U.S. top court turns away banks' appeal in credit unions case

Novation Companies

12/01/2015 14:45

By Lawrence Hurley 
    WASHINGTON, Jan 12 (Reuters) - The U.S. Supreme Court on 
Monday declined to hear an appeal filed by several banks 
objecting to a lawsuit filed by a federal regulatory agency over 
their alleged role in selling mortgage-backed securities to 
now-failed credit unions. 
    The litigation against the lenders, including units 
of Royal Bank of Scotland PLC RBSRB.UL  and Wells Fargo & 
Co WFC.N , can now go forward. 
    The other defendants in the case are units of Nomura 
Holdings Inc 8604.T  and Novation Companies Inc NOVC.PK . 
    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 case has already made one trip to the Supreme Court. In 
June, the justices threw out a previous appeals court ruling 
that allowed the lawsuit to go forward. 
    The lenders sought high court review for a second time after 
the 10th U.S. Circuit Court of Appeals ruled in August 2014 that 
the regulator did not wait too long before filing its lawsuit. 
    The case is Nomura et al v. NCUA, U.S. Supreme Court, 
14-379. 
 
 (Reporting by Lawrence Hurley; Editing by Will Dunham) 
 ((lawrence.hurley@thomsonreuters.com; 202-809-3080;)) 
 
Keywords: USA COURT/MBS