Harborview MBS Settlement
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Harborview MBS Securities Settlement
The lawsuit was settled for $275 million in cash. The following is a summary of the proceedings in this lawsuit: ‘On May 14, 2008, the New Jersey Carpenters Vacation Fund filed a complaint against, inter alia, the Defendants, in the Supreme Court of the State of New York, County of New York, Index No. 601451/08, asserting claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, 15 U.S.C. §§ 77k, 77l, and 77o (the Securities Act). On June 3, 2008, the Action was removed to the United States District Court for the Southern District of New York, Civ. No. 08-cv-5093. The case was assigned to the Honorable Harold Baer, Jr. On January 22, 2009, notice of the Action was published pursuant to the Private Securities Litigation Reform Act of 1995 (PSLRA), notifying eligible purchasers of their right to move for appointment as lead plaintiff. On June 30, 2009, the District Court appointed the New Jersey Carpenters Vacation Fund and Boilermaker Blacksmith National Pension Trust as Lead Plaintiffs and approved Lead Plaintiffs selection of Cohen Milstein Sellers & Toll PLLC as lead counsel. On May 19, 2009, Lead Plaintiffs filed the Consolidated First Amended Securities Class Action Complaint (the First Amended Complaint). The First Amended Complaint asserted claims concerning the purchase or sale of securities, issued in 15 residential mortgage-backed securities offerings2 (the Fifteen Original Offerings, each of which is sometimes referred to herein as an Offering), pursuant or traceable to two Registration Statements and accompanying Prospectuses filed with the Securities and Exchange Commission by Greenwich Capital Acceptance, Inc. on March 31, 2006 (No. 333-130961) and on March 23, 2007 (No. 333-140279), against The Royal Bank of Scotland Group, plc, RBS Financial Products Inc. f/k/a Greenwich Capital Financial Products, Inc., RBS Acceptance Inc. f/k/a Greenwich Capital Acceptance, Inc., RBS Securities Inc. f/k/a Greenwich Capital Markets, Inc. d/b/a RBS Greenwich Capital, and RBS Holdings USA Inc. f/k/a Greenwich Capital Holdings Inc. (collectively, the RBS Defendants), as well as Robert J. McGinnis, Carol P. Mathis, Joseph N. Walsh, III, John C. Anderson and James M. Esposito (collectively, the Individual Defendants and, together with the RBS Defendants, Defendants). On July 15, 2009, Defendants moved to dismiss the First Amended Complaint. On March 26, 2010, the Court issued a memorandum and order (the March 26, 2010 Order) granting in part and denying in part Defendants motions to dismiss. In the March 26, 2010 Order, the Court found that Lead Plaintiffs adequately alleged violations of the Securities Act against the Defendants for the Offerings in which the Lead Plaintiffs purchased securities, namely the Harborview Series 2006-4 and Harborview Series 2007-7 Offerings, by alleging Defendants failure to disclose that the mortgage originators systematically disregarded the applicable underwriting guidelines. The Court dismissed all other offerings from the case on standing grounds. The Court also dismissed claims based on the allegations that credit rating models were outdated, that credit enhancements were inadequate, and that Defendants purportedly omitted disclosure of material conflicts of interest with the Rating Agencies. On April 16, 2010, Defendants answered the First Amended Complaint. On July 12, 2010, a joint motion to intervene was filed by Lead Plaintiffs, Laborers Pension Fund and Health and Welfare Department of the Construction and General Laborers District Counsel of Chicago and Vicinity (Chicago Laborers), and Midwest Operating Engineers Pension Trust Fund (Midwest OE) seeking permission for Chicago Laborers and Midwest OE to intervene in the case to represent purchasers in certain of the Fifteen Original Offerings. On July 30, 2010, a second joint motion to intervene was filed by Lead Plaintiffs and Iowa Public Employees Retirement System (IPERS) seeking permission for IPERS to intervene in the case to represent purchasers in certain of the Fifteen Original Offerings. Lead Counsel also represents Chicago Laborers, Midwest OE, and IPERS in this Action. On December 22, 2010, the District Court issued an opinion and order granting the motions to intervene, restoring six of the Fifteen Original Offerings to the Action (the Intervenor Offerings). On July 15, 2010, Lead Plaintiffs moved to certify a class of purchasers of Certificates in the two Offerings in the case at that time, Harborview Mortgage Loan Trust, Series 2006-4 and 2007-7, to certify Lead Plaintiffs as Class Representatives and to appoint Cohen Milstein Sellers & Toll PLLC as Lead Counsel (the First Class Certification Motion). On January 3, 2011, Lead Plaintiffs filed the Consolidated Second Amended Securities Class Action Complaint, which, inter alia, added the claims of Chicago Laborers, Midwest OE, and IPERS. On January 18, 2011, the District Court denied the First Class Certification Motion (the First Class Certification Decision). While the District Court found that Lead Plaintiffs had satisfied all of the Rule 23(a) factors, including numerosity, commonality, adequacy and typicality, it found pursuant to Rule 23(b)(3) that individual issues of knowledge predominated and that the class action device was not the superior method of adjudication, precluding class certification. On January 21, 2011, Defendants moved to dismiss the claims asserted by Chicago Laborers, Midwest OE, and IPERS. On April 28, 2011, the District Court issued an order granting in part and denying in part Defendants motion to dismiss the claims of Chicago Laborers, Midwest OE, and IPERS. On February 1, 2011, Lead Plaintiffs filed a petition under Federal Rule of Civil Procedure 23(f) with the Second Circuit requesting interlocutory appeal of the District Court First Class Certification Decision. On April 29, 2011, the Second Circuit granted Lead Plaintiffs Rule 23(f) motion for an interlocutory appeal of the District Cour First Class Certification Decision. In a letter to the District Court dated May 5, 2011, Lead Counsel requested that the Court stay the Action pending the Second Circuit decision on the appeal of the Court First Class Certification Decision. On May 12, 2011, the District Court granted Lead Counsel request to stay the proceedings. On April 30, 2012, the Second Circuit affirmed the District Court denial of class certification on the ground that individual issues of knowledge predominated without prejudice to further motion practice in the District Court. In light of the Second Circuit decision, Lead Plaintiffs moved the District Court for permission to conduct additional discovery, and on May 7, 2012, the District Court granted that motion, setting an August 6, 2012 deadline for the submission of any additional class certification motions. On August 6, 2012, Lead Plaintiffs filed their renewed motion for class certification as to the two Offerings they purchased (the Second Class Certification Motion). Lead Plaintiffs restricted the temporal scope of the class to encompass only purchases prior to any downgrades of the Certificates and eliminated the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation from the class definition. On October 15, 2012, the Court granted in part the Second Class Certification Motion and appointed Lead Plaintiffs as the class representatives for the two Offerings they purchased (the Second Class Certification Order). The Court, however, further limited the class definition to those purchasers who bought the Certificates on the date of each initial offering directly from the issuers. On November 5, 2012, Lead Plaintiffs sought reconsideration of the Second Class Certification Order, seeking to expand the class to include those purchasers who bought the Certificates up to ten trading days after the initial offering date, which Defendants opposed. On November 16, 2012, Lead Plaintiffs sought reconsideration of the Court March 26, 2010 Order dismissing claims as to those offerings in which no Lead Plaintiff purchased securities in light of NECA-IBEW Health & Welfare Fund v. Goldman, Sachs & Co., 693 F.3d 145 (2d Cir. 2012) (NECA-IBEW). Plaintiffs reconsideration motion sought to reinstate claims with respect to twelve of the Fifteen Original Offerings that had previously been dismissed. On November 16, 2012, Defendants filed a motion to dismiss the Intervenor Offerings as barred by the statute of repose. On January 3, 2013, the District Court denied Defendants motion to dismiss the Intervenor Offerings. In the same Order, the District Court denied Lead Plaintiffs motion for reconsideration under NECA-IBEW without prejudice to renewal of the motion following a determination by the U.S. Supreme Court on whether or not to grant certiorari in NECA-IBEW. The District Court, also in the same Order, granted Lead Plaintiffs application for modification of the class definition (the Amended Second Class Certification Order). On October 31, 2012 and January 17, 2013, Defendants petitioned the Second Circuit for permission to appeal the District Court Second Class Certification Order and Amended Second Class Certification Order pursuant to Federal Rule of Civil Procedure 23(f). The Second Circuit denied both petitions on March 26, 2013. On April 30, 2013, following the U.S. Supreme Court denial of the certiorari petition in NECA-IBEW, the Court granted Lead Plaintiffs motion for reconsideration of the Court March 26, 2010 Order. After this decision, twelve of the Fifteen Original Offerings were restored to the case, resulting in a total of fourteen offerings being at issue (Fourteen Remaining Offerings). On May 10, 2013, Plaintiffs filed a Consolidated Third Amended Securities Class Action Complaint, and on May 13, 2013 filed a Corrected Consolidated Third Amended Securities Class Action Complaint (Third Amended Complaint), which asserted claims in relation to the Fourteen Remaining Offerings in the case. On June 10, 2013, Defendants answered the Third Amended Complaint. On June 25, 2013, Lead Plaintiffs filed a motion to modify the class to encompass the additional Offerings reinstated by NECA-IBEW and add IPERS and Midwest OE as Additional Class Representatives (Lead Plaintiffs Third Class Certification Motion.). On August 14, 2013, Defendants filed a motion for reconsideration seeking the dismissal of four of the Reinstated Offerings on statute of repose grounds based on the Second Circuit decision in Police & Fire Retirement System of Detroit v. IndyMac MBS, Inc, 721 F.3d 95 (2d Cir. 2013). On December 18, 2013, the District Court granted in part and denied in part Defendants motion, dismissing two Offerings from the case. On December 27, 2013, the District Court granted Lead Plaintiffs Third Class Certification Motion, expanding the class to encompass the Fourteen Remaining Offerings and appointing Midwest OE and IPERS as additional Class Representatives. On or around September 2013, Lead Counsel and Defendants began mediation under the auspices of Judge Layn Phillips, a former Federal District Court Judge. The Settling Parties reached an agreement in principle on February 14, 2014 with respect to the Settlement Amount of $275 million and certain related terms. The same day, Lead Counsel and Defendants Counsel notified the District Court and Second Circuit of the agreement in principle to settle the Action. 45. On February 24, 2014, the Settling Parties executed a term sheet setting forth certain terms of the Settlement subject to the completion of definitive documentation and Court approval. Lead Counsel has conducted extensive discovery relating to the claims and the underlying events and transactions alleged in the Third Amended Complaint. Lead Counsel has analyzed evidence adduced in discovery, including reviewing over 5.8 million pages of documents produced by Defendants and third parties, taking and defending a number of depositions, and gathering and closely examining thousands of loan files. Lead Counsel researched the applicable law with respect to the claims of Plaintiffs and the Settlement Class against the Defendants, as well as the potential defenses thereto, retained and consulted with numerous experts in the areas of damages, loan reunderwriting and due diligence, among others, and has actively litigated this case for the past six years. On June 18, 2014, the case was reassigned to the Honorable Loretta A. Preska. On July 17, 2014, the Court authorized this Notice to be sent to potential Class Members, certified the Settlement Class for purposes of the Settlement and scheduled the Final Approval Hearing to consider whether to grant final approval of the Settlement.’