On March 16, 2011, the FDIC filed a complaint against former Washington Mutual CEO, Kerry K. Killinger and his spouse, former COO Stephen J. Rotella and his spouse, and former home loans president David C. Schneider in the US District Court of the Western District of Washington. The complaint alleges that Killinger, Rotella, and Schneider profited by recklessly increasing the risk profile in WaMu’s held-for-investment loan portfolio. The complaint further alleged that these executives were responsible for WaMu’s higher risk home lending program that eventually caused the demise of the bank. In addition to the claims against Killinger, Rotella and Schneider for gross negligence, ordinary negligence and breach of fiduciary duty, the FDIC also asserted claims against Killinger’s and Rotella’s wives, alleging that Killinger and Rotella fraudulently conveyed valuable assets to their wives in order to hinder, delay, or defraud their creditors. Complaint.
Washington Mutual
Allstate Sues Merrill Lynch and Credit Suisse for Fraud
On February 28, 2011, Allstate Insurance, represented by Quinn Emanuel, filed complaints against Merrill Lynch and Credit Suisse affiliated entities in New York state court in connection with Allstate’s purchase of RMBS from those entities. The complaints follow similar complaints by Allstate against JP Morgan, Washington Mutual, Bear Stearns, Citigroup, and Deutsche Bank entities. The complaints allege that defendants fraudulently misrepresented the quality of the loans underlying the RMBS they underwrote and sold to plaintiff. Both complaints allege causes of action for common law fraud, fraudulent inducement, and negligent misrepresentation. The complaint against Merrill Lynch also adds claims for violations of Sections 11, 12(a)(2), and 15 of the ’33 Act. Allstate purchased over $167 million in RMBS from Merrill Lynch and over $231 million from Credit Suisse. CS Complaint. Merrill Complaint.
Allstate Sues JP Morgan, Washington Mutual, Bear Stearns, Citigroup, and Deutsche Bank for Fraud
On February 18, 2011, Allstate Insurance filed complaints against Citigroup- and Deutsche Bank-affiliated entities in New York state court. Two days earlier, Allstate filed a similar complaint in the same court against a number of JP Morgan, Washington Mutual, and Bear Stearns entities. The three complaints each allege that defendants fraudulently misrepresented the quality of the loans underlying the RMBS they underwrote and sold to plaintiff. Allstate brings causes of action for negligent misrepresentation and common law fraud in all three actions and for violations of Sections 11 and 12(a)(2) of the ’33 Act against JP Morgan and Citigroup but not Deutsche Bank. Allstate purchased over $200 million in RMBS from Citigroup, over $185 million from Deutsche Bank, and over $750 million from JP Morgan. Complaint Against Citigroup. Complaint Against Deutsche Bank.
Allstate Sues JP Morgan, WaMu and Bear Stearns Over Sale of RMBS
On February 16, 2011, several Allstate Insurance entities filed a complaint against a number of JP Morgan, Washington Mutual and Bear Stearns entities and certain Washington Mutual directors and officers in the Southern District of New York. Plaintiffs allege that defendants misrepresented the quality of the loans underlying over $757 million in RMBS they sold to Allstate. Allstate is represented by the Quinn Emanuel firm. Complaint.