Shocking new allegations from bond insurer Ambac Assured against EMC and JP Morgan Securities (formerly Bear Stearns) regarding Bear's accounting fraud, lack of good faith, and other untoward conduct in the origination and securitization of loans, and the ongoing refusal to buy back loans with deficiencies. Read more about this case at www.subprimeshakeout.com.
Shocking new allegations from bond insurer Ambac Assured against EMC and JP Morgan Securities (formerly Bear Stearns) regarding Bear's accounting fraud, lack of good faith, and other untoward conduct in the origination and securitization of loans, and the ongoing refusal to buy back loans with deficiencies. Read more about this case at www.subprimeshakeout.com.
Shocking new allegations from bond insurer Ambac Assured against EMC and JP Morgan Securities (formerly Bear Stearns) regarding Bear's accounting fraud, lack of good faith, and other untoward conduct in the origination and securitization of loans, and the ongoing refusal to buy back loans with deficiencies. Read more about this case at www.subprimeshakeout.com.
Exhibit 1Philip R. Forlenza
Erik Haas
Karla G. Sanchez
PATTERSON BELKNAP Wes & TYLER LLP
1133 Avenue of the Americas
‘New York, New York 10036
Telephone: (212) 336-2000
Fax: (212) 336-2222
prforlenza@pbwt.com
ehaas@pbwt.com
Attorneys for Ambac Assurance Corporation
and the Segregated Account of Ambac Assurance Corporation
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
weeeee x
AMBAC ASSURANCE CORPORATION and
THE SEGREGATED ACCOUNT OF AMBAC Index No, 08 Civ. 9464 (RMB) (THK)
ASSURANCE CORPORATION, i
Plaintiffs,
~ against -
EMC MORTGAGE CORPORATION,
BEAR, STEARNS & CO. INC. (now known as IP.
MORGAN SECURITIES INC.), JAMES E.
CAYNE, ALAN C. GREENBERG, WARREN J.
SPECTOR, ALAN D. SCHWARTZ, THOMAS
MARANO, JEFFREY MAYER, MICHAEL
NIERENBERG, JEFFREY L. VERSCHLEISER,
BARON SILVERSTEIN, and MARY
HAGGERTY,
Defendants.
41063550.NATURE OF THE ACTION...
IL
IL.
THE PARTIES.....
AL PLAINTIFFS sso
B. THE “BEAR STEARNS” DEFENDANTS
ci IE INDIVIDUAL DEFENDANTS...
JURISDICTION AND VENUE....
BACKGROUND 23
‘A. THE BEAR STEARNS MORTGAGE LOAN
SECURITIZATION “MACHINE” .. A 23
1. Bear Stearns Controlled Every Aspect of the
Securitization Process. . 24
2. Bear Stearns Churned Out Securitizations by
Sacrificing Loan Quality..... 29
‘The Individual Defendants Drove Bear Stearns’
Securitization Machine to Assume Inordinate Risk
for Personal Gain
B. _ BEAR STEARNS MADE MATERIALLY FALSE AND
MISLEADING DISCLOSURES TO INDUCE
PARTICIPATION IN ITS SECURITIZATIONS. a é sees 39
1, Bear Steams Made Materially False and Misleading
Statements in Its Marketing Presentations and Deal
Correspondence.....
2. Bear Steams Disseminated Materially False and
Misleading Mortgage-Loan Tapes
3. Bear Steams Disseminated Materially False and
Misleading Data Concerning the Historical
Performance of Its Earlier Securitization...
47
4. Bear Stearns Knowingly Supplied Materially False
and Misleading Information to Secure Rating
Agency Ratings.
5. Bear Stearns Made Materially False and Misleading
Representations and Disclosures in the Offering
Documents to Market and Sell the Notes
C. BEAR STEARNS FAILED TO DISCLOSE AND
AFFIRMATIVELY CONCEALED MATERIAL FACTS TO
INDUCE PARTICIPATION IN ITS SECURITIZATION:
1 Bear Stearns Knowingly Conducted and Concealed
“Bad Due Diligence”...
4106355v.1