12 Aug 2016 Cases

Compass Lexecon Clients: The Bank of New York Mellon, U.S. Bank, Wilmington Trust, Law Debenture Trust, Wells Fargo, HSBC and Deutsche Bank Prevail as Court Approves $4.5 Billion RMBS Settlement

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Compass Lexecon President Daniel R. Fischel Makes Recommendations and Testifies at Trial

In this matter, JP Morgan offered a $4.5 billion settlement to Trustees for 330 RMBS Trusts to settle claims relating to representations, warranties, documentation and servicing on mortgages conveyed to the Trusts. The Trustee Group, The Bank of New York Mellon, U.S. Bank, Wilmington Trust, Law Debenture Trust, Wells Fargo, HSBC and Deutsche Bank, retained Compass Lexecon President, Professor Daniel R. Fischel, to provide an independent opinion on the reasonableness of the settlement for each of the 816 Loan Groups within the Trusts in light of the reports of subject matter experts retained by the Trustees and other factors that Professor Fischel deemed relevant.

Professor Fischel, supported by a team at Compass Lexecon, developed a set of consistent criteria to evaluate the settlement and applied them to each Loan Group. This work involved comparing the proposed settlement to recent settlements involving similar issues, estimating the amount each Loan Group would receive if its Trustee accepted the settlement on its behalf, analyzing the support and opposition to the settlement on a Loan Group by Loan Group basis, analyzing measures of the potential recovery if the settlement were rejected by each Loan Group and considering the relevant aspects of reports by legal and industry experts retained by the Trustees. Professor Fischel provided a report and a supplemental report outlining his methodology and making recommendations for each Trust and Loan Group. The Trustees acted consistently with Professor Fischel's recommendations and accepted the settlement for Loan Groups in 319 of the 330 Trusts.

The Trustees then asked the New York State Supreme Court to approve the settlement for those Trusts. In January 2016, Professor Fischel testified for two days before Justice Marcy S. Friedman of the Supreme Court of the State of New York and explained his methodology and his recommendations. In her opinion, Justice Friedman repeatedly cited Professor Fischel's analyses and recommendations and ruled that the Trustees exercised their discretionary power reasonably and in good faith in approving the proposed settlement.

The Trustee Group was successfully represented by Jason H.P. Kravitt, Matthew D. Ingber (lead trial counsel) and Christopher J. Houpt of Mayer Brown LLP (representing The Bank of New York Mellon), Robert C. Micheletto, Matthew A. Martel and Joseph B. Sconyers of Jones Day (representing U.S. Bank), M. William Munno, Dale C. Christensen and Thomas Ross Hooper of Seward & Kissel LLP (representing Law Debenture Trust Company), Michael S. Kraut and Kurt W. Rademacher of Morgan, Lewis & Bockius LLP (representing Deutsche Bank), Michael M. Krauss, Robert L. Schnell, Jr. and Stephen M. Mertz of Faegre Baker Daniels LLP (representing Wells Fargo), Jean-Marie L. Atamian and James Ancone of Mayer Brown LLP (representing HSBC), and Michael E. Johnson and Jason J. Solomon of Alston & Bird LLP (representing Wilmington Trust).

Professor Fischel was supported by a team at Compass Lexecon led by Jerry Lumer that included Neal Lenhoff, Michael Keable, Rajiv Gokhale, Anne Marie Yale, Kevin Hartt, Elizabeth Wall, Hans-Jürgen Petersen, Erika Morris, Robin Stahl, Avisheh Mohsenin, Margaret Hlebowitsh, Donald Hong and Jonathan Williams, in Compass Lexecon's Chicago office.

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