Counseling financial institutions on litigation and regulatory matters
As financial institutions face litigation and investigations stemming from their most complicated financial instruments and transactions, they turn to our interdisciplinary team of attorneys to achieve the most favorable results. We bring decades of financial services experience to bear on current matters, such as advising on some of the furthest-reaching mortgage crisis litigation, recent class actions, and government investigations on unauthorized account openings.
We support the full range of our financial services clients’ legal needs, including:
- Post-Trial Motions
- Consumer Matters
- Shareholder/Investor Matters
- Corporate Restructuring
- Bankruptcy Litigation
To avoid the disabling conflicts that plague so many other large firms in this area, we work with a select group of financial services clients and private equity funds, including:
- American Express
- DoubleLine Capital
- Wells Fargo
- Bank of America
- Fifth Third Bank
- Western Alliance Bancorp.
- Berkshire Hathaway
- Invictus Global Management
- Oaktree Capital Management LP
Our lawyers are at the heart of some of the most important and precedent-setting litigation in the financial services industry. The team includes:
Our high-profile work on behalf of financial services entities includes:
We represent some of the nation’s most prominent companies in cutting-edge areas of commercial, business and consumer law, including:
- DoubleLine Capital and its CEO, Jeffrey Gundlach, against an action brought by former partners in 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.
- Bank of America in:
- Litigation brought by the State of New Mexico on behalf of state pension funds for losses suffered in the mortgage crisis. The State sued Bank of America and several other banks for approximately $120 million in alleged losses, for which it claimed a right to collect treble damages (i.e., $360 million) plus statutory penalties. With a motion to dismiss pending, Bank of America and the other defendants were able to settle on favorable terms.
- Obtaining a settlement in litigation filed by Ambac Financial Group seeking to avoid its monoline insurance liability for mortgages originated and securitized by the bank.
- Litigation filed in Colorado, New York, California, Texas and Nevada by the FDIC and private investors to hold the bank liable for losses these investors allegedly suffered on residential mortgage-backed securities (“RMBS”) investments.
- Interpleader litigation in New York federal court involving a dispute over sales of securities backing a collateralized debt obligation (“CDO”).
- Obtaining dismissal or favorable resolution of numerous state and federal securities actions filed by U.S. and foreign institutional investors in connection with RMBS purchased prior to the financial crisis.
- Merrill Lynch entities in:
- Breach of contract actions brought by U.S. Bank National Association in its capacity as trustee for RMBS trusts.
- Securities class actions brought against Merrill Lynch as underwriter of public securities offerings.
- 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.
- Resolving class action litigation after the City Attorney for Los Angeles filed suit against Wells Fargo alleging that bankers were improperly opening accounts for customers.
- 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. See case study at end of page.
- Obtaining summary judgment and numerous dismissals at the pleading stage in cases alleging that Wells Fargo breached duties as trustee of numerous trusts.
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:
- 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 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, we convinced the plaintiffs to dismiss their remaining claims.
- Wells Fargo in winning a landmark decision, 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.
We have extensive experience defending clients in high-stakes class action lawsuits and routinely obtain dismissals at the pleading stage or denials of class certification. Our representations include:
- Merrill Lynch in:
- 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.
- Wells Fargo in:
- 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 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.
- Obtaining denial of class certification in a lawsuit brought by home mortgage consultants alleging underpayment of wages.
Even though the financial crisis was more than a decade ago, we continue to represent major financial institutions in litigated and non-litigated disputes over obligations and losses arising from mortgage-backed securitization structures. A great deal of the work we perform in this space is resolved through alternative dispute resolution methods, including mediation and direct settlement negotiations. By their nature, most of these engagements are confidential, but two examples of our work follow:
- Innovatively invalidating assigned claims for millions of dollars in RMBS losses
Client: Bank of America
Munger, Tolles & Olson used an innovative approach to defend Bank of America in a case brought by German and Irish special-purpose entities relating to hundreds of millions of dollar of losses on RMBS investments. In discovery, we developed documentary evidence and deposition testimony to show that the plaintiffs had obtained their claims via assignments that were invalid under the doctrine of champerty, an ancient but infrequently invoked legal doctrine that prohibits trafficking in legal claims.
We moved for summary judgment on this basis before the United States District Court for the Southern District of New York, which agreed with the argument and dismissed the case in its entirety. The Second Circuit affirmed the district court’s judgment in 2021. Additional RBMS claims against Bank of America have been dismissed or have been settled on confidential terms.
- Dismissing tens of millions of dollars in rescissory damages
Client: Wells Fargo
In a case brought by Charles Schwab against Wells Fargo seeking tens of millions of dollars in rescissory damages – damages measured by the fair value of a security – on RMBS investments, 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.