Bloomberg News

MBIA Settles Suit Over Mortgage Exposure for $68 Million

September 06, 2011

(Updates with MBIA comment in third paragraph.)

Sept. 6 (Bloomberg) -- Bond insurer MBIA Inc., which guaranteed some of Wall Street’s toxic mortgage debt, agreed to pay $68 million to resolve investor lawsuits alleging the company misled shareholders about its exposure to mortgage- backed securities.

The accord settles claims by lead plaintiff Teachers’ Retirement System of Oklahoma and shareholders who purchased MBIA stock from July 2007 to January 2008, according to filings in federal court in Manhattan today by lawyers for the company and investors. The company denied wrongdoing, the filings said.

“Although we continue to believe our CDO exposure was fully disclosed, we are pleased to have reached a settlement that puts this matter behind us,” said Kevin Brown, a spokesman for Armonk, New York-based MBIA.

Investors alleged that MBIA made false and misleading statements about the nature and extend of its exposure to collaterialized debt obligations containing residential mortgage-backed securities, including the company’s exposure to CDOs made up of other CDOs containing the securities, the filings said.

Steven Singer, an attorney for investors, said the accord was a “very substantial recovery, in terms of the amount of recoverable damages.” The settlement is subject to court approval.

The case is In Re MBIA Inc. Securities Litigation, 08-264, U.S. District Court, Manhattan.

--Editors: Mary Romano, Fred Strasser

To contact the reporter on this story: Karen Gullo in San Francisco at kgullo@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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