UBS loses bid to dismiss FHFA mortgage debt case
Source: Reuters
A U.S. judge has rejected UBS AG's bid to dismiss a federal regulator's lawsuit accusing it of misleading Fannie Mae and Freddie Mac into buying billions of dollars of risky mortgage debt.
U.S. District Judge Denise Cote in Manhattan said on Friday that the Federal Housing Finance Agency may pursue claims that UBS violated federal securities laws by misleading Fannie Mae and Freddie Mac into buying $6.4 billion of subprime and other residential mortgage-backed securities.
The case is one of 17 that the FHFA filed last year against banks over losses suffered by the housing finance giants on approximately $200 billion of mortgage debt. Cote's decision is the first to consider a defendant bank's motion to dismiss, and the judge's reasoning may also be applied in the other cases.
"The court is essentially saying that banks do not get to plead ignorance when they had an obligation to provide information to investors," said Kathleen Engel, a professor at Suffolk University Law School in Boston and co-author of "The Subprime Virus."
Read more: http://www.reuters.com/article/2012/05/04/us-usa-fhfa-ubs-idUSBRE8431G720120504
Cote=Clinton nominee (served since 1994)
= new reply since forum marked as read
If they didn't get this dismissed at the pleading stage, they're hosed. And wait till everyone else piles on now that the cause of action has been proven to withstand a motion to dismiss. UBS is Swiss, ain't it? Romney might want to move his money (again). Hee hee.
