Morgan Stanley Dean Witter Capital I (Morgan Stanley RMBS)

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Morgan Stanley Dean Witter Capital, Securities Settlement

The lawsuit was settled for $95 million in cash. The following is a summary of the proceedings in this lawsuit: ‘On December 2, 2008, MissPERS filed a class action complaint against Defendants and certain other defendants in the Superior Court of California, County of Orange (Initial Complaint). The case was subsequently removed to the United States District Court, Southern District of New York. This case arises from the sale of certain residential mortgage-backed securities by Morgan Stanley entities during 2006 and 2007. Plaintiffs alleged that the offering documents for the securities contained false and misleading statements about the underlying borrowers and collateral. Defendants deny that the offering documents contained misstatements and asserted factual and legal defenses. The Initial Complaint asserted claims under the Securities Act of 1933 (Securities Act) on behalf of persons or entities who purchased or otherwise acquired mortgage pass-through certificates in 13 offerings pursuant or traceable to Morgan Stanley Capital I Inc.’s March 14, 2006 Pre-Effective Amendment No. 2 to Form S-3 Registration Statement and its accompanying prospectuses and prospectus supplements.5 On May 7, 2009, West Virginia filed a class action complaint against Defendants and certain other defendants asserting Securities Act violations (West Virginia Complaint). The West Virginia Complaint asserted claims related to the 13 offerings in the Initial Complaint and 16 additional offerings. On July 17, 2009, the Court issued an order consolidating the cases, appointing West Virginia as lead plaintiff and Coughlin Stoia Geller Rudman & Robbins LLP (Robbins Geller) as lead counsel. On September 15, 2009, West Virginia filed the Consolidated Amended Complaint (Consolidated Complaint). On August 17, 2010, the Court granted in part Defendants motion to dismiss West Virginia claims for lack of standing and for failure to comply with the applicable statute of limitations, and afforded MissPERS leave to amend. The Court appointed MissPERS as co-lead plaintiff, and Bernstein Litowitz and Robbins Geller as co-lead counsel. On September 10, 2010, MissPERS filed the Second Amended Complaint (Second Complaint). The Second Complaint included additional named plaintiffs, including NECA-IBEW Health and Welfare Fund, Pompano Beach Police and Firefighters Retirement System, and Carpenters Pension Fund of West Virginia (New Plaintiffs), as well as two other plaintiffs that, subsequently, voluntarily dismissed their claims. On September 15, 2011, the Court granted in part and denied in part Defendants motion to dismiss the Second Complaint, and directed MissPERS and New Plaintiffs to amend as to certain allegations. On September 30, 2011, MissPERS and New Plaintiffs filed the Third Amended Complaint (Third Complaint). On July 16, 2012, the Court denied Defendants motion to dismiss. 20. On July 27, 2012, Defendants filed a motion to stay proceedings pending the outcome of two cases before the Second Circuit: (1) In re IndyMac Mortgage-Backed Securities Litigation, Nos. 11-2998-cv (L), 11-3036-cv (con) (2d Cir. July 21, 2011) (IndyMac); and (2) Citigroup Inc. v. International Fund Management S.A., No. 12-1903 (2d Cir. May 9, 2012). On September 20, 2012, MissPERS and New Plaintiffs filed a motion for reconsideration and to amend in light of the Second Circuit decision in NECA-IBEW Health & Welfare Fund v. Goldman, Sachs & Co., 693 F.3d 145 (2d Cir. 2012) (Goldman Sachs). On January 11, 2013, the Court granted MissPERS and New Plaintiffs motion for reconsideration and denied Defendants motion to stay. Specifically, the Court held that because it appears that MissPERS had standing under Goldman Sachs as of the time of the Initial Complaint to sue on behalf of purchasers of each of the 13 offerings, the outcome of the appeal pending before the Second Circuit in IndyMac will not affect the scope of Plaintiffs claims. Accordingly, on January 31, 2013, MissPERS and New Plaintiffs filed the Fourth Amended Complaint (Fourth Complaint or the Complaint), which asserted claims arising from 13 offerings included in the Initial Complaint. On March 8, 2013, Defendants filed their Answer to the Fourth Complaint. On July 11, 2013, Defendants filed a motion for reconsideration of the Court September 15, 2011 Order in light of the Second Circuit decision in Police and Fire Ret. Sys. of City of Detroit v. IndyMac MBS, Inc., 721 F.3d 95 (2d Cir. 2013). On August 30, 2013, MissPERS and New Plaintiffs filed their Motion for Class Certification and Appointment of Class Representatives and Co-Class Counsel. On May 27, 2014, the Court granted Defendants motion for reconsideration. The Order dismissed New Plaintiffs claims without prejudice to the litigation of those claims by one or more class representatives if MissPERS motion for class certification is granted. Lead Counsel conducted extensive investigations related to the claims at issue and the underlying events and transactions alleged in the Fourth Complaint, including through document discovery and obtaining testimony from witnesses. Lead Counsel have analyzed evidence, including a substantial volume of documents produced by Defendants and third parties, have consulted with experts, and have researched the applicable law with respect to the claims of Lead Plaintiffs and the Settlement Class, as well as Defendants potential defenses. On July 23, 2014, after extensive arm-length negotiations, the Settling Parties reached an agreement in principle to settle the Action for $95 million, subject to the negotiation of a complete set of settlement terms. The negotiation of the Stipulation was subsequently completed and filed with the Court. By Order entered September 10, 2014, the Court preliminarily approved the Settlement, certified the Settlement Class for purposes of the Settlement, authorized this Notice to be sent to potential Settlement Class Members, and scheduled the Final Approval Hearing to consider whether to grant final approval to the Settlement. On September 16, 2014, the Court entered an order scheduling the Final Approval Hearing for December 18, 2014, at 1:00 p.m.’


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