Goldman Sachs Settles RMBS Suit
On February 6, plaintiffs Union Central Life Insurance, Ameritas Life Insurance, and Acacia Life Insurance filed a letter with the court stating that they had reached an agreement with Goldman Sachs to settle claims arising out of the insurance companies' investments in RMBS sponsored by Goldman Sachs. The details of the settlement are not public. The plaintiffs had asserted causes of action for violations of federal securities laws as well as for common law fraud, negligent misrepresentation, and unjust enrichment. Letter.
RMBS Fraud Claims Against Bank of America Dismissed
On February 6, Judge Stanley Chesler of the United States District Court for the District of New Jersey granted in part and denied in part Bank of America's motions to dismiss two related cases filed against it by several Prudential Insurance Company affiliates. Prudential asserted common law fraud, misrepresentation, and RICO claims against several Bank of America entities arising out of Prudential's investment in $1.9 billion in RMBS. Judge Chesler dismissed Prudential's fraud claim, holding that Prudential failed to adequately allege falsity and/or scienter in connection with alleged misstatements concerning occupancy status, appraisals, and credit ratings. He also held that, for the 21 securitizations at issue for which Bank of America served as underwriter only, Prudential failed to allege with the required specificity which Bank of America entity made which challenged representations. Judge Chesler dismissed both of Prudential's negligent misrepresentation claims. He granted Prudential limited leave to amend in connection with the fraud claim relating to those securitizations for which Bank of America served as underwriter only. Opinion.
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