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Lawsuits against the Trustees – 2 more issues- with an even better SPREADSHEET

Issue #1: Class Action v. Non-Class Action

From our non-Legal viewpoint, we see 3 types of lawsuits filed against the Trustees:

  1. Class Action/Verified Derivative Action where the class includes current owners of certificates in the trust

  2. Blackrock et al

  3. PIMCO

  4. Class Action/Verified Derivative Action where the class includes all current and former investors who acquired certificates in the trust

  5. Royal Park Investments SA/NV

  6. Individual Claim – No Class Action

  7. Commerzbank AG

  8. NCUA

  9. Pacific Life

  10. Phoenix Light

  11. Triaxx Prime CDO 2006-1

  12. Western & Southern Insurance

These differences are pertinent, because the Prayer for Relief in a Class Action/Derivative Action lawsuit awards the money damages to the Plaintiff and the Class, while in non-Class Action complaints, the money damages are awarded only to the individual Plaintiff. We noticed that the Blackrock and PIMCO complaints state that the class only includes “current owners” of certificates, while the Royal Park Investments SA/NV complaint states “all current and former investors”. We found that to be interesting.

Issue #2: Why do we show deals from the Gibbs & Bruns settlements?

There have been numerous questions why we have deals listed as being involved in Trustee litigation that were included in the Gibbs & Bruns settlements with Countrywide and Citibank, and pending settlements with others. Although those deals are not included in the Class Action lawsuits by Blackrock and PIMCO, they are included in the no-Class Action lawsuits submitted by Wollmuth Maher & Deutsch LLP. We would imagine that Wollmuth Maher & Deutsch LLP believes those settlements do not prevent an individual investor from suing for breaches of the Trustee’s contractual, fiduciary and common law duties. We think we found the language in the complaint that states just that.

If a deal is listed in a complaint brought against the Trustee, regardless of whether the lawsuit has merit, the Trustee must defend itself, thereby hiring expensive outside counsel and incurring legal fees and expenses. Once this occurs, the Trustee could decide to hold back funds if the deal is called and reimburse themselves from the collection account as long as the trust is active. Therefore, we must include those deals in our list.

Webbs Hill Call Rights / Trustee Litigation spreadsheet

To assist our clients, we added to our master spreadsheet “ALL NON-AGENCY DEALS” a flag indicating whether a deal is included in a Class Action Complaint. This is useful to know, as there is potential for a lump sum payment if the plaintiffs are successful. This sheet should be kept open throughout your trading day.

We also added a new sheet “ACTIVE TRUSTEE LAWSUITS”, that provides more detail and the exact language on:

  • Class Action

  • Awarding Damages to

  • Counsel Submitting Complaint

  • Class Definition

Please do not rely on us for any legal interpretations. We are not lawyers. The best we can do is show you what we see, match it up to individual deals, and point to the actual documents that your legal counsel can review.

Contact us at 203-276-0672 to become a client and access all reports and attachments.

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