According to a press release dated January 26, 2009, the complaint charges Deutsche Alt-A, certain of its officers and directors and the issuers and underwriters of the Certificates with violations of the Securities Act of 1933. Deutsche Bank Securities is a securities firm which provides a range of financial services, including engaging in the mortgage banking business.
Deutsche Securities acted as the underwriter in the sale of Deutsche Alt-A offerings, helping to draft and disseminate the offering documents. Deutsche Securities was the underwriter for all of the Trusts.
The complaint alleges that, on May 1, 2006, Deutsche Alt-A and the Defendant Issuers caused the Registration Statement to be filed with the Securities and Exchange Commission in connection with the issuance of billions of dollars of Certificates. The Certificates were issued pursuant to Prospectus Supplements, each of which was incorporated into the Registration Statement. The Certificates included several classes or tranches, which had various priorities of payment, exposure to default, interest payment provisions and/or levels of seniority.
The Certificates were supported by large pools of mortgage loans. The Registration Statement represented that the mortgage pools would primarily consist of loan groups generally secured by first liens on residential properties, including conventional, adjustable rate and negative amortization mortgage loans.
The complaint alleges that the Registration Statement omitted and/or misrepresented the fact that the sellers of the underlying mortgages to Deutsche Alt-A were issuing many of the mortgage loans to borrowers who:(i) did not meet the prudent or maximum debt-to-income ratio purportedly required by the lender; (ii) did not provide adequate documentation to support the income and assets required to issue the loans pursuant to the lenders’ own guidelines; (iii) were steered to stated income/asset and low documentation mortgage loans by lenders, lenders’ correspondents or lenders’ agents, such as mortgage brokers, because the borrowers could not qualify for mortgage loans that required full documentation; and (iv) did not have the income or assets required by the lenders’ own guidelines necessary to afford the required mortgage loan payments, which resulted in loans that borrowers could not afford to pay.
According to the complaint, by the fall of 2007, the truth about the mortgage loans that secured the Certificates began to be revealed to the public. As a result, the Certificates are no longer marketable at prices anywhere near the price paid by plaintiff and the Class and the holders of the Certificates are exposed to much more risk with respect to both the timing and absolute cash flow to be received than the Registration Statement/Prospectus Supplements represented.
On January 8, 2009, Judge Leonard D. Wexler denied the plaintiffs’ motion to remand the action back to State Court. On May 5, 2009, the plaintiffs filed a motion for appointment of lead plaintiff and lead counsel. On May 18, 2009, Judge Wexler granted the motion. According to the Order, the Massachusetts Bricklayers and Mason Trust Funds and the Pipefitters’ Retirement Fund Local 597 are appointed lead plaintiffs and the law firms of Coughlin Stoia Geller Rudman & Robbins, L.L.P. and Labaton Sucharow L.L.P., are approved as lead counsel. On June 18, 2009, the lead plaintiffs filed an Amended Class Action Complaint. On November 6, 2009, the defendants filed a motion to dismiss the Amended Complaint.
On April 6, 2010, Judge Leonard D. Wexler granted in part and denied in part the defendants’ motion to dismiss. Plaintiffs are given leave to re-plead. On May 24, 2010, the plaintiffs filed a Second Amended Complaint. The defendants responded by filing a motion to dismiss the Second Amended Complaint on September 14, 2010, which was denied on December 23, 2010.
According to a Memorandum and Order dated, February 24, 2011, the motions for a stay of discovery and/or an order pursuant to 28 U.S.C. § 1292(b) were denied by the Court and discovery was ordered to proceed.
On October 10, 2011, the plaintiff filed a motion to certify the class. As a result of the case in mediation, the motion to certify the class was denied on November 1, 2011, without prejudice to renewal if this matter is not concluded at the mediation.
On March 29, 2012, the Court issued an Order Preliminarily Approving Settlement and Providing For Notice.
On July 11, 2012, the Court issued an Order Approving Plan of Allocation of Settlement Proceeds. On the same date, the Court also issued an Order awarding attorneys' fees and expenses.
On July 11, 2012, the Court issued a Final Order and Judgment.