Kramer Levin Files Amicus Brief for SIFMA in the U.S. Supreme Court

On July 28, 2017, Kramer Levin filed an amicus brief in the United States Supreme Court on behalf of the Securities Industry and Financial Markets Association, an association of hundreds of securities firms, banks and asset managers. The brief supports a petition for a writ of certiorari filed by Credit Suisse First Boston Mortgage Securities Corp., Credit Suisse Management LLC, Credit Suisse Securities (USA) LLC, HSBC Securities (USA) Inc., RBS Securities Inc., and UBS Securities LLC, following a decision of the Second Circuit Court of Appeals in a case brought by the Federal Deposit Insurance Corporation (“FDIC”), as receiver for Citizens National Bank and receiver for Strategic Capital Bank.

The FDIC asserts claims under Sections 11 and 15 of the Securities Act of 1933 concerning Citizens National Bank’s and Strategic Capital Bank’s purchases of $140 million of mortgage-backed securities from the defendants. The Second Circuit construed a provision of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 that extends the “statute of limitations” for the FDIC to bring “contract” or “tort” claims to permit the FDIC to bring claims under the Securities Act after the expiration of its statute of repose.

The amicus brief argues that the Supreme Court should grant certiorari to determine whether the Second Circuit’s decision is inconsistent with both a 2014 Supreme Court decision that ruled that similar language in the Comprehensive Environmental Response, Compensation and Liability Act of 1980 applies only to statutes of limitations, and not to statutes of repose, and a 2017 Supreme Court decision that ruled that the statute of repose in the Securities Act “admits of no exception and on its face creates a fixed bar against future liability” that offer defendants “full and final security after three years.” The brief argues that “legislation must be enforced in accordance with its text, and not based on a judicial assessment of how best to effectuate a perceived legislative purpose, that the Second Circuit’s decision “undermines important aspects of the statute of repose that Congress made a central component of the Securities Act” and that this case “presents an ideal vehicle because the pressure to settle similar, future lawsuits seeking large recoveries, which has already led to large settlements, could be a roadblock to appeals reaching this Court in other cases.”

The case is Credit Suisse First Boston Mortgage Securities Corp., et al. v. FDIC, No. 17-10. This is the eleventh amicus brief we have filed on behalf of SIFMA within the past two and a half years — four in the United States Supreme Court, four in the Second Circuit, two in the Fifth Circuit and one in the Ninth Circuit.