The complaint was originally filed in the Supreme Court in the State of New York on June 3, 2008 but was removed to the Southern District Court of New York after a motion filed by Moody's.
The complaint charges certain officers and directors of the underwriter Credit Suisse, as well as credit ratings institutions Moody's and DBRS with misleading investors in regards to the risk levels of Mortgage Pass-Through Certificates. Plaintiffs allege that the Underwriter did not use proper due diligence in assessing the securities and that the ratings agencies assigned the securities the highest ratings levels despite being tied to the high-risk subprime market.
On January 22, 2009, Judge Paul A. Crotty signed the Order granting the motion to appoint the New Jersey Carpenters Health Fund as lead plaintiff and approved the lead plaintiff’s selection of the law firm of Schoengold Sporn Laitman & Lometti, P.C. as lead counsel. On March 23, 2009, the lead plaintiffs filed an Amended Class Action Complaint. On June 24, 2009, the defendants responded by filing a motion to dismiss the Amended Class Action Complaint. On June 25, 2009, the lead counsel was substituted with Cohen Milstein Sellers & Toll, PLLC.
According to the Order entered on March 29, 2010, the Court grants Defendants' motion to dismiss regarding Plaintiff's lack of standing as to: (i) all claims arising from the three Offerings (HEMT 2006-4; HEMT 2006-6; and HEMT 2007-2), none of which Plaintiff purchased, and (ii) claims arising from Section 12 of the Securities Act for failure to allege that it was a direct purchase of HEMT 2006-5. Plaintiff has leave, however, to replead allegations regarding the Section 12 claims. The Court denies Defendants' motion to dismiss allegations relating to the systematic abandonment of the Guidelines. Finally, the Court grants Defendnats' motion to dismiss as to allegations relating to appraisals and appraisal practices, loan-to-value ratios, and ratings and rating methodology; In sum, the following remains of plaintiff's action: (i)claims under both Section 11 and Section 15 relating to the abandonment of the Guidelines regarding only HEMT 2006-5 and subject to correcting the pleading deficiency regarding Section 12 standing, (ii) Section 12 claims relating to the abandonment of the Guidelines regarding only HEMT 2006-5.
On April 14, 2010, the plaintiffs filed a Second Amended Complaint. On September 14, 2010, the plaintiffs filed a motion to certify the class, which was granted on August 16, 2011.
On November 11, 2011, the Court issued a Joint Order Approving the Form and Method of Distribution of Notice of Pendency of Class Action pursuant to Fed. R. Civ. P. 23(c)(2)(8), and that the proposed Notice Program is the best notice that is practicable under the circumstances and comports with due process.
On January 23, 2013, the Court issued an Order granting in part and denying in part Plaintiff's motion for reconsideration of the Court's March 29, 2010 Order.
On December 21, 2015, the parties agreed to a Stipulation of Settlement. This Settlement was preliminarily approved by the Court on January 6, 2016. On May 10, 2016, the Court granted final approval of the Settlement and dismissed this case.