“Plaintiffs’ motion is the quintessential fishing expedition,” said lawyers for the Wall Street ratings agency. “They are asking the Court to compel production of potentially tens of millions of pages of documents that have previously been produced by S&P to various state and federal government entities, and more than 100 transcripts from depositions taken in numerous civil suits.”
CUNA Mutual has filed claims over $72 million of troubled MBS it bought from RBS Securities that were rated by S&P. CUNA Mutual is asking the U.S. Court for the Western District of Wisconsin to order the Wall Street bank to buy back the failed MBS it sold to the credit union insurer’s MEMBERS Life Insurance Co. and CUMIS Insurance Society units. CUNA Mutual has filed a separate motion to compel evidence in the U.S. District Court for the Eastern District of New York, where S&P is headquartered.
The suit is a microcosm of many of the legal actions spawned by the mortgage bust, including a leading Wall Street Bank (RBS Securities) that also is being sued by NCUA over MBS sold to the failed corporate credit unions, and S&P, which was sued last month by the Department of Justice over ratings it awarded failed collateralized debt obligations, complex MBS, that were sold to WesCorp FCU and Eastern Financial Florida CU, among others.
S&P, in opposing CUNA Mutual’s motion to compel, told the court it had provided many of the same documents to the Justice Department for its suit and “in support of this extraordinary demand, Plaintiffs do not demonstrate—or even argue—that any of the material they seek is related to the ten securities underlying the claims in this case.”
“To the contrary, Plaintiffs devote a whole section of their memorandum in the proposition that these materials need not relate to the transactions at issue. The argument strains credulity and is simply wrong,” state the S&P lawyers.
In its suit, CUNA Mutual alleges that RBS gave S&P false loan data, which S&P eventually used to rate the loans that were packaged into the MBS.
S&P says it agreed during a Feb. 13 teleconference to produce documents directly related to the 10 MBS, as long as CUNA Mutual could demonstrate those documents are not available from RBS.
CUNA Mutual, says S&P, has not proven that any of the documents it seeks are relevant to the claims and that the motion to compel is motivated “by a general hope that they may find something ultimately relevant to this case.”