underwriting guidelines

RMBS Cases Against UBS Dismissed as Time-Barred

On July 31, Judge Cecchi of the District of New Jersey dismissed with prejudice as time-barred claims filed by the Pension Trust Fund for Operating Engineers alleging misstatements and omissions in the offering documents for US$5 million in RMBS. Judge Cecchi determined that there were adequate storm warnings more than a year prior to the date when plaintiffs filed their claims that the originators of the loans underlying the securities at issue had abandoned their underwriting guidelines. The court held that this was sufficient to put the plaintiffs on inquiry notice and to trigger the running of the statute of limitations for their 1933 Act claims. A previous complaint had been dismissed as time barred with leave to amend, but the court determined that a second amended complaint would be futile and dismissed with prejudice. Order.

Judge Denies Washington Mutual’s Motion for Summary Judgment

On July 23, Judge Marsha Pechman of the United States District Court for the Western District of Washington denied Washington Mutual’s motion for summary judgment. Plaintiffs allege that Washington Mutual misrepresented the extent to which its underwriting guidelines were lowered and unevenly applied in connection with the sale of RMBS, including that the underwriters at Washington Mutual had substantial discretion to deviate from the already lowered guidelines. Judge Pechman held that the plaintiff class raised a genuine dispute as to whether the statements in the offering documents were false and misleading based on alleged systematic deviation from underwriting guidelines. Decision.