On July 9, the joint official liquidators of Bear Stearns & Co. Inc. filed suit against three rating agencies – Standard & Poors, Moody’s and Fitch – in New York state court over the agencies’ allegedly fraudulent investment ratings of RMBS and CDOs. The plaintiffs allege that the defendant rating agencies knowingly misrepresented information as to the independence and accuracy of their ratings, while purposefully omitting material information from their credit rating analyses. Plaintiffs bring a claim for common law fraud and seek over $1 billion in damages as well as punitive damages. Summons with Notice.
Bear Stearns & Co. Inc.
Bond Insurer Syncora Sues JPMorgan, Bear Stearns, and EMC Mortgage
On October 5, Syncora Guarantee Inc. filed suit in New York state court against JPMorgan Chase Bank NA, Bear Stearns & Co., Inc., and EMC Mortgage LLC. Syncora asserts claims of breach of contract, fraudulent inducement, and tortious interference in connection with a 2007 re-securitization of real estate mortgage investment conduits (REMICs) that consisted of certificates from four Bear Stearns RMBS. The complaint alleges that the defendants misrepresented the quality of the mortgage loans underlying the RMBS and the quality of the due diligence performed in connection with the origination of those loans. Syncora claims it has paid out over $94 million to insured investors on a transaction that experienced cumulative losses of over $111 million. Syncora seeks compensatory and punitive damages, reimbursement, and attorneys fees and costs. Complaint.