On the eve of an expected five-week jury trial in Texas state court, Yetter Coleman client, the Federal Deposit Insurance Corporation (FDIC), favorably settled its long-running litigation against Morgan Stanley & Co. for a cash payment of $24 million.
Filed in late 2011, the case was brought by the FDIC as receiver for Franklin Bank, a Houston-based bank that failed in 2008. The FDIC alleged that Morgan Stanley violated state and federal securities laws by making false and misleading statements in the offering documents for four residential mortgage-backed securities purchased by Franklin for $102 million. The alleged false and misleading statements related to the appraisals, loan-to-value ratios, and underwriting-guideline compliance for the loan pools underlying the RMBS.
Yetter Coleman was brought into the case as lead trial counsel in 2015, within 60 days of the expected trial date. After a continuance requested by Morgan Stanley, the Houston trial was set to begin July 7, 2015, before it settled in a public settlement.