According to the complaint, this action arises from defendants' sale of mortgage pass-through certificates (the "Certificates") based upon false and misleading offering documents. Mortgage pass-through certificates are securities entitling the holder to income payments from pools of loans and mortgage-backed securities aggregated and bundled for the purpose of selling certificates to institutional investors such as Plaintiff Similar to other asset-backed securities, the value of pass-through certificates is dependent on the ability of the underlying borrowers to repay their loans (principal and interest) and the adequacy of collateral in the event that borrowers cannot do so.
Specifically, the JP Morgan Entities did not disclose in the documents, inter alia, that the loan originators that had originated the mortgages to borrowers had ignored and/or never intended to follow the stated underwriting and appraisal standards and guidelines, and that JP Morgan Acquisition ignored its loan purchasing guidelines. The underlying mortgages were also loans on properties for which the collateral appraisals materially overstated the value of the underlying properties. Thus, the Certificates that were sold to investors as investment-grade instruments were later revealed to be below investment-grade instruments. As underlying mortgage borrowers become delinquent, default and suffer foreclosures, the purportedly investment-grade Certificates have been downgraded, cash flows have suffered and the Certificates have lost value. As a direct and proximate result of defendants' false and materially misleading statements and material omissions alleged herein, Plaintiff suffered damages when the truth about the risk profile and value of the Certificates became known, causing the price to drop.
On April 8, 2010, Judge John G. Koeltl granted the motion to appoint the Employees Retirement System of the Government of the Virgin Islands as Lead Plaintiff. The law firm of Robbins Geller Rudman & Dowd LLP was appointed Lead Counsel. On April 9, 2010, the lead plaintiff filed an Amended Complaint. On May 6, 2010, a notice of voluntary dismissal was filed, dismissing the action with prejudice against the various Trusts. The next day, Judge Koeltl signed the order dismissing the action against the 11 various Trusts.
On May 24, 2010, the defendants filed a motion to dismiss the Amended Complaint. Before any ruling, the lead plaintiff filed a Second Amended Complaint on July 8, 2010. On August 9, 2010, the defendants responded by filing motions to dismiss the Second Amended Complaint. By the Order entered on March 30, 2011 and the Amended Order entered on May 10th, Judge John G. Koeltl granted in part and denied in part the defendants’ pending motion to dismiss.
The parties are currently in the discovery phase of the proceedings.
On July 12, 2012, the Court issued an Order appointing lead plaintiffs and approving the selection of lead counsel.
On January 4, 2013, the Court issued an Order revising its earlier May 9, 2011 Order.
On September 30, 2014, the Court issued an Order granting in part and denying in part Plaintiffs' motion for class certification.
On July 17, 2015, the parties filed a Settlement Agreement. This Settlement was preliminarily approved by the Court on August 4. The Settlement was granted Final Approval on December 4, and judgment was entered in this case.