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News Now

CU System
Space Coast CU Agrees To Dismiss Lawsuit with Barclays Capital, State Street
NEW YORK (10/23/13)--Space Coast CU has agreed to dismiss its lawsuit against Barclays Capital and State Street Corp. over collateralized debt obligations (CDOs) Barclays sold to now-defunct Eastern Financial Florida CU, a Space Coast attorney confirmed to News Now Tuesday.
 
The credit union has "resolved the case" and is "pleased with the result," said David Bishop, an attorney with the law firm Kirby McInerney LLP in New York, who represented Space Coast.
 
Space Coast, based in Melbourne, Fla., acquired Miramar, Fla.-based Eastern Financial Florida CU in June 2009 in an emergency merger approved by state regulators.
 
As "successor in interest" for Eastern Financial Florida, Space Coast filed a lawsuit in the U.S. District Court for the Southern District of Florida, in Fort Lauderdale. The case involved 12 CDOs sold to Eastern Financial between 2005 and 2007. 
 
The original suit involved instruments underwritten by Merrill Lynch, Pierce and Fenner Inc., J.P. Morgan Securities LLC, UBS Securities LLC and Barclays Capital, and rated by ratings agency The McGraw Hill Cos. (Standard & Poor's) and Moody's Investor Services.
 
Space Coast CU's suit against the other firms is still pending.
 
Space Coast CU was allowed to amend its complaint in March of this year "by alleging in detail, and with a plausible factual basis" the alleged fraud committed by defendants after a federal court judge dismissed without prejudice the credit union's $100 million lawsuit against Wall Street banks and ratings agencies over CDOs sold to Eastern Financial Florida CU. The lawsuit with Barclays Capital and State Street Corp. was carved out of the original lawsuit.


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