Taking It to the Hill: Congress Urged to Unify Standards for Advisers and Brokers

Taking It to the Hill: Congress Urged to Unify Standards for Advisers and Brokers - 10/6/2009

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

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Taking It to the Hill: Congress Urged to Unify Standards for Advisers and Brokers
Staff Writer

Associated Press. October 6, 2009
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EXCERPT: In the latest of the subprime and credit crisis cases to be dismissed, on September 30, 2009, District of Massachusetts Judge Richard G. Stearns dismissed the securities class action lawsuit that had been filed by purchasers of mortgage pass-through certificates against Nomura Asset Acceptance Corporation, certain of its directors and officers, the eight mortgage trusts that had issued the certificates, and the offering underwriters who had supported the 2005 and 2006 public offerings of the certificates. […] As discussed in my prior post about this case, the plaintiffs initially filed their complaint against Nomura in Massachusetts state court, but the defendants removed the case to federal court. After plaintiffs had amended their complaint, the defendants moved to dismiss. […] In their amended complaint, the plaintiffs alleged that in connection with each of the eight separate certificate offerings, the defendants had misled investors with respect to the loan underwriting by the originators of the mortgages in the trusts; with respect to the originators’ appraisal practices; with respect to level of delinquencies for the mortgages in the trusts; and with respect to the certificates’ investment ratings. The court first addressed the standing of the plaintiffs to assert claims against the eight trusts, which, Judge Stearns noted, "are separate legal entities" that "each issued its own securities backed by different pools of mortgages." Judge Stearns found that because the named plaintiffs had only bought certificates from three of the eight defendant trusts, "the named plaintiffs are incompetent to allege an injury caused by purchase of Certificates that they themselves never purchased." Judge Stearns held, based on the "overwhelming weight of authority," that the named plaintiffs lacked constitutional standing to assert claims against the five trusts from which they had not purchased certificates.

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