A law firm representing a group of worker pension funds is stating that it has reached a $165 million settlement with four lenders relating to problem with a 2006 mortgage-backed securities (MBS) investment.
In its statement, Cohen Milstein Sellers & Toll said
that its clients achieved a settlement in a nine-year-old class action lawsuit that charged NovaStar, the Royal Bank of Scotland, Wells Fargo and Deutsche Bank with misleading investors on the quality of securities from NovaStar in 2006. The securities were downgraded to junk bond status, according to the law firm, which resulted in losses for the worker pension funds that purchased them.
“This has been a long, complex process, and our clients and the attorneys on the case have overcome significant obstacles in reaching this settlement,” said the plaintiffs’ lead attorney, Joel P. Laitman of Cohen Milstein Sellers & Toll. “This settlement will give closure and monetary relief to investors who suffered losses in connection with these NovaStar MBS.”
The settlement has yet to be approved by the U.S. District Court in the Southern District of New York, and no mention of the settlement was cited on the Department of Justice’s Web site.