psa

SEC Unveils Public Service Announcement to Promote Background Checks on Investor.gov

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On April 16, the Securities and Exchange Commission (“SEC“) unveiled a public service announcement (“PSA“) to encourage investors to check the background of their investment professional by using the free search tool on Investor.gov before investing. Chairman Clayton stated that:

“Investor education is an important line of defense against fraud and is critical to our efforts to both protect Main Street investors and improve their financial decision making. Through public service announcements, investor alerts and bulletins, and direct outreach, the SEC will continue to focus on empowering investors.” Press Release.

N.Y. Federal Court Allows RMBS Trustee Suit Against GE Mortgage to Proceed

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On January 14, Judge Katherine B. Forrest of the United States District Court for the Southern District of New York denied a motion for judgment on the pleadings in an action brought by the Bank of New York Mellon as Trustee for GE-WMC Mortgage Securities Trust 2006-1 against GE Mortgage and WMC Mortgage.  Judge Forrest rejected the argument that, as a matter of law, the Pooling and Servicing Agreement (PSA) limited the Trustee’s remedies for breaches of representations and warranties to WMC Mortgage only, because this interpretation conflicted with the contemporaneous agreements signed between the parties as well as the PSA itself.  Instead, the Court held that the PSA was ambiguous regarding which entities the Trustee could assert claims against, and accordingly the Trustee’s action against GE Mortgage was not barred by the agreement.  Decision.

NY Appellate Court Affirms Dismissal of Walnut Place’s Claims Against BofA and Countrywide

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On June 28, 2012, the New York Appellate Division, First Department, affirmed the dismissal of Walnut Place’s $1.1 billion RMBS suit against Countrywide and Bank of America. Walnut Place sued derivatively on behalf of an RMBS trustee seeking to compel repurchase of securitized loans due to alleged breaches of representations and warranties about the loans in the pooling and servicing agreement (“PSA”). The court held that the “no-action” clause in the PSA precludes the investor plaintiffs from bringing any action related to the PSA other than for an “event of default,” which is defined to include only loan servicing-related claims and does not include the representation and warranty claims plaintiffs attempted to assert. Order.

Citigroup Files New RMBS Action Against Impac

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On May 25, 2011, Citigroup Global Markets, Inc. (“Citigroup”) filed a complaint against Impac Funding Corp (“Impac”) in the U.S. District Court for the Central District of California alleging violations of Sections 18 and 20 of the ’34 Act and negligent misrepresentation related to Impac’s filing of a revised Pooling and Servicing Agreement (“PSA”) with the Securities and Exchange Commission (“SEC”). Citibank alleges that three weeks after it purchased approximately $7 million worth of mortgage-backed securities, Impac notified the Securities and Exchange Commission that the Pooling and Servicing Agreement (“PSA”) filed three years earlier in connection with the issuance of those securities was submitted in error. Citibank alleges that Impac filed a new PSA with the SEC including different terms that adversely impacted on the value of the certificates purchased by Citigroup. Citigroup seeks to recover the money damages that it claims to have suffered as a result. Complaint.