DENVER (2/5/13)--An amicus brief filed Friday by The Securities Industry and Financial Markets Association (SIFMA) argues that the National Credit Union Administration's lawsuits against Wall Street banks over sales of residential mortgage-backed securities to corporate credit unions were not filed in time and should be reversed.
SIFMA's brief was filed in the U.S. Court of Appeals for the Tenth Circuit in Denver. The appellate court is reviewing whether NCUA filed its lawsuit against RBS Securities within the proper statutes of repose and whether the agency should be permitted to extend the time limits via statutes of repose and limitation. A July 25 decision by the lower U.S. District Court in Wichita, Kan., had ruled that NCUA could proceed with its case.
In its brief, SIFMA maintains that NCUA did not bring its claims against the banks within the three-year statute of repose period required to file a civil suit. Instead, NCUA used an Extender Statute that extends the time period it is allowed to file a case. However, the Extender Statute "clearly and unambiguously does not apply to statutes of repose because it does not even mention them," said SIFMA.
"This case has far-reaching significance not only for SIFMA's members but also for the securities industry as a whole," said the brief. "The NCUA, the [Federal Deposit Insurance Corp.] and the Federal Housing Finance Agency have commenced more than 20 actions against financial institutions concerning the sale of more than $200 billion of residential mortgage backed securities, and seek to apply the same or similar extender statutes to Securities Act claims based on the same incorrect construction" used by the lower court in Kansas.
SIFMA said the lower court failed to "follow the plain language of the Extender Statute, and to recognize that it modifies only 'the applicable statute of limitations' for the NCUA's claims" and not the statute of repose.
NCUA's suits--against RBS Securities, Wachovia Capital Markets LLOC and Wachovia Mortgage Loan and Goldman Sachs, JP Morgan Chase, UBS Securities, Barclay's Capital and Credit Suisse Securities and more--claim they misrepresented and omitted material facts in documents presented to five corporate credit unions in a "systemic disregard of underwriting guidelines." The corporates' investments led to their collapse in 2009.