NEW YORK (4/8/13)--A federal court in New York City Thursday ordered, as part of an agreement, Standard & Poor's Financial Services LLC to produce all documents related to residential mortgage backed securities (RMBS) that are at the heart of CUNA Mutual Group's $72 million lawsuit against RBS Securities.
U.S. District Judge Naomi Reice Buchwald, in a memorandum and order that recited an agreement the parties made with the court in a conference call, ordered the ratings agency to produce:
"We are pleased with the court's decision to order S&P's to produce records related to the $72 million of failed mortgage-backed securities CUNA Mutual Group bought from RBS Securities," said Phil Tschudy, CUNA Mutual Group media relations manager.
"As we previously stated, we consider the documents to be highly relevant to our claims against RBS as they relate to the question of RBS' role in S&P's rating of the mortgage-backed securities at issue in the litigation against RBS," he told News Now.
S&P had alleged in a motion last week that the subpoena for documents was a fishing expedition, but CUNA Mutual Group responded the documents were "highly relevant" to its claims regarding the RMBS.
CUNA Mutual's lawsuit against RMBS, which is before the U.S. District Court for the Western District of Wisconsin, Madison, seeks recission and alleges unjust enrichment for more than $70 million in investments made in 15 certificates from 10 RMBS offerings from 2002 to 2007. Investors learned later that the securities were backed by defective, improperly written loans.
The suit, which was filed by CMFG Life Insurance Co., CUMIS Insurance Society Inc. and Members Life Insurance Co., maintains the products sold were misrepresented.
S&P is also being sued by the Department of Justice over its role in reviewing and inflating the value of the RMBS pools that collapsed. Some of those were sold to CUNA Mutual and to corporate credit unions (News Now March 11).