Bear Stearns Mortgage Pass-Through Litigation

Court: United States District Court, Southern District of New York
Case Number: 1:08-cv-08093
Judge: Hon. Laura Taylor Swain
Case Contacts: David R. Stickney, Jeroen van Kwawegen, Richard D. Gluck, Matthew P. Jubenville, Jonathan D. Uslaner, Laurence Reza Wrathall

This class action alleges violations of the Securities Act arising from Bear Stearns & Company, Inc.'s ("BSC") sale of mortgage pass-through certificates using false and misleading offering documents.  The offering documents contained false and misleading statements related to, inter alia, (1) the underwriting guidelines used to originate the mortgage loans underlying the certificates; and (2) the accuracy of the appraisals for the properties underlying the certificates.  The Defendants include BSC, Bear Stearns Asset Backed Securities I ("BSABS") and Structured Asset Mortgage Investments II, Inc. ("SAMI") (the BSC subsidiaries that issued the Certificates) and various BSABS and SAMI officers.

On December 23, 2009, the Honorable Laura Taylor Swain issued an order consolidating all previously-filed Bear Stearns pass-through cases under the caption In re Bear Stearns Mortgage Pass-Through Certificates Litigation, Master file No. 08-Civ. 8093 (LTS) (KNF).  Concurrently, Judge Swain appointed BLB&G client the Public Employees' Retirement System of Mississippi and the New Jersey Carpenters Health Fund as co-lead plaintiffs and appointed BLB&G and Cohen Milstein Sellers & Toll PLLC to serve as co-lead counsel.

On March 30, 2012, Judge Swain issued an order sustaining Plaintiffs’ claims for violation of Sections 11, 12 and 15 of the Securities Act related to untrue statements and omissions regarding underwriting standards and appraisals.  The Court concluded that Plaintiffs’ claims were timely because Plaintiffs could not have pled facts sufficient to survive a motion to dismiss prior to one year before the complaints were filed.  Further, the Court held that the filing of the complaints tolled the statute of repose for all members of the class, even where the original plaintiffs lacked standing to bring some claims.  The Court also concluded that Plaintiffs had adequately pled cognizable injury, and that loan repurchase was not the sole remedy available to Plaintiffs.  Finally, the Court concluded that Plaintiffs, who purchased select tranches of each offering at issue, had standing to represent all investors in those offerings.