On March 16, 2015, trial is scheduled to begin in FHFA v. Nomura Holding America Inc. in the U.S. District Court for the Southern District of New York. Notwithstanding the fact that individual defendants in corporate lawsuits typically are entitled to indemnification under their companies’ by-laws and face little personal exposure, this case—brought by the Federal Housing Finance Agency over the issuance of residential mortgage-backed securities (RMBS)—exposes the individual defendants to potentially ruinous liability under the Securities Act.
Two recent Securities Act decisions in the Southern District of New York should give pause to the defendants in Nomura, individual defendants in other RMBS-related actions, and indeed any director and officer defendants facing Securities Act claims. Both were authored by Judge Denise Cote, who will preside over the Nomura trial.
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