levine on the subject of valuing mortgage-backed
securities?
A.
My team and I were unable to substantiate
the marks of some securities.
Q.
And when you say your team was unable to
substantiate the marks of some securities, does that
mean that your team came up with a different value
for those securities than what that trader had
valued the securities at?
A.
Yes.
Q.
And do you recall how -- and I take it that
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your team determined that those securities were

valued lower than what trader Levine had valued them
at; is that correct?
A.
That is correct.
Q.
How much lower did your team determine that
those securities were valued at?
A.
I don't recall the exact dollar numbers.
Q.
Do you recall a level of magnitude? Before
you said the discrepancy between you, the value of
your group and the value of Andy Kimura was a 40
percent difference. Can you put it in the context
in terms of your group's dispute with the valuation
determinations of trader Levine?
MR. CURTIS: Objection to the
characterization.
Q.
A.
Depending upon the security, anywhere from
10 percent to -- to maybe 50 percent difference.
Q.
So, your group's values were anywhere from
10 percent to 50 percent lower than the values that
trader Levine had set those securities at?
A.
Yes, we estimated their values, they were
below trader marks.
Q.
And the trader mark is the value set by the
trader?
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your disagreement with the values set by Mr. Levine?

A.
The people who received the communications
wanted to understand the accuracy of our pricing
assumptions and market data that we used to price
verify.
Q.
And did you enlighten them on the
assumptions and market data that you were using to
derive lower values than what trader Levine was
setting values at?
A.
We presented it to everyone.
Q.
And what did they say in response?
A.
After much review, our information was
accepted as being reasonable and accurate.
Q.
So, as relates to Mr. Levine, did they
change the values that he had set for securities?
A.
Yes.
Q.
Did you receive any threats or pressures
relating to your disagreements over the values set
by Mr. Levine?
A.
Q.
Yes. Did you receive any threats or
pressures as a result of your disagreements with the
values set by Mr. Levine?
A.
I don't recall threats. I do recall
pressure to be particularly accurate and documented
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A.
Yes.
Q.
Now, your dispute or disagreement with Mr.
Levine, was that with respect to one particular
security or multiple securities?
A.
Multiple.
Q.
Tell me which securities you recall
disagreeing with trader Levine as to the valuation.
A.
I do not recall specifically.
Q.
Do you recall how many there were,
different types of securities?
A.
No.
Q.
Do you recall when, the time period when
you had these disputes or disagreements?
A.
October 2003. I'm -- yeah, about October
2003.
Q.
And did you communicate your disagreements
to Mitch Levine or anyone else?
A.
Yes.
Q.
To whom did you communicate your
disagreement as to the value?
A.
Mitchell Levine, Andy Kimura, Ed Valencia,
Sal Conti, Joanne Pace.
Q.
And do you recall what response, if any,
that you received from any of these individuals that
you have just identified to whom you communicated
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and thorough.
Q.
And did you believe your group to have been
accurate, documented and thorough?
A.
Yes.
Q.
Now, was there one particular assumption
with which you disagreed with the traders in terms
of valuation that resulted in your group coming up
with much lower values?
MR. WEINBERG: I'm sorry. Could you
have the question read back?
MR. COREN: Sure.
MR. WEINBERG: I just missed it. I'm
sorry.
Q.
Was there one particular assumption with
which you disagreed with the traders in terms of
valuation which resulted in your group coming up
with a much lower value?
A.
It could be myriad assumptions.
Q.
Do you recall that in fact your
disagreements related to the prepayment speed
assumptions that were being used in the valuation
model?
A.
I recall that at times being a discussion,
a discussion item.
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Q.
Well, what other disagreements do you
recall having in terms of the assumptions that were
being used to value these securities?
MR. WEINBERG: We're talking about Mr.
Levine's position?
MR. COREN: Correct.
Q.
Prepayment was one of the issues?
A.
Discount rate.
Q.
Right. Anything else? Loss rate an issue?
A.
Not that I recall.
Q.
In terms of your disagreement with Mr.
Kimura, do you recall what the assumptions were with
which you disagreed?
A.
Property default likelihood.
Q.
Prepayment speeds?
A.
Not that I recall.
Q.
The third one you identified, Abdullah,
tell me what you recall about that disagreement.
A.
Aamer Abdullah was trading those securities
for Mitchell Levine, his supervisor.
Q.
So, it was the same issues?
A.
Aamer Abdullah was trading the non-agency
securities portfolio on behalf of Mitchell Levine
that we had questioned.
Q.
And what, if anything, did Abdullah say to
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Q.
And did you have any disagreements with
Greg Richter about the valuation of subprime
A.
Not with him, not that I recall.
Q.
Do you recall having any disagreements with
anyone else at Credit Suisse having to do with the
valuation of subprime mortgage-backed securities?
A.
Could you repeat that question again?
Sorry.
Q.
Do you recall having disagreements with
anyone else at Credit Suisse having to do with the
valuation of subprime mortgage-backed securities?
A.
Yes.
Q.
With whom did you have those disagreements?
A.
I'm not sure if disagreement is quite the
right word. With differences that were resolved on
very subjective pricing matters.
Q.
What differences do you recall having as
relates to subprime mortgage-backed securities?
A.
On occasions there might be some residuals
that we felt we came up with different valuations
than the traders.
Q.
Is it fair to say that whenever there was a
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June 27, 2008
1
you?
2
A.
That he had left the firm, as I recall,
when we were -- right, perhaps right before we had 3
4
raised differences for the traders to explain or
5
substantiate.
6
Q.
Are you aware of any traders that were
7
fired as a result of having been determined to have
8
wrongly been setting values for securities?
9
A.
Do I know specifically and formally?
10
Q.
Do you know of any traders who have been
terminated as a result of having been determined to 11
12
set inappropriate values for securities?
A.
From my understanding, Mitchell Levine and13
14
Michael Flannelly.
15
Q.
Were both terminated for that reason?
16
A.
That was my understanding.
17
Q.
When were they terminated?
18
A.
I believe in March of '04.
19
Q.
I had asked you about a Richter and I think
20
I gave you the wrong first name. Does a Greg
21
Richter ring a bell?
22
A.
Yes.
23
Q.
And what position did Greg Richter have?
24
A.
I believe he was head of ABS principal
25
finance.
Page 57
difference or a disagreement, your group always had
a lower value than what the traders had set for the
security?
A.
No.
Q.
Sometimes you had a higher value?
A.
Yes.
Q.
Did you ever have a higher value as relates
to residual interests in subprime mortgage-backed
securities?
A.
Yes, we could, yes.
Q.
Do you recall any instances where you came
up with a higher value?
A.
I recall some residuals, yes.
Q.
Do you know who Andy Kimura reported to?
A.
Q.
Yes. Who is Kimura's boss?
A.
At what time frame?
Q.
Any time frame you can recall. If there
was more than one, just tell me all of them.
A.
I recall that he reported to Matthew Ruppel
and that he reported to Jim Healy.
Q.
Now, was there a department or a group
known as product control while you were at Credit
Suisse?
A.
Yes.
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Q.
And what was the responsibility of that
group?
A.
To generate and report the business P and L
for the various departments of the firm.
Q.
And were you within that group?
A.
Yes.
Q.
And was the function -- well, strike that.
What role or responsibility, if any, did
the product control group have in connection with
the securitization -- let me start over. That's a
mouthful.
Tell me what responsibilities, if any, the
product control group had in connection with the
securitization and sale of subprime mortgage-backed
securities.
A.
To the degree that there were subprime
mortgage securities on the firm's balance sheet and
there was a resultant P and L, then those positions
would be reported as on the balance sheet and that P
and L be reported on the income statement.
Q.
Well, was that group for determining the
value to be placed on the subprime mortgage-backed
securities that were retained in the inventory of
Credit Suisse?
A.
No.
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that these assets would be recorded on the books of

Credit Suisse?
A.
You're asking multiple questions there, I
believe. Could you break it apart?
Q.
Well, I gave you an example where you had a
disagreement over pricing or value concerning
mortgage-backed securities. You said that you would
go to the traders. You would ask them to
substantiate their values with market data or
otherwise. Let's assume they did that and you still
disagreed. What would happen next?
A.
If they substantiate it, then we would not
disagree. We would come to agree with them.
Q.
What if they did not in your view
substantiate their value, then what would happen?
A.
We would ask for additional information
from them and we would also show them our
information and ask for them to suggest where we
could supplement the accuracy and completeness of
our work.
Q.
Well, let's assume you went through that
whole process and you never reached an agreement. I
assume the value is an important issue that has to
be determined. Somebody has to make the final call
as to which value to go with, either the traders' or
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Q.
What group was responsible to do that?
A.
The traders.
Q.
Well, was product control responsible to
attempt to verify the prices set by the traders?
A.
Yes.
Q.
So, as I understand the way it worked
within Credit Suisse during the period you were
there, the traders set the price of these various
securities and then product control's responsibility
was to independently look at the prices that had
been set by the traders and determine whether you
agreed or disagreed; is that correct?
A.
Correct.
Q.
All right. And if you disagreed with the
values determined by the traders with respect to
subprime mortgage-backed securities retained by
Credit Suisse, what were you supposed to do?
A.
To ask the traders to provide independently
observable market information that would
substantiate where they were marking their
positions.
Q.
And if they did that and you were not
satisfied and still disagreed with the values set by
the traders, who was responsible within the Credit
Suisse organization to determine the actual value
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your group's value. Correct?

A.
It was the responsibility of the traders to
mark their positions. Product control was not
responsible and did not have authority to mark
positions. And if there were differences between
our valuations and the traders' valuations, we would
assess whether or not that difference was reasonable
noise, shall we say, in the light of the illiquidity
and the riskiness of the product. So that there may
have been a difference, but it might not be deemed
material for elevation or requiring further scrutiny
of the prices.
Q.
And what if you deemed the difference or
disagreement to be material, what were you supposed
to do?
A.
Then we would report that in our findings
and elevate to more senior individuals within
trading management and product control for their
resolution.
Q.
And would you report this and elevate it by
way of an e-mail?
A.
Yes.
Q.
Was there some formal memorandum process or
form that you were supposed to use to identify and
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elevate these disputes, or was it done just by

e-mailing the various people who were involved?
A.
There was a system called Global Price
Testing, GPT, it was a database of price testing
findings, and that would be used to summarize and
report to senior management pricing variances for
trading inventory.
Q.
And who maintained that report or
information?
A.
Don't know.
Q.
Now, in terms of your group's efforts to
verify or determine the prices or values of subprime
mortgage-backed securities, do you recall what the
key assumptions were that you considered?
A.
For what type of securities?
Q.
Subprime mortgage-backed securities.
A.
Credit ratings, spread, yield spreads,
prepayments, defaults.
Q.
Discount rate?
A.
That's what I meant by spread.
Q.
Do you recall in the 2002-2003 time frame
what information your group considered in order to
derive the appropriate prepayment assumption that
you would use in valuing subprime mortgage-backed
securities?
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Q.
How did you determine if a deal was
comparable?
A.
Maturity.
Q.
Originator?
A.
That was one consideration.
Q.
For example, if you're looking at all the
deals of one originator, they would be more likely
to be comparable?
A.
That was a starting point, but not
definitive.
Q.
What else did you look at?
A.
Generally, when we were looking at -- we'd
look at I believe FICO scores.
Q.
Anything else?
A.
Loan coupon.
Q.
That's the interest rate on the loan?
A.
Q.
Yes?
A.
Yes.
Q.
Did you find that, in general, the higher
the interest rate on the underlying loans, the
higher or faster which that pool would prepay?
A.
Generally.
Q.
And that's because people who are paying
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A.
The historical performance of comparable -THE WITNESS: Are you okay?

MR. WEINBERG: Go ahead. I'm sorry.
A.
The historical performance of existing
comparable deals.
Q.
Why was that important?
A.
For reasonableness comparison.
Q.
In order to project the future, it's
important to consider the past; is that correct?
A.
Yes.
Q.
What else did you consider as important in
determining the appropriate prepayment speed to use
in valuing a subprime mortgage-backed security?
A.
What were the factors that were used to
determine the prepayments of a mortgage security?
Q.
Yes, to determine what the appropriate
prepayment speed was to use in your valuation model.
A.
We took a look at -- we took a look at
comparable deals and considered, looking at the
historical performance of those comparable deals,
and if they weren't really comparable deals, then we
probably gave them less weighting. To the extent
they were more comparable, we gave them more
weighting.
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higher rates are more motivated to try to refinance

and get lower rates; is that correct?
A.
Possible.
Q.
Can you recall anything else you considered
in determining the appropriate prepayment speed to
use in your valuation model?
A.
Those are the ones that come to mind.
Q.
Did you look at any market data or monthly
publications to assist you in arriving at the
appropriate prepayment rate assumption?
A.
We would see through fixed income research
and through data reported on Bloomberg as to where
various types of deals were prepaying.
Q.
Did you look at any internal Credit Suisse
publications on that subject, such as HEAT reports?
A.
Generally not.
Q.
Were you aware that Credit Suisse put out
such a publication on a regular basis?
A.
Yes.
Q.
And why wouldn't you use those
publications?
A.
To maintain independence.
Q.
Now, in terms of deriving a value for
Credit Suisse's subprime mortgage-backed securities,
was your group using a model in order to reach that
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value?
A.
Q.
Yes. You indicated that it was the trader
who set the price of the securities, and the
responsibility of your group within product control
was to independently try to determine those values
and see if you could substantiate the values set by
the traders, correct?
A.
That was our role.
Q.
Right. In order to perform your role, did
you use a valuation model?
A.
Generally, we use models from Bloomberg or
Intex.
Q.
And within those models, you would import
the assumptions that you determined to be
appropriate concerning prepayment speed or discount
rate or loss rate; is that correct?
A.
We would use those inputs.
Q.
And do you know -- strike that.
Were you personally able to operate those
models?
A.
Yes.
Q.
And do you recall in general how many
inputs there were, how many variables had to be
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A.
May you please be more specific?
Q.
Yes. Did you see presentations of this
sort prepared within Credit Suisse to be used in
connection with marketing a relationship with a
subprime loan originator such as ABFS?
A.
No, not that I recall.
Q.
Did you know what the asset finance team
was?
A.
Yes.
Q.
What role did that team play?
A.
To securitize products for clients.
Q.
And did you interact with the asset finance
team?
A.
Sometimes.
Q.
And what, in what way would you interact?
A.
If I were looking to price verify certain
positions and I wanted some additional information
to understand the positions, I might approach them.
Q.
When the asset finance team or group
structured a securitization, was it the
responsibility of your group to price verify the
various securities within that securitization?
A.
Q.
Yes. Let's just talk in generally --
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inputted?
A.
No, not specifically.
Q.
Can you give me a range? And I know we
have a loss rate, we have a prepayment rate, we have
a discount rate assumptions. Anything else that is
inputted into the model?
A.
Those are the three basic ones.
Q.
Let me show you what's been marked as
Exhibit 1. You should have a book of exhibits
before you.
MR. WEINBERG: Do you want him to look
at the book or look at the original?
MR. COREN: He can look at, yes, look
at the original. It's the color presentation.
Q.
Are you familiar with materials of this
sort?
A.
Could you be more specific with your
question?
Q.
Yes. Well, let's start with Exhibit 1.
Have you seen -- while you were employed by Credit
Suisse, did you have an opportunity to review
Exhibit 1?
A.
To my recall, no.
Q.
Did you see materials of this sort before?
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June 27, 2008
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general about a securitization. If the asset

finance team structured, for example, a
securitization involving pools of ABFS subprime
mortgage-backed securities, was your group then
responsible to price verify the various tranches of
securities that were being sold or retained in
connection with that securitization?
A.
Our exercise was strictly internal in order
to price verify the positions that we held.
Q.
So, if Credit Suisse was going to hold any
of the tranches of a particular securitization, then
your group would be involved in price verifying the
values set by the traders; is that correct?
MR. WEINBERG: Objection to form. Go
ahead.
A.
If they were structuring a security that
had not been created yet and was not yet something
that we owned, we had no such role.
Q.
So, your role was only after there was a
securitization that was structured and Credit Suisse
owned a tranche of that securitization?
A.
If we didn't own something, there was no
responsibility on our part to price verify it.
Q.
Whose responsibility was it to set the
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price of the various tranches of securities that
were not going to be owned by Credit Suisse that 2
3
were either going to be sold or retained by the
4
originator of the loans in the securitization?
5
A.
I don't know.
6
Q.
Didn't Credit Suisse own all of the
7
tranches of a security in connection with a
8
securitization until they were sold; isn't that how
9
they were structured?
10
11
A.
12
Q.
Yes. Isn't it true that when you have a
13
securitization, Credit Suisse owns all of the
14
tranches of the security until the particular
15
tranches are sold to investors?
16
A.
Not necessarily.
17
Q.
Is that the case in some circumstances?
18
A.
It can be.
19
Q.
Well, in those circumstances, was your
group involved in price verifying the securities? 20
A.
If the securities had not been created yet,21
22
we would not price verify the securities.
Q.
Well, what if they had been created but not 23
24
yet sold?
A.
If they had been created and not yet sold 25
Q.
Mr. Hong, was there a -- strike that.

We talked a little bit about the dispute
resolution process where if your group disagreed
with a pricing determination by the traders, how you
would approach that. Was there a manual or
something in writing which told you what you were
supposed to do in connection with a valuation
dispute between your group and a trader?
A.
There was a price testing policy paper. I
don't recall the specifics of pricing difference
resolution.
Q.
If I were to want to make a request for
that policy, what would I ask for?
A.
Price testing policy.
Q.
And is that something that applied to both
your group and the traders?
A.
There was a policy that for our group with
respect to how we monitor the traders.
Q.
Now, are you familiar with a group known as
risk management?
A.
Yes.
Q.
What did that group do at Credit Suisse?
A.
It was responsible for calculating and
reporting the market risk of the firm's positions.
Q.
And did your group interact with the risk
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and were in inventory, existing securities, then

we -- it would fall in our population to test.
Q.
Now, did Credit Suisse from time to time
maintain in its inventory residual interests or
interest-only strips in subprime mortgage-backed
securities?
A.
Yes.
Q.
And in those circumstances, would it have
been the responsibility of your group to price
verify the values of those interest-only strips or
residual interests that are held on the books of
Credit Suisse?
A.
Yes.
THE WITNESS: Can we take a break?
MR. WEINBERG: Sure.
THE WITNESS: I just want to just -MR. WEINBERG: Do you want to take a
couple minutes?
MR. COREN: Sure.
THE VIDEOGRAPHER: It's now 10:17.
We're going off the video record.
(Brief recess.)
the video record. It's now 11 -- excuse me, 10:35.
BY MR. COREN:
Friday
June 27, 2008
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management group as related to pricing or valuation

issues?
A.
Yes.
Q.
Tell me why the two groups would interact
on that subject.
A.
In order for the market risk group to be
able to estimate the market risk of the firm's
positions, it had to have an underlying confidence
that the positions were correctly marked in the
first place.
Q.
And when you say marked, you mean priced or
valued, correct?
A.
Yes.
Q.
So, you would report -- I take it your
group would try to independently verify the values
or prices set by the traders and then you would, if
you had a disagreement, pass that information on to
the risk management group; is that correct?
A.
They were informed of differences that we
were trying to resolve with the traders if,
particularly if they were very, very substantial and
unresolved.
Q.
All right. And did you interact with Bruce
Jin of risk management?
A.
Yes.
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Q.
Jin.
And tell me about your interaction with Mr.

MR. WEINBERG: Can you more specific?
MR. COREN: Sure.
How frequently would you interact with Mr.
Q.
Jin?
A.
Several times a week.
Q.
And did you consider that your group in
product control and his group in risk management had
essentially the same mission, and that was to
protect the financial position of Credit Suisse and
make sure that assets that were being retained by
the company were properly valued?
Q.
Is that a fair statement?
A.
The role of valuations were the purview of
my group, not that of market risk.
Q.
But if you unearthed what you believed to
be a substantial disagreement as to value and that
the traders had set a value that you thought was
considerably higher than the value of a particular
security, it would be important for risk management
to know that; would it not?
Q.
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Q.
And did you tell Mr. Jin of the fact that
you were being pressured and threatened as a result
of a pricing or value disagreement that we had
discussed earlier?
Q.
You can answer that.
A.
Q.
Yes. We had covered at some length
earlier, and I don't intend to repeat it, the
threats and pressure that you experienced as
relating to disagreements over prices or values set
by the trading group, and I had asked you who you
shared those threats or pressure. Did you talk to
this one, who did you tell? You told me who you
elevated it to. My question is, did you bring those
issues to the attention of Mr. Jin?
MR. CURTIS: Objection. Can I -MR. WEINBERG: You can answer.
MR. CURTIS: In what time period are
you talking about?
MR. COREN: Any, ever.
Q.
Did you ever bring those issues to the
attention of Mr. Jin?
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A.
I recall keeping risk management informed.
They were not a, as I recall, a strict service
client or reporting audience of our work, but it was
a close cooperation.
Q.
Did you get along with Mr. Jin?
A.
Yes.
Q.
And did you and Mr. Jin ever talk about any
disagreements that you had in terms of the prices
determined by your group versus the prices set by
the trading group?
A.
I kept in touch at First Boston with Bruce
on our work. Bruce was one of the persons who
arranged my hiring.
Q.
Right. Was -- oh, Bruce hired you?
A.
He was, no, he was one of the persons who
was instrumental in my hiring.
Q.
Did you know Bruce before you were hired by
Credit Suisse?
A.
No.
Q.
Excuse me?
A.
No.
Q.
And why do you say he was instrumental in
your hiring?
A.
He was a key person in the interview
process.
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June 27, 2008
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A.
When I was at -- when those things
developed, Bruce had already left the firm.
Q.
I see. Did you talk to him about it at a
point in time when he was no longer at Credit
Suisse?
A.
Yes.
Q.
And where was he working at the time?
A.
RBS Greenwich Capital.
Q.
All right. And what did you tell Mr. Jin?
A.
I told Bruce that our group was -- that I
did not enjoy working for Willy and Ed, and that's
why I decided to leave product control for either
another department or for another firm.
Q.
Did you tell him that you had been
threatened and pressured not to disclose valuation
disagreements to auditors or regulators?
A.
I don't recall.
Q.
Were you fired by Credit Suisse?
A.
No.
Q.
Where did you go after you left Credit
Suisse?
A.
WestLB, the German bank.
Q.
And for how long did you stay there?
A.
Two years.
Q.
And where did you go after that?
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A.
J.P. Morgan.
Q.
Were you ever at Bear Stearns?
A.
In 1992 late to -Q.
I'm sorry. After you left Credit Suisse,
did you go back to Bear Stearns?
A.
I rejoined Bear Stearns in February of
2008.
Q.
What was your position with Bear Stearns in
February of 2008?
A.
Managing director, mortgage price
verification.
Q.
Was that a similar position that you held
at Credit Suisse?
A.
Yes.
Q.
And how large was your group that you
directed at Bear Stearns?
A.
I did not have any direct reports.
Q.
Let me -- strike that.
Do you recall when you first became
familiar with ABFS, that's American Business
Financial Services, Inc.?
A.
As I recall, when I identified loan
collateral that we were warehousing, I was asked to
price verify the loan collateral.
Q.
And that was the first time you had had any
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what was being repo financed.

Q.
And what was a repo financing; what did you
understand that to be?
A.
That we were in effect lending -- we would
lend money to a customer enabling them to hold given
assets for some short period of time, and that
lending would be secured by means of those assets at
subject.
Q.
And Alex writes to you on June 10, 2002,
"Victor: The assets are mortgage loans. The exit
strategy is periodic term securitizations. The next
one is planned for later on this month. We would
expect that most of the assets would be removed at
this time (but they are not required to do so)."
A.
My understanding is that the firm was repo
financing mortgage loans and that the plan was to
enable the sale of those loans by converting them
into securities, that there was an imminent such
transaction, but that a given transaction would not
necessarily sweep completely a set of loans out of
the repo financing.
Q.
And you understood this related to ABFS?
A.
It's my understanding.
Q.
Now, if you read above that, it looks like
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involvement with ABFS?

A.
As I recall.
Q.
Do you recall when that was?
A.
Not specifically.
Q.
Let me direct your attention to what's been
marked as Exhibit 3. It's an e-mail, actually a
series of e-mails.
MR. WEINBERG: He should look in the
bound -MR. COREN: Sure, yes, please.
Q.
Take a moment and read those e-mails. I
think if you're going to -- you should probably
start on the second page and then read just to be
familiar with them in order. Let me know when
you're ready.
A.
I believe I'm ready.
Q.
Okay. If you look at the e-mail on the
second page, it's from a Tian Zhong, June 7, 2002,
to a number of individuals, including yourself, and
the subject is Repo Report for AFIN. What did that
relate to?
A.
As I recall, it was a position report
showing what positions were being repo financed.
Q.
I'm sorry. Were what?
A.
As I recall, it was a position report of
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June 27, 2008
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Mr. Jin writes to a number of individuals, including

yourself, "These should be part of $200 million line
we have for American Business Financial Services.
$100 are committed, the other uncommitted. The
loans are subprimes. Tom, Tony, please let me know
if any of this is incorrect. Regards, Bruce."
Now, obviously, I, some of what I read was
abbreviated and hopefully I got the abbreviations
correct.
Can you tell me what was happening at this
time that you would be now involved in connection
with ABFS?
A.
Q.
Sure. What was going on at this time that
you would be in the loop of communications relating
to ABFS?
A.
My communications were with the asset
finance group in order to understand what they were
repo financing and, thereby, in order to understand
what was subject for my price testing.
Q.
So, did somebody request that you price
verify anything having to do with ABFS loans?
A.
I, as I recall, it was my decision to,
around that time, to request a dump of just what was
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in inventory overall and then I would just arrange

for all the various assets to be price verified.
Q.
Now, how do you go about price verifying
subprime mortgage loans that are in Credit Suisse's
inventory or in which they have an interest in; what
do you do?
A.
I would look for -- I would ask the traders
what was their planned -- their plan for turning
over this inventory, and then look for means in
order to track how they might thereby do so, and
then use that in order to identify a -- an
independent means for market comparison.
Q.
And let's assume that you were told that
the plan with respect to that inventory was to do a
securitization. Then what would you do?
A.
I would ask them for the general structure
of the securitization and then compare that -- and
take that general structure of the securitization
and price the projected securities based on
available comparable market information in order to
estimate the value of each of the pieces of the
securitization, sum the expected proceeds for an
aggregate, and then compare that to where the loans
were marked in the meanwhile.
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you turn to the next page, it identifies an

attachment. It looks like an Excel spreadsheet.
MR. WEINBERG: Are you asking whether
that he recalls that that's the attachment to the
e-mail he received?
MR. COREN: Yes. I can help you if
you turn to S-17. For some reason the text of the
e-mail was redacted on this version and it's on
another -- it's on the version which is Exhibit 18.
MR. WEINBERG: So, we should look at
Exhibit 18?
MR. COREN: Well, yes, to tell the
text of the e-mail.
Q.
Back to 17.
MR. WEINBERG: Have you looked at
this?
Q.
Can you verify that that was the attachment
that was sent to you?
A.
I honestly don't recall the details of that
attachment.
Q.
Do you recall that you requested
information about the potential securitization in
order for you to price verify the various tranches
of the securities?
A.
I remember making a request.
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Q.
Now, is that precisely what you did back in
the December 2002 time frame as relates to ABFS?
A.
As I recall.
Q.
That's a yes?
A.
Yes.
Q.
Let me direct your attention -MR. WEINBERG: His answer was as he
recalls.
MR. COREN: Right. Well -A.
Yes, as I recall.
Q.
Let me direct your attention to Exhibit 17.
A.
I have that.
Q.
Exhibit 17 is a multi-page document Bates
stamped CS 097996 through 98000. Would you take a
moment and familiarize yourself with this exhibit.
Let me know when you're ready.
A.
I believe I'm ready.
Q.
Okay. Let me start at the bottom e-mail on
Exhibit 17 from Alex Smith on December 4, 2002, to
you and Mr. Jin with a copy to others, and the
subject is ABFS. Do you recall receiving that
e-mail?
A.
Yes, I do.
Q.
And if you turn to the next several pages,
was that an attachment to the e-mail? You'll see if
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June 27, 2008
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Q.
Of the sort I just said?
A.
Could you repeat the question of what -Q.
Yes. Do you recall that you made a request
to receive information concerning the structure of
an ABFS securitization so that you could
independently determine the price of the various
tranches of the securities?
A.
I recall that.
Q.
Now, in the first paragraph of your e-mail,
which you wrote on December 4, 2002 at 3:49 p.m. to
Alex Smith and others, including Mr. Jin, and the
subject is ABFS, you wrote, "In our mortgage
business, we price verify our subprime residuals
inventory at 30 percent to 50 percent after loss
IRR's and still come up with substantial positive
variances over actual trader marks." What did you
mean by that?
A.
On the mortgage desk, they did have
subprime residuals in position. My group would
price test those residuals, and when we would run
prepayment and loss stresses on those residuals in
order to project their cash flows and we discounted
those cash flows at say 20 -- rather, 30 to 50
percent yields, we were able to substantiate that
the residuals were often worth at least as much or
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more than where they had them on their inventory.

Q.
And why were you saying that in connection
with this exercise relating to ABFS; why was that of
any issue?
A.
As a data point for what we determined to
be stringent but reasonable assumptions for pricing
residuals.
Q.
Now, an IRR is the same as a discount rate;
is it not?
A.
Yes, it is.
Q.
So, what you are saying is that when you
price verify subprime residuals, you were using
discount rates between 30 and 50 percent; is that
correct?
A.
Q.
So, what you were saying is that when you
or your group price verified subprime residuals, you
were using discount rates between 30 and 50 percent;
is that correct?
A.
Yes.
Q.
And is that because you determined that, as
relates to a subprime residual, the appropriate
discount rate is 30 to 50 percent?
A.
It seemed reasonable. However, because of
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traders with respect to those residuals kept on the

books of Credit Suisse had used even higher discount
rates; is that correct?
A.
That's one possibility, it could be a
higher discount rate, but notably, the valuation of
these instruments as a confluence of assumptions for
not just discount rate, but also default in
prepayments.
Q.
Understood. You then say, "Thus, what
would explain the 13 percent IRR residuals..." I'm
sorry. Let me start over.
"Thus, what would explain the 13 percent
IRR in this mock securitization? If CSFB would not
own residuals at this lower discount rate, what
makes us willing to finance them implicitly here for
ABFS?" What did you mean by that, those two
sentences?
A.
What I wanted to understand was if product
control and other traders were using IRR's in the 30
or higher range, but the residual on this
transaction was using a 13 percent IRR, I want to
know what would substantiate their 13 percent IRR
assumption and -- what would substantiate their 13
percent IRR assumption.
Q.
And during the period of time that you were
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the subjectivity on illiquidity and the riskiness of

the product, there is no definitive IRR for pricing
residuals.
Q.
Can we agree that the higher the IRR, the
higher the discount rate, the lower the resulting
value of the residual?
A.
Yes.
Q.
Now, you then go on to say, "In other
words, our traders mark their residuals at even
higher implicit IRR's." What did you mean by that?
A.
If we, say, use a 50 percent discount rate
to discount the assumed cash flows of the residual,
then -- and we still came up with a value above
where the traders are marking them, then one
possibility was that the traders were using higher
IRR's than we were.
Q.
Meaning the traders on those other residual
interests that you were price verifying; is that
correct?
A.
Yes.
Q.
So, what you are saying is as relates to -and that's not ABFS, but as relates to subprime
residuals that were on the books of Credit Suisse,
you were price verifying them using discount rates
of 30 to 50 percent and you were finding that the
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at Credit Suisse, with respect to residuals held on

the books of Credit Suisse, were they ever valued
using a discount rate as low as 13 percent?
A.
They could be valued at a discount rate
lower than 13 percent. It depends on what also the
other assumptions are.
Q.
Can you recall any subprime residual that
was held on the books of Credit Suisse while you
were there that was discounted at a rate as low as
13 percent; can you recall any?
A.
I cannot recall any.
Q.
You then go on in item 2, "Your 23 percent
HEP prepayment assumption translates to be much
slower than the 30 percent to 45 percent CPR which
subprime HEQ deals have actually been experiencing."
What do you mean there?
A.
For comparable subprime home equity deals
that we were looking at as a comparison point for
assumptions to price the mock securitization, those
other deals were prepaying around 30 to 45 percent
annualized, and then when you translate their 23
percent HEP prepayment assumption, it translates
into an assumed speed that was much slower than 30
to 45 percent CPR.
Q.
So, you were asking how can you justify
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that lower assumption as relates to CPR?

A.
Yes.
Q.
Now, when you, let me ask you, when you
posed your first question relating to the discount
rate, did -- now, Alex Smith was in the trading
group?
A.
I believe that he was in asset-backed
banking and structuring.
Q.
Did you get a response to your question;
did somebody tell you how they justified using a 13
percent discount rate when you were seeing rates
being used in the 30 to 50 percent range?
A.
Not that I recall.
Q.
Never got a response?
A.
I did interact with people to discuss, but
I don't recall the specifics of a response regarding
the IRR.
Q.
Did anyone persuade you that your concern
was not valid and that, in fact, using a 13 percent
discount rate was appropriate?
A.
Q.
Did anyone persuade you that your concern
was not valid and that, in fact, using a 13 percent
discount rate was appropriate?
A.
I do not recall anybody persuading me that
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were not valid and that the use of a discount rate

as low as 13 percent was appropriate and you said
essentially that never happened. Correct?
A.
I do not recall anyone providing me with
information to refute my questioning of the
assumptions.
Q.
Okay. Now I want to ask you that same
question as relates to the 23 percent prepayment
assumption, same question.
A.
I do not recall anybody providing me
information to refute my observations of other deals
in relation to the assumptions for this mock
securitization.
Q.
And that mock securitization relating -related to ABFS, correct?
A.
Yes.
Q.
Now, you say, you ask the question, "Thus,
what would justify your assumption here?" Was any
information presented to you to justify the
assumption?
A.
Which, which part of that e-mail? I'm
sorry.
Q.
You're on part 2.
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13 percent was market representative.

Q.
Do you recall any arguments or data or
materials that were supplied to you in an effort to
persuade you that a 13 percent discount rate was
appropriate?
A.
I don't recall.
Q.
Do you recall that nobody made such an
effort and that you were just ignored?
A.
I don't recall being ignored.
Q.
Do you recall anyone making an effort to
persuade you that your concerns were not valid?
A.
I don't recall anybody seeking to persuade
that my concerns were not valid.
Q.
Okay. Let me turn to the second point
where you raised a question about the prepayment
assumption being used in the ABFS securitization.
Do you recall whether or not anyone came back to you
with data or information in an effort to persuade
you that the use of the 23 percent prepayment
assumption was appropriate?
A.
Q.
I had asked you a series of questions
relating to the concerns you expressed about the
discount rate and whether or not anyone ever came
back to you and satisfied you that your concerns
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A.
Okay.
Q.
The first sentence is your challenging the
23 percent prepayment assumption. Your second
sentence is, "Thus, what would justify your
assumption here?" Did anyone give you information
to justify the 23 percent prepayment assumption?
A.
I don't recall the specifics of the
response.
Q.
You then go on and say, "Given the 11
percent GWAC of this ABFS collateral, could it
eventually prepay much faster, hurting the value of
the residual?" What did you mean by that?
A.
My concern was that with the high interest
rates that the underlying borrowers are paying, were
paying, that they might have opportunity to pay off
these loans and refinance with lower coupon loans
and shorten the lives of their 11 percent loans.
Q.
And that would result in the residual value
being worth even less, correct?
A.
It would reduce the value of the residual.
Q.
Yes. Now, did anyone respond to that
question about your observation that given the high
interest rates being paid by the borrowers of ABFS
and the impact that that may have on prepayment
speeds?
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MR. WEINBERG: Object, objection to

form. You can answer.
A.
Could you repeat the question? I mean,
it's just -- I'm just getting so many different
layers out of your questions.
Q.
Okay. Let's try again. That, since it has
a question mark at the end, I assume was another
question you were posing. You said, "Given the 11
percent GWAC," or interest rate, "of this ABFS
collateral, could it eventually prepay much faster,
hurting the value of the residual?" Did anyone
answer that question?
A.
I don't recall the specifics of the
responses back to me.
Q.
Do you know if you even got a response on
that subject?
A.
I may have, but generally people got back
to me on questions that I had, but I can't guarantee
that every single question I ever asked in my role
was always answered.
Q.
All right. Did anyone come back and
persuade you that your concerns were not valid on
that point?
A.
Not that I recall. Not that I recall.
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percent to 45 percent conditional prepayment rate

which subprime home equity deals have actually been
experiencing; is that what you were saying?
A.
Yes.
Q.
Now, when you were looking at the
experience in the marketplace which led you to
question the 23 percent prepayment assumption, what
home equity prepayment deals were you reviewing that
were actually experiencing prepayment speeds of 30
to 45 percent?
A.
I don't recall.
Q.
Was that across the entire industry?
A.
Across, across much of the deals on which I
was able to identify either in Bloomberg or in fixed
income research prepayment history.
Q.
And you were looking at, of course,
subprime loans and their prepayment history?
A.
Yes.
Q.
And were you comfortable that you had
adequate information and data to raise the concerns
that you were raising?
A.
Yes.
Q.
Now, let's go to item 3. "Currently,
subprime collateral with roughly 8.5 percent GWAC's
has been trading around 105, servicing released."
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the video record. It's now 11:13. This concludes

tape number 2 of this videotape deposition.
(Brief recess.)
BY MR. COREN:
Q.
Mr. Hong, we're still on Exhibit 17, which
is your e-mail of December 4, 2002. Back on item 2,
the 23 percent prepayment assumption that you were
questioning, I just want to read into the record,
you use some abbreviations, so I just want the
record to be clear on this. You say, "Your 23 HEP."
Does that mean home equity prepayment?
A.
Yes.
Q.
You continue on, "Prepayment assumption
translates to be much slower than the 30 percent to
45 percent CPR." What is -- is that -- what does
CPR mean?
A.
Conditional prepayment rate.
Q.
"Which subprime HEQ." What does HEQ mean?
A.
Home equity.
Q.
Home equity. So, if I can just translate
that, it's your 23 percent home equity prepayment
assumption translates to be much slower than the 30
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What did you mean by that?

A.
Collateral with approximately 8 and a half
percent gross weighted average coupons -- loan
pools, rather, of subprime borrowers with
approximately 8 and a half percent gross weighted
average coupons have been trading in the marketplace
at close to 105 relative to par.
Q.
Okay. And what does that mean, 105
relative to par?
A.
Trading at a premium over face value.
Q.
So, that would be a 5 percent premium over
face value?
A.
Yes.
Q.
And the face value is the, is that the
principal balance of the underlying subprime
mortgage loans?
A.
Yes.
Q.
Now, when you say "servicing released,"
what did you mean by that?
A.
The seller of the loan pools would allow
the buyer of the loan pools to take over not only
the ownership of the loans, but also the business of
servicing the loans, namely, billing borrowers on a
monthly basis and taking monthly borrower payments.
Q.
And if the servicing is released, that
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Page 100
would increase the value of the subprime collateral

1
to a potential buyer, correct?
2
A.
Per my understanding.
3
Q.
You then go on to say, "What would lead us
4
to feel that this ABFS collateral with 11 percent
5
coupons," my abbreviation, "would command a much
6
higher market price for that extra coupon given the
7
currently thin investor appetite for off-the-run
8
credit-exposed collateral." What did you mean by
9
that?
10
A.
As I recall, my understanding was that most
11
of the loan pools that were available on the
12
marketplace that were being produced had 8 and a
13
half percent gross weighted average coupons, whereas 14
the loan pool in subject had approximately 11
15
percent gross weighted average coupons, and that the 16
investor demand for higher coupon loan pools might 17
be very thin.
18
Q.
And why did you think it would be very
19
thin?
20
A.
If I recall correctly, the extra coupon
21
rate that the borrowers were paying might be a
22
signal that the borrowers are less creditworthy and
23
that, therefore, investors might not pay up
24
proportionately for the higher coupon because of the 25
A.
Q.
Yes. Were those the two reasons that
caused you to question why it was the traders were
valuing these ABFS loans or residual interests at
amounts that were higher than you deemed to be
appropriate?
A.
As I recall, yes.
Q.
You continue on, "For these reasons, I am
uncomfortable with CSFB booking this ABS repo
transaction at much above 105." What did you mean
by that?
A.
I was looking for more information in order
to get me comfortable with the traders marking the
collateral above 105.
Q.
Do you recall what the traders were marking
the collateral at?
A.
Not specifically.
Q.
We're going to -- I want to show you an
e-mail with that information and see if I can
refresh your recollection, but before I do that,
your next question was, "What would you suggest as a
solution?" Correct, that was your question?
A.
Yes.
Q.
Did anyone suggest a solution?
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offsetting potential credit risk of the homeowners.

Q.
Was it generally understood that people
with -- that were higher credit risks and were
paying higher interest rates had a higher default
rate and a higher prepayment rate as well?
MR. CURTIS: Objection to form and
foundation.
A.
Q.
Sure. Was it generally understood to
people in the business such as yourself that
borrowers who were paying higher interest rates on
subprime loans had a hirer propensity to default on
those loans?
A.
Yes.
Q.
And was it also your understanding, based
on your experience in the business, that people who
were paying higher interest on subprime loans had a
higher propensity to try to prepay those loans
faster?
A.
Yes.
Q.
And is that the two reasons that were
causing you to question why it was that the traders
were valuing the ABFS loans or residual interests at
higher amounts than you determined to be
appropriate?
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A.
I don't recall the specifics.
Q.
Let me direct your attention to Exhibit 18,
another series of e-mails. Now, take a moment and
familiarize yourself with that and then I'm going to
ask you some questions about that exhibit.
A.
I believe I'm familiar with it now.
Q.
Okay. I had asked you before whether you
could -- whether you recalled the attachment which
is part of Exhibit 17. You saw the structure
summary and the spreadsheet and you didn't recall,
and I'm wondering if you could take a look at S-18
and the information provided in there, including, in
particular, the 12.27 value on the residual, which
would now refresh your recollection that, in fact,
the structure summary and information attached to
Exhibit 17 is what was provided to you in connection
with your inquiry as we've been discussing.
MR. WEINBERG: You're asking whether
looking at that e-mail refreshes his recollection.
Q.
Yes, if you look at Exhibit 18 and the
information provided, does that refresh your
recollection that the structure summary and pricing
information attached to Exhibit 17 was in fact
provided to you at the time?
A.
I don't recall if this was the attachment
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Page 104
1
that I received in other e-mail, and the reference
to 12.27, as I read it, was from Bruce Jin, not from 2
3
me.
4
Q.
That's right, but do you see the 12.27 -5
A.
Yes.
6
Q.
-- in the attachment to Exhibit 17? My
7
only point was, putting those two together, does it
8
refresh your recollection?
9
A.
I don't recall exactly if that was the
10
attachment that I got.
11
Q.
Do you have any reason to believe it
12
wasn't?
13
A.
No.
14
Q.
I mean, you were copied on the Jin
15
e-mail -16
A.
Yes.
17
Q.
-- which had that information, correct?
18
MR. CURTIS: Objection, foundation.
19
A.
Yeah, I was copied on the e-mail, but my
20
understanding of your question is do I recall the
21
specifics of that attachment. I don't recall the
22
specifics of the attachment.
23
Q.
Right. But do you have any reason to
24
believe that what we've attached to it wasn't, in
25
fact, attached to the e-mail you got?
A.
My recollection from what I -- from that
time is that he provided information regarding the
collateral underneath the loan securitization and
the terms of a recent comparable deal that was being
sold or has been sold in the marketplace.
Q.
Deal for ABFS?
A.
Pardon?
Q.
Relating to ABFS?
A.
I, I believe so.
Q.
And when it says -- what is Vision I? In
addition on Vision I, I see -- I see ABFS has a
dirty price of 108.36, what does that mean?
A.
I read it as, on Vision, I see ABFS has,
and I don't know -- I didn't have access to Vision,
so I don't know why Alex Smith was saying that to
me.
Q.
What was Vision?
A.
I believe Vision is a reporting system for
repo collateral that CSFB was financing.
Q.
Okay. And what's a dirty price? What does
a dirty price mean?
A.
In general bond vernacular, it means a
price of -- the value including accrued interest.
Q.
And you see there is a spreadsheet attached
to this e-mail which was sent to you? Do you see
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MR. WEINBERG: Objection to form. He

said he doesn't recall.
A.
I mean, I don't have reason to believe that
it wasn't, but I just don't recall.
Q.
Fair enough. We're still on Exhibit -we're going to -- we're on Exhibit 18. Now, I think
to put this in context, we have to kind of go to the
back and we see that, on the second page of Exhibit
17 at the bottom of the e-mail from -MR. WEINBERG: I'm sorry, 17 or 18?
MR. COREN: I'm sorry. On 18.
Q.
We're on 18, second page, Bates stamp CS
098728. At the bottom of the page, it's December 4,
2002, from Alex Smith to you and Bruce Jin with a
copy to others. It says, "Attached are the strats
and the evaluation for the current loans on the ABFS
line. The evaluation was based off the same
economics that their current deal in the market has.
In addition, on Vision I see ABFS has a dirty price
of 108.36. I can't explain why the feed is showing
the trade at par." What did you understand that to
mean?
MR. WEINBERG: Are you asking at the
time what did he understand that to mean?
MR. COREN: Yes.
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the economic summary spreadsheet that was attached?

A.
Where is that?
Q.
If you look at the bottom.
MR. WEINBERG: There's no attachment.
Q.
No, no. It's a reference to it. Do you
see it says -A.
I see the reference to it, yes.
Q.
Now, apparently, information was provided
to you by Mr. Smith, and that's what triggered your
e-mail response which we just covered in Exhibit 17,
which is the same one which is on the second page of
Exhibit 18, correct?
MR. WEINBERG: I'm sorry. Are you
asking him whether his e-mail response is in
response to the bottom e-mail on that page?
MR. COREN: Yes.
A.
To the best of my recollection, yes.
Q.
Then above that, still on the second page
of Exhibit 18, you write to Mr. Giordano and others
with a copy to Mr. Jin, "Given how a large portion
of these ABFS loans are balloon or second tiered
loans and how our own traders actually carry their
own subprime collateral inventory around 104, my
sense is that CSFB should be marking them below
104." What did you mean by that?
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Page 108
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MR. CURTIS: As clarification, that's
2
not second tier loans. That's second lien loans.
3
MR. WEINBERG: You misspoke.
4
MR. COREN: Oh, I'm sorry. You're
5
right. Let me try it again.
6
Q.
You wrote. "Given how a large portion of
7
these ABFS loans are balloon or second lien loans
8
and how our own traders actually carry their own
subprime collateral inventory around 104, my sense 9
10
is that CSFB should be marking them below 104."
11
What did you mean?
12
A.
As I recall, a consideration of mine was
that because some of these loans have short balloon13
14
maturities that would shorten the lives of the
loans, and also that because some of these loans 15
16
were not first lien but second lien, that the
17
attendant credit risk could increase the default
rates of these loans and thereby mean overall the 18
19
loan pool is shorter in value, shorter in maturity
20
and shorter -- and lower in value.
21
Q.
Now, you said that, "And our own traders
22
actually carry their own subprime collateral
inventory around 104." Who is our own traders, is 23
24
that Credit Suisse traders?
25
A.
Other CSFB traders.
something on the first page of Exhibit 18 refreshes

his recollection on this point?
MR. COREN: Yes.
A.
As I recall, and based on what Tony
Giordano wrote on the first page of this exhibit and
what Alex Smith referred to at the bottom of the
second page of this exhibit, that would be around
108.
Q.
And what is the -- is that a meaningful
difference, the difference between 104 and 108?
A.
It can be.
Q.
Well, did you think it was at the time?
A.
As I recall, yes.
Q.
And that's why you were raising the
concern, correct?
A.
I believe so.
Q.
Okay. Now, why were you writing to Mr.
Giordano?
A.
He was a manager of the ABS finance group.
Q.
ABS meaning asset-backed securities finance
group?
A.
Yes, the asset-backed desk of the firm.
Q.
And Mr. Giordano was interacting with
American Business Financial Services; is that
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Q.
And when you say carry their own inventory,
is that subprime collateral that is in the inventory
of Credit Suisse and reported on the Credit Suisse
balance sheet?
A.
Yes.
Q.
So, you then say, "My sense is that Credit
Suisse should be marking them below 104." So, you
were telling Mr. Giordano and others that you
thought that the ABFS loans were worth even less
than the other subprime collateral that was on
Credit Suisse's books; is that correct?
MR. WEINBERG: You can answer.
A.
Q.
You were telling Mr. Giordano and others
that you thought that the ABFS loans were worth even
less than the other subprime collateral that was on
Credit Suisse's books; is that correct?
A.
As I recall, yes.
Q.
Now, when you thought they should be marked
at -- under 104, what was Mr. Giordano or others
pricing them at at that time? And perhaps you have
to look to the first page of Exhibit 18.
MR. WEINBERG: You're asking whether
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correct?
A.
I don't know.
Q.
Let's turn to the first page of Exhibit 18.
At the bottom, Mr. Giordano responds to you on
December 4, 2002, at 4:54 p.m., copied to a number
of individuals, the subject is ABFS, "Victor: As
far as the cash out the door is concerned, a 108
mark versus a 104 makes no difference. We advance
at the lower of 97 percent of market or 97 percent
of par." What did you understand that to mean?
A.
Per my recollection, my understanding was
that whether the loans were marked at 104 or 108 in
this price verification and marking exercise was not
going to affect the proceeds that would be advanced
to the client.
Q.
So, you understood it to mean no matter
what value was placed on it, it didn't matter
because Credit Suisse was going to advance less
money than that value because they were going to
advance less than par?
A.
Q.
So, you understood it to mean that no
matter what the value was placed on it, it didn't
matter because Credit Suisse was going to advance
less money than the par value of the loans?
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Q.
Is that what you understood him to be
saying?
A.
I did not understand it to be where
regardless of the value, that the -- my
interpretation is that the firm would not advance
more than par.
Q.
So, then whether it was worth 4 percent
more than par or 8 percent more or 20 percent more
didn't matter for purposes of how much money Credit
Suisse was going to pay, correct?
A.
That's my interpretation of what he said.
Q.
He then goes on to say, "This is,
practically speaking, an internal exercise, i.e.,
there is no urgency." How did you react when you
received his response that this was an internal
exercise and there was no urgency?
A.
It's an internal exercise.
Q.
Did you agree with him?
A.
I had no reason to disagree with him.
Q.
You then see a response from Mr. Jin, which
you are copied on. It's December 5, 2002, 9:36 a.m.
He writes to Mr. Giordano, he says, "Tony: The mark
does matter very much for ERC calculation, as you
know. As the ERC directly translates into BIS
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him to be saying?
A.
That the -- my understanding is that his
concern regarding valuations for risk measurement
purposes was the appropriateness of assumptions that
drove the valuation of the residual rather than the
investment grade pieces of the securitization.
Q.
Right. And were you aware that ABFS
retained the residual interests in the subprime
loans that it originated and that were securitized
by Credit Suisse?
A.
I had no reason to know either way.
Q.
Now, the residual portion is the, on the
hierarchy of the securities, that is the one that is
at the bottom of the priority list, correct?
A.
Q.
Sure. You have what you referenced here as
investment grade securitization proceeds, which is
something different than the residual interest,
correct?
A.
Yes.
Q.
And the residual interest in the various
tranches of the securitization is at the bottom. It
gets repaid last, correct?
A.
Generally, yes.
Q.
And it's the riskiest of the tranches of
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capital for your business, I wouldn't call this a

totally internal exercise or a matter without
urgency." What did you understand Mr. Jin to be
saying to Mr. Giordano?
A.
My understanding was that the valuation
assigned to the ABS collateral was going to
determine how much market risk the firm was taking
and, therefore, how much risk capital the firm would
assign in accordance with that market risk.
Q.
So, did you understand that Mr. Jin was
essentially telling Mr. Giordano to take this more
seriously than he was taking it?
A.
I never had any type of inkling that
anybody took anything lightly.
Q.
Mr. Jin continues, "Our concern on the mark
stems mainly from the assumption made on the
residual valuation and not on the IG securitization
proceeds." What did you understand that to mean?
A.
The proceeds from the investment grade
rated portions of the projected securitization.
Q.
Well, he says -- I understand you have
identified IG, but what he says is, "Our concern on
the mark stems mainly from the assumption made on
the residual valuation." What did you understand
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securities in a securitization, correct?

A.
In general, yes.
Q.
And that's because everybody above it has
to be repaid in accordance with their agreement
before money passes to the residual interest,
correct?
A.
Generally, correct.
Q.
And did you understand Mr. Jin to be
telling Mr. Giordano and others that the questions
being raised by you and by him relating to valuation
related to the residual valuation that had been
placed on the ABFS securitization by Mr. Giordano
and others; is that how you understood it?
A.
That's -- can you repeat that? That's -- I
have asthma of the brain. I have very short -shortness of breath.
Q.
Well, I have a feeling my questions aren't
as precise as they should be. Let me try it again.
You are raising questions about the
assumptions being used and the values being
determined in connection with the ABFS
securitization, correct?
A.
Correct.
MR. WEINBERG: Yes, that's really
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not -- objection to form.

Q.
Your answer was correct?
A.
As I recall regarding this time frame.
Q.
And Giordano responded in a way which
caused Mr. Jin to further respond, and Mr. Jin is
talking about questioning and the concern relating
to the value placed on the residual interests,
correct?
A.
Yes, as I remember.
Q.
And he says, "The rest of the mark," mark
being price, "comes from assumption on the residual
and I/O." And I/O is interest-only strip?
A.
Yes.
Q.
He then goes on, "Your analysis indicates a
value of 12.27 on the residual." What does that
mean?
MR. WEINBERG: What did you understand
it to mean?
A.
My understanding of what Bruce was saying
to Tony Giordano, even though I was an addressee,
but really was not the -- did not interpret myself
as being the real addressee, my interpretation is
that Bruce Jin was saying -- was reading that Tony
and his group was estimating a value of 12.27 for
the residual.
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approach in value would be a function of 12.27 times

the notional of the residual, not necessarily the
notional of the entire loan pool.
Q.
If you go back to the spreadsheet which is
attached to Exhibit 17, Bates stamp page CS 097999.
Tell me when you're there. Are you with me?
A.
I'm looking at that.
Q.
You see at the top it's a $380 million
securitization?
A.
Uh-huh.
Q.
Yes? We're going to get to the 379 number
in a second.
A.
Yes, it looks like a $380 million
securitization.
Q.
Okay. And -- but the reality was, although
it was designated a $380 million securitization, in
reality, 100 percent turned out to be $379,996,978,
correct, just slightly under $380 million?
A.
That's not my spreadsheet, but I -- I
haven't checked the math, but -Q.
That's what it says?
A.
Yes.
Q.
Okay. And then it has a -- the residual at
12.27 percent, and then it has a value of
$46,622,202. Do you see that?
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Q.
So, that would be, the residual would be
12.27 percent above the par value of the underlying
subprime loans? That's what 12.27 means, above par?
A.
That would -- the value, the price on that
residual is not easy to interpret because typically
residuals do not have an assigned par amount. So,
to say that it's 12.2 percent above par value is -it's not as easy to translate to say it's a par
value because often residuals have very little par
value, if any, to them.
Q.
Well, isn't it just a mathematical
calculation? If I go to the spreadsheet and
multiply 12.27 times the value of the underlying
mortgage loans, that's going to be the value of the
residual?
A.
Your question to me, if I recall, was
whether, about the residual being 12 points above
the -- 12 points on top of the par value of the
loans, as I think I heard it, it's -- how would I
describe it?
Q.
Well, here's -- I thought it was a simple
mathematical calculation. Tell me if I am wrong.
A.
My interpretation of what Bruce says to
Tony Giordano is that the value of the residual that
Tony had projected was 12.27, and that the total
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A.
Yes.
Q.
Isn't that merely $379,996,978 times 12.27
percent; doesn't that derive that number, $46
million and change?
A.
Do you have a calculator?
Q.
I have a telephone which has a calculator.
A.
That's fine.
Q.
I'm happy to see what my telephone says.
Mr. Dormont is giving you his telephone calculator.
I'm doing it as well. 379 -A.
That's the way the math works out.
Q.
So, in order to what -- strike that.
What Mr. Jin was saying, when we go back to
Exhibit 18, was that Tony's group was valuing this
residual interest at 12.27 percent of the actual
pool of subprime loans that are included in the
securitization; is that correct?
He's asking whether that's how you understood it at
the time.
A.
I don't recall how I understood it at the
time.
Q.
Well, is that how you understand it now
when you look at the spreadsheet and the e-mail?
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A.
That's how I understand that spreadsheet
now.
Q.
Okay. And Mr. Jin continues on, "This
compares," meaning his residual value of 12.27, he
says, "This compares with roughly 1 to 2 points that
the desk normally assigns for the value." I'm
sorry?
MR. WEINBERG: I think you misspoke.
I'm sorry.
Q.
Is that percent or point, PT?
A.
I don't know.
Q.
It means the same thing, doesn't it?
A.
If you price effectively all the
securitization charges at par, it would be -- it
could be the same, but you'd have to talk to Bruce
Jin.
Q.
All right. What he says is, "This
compares," this being 12.27 value set by Tony and
his group, "compares with roughly 1 to 2 points that
the desk normally assumes for the value of the
residual held on our book." What did you understand
that to mean?
A.
Then or now?
Q.
Well, let's first do then and then we'll do
now.
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then we would have a value of about $4 million as

compared to $47 million, correct?
A.
Correct, by that math.
Q.
And if we used a value of 2, we would have,
you know, a value of, you know, somewhere under $8
million as compared to the approximately $47
million, correct?
A.
Correct, by that math.
Q.
And can we agree that that was a very
meaningful difference in the values?
Q.
You can answer that question.
A.
It would seem to be meaningful.
Q.
We then see the response of Mr. Giordano on
December 5, 2002, "Bruce: I completely agree with
what you are saying. I didn't realize that you were
in the midst of calculating/reporting ERC numbers.
My point was specifically intended to address money
out the door." He then finishes where he says,
"Structures are presently being rerun using these
new levels. I will let you know where we come out
and adjust the mark accordingly."
Do you have a recollection of the new
structures that were run and what the new values
turned out to be?
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A.
Okay. Because I don't recall exactly what
I thought back then.
Q.
Okay. Well, tell me what you think now.
A.
My interpretation of what Bruce said to
Tony is that on subprime securitizations, the
residual would come out to be worth 1 or 2 points of
par. In this example, the asset-backed finance
group in this transaction was coming up with about
12 points.
Q.
All right. Let's -- tell me the difference
in -- that difference, how that translates into
difference in the residual value. Am I correct, in
order to do that, we can do the simple mathematical
calculation of -- we did it with the 12.2 percent
and we came up with a value of $46,622,202, correct?
A.
Uh-huh.
Q.
Yes?
A.
Yes.
Q.
Uh-huhs don't work well on the transcript.
A.
Yes.
Q.
I'm not trying to be rude.
A.
No, no, no.
Q.
Now, if we wanted to use the -- what Mr.
Jin is saying Credit Suisse values the residuals
held on its book at using the 1 to 2, if we used 1,
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A.
No.
Q.
Were you involved in price verifying
subprime residual interests that were maintained on
the books of Credit Suisse in the 2002-2003 time
frame?
A.
Yes, I did price verify our firm inventory
of subprime residuals.
Q.
And did you agree with Mr. Jin, that Credit
Suisse was valuing the subprime residuals on its
books at the time between 1 and 2 percent above par?
A.
In that region, yes.
Q.
Let me direct your attention to Exhibit 52
in the book.
A.
That's another book, isn't it?
Q.
It may be a different book. Take a moment
and review Exhibit 52. Tell me when you're ready.
A.
I'm ready.
Q.
Did you interact with Kenneth Rosenberg
back in the 2002-2003 time frame?
A.
Can you be more specific by interact?
Q.
What position did Mr. Rosenberg have?
A.
I honestly don't recall.
Q.
Okay. If we start at the bottom of the
exhibit, we see an e-mail from Mr. Rosenberg,
December 10, 2002, to Mr. Giordano, subject
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Valuation ABFS Economic Summary 12/10/02. It says,

"The attached structure is updated to reflect:
Number 1, updated spreads; number 2, updated
benchmarks; and number 3, change in residual
discount rate from 13 percent to 18 percent."
I can -- I then see an e-mail from, above
that, from Mr. Giordano to you, subject Valuation
ABFS Economic Summary 12/10/02, and he writes,
"Victor: Attached is an updated valuation, reflects
actual structure now in the market as well as
increased discount rate for residual. Let me know
if you are comfortable with this. We typically give
only credit -- we typically give only credit for
only 50 percent of residual value. Given the
resulting high valuation for the residual, we would
appreciate your input on where a reasonable
valuation would be." And then it continues on.
What do you recall that was about?
A.
Beyond just the text of this, I don't
really recall.
Q.
Well, do you recall that in response to
your questions as to pricing and valuation, that
some additional models were run and pricing numbers
were changed?
A.
That's what I recall.
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to you, "Victor: Attached is an updated valuation."

And he tells you -MR. WEINBERG: I'm sorry. I think
what he's saying is there's no indication on this
e-mail that he's received that there's an
attachment, that there's some document attached.
MR. COREN: Well, it is.
MR. WEINBERG: I don't see it.
MR. COREN: So, you're saying where it
says, "Attached is an updated..."
MR. WEINBERG: Yes, but there's
nothing on the document that indicates there's an
attachment that goes in the e-mail to him, to Mr.
Hong.
Q.
All right. Well, obviously you got
something and you looked at it because you responded
to it?
A.
It's not obvious to me.
Q.
Right?
A.
It's not obvious to me.
Q.
Well, look at your e-mail above. You
respond at 11:39, 20 minutes later.
A.
But it's not obvious to me that it was
actually attached to this.
Q.
Well, you say, "Please call me regarding
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1
Q.
And Exhibit 53 is the revised pricing
2
model; is it not?
3
A.
Let me first get familiar with it. Okay.
4
I'm looking at Exhibit 53.
5
Q.
Yes.
6
MR. WEINBERG: I'm sorry. What's the
7
question? I've lost it. I'm sorry.
8
Q.
53 is what was forwarded to you; is it not?
9
A.
I don't recall. I don't see anything here
10
that shows that it was specifically forwarded to me.
11
Q.
Can't you tell that what was forwarded to
12
you by Mr. Rosenberg identifies this spreadsheet
13
that has been separately marked as Exhibit 53?
14
MR. WEINBERG: If you're -- can you
15
point him to something that should indicate that
16
that might help refresh his recollection?
17
MR. COREN: Sure, yes.
18
Q.
If you look at the bottom of 52 on the
19
first page and compare that, what it describes, to
20
53.
21
A.
I read that Tony says that -- I read that
22
Tony has written that he's attached an updated
23
valuation, but I don't see it being included in an
24
e-mail to me.
25
Q.
Well, if you look right above it, he writes
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your prepayment default loss and IRR assumptions."
Right? So, you must have known -- you must have
gotten something that had assumptions?
MR. WEINBERG: Objection to form,
argumentative. You can answer.
A.
He -- in all honesty, I just don't see
where it was attached to this e-mail and I don't
specifically recall that Exhibit 53. It's entirely
possible that he could have said he attached it,
maybe it's something I didn't get it, maybe, and
then I just said, hey, call and talk with me.
Q.
Okay. Fair enough. You respond to what
Mr. Giordano sent to you, whether it was just an
e-mail or whether it had a spreadsheet or not, you
say to him, "Please call me regarding your
prepayment default loss and IRR assumptions. Recent
ABFS deals have spiked to 45 percent HEP." Tell me
why you sent that e-mail to Mr. Giordano.
A.
As I recall, I wanted to discuss further
his assumptions, they could have been updated
assumptions, and based on the text of this, I wanted
to have an updated discussion as to what I was
observing.
Q.
All right. Now, did you recall that he was
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using a 23 percent prepayment assumption?

A.
I recall that he was.
Q.
Yes. And you disagreed with that, correct?
A.
Yes.
Q.
And you disagreed in part because recent
ABFS deals had spiked as high as 45 percent,
correct?
A.
Yes, as I recall.
Q.
And because your review of general market
data showed you prepayment speeds from 30 to 45
percent, correct?
A.
Yes, as I recall.
Q.
And ABFS was at the higher part of that
range and it had recently experienced 45 percent
prepayment speeds, correct?
A.
Which range?
Q.
The higher of 30 to 45. ABFS was at 45,
correct?
A.
Yes, as I recall.
Q.
And using a prepayment speed of 45 percent
versus 23 percent would result in a much lower value
for the residual interest, correct?
A.
All else being equal, it would result in a
lower value. I don't know what specifically you
mean by much.
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it was specific to this situation.

Q.
And were you aware that in lots of states,
prepayment penalties were unlawful?
A.
I don't know.
Q.
Now, you asked Mr. Giordano to call you
regarding his assumptions. Did he call you?
A.
I don't recall.
Q.
Turn to Exhibit 54. Exhibit 54 is an
e-mail from Kenneth Rosenberg to you, December 10,
2002. It indicates an attached, attached Microsoft
XL chart, and the subject is ABFS Prepays, and it's
a rather large document because it has the Excel
spreadsheet attached. Do you recall receiving this?
A.
I would first like to get familiar with
this document as it is here.
Q.
You are or are not?
A.
I wish to first see, I need to go see -Q.
Sure, take your time.
A.
-- to know the document before I answer
whether or not I have seen it before.
Q.
Take your time.
A.
I'm ready.
Q.
Having reviewed Exhibit 54, does that
refresh your recollection that you received it at
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Q.
Well, do you recall the sensitivity of the
model in the sense that, you know, a 10 percent
change in prepayment speeds or a 20 percent change
in prepayment speeds, what impact that would have on
the value?
A.
Do I recall specifically? No.
Q.
Do you recall in general that these models
were very sensitive and that small increases in
prepayment speeds or discount rates could result in
large decreases in the value of the residual?
A.
Generally, but not always.
Q.
Well, the relationship is not linear; it's
exponential, is it not, in the model?
A.
It can actually change directions.
Q.
Explain what that means.
A.
If you have a lot of existing prepayment
penalties on the loans, the -- that would otherwise
expire if the borrowers do not prepay, if you have
relatively front-loaded prepayments, in some
situations you can actually have the residual
increase in value.
Q.
Well, if you take out the issue of
prepayment penalties, then what I said would be
correct; would it not?
A.
As a general concept, but I don't know if
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the time?
A.
I don't recall specifically from then, but
I -- I don't recall specifically whether it was
received then. I don't -- I don't say that I didn't
receive it. I just don't recall it.
Q.
All right. Do you recall that in fact you
received some information concerning ABFS's actual
prepayment experience?
A.
I see that I got the e-mail, but I don't
recall the specifics of it.
Q.
Based on the information that was provided
to you -- strike that.
Assuming this information was provided to
you with this e-mail, would that justify the use of
a 23 percent prepayment speed in your view?
A.
I don't know when this data snapshot was
created in relation to when the mock securitization
was done.
Q.
Well, there is a date on here. Created
November 9, 2002?
A.
Okay.
Q.
That's Bates stamp page CS 006417.
A.
Okay. So, it's dated as of November 2nd.
Q.
And then you may see a November 1 date on
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others.
A.
Uh-huh.
Q.
Does that give you a better piece of
information in terms of when it was created?
A.
I see it was contemporaneous. Okay. So,
the question, your question is?
Q.
Did the information contained in Exhibit
4 -- 54 with respect to the ABFS prepayment history
in your view justify use of a 23 percent prepayment
speed in valuing ABFS residuals?
A.
I don't know what the scale is on the left
side. So, I wouldn't know.
Q.
Can't you answer the question merely by
looking at the graph which is CS 006416?
MR. WEINBERG: Could you just repeat
the question so we can have it in mind?
Q.
The question is, can't you answer the
question merely by -MR. WEINBERG: No, no, I meant the
prior -- what do you want, how do you want him to
interpret this? That's what I'm trying to find out.
Q.
Does the information contained in Exhibit
54 in your view justify the use of a 23 percent
prepayment speed when determining the value of ABFS
residuals?
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view, and is it correct that your view was that to

value the ABFS residuals, you should use a
prepayment speed closer to 45 percent than 23
percent?
A.
As I recall, yes.
Q.
Now, when you say the front office, who is
in the front office that you were -A.
I mean generically referring to the traders
and the analysts and the bankers.
Q.
Okay. Let's turn to Exhibit 19.
MR. WEINBERG: 19?
MR. COREN: This is a good point if
you want to stop. Why don't we go off the record.
THE VIDEOGRAPHER: It is now 12:28.
We're going off the video record. This concludes
tape number 3 of the videotape deposition of Victor
Hong.
(Luncheon recess.)
BY MR. COREN:
Q.
Good afternoon, Mr. Hong. Would you turn
to Exhibit 19, please. Would you familiarize
yourself with this series of e-mails and let me know
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A.
As I said, I don't know what the scaling of
2
this is.
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Q.
All right. So, you need more information?
4
A.
Yes.
5
Q.
Did you ever come to conclude that it was
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appropriate to use 23 percent to value -- a 23
percent prepayment speed to value ABFS residuals? 7
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A.
I do not recall agreeing to use 23 percent
9
EGP.
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Q.
All right. In fact, you believed that a
much higher prepayment speed needed to be used to 11
12
value ABFS residuals, correct?
13
A.
As I recall, I identified information
showing on comparable deals, perhaps ABFS deals,14
15
that 45 may have been experienced.
16
Q.
And, therefore, in your view it would have
17
been more appropriate to use a prepayment speed
18
closer to 45 percent than to 23 percent, correct?
19
20
A.
My, as I recall, I was asking for the front
21
office to substantiate its views. I had my views.
22
And I don't recall if I definitively said it has to
23
be there. Plus, I was simply providing an
24
independent opinion.
Q.
Well, I'm asking you about your independent 25
Page 133
when you're ready.
MR. COREN: Could you move that book
perhaps?
MR. WEINBERG: You want this book?
MR. COREN: No, I just wanted to get
it out of the camera.
A.
I'm ready.
Q.
I think we have to start with the second
page of this exhibit. It's an e-mail from Kenneth
Rosenberg, December 11, 2002, to Anthony Giordano
with copies of -- copies to a number of individuals.
The subject is ABFS Valuation. He writes, "Below
please find the residual valuation for the ABFS pool
in our warehouse facility at various prepayment
speeds and discount rates." And it then goes on and
identifies prepayment speeds, as you can see along
the top, and discount rates on the left axis, and
then, depending on the discount rate and prepayment
speed, it has a value for the residual interest. Do
you recall receiving a copy of this e-mail?
A.
Vaguely.
Q.
Let me turn to the next page, and if we
start at the bottom, Bates stamp page CS 006410,
it's an e-mail from you to Mr. Giordano. The
subject is ABFS Valuation. And the e-mail was sent
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on December 11, 2002, at 1:03 p.m. Is that correct?

A.
As I read it.
Q.
And you wrote to Mr. Giordano, "Has Greg
Richter opined about these assumptions or where CSFB
would be willing to bid the collateral or the
residual itself?" Why were you asking whether Greg
Richter had opined about these assumptions or where
CSFB would be willing to bid the collateral or the
residual itself, why did you ask that question?
A.
In this mock securitization of -- that was
used internally to price test the collateral, what I
wanted to know was what other people, perhaps with
the expertise, the market expertise to know, what
they thought might be appropriate assumptions for
valuing the pieces of this mock securitization,
particularly the residual tranche.
Q.
Did anyone answer your question?
A.
Don't recall.
Q.
Did Greg Richter answer your question?
A.
I don't recall.
Q.
Did you speak with him at all on this
subject?
A.
I don't recall.
Q.
And what position did Greg Richter have at
Credit Suisse First Boston?
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our positions, and how traders owning actual

residuals appeared to be marking the residuals at
IRR's even higher than 30 to 50 percent.
Q.
So, here, is this the same area we covered
before where you're questioning the appropriateness
of using a discount rate which is 20 percent or
lower?
A.
Yes.
Q.
And you say that -- do I understand you to
be saying that when Credit Suisse values and prices
its own subprime residuals inventory, it uses
discount rates much higher than 20 percent?
A.
That would be correct.
Q.
And I think you said earlier that when
Credit Suisse valued the residual interest that it
held on its own books, that it used discount rates
as high as 50 percent; is that correct?
A.
You mean when we price tested positions?
Q.
Yes.
A.
Yes.
Q.
You continue on and you say, "I am reticent
for CSFB to warehouse ABFS collateral with
assumptions which are outside those which our firm
uses to price its own inventory." Why were you
reticent for Credit Suisse to do that?
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A.
If I remember correctly, he was the head of
ABS principal finance.
Q.
Is that a pretty high position in the
company?
A.
Could be.
Q.
Was he higher than you in the corporate
hierarchy?
A.
Yes.
Q.
Was he someone to whom you reported from
time to time?
A.
No.
Q.
Do you know to whom Mr. Richter reported?
A.
Don't recall.
Q.
All right. There's another e-mail which
you sent. It's at the top of the page, also
December 11, 2002, the subject ABFS Valuation, and
you wrote, "The reason why I ask where Greg would
price the collateral or residual is because the 20
percent or lower IRR's which you are assuming seem
very generous given where CSFB actually creates and
marks its own subprime residuals inventory." What
did you mean by that?
A.
It was a restatement of my -- or rather
it's analogous to my statement regarding the 50 to
30 percent IRR's that we would use to price this,
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A.
In this mock securitization process, we -I looked at the assumptions of their projected
securities tranches that might be created from them,
and I compared them to my understanding of where
other positions, other comparable positions in the
firm would either be marked or tradable, and on the
basis of IRR alone, it seemed inconsistent, and I
wanted to ask if there were other considerations
that I should have that would resolve the
inconsistency, and that otherwise, besides new
information regarding prepayments and defaults that
I could incorporate, I had doubts about what was the
securitizable sale value of the collateral which we
were warehousing.
Q.
And as you sit here today, as far as you
can recall, nobody ever persuaded you that your
position was not appropriate with respect to your
disagreement on the values?
Q.
Is that correct?
A.
I don't recall anybody showing information
to refute my observations.
Q.
Okay. Now, who are you sending this e-mail
to that we've just gone over?
A.
Anthony Giordano was a member of the
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asset-backed finance group. Usman Babar was one of

my analysts, so was Jane Tang. Bruce Jin was
responsible for mortgage market risk. Atul
Shrivastava was one of Bruce Jin's market risk
analysts.
Q.
You then continue, "Also, given the
relatively on-the-run 8.25 percent GWAC subprime
collateral..." Strike that.
Let me just ask you this. The last
paragraph in your e-mail where you're talking about
other collateral trading around 104, what point were
you raising there?
A.
I was wondering what about this ABFS
collateral would make it worth more than 104 when in
comparison to some of the more generic collateral
that was being produced from loan originations.
Q.
And you never got a satisfactory answer to
that question as far as you can recall?
Q.
Is that correct?
A.
I don't recall anybody answering my
question.
Q.
What did you mean by on-the-run, what does
that mean, versus off-the-run?
A.
New issuance subprime collateral that was
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A.
I do not recall this.
Q.
As you can see, this is relating to the
same $380 million gross value of collateral example
that we spoke of before lunch?
MR. CURTIS: Objection to the form and
foundation.
Q.
Do you see how the assumptions have changed
and now it's running using a 25 percent prepayment
speed and a 25 percent discount rate and a 30
percent prepayment speed and a 30 percent discount
rate and it shows you the impact on the residual
value; do you see that?
A.
I see the tail that says that here.
Q.
Is this the type of exercise that you were
undertaking back in December of 2002 in order to
price verify the ABFS collateral?
A.
I don't recall seeing this, so I don't
know, I can't answer to this specifically.
Q.
I'm going to show you -MR. COREN: Is this marked or not?
MR. DORMONT: No, it's not.
MR. COREN: Let's mark it. We wanted
to mark at least one new exhibit. What number are
we at?
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within the approximate 8 and a quarter percent

average coupon rate that other originators were
generally producing then.
Q.
I direct your attention to Exhibit 55, 55.
It's an e-mail from Anthony Giordano to you,
December 12, 2002. He writes, "Victor: I'll
forward valuation matrix separately. Once you've
had a chance to review, let's talk." What did you
understand this to be referring to?
A.
I don't recall specifically this e-mail
now. Right now, I would interpret it to say that he
would come up with a grid of potential valuations
based on assumptions.
Q.
Let me direct your attention to Exhibit 20.
This is an e-mail from Joshua Powell to Kenneth
Rosenberg and Alex Smith. It's December 19, 2002.
The re is ABFS Valuation, December 20th, and it
writes, Mr. Powell writes, "Attached is the revised
valuation including the up front proceeds and total
value." And then you see two pages, the next two
pages are a structure summary with the value
economics with respect to this ABFS securitization.
Do you recall receiving a copy of the
structure summary which is an exhibit to the e-mail
which is S-20?
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MR. DORMONT: 74.

MS. THURMOND: 74.
MR. COREN: 74?
MR. DORMONT: Yes.
Q.
I'm showing you what's been marked as
Exhibit 74. It's a two-page document from the files
of Credit Suisse, Bates stamp CS 161641 and 642.
Are you familiar with this document? Have you seen
it before?
A.
I don't recall specifically.
Q.
Upper left-hand corner, it says, "Source,
Intex." What did you understand that to mean?
A.
My understanding of the Intex is a provider
of cash flow models and collateral performance data
on securitizations to Wall Street.
Q.
Is that something you used in connection
with your price verification?
A.
Intex is a vendor which provides cash flow
models which my team did use.
MR. CURTIS: Did or did not?
THE WITNESS: Did.
Q.
75. I'm showing you what's been marked as
Exhibit 75 from the files of Credit Suisse, Bates
stamp CS 000097 through 000109. Have you seen this
before?
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A.
Not that I recall.
2
Q.
Is this -- would you see these types of
3
sales points materials as part of your
4
responsibilities or not?
5
A.
No.
6
Q.
And you see this has a date in the upper
7
right-hand corner, February 24, 2003. So, it's
about two months after that series of e-mails that 8
we've been looking at which were in December of 9
10
2002, correct?
A.
Are you talking about, asking if the time 11
12
elapse is correct?
13
Q.
Yes.
14
A.
Sure.
MR. WEINBERG: He's asking you if 15
16
February is two months after December.
MR. COREN: Yes, it was a rhetorical 17
18
question.
MR. WEINBERG: That seems to be the 19
20
question.
21
A.
I don't recall.
22
Q.
Fair enough. You got me.
23
If you see on this sales point for a $400
million securitization identified as ABFS Mortgage 24
Loan Trust 2003-1, you see the pricing speed that's25
well, tell me what you mean by mock securitization.

A.
A mock securitization is what you would
call a dress-up rehearsal or an iterative process to
see what type of structure might be created for
optimal salability out of a pool of loans. So,
it's -- think of it as like one part of a
trial-and-error process in order to say, hey, if we
structure and price it this way, does it work, if we
structure and price it this way, does it work.
That's -- but the mock securitization can be used
for any audience, any internal or external process.
It's, you know, it's effectively just a dress
rehearsal.
Q.
All right. And that dress rehearsal could
turn out to be the same or I guess different than
the final play or the final securitization; is that
correct?
A.
True.
Q.
And do you know -- strike that.
I think from what you just told me,
although you were involved in the dress rehearsal in
terms of pricing of ABFS securitizations, you don't
know the actual assumptions that were ultimately
used in the various securitizations to price the
securities; is that correct?
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being used is 23 percent HEP; do you see that on the

first page?
A.
I see it there.
Q.
Did you ever come to learn what pricing
speeds, discount rates and loss rates were used by
Credit Suisse to price the ABFS securitizations that
were done in 2001, 2002 and 2003?
A.
Q.
Did you ever come to learn what pricing
speeds, discount rates and loss rates were used by
Credit Suisse to price the ABFS securitizations that
were done in 2001, 2002 and 2003?
A.
You're asking if I -- for the actual deals?
Q.
Yes.
A.
No. Not that I recall.
Q.
And were you aware that the mock
securitization that you were pricing was an actual
securitization of ABFS?
A.
I don't understand the question.
Q.
You referred to pricing a mock
securitization. Do you recall that?
A.
Yes.
Q.
And I take it what you mean by mock --
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MR. WEINBERG: Objection to form. You

can answer.
A.
My involvement with mock securitizations is
simply for my own internal exercise for price
verification. I don't know what other people might
do with a mock securitization for their processes or
their needs.
Q.
No, no. I wasn't asking you that. I was
asking whether or not you came to learn what
assumptions were actually used in the real
securitizations as opposed to the dress rehearsal
you described.
A.
No, not to my knowledge.
Q.
Exhibit 76, which is a multi-page document that came
out of ABFS's files. I take it you've never seen
this before?
A.
I don't recall seeing this before.
Q.
Did you ever interact back in the 2002-2003
time frame with any representatives of Bear Stearns
having to do with the pricing of subprime residuals
or other securities?
A.
Q.
Did you ever interact back in the 2002-2003
time frame with any representatives of Bear Stearns
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having to do with the pricing of subprime residuals

or other securities?
A.
Not that I recall.
Q.
Did you know that, as relates to
securitizations of ABFS subprime mortgage loans,
that Credit Suisse and Bear Stearns were both
underwriting those securities?
A.
I don't recall.
MR. WEINBERG: Who gets the originals?
MR. COREN: Just leave them right
there. We'll collect them at the end of the day.
Q.
77? I'm showing you what's been marked as
Exhibit 77, a multi-page document from the files of
Credit Suisse, Bates stamp CS 165435 through CS
165459. It's a collateral pool analysis dated
February 2003 relating to ABFS. Have you seen this
document or this information before?
A.
I do not recall ever seeing this document
before.
Q.
Was this the type of document that you
would see from time to time, or you've never seen a
document of this sort?
A.
Q.
Sure. Was this the type of document that
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of June 20 -- I'm sorry, June 3, 2003, is the date

of the analysis and it relates to ABFS.
A.
I do not recall ever seeing this document
before.
Q.
Exhibit 79, a multi-page document from the files of
Credit Suisse, Bates stamp CS 000543 through CS
000546. It's entitled ABFS Mortgage Loan Trust
2003-2 Collateral Performance versus HEAT, June
2003. Have you seen this before?
A.
No. Not that I can recall.
Q.
Were you aware that other departments
within Credit Suisse were comparing ABFS's actual
performance to information and data in the Credit
Suisse HEAT reports?
A.
Q.
Can you -- strike that.
Did you become aware that Credit Suisse was
in the process of doing a securitization for ABFS in
the summer of 2003 and that it decided not to go
forward with that securitization?
A.
Q.
Did you become aware that Credit Suisse was
in the process of doing a securitization for ABFS in
the summer of 2003 and that Credit Suisse decided
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you would have seen from time to time, even if you 1

2
haven't seen this particular one?
3
A.
No.
4
Q.
Would you be doing a collateral pool
5
analysis for purposes of your price verification?
6
A.
I would want to know generally what the
7
collateral was like, but I would not typically do a
8
very detailed collateral pool analysis.
9
Q.
Now, did your group interact with the
10
structuring department, that is, the department that
11
actually structured these securitizations?
12
A.
No. We usually had a go-between, but -13
the traders or the bankers.
Q.
Did you know who it was that was in charge 14
15
of structuring the ABFS securitizations?
16
A.
No.
17
Q.
Did you know what department was
18
responsible for doing that within Credit Suisse?
19
A.
As I recall, my assumption was the
structuring analyst within the group of traders and 20
21
bankers.
22
Q.
Exhibit 78, a multi-page document from the files of 23
Credit Suisse, Bates stamp CS 000606 through CS 24
25
000617. Have you seen this before? It has a date
Page 149
not to go forward with that securitization?
THE WITNESS: Could we take a one -MR. WEINBERG: You're asking about at
the time?
MR. COREN: Well, my first question
would be, were you aware of it at the time, and then
my next question would be, did you ever become aware
of it.
MR. WEINBERG: Answer the first
question first.
Q.
Did you know it at the time?
A.
At the time, I learned that a
securitization was -- did not proceed.
MR. WEINBERG: And with respect to the
second question, you should exclude anything you may
have learned from counsel in connection with
preparing for the deposition.
A.
Okay. So, what was the second question
again?
Q.
Well, the first question was, you did
apparently learn at the time that a planned
securitization did not proceed, correct?
A.
Yes.
Q.
And how did you learn that?
A.
As I recall, through market research.
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Q.
And what do you recall having learned?
A.
The details, I don't recall.
Q.
Do you recall who told you that the planned
securitization would not proceed?
A.
I don't recall who.
Q.
Were you told why Credit Suisse had decided
not to proceed with the planned securitization?
A.
Not that I recall.
MR. WEINBERG: Do you want to talk?
THE WITNESS: I just wanted, just real
quick.
MR. COREN: Sure. We're going to go
off the record.
THE VIDEOGRAPHER: It is now 1:57.
We're going off the video record.
(Brief recess.)
BY MR. COREN:
Q.
Is there something you wanted to clarify or
to provide any information after speaking with your
counsel?
A.
No, I'm fine.
Q.
Direct your attention to Exhibit 61. This
is a two-page document from the files of Credit
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A.
Do not recall.
Q.
Do you see above that Mr. Keane responds to
you on July 7, 2003, at 7:18 a.m., "Tony should be
able to assist you," and he copies Anthony or Tony
Giordano. Do you see that?
A.
I see that, yes.
Q.
Did you ever have a discussion with Tony
Giordano to find out what had actually happened
relating to the ABFS securitization?
A.
Not that I recall.
Q.
Direct your attention to Exhibit 62. This
is an e-mail, July 7, 2003, from you to a number of
individuals, and you wrote, "Meghan spoke with me
this morning and indicated that ABFS has reduced
this line very recently via some whole loan sales in
the 105-ish region. This seems in line with
prevailing informal quotes for subprime home equity
collateral and helps us to get comfortable with the
mark and liquidity of this collateral. In a couple
of weeks, product control will be requesting a mock
securitization analysis of this collateral, probably
using subordination levels similar to those of ABFS
2002-4." Do you know whether that ever happened?
A.
Don't recall.
Q.
Do you recall your last involvement in
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Suisse, Bates stamp CS 365584 and 5585. At the

bottom of the page there's an e-mail from you to
Anthony Giordano and others, and it says, "Is there
any," you wrote, "Is there any news which might
affect the securitization/sale outlook for the $130
million ABFS collateral which CSFB is repo
financing?" Why did you send that e-mail?
A.
Q.
Yes. Why did you send that e-mail?
A.
There must have been something which caused
the planned securitization not to go through.
Q.
But you were asking -- well, why were you
asking is there any news which may affect the
securitization or sale outlook for that $130 million
of ABFS collateral? Did it show up on some -- a
report or some sort that -A.
Yes, I believe I recall it came up in some
market research that I must have had.
Q.
And the response from -- well, I then see
above that another e-mail from you, and this one is
to Brendan Keane, July 3, 2003, "My understanding is
that CSFB pulled this securitization because of
investor or regulator concerns about the originator.
Would you have any additional color?" Do you recall
getting a response to your question?
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connection with any matter relating to ABFS?

A.
No.
Q.
Do you recall any involvement that you had
in any matter relating to ABFS that we have not
covered today at your deposition?
A.
Q.
Sure. Do you recall any involvement that
you had with any matter relating to ABFS that we
have not covered or discussed today at your
deposition? Is there anything else you remember
about ABFS?
MR. WEINBERG: Objection. You can
answer.
A.
No.
MR. COREN: I have nothing further.
Thank you very much.
THE WITNESS: Thank you.
MR. CURTIS: Next?
THE WITNESS: Are we done?
(Discussion held off the record.)
(Brief pause.)
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BY MR. SCHWAB:
Q.
Mr. Hong, good afternoon. My name is
Gregory Schwab. I'm with the firm of Saul Ewing and
I represent BDO Seidman in this matter. I just have
a brief statement for the record.
I would like to note that BSO has asserted
that this action as to BDO is subject to mandatory
arbitration. BDO accordingly has filed with the
Court a petition to compel arbitration which
currently is pending. My appearance today on behalf
of BDO is subject to and without waiver of BDO's
position as asserted in the petition.
I just have perhaps one question for you,
Mr. Hong, which is, in connection with your work
that you testified to regarding ABFS transactions,
did you ever have occasion to speak with anyone at
BDO Seidman?
A.
Not that I can recall.
MR. SCHWAB: Okay. That's all I have.
BY MR. CURTIS:
Q.
Good afternoon, Mr. Hong. I'm Doug Curtis,
as you know. I'd like to go over a few of the areas
that you were questioned on earlier just to get some
additional information from you.
First, you testified earlier today about
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A.
Generally, yes.
Q.
And what did those relate to? Did those
relate to a mark in a warehouse line?
A.
It was relating to potential assumptions
for estimating what type of securities could be
carved from a pool of loans that we were
warehousing.
Q.
At one point you were asked about the work
that you did in connection with the ABFS
securitization, and I just wanted to ask you a few
clarifying questions about that. The so-called ABFS
securitization was a mock securitization that you
were looking at; is that right?
A.
Yes.
Q.
And that was as part of an internal
exercise, correct?
A.
Purely.
Q.
It did not relate to a future
securitization, correct?
MR. COREN: I'm going to object to the
form. Perhaps you can lead your witness a little
bit less.
MR. CURTIS: You can object to the
form.
A.
Could you ask the question again?
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the price verification group that you worked with at

Credit Suisse, correct?
A.
Yes.
Q.
Was the price verification group at Credit
Suisse ever asked to price verify for future
securitizations that Credit Suisse was underwriting?
A.
No.
Q.
Did your price verification group, were
they ever asked to price verify values that would be
included in road show documents or other marketing
documents?
A.
Not to my knowledge.
Q.
If a subprime originator retained all the
I/Os from a securitization, would your price
verification group have any role in valuing those
I/Os?
A.
No.
Q.
You saw a series of communications from
December of 2002, e-mails back and forth that were
discussing certain assumptions in connection with
certain assets. Do you recall that?
A.
The discussions?
Q.
Yes.
A.
Where I was participating?
Q.
Yes.
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June 27, 2008
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Q.
The work that you did did not relate to a
future securitization, correct?
A.
To my knowledge, our work was not
incorporated into any future securitization.
Q.
Did you have any understanding that the
work you were doing was being done in connection
with a pending securitization for ABFS?
A.
To my knowledge, our analysis was strictly
for product control use.
Q.
Okay. You indicated that you did not
specifically recall what information was provided to
you in response to certain questions that you raised
in December of 2002. Do you recall that testimony?
A.
No.
Q.
No, you don't recall that testimony?
A.
No, I don't recall that.
Q.
Okay. Well, in connection with questions
that you raised in December of 2002 about certain
ABFS assets, do you recall whether or not this
matter was -- the questions you raised were left
unresolved?
A.
Generally, the questions that I raised
regarding price verification were resolved.
Q.
Do you recall whether or not the ABFS
questions that you were raising were an exception to
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that general rule?

A.
It was not an unusual or exceptional event
in terms of questioning valuations or assumptions.
Q.
And to the best of your recollection, did
it end up going unresolved?
A.
To the best of my recollection, it was
resolved.
Q.
Earlier today you testified about your
unhappiness at Credit Suisse in connection with your
relationship with a couple of managers that you had,
Ed Valencia and Willy Pest; is that correct?
A.
Yes.
Q.
Did you have any problems with your
employment at Credit Suisse relating to either a
lack of support from managers or feelings of threats
from managers before Ed Valencia and Willy Pest
arrived in the product control group?
A.
Q.
When did Ed Valencia arrive in the product
control group?
A.
I believe like September 30th of '03.
Q.
And when did Mr. Pest arrive?
A.
Sometime in early '04.
Q.
And you don't recall any threats or
concerns about supporting your role prior to those
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Q.
So, ABFS -- let's clarify. ABFS securities
were traded on the asset-backed desk?
A.
Yes.
Q.
And what desk were the securities traded on
that you were discussing -- that you were discussing
in connection with Mr. Kimura, Mr. Levine and Mr.
Abdullah?
A.
Q.
What desks did Mr. Kimura, Levine and
Abdullah trade on?
A.
The mortgage desk.
Q.
Which is different from the asset-backed
security desk?
A.
Yes.
Q.
The valuations that you were discussing in
connection with Mr. Kimura, Mr. Levine and Mr.
Abdullah, did they relate to ABFS-related I/O
residuals in any way?
A.
Not that I recall.
Q.
And the securities that you were valuing
there, they were securities that were carried on
Credit Suisse's books, correct?
A.
Yes.
Q.
Did you ever work with valuations that were
being provided to the issuers of the securities in
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1
dates?
2
A.
No.
Q.
You discussed certain instances where you 3
had questions and concerns about marks, and you 4
5
named traders, including Andy Kimura, Mitchell
Levine and Aamer Abdullah. Do you recall your 6
7
testimony about those individuals?
8
A.
Yes, I do.
9
Q.
What kinds of securities were at issue in
10
those instances?
A.
Residential mortgage-backed securities. 11
12
Q.
Were they subprime mortgages?
A.
Typically, prime, including federal agency13
14
mortgage securities.
Q.
They were not ABFS, ABFS securities; were15
16
they?
17
A.
Not that I recall.
18
Q.
Do you recall what desk or desks the
securities at issue in those instances were traded 19
20
on?
A.
A separate desk, the asset-backed desk. 21
22
Q.
I'm sorry. What was traded on the
23
asset-backed desk?
24
A.
The -- you were asking about ABFS
25
securities?
Page 161
these instances?
A.
Q.
In connection with the instances you
discussed -A.
Yes.
Q.
-- were you looking at valuations that
were, to your understanding, being provided to the
issuers of those securities?
A.
Q.
Did you ever feel threatened or pressured
regarding your price verification work on
ABFS-related securities?
A.
Q.
Did you ever feel threatened or pressured
with respect to any work you did in connection with
price verification for subprime mortgage-related
securities?
A.
MR. CURTIS: I have no further
questions.
BY MR. COREN:
Q.
Mr. Hong, in response to Mr. Curtis's
questions, you had indicated to him that you thought
that your concerns or questions regarding the
pricing of the ABFS collateral that you and I spent
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hours discussing earlier today, you told him you

thought it was resolved. Do you recall that a
minute ago?
A.
Yeah, generally, the issues that we brought
up were resolved.
Q.
Well, how were these issues resolved?
A.
I don't recall specifically.
Q.
Well, you don't recall whether they were
resolved or they were not resolved; do you?
A.
Based on the e-mails that I just read, I
believe that some of the positions were sold, and
that would be a resolution.
Q.
Meaning if the assets are no longer on
Credit Suisse's books, it's no longer your concern;
that's a resolution, correct?
MR. CURTIS: Objection to the form.
A.
If the assets are sold, then that would
give me the market data to validate or not the
reasonableness of the marks, and also to the degree
that some of the positions may be sold, what's left
over would be -- I mean, what's sold is simply not
subject to my test population.
Q.
And if ABFS retained some of these residual
interests based on values set by Credit Suisse, you
wouldn't know that; would you?
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Q.
15 or 50?
A.
A few minutes.
Q.
A few minutes. Turn to Exhibit S-62.
A.
I'm reading it.
Q.
This is your e-mail on July 7, 2003, right?
A.
Uh-huh.
Q.
Yes?
A.
Yes.
Q.
You say, "In a couple of weeks, product
control will be requesting a mock securitization
analysis of this collateral, probably using
subordination levels similar to those of ABFS
2002-4. Please keep us updated on new
developments." Can we agree that it hadn't been
resolved as of July 7, 2003?
MR. WEINBERG: I'm sorry, what hadn't
been resolved?
Q.
The questions you were asking and the
disagreements you were having about valuation
assumptions.
MR. WEINBERG: The questions he was
asking back in December?
MR. COREN: Right.
A.
To my recall, it would seem that there was
resolution.
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MR. CURTIS: Objection to form,

foundation.
Q.
Would you?
A.
No.
Q.
Did you meet with Mr. Curtis between the
time I took your testimony earlier and the questions
he just asked you?
A.
Yes.
Q.
Did he tell you the questions he was going
to ask you?
MR. WEINBERG: Instruct him not to
answer.
Q.
Did he tell you the answers he wanted from
you?
MR. WEINBERG: You know that's not a
proper question. You know full well it's not a
proper question. You shouldn't be asking it.
MR. COREN: Are you instructing him
not to answer?
MR. WEINBERG: I'm instructing him not
to answer. It's a privileged communication.
Q.
How much time did you spend meeting with
Mr. Curtis between the time I questioned you and the
time he questioned you?
A.
A few minutes.
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June 27, 2008
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Q.
Well, tell me how it was resolved. What
was the resolution?
A.
In general with price verification, if
there's a question by price verification analysts,
the -- one of the most objective tools is to see
where the positions are being sold and using that
data point to either get comfortable with the mark
or to revise the mark.
Q.
Well, you were talking about the value in
connection with whole loan sales, not
securitizations, correct?
MR. WEINBERG: So, what period, what
time period are you asking?
MR. COREN: Well, his e-mail is
referring to -MR. WEINBERG: Are you asking about
the time of the e-mail?
MR. COREN: Yes.
Q.
In the 105-ish region, that's not a
securitization, that's a whole loan sale, correct?
A.
It's a sale of loans in raw form.
Q.
Right. Meaning not a securitization,
correct?
A.
Correct.
Q.
Meaning no residual interest was created or
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valued, correct?
A.
No, none was created.
Q.
Or valued?
A.
If it's not -Q.
I guess if you didn't create it, you can't
value it, correct?
MR. CURTIS: Well, objection. Let him
answer.
A.
If it's not created, there's nothing to
value.
Q.
Okay. So, as of this point in time, you
have no idea what valuation assumptions were being
utilized by Credit Suisse with respect to a
potential securitization of ABFS subprime mortgages,
correct?
A.
Q.
So, at this -- as of this point in time,
you have no idea what valuation assumptions were
being utilized by Credit Suisse with respect to a
potential securitization of ABFS subprime mortgages,
correct?
A.
Correct, I would have no reason or need to
know.
MR. COREN: I have nothing further.
THE VIDEOGRAPHER: Anybody else?
Friday
June 27, 2008
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C ERT IFIC A T E
I, ROBERT T. TATE, a Certified Court
Reporter, Certified Realtime Reporter and Notary
Public, do hereby certify that prior to the
commencement of the examination,
VICTOR HONG
was duly sworn by me to testify 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 stenographic
notes of testimony taken by me at the time, place
and on the date hereinbefore set forth.
I do further certify that I am neither a
relative nor employee nor attorney nor counsel of
any of the parties to this action, and that I am
neither a relative nor employee of such attorney or
counsel and that I am not financially interested in
this action.
_______________________________
ROBERT T. TATE, C.C.R., C.R.R.
Certificate No. XI00887
Date: June 28, 2008
Page 167
MR. COREN: Thank you very much.
1
THE VIDEOGRAPHER: It is now 2:23. We
2
3 are concluded with the videotape deposition of
4 Victor Hong.
5
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A
Aamer 48:23 49:1
54:19,22 159:6
abbreviated 81:8
abbreviation 98:6
abbreviations 81:8
95:12
Abdullah 48:23 49:1
54:17,19,22,25
159:6 160:7,10,17
ABFS 68:6 69:3
78:20 79:1 80:23
81:12,17,23 83:2
83:21 85:5,12 86:3
87:22 88:16 91:16
92:16 93:10,23
94:9 98:5 99:23
100:4 103:16,19
104:6,8,11,13
105:21 106:7
107:9,17 109:6
112:7 113:12,21
122:1,8 125:18
126:6,13,17
128:12 130:8,10
130:24 131:7,12
131:14 132:2
133:12,13,25
135:16 136:22
138:13 139:17,22
140:17 142:24
143:6,11,18
144:22 146:5,16
147:15 148:2,8,19
148:24 151:6,15
152:9,14,22 153:1
153:4,8,11 154:15
156:9,11 157:7,19
157:24 159:15,15
159:24 160:1,1
161:25 162:23
164:12 166:14,20
ABFS's 129:7 145:16
148:13
ABFS-related
160:17 161:12
able 42:16 46:9
66:21 73:7 85:24
96:14 152:4
ABRAMOWITZ
3:13
ABS 2:17 26:8,25
55:24 100:10
108:20,21 111:6
135:2
absence 38:10
accelerates 20:22
accepted 52:13
access 104:14
(856) 983-8484

account 45:7
accountable 44:21
accrued 104:23
accuracy 34:2 52:3
60:19
accurate 33:18,20
52:13,25 53:3
168:10
acknowledged 11:21
action 154:7 168:15
168:18
actual 59:25 85:16
117:15 122:10
129:7 136:1
143:13,17 144:23
148:13
addition 103:19
104:11
additional 39:21
42:19 43:2,23
44:22,24 60:16
68:18 122:23
151:24 154:24
address 47:25
120:18
addressee 114:20,22
addressing 21:8
adequate 96:20
adjust 120:22
advance 109:8,18,20
109:24 110:6
advanced 109:14
affect 20:4 109:14
151:5,13
affirmative 24:23
44:1,3 64:18
AFIN 79:20
afternoon 132:23
154:2,21
agency 17:5 159:13
aggregate 82:24
ago 162:3
agree 21:9 60:13
87:4 110:19 120:9
120:15 121:8
164:14
agreed 59:12
agreeing 131:8
agreement 60:22
113:4
ahead 30:24 31:1
63:3 69:15
al 1:8 5:10
Alex 80:9 83:19
85:11 90:5 103:14
104:15 108:6
139:16
allow 97:20
alternative 22:4
American 1:4 5:8

78:20 81:3 108:25
Amir 42:2 43:15,18
44:13
amount 115:6
amounts 99:24 100:5
amplification 30:18
analogous 135:24
analysis 114:14
146:15 147:5,8
148:2 152:21
157:8 164:11
analyst 13:12 15:10
28:5,12 29:7 38:16
147:20
analysts 22:15 132:9
138:2,5 165:4
analytic 22:2
analyzing 15:17
ANDREW 2:4
Andy 31:25 32:2,5
33:6 40:19 45:8
48:9 50:10 51:21
57:14 159:5
ANELLO 3:13
Angeles 14:20
annualized 89:21
answer 6:21 7:1 9:20
10:1,3 21:22 31:19
36:6 41:25 42:11
42:24 46:9,17
50:16 74:25 76:7
76:20 83:7 94:2,12
107:14 114:2
120:12 125:6
128:20 130:13,17
134:17,19 138:17
140:19 145:2
149:9 153:13
163:12,19,21
166:8
answered 94:20
answering 138:21
answers 163:13
Anthony 1:8 5:9
133:10 137:25
139:5 151:3 152:4
anybody 90:25 91:12
92:11 111:15
137:21 138:21
166:25
apart 60:4
apparently 105:8
149:21
appearance 154:10
APPEARANCES
2:1
appeared 11:20
136:2
appetite 98:8
applied 21:17 72:15
appreciate 122:16
approach 68:19 72:5
116:1
approached 43:8,12
appropriate 7:3
62:23 63:12,16
65:5,10 66:17
86:23 90:20,24
91:5,20 92:2 99:25
100:6 131:6,17
134:14 137:17
appropriateness
112:4 136:5
approximate 139:1
approximately 32:25
97:2,5 98:15 120:6
April 33:11
arbitration 154:8,9
Arch 1:16 2:12
area 136:4
areas 154:22
argumentative 125:6
arguments 91:2
arrange 82:1
arranged 75:13
arrive 158:19,22
arrived 158:17
arriving 34:14 65:9
article 11:11,20,21
12:4,14,22
articles 23:1,16
asked 11:4,9 12:20
12:21 28:13,15
33:17 34:3 46:14
55:19 76:13 78:23
91:22 94:19 101:7
128:6 155:5,9
156:8 163:7
asking 11:1 47:17
60:3 84:3 89:25
101:18 103:23
105:14 107:25
117:20 131:20,25
134:6 142:11,15
143:13 145:8,9
149:3 151:12,13
159:24 163:17
164:18,22 165:13
165:16
asserted 154:6,12
assess 8:17 61:8
asset 2:15 8:20 68:8
68:13,20 69:1
81:18
assets 41:12,14 60:1
74:12 80:6,7,10,13
82:2 155:21
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asset-backed 8:9
26:25 90:7 108:21
108:23 119:7
138:1 159:21,23
160:2,12
assign 111:9
assigned 111:6 115:6
assigning 17:17
assigns 118:6
assist 65:9 152:4
Assisted 26:4
assume 60:10,21,23
82:14 94:7
assumed 87:12 89:23
assumes 118:20
assuming 129:13
135:19
assumption 53:5,15
62:23 65:10 88:23
88:24 89:13,22
90:1 91:16,20
92:10,19,21 93:3,5
93:6 95:10,16,25
96:7 111:17,24
114:11 126:1
147:19
assumptions 22:6
52:4,7 53:19,22
54:2,12 62:14
66:16 67:5 86:6
88:6 89:6,19 92:7
92:13 112:4
113:20 125:1,3,17
125:21,22 128:7
134:4,7,14 136:23
137:2 139:13
140:7 144:23
145:10 155:20
156:4 158:3
164:20 166:12,18
asthma 113:15
attached 101:15,23
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dress 144:12,14,21
145:11
dress-up 144:3
drive 47:25
drove 112:5
duly 5:19 168:7
dump 81:25
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128:13
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exceptional 158:2
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excuse 71:24 75:20
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exercise 69:8 86:3
109:13 110:14,17
110:18 111:2
140:15 145:4
156:16
exhibit 4:9,10,10,11
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67:10,20,23 79:6
83:11,13,15,19
84:9,11 95:8 101:2
101:5,9,16,20,23
102:6 103:5,6,8
105:10,12,19
107:24 108:1,5,7
109:3 116:5
117:14 121:12,16
121:24 123:1,4,13
125:9 128:9,9,24
130:7,22 132:10
132:24 133:9
139:4,14,24
140:24 141:6,23
145:15 146:13
147:23 148:6
150:24 152:11
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existing 63:4 71:1
127:16
exit 80:10
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expect 80:13
expected 82:23
experience 13:18
96:6 99:16 129:8
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126:14 131:15
experiencing 89:15
96:3,9
Expert 3:19 5:3
expertise 134:13,13
expire 127:18
explain 55:4 88:10
88:12 103:20
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express 39:5
expressed 38:25
91:23
expressing 43:19
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external 144:11
extra 98:7,21
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79:6,17 83:18,22
83:25 84:5,8,13
85:9 92:23 95:9
100:20 101:19
102:1,15,19,25
103:9 104:25
105:10,14,15
117:25 121:24
122:6 123:24
124:5,13,21 125:8
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90:19,23 101:14
101:23 102:25
129:6 131:10
factors 63:14
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78:20 79:14 101:6
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68:13,20 69:2
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financial 1:5 2:15 5:9
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financing 80:2,17,22
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finding 87:25
findings 61:17 62:5
fine 117:7 150:23
finishes 120:19
fire 39:25
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44:25 55:7 77:18
firm 15:9,11 37:17
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77:2,13 80:16
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111:7,8 121:6
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first 3:4,5,5,10,10,11
18:13,13 19:15,18
24:1,3,10,22 25:3
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29:23 32:11 35:14
35:20 55:20 73:10
75:11 78:19,25
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118:24 123:3,19
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(800) 636-8283


front 131:20 132:6,7

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hours 9:12 162:1
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implicitly 88:15
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indicate 123:15
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(856) 983-8484

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128:23 133:1,7
real 114:22 145:10
150:10
reality 116:15,17
realize 120:16
really 63:22 113:25
114:21 122:20
Realtime 168:3
reason 55:15 84:7
102:11,23 103:3
110:20 112:11
135:17 166:22
reasonable 52:13
61:8 86:6,25
122:16
reasonableness 63:7
162:19
reasons 99:21 100:2
100:9
REBMANN 1:20
recalled 101:8
recalls 83:8 84:4
receive 13:13 21:8
52:17,21 85:4
129:5
received 12:8 13:18
42:7,8 51:24 52:2
84:5 102:1 110:16
124:5 128:25
129:4,7
receiving 83:21
128:14 133:20
139:23
recess 40:12 71:22
95:3 132:18
150:16
recognized 22:18,23
recollection 36:8
100:21 101:14,19
101:22 102:8
104:1 105:17
108:2 109:11
120:23 123:16
128:25 158:4,6
record 5:2 6:1,8,11
26:22 40:11,14
45:25 46:2,6 71:21
71:24 95:1,5,11,13
132:13,15,20
150:13,15,18
153:20,22,25
154:5
recorded 60:1
records 17:18
recruited 16:15
redacted 84:8
reduce 93:20
reduced 152:14
reference 42:5 102:1
105:5,7
referenced 112:16
referred 4:15 41:7
41:19 108:6
143:22
referring 11:11
132:8 139:9
165:15
refinance 19:25 65:1
93:16
reflect 122:2
reflects 122:9
refresh 100:21
101:14,21 102:8
123:16 128:25
refreshes 101:19
108:1
refute 92:6,12
137:22
regarding 12:13,22
45:7 46:13 90:16
104:2 112:3 114:3
124:25 125:16
128:7 135:24
137:11 154:15
157:23 161:11,24
regardless 110:5
Regards 81:6
region 121:11 152:16
165:19
regular 25:10 65:18
regulator 151:23
regulators 34:21,23
35:2,13,25 36:20
36:25 37:6,11 39:8
39:12,17 77:16
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144:14,21 145:11
rejoined 78:6
relate 79:21 156:2,3
156:18 157:1
160:17
related 53:21 73:1

80:23 92:16
113:11
relates 18:7 52:14
56:20 57:7 83:2
86:23 87:21,22
90:1 92:9 146:4
148:2
relating 42:7 52:18
76:12 81:16 86:3
90:4 91:23 92:15
104:8 113:10
114:6 140:2
146:16 152:9
153:1,4,8 156:4
158:14
relation 92:13
129:18
relationship 20:24
21:10 68:5 127:12
158:10
relative 17:1,20 97:7
97:9 168:14,16
relatively 127:19
138:7
released 96:25 97:18
97:25
remember 84:25
114:9 135:1
153:10
remembered 6:24
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repayment 21:4
repeat 6:18 21:6,23
30:16 31:2 38:21
39:13 42:25 46:10
47:14 52:20 56:9
66:3 70:11 76:8,10
81:14 85:2 86:16
90:21 91:21 94:3
99:8 100:1 107:15
109:21 113:14
130:15 143:8
145:23 146:24
148:22 151:8
153:6 160:8 161:2
166:16
replacements 20:2
repo 26:9 27:11
79:20,23 80:1,2,16
80:22 81:20
100:10 104:19
151:6
report 58:3 61:17,21
62:6,8 73:14 79:20
79:22,25 151:16
reported 57:14,20,21
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reporter 5:15,17
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represent 5:3 6:4
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representative 91:1
representativeness
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representatives
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reputationally 39:23
reputations 39:24
request 45:16 47:18
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requested 84:21
requesting 152:20
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REQUESTS 4:23
required 80:14
requiring 61:12
rerun 120:20
research 16:18,20
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reside 7:7
residential 26:22
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residual 57:8 71:4,11
86:23 87:6,12,17
88:20 89:7 93:12
93:18,20 94:11
99:23 100:4
101:13 111:18,25
112:5,8,12,18,21
113:5,11 114:7,11
114:15,25 115:1,5
115:15,17,24
116:2,23 117:15
118:4,21 119:6,12
121:3 122:4,11,14
122:15 126:22
127:10,20 133:13
133:19 134:6,9,16
135:18 136:15
140:11 162:23
165:25
residuals 56:22
57:13 85:13,19,20
85:21,25 86:7,12
86:18 87:3,9,23
88:1,10,14 89:1
115:6,9 119:24
(800) 636-8283

121:7,9 130:10,25
131:7,12 132:2
135:21 136:2,2,11
145:21 146:1
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resigned 13:22
resolution 61:20 72:3
72:11 162:12,15
164:25 165:2
resolve 73:20 137:9
resolved 56:17
157:23 158:7
162:2,5,6,9,9
164:15,17 165:1
respect 42:20 43:3
51:3 59:15 72:18
82:15 88:1 89:1
130:8 137:17
139:22 149:14
161:15 166:13,19
respond 93:21 114:5
124:22 125:13
responded 114:4
124:16
responds 109:4
152:2
response 33:25 34:7
35:22 51:23 52:11
90:9,14,16 93:8
94:15 105:10,14
105:15 110:16,21
120:14 122:21
151:19,25 157:12
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responses 94:14
responsibilities 58:12
142:4
responsibility 58:1,8
59:9 61:3 66:6
68:22 69:24,25
71:9
responsible 43:24,25
59:1,3,24 61:5
69:5 72:23 138:3
147:18
RESS 1:16
rest 114:10
restatement 135:23
result 11:19 32:20
41:11 52:22 55:7
55:11 76:2 93:18
126:21,23 127:9
resultant 58:18
resulted 17:9 29:1
53:7,17
resulting 87:5 122:15
retained 58:23 59:16
69:6 70:3 74:12
112:8 155:13
(856) 983-8484

162:23
reticent 136:21,25
review 9:16,22 26:4
52:12 67:22
121:16 126:9
139:8
reviewed 9:18 10:5
128:24
reviewing 96:8
revise 165:8
revised 123:1 139:18
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Richard 3:15 9:4
Richter 49:6,7 55:19
55:21,23 56:2
134:4,7,19,24
135:12
right 18:11 19:10
20:19 21:8 25:13
26:20 33:12 41:21
45:18 54:9 55:3,3
56:17 59:14 66:11
73:23 75:14 77:9
83:9 94:21 102:4
102:23 106:5
112:7 118:17
119:10 123:25
124:15,19 125:2
125:25 129:6
131:3,10 135:14
139:11 144:14
146:10 156:13
164:5,23 165:22
right-hand 142:7
ring 24:5 55:21
risk 7:15,22,23,24
13:10 72:20,24,25
73:6,7,18,24 74:9
74:17,22 75:1 99:1
106:17 111:7,8,9
112:3 138:3,4
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riskiness 61:10 87:1
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RMBS 26:8,22
road 1:24 155:10
Robert 5:15 168:2
168:21
role 8:15,15,16,17
17:19 28:13 58:8
66:10,11 68:11
69:18,19 74:16
94:19 155:15
158:25
Rome 2:22
Rosenberg 121:18
121:21,24 123:12
128:10 133:10
139:16
roughly 96:24 118:5

118:19
rude 119:21
rule 158:1
run 22:9 85:20
120:24 122:23
running 140:8
Ruppel 57:20
S
S 4:8
sabbatical 37:17
38:10 39:1
Sal 51:22
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salary 28:19
sale 16:4 58:14
80:18 137:13
151:14 165:20,21
sales 14:4 142:3,23
152:15 165:10
salesperson 16:10
Salomon 13:23,25
14:5,7,16
SANKET 3:3
Santilli 1:8 5:10
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86:2,11,17 87:21
96:3 104:15 110:3
111:4 112:1
114:19,23 117:13
119:24 120:16
124:4,9 136:10
says 103:15 104:10
105:6 110:23
111:22,23 114:10
115:23 116:21
117:8 118:5,17
120:19 122:1
123:21 124:10
140:14 141:11
151:3
scale 130:11
scaling 131:1
school 13:5 18:16,17
18:24
Schwab 2:9 4:5
154:1,3,19
scores 64:14
scrutiny 44:7,20
61:12
second 45:22,24
79:13,18 91:14
93:3 103:8,12
105:11,18,21
106:2,2,7,16 108:7
116:12 133:8
149:15,18
secret 34:22,24
secured 80:7
securitizable 137:13
securitization 58:10
58:14 68:21,23
69:1,3,7,11,20,21
70:4,8,13 82:16,18
82:19,23 84:22
85:5 88:13 89:19
91:16 92:14,15
104:3 111:18,21
112:6,17,22 113:1
113:12,22 116:9
116:14,16 117:17
118:14 129:18
134:10,15 137:1
139:22 142:24
143:17,18,23
144:1,2,10,16
145:6 148:19,21
148:24 149:1,13
149:22 150:4,7
151:11,14,22
152:9,21 155:14
156:10,12,12,19
157:2,4,7 164:10
165:20,22 166:14
166:20
securitizations 80:11
119:5 141:15
143:6,11 144:22
144:24 145:3,11
146:5 147:11,15
155:6 165:11
securitization/sale
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securitize 68:12
securitized 15:22
112:9
security 14:19,21
20:5,10,21 21:1,3
21:7,7,11,13 34:16
50:17 51:4 57:3
63:13,15 69:16
70:7,14 74:22
160:13
see 22:6 41:8 65:11
66:8 67:25 68:3
77:3 83:25 100:20
102:4 103:8,19
104:11,11,13,24,25
105:6,7 110:21
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120:14 121:24
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seeking 91:12
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Seidman 2:9 154:4
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seller 97:20
send 151:7,9
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senior 61:18 62:6
sense 17:11 21:11
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sensitive 127:8
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September 15:5
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series 79:7 91:22
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seriously 111:12
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Services 1:5 5:9
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set 8:20 34:15 50:21
50:24 52:1,15,18
52:23 55:12 57:2
59:4,8,11,23 66:5
66:8 69:13,25
73:16 74:20 75:9
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shared 47:24 76:14
sheet 26:18 58:17,19
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short 80:6 106:13
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shorten 93:17 106:14
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106:19,20
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show 60:17 67:9
100:19 140:20
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showing 79:23
103:20 131:14
137:21 141:5,22
145:14 146:12
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Shrivastava 138:4
side 130:12
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164:12
simple 115:21 119:13
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162:21
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Skokie 15:14
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95:17,25
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Smith 83:19 85:11
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108:6 139:16
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sold 15:23 69:6 70:3
70:8,15,24,25
104:5,5 162:11,17
162:20,21 165:6
solution 100:23,25
somebody 8:15 60:24
81:22 90:10
Sopher 10:17 42:3
sorry 15:25 18:9
31:2 37:1,23 45:19
48:20,24 53:10,14
56:10 63:3 78:4
79:24 88:11 92:24
103:10,11 105:13
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123:6,7 124:3
148:1 159:22
164:16
sort 67:17,25 68:4
85:1 146:22
151:16
Source 141:11
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12:10 42:6 134:21
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speaking 110:14
150:21
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20:12 22:20 24:16
29:3 30:12 33:16
34:24 36:17 41:4
43:5 57:15 67:18
68:2,24 74:3
112:15 121:20
128:1
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11:16 23:5 25:11
40:1 51:8 55:9
67:2 79:4 100:18
120:18 123:10
125:9 126:24
127:6 129:2,3
139:10 140:19
141:10 157:11
162:7
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93:7 94:13 101:1
102:21,22 129:10
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53:21 63:12,17
65:5 66:17 89:23
126:20 129:15
130:10,24 131:7
131:11,17 132:3
133:19 140:9,10
142:25
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96:9 126:10,15
127:3,4,9 133:15
133:16 143:5,10
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35:17 48:15,19
49:2
Spelled 38:1
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101:10 104:24
105:1 115:12
116:4,19 117:25
118:1 123:12
125:15 128:14
spreadsheets 22:10
Square 2:19
stamp 103:12 116:5
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stand 27:2
standard 21:18
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Stanley 2:16,16,16
2:17
start 24:3,7 49:8
58:10 67:20 79:13
83:18 88:11
121:23 133:8,23
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starting 64:10
state 5:25
statement 21:5
58:20 74:15
135:24 154:5
states 128:2
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Stearns 2:14,15,15
16:15,17,21 17:25
18:5,10 19:2,11,20
21:16,19,20,25
22:15,18,23 23:23
78:2,5,6,8,16
145:20,25 146:6
Steinberg 2:6
stems 111:17,24
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Stephanie 37:20
Stephen 42:4
Steve 6:3 10:17 23:6
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Street 1:16 2:3,8,12
2:20 7:8 11:12,15
11:20 12:3,6,9
141:15
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strict 75:2
strictly 69:8 157:8
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72:1 78:18 117:12
129:12 138:8
144:19 148:17
stringent 86:6
strip 21:3 114:12

strips 71:5,10
structure 82:17,19
85:4 101:9,15,22
122:2,10 139:21
139:24 144:4,8,9
structured 15:20
19:8 22:2,16 68:21
69:2,20 70:9
147:11
structures 120:20,24
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16:2 17:7,10 69:16
90:8 147:10,15,20
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48:11 49:15 65:15
73:5 79:20 80:8
81:21 83:21 85:12
94:16 98:15 109:6
121:25 122:7
128:12 133:12,25
134:22 135:16
154:7,11 162:22
subjective 56:18
subjectivity 87:1
subjects 42:14
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164:12
subprime 17:4 19:12
19:17 32:15 40:22
49:11 56:2,7,13,20
57:8 58:14,16,22
59:16 62:12,16,24
63:13 65:24 68:6
69:3 71:5 82:4
85:13,19 86:12,18
86:23 87:22 89:7
89:15,17 95:21
96:2,17,24 97:4,15
98:1 99:12,17
105:23 106:9,22
107:2,10,18 112:8
115:3 117:16
119:5 121:3,7,9
135:21 136:11
138:7,25 145:21
146:1,5 152:17
155:13 159:12
161:16 166:14,20
subprimes 81:5
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substance 11:22,25
36:7
substantial 73:21
74:19 85:15
substantially 41:12
substantiate 49:17
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Suisse's 65:24 82:4
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Suite 1:16,23
Suja 42:2 43:15,19
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sum 82:23
summarize 62:5
summary 101:10,15
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122:1,8 139:21,24
summer 148:20,25
superiors 31:17
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supplement 7:2
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supplied 91:3
support 158:15
supported 43:9
supporting 158:25
supportive 38:7
supposed 59:17
61:15,25 72:7
sure 13:20 21:24
38:22 40:8 43:1
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Sussman 2:5
swaps 27:16
swear 5:17
sweep 80:21
sworn 1:12 5:19
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system 62:3 104:18
S-1 4:16
S-17 4:17 84:7
S-18 4:17 101:11
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S-20 4:18 139:25
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S-62 4:21 164:3
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S-75 4:10
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tail 140:14
take 13:22 34:8
37:16 38:9 40:7,9
44:8 45:2,5 49:25
71:14,17 73:14
79:11 82:19 83:14
97:21 101:3,11
111:11 121:15
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taker 17:14,16
talk 19:20 45:21
68:25 75:7 76:14
77:3 118:15
125:12 139:8
150:9
talked 72:2
talking 8:15 54:4
76:22 114:6
138:10 142:11
165:9
Tang 10:17 42:3
(856) 983-8484

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tape 46:6 95:2,5
132:16,20
Tate 1:23,23 5:15,16
5:16 168:2,21
team 29:13 41:9
47:24 49:17,19,21
50:1,5 68:8,11,14
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Technical 13:5
telecom 15:21
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117:8,9
tell 6:19,25 7:3 8:25
11:18 12:12 15:15
18:13 19:2 24:14
30:12 32:18 35:6
39:10,15,19 42:13
42:18 43:1,6,10,16
51:6 54:18 57:19
58:12 73:4 74:1
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81:10 84:12 90:10
115:22 116:6
119:3,10 121:16
123:11 125:18
144:1 163:9,13
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107:8,16 111:11
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tended 29:13
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term 1:2 5:12 80:11
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55:17
terms 30:13 41:19
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53:6,16 54:2,11
62:11 65:23 75:8
104:4 130:4
144:22 158:3
test 71:2 85:20
134:11 162:22
tested 136:18
testified 5:20 8:22
154:15,25 158:8
testify 168:7
testimony 6:15 7:2
30:8 40:17 157:13
157:15 159:7
163:6 168:11
testing 62:4,4 72:9
72:14 81:21
text 84:7,13 122:19
125:22
Thank 153:16,17
167:1
thin 98:8,18,20
thing 118:12
things 77:1
think 7:3 15:5 23:22
27:14 36:1 40:25
41:5 45:18,20
55:19 79:12 98:19
103:6 108:13
115:19 118:8
119:3 124:3 133:8
136:14 144:6,20
third 54:17
thorough 53:1,3
thought 74:20 107:9
107:17,21 115:21
119:2 134:14
161:23 162:2
threat 37:14
threatened 34:13,19
35:11,23 37:5
38:23 39:6,25
41:10 47:3 76:2
77:15 161:10,14
threatening 36:13,23
37:10
threats 38:19 42:8
52:17,21,24 76:11
76:14 158:15,24
three 9:10 44:10
67:8
three-hour 9:11
THURMOND 1:18
141:2
Tian 79:18
tier 106:2
tiered 105:21
time 6:17,23,25
18:13 19:15 25:2
25:22 38:14 47:20
48:25 51:12 57:17
57:18 62:21 71:3,3
76:21 77:4,7 78:25
80:6,14 81:11,15
81:25 83:2 88:25
101:24 103:24
104:2 107:23
108:13 114:3
117:21,23 121:4
121:10,19 128:19
128:22 129:1
135:10,10 142:11
145:20,25 146:21
146:21 147:1,1
149:4,6,11,12,21
163:6,22,23,24
165:13,17 166:11
166:17 168:11
times 9:10 53:24
74:7 115:13 116:1
117:2
timing 20:22
title 7:18
today 5:15 6:14
23:10 137:15
153:5,9 154:10,25
158:8 162:1
Today's 5:3
told 12:24 34:20,22
35:1,4,23 36:11,19
36:21 39:20 42:19
43:2,6,13 72:6
76:15 77:10 82:14
144:20 150:3,6
162:1
Tom 81:5
Tony 81:5 108:4
110:23 114:20,23
115:24,25 118:18
119:5 123:21,22
152:3,4,7
Tony's 117:14
tools 165:5
top 115:18 116:8
133:17 135:15
total 115:25 139:19
totally 111:2
touch 75:11
track 82:11
tradable 137:6
trade 17:1,21 40:22
49:9 103:21
160:10
traded 159:19,22
160:2,4
trader 8:18,19,20
14:6,7,16,23 15:3
32:23 34:3,15
39:22 40:19 46:13
48:9 49:14,22 50:2
50:13,21,23,24,25
51:7 52:8 66:4
72:8 85:16
traders 33:7 41:13
48:11,13,22 49:4
53:6,16 55:4,6,10
56:24 57:2 59:2,4
59:8,11,15,18,24
60:8,25 61:3,7
66:9 69:13 72:4,16
72:18 73:16,20
74:20 82:8 87:9,14
87:15,17 88:1,19
99:22 100:3,14,16
105:22 106:8,21
106:23,24,25
132:8 136:1
147:13,20 159:5
trading 8:5,7,14 14:4
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14:10,12 26:5,6
31:6 40:21 54:19
54:22 61:19 62:7
75:10 76:13 90:5
96:25 97:6,10
138:11
trainee 14:2
training 13:21 14:3
tranche 69:21
134:16
tranches 69:5,11
70:1,7,14,15 84:23
85:7 112:22,25
137:3
transaction 32:10
80:20,20 88:21
100:11 119:8
transactions 15:18
15:19 22:3,16
154:15
transcript 119:19
168:10
translate 89:21
95:23 115:8
translates 89:13,22
95:17,25 110:25
119:11
traveling 44:14
treasury 16:22
trial-and-error 144:7
triggered 105:9
trips 25:11
true 70:12 144:18
168:10
Trust 142:25 148:8
Trustee 1:4 5:8 6:4
6:14,16
truth 168:7,8,8
try 33:4 34:8 37:3
65:1 66:7 73:15
94:6 99:18 106:5
113:18
trying 30:17 41:8
73:20 119:21
130:21
Tuckerton 1:24
turn 83:24 84:1,7
91:14 109:3 128:9
132:10,23 133:22
144:15 164:3
turned 116:17
120:25
turning 82:9
two 73:4 77:24 88:16
99:21 100:2 102:7
139:20,20 142:8
142:16
two-page 141:6
150:25
(800) 636-8283

type 15:19 21:18

62:15 111:14
140:15 144:4
146:20,25 156:5
types 8:7 14:12 19:7
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Uh-huh 27:24 48:7
116:10 119:16
130:2 164:6
Uh-huhs 119:19
ultimate 20:21
ultimately 144:23
unable 49:17,19
uncomfortable
100:10
uncommitted 81:4
uncover 43:23 44:22
uncovered 39:20
44:24
underlying 18:21
19:24 20:4,7,11,13
20:16,20 64:22
73:8 93:14 97:15
115:2,13
underneath 104:3
understand 6:18,20
20:14 24:17 34:10
40:2 44:6,19,23
47:16 52:3 59:6
68:19 80:3,15
81:19,20 88:18
103:21,24 109:10
110:4 111:3,10,19
111:22,25 113:8
114:17 117:24
118:1,21 136:9
139:9 141:12
143:21
understanding 19:24
55:13,16 80:16,24
98:3,11 99:15
102:20 109:11
111:5 112:2
114:19 137:4
141:13 151:21
157:5 161:7
understood 40:5
80:23 88:9 99:2,9
109:16,22 110:2
113:13 117:20,22
undertaking 140:16
underwriting 146:7
155:6
(856) 983-8484

unearthed 74:18
unhappiness 43:19
158:9
unhappy 29:9
University 13:3,4,19
13:20
unlawful 128:3
unresolved 73:22
157:21 158:5
unusual 158:2
upcoming 11:5
updated 122:2,3,3,9
123:22 124:1,10
125:21,23 164:13
upper 141:11 142:6
urgency 110:15,17
111:3
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use 22:4 23:10 61:25
62:24 63:12,17
65:6,20 66:12,13
66:19 82:12 87:11
91:19 92:1 95:12
119:23 129:14
130:9,23 131:6,8
131:17 132:2
135:25 141:19
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uses 136:11,24
Usman 42:3 138:1
usually 147:12
utilized 21:25 166:13
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v 1:7
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Valencia 29:10,15,16
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38:23 39:14 43:18
43:21 44:12 51:21
158:11,16,19
Valencia's 29:22
35:21 36:21,23
37:4,9 38:24
valid 90:19,23 91:11
91:13 92:1 94:22
validate 162:18
valuation 7:15,22,24
8:12,14 18:7,20
19:12,16,21 21:16
21:17 22:24 23:14
26:4 29:12 30:6
33:1,17,19,22 34:2
34:4 35:24 36:19
36:24 37:6,10
38:18 39:7,11,16
40:18 43:14,20,24
44:22,24 48:11
50:12 51:7 53:7,17

53:22 56:2,7,13
63:17 65:6 66:12
72:7 73:1 77:15
88:5 111:5,18,25
112:5 113:10,11
122:1,7,9,15,17,22
123:23 124:1
133:12,13,25
135:16 139:7,17
139:19 164:19
166:12,18
valuations 8:6 30:13
30:18 33:13 40:4
45:8 56:23 61:7,7
74:16 112:3
139:12 158:3
160:15,24 161:6
valued 18:1 49:23
50:2,2,6 73:12
74:13 89:2,4
136:15 166:1,3
values 17:17 22:7
32:19 41:11,13
42:20 43:3 48:9
50:19,20,22 52:1,8
52:9,15,18,23 53:8
55:8,12 59:15,23
60:9 62:12 66:7,8
69:13 71:10 73:15
76:12 113:20
119:24 120:10,24
136:10 137:18
155:9 162:24
valuing 17:8,11
20:13,14,17 22:1
22:19 26:11,16
49:15 62:24 63:13
99:23 100:4
117:14 121:9
130:10 134:15
155:15 160:20
variables 66:25
variances 62:6 85:16
varied 25:22
various 8:13 23:2
26:11 58:4 59:8
62:2 65:13 68:23
69:5 70:1 82:2
84:23 85:6 112:21
133:14 144:24
vendor 141:18
verification 8:1,2
25:19,21 27:19
28:11 29:6 31:6
41:20 78:11
109:13 141:17
145:5 147:5 155:1
155:4,8,15 157:23
161:11,16 165:3,4
verified 82:2 86:18
verify 52:5 59:4
62:12 68:17,22
69:5,9,24 70:22
71:10 73:15 78:24
81:23 84:17,23
85:13 86:12 121:6
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verifying 69:12
70:20 82:3 87:18
87:24 121:2
vernacular 104:22
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versus 75:9 109:8
126:21 138:24
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Victor 1:13 3:15 4:3
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80:10 95:6 109:6
122:9 124:1
132:16,21 139:6
167:4 168:6
video 3:19 5:2,3 6:8
6:11 40:11,14 46:2
46:6 71:21,24 95:1
95:5 132:15,20
150:15,18 153:22
153:25
VIDEOGRAPHER
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40:10,13 46:1,5
71:20,23 94:25
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150:14,17 153:21
153:24 166:25
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videotape 1:12 5:13
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132:21 167:3
view 60:14 129:15
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Vision 103:19 104:10
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29:17
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waiver 154:11
Wall 11:12,15,20
12:3,6,8 141:15
want 6:18 30:20 36:7
67:12 71:16,17
72:12 88:21 92:8
95:11,12 100:19
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130:20,20 132:13
133:4 147:6 150:9
wanted 38:12 46:15
47:18 52:3 68:18
88:18 119:23
125:20,22 133:5
134:12 137:8
140:23 150:10,20
156:10 163:13
wants 45:23
warehouse 133:14
136:22 156:3
warehousing 78:23
137:14 156:7
Warren 2:5
wasn't 102:12,24
103:4 145:8
way 32:12 59:6
61:22 68:16
112:11 114:4
117:11 144:8,9
160:18
week 74:7
weeks 9:8 152:20
164:9
weighted 97:3,5
98:14,16
weighting 63:23,25
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40:8 41:24 42:10
42:22 45:15,23
47:16 53:10,13
54:4 56:8 63:3
67:12 68:1 69:14
71:15,17 74:3,24
76:6,18,20 79:8
83:7 84:3,10,15
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101:18 103:1,10
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106:3 107:12,14
107:25 113:25
114:17 117:19
118:8 123:6,14
124:3,8,11 125:5
129:16 130:15,19
132:11 133:4
140:13 142:15,19
143:19 145:1
146:9 149:3,9,14
150:9 153:12
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164:16,21 165:12
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weren't 63:22
WestLB 77:22
we'll 7:4 45:15
(800) 636-8283

118:24 146:11
we're 5:4 6:7 40:10
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we've 46:25 101:17
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Willy 29:9,15,19,20
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44:1,3 45:21 46:3
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71:16 141:21
149:2 150:10
153:17,19 156:21
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wondering 29:4
101:11 138:13
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words 87:9
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119:19 144:8,9
154:14 156:8
157:1,3,6 160:24
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working 77:7,11
works 117:11
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107:9,17 110:8
119:6 138:14
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111:1 130:12
162:25
write 12:23 105:19
writes 80:9 81:1
110:23 122:8
123:25 133:12
139:6,18,18
writing 33:2,4 72:6
(856) 983-8484

108:18
written 23:16 123:22
wrong 55:20 115:22
wrongly 55:8
wrote 85:10,12
106:6 108:5 134:3
135:17 151:4
152:13
X
X 4:1,8
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XL 128:12
Y
Yap 42:3
yeah 28:16,16 51:14
102:19 162:4
year 5:4 12:22 16:6
33:10
years 17:23 19:2,5
23:23 29:5 77:24
yield 26:9 62:17
yields 85:24
York 1:14,14 3:2,8
3:14 5:6,6 7:8
Z
Zhong 79:18
$
$100 81:4
$130 151:5,14
$200 81:2
$379,996,978 116:17
117:2
$380 116:8,13,16,18
140:3
$4 120:1
$400 142:23
$46 117:3
$46,622,202 116:25
119:15
$47 120:2,6
$8 120:5
0
000097 141:24
000109 141:24
000543 148:7
000546 148:8
000606 147:24
000617 147:25
006410 133:23
006416 130:14
006417 129:23
03 158:21
04 27:21 44:9 55:18
158:23
06 7:13
08033 3:20
08055 1:24
097996 83:14
097999 116:5
098728 103:13
1
1 3:8 67:10,20,23
118:5,19 119:6,25
119:25 121:10
122:3 129:25
1:03 134:1
1:23 132:20
1:57 150:14
10 9:12 10:10,11
50:18,20 80:9
121:25 127:2
128:10
10:17 71:20
10:35 71:24
100 116:17
10010 3:8
10017 3:14
10022 3:2
104 105:23,25 106:9
106:10,23 107:7
107:22 108:10
109:8,12 138:11
138:14
105 96:25 97:7,8
100:11,15
105-ish 152:16
165:19
108 108:8,10 109:7
109:12
108.36 103:20
104:12
11 25:5 71:24 93:9
93:17 94:8 98:5,15
133:10 134:1
135:16
11:13 95:1
11:29 95:5
11:39 124:22
12 115:17,18 119:9
139:6
12.2 115:7 119:14
12.27 101:13 102:2,4
114:15,24 115:2,3
115:13,25 116:1
116:24 117:2,15
118:4,18
12/10/02 122:1,8
12:28 132:14
121 4:19
1225 1:2 5:12
123 4:19
128 4:20
13 4:24 88:10,12,21
88:22,23 89:3,5,10
90:10,19,23 91:1,4
92:2 122:5
132 4:18
139 4:18,20
141 4:10,10
145 4:11
146 4:11
147 4:12
148 4:13
15 164:1
150 4:21
1500 2:8
152 4:21
154 4:5,6
161 4:4
161641 141:7
1617 1:20
165435 146:14
165459 146:15
17 83:11,13,19 84:14
95:8 101:9,16,23
102:6 103:9,10
105:10 116:5
1701 2:3
1717 1:16
18 84:9,11 101:2,20
103:6,10,11,12
105:12,19 107:24
108:1 109:3
117:14 122:5
180 1:24
19 132:10,11,24
139:16
19th 1:20
19102 2:8
19103 1:17 2:20
19103-1895 1:21
19103-2921 2:3
19104-2808 2:12
1977 13:5
1981 13:4
1985 13:3,21,23
1988 14:17,25
1989 15:6
1991 16:8
1992 13:14 16:13,16
19:1 78:3
1996 24:4,5,10
1997 32:11
2
2 46:7 89:12 92:25
95:2,9 118:5,19
119:6,25 120:4
121:10 122:3
2nd 129:24
2:01 150:18
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June 27, 2008
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2:07 153:22
2:09 153:25
2:23 167:2
20 85:23 110:9
124:22 127:3
135:18 136:6,12
139:14 148:1
20th 139:17
2000 25:10
2001 25:10 143:7,12
2002 79:18 80:9 83:2
83:19 85:10 95:9
103:14 109:5
110:22 120:15
121:25 128:11
129:21 133:10
134:1 135:16
139:6,16 140:16
142:10 143:7,12
155:19 157:13,18
2002-2003 62:21
121:4,19 145:19
145:24
2002-4 152:23
164:13
2003 51:14,15 142:7
143:7,12 146:16
148:1,10,20,25
151:21 152:3,12
164:5,15
2003-1 142:25
2003-2 148:9
2004 24:11 33:11
2005 2:20
2006 1:2 5:12 13:16
2008 1:10 5:4 78:7,9
168:23
222 7:8
23 89:12,21 91:19
92:9 93:3,6 95:10
95:13,24 96:7
126:1,21 129:15
130:9,23 131:6,6,8
131:18 132:3
143:1
24 142:7
25 140:8,9
27 1:10
27th 5:4
28 168:23
2800 2:19
2929 2:12
3
3 24:5,10 79:6 95:6
96:23 122:4
132:16 148:1
151:21
3:49 85:10
(800) 636-8283

30 24:11 85:14,23
86:13,19,24 87:25
88:19 89:14,20,23
90:12 95:17,25
96:9 126:10,17
135:25 136:3
140:9,10
30th 158:21
34th 7:8
354-6000 3:20
365584 151:1
3710 1:16
379 116:11 117:10
38th 2:8
399 1:13 3:1 5:5
4
4 83:19 85:10 95:9
103:13 109:5
110:8 130:8
132:21
4:54 109:5
40 32:25 33:13 50:10
45 4:24 89:14,20,24
95:18 96:1,10
125:18 126:6,10
126:14,17,17,20
131:15,18 132:3
49 13:7
5
5 1:23 4:4 97:11
110:22 120:15
50 50:18,20 85:14,23
86:13,19,24 87:11
87:25 90:12
122:14 135:24
136:3,17 164:1
52 121:12,16 123:18
53 123:1,4,8,13,20
125:9
54 128:9,9,24 130:8
130:23
55 139:4,4
5585 151:1
565 3:14

Friday
June 27, 2008
Page 185
74 141:1,2,3,6
75 141:22,23
76 145:15
77 146:12,13
78 147:23
79 4:16 148:6
8
8 97:2,5 98:13 110:9
139:1
8.25 138:7
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8:12 1:14
8:13 5:21 6:8
8:14 6:10
800 1:25
83 4:17
84 4:17
856 1:25 3:20
9
9 129:21
9:01 40:11
9:21 40:14
9:31 46:2
9:36 46:6 110:22
97 109:9,9
97-C1 32:8
98000 83:14
983-8484 1:25
6
6 3:19
61 150:24
62 152:11
636-8283 1:25
642 141:7
67 4:16
7
7 1:4 79:18 152:3,12
164:5,15
7:18 152:3
(856) 983-8484
Tate & Tate, Inc.

(800) 636-8283

Testimony: Willie Pest (CPA at PWC) - Sarbanes Oxley Violations

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C of CP, Philadelphia County

July Term, 2006, No. 1225

Miller v. Santilli, et al.

COURT OF COMMON PLEAS

Tate & Tate, Inc.

C of CP, Philadelphia County

Miller v. Santilli, et al.

WILMER, CUTLER, PICKERING, HALE & DORR, LLP

THE VIDEOGRAPHER: Your Honor, we are

Tate & Tate, Inc.

C of CP, Philadelphia County

Miller v. Santilli, et al.

any, you've done for this deposition?

Tate & Tate, Inc.

C of CP, Philadelphia County

Miller v. Santilli, et al.

about the deposition you are asking about?

Tate & Tate, Inc.

C of CP, Philadelphia County

Miller v. Santilli, et al.

Tate & Tate, Inc.

C of CP, Philadelphia County

Miller v. Santilli, et al.

mortgage-backed securities were valued?

because they are moving or because they have found

Tate & Tate, Inc.

C of CP, Philadelphia County

Miller v. Santilli, et al.

valuing mortgage-backed securities?

Tate & Tate, Inc.

C of CP, Philadelphia County

Miller v. Santilli, et al.

Tate & Tate, Inc.

C of CP, Philadelphia County

Miller v. Santilli, et al.

Tate & Tate, Inc.

C of CP, Philadelphia County

Miller v. Santilli, et al.

from your superiors after defending the value -- the 1

Tate & Tate, Inc.

C of CP, Philadelphia County

Miller v. Santilli, et al.

and suggested perhaps you needed a sabbatical or you

that you were criticized, meaning more than just

Tate & Tate, Inc.

C of CP, Philadelphia County

Miller v. Santilli, et al.

Tate & Tate, Inc.

C of CP, Philadelphia County

Miller v. Santilli, et al.

THE VIDEOGRAPHER: We're now going off

discovering pricing problems that you were bringing

Tate & Tate, Inc.

C of CP, Philadelphia County

Miller v. Santilli, et al.

your team determined that those securities were

your disagreement with the values set by Mr. Levine?

Tate & Tate, Inc.

C of CP, Philadelphia County

Miller v. Santilli, et al.

Tate & Tate, Inc.

C of CP, Philadelphia County

Miller v. Santilli, et al.