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.
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
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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