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SEATTLE - (Mealey's) Lead plaintiffs and defendants in a securities class action lawsuit against two subsidiaries of Washington Mutual Bank and certain of its officers and directors have agreed to a $26 million settlement on claims that the defendants misrepresented the investment quality of certain mortgage-backed securities in violation of federal securities law, according to court documents filed in Washington federal court on Sept. 4 (in re Washington Mutual Mortgage-Backed Securities Litigation, No. 09-0037, W.D. Wash.).
(Settlement memorandum available. Document #57-120910-099B.)
According to the settlement memorandum, which was filed in the U.S. District Court for the Western District of Washington by lead plaintiffs Doral Bank of Puerto Rico, Policeman's Annuity Benefit Fund of the City of Chicago and Boilermakers National Annuity Trust, defendants WaMu Asset Acceptance Corp., WaMu Capital Corp., David Beck, Diane Novak, Rolland Jurgens and Richard Carreaga have agreed to the settlement in exchange for dismissal of claims brought against them for violation of Sections 11, 12 and 15 of the Securities Act of 1933.
The settlement is subject to court approval.
The lead plaintiffs filed a second amended complaint in the District Court on April 1, 2010, alleging that the defendants misrepresented the underwriting practices used in originating the mortgage-backed securities that comprised a number of certificates that were sold to shareholders in violation of the Securities Act.
On Oct. 21, 2011, Judge Marsha J. Pechman certified a class consisting of "all persons or entities who purchased or otherwise acquired the following Certificates: 2006 AR-7 tranche 2A; 2006 AR-12 tranche 1A1; 2006 AR-16 tranches 2A1, LB1, LB2, LB3, 3B1, 3B2, and 3B3; 2006 AR-17 tranche 1A; 2006 AR-18 tranche 2A1; and 2007-HY1 tranches 1A1 and 3A3 on or before August 1, 2008 pursuant and/or traceable to their Registration Statements and accompanying Prospectuses filed with the SEC and who were damaged thereby."
Then, on July 23, Judge Pechman denied the defendants' motion for summary judgment, and the parties began settlement negotiations.
The lead plaintiffs are represented by Beth Kaswan and David R. Scott of Scott & Scott in New York; Anne L. Box and John T. Jasnoch of Scott & Scott in San Diego; Steven J. Toll, Joshua S. Devore and S. Douglas Bunch of Cohen Milstein Sellers & Toll in Washington, D.C.; Christopher Lometti and Daniel B. Rehns of Cohen Milstein in New York; and Kim D. Stephens and Janissa A. Strabuk of Tousley Brain Stephens in Seattle.
The defendants are represented by Louis D. Peterson and Brian C. Free of Hillis Clark Martin & Peterson in Seattle, John D. Pernick, David M. Balabanian and Frank Busch of Bingham McCutchen in San Francisco and Evan R. Chesler, Daniel Slifkin, Michael A. Paskin and Wes Earnhardt of Cravath, Swaine & Moore in New York.
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