Ally Financial’s Motions to Dismiss FHFA Claims Granted in Part

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On December 19, 2012, Judge Denise Cote of the federal district court for the Southern District of New York decided motions to dismiss FHFA’s action against Ally Financial and underwriters of Residential Capital securities. The court dismissed claims of owner-occupancy and LTV-ratio fraud, Virginia Securities Act claims for certificates purchased before September 6, 2006, and Virginia Securities Act and Section 12(a)(2) claims with respect to certificates purchased from parties other than defendants. The court denied the remaining aspects of the motions to dismiss, including defendants’ requests that the court strike the demand for punitive damages, that the claims against Ally Financial Inc. be dismissed based on lack of control of the alleged primary violators, and for dismissal of the allegations against underwriter defendants that are not based on owner-occupancy and LTV fraud. Decision.