KANSAS CITY, Mo. (4/3/12)--Wachovia Capital Markets has filed a motion to consolidate a lawsuit filed against it by National Credit Union Administration (NCUA) over residential mortgage-backed securities (RMBS) sold to corporate credit unions with a similar suit filed by NCUA against RBS Securities.
The NCUA's original complaint against Wachovia alleged that originators of the RMBS had systematically abandoned the stated underwriting guidelines, resulting in riskier RMBS that the corporates would not have bought, had they known, said NCUA. Wachovia representatives sold about $100 million in RMBS to the two corporates in 2006, and U.S. Central purchased approximately $80 million in RMBS underwritten by Wachovia, according to court documents.
NCUA presented similar complaints in its suit for $565 million in damages from RBS in the U.S. District Court for the District of Kansas, alleging that the firm violated federal and state securities laws when it sold securities to the now-defunct U.S. Central FCU. The agency claimed that RBS sellers and underwriters made numerous material misrepresentations in the offerings documents that caused U.S. Central to believe the risk of loss associated with the investment was minimal.
In the Wachovia case before the U.S. District Court for the District of Kansas, Wachovia asked in a motion filed Wednesday to consolidate the cases 'in light of the existence of common questions of law and fact" of the two cases.