May 10, 2017

A New York federal judge on Tuesday preliminarily approved a $165 million settlement to be paid by Wells Fargo, Deutsche Bank and the Royal Bank of Scotland, putting them one step closer to resolving a class action over their underwriting of $7.7 billion worth of mortgage-backed securities issued by bankrupt subprime lender NovaStar.

U.S. District Judge Deborah A. Batts gave an initial green light to the deal, which would end long-standing claims from investors, including union pension funds, who allege that Deutsche Bank Securities Inc., RBS Securities Inc. and Wachovia Capital Markets LLC — now Wells Fargo Advisors LLC — lied in offering documents on securities issued by NovaStar Mortgage Inc.

Joel P. Laitman, counsel for the investors, told Law360 on Wednesday that he is “very pleased … to move forward with ultimately being able to disburse funds to the investors who were injured.”

The plaintiffs are represented by Joel P. Laitman, Michael B. Eisenkraft and Christopher Lometti of Cohen Milstein Sellers & Toll PLLC.

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