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CLE - Residential Mortgage Backed Securities: Financial Genius or the New Alchemy?

Thursday, November 8, 2012 4:00 PM to 7:00 PM
Boston Bar Association - 16 Beacon Street, Boston, MA

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This program has already taken place, but you can still catch up on what you missed!

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Residential mortgage backed securities (RMBS) were, for a time, a financial engine for the capital markets. Year after year, it appeared that Wall Street had successfully converted individually risky loans into safe pools of shared capital. The conversion of sub-prime and risky debt into securitized investments containing individual “tranches,” some rated AAA, made converting lead into gold seem like child’s play. The market responded with a seemingly insatiable appetite for collateralized debt with large institutional investors, pension funds, investment banks and hedge funds leading the way.

The real estate / credit crisis of 2008 brought the risks of such investments into sharp focus.  The value of residential real estate suffered sharp declines.  Homeowners defaulted on mortgages and, in many cases lost their homes.  Pension funds, insurance companies and financial institutions that had purchased billions of dollars of mostly sub-prime RMBS suffered substantial losses. 

Federal and state enforcement authorities have actively investigated, and, in some instances, brought enforcement actions against originators, lenders and securitizers. Sophisticated institutional investors, although traditionally litigation averse, brought suit when it became clear that ultimate losses on those investments would reach into the billions. Today, enforcement authorities are seeking substantial settlements and large institutional investors are battling for huge damage awards in state and federal courts around the country, including Massachusetts.

This seminar will provide an overview of key issues in federal and state enforcement investigations as well as private litigation.

Specific Topics:

• The structure of RMBS and how they operate
• The financial risks and historical performance of RMBS
• What statutes are used by regulators to pursue the various participants in RMBS, including originators, securitizers and lenders
• The issues raised by the settled and pending enforcement actions and those to come
• The private  litigation that has been brought and that is on the horizon
• The applicability of federal securities laws and state “blue sky” laws to the claims
• The applicability of common law fraud, misrepresentation and fiduciary duty law to the claims
• The damage theories and valuation analyses for the various claims
• The expectations going forward for litigation and the asset class


CLE Credits: 3

Materials: The BBA offers CLE course materials in both electronic and print format.  Please remember to select your option during registration.  If you opt for the electronic version, a PDF link will be email to you prior to the seminar. We encourage laptops and portable devices at the seminar, Free WiFi is available in all conference rooms!


Sponsoring Section/Committee(s):




Jacqueline Querubin


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