Financial Services

We represent some of the nation’s most prominent companies in cutting-edge areas of commercial, business and consumer law. We also have extensive experience defending clients in high-stakes class action lawsuits and routinely obtain dismissals at the pleading stage or denials of class certification.

An example of the out-of-the-box approach by MTO can be seen in a case where Charles Schwab had brought suit against Wells Fargo seeking tens of millions of dollars in rescissory damages on investments, damages measured by the fair value of a security. Munger, Tolles & Olson developed a novel and unprecedented argument concerning the proper calculation of prejudgment interest in the rescission context. We filed a motion for summary judgment, arguing that when interest was properly calculated, Schwab had no rescissory damages. The court agreed and dismissed the case and Schwab was ordered to pay Wells Fargo’s costs for defending the suit.

A great deal of the work we perform in this space is resolved through alternative dispute resolution methods, including arbitration, mediation and direct settlement negotiations. By their nature, most of these engagements are confidential, but public examples of our representations include:

• Bank of America in:
  • Litigating and resolving a range of disputes arising from the global financial crisis. By way of example, our team helped to settle Bank of America’s long-running, multibillion-dollar web of litigation with monoline mortgage insurer Ambac Assurance Corp./Ambac Financial Group — litigation that had been pending for many years in courts across the country. We obtained dismissal or favorable resolution of numerous state and federal securities actions filed by U.S. and foreign institutional investors in connection with residential mortgage-backed securities (RMBS) purchased prior to the financial crisis. We also defended the Bank against litigation filed in numerous states by the FDIC relating to losses allegedly suffered on RMBS investments.
  • Bank of America subsidiary against indemnification litigation brought by UBS for its RMBS securities settlements, including its $885 million settlement with the Federal Housing Finance Agency.
  • Litigation brought by the State of New Mexico on behalf of state pension funds alleging approximately $120 million in alleged losses, for which it claimed a right to collect treble damages (i.e., $360 million) plus statutory penalties from Bank of America and several other banks. With a motion to dismiss pending, Bank of America and the other defendants were able to settle on favorable terms.
  • Interpleader litigation in New York federal court involving a dispute over sales of securities backing a collateralized debt obligation (CDO).
  • An investigation by a consortium of district attorneys relating to the Bank’s call recording disclosure requirements.
  • Defending Bank of America’s subsidiary Countrywide Home Loans in a case brought by Swiss bank UBS seeking recovery of $200 million in connection with its settlements of mortgage-crisis-era securities litigation.
• Merrill Lynch entities in:
  • Securities class actions brought against Merrill Lynch as underwriter of public securities offerings.
  • A putative class action alleging the wrongful escheatment of customer stock interests in third-party corporations.
  • A putative securities class action filed by Plymouth County Contributory Retirement System.
  • Breach of contract actions brought by U.S. Bank National Association in its capacity as trustee for RMBS trusts.
• Wells Fargo in:
  • A lawsuit brought by Ronald Hilton (of the Hilton hotelier family) over inheritance of millions of shares of Hilton Hotels Corporation stock from deceased hotel magnate Conrad Hilton.
  • Obtaining a settlement in a class action for opening unauthorized accounts on behalf of retail banking customers. More than a dozen other class action suits were also filed; most were dismissed in favor of arbitration or due to individual settlements.
  • Obtaining affirmance of summary judgment in a lawsuit, brought by the City Attorney of Los Angeles, alleging that Wells Fargo engaged in discriminatory and predatory mortgage-lending practices targeting minority borrowers in violation of the Fair Housing Act.
  • Obtaining summary judgment in a lawsuit brought by Charles Schwab & Company alleging losses on RMBS issued by a Wells Fargo subsidiary.
  • Obtaining summary judgment and numerous dismissals at the pleading stage in cases alleging that Wells Fargo breached duties as trustee of numerous trusts.
  • Obtaining a settlement in a class action lawsuit alleging $575 million in damages brought by a class of institutional investors who alleged that the bank breached the terms of its securities lending program contracts and its fiduciary duties to its customers by placing them in inappropriately risky investments. This favorable class action settlement was made possible by Munger, Tolles & Olson securing a unanimous jury verdict win on an individual action alleging the same claims following a seven-week trial.
  • Obtaining denial of class certification in a lawsuit brought by home mortgage consultants alleging underpayment of wages.
• DoubleLine Capital, an investment management firm and its, CEO, Jeffrey Gundlach, against an action brought by former partners in a JAMS arbitration, achieving a complete defense award as well as victory on counter claims that significantly reduced the value of the partners’ outstanding equity after a two-phase, multi-week hearing. In January 2024, MTO successfully secured confirmation of the arbitration award denying all claims facing DoubleLine Capital and its founder.
• Fortress Investment Group in successfully resolving a lawsuit filed by HM Ruby, a life settlement investment fund, that claimed $400 million in damages for Fortress’ alleged violations of a credit agreement. After MTO won a bench trial for Fortress in 2016, an appeals court reversed on the ground that HM Ruby was entitled to a jury trial. The matter was resolved for Fortress on favorable terms in January 2022, shortly before a second trial.

Munger, Tolles & Olson litigators are known as much for providing long-term strategic leadership on cases as for their ability to join defense teams on the eve of trial. Examples of our work follow:

• Grayscale Investments LLC, the largest publicly traded bitcoin investment fund in the world, in challenging the SEC’s decision to block a national exchange’s request to convert Grayscale’s flagship product to a spot ETP that would hold and closely track the value of bitcoin. The U.S. District Court for the District of Columbia vacated the SEC’s decision, leading to the SEC approving the first listing and trading of spot bitcoin ETPs (including Grayscale’s) in January 2024.
• BMO Harris in overturning a $560 million jury award (more than $1 billion with prejudgment interest) arising out of the multi-billion-dollar Petters Ponzi scheme. BMO Harris was found liable for aiding and abetting a breach of fiduciary duty that was perpetrated by high-level Petters company executives who held a company account at a predecessor to BMO Harris. The U.S. District Court for the Eighth Circuit reversed the jury verdict and instructed the district court to enter judgment for BMO.
• American Express in a U.S. Supreme Court victory in a lawsuit brought by 17 states and the U.S. Department of Justice alleging that the credit card company’s merchant contracts were anti-competitive and violated federal antitrust laws.
• Bank of America and its senior executives in a U.S. District Court for the Second Circuit appeal resulting in affirmance of a district court’s dismissal of a shareholder class action.
• Defendants Fifth Third Bank and Associated Commercial Finance, Inc., in affirming the dismissal of the bulk of the plaintiffs’ claims for fraudulent transfer and unjust enrichment relating to a syndicated loan as part of an alleged $3.7 billion Ponzi scheme. On remand, MTO convinced the plaintiffs to dismiss their remaining claims.
• Wells Fargo in winning a landmark decision for itself and also for the mortgage lending and servicing industry, in Kwang Sheen v. Wells Fargo Bank, N.A., in which the California Supreme Court ruled that lenders and loan servicers do not owe borrowers a general duty of care to protect a borrower’s economic interests, including when processing, reviewing or responding to a mortgage modification application.