Industry

Financial Services

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 resolutions. 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.

Services

We support the full range of our financial services clients’ legal needs, including: 

Litigation

  • Fiduciary & Contract
  • Consumer 
  • Securities

Appellate

  • Appeals
  • Post-Trial Motions

Class Actions

  • Consumer Matters 
  • Shareholder/Investor Matters

Restructuring

  • Corporate Restructuring
  • Bankruptcy Litigation

Clients

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
  • Bank of America / Merrill
  • Fifth Third Bank
  • Berkshire Hathaway
  • UBS
  • Citigroup
  • Wells Fargo

Team

Our lawyers are at the heart of some of the most important and precedent-setting litigation in the financial services industry. The team includes:

Related Practices

Experience

Our high-profile work on behalf of financial services entities includes:

Litigation
We represent some of the nation’s most prominent companies in cutting-edge areas of commercial, business and consumer law, including:

  • Bank of America 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.
    • Litigation filed in New York State and federal court by numerous European banks and other entities alleging that the bank breached its duties as trustee of dozens of RMBS trusts.
    • Interpleader litigation in New York federal court involving a dispute over collateral backing a collateralized debt obligation (“CDO”).
  • Merrill Lynch entities in:
    • Breach of contract actions brought by U.S. Bank National Association in its capacity as trustee for RMBS trusts.
    • A putative class action alleging the wrongful escheatment of customer stock interests in third-party corporations.
  • Wells Fargo in:
    • 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.
    • Defending in a civil enforcement action brought by the Los Angeles City Attorney against Wells Fargo Bank, alleging improper sales practices.
    • 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.

Appellate
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.

Class Actions
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:

  • 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.
    • Nationwide class, mass and individual actions involving claims by investors in more than $2 billion in notes of special purpose entities owned by Medical Capital Holdings.
    • Obtaining denial of class certification in a lawsuit brought by home mortgage consultants alleging underpayment of wages.
  • Wells Fargo, Bank of America and Merrill Lynch in obtaining a dismissal of two class actions over so-called “forced patronage,” where employees are required use the trading arm of their employer. The U.S. Court of Appeals for the Ninth Circuit affirmed the decision.

Financial Restructuring
Our team includes recognized lawyers in securities, tax and litigation, as well as a Fellow of the American College of Bankruptcy. Our representations include:

  • Berkshire Hathaway as a bondholder and asset bidder in the bankruptcy of one of the largest mortgage servicers in the country.
  • Merrill Lynch in connection with both the U.S. Chapter 15 cases and Cayman Islands’ liquidation of the Sphinx Group of Companies following the collapse of the multi-national hedge fund. Our work included serving as Merrill’s representative on the official Cayman Islands liquidation committee responsible for analyzing and structuring a plan to distribute more than $500 million of investor funds.

Case Studies
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.

Coverage: BofA To Settle Out Of Investor Suit Over $665M RMBS Notes

  • 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.

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