Case 1:09-md LAK-GWG Document 909 Filed 05/16/12 Page 1 of 4 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

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1 Case 1:09-md LAK-GWG Document 909 Filed 05/16/12 Page 1 of 4 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK In re: LEHMAN BROTHERS SECURITIES AND ERISA LITIGATION This Document Applies To: No. 09-MD-2017 (LAK) Stichting Pensioenfonds ABP v. Merrill Lynch & Co., Inc., et al., No. 10 Civ (LAK) REPLY IN SUPPORT OF PLAINTIFF S NOTICE OF SUPPLEMENTAL AUTHORITY GRANT & EISENHOFER P.A. Jay W. Eisenhofer, Esq. Geoffrey C. Jarvis, Esq. 485 Lexington Avenue, 29th Floor New York, New York Telephone: (646) Facsimile: (646) Attorneys for Plaintiff Stichting Pensioenfonds ABP

2 Case 1:09-md LAK-GWG Document 909 Filed 05/16/12 Page 2 of 4 Plaintiff Stichting Pensioenfonds ABP ( ABP ) respectfully submits this reply to the Merrill Lynch Defendants Response to Plaintiff s Notice of Supplemental Authority ( Response ), filed May 11, The Merrill Lynch Defendants seek to distinguish Federal Housing Finance Agency v. UBS Americas, Inc., --- F. Supp. 2d ---, 2012 WL (S.D.N.Y. May 4, 2012) ( UBS Americas ) on the grounds that the pleadings in that case were governed by Fed. R. Civ. P. 8(a), and that the plaintiff s claims did not require allegations of scienter, reliance, or loss causation. These distinctions are irrelevant given the reasons why Plaintiff draws on UBS Americas namely, for its holdings on the questions of when an RMBS plaintiff should be on notice of its claims, 1 what constitutes a material misstatement or omission in the context of RMBS offering documents, 2 and what is necessary to plead control person liability. As these matters do not implicate scienter, reliance or loss causation, the distinction drawn by Defendants is meaningless. 3 Rather than file their own notice of supplemental authority, Defendants seek to use their response as a vehicle to put two recently decided decisions before this Court. Both of these 1 The UBS Americas court rejected the defendants argument that the Securities Act claims at issue were timebarred, given the timing of the credit rating downgrades of the securities at issue. UBS Americas, 2012 WL , at *8-10. This holding is not irrelevant, as the Merrill Lynch Defendants contend, because Plaintiff s Securities Act claims are timely under the Securities Act s statutes of limitations and repose, as set forth in Plaintiff s Omnibus Memorandum of Law in Opposition to Defendants Motion to Strike and to Dismiss the Amended Complaint ( Opp. Br. ), filed Feb. 13, 2012, at The UBS Americas court similarly rejected the defendants position that appraisal values and LTV ratios were inactionable opinions, and that purported disclosures regarding, inter alia, owner-occupancy rates and exceptions to the underwriting standards defeated plaintiff s claims. Id. at *16-18, The definition of materiality is identical under the Securities Act of 1933 ( Securities Act ) and the Securities Exchange Act of 1934 ( Exchange Act ). See In re Morgan Stanley Information Fund Sec. Litig., 592 F. 3d 347, 360 (2d Cir 2010). 3 Furthermore, the fact that ABP has not conducted its own loan-level analysis (Merrill Defendants Response at n.4) is irrelevant, because the FHFA analysis ABP cites to covered similar securities, created by the same defendants, during the same relevant time period, and using similar practices. In addition, the FHFA analyzed certificates from one of the same Issuing Trusts purchased by Plaintiff. Amended Complaint

3 Case 1:09-md LAK-GWG Document 909 Filed 05/16/12 Page 3 of 4 cases, however, are readily distinguishable. Landesbank Baden-Wurttemburg v. Goldman, Sachs & Co., No , 2012 WL (2d Cir. Apr. 19, 2012) is not directly relevant to the adequacy of [ABP s] Amended Complaint, as the Merrill Lynch Defendants claim. In Landesbank, the court found that the plaintiff did not adequately plead its fraud claims because it relied on references to due diligence reports from which defendants allegedly had knowledge of the widespread abandonment underwriting standards, but plaintiff did not identify any specific due diligence reports. Landesbank, 2012 WL , at *2. ABP s claims do not rest solely on unspecified due diligence reports, and instead include, inter alia, allegations regarding the Merrill Lynch Defendants vertically integrated securitization operations, third-party statistical analyses, and government investigations. Amended Complaint , New Jersey Carpenters Health Fund v. NovaStar Mortgage, Inc., 2012 WL (S.D.N.Y. Mar. 29, 2012) is similarly distinguishable because in that case, the court held that allegations of widespread abandonment of underwriting standards, supported by general allegations and anecdotes of [confidential witnesses], did not provide enough detail to adequately plead material misstatements and omissions. N.J. Carpenters, 2012 WL , at *4. Again, ABP s claims are supported by much more, including the results of a third-party loan-level analysis which included certificates from one of the same Issuing Trusts sold to ABP. Amended Complaint Finally, N.J. Carpenters holding that plaintiff failed to sufficiently plead that the misstatements were material in light of the disclosures contained in the offering documents is not applicable here, as the Amended Complaint adequately alleges that the Merrill Lynch Defendants disclosures did not address the risks which they knew already existed 4 To the extent that the Merrill Lynch Defendants cast the decision in N.J. Carpenters as holding that allegations of widespread abandonment of underwriting standards fail as a matter of law because they are not specific to the securities at issue, ABP respectfully disagrees and notes that numerous courts have found allegations that the securities at issue were the product of a systematic abandonment of underwriting standards sufficient to survive a motion to dismiss. Opp. Br. at

4 Case 1:09-md LAK-GWG Document 909 Filed 05/16/12 Page 4 of 4 that Defendants and the originators had completely abandoned the stated underwriting guidelines. Opp. Br. at Respectfully submitted, DATED: May 16, 2012 GRANT & EISENHOFER P.A. /s/ Geoffrey C. Jarvis Jay W. Eisenhofer, Esq. Geoffrey C. Jarvis, Esq. 485 Lexington Ave., 29th Floor New York, New York Telephone: (646) Facsimile: (646) Attorneys for Plaintiff Stichting Pensioenfonds ABP 5 To the extent that the N.J. Carpenters decision is correct that representations regarding the originators discretion to deviate from the stated underwriting guidelines based on compensating factors reflect subjective opinions, the Amended Complaint adequately alleges that the originators in this action did not believe such compensating factors were warranted at the time that they originated the loans underlying the Certificates ,

5 Case 1:09-md LAK-GWG Document Filed 05/16/12 Page 1 of 1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK In re: LEHMAN BROTHERS SECURITIES AND ERISA LITIGATION This Document Applies To: No. 09-MD-2017 (LAK) Stichting Pensioenfonds ABP v. Merrill Lynch & Co., Inc., et al., No. 10 Civ (LAK) CERTIFICATE OF SERVICE I, Geoffrey C. Jarvis, Esq., an attorney admitted to practice in the State of New York and a Director with the firm of Grant & Eisenhofer, P.A., hereby certify that: On the 16 th day of May, 2012, I have caused service of the Reply in Support of Notice of Supplemental Authority in Further Support of Plaintiff s Omnibus Memorandum of Law in Opposition to Defendants Motions to Strike and to Dismiss the Amended Complaint to be made by electronic filing with the Clerk of the Court using the CM/ECF System, which will send a Notice of Electronic Filing to all parties with an address of record, who have appeared and consent to electronic service in this action. Dated: New York, New York May 16, 2012 /s/ Geoffrey C. Jarvis Geoffrey C. Jarvis