On April 25, 2016, the Federal Home Loan Bank of Seattle (“FHLBS”) agreed to a $190 million settlement with Bank of America in connection with multiple lawsuits filed in 2010 stemming from the sale of hundreds of millions of dollars of RMBS. FHLBS alleged that Bank of America made misstatements or omissions in connection with the issuance of the RMBS in violation of the Washington State Securities Act. Additional details of the settlement are not publicly available.
Washington State Securities Act
Washington State Court Strikes Jury Demands in RMBS Case
On March 7, Judge Laura Inveen of the King County Superior Court in Washington State granted the motion to strike jury demands filed by defendants in 11 RMBS actions brought by the Federal Home Loan Bank of Seattle. Judge Inveen ruled that claims for rescission or rescissionary damages under the Washington State Securities Act are equitable in nature and thus not eligible to be tried to a jury. Orrick successfully briefed and argued the motion. Order.
Complaint Against Merrill Lynch for Sale of Mainsail and Victoria Commercial Paper Survives Motion to Dismiss
On February 18, 2011, Judge Martinez of the U.S. District Court for the Western District of Washington denied Merrill Lynch’s motion to dismiss, holding that plaintiffs had pleaded sufficient facts to state claims under the Washington State Securities Act (“WSSA”) for primary and control person liability and for breach of contract. Plaintiff, King Country, Washington, invested county cash reserves in RMBS and alleges that defendants omitted to disclose significant and foreseeable risks in the underlying mortgage pools. Plaintiff further alleges that defendants knew the credit ratings associated with the securities were not reliable and that they were in fact trying to rid themselves of the same securities they held out as prudent investments. The Court found these allegations sufficient to survive the motion to dismiss. Decision.