This is a securities class action lawsuit against Deutsche Bank, certain officers and directors, and certain Deutsche Bank subsidiaries and affiliates, and certain independent rating agencies.
These Deutsche Bank subsidiaries and affiliates were engaged in the business of purchasing home loans secured by mortgages on real property, packaging those loans into specially created investment vehicles and selling to the investor public interests in these investment vehicles. These investments are generally referred to as Deutsche Alt-A Mortgage Pass-Through Certificates.
Deutsche Bank issued billions of dollars of Deutsche Alt-A Mortgage Pass-Through Certificates. The Deutsche Alt-A Mortgage Pass-Through Certificates were issued pursuant to Prospectus Supplements, each of which was incorporated into the Registration Statement. The Deutsche Alt-A Mortgage Pass-Through Certificates included several classes or tranches, which had various priorities of payment, exposure to default, interest payment provisions and/or levels of seniority. The Deutsche Alt-A Mortgage Pass-Through Certificates were supported by large pools of mortgage loans. The Registration Statement represented that the mortgage pools would primarily consist of loan groups generally secured by first liens on residential properties, including conventional, adjustable rate and negative amortization mortgage loans.
The class action complaint alleges that the Registration Statement omitted and/or misrepresented the fact that the sellers of the underlying mortgages to Deutsche Alt-A were issuing many of the mortgage loans to borrowers who:
(i) did not meet the prudent or maximum debt-to-income ratio purportedly required by the lender;
(ii) did not provide adequate documentation to support the income and assets required to issue the loans pursuant to the lenders' own guidelines;
(iii) were steered to stated income/asset and low documentation mortgage loans by lenders, lenders' correspondents or lenders' agents, such as mortgage brokers, because the borrowers could not qualify for mortgage loans that required full documentation; and
(iv) did not have the income or assets required by the lenders' own guidelines necessary to afford the required mortgage loan payments, which resulted in loans that borrowers could not afford to pay.
According to the complaint, by the fall of 2007, the truth about the mortgage loans that secured the Deutsche Alt-A Mortgage Pass-Through Certificates began to be revealed to the public. As a result, the Deutsche Alt-A Mortgage Pass-Through Certificates are no longer marketable at prices anywhere near the price paid by plaintiff and the Class and the holders of the Deutsche Alt-A Mortgage Pass-Through Certificates are exposed to much more risk with respect to both the timing and absolute cash flow to be received than the Registration Statement/Prospectus Supplements represented.
Name (Stock Symbol)
McGraw-Hill Companies, Inc., The (MHP)
The McGraw-Hill Companies, Inc. provides information services and products to the financial services, education, and business information markets. It operates under the Standard & Poors brand, which provides investment research, market indices, credit ratings, financial data, and fixed income research and analysis to investors, corporations, governments, financial institutions, investment managers, and advisors.
Moodys Investor Services
Moodys Investor Services, a subsidiary of Moodys Corporation, publishes credit ratings on a range of debt obligations, including various corporate and governmental obligations, structured finance securities, and commercial paper programs, as well as the entities that issue such obligations.
Deutsche Bank AG (DB)
Deutsche Bank provides investment banking products and services. It operates in three divisions; Corporate and Investment Bank, Private Clients and Asset Management, and Corporate Investments.
DBRS, Inc. is a rating agency, which rates the credit quality of financial instruments.
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