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Posts by: Steven J. Fink

U.S. Bank Reaches $6 Million Settlement of Claims for Breach of RMBS Trustee Duties

On December 17, the parties in Oklahoma Police Pension and Retirement System v. U.S. Bank, N.A., No. 11-cv-8066 (S.D.N.Y.) asked the court to approve a $6 million settlement of class action claims asserted against U.S. Bank in its capacity as trustee for five RMBS trusts sponsored by Bear Stearns. The class consisted of 1,800 investors who had bought certificates in the trusts. Claims related to nine other trusts had been dismissed earlier in the litigation and were not included in the settlement. The complaint included claims for breach of contract, breach of the covenant of good faith and fair dealing, and violation of the federal Trust Indenture Act.  Motion for ApprovalSettlement Agreement.

Second Circuit Affirms Dismissal of $56M MBS Suit against Bank of America

On November 25, the United States Court of Appeals for the Second Circuit upheld the dismissal of IKB Deutsche Industriebank AG’s suit against Bank of America. IKB alleged that BofA fraudulently misrepresented the quality of loans underlying mortgage backed securities sold in 2005 and 2006. The court held that the complaint’s generalized allegations that BofA knew of claimed mortgage defects by virtue of access to due diligence reports prepared by Clayton and BofA’s own due diligence procedures were not sufficient to plead fraudulent intent. The court also affirmed dismissal of IKB’s claim for fraud relating to representations about the transfer of mortgages to the issuing trust, holding that these representations constituted promises to perform in the future and thus were not the proper subject of a fraud claim absent allegations that there was an intent not to perform at the time the promises were made.  Summary Order.