Phoenix Light SF Limited

Phoenix Light Sues Five RMBS Trustees Over $2.4 Billion in RMBS

On December 23 and 24, Phoenix Light SF Limited and other RMBS certificateholders filed suit against HSBC, Wells Fargo, Deutsche Bank, Bank of New York Mellon, U.S. Bank, and Bank of America in the United States District Court for the Southern District of New York regarding $2.4 billion in RMBS. The complaints assert causes of action under the Trust Indenture Act and a provision of the New York Real Property Law known as the Streit Act, as well as under state law for breach of contract, breach of fiduciary duty, negligence, gross negligence, and negligent misrepresentation. Plaintiffs allege that the trustees breached their duties under the governing trust agreements by failing to notify the investors of deficiencies in the loans, failing to take action to address those alleged deficiencies, and failing to require the repurchase of defective loans. Plaintiffs seek compensatory damages and unspecified equitable relief.  HSBC ComplaintWells Fargo ComplaintDeutsche Bank ComplaintBNY Mellon ComplaintU.S. Bank and Bank of America Complaint.

JP Morgan Sued by Investors Over $1.7B in Mortgage-Backed Securities

On August 21, a collection of investors including Phoenix Light SF Limited, Blue Heron Funding II Ltd. and Kleros Preferred Funding V PLC (the Investors) brought suit against a number of JP Morgan and Bear Stearns entities in New York State Supreme Court.  The Investors allege that JP Morgan and Bear Stearns made misrepresentations in the offering documents for 47 RMBS concerning the underwriting guidelines used to originate the mortgage loans backing the RMBS, loan-to-value ratios, owner occupancy rates, the credit ratings assigned to the RMBS and the transfer of title of the underlying mortgage loans.  The Investors allege that the defendants knew their representations were false by virtue of due diligence performed prior to the securitizations and by virtue of their decision to dispose of substantial subprime assets while simultaneously marketing the RMBS to the Investors as sound investments.  The Investors assert causes of action for common law fraud, fraudulent inducement, aiding and abetting fraud, negligent misrepresentation and rescission based upon mutual mistake.  Complaint.

Investor Funds Bring Lawsuit Against Goldman Sachs

On July 3, Phoenix Light SF Limited, Blue Heron Funding Ltd., Silver Elms CDO II Limited and Kleros Preferred Funding V PLC, filed a complaint against Goldman Sachs in the Supreme Court of the State of New York relating to more than $450 million of RMBS certificates purchased between 2005 and 2007.  Plaintiffs allege that Goldman Sachs disseminated offering documents containing false and misleading information regarding collateral quality and underwriting standards.  Plaintiffs further allege that Goldman failed to disclose that it shorted the same certificates it offered.  The complaint alleges fraud, fraudulent inducement, aiding and abetting fraud, and negligent misrepresentation, and seeks compensatory damages, punitive damages, rescission and/or rescissory damages and costs.  Complaint.

Phoenix Light SF and Other Investors Sue Bank of America Over $261 Million in RMBS

On November 13, Phoenix Light SF Limited and other investors filed a summons with notice in the Supreme Court for the State of New York against Bank of America and various Countrywide affiliates.  Plaintiffs assert claims for common-law fraud, fraudulent inducement, negligent misrepresentation, and aiding and abetting fraud arising out of their alleged purchase of $261 million of RMBS.  Plaintiffs allege misrepresentations in the offering documents regarding underwriting guidelines, loan characteristics, the securities’ credit ratings, and the validity of the trusts and the assignments of loans to the trusts.  The case seeks over $122 million in damages.  Summons with Notice.

Foreign Investors Bring $1.8 Billion RMBS Lawsuit Against Six Investment Banks

On May 22, 2012, Blue Heron Funding Ltd., Phoenix Light SF Limited, Silver Elms CDO PLC, and Kleros Preferred Funding V PLC filed a summons with notice in the New York State Court against six investment banks and their related entities over $1.8 billion in RMBS certificates originally issued between 2005 and 2007. The plaintiffs, which are incorporated in either the Cayman Islands or Ireland, alleged that the offering materials issued by the defendant banks in connection with their respective RMBS offerings contained material misstatements and omissions regarding the underwriting and appraisal standards used in connection with the underlying mortgage loans, the statistical characteristics of those loans, and the credit ratings of the securities. The plaintiffs assert claims under Sections 11, 12 and 15 of the Securities Act of 1933 and seek to recover a combined total of $1.8 billion, plus legal fees, interest, and punitive damages. Summons.