|
 U.S. District Judge Harold Baer said investors may now pursue claims
as a group against Citigroup Inc <C.N>, Goldman Sachs Group Inc <GS.N>
and UBS AG <UBSN.VX> over an estimated $11.9 billion of securities.
Those offerings were linked to the RALI Mortgage Asset-Backed
Pass-Through Certificates, which were issued in 2006 and 2007 by the
former Residential Capital LLC. One offering was the subject of a
partial $100 million settlement this year.
Baer also said investors may pursue a similar case against Royal
Bank of Scotland Group Plc <RBS.L> over an estimated $22.5 billion
of securities in 12 offerings linked to the Harborview Mortgage Loan
Trusts, which were also created in 2006 and 2007.
The judge also named the Iowa Public Employees Retirement Systems
and Illinois' Midwest Operating Engineers Pension Trust Fund as
class representatives in the Harborview case.
Lawyers for the bank defendants did not immediately respond to
requests for comment.
The lawsuits are among the larger cases accusing banks that packaged
mortgages into securities of deceiving investors in prospectuses
about the quality of the underwriting, causing investors to lose
money when market conditions deteriorated.
Baer rejected arguments that the investor claims were too dissimilar
to justify grouping them, which can result in higher recoveries at
lower cost and that some class members had been sophisticated enough
to know the risks of what they bought.
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But he also said many of the same arguments have been pressed by
various parties over the course of more than five years of
litigation. Both lawsuits were filed in 2008.
"At the outset, as I reread defendants' papers and this opinion, I
was reminded of a thought ascribed to Albert Einstein, it goes like
this, insanity is doing the same thing over and over and expecting
different results," Baer wrote.
Joel Laitman, a partner at Cohen, Milstein, Sellers & Toll
representing the lead plaintiffs in both cases, and who previously
estimated the sums at issue, called Baer's decision "very, very
positive for the litigation."
The cases in the U.S. District Court, Southern District of New York
are New Jersey Carpenters Vacation Fund et al v. Royal Bank of
Scotland Group Plc et al, No. 08-05093; and New Jersey Carpenters
Health Fund et al v. Residential Capital LLC et al, No. 08-08781.
(Reporting by Jonathan Stempel in New
York; editing by Kenneth Barry)
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