In a court ruling on April 2, 2013, Judge Jed S. Rakoff of the Southern District of New York dismissed all claims from Dexia against JPMorgan, Washington Mutual and Bear Stearns over losses on mortgage-backed securities in 65 residential mortgage investments, according to court documents.
The Brussels-based French-Belgian lender first filed its claim in the New York State Court on January 2012. Dexia sued the banks for fraud in connection with the sale of more than $1.7 billion in RMBS, alleging that defendants purposely securitized defective mortgages and then concealed the poor quality of those mortgages in offering materials, according to a blog posted by the structured finance litigation team at Lowenstein Sandler.
In September 2012, the court denied the defendants’ motion to dismiss the action. Following a summary judgment motion by the defendants, the court dismissed with prejudice all claims brought by Dexia. FSA Asset Management however can continue to pursue its claims relating to certain certificates, with losses of more than $5 million.
The Lowenstein Sandler blog said that the court will issue an opinion explaining the reasons for the rulings in due course.