The ruling by U.S. District Judge Mariana Pfaelzer in Los Angeles narrows the potential scope of claims by investors led by the Iowa Public Employees’ Retirement System.
According to Bank of America, in a November 4, 2010 order, the federal court ruled that the named plaintiffs in Maine State Retirement System v. Countrywide Financial Corporation, et al. have standing to sue only over offerings of mortgage-backed securities in which they actually purchased, and that the statute of limitations would be tolled only for offerings in which the named plaintiffs in a separate state court action (Luther v. Countrywide Home Loans Servicing LP, et al. – a case on which the Maine State plaintiffs relied for tolling purposes) had also purchased.
“Each MBS is backed by a pool of unique loans, and the representations made in the prospectus supplements accompanying the issuance of those securities are themselves unique,” the judge wrote. “Plaintiffs argue that they have standing to sue over any offering issued pursuant to a common registration statement. Plaintiffs are mistaken.”
The Maine State plaintiffs were given thirty days to file a second amended complaint consistent with the Court’s November 4 order, and the court also said that it will address Countrywide’s other arguments for dismissal not addressed in its November 4 order when it considers any new complaint that is filed.
Bank of America, which bought Countrywide in July 2008, said the ruling means no more than 22 offerings, with a principal amount of $31 billion, could be covered in an amended complaint — down from an original 427 offerings, according to Reuters.
The January complaint sought to unwind the investors’ purchases of mortgages. It accused Countrywide and many underwriters of misrepresenting the risks of owning securities issued between January 2005 and November 2007.