RMBS Fraud Claims Upheld; Plaintiff Was Justified in Relying on Misrepresentations

On November 17, 2016, the First Department issued a decision in Phoenix Light SF Ltd. v. Credit Suisse AG, 2016 NY Slip Op. 07757, reversing the dismissal of RMBS fraud claims, explaining:

The allegations that with respect to their purchase of residential mortgaged-back securities plaintiffs relied on misrepresentations and omissions made by defendants in the offering documents are sufficient to state the justifiable reliance element of the fraud claims; plaintiffs are not required to allege that they requested from defendants the actual loan files or due diligence reports or that they obtained representations and warranties made directly by defendants about the quality of the loans, as opposed to those made to defendants by other parties with direct access to the relevant information.

(Internal citations omitted).