Wells Fargo & Co., Deutsche Bank AG and the Royal Bank of Scotland PLC on Wednesday agreed to pay $165 million to settle a class action lawsuit over their underwriting of $7.7 billion worth of mortgage-backed securities issued by bankrupt subprime lender NovaStar.
The proposed settlement, filed in federal district court in Manhattan, requires approval from U.S. District Judge Deborah A. Batts. If that approval is granted, the settlement would resolve 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.
“After years of hard-fought litigation — which included a dismissal, an appeal, and even the bankruptcy of some of the defendants — thousands of workers will finally get some financial relief,” Steven J. Toll, the managing partner of Cohen Milstein Sellers & Toll PLLC, which represented the plaintiffs, said in a statement.
“The perseverance that we had to get to this result makes it very satisfying,” Toll said in an interview.
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