Merrill Wins Dismissal of Woori Bank Suit Over CDO Losses
U.S. District Judge Victor Marrero in Manhattan ruled in a written decision made public yesterday that Seoul-based Woori failed to sue within three years as required by a South Korean statute of limitations. Marrero rejected Woori’s argument that the three-year period didn’t begin to run until the Financial Crisis Inquiry Commission published a Jan. 27, 2011, report.
“The overall controversy surrounding Merrill Lynch’s CDO investments and relationship with the ratings agencies, numerous government investigations into Merrill Lynch, and private lawsuits against Merrill Lynch relating to the specific CDOs at issue in Woori’s claims in this case, were sufficient to put Woori on notice of a putative claim” more than three years before the case was filed, Marrero said.
Woori claimed in a complaint filed in May that it was defrauded by Merrill in 2005 and 2006 when the bank sold interests in seven collateralized debt obligations, or CDOs, designed to move toxic mortgage assets off Merrill’s books.
Merrill used misleading credit ratings to hide the risks of mortgages underlying its CDOs and residential mortgage-backed securities, or RMBS, Woori alleged.
Christopher Lebsock, a lawyer for Woori, didn’t immediately return a voice-mail message seeking comment on the ruling.
In December, a different federal judge in Manhattan dismissed a suit by Woori against Royal Bank of Scotland Group Plc over claimed losses on $80 million of CDOs tied to the housing market. Woori has asked the judge to reopen the case.
The Merrill case is Woori Bank v. Merrill Lynch, Pierce, Fenner & Smith Inc., 12-cv-3993, U.S. District Court, Southern District of New York (Manhattan).
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