Residential Capital, an Ally Financial subsidiary, cannot be sued in a class action law suit where  the proposed class comprises "large, institutional and sophisticated investors" that have the financial resources as well as incentive to pursue their own claims, Judge Harold Baer ruled in the case called New Jersey Carpenters Health Fund v. Residential Capital LLC.

The buyers in this case alleged that the offering documents for securities they bought were "materially misleading." Specifically, they contended that the offering documents were misleading as to whether the residential loans backing the securities conformed with the proper underwriting guidelines.

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