Cases : Structured Finance

Representation of institutional investors in a lawsuit involving ABS backed by automobile loans. The case alleges that in marketing these ABS to plaintiffs and other investors, defendants TCF Bank and Gateway fraudulently and materially understated the key metric that investors rely upon to evaluate and price auto-loan ABS, resulting in millions of dollars of investor losses. The court recently denied TCF Bank’s and Gateway’s motion to dismiss. 

Representation of Aozora Bank, Ltd. in a lawsuit involving a fraudulent CDO whose underlying collateral was represented by J.P. Morgan to be high-grade and selected by an independent collateral manager. The case alleged that J.P. Morgan secretly usurped control over portfolio selection and filled the CDO with toxic assets that J.P. Morgan wished to remove from its own books.

Representation of CIMB Thai Bank PCL in a lawsuit relating to four fraudulent CDOs, the underlying collateral for which Morgan Stanley represented would be comprised of safe, high-quality assets selected by independent collateral managers. The case alleged that Morgan Stanley controlled portfolio selection and chose high-risk collateral, while actively shorting the same collateral in order to enrich itself at Plaintiff’s expense.

KM acted as lead counsel for a group of Singapore-based investors in a securities class action against Morgan Stanley pertaining to notes issued by Cayman Islands-registered Pinnacle Performance Ltd.  Plaintiffs alleged that Morgan Stanley routed Pinnacle investors’ principal into synthetic collateralized debt obligations (“CDOs”) which were built to fail and then bet against.  As the CDOs failed by design, plaintiffs’ principal was swapped to Morgan Stanley, enriching Morgan Stanley while rendering the Pinnacle Notes an all-but-total loss.  This case resulted in a settlement of $20 million for the class following the court’s order certifying common law fraud claims.

Maine State Retirement System v. Countrywide Financial Corp., No. 10-cv-00302 (C.D. Cal. 2013).  Counsel for class representative.  $500 million settlement.

Space Coast Credit Union v. Barclays Capital Inc., No. 11-cv-02802 (S.D.N.Y. 2013).  Counsel for Plaintiff.  Parties dismissed the case following a consensual resolution.

Lead counsel for individual investor lead plaintiffs in this securities fraud class action relating to Citigroup’s exposure to losses associated with its creation or sponsorship of numerous collateralized debt obligations (“CDOs”).  This case resulted in a settlement of $590 million for the class.  The settlement was, at the time, the largest CDO-related settlement ever, as well as the largest settlement of a fraud-only action.  A later filed SEC complaint concerning similar allegations settled for a small fraction of the class action settlement amount.

Lead counsel for lead plaintiff New York State Common Retirement Fund in a securities fraud class action against National City Corporation relating to the bank’s exposure to subprime assets.  This case resulted in a settlement of $168 million for the class.

Lead counsel for lead plaintiff New York City Pension Funds in a class action against Wachovia Corporation arising from the bank’s alleged misrepresentations of their exposure to the subprime market.  This case resulted in a settlement of $75 million for the class.