BAC-WT - Bank of America Warrants

[PlanMaestro]

 

Path #1: BAC is found liable for Countrywide's debts.  As such, the $8.5b Gibbs & Bruns settlement is now endangered.  Why? Because the expert opinions of RMMS and Capstone relied upon in the Gibbs & Bruns settlement were predicated on the inability to pierce the corporate veil.  In light of this new information, the settlement can no longer meet the "reasonable" test for Article 77.  As such it is rejected.

 

Michael, you have heard most of this before but let me put it in conected paragraphs instead of tweets.

 

The RMMS estimate (Lin's opinion) doesn't make assumptions of successor liability, it is an estimate of the bond loses BEFORE any BAC tactic.  Yes, Capstone does assume successor liability in its recovery, however its $4 billion potential recovery  (the Countrywide equity) DIDN'T BOUND the $8.5 billion settlement … it was just a nice extra to support how good was the settlement.

 

So I don't see how you go around the reasonableness of a deal that includes lots of goodies with an ex-post failing of SL. And it's not that clear it will fail. Certainly not the 75% probability assumed by Christian especially when it will be appealed in that case.

 

Therefore, the logical chain (SL challenged -> SL appeal failing -> 77 falling apart -> BNYM suing) consists of too many low probability steps.

 

For a start, that Walnut abdicated completely … it was not about SL. If not they would have delayed and waited for Bransten. Hey, also the 77 settling parties are not like that they WANT it to fall apart. They're having a large opportunity cost while getting 77 approved. And even if ALL of those logical steps happened, Bank of America would not be even remotely close to be impaired.

 

It looks to me much much more probable that MBIA would like to restart their muni business  and get some liquidity back well before that. But take it only as the thoughts of an engineer playing lawyer, and we have heard a lot lately how engineers are bad investors.

 

PS: thanks xasp, Looking forward to read the Allstate case

[MYDemaray]

xazp -- as I'm diving into the case, I notice that this was dismissed by Pfaelzer. There are many who feel that Bransten may see things differently.  Can you speak to this?

 

Bransten: "You don't have to remind anyone again that my entire case should depend on a Central District California judge...I believe that, indeed, if you come to the commercial division in New York state, you have equal kind of judge and equal ability for this judge to reason and equally good appellate division to reverse if I'm wrong and a Court of Appeals that has equal amount of standing California.

 

You constantly put in case from the Central District of California. Guess what? Where is a case from New York? Why isn't there a case from New York? Maybe because the Central District of California is wrong. And maybe I'm going to be making other kinds of law."

 

So...there's that.

 

http://newsandinsight.thomsonreuters.com/Legal/News/2012/08_-_August/In_BofA_successor_liability_issue,_whose_law_applies_/

[MYDemaray]

The RMMS estimate (Lin's opinion) doesn't make assumptions of successor liability, it is an estimate of the bond loses BEFORE any BAC tactic.

 

What do you make of that quote from the bottom of page 2 in his opinion -- seems to me like his haircuts are based on BofA not being liable.

 

In any case, I'm trying to successfully devil advocate against myself here, as you know and I appreciate the dialog.  I agree that the probability chain likely breaks down.  I'm simply trying to envision the chain and test its strength.  I know many of you have done that already and have gained comfort, so I appreciate your assistance in the process.

[enoch01]

XAZP -- thank you for that case, I will read it

 

Enoch01 -- from bottom of page 2: "In my opinion the calculation and utilization of these particular haircuts is logical since BofA's willingness and legal obligation to repurchase certain loans represents the largest hurdle from Investors Group's perspective"

 

http://www.cwrmbssettlement.com/docs/Opinion%20Concerning%20Contemplated%20Settlement%20Amount%20For%20530%20Trusts.pdf

 

I read that to indicate that haircuts would have been less severe and settlement amount larger if BofA were liable.

 

Yup, I read that too.  First, I don't think the "Breach Rate" relates to SL.  So I start with "Actual Losses" x "Breach Rate" for a worst case.

 

But again, that is not the only hurdle, that is the "largest", and again that's only from the perspective of the Investors Group.

 

None of this addresses the fact that the Trustee relied on this opinion to help form their argument for "reasonableness".  Lots of other legs have to get knocked out before "reasonableness" is rejected.

 

All ITEO - In This Engineer's Opinion :)

 

I do like that you are pushing on this.

[PlanMaestro]

I love this discussion, there is always something that you might be missing. And we are talking about probabilities here.

 

Regarding that specific paragraph. I read it as arguing that the legal and business hurdles for repurchase obligation are tougher for private label than for monolines or GSEs. I don't see how it is related to the SL issue but beware of ITEO.

 

What do you make of that quote from the bottom of page 2 in his opinion -- seems to me like his haircuts are based on BofA not being liable.

 

In any case, I'm trying to successfully devil advocate against myself here, as you know and I appreciate the dialog.  I agree that the probability chain likely breaks down.  I'm simply trying to envision the chain and test its strength.  I know many of you have done that already and have gained comfort, so I appreciate your assistance in the process.

[MYDemaray]

thanks for weighing in enoch --

 

Personally I think settlement is approved for the following reasons:

 

1. Courts prefer settlements vs. litigation (right?)

 

2. The whole point of the PSA is to curtail nuisance suits and to limit this stuff to places where a large group of holders agree -- the Investor Group has this and so long as they think it is reasonable, is it really the job of the court to advocate on behalf of the 75% that haven't shown up versus accepting a settlement which satisfies a large group of plaintiffs?  (anyone know what % of the pools the objectors hold?).  If the objector group was much larger than the Investor Group, there might be good grounds that the settlement was unreasonable.  Likewise, if the Investor Group abandons the settlement, then there is a problem.  But otherwise, the willingness of the plaintiffs to settle should give some indication that they feel the terms are reasonable.

 

As Kapnick stated re Article 77: "it's not a class action. There aren't provisions in there to opt out that you are talking about. That's not what this is. If you started it, maybe that's what you would have done, but they started it and that's what they did. I have to work, at least now, within the confines of the proceeding that is before me."

 

...probably not well reasoned, but there you have it.

 

Also, I must confess I'm lost on the acronym ITEO -- International Trade and Employment office? Is that where all of you guys work?  No wonder you have so much time on your hands... ;-)

 

[enoch01]

thanks for weighing in enoch --

 

Personally I think settlement is approved for the following reasons:

 

1. Courts prefer settlements vs. litigation (right?)

 

2. The whole point of the PSA is to curtail nuisance suits and to limit this stuff to places where a large group of holders agree -- the Investor Group has this and so long as they think it is reasonable, is it really the job of the court to advocate on behalf of the 75% that haven't shown up versus accepting a settlement which satisfies a large group of plaintiffs?  (anyone know what % of the pools the objectors hold?).  If the objector group was much larger than the Investor Group, there might be good grounds that the settlement was unreasonable.  Likewise, if the Investor Group abandons the settlement, then there is a problem.  But otherwise, the willingness of the plaintiffs to settle should give some indication that they feel the terms are reasonable.

 

As Kapnick stated re Article 77: "it's not a class action. There aren't provisions in there to opt out that you are talking about. That's not what this is. If you started it, maybe that's what you would have done, but they started it and that's what they did. I have to work, at least now, within the confines of the proceeding that is before me."

 

Agreed on both 1 and 2.  Personally I think MBI gets settled sooner rather than later, SL issue doesn't come up, and this all goes according to the Trustee's settlement.  But I could be wrong.

 

Also, I must confess I'm lost on the acronym ITEO -- International Trade and Employment office? Is that where all of you guys work?  No wonder you have so much time on your hands... ;-)

 

LOL.  ITEO is an acronym: In This Engineer's Opinion.  In another thread (http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/aapl-apple-inc/msg99837/#msg99837) the investment prowess of engineers (or maybe only some engineers, or only certain types of engineers) was denigrated by our usually gracious and most benevolent host.  Therefore, I felt the need to add the "ITEO" disclaimer to my opinion, so you could discount it properly :)

[hyten1]

http://www.forbes.com/sites/nathanvardi/2013/01/23/billionaire-banker-targeting-big-banks-over-mortgages/?partner=yahootix

[MYDemaray]

http://www.forbes.com/sites/nathanvardi/2013/01/23/billionaire-banker-targeting-big-banks-over-mortgages/?partner=yahootix

 

Seems like Beal is going to run into the same statute of limitations / statute of repose issues as everyone else...

 

[CONeal]

Couple of new board members where named today

 

http://finance.yahoo.com/news/bank-america-board-appoints-directors-210300293.html;_ylt=AuEQPivMpeheu9da0VxvnXmiuYdG;_ylu=X3oDMTIxdmYzYjNrBG1pdANXaWRlIFF1b3RlcyBNb2R1bGUEcG9zAzMzBHNlYwNNZWRpYVJlY2VudFF1b3Rlc1BvcnRmb2xpb3NXaWRl;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3

[Rabbitisrich]

The Lin report didn't utilise any successor liability arguments, as far as I know, and the Walnut Place led counter-arguments focused on Lin's breach and repurchase assumptions. If the passage MyDemaray cited is later claimed to presume on SL, then it would be reasonable to ask why Grais and co. didn't attack the issue at the time.

 

The SL stuff was employed to explain the discount between the $8.5 settlement, and the $8.8 low end of Lin's estimated settlement range.

 

This Alison Frankel report links to Bransten's 2010 ruling that BAC could not dismiss MBIA's contention of "De Facto merger" under New York law: http://blogs.reuters.com/alison-frankel/2011/10/11/why-countrywide-bankruptcy-likely-wont-solve-bofa-mbs-problems/

[xazp]

Yeah, three points:

 

1)  Pfaelzer is in charge of the private mortgage suits: this is AIG, Allstate, various pension funds, etc.  Bransten is in charge of the mortgage insurer suits: MBIA.  You were asking about the Gibbs/Brun settlement, so the relevant litigation is with Pfaelzer.  Essentially any of the Gibbs/Brun group who have sued, or would like to sue in the future, would have to go through Pfaelzer, so it's her opinion that matters. 

 

2)  It's notable that a bunch of the claims were dismissed with prejudice.  "With prejudice" means it can not be appealed and is the final ruling.  The reason they were dismissed was statute of limitations/statute of repose.  There are some exceptions (FHA, some tolling agreements) but in effect *most* parties are now 3 years two late to file a lawsuit.  MBIA filed in time, as well as some smaller players - but this is the primary line of defense. 

 

3)  Bransten is a NY state judge, Pfaelzer is a federal judge.  Bransten can only preside over litigation where the NY state court is the proper venue.  That gets rid of all the federal securities claims (the obvious venue for the Gibbs/Brun) people.  It makes it more difficult to do a class action ("federal class action" is the usual path).  And it mostly (though this will be argued) gets rid of companies that are not based in NY - PIMCO, Allstate, foreign companies - are good examples. 

 

 

 

xazp -- as I'm diving into the case, I notice that this was dismissed by Pfaelzer. There are many who feel that Bransten may see things differently.  Can you speak to this?

 

Bransten: "You don't have to remind anyone again that my entire case should depend on a Central District California judge...I believe that, indeed, if you come to the commercial division in New York state, you have equal kind of judge and equal ability for this judge to reason and equally good appellate division to reverse if I'm wrong and a Court of Appeals that has equal amount of standing California.

 

You constantly put in case from the Central District of California. Guess what? Where is a case from New York? Why isn't there a case from New York? Maybe because the Central District of California is wrong. And maybe I'm going to be making other kinds of law."

 

So...there's that.

 

http://newsandinsight.thomsonreuters.com/Legal/News/2012/08_-_August/In_BofA_successor_liability_issue,_whose_law_applies_/

[MYDemaray]

Thanks again xazp...I got through most of Allstate v. Countrywide.  Good stuff.

 

How then did the settlement end up before Pauley (obviously kicked back to state by the 2nd circuit)...assuming it stayed in federal court, would it have eventually made its way to Pfaelzer?  How is it determined that Pfaelzer sees all the mortgage suits..can plaintiffs judge shop?

 

Also Pfaelzer is 87 years old!

[Sullivcd]

A dismissal with prejudice prohibits a claimant from re-filing but does not take away an appeal. If a case is dismissed without prejudice a claimant has a year to re-file from the date of the order.

 

Litigators almost always want to be in state court for a host of reasons (pleading standards, evidentiary standards, elected rather than article iii judges, favorable state law, etc.) However, if a case is filed as a class action, there is a federal act that gives jurisdiction to federal courts in the event of even minimal diversity. This means that to maintain a state court class action you have to have all plaintiffs in the class and all defendants residing in the same state. Also there must be only state law at issue. So, it is almost always easier to achieve class certification in state court but the class is going to contain only plaintiffs from that state. A strategy that can be used is to allow a state action to take get out ahead of a larger federal action to obtain favorable rulings and uncover key evidence that would be harder to get in federal court. Looks like they have done the opposite here though.

[xazp]

Assorted replies:

 

You are right about dismissal with prejudice being appeal-able, thanks for the correction.  To my knowledge, none of the dismissed with prejudice people have appealed the statute of limitations/repose rulings (just based on Google searches).  If anyone is aware of appeals from Pfaelzer's dismissals, I'd like to see. 

 

The reason plaintiffs are generally choosing Federal vs State is that the Federal Securities Act laws are the easiest to prove, and those laws were sort of designed for cases like these. 

 

Pfaelzer is old, and it was a risk when I started looking through this stuff.  But now that 3 years have passed since when she said the statute of limitations & repose had passed, I think people that start litigation today are reasonably likely to be dismissed on the same grounds by a different judge. 

 

The reason that all the litigation goes through Pfaelzer is called "multi-district litigation."  Because Pfaelzer knows the relevant case law, the general charges, etc, everything is sent to her for efficiency's sake.  Otherwise you'd have 10 different courts with each judge starting fresh trying to understand the legal issues, who did what etc.  So it's an efficiency thing, and in this case, it happens to favor BAC. 

 

The Walnut place stuff was convoluted and pretty interesting.  They took a different approach from other parties.  But they eventually walked from the lawsuit, and, I haven't seen anyone following that path since then.  I wouldn't take them as the primary case (or if you do, factor in that after winning some rulings they simply gave up). 

 

 

 

 

A dismissal with prejudice prohibits a claimant from re-filing but does not take away an appeal. If a case is dismissed without prejudice a claimant has a year to re-file from the date of the order.

 

Litigators almost always want to be in state court for a host of reasons (pleading standards, evidentiary standards, elected rather than article iii judges, favorable state law, etc.) However, if a case is filed as a class action, there is a federal act that gives jurisdiction to federal courts in the event of even minimal diversity. This means that to maintain a state court class action you have to have all plaintiffs in the class and all defendants residing in the same state. Also there must be only state law at issue. So, it is almost always easier to achieve class certification in state court but the class is going to contain only plaintiffs from that state. A strategy that can be used is to allow a state action to take get out ahead of a larger federal action to obtain favorable rulings and uncover key evidence that would be harder to get in federal court. Looks like they have done the opposite here though.

[PlanMaestro]

Frontline:

As Deadlines Loom for Financial Crisis Cases, Prosecutors Weigh Their Options.

 

http://www.pbs.org/wgbh/pages/frontline/business-economy-financial-crisis/untouchables/as-deadlines-loom-for-financial-crisis-cases-prosecutors-weigh-their-options/

 

With the clock winding down to bring new cases, the government has begun the search for a way around the usual time limit for fraud charges.

 

Earlier this month, the SEC argued before the Supreme Court that the five-year clock should not begin when the alleged fraud took place. Instead, the government said, the clock should begin when investigators are reasonably able to detect a crime. A victory could make it easier for investigators to pursue litigation stemming from the crisis, although the justices appeared skeptical in oral arguments. The court’s decision in the case, Gabelli et al v. SEC, is expected by June.

 

In the meantime, regulators may have other options. In October, a federal mortgage task force established by the Obama administration brought a suit against JPMorgan Chase under the Martin Act. The act, once described as “the legal equivalent of King Arthur’s Excalibur”, allows the government to pursue criminal or civil charges. More importantly, it sets a lower burden of proof by not requiring prosecutors to demonstrate that a defendant intended to commit fraud or that fraud actually took place.

 

“In other words, you have to be less guilty,” said Jonathan Macey, a professor of corporate law, corporate finance, and securities law at Yale University.

 

In 2003, New York attorney general used the Martin Act to secure a $1.4 billion settlement from 10 banks over allegations that their analysts inflated ratings.

 

A second option is to enter a “tolling agreement.” Under such a scenario, the individual or company grants the government a waiver to the statute of limitations to keep it from rushing an indictment. In return, the agreement offers the individual or firm the opportunity to explain why they should not face charges.

 

The government ”would say, ‘we’d like you to agree, and if you won’t … then we’ll just indict you and sort out the rest of the case later. Whereas if you give us more time, that will give you a chance to argue that we shouldn’t charge you,’” explained Peter Henning, a professor of law at Wayne State University.

 

Attorneys at both the Department of Justice and the Commodity Futures Trading Commission are said to have reached such deals in their investigations into alleged rigging of the London Interbank Offered Rate, or LIBOR, according to reports from Bloomberg and Reuters.

 

Prosecutors have also begun testing a statute passed in the wake of the savings and loan crisis known as the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA).

 

The upside of FIRREA, explained Jay Williams, a partner with Schiff Hardin LLP, is that it offers the government a path to bring civil actions against misconduct typically addressed through criminal charges. In doing so, it extends the statute of limitations to 10 years while lowering the burden of proof needed to win a case. Whereas guilt must be established beyond a reasonable doubt in criminal cases, in FIRREA suits, violations must only be proven by a preponderance of the evidence. In other words, a jury must only determine that a violation is more likely than not.

 

The use of FIRREA in mortgage-related cases is somewhat uncharted territory. The law was first passed to prosecute individuals who defrauded federally insured deposit institutions, but as Williams noted, the government has been encouraged by early victories in its broadening interpretation of the statute. Last February, for example, a Citibank subsidiary agreed to $158 million settlement with the Department of Justice in a FIRREA case. The bank’s Citimortgage unit was accused of submitting faulty loans to a federal-mortgage insurance program.

 

 

 

[PlanMaestro]

Frontline: The Untouchables.

http://www.pbs.org/wgbh/pages/frontline/untouchables/

 

Lanny Breuer is leaving his position as head of the Justice Department’s criminal division.

http://www.washingtonpost.com/business/economy/doj-criminal-division-chief-stepping-down/2013/01/23/e4331e32-64e0-11e2-b84d-21c7b65985ee_story.html

[Rabbitisrich]

 

1)  Pfaelzer is in charge of the private mortgage suits: this is AIG, Allstate, various pension funds, etc.  Bransten is in charge of the mortgage insurer suits: MBIA.  You were asking about the Gibbs/Brun settlement, so the relevant litigation is with Pfaelzer.  Essentially any of the Gibbs/Brun group who have sued, or would like to sue in the future, would have to go through Pfaelzer, so it's her opinion that matters. 

 

3)  Bransten is a NY state judge, Pfaelzer is a federal judge.  Bransten can only preside over litigation where the NY state court is the proper venue.  That gets rid of all the federal securities claims (the obvious venue for the Gibbs/Brun) people.  It makes it more difficult to do a class action ("federal class action" is the usual path).  And it mostly (though this will be argued) gets rid of companies that are not based in NY - PIMCO, Allstate, foreign companies - are good examples. 

 

 

Pfaelzer applied Delaware law to the Allstate dismissal, and reasoned that the plaintiff's inability to establish fraudulent conveyance effectively ended their successor liability argument. Bransten hasn't ruled on SL yet, but because MBIA is a New York company, I think that she would have the major word on successor liability under New York law, which doesn't seem, based upon her 2010 ruling to allow BAC to remain a defendant, to require evidence of fraudulent conveyance. Kapnick's final hearing is set for May of 2013 and pleadings are due in March, so there is still room for Bransten to throw a wrench in the works by removing the ring-fence.

 

I'd love to hear one of the lawyers of the board comment on whether a negative SL ruling could really impact the settlement. As other commentators have noted, Grais and co. attacked Lin's default, breach, and repurchase assumptions, not his SL presumptions. The SL issue seems to have more to do with applying additional legal haircuts to reach $8.5, rather than the low end of Lin's settlement range. Is this much ado about nothing, or do the MBI fans have a good point?

[xazp]

Bransten hasn't ruled on SL yet, but because MBIA is a New York company, I think that she would have the major word on successor liability under New York law >>

 

Not to mention Bransten is a state judge for NY, so odds are fairly good she's applying NY law.  So yes, I think odds are in favor of MBIA winning the successor liability case. 

 

IMO MBIA gets more attention than its due based on either financial or legal risk.  BAC says there are $11Bn of outstanding balance for all the mortgage insurers put together, including Assured and Synorca which settled.  The GSE balance is $350Bn, and the private label is $130Bn.  We are talking an order of magnitude difference in size. 

 

And I still think the stuff to focus on is either A) statute of limitations/repose or B) the 25% threshold for exerting R&W.  I think successor liability is not super important relative to those. 

 

 

Pfaelzer applied Delaware law to the Allstate dismissal, and reasoned that the plaintiff's inability to establish fraudulent conveyance effectively ended their successor liability argument. Bransten hasn't ruled on SL yet, but because MBIA is a New York company, I think that she would have the major word on successor liability under New York law, which doesn't seem, based upon her 2010 ruling to allow BAC to remain a defendant, to require evidence of fraudulent conveyance. Kapnick's final hearing is set for May of 2013 and pleadings are due in March, so there is still room for Bransten to throw a wrench in the works by removing the ring-fence.

 

I'd love to hear one of the lawyers of the board comment on whether a negative SL ruling could really impact the settlement. As other commentators have noted, Grais and co. attacked Lin's default, breach, and repurchase assumptions, not his SL presumptions. The SL issue seems to have more to do with applying additional legal haircuts to reach $8.5, rather than the low end of Lin's settlement range. Is this much ado about nothing, or do the MBI fans have a good point?

[MYDemaray]

Maybe this was obvious to others, as it appears to be in xazp's most recent post, but I emailed Isaac Gradman asking about statute of limitations/repose with respect to rumors that Beal has amassed > 25% of some pools.  His response was that > 25% would be a rep & warrant / putback case under NY state law which has a 6 year statute of limitations.

[xazp]

Are you referring to this?  http://www.fool.com/investing/general/2013/01/24/billionaire-banker-has-bank-of-america-in-his-sigh.aspx

 

Beal is a smart guy.  Now when I read this, I think he's going after banks other than BAC.  The reason is that in 2010 and 2011 various lawyer groups already tried to round up the 25% threshold for BAC.  The winner of this process was Gibbs/Brun and that led to the $8.5Bn settlement.  It's hard to imagine someone trying to replicate their work 3 years later, without the support of all the heavyweights that have already signed up with Gibbs/Brun.  And, if the settlement is approved, all that work will lead to nothing anyway. 

 

Well 6 year statute of limitations is a bit problematic too.  Assuming they file at the earliest mid-2013, the 6 year statute of limitations brings things to mid-2007.  That probably already axes 50%+ of their claims (i.e. 2004-mid-2007 would be outside). 

 

Maybe this was obvious to others, as it appears to be in xazp's most recent post, but I emailed Isaac Gradman asking about statute of limitations/repose with respect to rumors that Beal has amassed > 25% of some pools.  His response was that > 25% would be a rep & warrant / putback case under NY state law which has a 6 year statute of limitations.

[MYDemaray]

good points xazp.  Here's the WSJ story for those who missed it yesterday: http://online.wsj.com/article/SB10001424127887324595704578241732333445130.html?KEYWORDS=beal

 

The nice thing is -- they put the specific bonds in their advertisement.  From that we should be able to ascertain quickly who they are going after.  Now to hunt down the ad....

 

UPDATE: Here it is http://www.structuredfinancelitigation.com/files/2012/10/CXA-Ad.pdf

[onyx1]

good points xazp.  Here's the WSJ story for those who missed it yesterday: http://online.wsj.com/article/SB10001424127887324595704578241732333445130.html?KEYWORDS=beal

 

The nice thing is -- they put the specific bonds in their advertisement.  From that we should be able to ascertain quickly who they are going after.  Now to hunt down the ad....

 

From October 2012 ABS Daily:

 

http://www.structuredfinancelitigation.com/files/2012/10/CXA-Ad.pdf

 

I don't see any CW trusts on this list.

[MYDemaray]

yeah...three Merrill deals and only one MLMI 2007-HE1 in 2007.  Does the "HE1" indicate it was issued earlier in the year?  (vs. HE2 and HE3?)

[onyx1]

yeah...three Merrill deals and only one MLMI 2007-HE1 in 2007.  Does the "HE1" indicate it was issued earlier in the year?  (vs. HE2 and HE3?)

 

I believe so.