On December 18, Judge Katherine B. Forrest of the United States District Court for the Southern District of New York approved a $95 million settlement to end a class action brought by RMBS investors against Morgan Stanley. The complaint alleged that Morgan Stanley made material misrepresentations regarding its appraisals and underwriting standards of the underlying mortgages in the marketing and sale of the RMBS. Judge Forrest also granted lead plaintiffs’ application for approximately $17.2 million in attorneys’ fees and expenses. Final Judgment. Order Granting Attorneys’ Fees and Expenses.
Judge Katherine B. Forrest of the United States District Court for the Southern District of New York
Pension Fund Class Action to Proceed Against Bank of America and U.S. Bancorp
On December 6, Judge Katherine B. Forrest of the United States District Court for the Southern District of New York denied Bank of America and U.S. Bancorp’s motions to dismiss a suit by the Policemen’s Annuity and Benefit Fund of the City of Chicago. Plaintiff brought claims against Bank of America and U.S. Bancorp for breach of contract, breach of the implied covenant of good faith and fair dealing, and the Trust Indenture of 1939, alleging that defendants failed to protect investors in their role as trustees for RMBS issued by Washington Mutual. Plaintiff alleges that Bank of America and Bancorp failed to take certain actions required by the pooling and servicing agreements, including taking possession of loan files, reviewing those files to ensure they were complete, or requiring Washington Mutual to repurchase or fix defective loans. The court limited plaintiff’s ability to pursue claims only to trusts in which it had purchased certificates or on behalf of purchasers of certificates whose certificates are backed by the loan group that back plaintiff’s certificates or whose certificates are cross-collateralized by loan groups that back plaintiff’s certificates. Decision.