New York Supreme Court

Bank of America Shareholder Files Suit Alleging Lack of Due Diligence in RMBS Offerings

On September 19, 2011, a Bank of America shareholder (a profit sharing plan) filed suit in New York Supreme Court against the Bank and certain present and former directors and officers. The suit alleges that Bank of America, while acquiring and securitizing large volumes of mortgage loans, failed to conduct due diligence adequate to ensure the accuracy of the RMBS offering documents. The complaint further alleges that Bank of America included in the securities pools a significant number of mortgages recommended for omission by third-party due diligence providers that Bank of America had retained. Plaintiff seeks unspecified damages for losses in stock value, but the complaint does not cite specific legal causes of action. Complaint.

RMBS Insurer Sues Goldman in New York State Court

CIFG Assurance North America Inc. (“CIFG”) filed suit in New York Supreme Court against Goldman Sachs and affiliated entities, and M&T Bank, the originator of the majority of the loans that backed approximately $277 million of RMBS insured by CIFG. CIFG asserts claims for fraudulent inducements and breach of contracts, alleging that Goldman misrepresented or omitted important details concerning the mortgages, including Goldman’s alleged plan to offload its own exposure of these RMBS to the investors. In addition to seeking damages, CIFG has demanded that Goldman and M&T cure or repurchase the allegedly defective loans. Complaint.

Shareholder Derivative Action Brought Against Bank of America Executives for Losses Due to Suspension of Foreclosures

O’Hare et al. v. Moynihan et al., No. 11 – 103729 (Sup. Ct. N.Y. Mar. 28, 2011)

A shareholder derivative action was brought in New York Supreme Court against members of the Board of Directors of Bank of America and certain of its executive officers, alleging breaches of fiduciary duties during a ten-month period in 2010. Plaintiffs allege that defendants issued materially false and misleading statements regarding Bank of America’s business, concealing defects in the recording of mortgages and improprieties with respect to the preparation of foreclosure paperwork. Plaintiffs allege that these misstatements harmed Bank of America and its investors when the company had to temporarily discontinue foreclosures and admit to the problems it was experiencing. Complaint.