Nat’l Credit Union Admin. Bd. v. RBS Sec. Inc. et al., No. 2:11-cv-05887 (C.D. Cal. July 18, 2011)

On March 16, 2015, Judge George Wu of the United States District Court for the Central District of California denied RBS Securities Inc.’s motion to dismiss the National Credit Union Administration’s second amended complaint. In July 2011, NCUA sued RBS on behalf of WesCorp, a federal credit union, in order to recover billions of dollars for failed wholesale credit unions claiming investment banks misled them about the nature and quality of offered RMBS. NCUA alleges that RBS’ underwriters downplayed investment risks and made misrepresentations in offering documents by underestimating the likelihood that borrowers would default on their mortgages. Judge Wu said that the court would not consider a motion to dismiss parts of claims under F.R.C.P. 12(b)(6). He noted that his approach differed from that of Judge John W. Lungstrum of the District of Kansas, who agreed to hear motions to dismiss portions of a claim in NCUA v. RBS Secs., Inc., No. 11-2340-JWL (D. Kan. June 20, 2011), denying and granting those motions in part. Order.