California Corporate Securities Act

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.

Investment Company Sues Bank of America Claiming Recently Announced Proposed $8.5 Billion Settlement Proves Fraud

On July 18, 2011, Federated Investment Management Co. and affiliated entities sued Bank of America, Countrywide, affiliated entities, and individual officers and directors in California state court. Plaintiff claims that Bank of America’s recently announced proposed $8.5 billion settlement with various MBS investors and Bank of New York Mellon as Trustee evidences that Countrywide fraudulently concealed the quality of the loans it originated. Specifically, the complaint alleges that Countrywide’s underwriting standards and guidelines failed to meet industry standards and that it misrepresented that fact to investors. While the plaintiffs allege they do not have access to the loan files underlying the securities they purchased, they assert that the disclosure of the proposed settlement and challenges by investors and regulators have uncovered Countrywide’s alleged fraud. Plaintiff brings claims for fraud and negligent misrepresentation, as well as claims under the Securities Act of 1933, the California Corporate Securities Act, and the California Civil Code, and seek both compensatory and/or recessionary damages, as well as punitive damages. Complaint.