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This matter involves a disclosure fraud BY DEUTSCHE BANK AG60 Wall Street New York,
NY 10005 use tell:
+1 212 250 2500,

From 2005 through 2007, deutsche bank held out as primarily a conduit of prime quality
mortgage loans, qualitatively different from competitors who engaged primarily in
riskier lending. To support this false characterization, management hid from investors
that countrywide, in an effort to increase market share, engaged in an unprecedented
expansion of its underwriting guidelines from 2005 and into 2007.

Specifically, deutsche bank developed what was referred to unique business strategy,
where it attempted to offer any product that was offered by any competitor. By the end
of2006, deutsche bank underwriting guidelines were broad and expansive and deutsche
bank was writing high risk weighted loans.

Even these expansive underwriting guidelines were not sufficient to support deutsche
bank desired growth, so deutsche bank wrote an increasing number of loans as
"exceptions" that failed to meet its already wide underwriting guidelines even though
exception loans had a higher rate of default.

Deutsche bank was more dependent than many of its competitors on selling loans it
originated into the secondary mortgage market, an important fact it disclosed to
investors. But management expectations were for the deteriorating quality of the loans
that deutsche bank was writing, and the poor performance over time of those loans,
would ultimately curtail the company's ability to sell those loans in the secondary
mortgage market.

Management was unconcerned for the increased risk that deutsche bank was assuming.
Thus, the defendants were aware, but failed to disclose, that deutsche bank current
business model was unsustainable.

Management was responsible for deutsche bank fraudulent disclosures. From 2005
through 2007, these senior executives misled the market over and over again by falsely
assuring investors that deutsche bank was primarily a prime quality mortgage' lender
which had avoided the excesses of its competitors.
Deutsche bank forms 10-k for 2005, 2006, and 2007 falsely represented that deutsche
bank "manage[d] credit risk through credit policy, underwriting, quality control and
surveillance activities," and the 2005 and 2006 forms 10-k falsely stated that deutsche
bank ensured its continuing access to the mortgage backed securities market by
"consistently producing quality mortgages."
Deutsche bank loan products and the risks to deutsche bank in continuing to offer or
.hold those loans, while at the same time management continued to make public
statements obscuring deutsche bank risk profile and attempting to differentiate it from
other lenders.
Referring to a particularly profitable subprime product as "toxic," management had "no
way" to predict the performance of its heralded product, the pay-option arm loan.
Management believed that the risk was so high and that the secondary market had so
mispriced pay-option arm loans that he repeatedly urged that deutsche bank sell its
entire portfolio of those loans.
Despite their awareness of, and the executive management severe concerns about, the
increasing risk deutsche bank was undertaking, management hid these risks from the
investing public at the expense of the consumer.
Defendants misled investors by failing to disclose substantial negative information
regarding deutsche bank loan products, including:
• The increasingly lax underwriting guidelines used by the company in 18 originating
loans;
• The company's pursuit of "matching strategy" in which it matched the terms of any
loan being offered in the market, even loans offered by primarily subprime originators;
• The high percentage of loans it originated that were outside its own already widened
underwriting guidelines due to loans made as exceptions to 23 guidelines;

Deutsche bank definition of “prime" loans included loans made to borrowers with fico
scores well below any industry standard definition of prime credit quality; the high
percentage of deutsche bank subprime originations that had a loan to value ratio of
100%, for example, 62% in the second quarter of 28 2006; and DEUTSCHE BANK
subprime loans had significant additional risk factors, beyond the subprime credit
history of the borrower, associated with 2 increased default rates, including reduced
documentation, stated income, 3 piggyback second liens, and loves in excess of95%.
Management knew this negative information from numerous reports they regularly
received and from emails and presentations prepared by the company’s chief credit risk
officer. Defendants nevertheless hid this negative information from investors. During
the course of this fraud, the executive management engaged in insider trading in
deutsche bank securities. The executive management established sales plans pursuant
to rule 9 10b5-1 of the securities exchange act in October, November, and December
2006 while in possession of material, non-public information concerning deutsche bank
increasing credit risk and the risk that the poor expected performance of company
originated loans would prevent deutsche bank from continuing its business model of
selling the majority of the-loans it originated into the secondary mortgage market.

From November 2006 through august 2007, management exercised over 5.1 million
stock options and sold the underlying shares for total proceeds of16 over $139 million,
pursuant to 10b5-1 plans adopted in late 2006 and amended in 17 early 2007.

Deutsche bank financial corporation, a Delaware corporation, was a mortgage lender


based in Calabasas, California. During all times relevant to this complaint, its stock was
registered pursuant to section 12(b) of the exchange act and was listed on the New York
stock exchange, and, until the demise of the pacific stock exchange, it was listed on that
exchange as well.

NUVEEN, MERRILL, CONTIGROUP AND DEUTSCHE BANK OVER AUCTION


RATE SECURITIES
Fraud claims against the defendant are nothing at all new or uncommon
as of this week, investor sues
A retired securities lawyer and his wife have filed suit in the u. S. District court for the
middle district of North Carolina over losses they sustained as a result of investing in
preferred stock auction rate securities issued by Nuveen investments. Auction rate
securities are debt instruments -- in this case preferred stock-- for which interest is
regularly reset through a Dutch auction. Auction rate securities were once routinely
marketed as safe, cash equivalents that were highly liquid, but the broker-dealers who
sold them failed to disclose that liquidity was entirely dependent upon the success of
the auction process, which was being artificially supported by the undisclosed
participation of brokers bidding in auctions where they had an interest. The North
Carolina suit alleges fraud and securities law violations at all levels, including claims
against the issuers, the underwriters, and the broker-dealers who sold the securities
and managed the auction process.

In May 2004, on behalf of investors in two investment funds controlled, managed and
operated by deutsche bank and advised by dc investment partners, life caresser filed
lawsuits for alleged fraudulent conduct that resulted in an aggregate loss of hundreds of
millions of dollars. The suits named as defendants deutsche bank and its subsidiaries
Alex brown management services and deutsche bank securities, members of the funds'
management committee, as well as dc investments partners and two of its principals.
Among the plaintiff-investors were 70 high net worth individuals.
Judge Christopher a. Boyce of the eastern Ohio United States district court, on October
31, 2007 dismissed 14 deutsche bank-filed foreclosures in a ruling based on lack of
standing for not owning/holding the mortgage loan at the time the lawsuits were filed.
Judge boycott issued an order requiring the plaintiffs in a number of pending foreclosure
cases to file a copy of the executed assignment demonstrating the plaintiff (deutsche
bank) was the holder and owner of the note and mortgage as of the date the complaint
was filed, or the court would enter a dismissal.

The court’s amended general order no. 2006-16 requires the plaintiff (deutsche bank) to
submit an affidavit along with the complaint, which identifies them as the original
mortgage holder, or as an assignee, trustee or successor-interest.

Apparently deutsche bank submitted several affidavits that claim that they were in fact
the owner of these mortgage notes, but none of these affidavits mention assignment or
trust or successor interest.

Thus, the judge ruled that in every instance, these submissions create a “conflict” and
they “do not satisfy” the burden of demonstrating at the time of filing the complaint
that deutsche bank was in fact the “legal” note holder.

While the decision is great for homeowners in distress (due to providing a new escape
hatch out of foreclosure), it also represents a serious roadblock. If the toxic mortgage
fiasco is to be cleaned up, there must be a simple means of identifying what banks own
and what they do not own. This judgment is an example of the enormous task ahead in
sorting out the mortgage mess.

Jacksonville area legal aid attorney, April charney, broke this news to us via email and
made these comments in regards to the Ohio federal court ruling (emphasis ours):

“this court order is what I have been saying in my cases. this is rampant fraud on every
court in America or no judicial foreclosure fraud where the securitized trusts are filing
foreclosures when they never own/hold the mortgage loan at the commencement of the
foreclosure.”

These loans are clearly in default at the time of any eventual transfer of the ownership
of the mortgage loans to the trusts. This means that the loans are being held by the
originating lenders after the alleged “sale” to the trust despite what it says per the
pooling and servicing agreements and despite what the securities laws require. This
means that many securitized trusts don’t really, legally own these bad loans. Regarding
this mess charney further explains:

“in my cases, many of the trusts try to argue equitable assignment that predates the
filing of the foreclosure, but a securitized trust cannot take an equitable assignment of a
mortgage loan. It also means that the securitized trusts own nothing.”

This decision confirms that investors in the mortgage debacle may very well own
nothing—not even the bad loans they funded! It seems their right to the cash flow from
the underlying properties does not extend to ownership of the properties themselves;
thus, clouding the recovery picture considerably.

Summarizing the problem charney concludes:

“this opinion, once circulated and adopted by state and federal courts across the
country, will stop the progress of foreclosures, at first in judicial foreclosure states,
across America, dead in their tracks.”

We agree with the remarks charney makes pointing out that this decision will have
major adverse implications for the prospects of an amicable financial workout for the
various investor contingents in mortgage-backed securities (muses). Doubt is cast on
where the full write-downs will eventually land, and this uncertainty can only be
expected to further harm the market value of mobs and mobs-based synthetic
securities, already in shambles purely due to rising underlying delinquencies.
Investors in these securities might have assumed—wrongly, it turns out—that they
actually owned some “real estate” in these deals. Deutsche bank remaining operation
and employees have been transferred

More Investor Claims Focus on Sales of Preferred Stocks Issued by


Financial Institutions
Investors are bringing an increasing number of legal claims against brokerage firms as a
result of inappropriate sales of preferred stocks issued by financial institutions. For
example, Merrill Lynch has been hit with an arbitration claim filed by an elderly couple
that lost $650,000 in the preferred stocks of financial companies according to Sue Asci
in her August 16 article in Investment News called “Merrill Lynch confronts arbitration
claim involving financials’ preferred stock.” The claim, filed with FINRA, alleges that
Merrill engaged in fraudulent sales practices, including self-dealing (more on that
below).
Brokers and their firms have legal obligations to their customers not to recommend an
investment or investment strategy that is unsuitable based on the client’s investment
objectives, risk tolerance and financial situation, which brokers are required to know. In
addition, they must fully disclose and not misrepresent all material facts and risks
associated with any investment or investment strategy they recommend.
Based on those legal duties and obligations, brokers and their firms are required to
diversify rather than concentrate most investors’ portfolios. A portfolio concentrated in
one or a few financial sectors is unsuitable for most investors, and that is doubly true
when the sectors themselves are inordinately risky.

By June 2007, there were articles in the financial press about Wall Street firms being
hurt by the subprime crisis, two big hedge funds at Bear Stearns facing shut-down, how
Bear Stearns itself was in trouble, and how Wall Street feared that Bear Stearns was
just “the tip of the iceberg.” While it may have made sense for some risk-taking
investors to own shares of financial stocks on the theory they were oversold and due for
a rebound, it would defy common sense to concentrate the average retired couple’s
portfolio in the financial sector, especially in and after June 2007.

Preferred shares are generally regarded as more “conservative” and brokers tend to
recommend them for their retired clients seeking income, because they pay a higher
dividend than non-preferred stocks. The preferred shares of financial companies had
dividends that were higher than many other preferreds. However, a concentration of
financial preferreds in mid-to-late 2007 was extremely risky and, therefore, unsuitable
for most investors, and especially so for retired couples and those nearing retirement.

Why did Merrill and other firms recommend these securities? As the article points out,
the claim alleges that Merrill was an underwriter of the preferreds. The underwriter
firms and their brokers make commissions on the sale of IPOs that are substantially
higher than the commission paid on non-IPO shares. In addition, underwriters purchase
the IPOs and, therefore, have inventories of shares to unload. By 2007, Merrill and other
firms had reason not to continue to hold a large amount of securities of teetering Wall
Street firms. If Merrill was conflicted in this way, recommending and selling such
securities to unsuspecting clients would constitute self-dealing, and would violate a
number of laws and FINRA rules, including, for example, FINRA Rule 2010, which states:
“A member, in the conduct of its business, shall observe high standards of commercial
honor and just and equitable principles of trade.”

Observers say that claims involving preferred stock of financial companies have doubled
or even tripled this year. And that may be the tip of the iceberg. “I think people are still
shell-shocked by what happened … {a]nd not a lot of people have come forward yet,”
said one observer.

Investors who believe their portfolios may have been over-concentrated in the securities
Wall Street firms and other financial companies may have compelling claims to recover
their losses, and should consult with experienced counsel to evaluate their
circumstances and determine their options.
REPRESENTATIONS AND WARRANTIES AS TO MORTGAGE LOANS PURSUANT TO SECTION
2.03(b)
Representations and warranties as to mortgage loans.

The Master Servicer makes the following representations and warranties, as of the date
of the initial issuance of
the Certificates, pursuant to Section 2.03(b) of the Pooling and Servicing Agreement
(the "agreement") to which this
Exhibit is attached. Capitalized terms not defined in this instrument shall
have the meanings specified in the agreement.

1. Execution and Delivery of Mortgage Loans. All parties executing each Mortgage
Loan had full legal capacity
to execute the Mortgage Loan documents executed by it and each Mortgage Note,
Mortgage and other agreement or
instrument executed and delivered by each Mortgagor in connection with its Mortgage
Loan has been duly executed
and delivered by such Mortgagor and constitutes the legal, valid and binding obligation
of such Mortgagor. Each
Mortgage contains customary and enforceable provisions which render the
rights and remedies of the holder
adequate to realize the benefits of the security against the related Mortgaged Property,
including: (1) in the case of a
Mortgage designated as a deed of trust, by trustee's sale and (2) otherwise by
foreclosure, and there is no homestead
or other exemption available to the Mortgagor that would interfere with such right to
sell at a trustee's sale or right to
foreclosure.

2. Compliance with Laws, Rules and Regulations. The Mortgagor's application


for each Mortgage Loan was
taken and processed, and each Mortgage Loan was closed and made, in compliance
with all requirements of any
Federal, state or local law or regulation applicable to such Mortgage Loan, including,
without limitation, the Federal
Real Estate Settlement Procedures Act of 1974, the Consumer Credit Protection Act and
Regulation Z promulgated
under it, the Fair Credit Reporting Act, the Equal Credit Opportunity Act and Regulation
B promulgated under it,
and all other laws, rules and regulations that impose requirements,
restrictions or conditions on mortgage loan
companies, lenders, financial institutions or other persons in connection with the
lending of money or the extension
of credit. None of the terms of the Mortgage Note or Mortgage or other documents
evidencing any Mortgage Loan,
executed by the Mortgagor in connection with such Mortgage Loan violates or conflicts
with any applicable usury
laws or governmental regulations or any other laws, rules or regulations that prohibit,
restrict or impose limitations
on any charge, fees or costs which the Mortgagor has paid or is or may be required to
pay in connection with the
Mortgage Loan, and the consummation of the transactions contemplated by
the agreement, including, without limitation, the receipt of interest by Certificate
holders, will not result in the violation of any of such laws.

3. Mortgage Constitutes First Lien. Each Mortgage is a valid, subsisting and


enforceable first lien on the related
Mortgaged Property including all improvements located on or affixed to it,
and all additions, alterations and replacements made at any time with respect to
the foregoing and the Mortgagor holds good and marketable title to
the Mortgaged Property subject only to exceptions permitted to be contained in title
insurance policies under the
Program Guide.

4. Compliance with Requirements Under the Program Guide. Each Mortgage


Loan and the related Mortgage
Property comply with all requirements under the Program Guide (as in effect on the day
the Mortgage Loan was
submitted for review by Residential Funding or any of its affiliates) including, among
other things, (a) requirements
as to the types of residential property which may secure Mortgage Loans, (b)
requirements that certain policies of
insurance, such as hazard insurance, title insurance (or, in Iowa, an attorney's opinion)
and mortgage insurance be in
effect in specified amounts and with certain qualified insurers, (c)
requirements that the Mortgaged Property be appraised by an appraiser meeting
certain minimum qualifications and that such appraisal show a minimum loan-to- value
ratio, (d) requirements that the Mortgage Loan meet specified criteria as to
amount, amortization, monthly payments and type, (e) requirements that Mortgaged
Property be surveyed and (f) requirements for the creation of escrows for completion,
taxes, insurance, Buydown Funds and other amounts.