NEW YORK A U.S. judge threw out a lawsuit from South Korea's Woori Bank accusing Bank of America Corp's Merrill Lynch unit of misleading investors about the riskiness of collateralized debt obligations, saying the suit had missed a deadline under South Korean law.
U.S. District Judge Victor Marrero said the 2012 lawsuit had been filed after a three-year deadline under South Korean law had expired. Woori Bank, which is owned by Woori Finance Holdings Co Ltd, argued that it had three years from when the U.S. Financial Crisis Inquiry Commission published a January 27, 2011 report on the economic crisis to bring its claims.
But the judge disagreed in a ruling dated February 5 that was released Wednesday. Marrero said Woori should have been aware of the "overall controversy surrounding Merrill Lynch's CDO investments" several years earlier, as lawyers for Merrill Lynch had argued.
U.S. lawyers for Woori did not immediately return requests for comment Wednesday evening. A spokesman for Bank of America, Bill Halldin, said the company was pleased with the court's decision. Bank of America bought Merrill Lynch in 2008.
Woori had accused Merrill Lynch of misrepresenting the riskiness of seven CDOs in which Woori had invested in 2005 and 2006. In all, Woori invested $143 million in those CDOs, according to the ruling.
Woori accused Merrill of inducing it to invest by concealing information about the riskiness of the underlying mortgages and the credit ratings assigned to those CDOs. The lawsuit sought at least $143 million and other damages for claims including fraud, negligent misrepresentation and unjust enrichment.
Created in the aftermath of the 1997 Asian financial crisis, Woori became the South Korean financial sector's biggest victim of the U.S. subprime mortgage crisis, writing off much of a roughly $1.5 billion stake in credit default swaps and CDOs.
It sued several U.S. banks in connection with those losses, including Citigroup Inc and Royal Bank of Scotland Group Plc. A federal judge dismissed the case against RBS in December. Citigroup's motion to dismiss the lawsuit against it is still pending. The case is Woori Bank v. Merrill Lynch et al., in the U.S. District Court for the Southern District of New York, no. 12-3993.
(Reporting by Jessica Dye; Editing by Edwina Gibbs)