Overview
In an opinion Wednesday, Judge Pauley allowed class action claims to proceed against certain Bank of America officers and directors for allegedly concealing the bank’s exposure to claims that would force the bank to repurchase faulty mortgage securities from investors or insurance companies. Judge Pauley had dismissed the executives from an original complaint, but found that an amended complaint cured the defects. In particular, he found that plausible claims of fraud based on the allegations (1) that a letter from Bank of America to the Financial Crisis Inquiry Commission was inconsistent with later public statements from CEO Brian Moynihan about the bank’s mortgage exposure, and (2) that the defendants who certified the bank's financial statements failed to disclose the exposure, contrary to GAAP.
