| NEW YORK
NEW YORK Aug 28 A U.S. regulator can proceed
with lawsuits accusing HSBC Holdings Plc and Nomura
Holdings Inc of misleading Fannie Mae and Freddie Mac
into buying mortgage-backed securities that later turned toxic,
a federal judge ruled on Thursday.
The decision from U.S. District Judge Denise Cote in
Manhattan clears the way for HSBC to face trial Sept. 29 in a
case by the Federal Housing Finance Agency that the bank has
estimated could expose it to $1.6 billion in liability.
FHFA launched 18 lawsuits in 2011 over about $200 billion in
mortgage-backed securities. HSBC, Nomura and Royal Bank of
Scotland Group Plc are the remaining banks being sued by
Other banks have settled ahead of trial, enabling the FHFA
to recover $17.3 billion. Goldman Sachs Group Inc became
the latest to settle last Friday, agreeing to a deal the FHFA
valued at $1.2 billion.
In 2012, Cote issued a key ruling in the litigation,
rejecting an argument by UBS AG that the case against
it was untimely.
The 2nd U.S. Circuit Court of Appeals in New York upheld
Cote's decision in 2013. UBS later settled for $885 million, but
the ruling's rationale was applied to the remaining cases.
In June, however, the U.S. Supreme Court issued a ruling in
an environmental case, CTS v. Waldburger, which raised similar
questions about the timing of lawsuits.
The decision prompted the remaining banks in the FHFA
litigation to urge Cote to reconsider her ruling or
alternatively allow them to immediately appeal.
But Cote on Thursday said "it is clear that CTS does not
disturb that decision."
The judge's ruling affirmed her earlier finding that a law
passed in 2008 that established the FHFA in the wake of the
financial crisis extended the period of time the agency had to
Cote also rejected the banks' request to immediately appeal
her 2012 ruling as "inappropriate," noting how soon the trials
in the HSBC and Nomura cases are set to begin.
"The parties will soon be able to appeal this issue,
together with all other issues, following a final judgment," she
wrote. "The most efficient way to reach the ultimate termination
of this litigation is to try these cases."
Representatives for HSBC and the FHFA declined comment.
Representatives for Nomura and RBS, which is a defendant in the
case against Nomura, did not immediately respond to requests for
The case is Federal Housing Finance Agency v. HSBC North
America Holdings Inc, U.S. District Court, Southern District of
New York, No. 11-6189.
(Reporting by Nate Raymond in New York; Editing by Noeleen
Walder and Tom Brown)