On November 28, 2011, the National Credit Union Administration (“NCUA”), an independent federal agency that supervises and charters federal credit unions, filed a complaint in the federal district court for the District of Kansas against Wachovia Capital Markets LLC. NCUA is suing in its capacity as the liquidating agent of two failed credit unions, U.S. Central Federal Credit Union (“U.S. Central”) and Western Corporate Federal Credit Union (“WesCorp”). NCUA seeks approximately $200 million in damages based on alleged untrue statements and omissions in the offering documents for 5 RMBS purchased by U.S. Central and WesCorp. NCUA asserts causes of action under Sections 11 and 12(a)(2) of the federal Securities Act, as well as violations of the California and Kansas securities laws. Complaint.
federal Securities Act
MSRB Warning on Application of Federal Securities Laws to Private Placements
On August 3, the MSRB urged financial advisors to state and local government issuers to determine whether certain actions, such as introducing potential investors to issuers or negotiating with potential investors for transaction-based compensation, would cause them to be placement agents and require registration with the SEC as brokers. The MSRB also warned that certain financings called “bank loans” may in fact be private placements of municipal securities. MSRB Release.
National Credit Union Administration Sues JP Morgan, RBS In Connection With Over $800 Million In RMBS
On June 20, 2011, National Credit Union Administration, acting as the liquidating agent for five now-defunct credit unions, filed two separate lawsuits against JP Morgan and Royal Bank of Scotland, and various other depositors and issuers, in the U.S. District Court for the District of Kansas. The NCUA brings claims under Section 11 and 12(a)(2) of the Federal Securities Act as well as under the state securities laws of Kansas, Illinois, Texas and California. NCUA alleges that defendants misrepresented the risks associated with the sale of hundreds of RMBS, including in connection with representations concerning underwriting guidelines, loan-to-value ratios and credit enhancements, which caused the credit unions who bought the RMBS to suffer “unprecedented” losses. The NCUA is seeking $800 million dollars from the defendants. NCUA Compl. vs. JPM. NCUA Compl. vs. RBS.