Judge says SEC suit against BOA should proceed

by Ryan Smith01 Apr 2014
A federal judge has recommended letting the government continue to pursue a lawsuit against Bank of America over $855 million worth of shoddy mortgage-backed securities.

U.S. Magistrate Judge David Cayer recommended letting the suit, filed by the Securities and Exchange Commission, proceed, according to a Reuters report. Last week, Cayer recommended dismissal for another suit against the bank, this one filed by the Department of Justice.

The SEC accuses the lender of misleading Wachovia Corp. and the Federal Home Loan Bank of San Francisco about the quality of $855 million in securities backed by jumbo adjustable-rate mortgages, Reuters reported.

Cayer recommended letting the SEC pursue claims that Bank of America negligently “made material misrepresentations and omissions” about the quality of the loans.

Cayer’s recommendations – both to allow the SEC case and dismiss the Justice Department Case – are subject to review by U.S. District Judge Max Cogburn, Reuters reported. District judges often follow the recommendations of magistrate judges, but are not required to do so.
 

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