The core of our expertise is to understand disputes in unusually complex subjects, to distill those disputes to their most fundamental points, and then to present our client’s side of those points comprehensibly and persuasively to judges and juries. For many years, our partners have applied that expertise in the three areas of insurance and reinsurance, performance of complex computer and communications systems, and securities.
We now focus mainly on a fourth area, litigation about structured finance, including mortgage-backed securities and CDOs of asset-backed securities, trust preferred securities, and other collateral. We do not represent any sell-side organizations (including banks, dealers, loan originators, collateral managers, or rating agencies), so we are free to represent investors in virtually any structured finance security.
We began our study of structured finance in April 2007, before the credit crisis began. Our partner David Grais wrote two of the first papers in the field, Not “The World’s Shortest Editorial”: Why the First Amendment Does Not Shield the Rating Agencies from Liability for Over-Rating CDOs, published in BLOOMBERG LAW REPORTS, and "I Can Resist Everything Except Temptation”: Undisclosed Effects of Moral Hazard in Recent Subprime-Backed Securities, presented at the Mealey’s Subprime-Backed Securities Litigation Conference in March 2008, which Mr. Grais chaired.
The firm is now prosecuting many of the largest and most important cases in structured finance litigation. On behalf of large original purchasers of residential mortgage-backed securities, the Federal Home Loan Banks of Seattle and San Francisco, The Charles Schwab Corporation, and the Federal Deposit Insurance Corporation as receiver of failed banks, we are working on actions against 19 securities dealers to rescind the sale and purchase of nearly $30 billion in certificates backed by Alt-A and prime mortgage loans. We have successfully defeated all of the motions to dismiss that have been decided to date and have embarked on discovery in the largest of these actions.
On behalf of all investors in mortgage-backed securities (whether or not at original issuance), we have devised an innovative strategy of derivative litigation to require sellers of mortgage loan collateral to repurchase loans that did not comply with the representations and warranties that the sellers made about them. We filed the first of these actions against Bank of America Corporation to require it to repurchase the many non-compliant loans that Countrywide sold to trusts in which our clients hold large positions. If the court approves our strategy, then derivative litigation will be a powerful tool for investors in virtually all residential mortgage-backed securities.
We also represent many of our clients as intervenor-respondents in the proceeding to approve the proposed settlement that Bank of New York Mellon reached with Bank of America and Countrywide. On behalf of one of those clients, we removed that proceeding from state to federal court in New York and successfully defeated Bank of New York Mellon’s motion to remand. We are now participating in discovery about the reasonableness of the settlement.