An insurance company will get a second crack at suing now-defunct Bear Stearns & Co. for making misrepresentations aimed at helping the bank unload “toxic” mortgage-backed securities tied to the housing crash.
In a unanimous decision, the Appellate Division, First Department, said CIFG Assurance North America can file an amended complaint accusing Bear Stearns of making material misrepresentations in order to get insurance for two of its credit default swaps linked to collateralized debt obligations. Both were “loaded” with “toxic” residential mortgage-backed securities, a key contributor to the housing crash that fueled the 2008 recession, the ruling said.
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