On April 17, Justice Eileen Bransten of the Supreme Court of the State of New York dismissed all claims in a suit brought by investment vehicle Sealink Funding Ltd. in connection with RMBS purchased from Morgan Stanley. Sealink acquired the certificates at issue from Sachsen LP Europe Plc and brought claims for fraud, fraudulent inducement, and aiding and abetting fraud. Sealink alleges misstatements by Morgan Stanley regarding the due diligence and underwriting performed on the mortgages underlying the securities, misstatements of loan-to-value and debt-to-income ratios and misstatements concerning the risks of RMBS generally. The court held that under governing English law, Sachsen’s tort claims could only be transferred to Sealink by explicit reference in the agreements transferring the securities. Finding no such transfer provision, the court dismissed Sealink’s claims. Decision.
Sealink Funding Ltd.
Multiple Plaintiffs Drop RMBS Suits Against Countrywide
On October 19, Judge Mariana R. Pfaelzer of the Central District of California dismissed with prejudice four cases against Countrywide Financial Corp., and related entities, pursuant to stipulations among the parties. Landesbank Baden-Wurttemberg, Dexia SA, Sealink Funding Ltd., and Thrivent Financial for Lutherans, had each pursued separate but similar claims against Countrywide alleging that Countrywide had concealed underwriting failures and misrepresented the quality of the loans to ratings agencies in order to receive better ratings for its RMBS. The plaintiffs, combined, had sought relief in connection with alleged misrepresentations that affected more than $2 billion RMBS bought between 2005 to 2007. The stipulations did not reveal any terms other than that each party would shoulder its own attorneys fees and costs. Stipulations.