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| Copyright The Pacific City Sun 2012 |
Monday, April 9, 2012
European Banks Sue Countrywide and Merrill Lynch Over Toxic Mortgage-Backed Securities
European Banks Sue Countrywide and Merrill Lynch Over Toxic Mortgage-Backed Securities
European Banks Sue Countrywide and Merrill Lynch Over Toxic Mortgage-Backed Securities
(CN) - In seperate complaints, two European banks claim in New York Supreme Court that Merrill Lynch and Countrywide duped them into investing hundreds of millions of dollars in mortgage-backed securities.
Dexia SA/NV of Belgium sued Merrill Lynch and Landesbank Baden-Wurttemberg of Germany named Countrywide as a defendant.
Dexia alleges that Merrill Lynch misled the institution about $527 million worth of residential mortgage-backed securities, while Landesbank claims Countrywide misled it about $455 million worth of RMBS.
Merrill Lynch claimed it investigated both the mortgage lenders and the loan applicants before packaging the loans into the now infamously toxic financial products.
"In truth, and as Dexia and the world would only later discover, the originators whose loans collateralized the Merrill Lynch RMBS at issue were among the worst of the worst culprits in the subprime lending industry. These originators have since folded up their operations, filed for bankruptcy or been shut down by regulators, and are the subject of numerous governmental investigations and private lawsuits alleging misconduct arising out of pervasive illegal and improper mortgage lending practices and other violations of law," the lawsuit states."Merrill Lynch learned that the originators routinely and flagrantly disregarded their own underwriting guidelines, originated loans based on wildly inflated appraisal values, and manipulated the underwriting process in order to issue to borrowers loans who had no plausible means to repay them,"
Landesbank Baden-Wurttemberg's lawsuit involves $455 million worth of bad RMBS sold by Countrywide, touted by the company as sound investments with AAA ratings.
"As (Landesbank Baden-Wurttemberg) would only later discover, the originators of those loans . . . were among the worst culprits in the subprime industry," the complaint reads. "Countrywide also knowingly provided false information to the credit rating agencies to secure an investment grade rating for its RMBS."
Both plaintiffs claim in their complaints that because of the astounding loan default rates and massive downgrades of the certificates, which are all now considered "junk," the companies investments are no longer marketable. The lawsuits name Merill Lynch, Countrywide and a host of subsidiaries and corporate officers.
The lawsuits were filed by Gerald H. Silk, Avi Josefson and Ross Shikowitz of Bernstein Litowitz Berger & Grossmann LLP of New York.
Dexia SA/NV of Belgium sued Merrill Lynch and Landesbank Baden-Wurttemberg of Germany named Countrywide as a defendant.
Dexia alleges that Merrill Lynch misled the institution about $527 million worth of residential mortgage-backed securities, while Landesbank claims Countrywide misled it about $455 million worth of RMBS.
Merrill Lynch claimed it investigated both the mortgage lenders and the loan applicants before packaging the loans into the now infamously toxic financial products.
"In truth, and as Dexia and the world would only later discover, the originators whose loans collateralized the Merrill Lynch RMBS at issue were among the worst of the worst culprits in the subprime lending industry. These originators have since folded up their operations, filed for bankruptcy or been shut down by regulators, and are the subject of numerous governmental investigations and private lawsuits alleging misconduct arising out of pervasive illegal and improper mortgage lending practices and other violations of law," the lawsuit states."Merrill Lynch learned that the originators routinely and flagrantly disregarded their own underwriting guidelines, originated loans based on wildly inflated appraisal values, and manipulated the underwriting process in order to issue to borrowers loans who had no plausible means to repay them,"
Landesbank Baden-Wurttemberg's lawsuit involves $455 million worth of bad RMBS sold by Countrywide, touted by the company as sound investments with AAA ratings.
"As (Landesbank Baden-Wurttemberg) would only later discover, the originators of those loans . . . were among the worst culprits in the subprime industry," the complaint reads. "Countrywide also knowingly provided false information to the credit rating agencies to secure an investment grade rating for its RMBS."
Both plaintiffs claim in their complaints that because of the astounding loan default rates and massive downgrades of the certificates, which are all now considered "junk," the companies investments are no longer marketable. The lawsuits name Merill Lynch, Countrywide and a host of subsidiaries and corporate officers.
The lawsuits were filed by Gerald H. Silk, Avi Josefson and Ross Shikowitz of Bernstein Litowitz Berger & Grossmann LLP of New York.
Copyright Courthouse News Service 2012
Chevron Forum Shopping Bylaw Invalid, Shareholder Says
Chevron Forum Shopping Bylaw Invalid, Shareholder Says
Chevron Forum Shopping Bylaw Invalid, Shareholder Says
(CN) - Chevron got slapped with a shareholder derivative action for adopting a "forum shopping" bylaw requiring shareholder actions to be filed in the Delaware Court of Chancery to the exclusion of all other courts.Stephen Bushansky claims the bylaw is invalid because it conflicts with federal constitutional and statutory provisions and infringe upon federal jurisdiction of the California courts as well as other state courts.
Plaintiff asserts that the bylaw is not enforceable because its provisions attempt to subject stockholders to Delaware's legal processes in conflict with other state, federal and due process laws.
"Moreover, the Exclusive Forum Bylaw provides that any stockholder who sues in any forum other than the Delaware Court of Chancery may be sued by the company for breach of the Exclusive Forum Bylaw and held liable for the company's expenses in the other forum," the complaint states.
In addition, the bylaw "requires that actions arising under provisions of the Delaware General Corporation Law that are actions at law, rather than actions at equity, must be brought in the Delaware Court of Chancery even though the court's statutorily and historically defined jurisdiction excludes such claims," the complaint states.
Bushansky named board chairman and CEO John Watson as well as board members and company directors Samuel Armacost, Linnet Deily, Robert Denham, Robert Eaton, Chuck Hagel, Enrique Hernandez Jr., Franklyn Jenifer, George Kirkland, Sam Nunn, Donald Rice, Kevin Sharer, Charles Shoemate, John Stumpf, Ronald Sugar and Carl Ware as defendnats.
He is seeking an order preventing the company from enforcing the bylaw, to have it declared invalid, requiring the company repay any damages or losses that it has caused as well as any court costs and attorney's fees generated by shareholder action.
Bushansky, of New York, filed the complaint in the San Francisco Division of the U.S. District Court of Northern California. He is represented by Joseph H. Weiss, James E. Tullman and Joshua M. Rubin of Weiss & Lurie of New York and by Leigh A. Parker in Los Angeles.
Copyright Courthouse News Service 2012
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