On April 17, Justice Eileen Bransten of the Supreme Court of the
State of New York dismissed all claims in a suit brought by
investment vehicle Sealink Funding Ltd. in connection with RMBS
purchased from Morgan Stanley. Sealink acquired the
certificates at issue from Sachsen LP Europe Plc and brought claims
for fraud, fraudulent inducement, and aiding and abetting
fraud. Sealink alleges misstatements by Morgan Stanley
regarding the due diligence and underwriting performed on the
mortgages underlying the securities, misstatements of loan-to-value
and debt-to-income ratios and misstatements concerning the risks of
RMBS generally. The court held that under governing English
law, Sachsen's tort claims could only be transferred to Sealink
by explicit reference in the agreements transferring the
securities. Finding no such transfer provision, the court
dismissed Sealink's claims.
Decision.
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