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Mortgage-Backed Securities Litigation

Federal Home Loan Bank of Pittsburgh v. J.P. Morgan Securities, Inc., GD09-016892 (Cmm. Pl. All. Co.) Pittsburgh


lead case for 4 related actions Action against banks including JP Morgan and rating companies ( Standard & Poor’s and Moody’s) regarding the sale of $2.8 billion of mortgage-backed securities. The action asserts common law claims and claims under Sections 11, 12(a) and 15 of the Securities Act of 1933. The bank claims it would not have bought the bonds if JPMorgan, which sold them, and the ratings companies “had provided complete and accurate information regarding the risks of nonpayment.” “Dana Yealy, general counsel for the Federal Home Loan Bank of Pittsburgh, said in a phone interview that the bank spent $2.8 billion for the mortgage-backed securities involved in the four cases….One of the lawsuits involves $1.7 billion of mortgage- backed securities bought by the Federal Home Loan Bank from May 2006 to December 2007”


Originally filed 29 September 2009 in Pennsylvania state court, the action was removed to federal district court by defendants; plaintiff’s motion to remand to state court was granted on 21 December 2009. As of December 3, 2010 the court partially granted and partially denied defendants’ motion to dismiss: “[Judge] Wettick said the Federal Home Loan Bank’s fraudulent misrepresentation claims against the ratings companies could proceed. The judge dismissed claims against them for negligent misrepresentation and violations of the Securities Act of 1933… Fraudulent and negligent misrepresentation claims were dismissed against a group of JPMorgan units except J.P. Morgan Securities Inc. Claims based on the Securities Act of 1933 were dismissed against some JPMorgan units. They can proceed against the parent company and J.P. Morgan Securities.”