(NEW YORK CITY) A Federal Court has finalized a $335 million global settlement of a class action lawsuit brought by New Jersey Carpenters Health Fund on behalf of purchasers of mortgage-backed securities (MBS) issued by Residential Accredit Loans, Inc., (RALI). Cohen Milstein Sellers & Toll PLLC served as lead counsel in the consolidated class action.
On July 31, 2015, Judge Katherine Failla, of the U.S. District Court for the Southern District of New York, gave final approval to a $235 million settlement with underwriters Citigroup Global Markets Inc., Goldman Sachs & Co., and UBS Securities LLC. She also approved a plan for distribution to investors of those funds as well as the previously approved $100 million settlement with RALI, its affiliates, and the individual Defendants that was reached in in 2013.
This global settlement marks an end to a long and complicated class action over MBS offerings that RALI and certain of its affiliates issued and sold to the New Jersey Carpenters Health Fund and other investors from 2006 through 2007. The case took seven years of intense litigation to resolve.
In terms of investor recovery, lead counsel for the Plaintiffs, Joel P. Laitman, of Cohen Milstein, termed the settlement “exceptional in that a meaningful recovery to investors was achieved despite enormous obstacles – including the initial denial of class certification by the District Court and the affirmance of the denial of class certification by the federal appeals court.”
According to Cohen Milstein Managing Partner Steven J. Toll, “This settlement brings closure and substantial monetary relief to investors who suffered losses in connection with these RALI mortgage-backed securities. Our litigation team persevered against all odds to achieve this long-awaited settlement for this Class of investors.”
The case involved allegations that RALI and its affiliates committed Securities Act violations in connection with the public offerings of the MBS and systematically disregarded the applicable underwriting guidelines when originating the mortgage loans underlying the securities at issue. Despite RALI and its affiliates seeking voluntary Chapter 11 Bankruptcy, the Plaintiffs in 2013 secured a $100 million settlement from RALI and its affiliates that is part of the $335 million total settlement.
In addition to Laitman and Toll, the Lead Plaintiffs are represented by attorneys Christopher Lometti, Michael Eisenkraft, Julie G. Reiser, Kenneth M. Rehns, and S. Douglas Bunch, all of Cohen Milstein Sellers & Toll PLLC.