On May 26, 2016, the FDIC reached a $190 million settlement of RMBS claims against eight financial institutions, including Barclays Capital Inc.; Deutsche Bank Securities Inc.; Goldman, Sachs & Co; RBS Securities Inc.; and UBS Securities LLC. The settlement resolves six separate suits brought in 2011 and 2012 in California and Alabama alleging misrepresentations within the defendant underwriters’ RMBS offering documents. The FDIC, as a receiver, will distribute the settlement funds among five failed bank receiverships. FDIC Settlement Agreement.
Deutsche Bank Securities
Federal Home Loan Bank of San Francisco Settles RMBS Claims Against Banks
On January 15, 2015, the Federal Home Loan Bank of San Francisco (FHLB) agreed to a $459 million settlement with various banks stemming from the sales of billions of dollars of RMBS. FHLB originally filed the claims in the Superior Court of California, County of San Francisco in 2010 against Bank of America Corp., Credit Suisse Securities (USA) LLC, Countrywide Financial Inc., Deutsche Bank Securities, Inc. and other banks concerning 229 RMBS transactions. FHLB alleged causes of action for violation of the Securities Act of 1933 and the California Corporate Securities Act as a result of dealers allegedly concealing information and lying about the quality of RMBS sold to FHLB. It is unclear which banks are involved in the settlement.
Central District of California Dismisses FDIC’s Federal and State Securities Claims In Connection With RMBS Purchases
On August 26, Judge Mariana R. Pfaelzer of the U.S. District Court for the Central District Court of California dismissed with prejudice a suit brought by the Federal Deposit Insurance Corporation (FDIC) against Countrywide Securities Corporation, Countrywide Financial Corporation, Bank of America Corporation, Deutsche Bank Securities, Inc. and Goldman, Sachs & Co. In its amended complaint, the FDIC alleged that the offering documents for eight RMBS certificates that Guaranty Bank purchased between July 2005 and April 2006 contained material misstatements in violation of Sections 11 and 12(a)(2) of the Securities Act of 1933 and Article 581-33 of the Texas Securities Act. It also brought claims under Section 15 of the 33 Act against Countrywide. The FDIC was appointed as receiver for Guaranty Bank in August 2009 and filed suit on August 17, 2012. The court followed its earlier decisions in dismissing the FDIC’s claims as time-barred by the three year statute of repose under the ’33 Act. The court also held that the extender provision of FIRREA does not toll or pre-empt state statutes of repose, and therefore dismissed the FDIC’s claims under the Texas Securities Act as time-barred. Decision.
Order Compelling Deutsche Bank to Produce Documents Previously Provided to NY Attorney General Affirmed
On November 19, 2010, the Appellate Division of the New York Supreme Court, Fourth Department, affirmed an order compelling Deutsche Bank Securities, Inc. to produce to M&T Bank Corp. approximately 1.7 million pages of documents it previously produced to the New York State Attorney General concerning the packaging and sale of RMBS. Deutsche argued that discovery of documents concerning RMBS not underlying the CDOs at issue in the suit with M&T should not be required. The New York appellate court rejected that contention, stating that the discovery rules in New York are “to be interpreted liberally in favor of disclosure.” Decision.