Allstate to Pursue Fraud Claims against 3 Banks
Allstate Insurance Company will pursue fraud claims against Deutsche Bank, Merrill Lynch and Morgan Stanley over residential mortgage-backed securities, alleging that the banks ignored defects in the loans packaged into the securities, misrepresented their underwriting guidelines and manipulated the process of due diligence, Reuters reported March 18.
In 2011, Allstate filed suit against the three banks over the RMBS; Deutsche Bank was sued for $185 million, Merrill Lynch for $167 million and Morgan Stanley for $105 million.
Deutsche Bank had asked a court to dismiss Allstate’s claims, a motion the New York state court denied March 15. Allstate may now be entitled to recover damages for inflated securities prices and for declines in market value, Reuters reported.
Daniel Brockett of Quinn Emanuel Urquhart & Sullivan, the law firm representing Allstate, said he expects the court’s decision to influence other residential mortgage-backed securities cases pending in New York.