The American Lawyer Profiles BLB&G Institutional Investor Litigation Against RMBS Trustees

June 19, 2014

On June 18, 2014, ten of the world’s largest institutional investors, represented by Bernstein Litowitz Berger & Grossmann LLP, filed six derivative actions on behalf of more than 2,200 private-label RMBS trusts issued between 2004 and 2008 against the principal financial crisis-era RMBS trustees.  The AmLaw Litigation Daily reported on this historic initiative in its June 19 feature, “Bernstein Litowitz Targets Banks in New RMBS Assault.”  The American Lawyer previously profiled BLB&G’s record recoveries on behalf of investors in excess of $5 billion from Wall Street banks and other financial institutions in a 2013 article. (Click here).

The institutional investors, which include BlackRock, Inc. and Pacific Investment Management Co. (PIMCO), initiated the litigation in their representative capacities on behalf of the RMBS trusts in New York Supreme Court against U.S. Bank National Association; Deutsche Bank National Trust Company and Deutsche Bank Trust Company Americas; The Bank of New York Mellon; Wells Fargo; HSBC Bank USA, National Association; and Citibank N.A.  The complaints alleged that the trustee banks failed to protect the trusts and certificate-holders and breached their contractual, statutory and common law duties owed to the trusts where the trustees knew “that the pools of loans backing the trusts were filled with defective mortgage loans” and “unreasonably refus[ed] to take any action,” including enforcing the trusts’ contractual rights against the loan sellers and other responsible parties.  Similarly, the trustees are alleged to have breached their duties by failing to take any action against rampant violations of prudent servicing standards by the loan servicers.

BLB&G partners Timothy DeLange and Benjamin Galdston are the lead attorneys for the derivative suits.