On January 3, 2007, the Court entered the Memorandum Opinion and Order # 94096, the plaintiff’s request to reopen discovery is denied.
On September 20, 2006, the Court entered the Order (Certified Copy) from the U.S. Court of Appeals for the Second Circuit. According to the Order, Petitioner Teamsters Local 445 Freight Division Pension Fund seeks permission to appeal, pursuant to Fed. R. Civ. P. 239(f), the district court's order denying its motion for class certification. Upon due consideration, it is ordered that the Fed. R. Civ. P. 23 (f) petition is granted. A scheduling order shall issue forthwith.
According to an article dated August 8, 2006, on August 1, 2006, Judge Scheindlin denied the plaintiff’s motion for class certification. Plaintiff union pension fund sought class certification in its action under §§10(b) and 20(a) of the Securities Exchange Act and SEC Rule 10b-5 on claims that defendants Bombardier Capital Mortgage Securitization Corp. and Bombardier Capital Inc. (BCI) defrauded investors by misrepresenting the integrity of certain certificates. It alleged that BCI's management disregarded underwriting standards, infecting the collateral pool with uncreditworthy borrowers. The court denied certification. Noting that positive statements, not omissions, are central to the alleged fraud, it held that plaintiff could not rely on the presumption of reliance under Affiliated Ute Citizens v. United States. Because plaintiff failed to show that the certificates market was efficient, it could not rely on the fraud on the market presumption of transaction causation. Thus plaintiff's putative class action failed the predominance requirement of Federal Rule of Civil Procedure 23(b)(3).
In a press release dated September 15, 2005, for the foregoing reasons, defendants' motion to dismiss is denied in part and granted in part, without prejudice, and with leave to replead within twenty days of receipt of this Opinion and Order. The Clerk of the Court is directed to close the motion [Docket #16]. A conference is scheduled for September 15, 2005, at 2:30 p.m.
On May 16, 2005, a Stipulation and Order of Dismissal was signed by Judge Shira A. Scheindlin. According to the Order, the Underwriter defendants, Credit Suisse First Boston LLC, J.P. Morgan Securities, Inc., and Prudential Equity Group, LLC were dismissed from the action without prejudice and without costs to any party.
The class action lawsuit was filed on behalf of all persons and entities that purchased Bombardier Capital Mortgage Securitization Pass-Through Certificates Series 2000A. The claims asserted arise under Sections 10 and 20 of the 1934 Act and New York common law.
The complaint alleges that during the Time Period, Bombardier Capital's prospectus disseminated in connection with the offering of the Certificates contained materially false and misleading information concerning the manufactured housing loans originated during 1997 through 1999, which were pooled together to serve as collateral for the Certificates. These misstatements which detailed the underwriting and loan origination procedures and represented that they were in compliance with underwriting standards were influential in obtaining a high-quality credit rating for the Certificates, and in turn enabled the Certificates to trade at artificially inflated values. Truth be known to the defendants -- but not the investing public -- that all underwriting standards were abandoned and the Company recklessly approved manufactured housing loans to borrowers with shoddy credit and income histories. In late 2002, Fitch rating agency downgraded the Certificates, citing a deterioration in the manufactured housing market. The truth was only revealed, in part, as of February 2, 2004, when Fitch downgraded the Certificates explaining "a combination of underwriting problems and servicing problems have resulted in the highest cumulative losses of any manufactured housing lender."