Henry

First Alliance Mortgage Company was driven into bankruptcy and subsequent liquidation by well-publicized and justified allegations of fraudulent lending practices. The demise of First Alliance has led to two separate actions against Lehman Brothers, Inc. and its subsidiary Lehman Commercial Paper, Inc. (collectively referred to as “Lehman”) growing out of Lehman’s activity as a lender to First Alliance and as the underwriter of First Alliance’s securitized debt. One is a class action on behalf of First Alliance’s borrowers seeking to impose liability for aiding and abetting the fraudulent scheme engaged in by First Alliance. The other, brought by the bankruptcy trustee appointed to liquidate First Alliance, seeks to set aside payments Lehman received in the course of its financing relationship with First Alliance and to subordinate Lehman’s secured claims in the First Alliance bankruptcy in favor of the claims of First Alliance’s unsecured creditors. (This group of unsecured creditors is essentially the same as the group of borrowers asserting their claims of fraud against First Alliance, as is explained in more detail below. See infra at 985.) These two separate actions were…