SUPREME COURT OF THE STATE OF NEW ... - New York Times

mortgages were conveyed and sold throughout the financial system. This pipeline was essential
to the origination of the burgeoning numbers of high-risk mortgages.” (FCIC Report at 70, 125.)
The FCIC concluded that:
[F]irms securitizing mortgages failed to perform adequate due diligence on the
mortgages they purchased and at times knowingly waived compliance with
underwriting standards. Potential investors were not fully informed or were
misled about the poor quality of the mortgages contained in some mortgagerelated
securities. These problems appear to have been significant.
(FCIC Report, at 187.)
ALLEGATIONS
IV.
DEFENDANTS’ MATERIAL MISREPRESENTATIONS
A. Defendants’ Offering Materials
102. AIG purchased over $28 billion worth of certificates in Defendants’ residential
mortgage backed securities. The particular RMBS investments at issue in this litigation are set
forth in Exhibit A, which lists, among other things, the name, tranche level, purchaser, purchase
date, and purchase price for each of these investments.
103. AIG purchased the certificates pursuant to registration statements, prospectuses,
prospectus supplements, free writing prospectuses, presentations, term sheets, customized
spreadsheets provided upon request of AIG, and other written materials (the “Offering
Materials”). The AIG employees responsible for managing Plaintiffs’ portfolios and making the
purchase decisions for all the RMBS at issue were located in New York, New York. These same
employees conducted the due diligence described below.
104. The Offering Materials were prepared by Defendants. Defendants intended for
investors like AIG to rely on the Offering Materials, and AIG relied to its detriment on the
Offering Materials in making its purchase decisions. The depositors filed a Form S-3
Registration Statement with the SEC indicating its intention to sell mortgage-backed securities.
34