Case 1:09-md LAK-GWG Document 902 Filed 05/11/12 Page 1 of 4

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1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK In re Case 109-md LAK-GWG Document 902 Filed 05/11/12 Page 1 of 4 LEHMAN BROTHERS SECURITIES AND ERISA LITIGATION This Document Applies To Stichting Pensioenfonds ABP v. Merrill Lynch & Co., Inc., 10 Civ (LAK) X FILED IN SUPPORT OF MDL ECF NOS. 559, 561, 564 FILED IN RESPONSE TO MDL ECF NOS. 739, 740, 901 X Civil Action 09 MD 2017 (LAK) MERRILL LYNCH DEFENDANTS RESPONSE TO PLAINTIFF S NOTICE OF SUPPLEMENTAL AUTHORITY IN FURTHER SUPPORT OF ITS OMNIBUS MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANTS MOTIONS TO STRIKE AND TO DISMISS THE AMENDED COMPLAINT

2 Case 109-md LAK-GWG Document 902 Filed 05/11/12 Page 2 of 4 The Merrill Lynch Defendants 1 write respectfully in response to Stichting s May 9, 2012 submission of a decision from Federal Housing Finance Agency v. UBS Americas, Inc., --- F. Supp. 2d ---, 2012 WL (S.D.N.Y. May 4, 2012) ( FHFA ). Contrary to Stichting s statement, FHFA is not directly relevant to the above-captioned case. In fact, the FHFA decision is far less relevant to this action than two other recent decisions, neither of which Stichting brings to the Court s attention. Critically, the plaintiff in FHFA (unlike Stichting) did not allege that the defendants engaged in fraud WL , at *11. As such, the pleadings in FHFA were governed by Federal Rule of Civil Procedure 8(a)(2), which [only] requires that the complaint contain a short and plain statement of the claim showing that the pleader is entitled to relief. Id. 2 Here, on the other hand, Stichting solely asserts fraud claims (and other claims sounding in fraud) that must satisfy the heightened pleading standards of Rule 9(b) and the PSLRA. See MLDB at 4-5. The Amended Complaint s generic allegations of widespread abandonment, which are entirely unconnected to the specific securities purchased by Stichting, fall well short of stating a claim under these pleading standards, as numerous courts have held. Id. at 10-11, Additionally, none of the causes of action at issue in FHFA require[d] allegations of scienter, reliance, or loss causation in order to state a claim WL , at *11. Stichting s fraud claims, however, require particularized facts concerning each of these elements, which the Amended Complaint does not contain. See MLDB at 8, 9-23, With respect to scienter in particular, Rule 9(b) and the PSLRA require Stichting (unlike the plaintiff in FHFA) to allege facts that give rise to a strong inference of scienter. Id. at 5. Under controlling Second 1 Terms defined in the Merrill Lynch Defendants Memorandum of Law in Support of Their Motion to Strike and Dismiss Plaintiff s Amended Complaint ( MLDB ) are incorporated herein. 2 Even under Rule 8, FHFA dismissed negligent misrepresentation claims for the very reasons identified by the Merrill Lynch Defendants. Id. at *22-23 (dismissing claims because an arm s length business transaction does not give rise to the requisite special relationship). 1

3 Case 109-md LAK-GWG Document 902 Filed 05/11/12 Page 3 of 4 Circuit authority (and a wealth of caselaw from this District), Stichting s allegations fail to raise such an inference because, inter alia, they are not connected to the relevant offerings, do not distinguish between the defendants, and fail to identify specific reports containing information contrary to the defendants disclosures. Id. at 10-23; Merrill Lynch Defs. Reply Br. at Applying the very cases cited by the Merrill Lynch Defendants, the Second Circuit recently issued a summary order affirming the dismissal of a CDO complaint that (like the Amended Complaint here) attempted to establish scienter by referencing unspecified due diligence reports. Landesbank Baden-Wurttemberg v. Goldman, Sachs & Co., No , 2012 WL , at *2 (2d Cir. Apr. 19, 2012) ( generalized references in the complaint to... due diligence reports commissioned by [the defendant] are insufficient to sustain [plaintiff s] pleading burden as to intent ). This decision and the decision it affirmed are therefore directly relevant to the adequacy of Stichting s Amended Complaint, and support dismissal. 3 Finally, Stichting s submission also ignores a recent opinion from an MBS case, which dismissed a complaint with prejudice (even under Rule 8) because the plaintiff (like Stichting) failed to tie its allegations to the specific securities it purchased. See N.J. Carpenters Health Fund v. NovaStar Mortg., Inc., 2012 WL , at *4-5 (S.D.N.Y. Mar. 29, 2012) ( NovaStar ) (granting motion to dismiss because Plaintiff relies on general allegations of alleged underwriting lapses without tying any of them to the loans that secured Plaintiff s investment ). 4 The NovaStar court further held that the plaintiff did not identify a misstatement 3 In addition to these crucial distinctions, FHFA s discussion of statute of limitations issues is also irrelevant here because Stichting s Securities Act claims are barred by the Securities Act s absolute statute of repose regardless of when those claims could have been discovered. See MLDB at As Stichting concedes, the FHFA court based its decision, in part, on plaintiff s own loan-level analysis, Notice at 3, which purported to identify specific non-compliant loans underlying the securities at issue in that case. See, e.g., 2012 WL , at *12 ( In support of the latter assertion, the Agency cites the results of its own review of loan-level data for a sampling of mortgage loans included in each securitization. ). Stichting has not conducted any such loan-level analysis. Accordingly, its allegations are far more similar to the general allegations of alleged underwriting lapses at issue in NovaStar than the loan-level analysis conducted in FHFA. 2

4 Case 109-md LAK-GWG Document 902 Filed 05/11/12 Page 4 of 4 concerning underwriting exceptions because the statement that such exceptions would be granted where in the underwriter s judgment there were compensating factors reflected a subjective opinion, which could only be false if the complaint alleged that the underwriter grant[ed] an exception where it didn t believe compensating factors existed that warranted the exception. Id. at *5. The Amended Complaint here makes no such allegation. Moreover, NovaStar also held that risk disclosures (which are substantially similar to the warnings contained in the offering documents here) rendered plaintiff s allegations immaterial as a matter of law. Id. at *5-6. Copies of the Landesbank and NovaStar opinions are enclosed for the Court s convenience. Dated New York, New York May 11, 2012 Respectfully submitted, CLEARY GOTTLIEB STEEN & HAMILTON LLP By /s/ Meredith E. Kotler Mitchell A. Lowenthal (mlowenthal@cgsh.com) Meredith E. Kotler (mkotler@cgsh.com) Jared Gerber (jgerber@cgsh.com) One Liberty Plaza New York, New York Tel (212) Fax (212) Attorneys for the Merrill Lynch Defendants 3

5 Case 109-md LAK-GWG Document Filed 05/11/12 Page 1 of 3 Slip Copy, 2012 WL (C.A.2 (N.Y.)) (Not Selected for publication in the Federal Reporter) (Cite as 2012 WL (C.A.2 (N.Y.))) Page 1 Only the Westlaw citation is currently available.this case was not selected for publication in the Federal Reporter. United States Court of Appeals, Second Circuit. LANDESBANK BADEN WURTTEMBERG, Plaintiff Appellant, v. GOLDMAN, SACHS & CO., TCW Asset Management Company, Defendants Appellees. No April 19, Appeal from a judgment of the United States District Court for the Southern District of New York (Pauley, J.). Arthur R. Miller, Of Counsel (William H. Narwold, Motley Rice LLC, Hartford, CT; Vincent I. Parrett, William S. Norton, John Brandon Walker, Motley Rice LLC, Mount Pleasant, SC, on the brief) New York, NY, for for Appellant. Theodore Edelman (Richard H. Klapper, William B. Monahan, Christopher J. Dunne, W. Rudolph Kleysteuber, Jacob E. Cohen, the brief) Sullivan & Cromwell LLP New York, NY, for Appellee Goldman, Sachs & Co. Mark A. Kirsch (Christopher M. Joralemon, on the brief) Gibson, Dunn & Crutcher LLP New York, NY, for Appellee TCW Asset Management Company. Present DENNIS JACOBS, Chief Judge, ROSE- MARY S. POOLER, and SUSAN L. CARNEY, Circuit Judges. SUMMARY ORDER *1 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED AND DE- CREED that the district court's judgment is AF- FIRMED. Landesbank Baden Wurttemberg ( Landesbank ) appeals from the dismissal of its common law claims for fraud, negligent misrepresentation, and unjust enrichment. We assume the parties' familiarity with the underlying facts, the procedural history, and the issues presented for review. We review de novo the grant of a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Harris v. Mills, 572 F.3d 66, 71 (2d Cir.2009). [A]lthough a court must accept as true all of the allegations contained in a complaint, that tenet is inapplicable to legal conclusions, and threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Id. at 72 (internal quotation marks and brackets omitted). To survive a motion to dismiss, a complaint must plead enough facts to state a claim to relief that is plausible on its face. ECA & Local 134 IBEW Joint Pension Trust of Chi. v. JP Morgan Chase Co., 553 F.3d 187, 196 (2d Cir.2009) (internal quotation marks omitted). [1] Landesbank asserts claims for common law fraud against the defendants, Goldman, Sachs & Co. ( Goldman ) and TCW Asset Management Company ( TCW ), in connection with the marketing and sale to a subsidiary of Landesbank of notes in a collateralized debt obligation known as Davis Square Funding VI ( Davis Square ). FN1 FN1. For simplicity, both Landesbank and its subsidiary are referred to herein as Landesbank. Under New York law, [t]he elements of a cause of action for fraud require a material misrepresentation of a fact, knowledge of its falsity, an intent to induce reliance, justifiable reliance by the plaintiff and damages. Eurycleia Partners, LP v. Seward & Kissel, LLP, 12 N.Y.3d 553, 559 (2009). A claim for common law fraud is subject to the particularity pleading requirements of Federal Rule of Civil Procedure 9(b), which requires that the plaintiff (1) detail the statements (or omissions) that the plaintiff contends are fraudulent, (2) identify the speaker, (3) state where and when the statements (or omissions) were made, and (4) explain why the statements (or omissions) are fraudulent. Eternity Global Master Fund Ltd. v. Morgan Guar. Trust Co. of N.Y., 375

6 Case 109-md LAK-GWG Document Filed 05/11/12 Page 2 of 3 Page 2 Slip Copy, 2012 WL (C.A.2 (N.Y.)) (Not Selected for publication in the Federal Reporter) (Cite as 2012 WL (C.A.2 (N.Y.))) F.3d 168, 187 (2d Cir.2004) (internal quotation marks omitted). [W]e have repeatedly required plaintiffs to plead the factual basis which gives rise to a strong inference of fraudulent intent. O'Brien v. Nat'l Prop. Analysts Partners, 936 F.2d 674, 676 (2d Cir.1991) (internal quotation marks omitted). A strong inference of fraudulent intent may be established either (a) by alleging facts to show that defendants had both motive and opportunity to commit fraud, or (b) by alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness. Lerner v. Fleet Bank, N.A., 459 F.3d 273, (2d Cir.2006) (quoting Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1128 (2d Cir.1994)). *2 The complaint in this case does not ascribe to Goldman or TCW any particular motive for committing fraud beyond a general profit motive common to all corporations, which does not suffice. See Novak v. Kasaks, 216 F.3d 300, 307 (2d Cir.2000). Landesbank argues that a strong inference of fraudulent intent arises because the defendants knew facts or had access to information suggesting that their public statements were not accurate. ECA, 553 F.3d at 199 (internal quotation marks omitted). The complaint alleges that Goldman had access to confidential due diligence reports which showed that the quality of the mortgages underlying the collateral for the Davis Square notes did not justify the notes' triple-a ratings. However, an allegation that defendants had access to information that was inconsistent with their alleged misstatements must specifically identify the reports or statements containing this information. Novak, 216 F.3d at 309; see also San Leandro Emergency Med. Grp. Profit Sharing Plan v. Philip Morris Cos., 75 F.3d 801, (2d Cir.1996). The only due diligence report specifically identified in the complaint is dated from 2007, after the issuance of the Davis Square notes, and the due diligence conveyed in that report therefore does not bear on the defendants' knowledge at the time of issuance. The generalized references in the complaint to other due diligence reports commissioned by Goldman are insufficient to sustain Landesbank's pleading burden as to intent. [2] Landesbank argues that the complaint sufficiently states a claim for negligent misrepresentation under New York law. [T]he elements of negligent misrepresentation are (1) carelessness in imparting words; (2) upon which others were expected to rely; (3) and upon which they did act or failed to act; (4) to their damage. Most relevant, the action requires that (5) the declarant must express the words directly, with knowledge or notice that they will be acted upon, to one to whom the declarant is bound by some relation or duty of care. Dall. Aerospace, Inc. v. CIS Air Corp., 352 F.3d 775, 788 (2d Cir.2003) (citation omitted). [T]he law of negligent misrepresentation requires a closer degree of trust between the parties than that of the ordinary buyer and seller in order to find reliance on such statements justified. Id. In determining whether a complaint adequately pleads justifiable reliance, we consider whether the person making the representation held or appeared to hold unique or special expertise; whether a special relationship of trust or confidence existed between the parties; and whether the speaker was aware of the use to which the information would be put and supplied it for that purpose. Kimmell v. Schaefer, 89 N.Y.2d 257, 264 (1996). [A] sparsely pled special relationship of trust or confidence is not fatal to a claim for negligent misrepresentation where the complaint emphatically alleges the other two factors enunciated in Kimmell. Eternity Global Master Fund, 375 F.3d at 188 (internal quotation marks omitted). *3 The Offering Circular by which the Davis Square notes were marketed disclaimed both the existence of a special relationship of trust or confidence between the defendants and Landesbank and any particular expertise on the part of the defendants with respect to the credit quality of the Davis Square notes. It cautioned investors to consider and assess for themselves the likely level of defaults on the underlying collateral, and disclaimed a fiduciary or advisory role. The Offering Circular also required Landesbank to represent that it was a sophisticated investor and had sufficient access to financial and other information to make an informed investment decision, including an opportunity to ask questions and request additional information concerning Davis Square. The relationship between Landesbank and the defendants was that of buyer and seller in a standard arm's length transaction; and by its own representations Landesbank possessed sufficient expertise to evaluate the risks of its investment. The complaint therefore fails to plead justifiable reliance. See Dall. Aerospace, 352 F.3d at 789 ( [Plaintiff] cannot claim it relied on [defendant's] special expertise because it is clear that [plaintiff] itself had the relevant expertise at issue. ).

7 Case 109-md LAK-GWG Document Filed 05/11/12 Page 3 of 3 Slip Copy, 2012 WL (C.A.2 (N.Y.)) (Not Selected for publication in the Federal Reporter) (Cite as 2012 WL (C.A.2 (N.Y.))) Page 3 Landesbank argues that its representations affirming its status as a sophisticated investor with means to make an informed investment decision do not undermine [its] allegation of reasonable reliance, because the allegedly misrepresented facts [were] peculiarly within [defendants'] knowledge. Warner Theatre Assocs. Ltd. P'ship v. Metro. Life Ins. Co., 149 F.3d 134, 136 (2d Cir.1998). However, as previously discussed, Landesbank's complaint fails to allege facts plausibly establishing existence of such knowledge. This argument is therefore meritless. [3] Landesbank also seeks to recover under a theory of unjust enrichment. To prevail on a claim for unjust enrichment in New York, a plaintiff must establish 1) that the defendant benefitted; 2) at the plaintiff's expense; and 3) that equity and good conscience require restitution. Kaye v. Grossman, 202 F.3d 611, 616 (2d Cir.2000) (internal quotation marks omitted). Landesbank has failed to state a claim for either fraud or negligent misrepresentation, and has not otherwise shown that it is entitled to restitution as a matter of equity. We have considered Landesbank's remaining arguments and find them to be without merit. For the foregoing reasons, the judgment of the district court is hereby AFFIRMED. C.A.2 (N.Y.),2012. Landesbank Baden-Wurttemberg v. Goldman, Sachs & Co. Slip Copy, 2012 WL (C.A.2 (N.Y.)) END OF DOCUMENT

8 Case 109-md LAK-GWG Document Filed 05/11/12 Page 1 of 6 (Cite as 2012 WL (S.D.N.Y.)) Page 1 Only the Westlaw citation is currently available. United States District Court, S.D. New York. NEW JERSEY CARPENTERS HEALTH FUND, on Behalf of Itself and All Others Similarly Situated, Plaintiff, v. NOVASTAR MORTGAGE, INC., Novastar Mortgage Funding Corporation, Scott F. Hartman, Gregory S. Metz, W. Lance Anderson, Mark Herpich, RBS Securities, Inc. f/k/a Greenwich Capital Markets, Inc., d/b/a RBS Greenwich Capital, Deutsche Bank Securities, Inc., and Wells Fargo Advisors, LLC f/k/a Wachovia Securities LLC, Defendants. No. 08 Civ. 5310(DAB). March 29, ORDER AND MEMORANDUM DEBORAH A. BATTS, District Judge. *1 Plaintiff New Jersey Carpenters Health Fund ( Plaintiff ) brings this putative class action alleging that Defendant NovaStar Mortgage, Inc. ( NMI ) disregarded its own underwriting guidelines in originating residential mortgage loans and then, through its subsidiary NovaStar Mortgage Funding Corporation ( NMFC ) FN1, arranged for the sale of securities to investors that were collateralized by these mortgage loans. FN1. Defendants Scott F. Hartman, Gregory S. Metz, W. Lance Anderson and Mark Herpich (the Individual Defendants ), together with NMI and NMFC are collectively known as the NovaStar Defendants. Pursuant to a June 16, 2006 Registration Statement (the Registration Statement ) filed with the SEC by NMFC, the securities consisted of the issuance, distribution, and sale of mortgage pass-through certificates issued on May 25, 2007 (the Certificates ) and representing interests in the NovaStar Mortgage Funding Trust Series (the Offering ). FN2 Defendants RBS Securities, Inc., Deutsche Bank Securities, Inc., and Wells Fargo Securities, LLC (collectively the Underwriter Defendants ) were the underwriters for the Certificates. Plaintiff alleges that the offering documents for the Certificates contained material misstatements and/or omissions in violation of Sections 11, 12 and 15 of the Securities Act of 1933 ( the 1933 Act ). Plaintiff also alleges that the Underwriter Defendants failed to perform the requisite level of due diligence in connection with the Offering. FN2. Plaintiff initially purported to bring its claims on behalf of itself and a class of persons who purchased Certificates sold in any of six different offerings that were conducted under the June 16, Registration Statement. However, Plaintiff only alleges that it purchased in one of those six offerings (the Trust Series), and in its Order of March 31, 2011 this Court held that Plaintiff lacks standing to sue for the remaining Trust Series offerings under the June 16, 2006 Registration Statement. See March 31, 2011 Order (Docket No. 116) at In an Order dated March 31, 2011, this Court dismissed Plaintiff's First Consolidated Amended Securities Class Action Complaint ( CAC ), but granted Plaintiff leave to replead certain claims against certain Defendants. That Order required Plaintiff make allegations specific to the NovaStar Defendants' origination practices that related to the only offering that is relevant here the Offering and make allegations that are specific to the M 1 Certificates it bought. (March 31, 2011 Order, at 26.) Plaintiff filed a Second Amended Complaint on May 18, 2011, and a [Corrected] Second Amended Complaint ( SAC ) on June 30, Now before the Court are Motions to Dismiss the SAC, filed separately by the NovaStar Defendants and the Underwriter Defendants on July 8, For the reasons below, the Motions to Dismiss filed separately by the NovaStar Defendants and the Underwriter Defendants are GRANTED in their entirety, with prejudice. I. BACKGROUND For purposes of this Motion, the Court assumes

9 Case 109-md LAK-GWG Document Filed 05/11/12 Page 2 of 6 (Cite as 2012 WL (S.D.N.Y.)) Page 2 all of Plaintiff's factual allegations in the SAC are true. The Court assumes the Parties' familiarity with the factual background of this matter as fully set forth in the Court's Order of March 31, 2011, at pages This putative class action arises from the issuance of $1.32 billion of Certificates, which were collateralized by residential mortgage loans. (SAC 5, 16.) NMI originated the mortgages which backed the Certificates, allegedly pursuant to underwriting guidelines set forth in the Registration Statement and the Prospectus Supplement ( the Prosupp ) (together, the Offering Documents ). (SAC ) Plaintiff purchased 100,000 units of NovaStar Home Equity Loan Asset Backed Certificates, Series , Class M 1 Certificates pursuant to the June 16, 2006 Registration Statement. FN3 (SAC 20.) Plaintiff purchased its Certificates directly from Defendant RBS in the initial public offering. (SAC 135.) FN3. The Offering was composed of five senior and nine mezzanine tranches (with M 1 being the highest mezzanine tranche). These tranche designations reflect the position of the tranche in the subordination structure and the amount of protection provided to each tranche against realized losses. Realized losses from defaulting borrowers would first reduce the principal of the M 9 Certificates and then proceed upward to investors who purchased M 8, M 7, etc. (SAC 5, n. 3; Prosupp at S10, S ) *2 At the time of issuance, 81% of the Certificates in the Offering were assigned the highest, AAA or Aaa, investment grade ratings from rating agencies Moody's and S & P. (SAC ) The Class M 1 Certificates, purchased by Plaintiff, had an initial rating of Aa1 or AA+, indicating to investors that the M 1 Certificates were considered to be of very high grade/quality by the rating agencies. (SAC 39, 41.) In July 2007, two months after the Offering, rating agencies revised the methodologies used to rate mortgage-backed securities because the performance of the underlying collateral called into question the accuracy of the loan data. (SAC 98.) When the rating agencies applied the new methodology to the Certificates, the ratings collapsed as many as 20 levels. The Class M 1 Certificates have now been downgraded to junk bond levels of C or CCC, reflecting the rating agencies' assessment that it is likely that the bonds will default prior to investors receiving their principal. (SAC ) The Prospectus included underwriting guidelines applicable to all the Certificates in the Offering. (See Prosupp at S86 90; SAC 45 48, 50, ) The Offering Documents contained a litany of risk factors, yet they do not warn investors that the stated loan origination guidelines would be routinely disregarded, as Plaintiff alleges they were. (SAC ) The SAC alleges violations of Sections 11, 12(a)(2) and 15 of the 1933 Act, 15 U.S.C. 77k, 771(a)(2) and 77o, based on a material omission that was not disclosed in the offering documents the underwriting guidelines set forth in the offering documents were systematically disregarded, (SAC 8, 10, 70 82, ) These material omissions constituted material misstatements in the specific portions of the offering documents that described the guidelines used to originate mortgages, because, in fact, those guidelines were frequently disregarded. (SAC ) II. DISCUSSION A. Legal Standard For a complaint to survive dismissal under Rule 12(b)(6), the plaintiff must plead enough facts to state a claim to relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim has facial plausibility, the Supreme Court has explained, when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, , 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at ). [A] plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a for-

10 Case 109-md LAK-GWG Document Filed 05/11/12 Page 3 of 6 (Cite as 2012 WL (S.D.N.Y.)) Page 3 mulaic recitation of the elements of a cause of action will not do. Twombly, 550 U.S. at 555 (internal quotation marks omitted). In keeping with these principles, the Supreme Court has stated, *3 a court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868, 2009 WL , at *13. In ruling on a 12(b)(6) motion, a court may consider the complaint as well as any written instrument attached to the complaint as an exhibit or any statements or documents incorporated in it by reference. Zdenek Marek v. Old Navy (Apparel) Inc., 348 F.Supp.2d 275, 279 (S.D.N.Y.2004) (citing Yak v. Bank Brussels Lambert, 252 F.3d 127, 130 (2d Cir.2001) (internal quotations omitted)). Since Plaintiff's allegations and claims sound in strict liability, not fraud, FN4 the SAC is subject to the standards of Rule 8(a), not to the heightened pleading requirements of Rule 9(b). Rule 8(a) provides that a pleading must contain a short and plain statement of the claim showing that the pleader is entitled to relief. Rule 8(a)(2). Rule 8 does not require detailed factual allegations, but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation. Iqbal, 129 S.Ct. at A pleading that offers labels and conclusions or a formulaic recitation of the elements of a cause of action will not do. Id. Nor does a complaint suffice if it tenders naked assertion[s] devoid of further factual enhancement. Id. While legal conclusions can form the framework of a complaint, they must be supported by factual allegations. Id. FN4. This Complaint asserts no allegations or claims sounding in fraud and Plaintiff specifically disclaims any such allegations. (SAC 3.) B. Claims pursuant to Sections 11 and 12(a) of the 1933 Act Plaintiff alleges violations of Section 11 of the 1933 Act against NMFC, the Individual Defendants, FN5 and the Underwriter Defendants. Plaintiff alleges violations of Section 12(a)(2) against Underwriter Defendant RBS. In particular, Plaintiff alleges that the Offering Documents contained material misstatements and omissions concerning the mortgage loan collateral because when originating the mortgages NovaStar systematically disregarded its own underwriting guidelines. FN5. The Individual Defendants, and their titles during the relevant time period, are Scott F. Hartman (NFMC's President and Director of NFMC); Gregory S. Metz (NFMC's Secretary and Principal Financial Officer); W. Lance Anderson (Director of NFMC and NovaStar's President and Chief Operating Officer); and Mark Herpich (Director of NFMC). All of the Individual Defendants signed the June 16, 2006 Registration Statement pursuant to which the Offering was made. (SAC ) To state a claim under Section 11, a plaintiff must allege that (1) it purchased a registered security; (2) the defendant participated in the offering in a manner giving rise to liability under Section 11; and (3) the registration statement contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading. 15 U.S.C. 77k(a). A claim under this section may be asserted against every person who signed the registration statement, the directors of the issuer and the underwriter of the securities. Id. Liability under Section 12(a)(2) arises when a person offers or sells a security by means of a prospectus or oral communication that includes a material misrepresentation or omission, 15 U.S.C. 771(a)(2). Claims under Sections 11 and 12(a)(2) of the Securities Act have roughly parallel elements. In re Morgan Stanley Info. Fund Sec. Litig., 592 F.3d 347, 359 (2d Cir.2010). Section 11 imposes liability on issuers and other signatories of a registration statement, while Section 12(a)(2) imposes liability under similar circumstances with respect to, inter alia, prospectuses. See Iowa Pub. Emps'. Ret. Sys. v. MF Global, Ltd., 620 F.3d 137, 141 (2d Cir.2010).

11 Case 109-md LAK-GWG Document Filed 05/11/12 Page 4 of 6 (Cite as 2012 WL (S.D.N.Y.)) Page 4 *4 Plaintiff alleges that Defendants systematically failed to comply with and disregarded the stated underwriting guidelines as follows NovaStar improperly granted exceptions by approving loans that did not have appropriate compensating factors; NovaStar failed to obtain proper documentation from borrowers required under its underwriting guidelines; NovaStar failed to determine reasonableness of borrowers' representations in Stated Income/Stated Asset and low documentation loans; Defendants failed to disclose that NovaStar's quality control systems did not adequately monitor compliance with underwriting standards; and Defendants failed to conduct proper due diligence regarding the quality of the loans in the collateral pool. (SAC 109.) Plaintiff alleges that because Defendants failed to disclose that NovaStar routinely disregarded its underwriting practices, the statements in the Offering Documents related to NovaStar's underwriting standards were materially untrue and omitted material facts necessary to make them not misleading. Defendants argue that Plaintiff's SAC fails to allege any actionable statement or omission because it does not contain allegations specific to the class M 1 Certificates Plaintiff bought, and because Plaintiff's allegations that Defendants ignored underwriting guidelines are conclusory and cannot be squared with the actual disclosures Plaintiff received. Defendants further argue that Plaintiff fails to allege sufficiently that any misstatement or omission was material in light of the total mix of information available at the time of the Offering. The SAC is bolstered by allegations of former NMI employees who were engaged in origination of NMI residential mortgages at the time the loans were underwritten. (SAC ) Plaintiff claims that its allegations of disregarded underwriting guidelines are supported by particular facts compiled from these NovaStar employees. The employees make the following allegations NovaStar employees were given performance incentives based on loan volume targets (SAC 70 74); loans were sometimes approved when documentation was incomplete or facially deficient (SAC 75 79); loans were sometimes approved under NovaStar's Stated Income program without determining the reasonableness of the borrower's representations (SAC ) However, no interviewed employee ties a particular loan to a deviation from the underwriting guidelines for the collateral backing the Offering. The SAC does not cite one specific loan that should not have been included in the Offering. In fact, Plaintiff does not cite any example of a loan that failed to meet the underwriting guidelines and ended up in the loan pool, let alone the specific loans which secured Plaintiff's investment in the M 1 Certificates. The general allegations and anecdotes of former NMI employees alone do not indicate there were material misstatements or omissions in the offering documents concerning the origination of the loans backing the Offering. See In re IAC Sec. Litig., 695 F. Sup.2d 109, 119 (S.D.N.Y.2010) (confidential witness statements stated in the most general of terms and without any [corroborating] facts failed to support 1933 Act claims because they did not provide enough detail to nudge plaintiffs' claims across the line from conceivable to plausible. ) *5 While Plaintiff alleges that NovaStar improperly granted exceptions, (SAC 109), the Prosupp explained that the underwriting guidelines conferred discretion on the underwriters to deviate from the guidelines where in the underwriter's judgment there were compensating factors. ( Prosupp at S87.) Plaintiff has not alleged facts to show one instance of NMI granting an exception where it didn't believe compensating factors existed that warranted the exception. Plaintiff does not allege sufficiently that NMI did not believe an exception was warranted as to any loan it approved. FN6 FN6. Allegations that reflect subjective opinions, as opposed to statements of fact, are not actionable unless the SAC alleges that the speaker did not truly have the opinion at the time it was made public. Tsereteli v. Residential Asset Securitization Trust 2006 A8, 692 F.Supp.2d 387, 393 (S.D.N.Y.2010) (citing Shields v. Citytrust Bancorp., 25 F.3d 1124, 1131 (2d Cir.1994)). The Court finds that Plaintiff's allegations are not sufficiently specific to state a claim upon which relief can be granted. Plaintiff's claims were previously dismissed, without prejudice, because Plaintiff fail[ed] to make allegations specific to the NovaStar Defendants' origination practices that relate to the only offer that is relevant here the Offering.

12 Case 109-md LAK-GWG Document Filed 05/11/12 Page 5 of 6 (Cite as 2012 WL (S.D.N.Y.)) Page 5 (March 31, 2011 Order, at 26.) The need for such specificity is well-recognized. See, e.g., Footbridge Ltd. v. Countrywide Home Loans, Inc., 2010 WL at *12 13 (S.D.N.Y. Sept.28, 2010) (dismissing claim that lender abandoned its underwriting guidelines and made exceptions without compensating factors where plaintiffs failed to tie general allegations of abundant exceptions to the specific securitizations in which they invested); City of Ann Arbor Empl. Ret. Sys. v. Citigroup Mortgage Loan Trust, Inc., 703 F.Supp.2d 253, 263 (E.D.N.Y.2010) (1933 Act claims dismissed where plaintiff failed to show how omissions regarding underwriting guidelines were tied to specific loans). The SAC does not cure this fatal defect. Plaintiff does not provide details that would tie its claim of loosened underwriting guidelines to the specific loans that secured the Class M 1 Certificates that Plaintiff bought. Instead, Plaintiff relies on general allegations of alleged underwriting lapses without tying any of them to the loans that secured Plaintiff's investment in the M 1 Certificates. The Court further finds that the SAC fails to allege sufficiently the alleged misstatements and omissions would have been material in light of the extensive risk disclosures and information Plaintiff received, as well as events generally known about the NovaStar Defendants and the subprime market in the months preceding the Offering. A court finds a violation of Section 11 when material facts have been omitted or presented in such a way as to obscure or distort their significance. In re Flag Telecom Holdings, Ltd. Sec. Litig., 618 F.Supp.2d 311, (S.D.N.Y. May 1, 2009); see also Caiola v. Citibank, N.A., 295 F.3d 312, 329 (2d Cir.2002) (materiality is found where there is a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the total mix of information made available ) (citing Basic Inc. v. Levinson, 485 U.S. 224, , 108 S.Ct. 978, 99 L.Ed.2d 194 (1988)). The test for determining whether the prospectus contained a material misstatement or omission is whether the defendants' representations in the prospectus, taken together and in context, would have misled a reasonable investor. In re Flag Telecom Holdings, Ltd. Sec. Litig., 618 F.Supp.2d at *6 Here, Plaintiff received extensive risk disclosures that explicitly warned Plaintiff, among other things, that [s]ubstantially all of the loans in the mortgage pool were underwritten to non-conforming standards and may experience higher delinquency and loss rates; [t]he Mezzanine Certificates are particularly sensitive to the timing and amount of losses and prepayment on the mortgage loans; FN7 the mortgage pool contains high original loan-to-value loans which could cause losses to holders of the Class A and Mezzanine Certificates; [i]f the residential real estate market should experience an overall decline in property values... the actual rates of delinquencies, foreclosures and losses could be higher than those now generally experienced in the mortgage lending industry; [r]ecent developments in the residential mortgage market may adversely affect the market value of the Certificates. ( Prosupp at S13, S20, S22.) These extensive disclosures in the Prospectus and the Prosupp render Plaintiff's conclusory allegations immaterial as a matter of law because it cannot be said that any reasonable investor could consider them important in light of adequate cautionary language set out in the same offering. Halperin v. ebanker USA.com, 295 F.3d 352, 357 (2d Cir.2002). FN7. Plaintiff purchased Class M 1 Mezzanine Certificates, (SAC 20.) This is particularly true in light of the total mix of information available to Plaintiff at the time it purchased the M 1 Certificates as part of the Offering. Basic, 485 U.S. at The SAC acknowledges that Plaintiff was aware of the publicly known financial issues at NovaStar and the publicly disclosed information regarding developments in the subprime market during 2006 and (SAC 56.) The Offering Documents disclosed the high-risk nature of the loans backing the certificates, and in the months leading up to Plaintiff's purchase information regarding the downtown of the subprime mortgage market was well-known and widely available. This Court previously required that Plaintiff do more that allege the subprime market melted down and Defendants were market participants, so they must be liable for my losses in my risky investment. (March 31, 2011 Order, at 26.) Plaintiff has simply failed to do so. Accordingly, Plaintiff's claims under Section 11 and 12(a) are hereby DISMISSED, with prejudice. C. Claims pursuant to Section 15 of the 1933 Act

13 Case 109-md LAK-GWG Document Filed 05/11/12 Page 6 of 6 (Cite as 2012 WL (S.D.N.Y.)) Page 6 Plaintiff alleges violations of Section 15 of the 1933 Act against NMI and Defendants Hartman and Metz as controlling persons of NMFC. In particular, Plaintiff alleges that Hartman and Metz as senior officers of NMFC (the Issuer) were responsible for preparing and filing the Offering Documents and as senior officers of NMI (the Sponsor) were responsible for selecting the mortgages to be included in the pool, structuring the Offering and pricing the sale of the Certificates on the Offering. (SAC 24 28, ) Issuer NMFC is a wholly-owned subsidiary of NMI, (SAC 22), and Plaintiff alleges that NMI had direct responsibilities in selecting the mortgages in the pool, structuring the Offering and pricing the Certificates, and had the power to exercise control over the Issuer. Accordingly, Plaintiff alleges that Defendants Hartman, Metz and NMI all had and exercised the power to influence NMFC to engage in violations of the 1933 Act, contrary to Section 15 of the Act. *7 To plead a claim under Section 15, a plaintiff must allege (1) a primary violation by a controlled person and (2) direct or indirect control by the defendant of the primary violator. E.g., Adelphia Comm., 2007 U.S. Dist. LEXIS 66911, at *30; In re Global Crossing, Ltd. Sec. Litig., 322 F.Supp.2d 319, 349 (S.D.N.Y.2004). Culpable participation by the controlling person is not an element of a Section 15 claim. E.g., Adelphia Commc'ns, 2007 U.S. Dist. LEXIS 66911, at *31; Global Crossing, 322 F.Supp.2d at 349. In In re Refco, Inc. Sec. Litig., 503 F.Supp.2d 611 (S.D.N.Y.2007), the court stated, a signature on an SEC filing containing the misrepresentations that are the subject of a claim is suggestive of control... allegations that [the individual] was directly involved in its day-to-day operations, including financial reporting and accounting... suffices as an allegation of control. Id. at 638. D. Leave to Replead When a complaint has been dismissed, permission to amend it shall be freely given when justice so requires. Fed.R.Civ.P. 15(a). However, a court may dismiss without leave to amend when amendment would be futile, or would not survive a motion to dismiss. Oneida Indian Nation of New York v. City of Sherrill, 337 F.3d 139, 168 (2d Cir.2003) (internal citations omitted), rev'd on other grounds sub nom. City of Sherrill v. Oneida Indian Nation of New York, 544 U.S. 197, 125 S.Ct. 1478, 161 L.Ed.2d 386 (2005). Plaintiff here has already once been granted leave to replead its Complaint. On the record before the Court, it appears beyond doubt that Plaintiff can prove no set of facts in support of its claims which would entitle it to relief. Because an additional amended complaint would not be able to survive a motion to dismiss, Plaintiff's SAC is hereby dismissed without leave to replead. III. CONCLUSION For the reasons above, the Motions of the NovaStar Defendants and the Underwriter Defendants to dismiss the SAC are GRANTED, with prejudice and without leave to replead. The Clerk is directed to close the docket in this case. SO ORDERED. S.D.N.Y.,2012. New Jersey Carpenters Health Fund v. NovaStar Mortg., Inc. END OF DOCUMENT Here, the Court has dismissed the Section 11 claims against the NovaStar and Individual Defendants. Because the Court has found that Plaintiff's Section 11 claims cannot be sustained, there is no primary violation and no claims under Section 15 can proceed. In re Morgan Stanley, 592 F.3d at 358. Accordingly, the claims against Defendants NMI, Hartman and Metz pursuant to Section 15 of the 1933 Act are hereby DISMISSED, with prejudice.