material misstatements

National Credit Union Administration Board Accepts UBS Securities LLC Offer of Judgment

On February 25, the National Credit Union Administration Board (“NCUA”) accepted an offer of judgment tendered by UBS Securities LLC (“UBS”) in the amount of $33,014,285 plus prejudgment interest, which will be calculated by the court. NCUA and UBS will attempt to agree on costs and fees also to be paid by UBS.  Acting as the liquidating agent for Southwest Corporate Federal Credit Union and Members United Corporate Federal Credit Union, NCUA’s complaint alleged that UBS made material misstatements in connection with the sale of 20 RMBS certificates, alleging more than $918 million in actual gross losses.  UBS specified in the offer of judgment that its offer should not be construed as an admission of liability. Offer of Judgment. Complaint.

New York Federal Court Rejects Argument Based on “Repurchase or Substitute” Clauses

On December 23, 2010, Judge Leonard Wexler of the United States District Court for the Eastern District of New York issued rulings denying motions to dismiss in two related cases asserting non-fraud based federal securities claims alleging material misstatements in RMBS offering documents. The Court declined to follow Lone Star Fund V (U.S.) v. Barclays Bank PLC, 594 F.3d 383 (5th Cir. 2010), in which the Fifth Circuit affirmed dismissal of a case on the ground that plaintiffs’ sole remedy was the originator “repurchase or substitute” clauses in MBS transaction documents. Judge Wexler found that Lone Star was factually distinguishable, and had not been adopted by the Second Circuit. The Court also found that specific allegations about claimed misrepresentations as to only a “tiny fraction of the mortgages underlying the securities” were sufficient to state a claim as to the entire pool of underlying mortgage loans because Plaintiffs were not bound by heightened pleading standards applicable to fraud cases. Decision.