Overcoming a major legal hurdle, the Wyoming Retirement System and Wyoming State Treasurer obtained class certification in a federal lawsuit brought on behalf of investors in nine IndyMac mortgage-backed securities offered in 2006 and 2007.
Berman DeValerio represents the two Wyoming lead plaintiffs in their effort to recoup money from the six banks that underwrote the offerings, as well as IndyMac MBS, the unit of now-defunct IndyMac Bank that issued the once highly rated securities without disclosing that they were packed with hastily granted home loans to high-risk borrowers. IndyMac Bank was seized by the federal government in 2008 in what regulators then called the second-largest bank failure in U.S. history.
A $6 million partial settlement with five individual defendants awaits judicial approval. The individual defendants, former directors and officers of IndyMac MBS, had signed registration statements for the MBS offerings filed with the Securities and Exchange Commission.
In his August 17 opinion, the Hon. Lewis A. Kaplan of New York’s Southern District Court certified the class with respect to nine mortgage-backed securities. In his opinion, Judge Kaplan said allowing the lawsuit to proceed as a class action “has clear benefits that outweigh any issues raised by defendants,” who had argued that plaintiffs should be forced to sue individually.
The Wyoming plaintiffs filed the lawsuit in 2009, alleging that issuers and underwriters misled investors when describing the loan underwriting process and standards underlying the mortgage-back securities offering.
The plaintiffs’ complaint states that the issuers and underwriters misled investors because the loans underpinning the securities did not adhere to the lending standards described in the offering statements. Further, plaintiffs allege that the underwriters did not perform sufficient due diligence on IndyMac and the loans before selling the securities to the public.
The case is In re IndyMac Mortgage-Backed Securities Litigation, 09-civ-4583 (S.D.N.Y.). Judge Kaplan’s memorandum opinion is available by clicking here.
*In August 2017, our firm name changed to Berman Tabacco. Case references and content published before that date may refer to the firm under our prior name, Berman DeValerio.