As a result of the First Circuit's January 20, 2011
opinion, the plaintiffs in the Nomura Asset Acceptance Corporation
mortgage-backed securities lawsuit have managed to revive a slender portion of
their case, albeit on a rather precarious basis. The First Circuit otherwise
affirmed the lower court's dismissal of the remainder of their case.
The First Circuit's opinion could be influential in other
mortgage-backed securities suits, particularly on questions surrounding the
standing of claimants to assert claims based on offerings in which they did not
The First Circuit's January 20 opinion can be found here.
As discussed here, purchasers of
mortgage pass-through certificates filed this action in March 2008 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
On September 30, 2009, District of Massachusetts Judge Richard G.Stearns
granted the defendants' motions to dismiss, as discussed here.
Judge Stearns held that the plaintiffs lacked standing to assert claims in
connection with the six out of the eight offerings in which the named
plaintiffs had not purchased certificates. Judge Stearns found that the
plaintiffs had not adequately pled claims with respect to the two remaining
With respect to the plaintiffs' allegations concerning
the mortgage originators' underwriting standards, Judge Stearns found that the
offering documents contain a "fusillade of cautionary statements"
that "abound with warnings about the potential perils." Judge Stearns
noted that plaintiffs' contention that they were not "on notice" of
those perils "begs credulity."
The plaintiffs appealed.
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