VI. USATŐs PURCHASES OF JUNK BONDS FROM DREXEL VIOLATED AFFILIATED PARTY 
REGULATIONS

A. APPLICABLE STATUTES AND REGULATIONS

 	118. At all relevant times, "any transaction [between a savings 
association and its affiliate without the prior written consent of the 
[FHLBB] involving the purchase, sale or lease of property or assets 
(other than participating interests in certain mortgage loans)" was 
prohibited if the consideration in the preceding 12 month period for all 
such transactions exceeded the lesser of $100,000 or 0.1 percent of the 
savings and loan association total assets. 12 C.F.R. ¤ 584.3(a)(7)(i) 
(1984-88).
	119. At all relevant times, an affiliate of a savings association 
included any person or company that controlled such institution. 12 
C.F.R. ¤ 583.15 (1984-88)
 	120. At all relevant times, a person was be "deemed to have control of" 
an insured institution or holding company "if the person directly or 
indirectly or acting in concert with one or more other persons . . . 
own[ed] [or] controll[ed] . . . more than 25 percent of the voting shares 
of "an insured institution or holding company. 12 C.F.R. ¤ 583.26(a), (b) 
(1984-88).

B. DREXEL ACTED IN CONCERT WITH MCO AND FEDERATED TO OBTAIN CONTROL OF 
UFG

 	121. Drexel, acting as the agent of MCO and Federated, acquired 
approximately 600,000 shares of UFG stock (approximately 7.5 percent, of 
the outstanding common shares) in open market purchases and resold the 
shares to MCO or Federated during the period May 1982 through June 29, 
1983.
 	122. By June 29, 1983, MCO and Federated owned in aggregate 24.3% of 
the outstanding shares of UFG common stock. On that date, they applied to 
the FHLBB to jointly acquire an additional 10% of the common shares of 
UFG in order to increase their ownership to approximately 35% of the 
outstanding shares of UFG.
 	123. After June 29, 1983, Drexel continued to acquire shares of UFG in 
open market transactions and to maintain the shares in an account managed 
by the high yield bond department at Drexel for resale to MCO and 
Federated. By December 1984, Drexel had acquired 585,371 additional 
shares of UFG in the high yield bond department account and thereafter 
began negotiating an option agreement with MCO and Federated for the 
transfer of the 585,371 shares to MCO and Federated.
 	124. From January 1985 through December 20, 1985 Drexel acquired 
approximately 200,000 additional shares of UFG in the high yield bond 
department account for the purpose of transferring these additional 
shares to MCO and Federated as part of the option agreement it was then 
negotiating with MCO and Federated.
 	125. The additional 200,000 shares purchased by Drexel raised the 
number of common shares of UFG owned by Drexel and held in the high yield 
bond department account to 790,459. That amount represented 9.7% of UFG's 
outstanding common shares, the approximate number of additional shares of 
UFG that the MCO and Federated application had advised the FHLBB that MCO 
and Federated proposed to acquire.
 	126. Drexel acquired 790,459 shares of UFG stock to assist Hurwitz, 
MCO, and Federated to obtain control of UFG, 300,000 of which were 
optioned to MCO under the Drexel Option.
 	127. The remaining 490,000 shares, which Drexel could not option to 
MCO/Federated (approximately 6.1 percent of the outstanding shares), 
continued to be held by Drexel in the high yield bond department account.

 	128. At all relevant times, Drexel was acting in concert with MCO, 
Federated, Hurwitz and Kozmetsky to assist them to obtain control of UFG 
and USAT and, along with MCO, Federated, Hurwitz, and Kozmetsky, was a 
controlling shareholder of UFG.

C. DREXEL'S SALE OF JUNK BONDS TO USAT

 	129. Drexel's involvement with UFG was not limited to the purchase of 
shares of UFG in furtherance of Hurwitz, MCO, Federated, Gross, and 
Kozmetsky's assumption of control of UFG.
 	130. Subsequent to Drexel's assistance in Hurwitz, MCO, and Federated's 
acquisition of UFG, USAT purchased junk bonds from Drexel. From 1984 
through 1988, USAT purchased approximately $1.8 billion of Drexel junk 
bonds and other Drexel-brokered securities. Indeed, USAT ultimately 
became the eighth largest purchaser of Drexel-underwritten junk bonds 
among all savings and loan associations.
 	131. As a consequence, (a) Drexel was an affiliated person of UFG and 
USAT, (b) USAT purchased high-risk junk bonds sold or underwritten by 
Drexel, and (c) Drexel benefited from its sales of junk bonds to USAT.

D. FIFTH CLAIM FOR RELIEF: USAT'S PURCHASE OF JUNK BONDS FROM DREXEL 
VIOLATED THE REGULATION PROSCRIBING AFFILIATED PARTY TRANSACTIONS 
(Respondents MAXXAM, Federated, UFG, Hurwitz, Munitz, and Huebsch)

 	132. OTS repeats and incorporates the allegations set forth in 
paragraphs 1 through 131 above.
 	133. Drexel, acting in concert with Hurwitz, MCO, Federated, and 
Kozmetsky, controlled UFG and USAT, within the meaning of 12 C.F.R. ¤ 
583.26(a) and (b)(1984-88).
 	134. Drexel was an affiliated person of UFG and USAT, within the 
meaning of 12 C.F.R. ¤ 583.15 (1984-88).
	135. The Respondents caused USAT to purchase junk bonds underwritten or 
sold by Drexel, an affiliated person of USAT, without the prior written 
approval of the FHLBB in violation of 12 C.F.R. ¤ 584.3(a)(7)(i) 
(1984-88).