WICHITA, Kan. (7/11/13)--Saying that the claims are time-barred, a federal court in Wichita, Kan.,Wednesday afternoon dismissed the National Credit Union Administration's lawsuit against Barclays Capital over the sale of residential mortgage-backed securities (RMBS) that caused losses to U.S. Central FCU and Western Corporate FCU.
Also, in a separate ruling Wednesday, U.S. District Judge John W. Lungstrum reaffirmed an earlier ruling he made in a similar lawsuit filed by NCUA against Credit Suisse Securities: that a tolling agreement NCUA had entered into with the defendants, and which NCUA had argued extended the time allowed to file the lawsuits, "is not effective in extending the applicable three-year limitations period under the Extender Statute."
NCUA told BloombergBusinessweek yesterday afternoon it couldn't comment immediately on the decision.
The agency had filed eight cases against brokerage firms charging that they made misleading statements about the securities they sold to the corporates. The Barclays case addressed $555 million in securities ranging from $12.515 million to $200 million in 12 certificates sold between Oct. 15, 2006, and June 12, 2007, according to the ruling.
NCUA argued in all cases filed in the U.S. District Court in Kansas and other districts that it had met the statute of limitations for filing the lawsuits because of tolling agreements that delayed filing dates or because of a statute that extended the time to file in certain situations.
"The court reaffirms here the rulings that it issued in the Credit Suisse case concerning the application of that statute," said Lungstrom in the Barclays ruling. "Accordingly, absent some form of tolling, plaintiff was required to file these claims by March 20, 2012, three years after its appointment as conservator for U.S. Central and WesCorp. Plaintiff did not initiate this action, however, until Sept. 25, 2012," he said.
"Nor may plaintiff rely on the Extender Statute's alternative reference to the applicable state-law limitations periods, as this case was filed more than five years after the purchases of these certificates," he said, adding "all of the claims...this action are time-barred, and the plaintiff's complaint is hereby dismissed in its entirety."
In Wednesday's Credit Suisse ruling, the court reaffirmed its April 8 dismissal of some of the complaints as time-barred and ruled "that plaintiff may not rely on [the tolling] agreement to avoid application of the Extender Statute's limitations period."
The dismissal, if upheld by higher courts, likely will impact not only NCUA's lawsuits but those of other agencies trying to recoup losses from RMBS investments. The Credit Suisse ruling specifically mentioned an amicus brief filed by the Federal Deposit Insurance Corp. and rejected the FDIC's arguments, which were similar to NCUA's.