IndyMac Mortgage-Backed Securities Inc Investor Class Action Lawsuit 05/14/2009

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Company Name(s): 
IndyMac Bancorp
Case Name: 
IndyMac Bancorp Shareholder Class Action Lawsuit 05/14/2009
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Approved
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
05/14/2009
Court of Filing: 
U.S. District Court for the Southern District of New York
Date Settled: 
02/23/2015
Settlement Amount: 
$346,000,000
Deadline to Participate in Settlement: 
01/28/2015
Summary: 

February 23, 2015 - The court approved the settlement, entered the orders approving the plan of allocation, the motion for attorneys' fees and expenses, and dismissed the action with prejudice.

February 3, 2015 - The court held a final settlement hearing.

September 30, 2014 - The court preliminarily approved the partial settlement for certain underwriters.

The settlement with the underwriter defendants is in reference to the following certificates:

IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H2, IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series 2006-H3, IndyMac Home Equity Mortgage Loan Asset-Backed Trust, Series INABS 2006-D, IndyMac IMJA Mortgage Loan Trust 2007-A1, IndyMac IMJA Mortgage Loan Trust 2007-A2, IndyMac IMJA Mortgage Loan Trust 2007-A3, IndyMac IMJA Mortgage Loan Trust 2007-A4, IndyMac IMSC Mortgage Loan Trust 2007-AR1, IndyMac IMSC Mortgage Loan Trust 2007-F1, IndyMac IMSC Mortgage Loan Trust 2007-F2, IndyMac IMSC Mortgage Loan Trust 2007-F3, IndyMac IMSC Mortgage Loan Trust 2007-HOA1, IndyMac INDA Mortgage Loan Trust 2006-AR1, IndyMac INDA Mortgage Loan Trust 2006-AR2, IndyMac INDA Mortgage Loan Trust 2007-AR1, IndyMac INDA Mortgage Loan Trust 2007-AR2, IndyMac INDA Mortgage Loan Trust 2007-AR7, IndyMac INDA Mortgage Loan Trust 2007-AR8, IndyMac INDA Mortgage Loan Trust 2007-AR9, IndyMac INDX Mortgage Loan Trust 2006-AR13, IndyMac INDX Mortgage Loan Trust 2006-AR15, IndyMac INDX Mortgage Loan Trust 2006-AR21, IndyMac INDX Mortgage Loan Trust 2006-AR23, IndyMac INDX Mortgage Loan Trust 2006-AR25, IndyMac INDX Mortgage Loan Trust 2006-AR27, IndyMac INDX Mortgage Loan Trust 2006-AR29, IndyMac INDX Mortgage Loan Trust 2006-AR33, IndyMac INDX Mortgage Loan Trust 2006-AR35, IndyMac INDX Mortgage Loan Trust 2006-AR37, IndyMac INDX Mortgage Loan Trust 2006-AR41, IndyMac INDX Mortgage Loan Trust 2006-FLX1, IndyMac INDX Mortgage Loan Trust 2006-R1, IndyMac INDX Mortgage Loan Trust 2007-AR15, IndyMac INDX Mortgage Loan Trust 2007-AR17, IndyMac INDX Mortgage Loan Trust 2007-AR19, IndyMac INDX Mortgage Loan Trust 2007-AR21IP, IndyMac INDX Mortgage Loan Trust 2007-AR5, IndyMac INDX Mortgage Loan Trust 2007-AR9, IndyMac INDX Mortgage Loan Trust 2007-FLX3, IndyMac Residential Mortgage-Backed Trust Series 2006-L2, Residential Asset Securitization Trust 2006-A11, Residential Asset Securitization Trust 2006-A12, Residential Asset Securitization Trust 2006-A13, Residential Asset Securitization Trust 2006-A14CB, Residential Asset Securitization Trust 2006-A15, Residential Asset Securitization Trust 2006-A7CB, Residential Asset Securitization Trust 2006-R2, Residential Asset Securitization Trust 2007-A1, Residential Asset Securitization Trust 2007-A5, Residential Asset Securitization Trust 2007-A8

September 19, 2014 - Parties filed an amended stipulation of a partial settlement for certain underwriters.

April 5, 2013 - The court granted the lead counsel's motion for compensation.

March 6, 2013 - The lead counsel filed a motion for compensation.

December 18, 2012 - The court approved the settlement, established a litigation fund, entered the orders approving the plan of allocation, and approved the motion for attorneys’ fees and expenses.

August 17, 2012 - The court preliminarily approved the partial settlement for certain individual defendants.

The settlement with the individual defendants is in reference to the following certificates:

IndyMac INDA Mortgage Loan Trust 2006-AR1, IndyMac INDA Mortgage Loan Trust 2006-AR2, IndyMac INDA Mortgage Loan Trust 2006-AR3, IndyMac INDA Mortgage Loan Trust 2007-AR1, IndyMac INDA Mortgage Loan Trust 2007-AR3, IndyMac INDA Mortgage Loan Trust 2007-AR7, IndyMac INDX Mortgage Loan Trust 2006-AR2, IndyMac INDX Mortgage Loan Trust 2006-AR3, IndyMac INDX Mortgage Loan Trust 2006-AR4, IndyMac INDX Mortgage Loan Trust 2006-AR7, IndyMac INDX Mortgage Loan Trust 2006-AR11, IndyMac INDX Mortgage Loan Trust 2006-AR12, IndyMac INDX Mortgage Loan Trust 2006-AR14, IndyMac INDX Mortgage Loan Trust 2006-AR15, IndyMac INDX Mortgage Loan Trust 2006-AR19, IndyMac INDX Mortgage Loan Trust 2006-AR25, IndyMac INDX Mortgage Loan Trust 2006-AR29, IndyMac INDX Mortgage Loan Trust 2006-AR31, IndyMac INDX Mortgage Loan Trust 2006-AR33, IndyMac INDX Mortgage Loan Trust 2006-AR35, IndyMac INDX Mortgage Loan Trust 2006-FLX1, IndyMac INDX Mortgage Loan Trust 2007-AR5, IndyMac INDX Mortgage Loan Trust 2007-FLX1, IndyMac INDX Mortgage Loan Trust 2007-FLX3, IndyMac MBS Home Equity Mortgage Loan Asset-Backed Trust, Series INABS 2006-D, IndyMac Residential Mortgage-Backed Trust, Series 2006-L2, Residential Asset Securitization Trust 2006-A2, Residential Asset Securitization Trust 2006-A7CB

July 31, 2012 - Parties filed a stipulation of partial settlement for certain individual defendants.

August 15, 2011 - Plaintiffs filed a second amended complaint.

July 20, 2011 - A plaintiff filed a notice of voluntary dismissal with prejudice.

July 5, 2011 - Plaintiffs filed a motion for reconsideration of the June 21, 2011 order.

June 21, 2011 - The court denied the plaintiff's April 19, 2011 motions.

June 1, 2011 - The U.S. Court of Appeals for the Second Circuit ordered the judgment of the district court is affirmed.

April 19, 2011 - A plaintiff filed a motion to amend the court's July 29, 2009 order and filed a motion for lead plaintiff.

February 10, 2011 - The court dismissed two individual defendants with prejudice as to all claims.

July 7, 2010 - The court granted the plaintiffs' motion for reconsideration.

June 29, 2010 - Plaintiffs filed a motion for reconsideration of the June 21, 2010 order.

June 21, 2010 - The court granted in part and denied in part defendants' additional motions to dismiss.

March 11, 2010 - Plaintiffs filed a notice of appeal.

February 17, 2010 - The court issued a judgment dismissing the amended complaint against the three individual defendants only.

February 5, 2010 - The court granted the motions to dismiss of three individual defendants.

November 23, 2009 - The defendants filed motions to dismiss.

October 29, 2009 - The lead plaintiffs filed an amended complaint.

October 9, 2009 - The lead plaintiffs filed a consolidated complaint on behalf of investors who purchased mortgage pass-through certificates of The IndyMac Trusts, in connection with and/or pursuant or traceable to materially untrue and misleading registration statements filed with the United States Securities and Exchange Commission by IndyMac MBS Inc on August 15, 2005, SEC File Number 333-127556, February 24, 2006, SEC File Number 333-132042, and February 14, 2007, SEC File Number 333-140726 as well as the Prospectuses and Prospectus Supplements issued thereunder and incorporated therein by
reference. The lead plaintiffs allege that the defendants violated the Securities Act of 1933.

July 29, 2009 - The lead plaintiffs and lead counsel were appointed and call cases were consolidated.

July 13, 2009 - Lead plaintiff motions were filed.

May 14, 2009 - An investor in mortgage pass-through certificates of The IndyMac Trusts, filed a lawsuit in the U.S District Court for the Southern District of New York against IndyMac Trusts over alleged violations of Federal Securities Laws in connection with and/or pursuant to or traceable to a
registration statement filed by IndyMac Trusts with the SEC on form S-3 on February 24, 2006 (as amended on March 29, 2006 and April 13, 2006).

This action arises from IndyMac Trusts’ sale of mortgage pass-through certificates, issued pursuant to the Offering Materials, which negligently omitted material information. The Offering Materials explained the structure of the IndyMac Trusts and provided a description of the Certificates. The Offering Materials further explained the structure of the IndyMac Trusts and provided a description of the Certificates. The Offering Materials state that IndyMac Trusts intended to sell $40 billion in mortgage pass-through Certificates through a yet-to-be-determined number of individual entities created solely to issue the Certificates. The Certificates would be issued pursuant to the Offering Materials and each series of Certificate was floated pursuant to a Supplemental Prospectus that referred back the Registration Statement.

The complaint asserts that the Offering Materials contained both material misstatements and omissions, which investors relied upon to their detriment. The
Offering Materials negligently omitted certain information because IndyMac Trusts was suffering from several adverse factors that were not revealed, or adequately disclosed in the Offering Materials. These factors include, but are not limited to, (i) the failure to disclose IndyMac Trusts’s actual
underwriting practices; (ii) the retention of biased appraisers that delivered appraisals in excess of the actual property value, which in turn distorted the reported loan-to-value ratio; and (iii) the failure to prevent and remedy such improper and harmful actions that resulted in the decline in the Certificates’ value.

The Underwriters were obligated to conduct meaningful due diligence to ensure that the Offering Materials contained no material misstatements or omissions, including the stated manner in which the mortgages had been originated. The Underwriters received massive fees for their work in connection with the Offerings. Based on, inter alia, the Underwriters’alleged due diligence and the representations in the Offering Materials relating to the underwriting of the Certificate collateral, rating agencies such as Moody’s Investors Service, Inc. Standard & Poor’s, and Fitch Ratings assigned the Certificates among the highest ratings applicable to such debt issues.

Following the issuance of the Certificates, disclosures began to emerge revealing that IndyMac Trusts routinely disregarded the underwriting guidelines in its mortgage loan origination. These disclosures were confirmed by substantially higher rates of delinquencies and foreclosures on collateral for such highly-rated debt issues. These disclosures, and the poor performance of the collateral, caused the Underwriter Rating Agencies to review and revise the ratings assigned.