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Sixth Circuit Affirms Dismissal of all Claims Against LLFW's Clients in Connection with the Sale of Mortgage-backed Securities.

On June 20, 2012, the United States Court of Appeals for the Sixth Circuit decided Republic Bank & Trust Company v. Bear Stearns & Company, Inc., et al., case number 10-5510, unanimously affirming the decision of the district court dismissing fraud and related claims against the defendants, all represented by LLFW, in connection with the sale of more than $50 million in mortgage-backed securities. Read the Sixth Circuit opinion here.

Republic claimed, among other things, that Bear Stearns misrepresented the risks of investing in the securities and the characteristics of the underlying mortgages. The Sixth Circuit upheld dismissal of all of the claims on multiple grounds, including that the risks of investing and the nature of the mortgages had been adequately disclosed in the offering documents for the securities. In holding that the plaintiff failed to allege facts sufficient to state a claim on any theory, the Court agreed with LLFW's argument that the strict standards for pleading fraud in federal court also applied to Republic's non-fraud claims, including common law negligent misrepresentation and state blue sky law claims analogous to claims under Section 12(a)(2) of the Securities Act of 1933.

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