Federal Judge Lungstrum (D. Kan.) issued a Memorandum and Order in National Credit Union Administrative Board v. RBS Securities, Inc. et al., No. 11-2340 (Sept. 12, 2013).  The Board, as conservator and liquidating agent of the U.S. Central Federal Credit Union, alleged that the defendants made “untrue statements or omissions of material facts relating to” a number of RMBS. The main allegation is that  “the originators for the loans underlying the [RMBS] certificates systematically abandoned underwriting guidelines, and that the certificates’ offering documents failed to disclose that fact or misrepresented that guidelines were followed.” (3) The court found that

plaintiff’s forensic analysis, based on the particular loans underlying the six dismissed offerings, support a plausible claim of misrepresentations involving the LTV and owner-occupancy ratios. Not only are those alleged misrepresentations independently actionable, they provide a connection to the particular certificates at issue and thus support a plausible claim based on the abandonment of underwriting guidelines.  That is true for claims based on these six offerings, even without originator-specific allegations.  Accordingly, the Court denies the motion by RBS and Wachovia to dismiss certain claims on this basis. (7)

Courts have been increasingly willing to draw a distinction between run of the mill misrepresentation and systemic misrepresentation (see here and here for instance).  This will have a big impact on how reps and warranties are drafted going forward as well as, obviously, the scope of theories of liability for breach of contract in the context of securities offerings.