Circuit Affirms Dismissal of Claims Against Bank
The U.S. Court of Appeals for the Second Circuit refused on Wednesday to revive claims that the Royal Bank of Scotland Group plc misled investors about its subprime exposure. The ruling is a win for RBS's lawyers at Wilmer Cutler Pickering Hale and Dorr, and for a team at Cleary Gottlieb Steen & Hamilton representing Morgan Stanley & Co., UBS AG, and other underwriters for five mortgage-backed securitization deals.
Seth Waxman, a partner with Wilmer argued for the bank, which is also represented by partners Andrea Robinson and David Lesser. Lewis Liman, a partner at Cleary argued for the underwriter-defendants. Jonathan Levine of Girard Gibbs argued on behalf of the plaintiffs.
In January 2009, RBS reported write-downs of $41 billion for the previous year. The securities plaintiffs bar pounced, alleging that RBS misstated the extent of its subprime exposure. RBS also faced claims that it misled shareholders about the benefits of its 2008 acquisition of the Dutch banking giant ABR AMRO Group.
Southern District Judge Deborah Batts gutted the case in January 2011, ruling that the holders of ordinary shares don't have standing to sue because they bought their shares on European stock exchanges. Batts dismissed the remainder of the case, brought by preferred stockholders, in September 2012, finding that Girard Gibbs and its co-counsel failed to identify any actionable misstatements.
The Second Circuit agreed in Wednesday's decision, which was issued just two weeks after oral argument. "[T]he offering documents here extensively described" RBS's holdings of residential mortgage-backed securities, the court wrote. "We conclude that the defendants-appellee's disclosures satisfied their legal obligations."
The case is The Freeman Group v. Royal Bank of Scotland, 12-3642-cv.