U.S. justices send credit union case back to appeals court

Novation Companies

16/06/2014 17:25

By Lawrence Hurley 
    WASHINGTON, June 16 (Reuters) - The U.S. Supreme Court on 
Monday threw out an appeals court ruling that had allowed a 
lawsuit by a federal regulatory agency to go forward against 
several banks over their role in selling mortgage-backed 
securities to now-failed credit unions. 
    The court's decision means the Denver-based 10th U.S. 
Circuit Court of Appeals will be forced to reconsider whether 
the National Credit Union Administration's litigation against 
the lenders, including units of Royal Bank of Scotland 
PLC RBSRB.UL  and Wells Fargo & Co  WFC.N , can continue. 
    The other defendants in the case are units of Nomura 
Holdings Inc  8604.T  and Novation Companies Inc  NOVC.PK .  
    The court threw out the appeals court's earlier ruling in 
favor of the agency in light of its decision last week in a case 
called CTS v. Waldburger, which raised a similar legal question 
about the timing of lawsuits. 
    The National Credit Union Administration is the independent 
federal agency that regulates, charters and supervises federal 
credit unions. 
    The regulator had sued on behalf of two failed credit 
unions, U.S. Central Federal Credit Union and Western Corporate 
Federal Credit Union. The regulator has separate litigation 
pending against other defendants over securities sold to other 
failed credit unions. 
    The government agency placed several credit unions into 
conservatorship following losses they incurred when what were 
considered low-risk investments in 2006 and 2007 were 
significantly downgraded following the 2008 financial crisis. 
The regulator says the lenders made misrepresentations, in 
violation of federal securities laws, when selling the 
securities. 
    The lenders sought high court review after the 10th U.S. 
Circuit Court of Appeals ruled in August 2013 that the regulator 
did not wait too long before filing its lawsuit. 
    The case is Nomura et al v. NCUA, U.S. Supreme Court, 13-576 
 
 (Reporting by Lawrence Hurley; Editing by Will Dunham and Grant 
McCool) 
 ((lawrence.hurley@thomsonreuters.com)(202-898-8397)(Reuters 
Messaging: lawrence.hurley.thomsonreuters.com@reuters.net)) 
 
Keywords: USA COURT/CREDITUNION