In a key win for Simpson Thacher & Bartlett’s David Woll and a big chunk of the financial industry, New York’s Appellate Division, First Department, on Thursday knocked out billions of dollars in contract claims against banks that churned out mortgage-backed securities. The court ruled that the clock had run out on so-called put-back claims against a subsidiary of Deutsche Bank SA that sold one such securitization, leaving investors and the trustee for the security out of luck.
The decision, which you can read here, dismisses a $330 million lawsuit alleging that Deutsche Bank unit DB Structured Products misled investors about home loans pooled into an RMBS securitization in 2006. A trustee for RMBS investors, HSBC Bank, wanted DB to repurchase the underlying home loans, but the First Department ruled that the allegations are time-barred under New York law. Marc Kasowitz of Kasowitz Benson Torres & Friedman represents the trustee.
