Morgan Stanley Seeks To Quash HSH's $524M RMBS Action

February 25, 2014

Martis Alex argues before New York Supreme Court in the RMBS case against Morgan Stanley

During oral arguments before the New York Supreme Court, Morgan Stanley claimed that HSH, a German bank, waited too long to bring its claim, which includes a loss of more than half a billion dollars from faulty residential mortgage-backed securities (RMBS). According to the Morgan Stanley, represented by Davis Polk & Wardwell LLP, HSH is bound by Germany's three-year statute of limitations.

Representing HSH, Martis Alex argued that the German statute of limitation differs greatly from American statues because it sets the bar of gross negligence, and it is not a standard of negligence of what a reasonable person would have done.

"If something comes to the attention of a German entity [it applies], but they're not obligated to go out and look for it," Alex said.

Additionally, Alex argued that information was limited in 2007 about the collapse of the RMBS market, or the actions of the defendants in particular. "They have said there was specific information out there that the representations were false. I haven't seen that and they haven't shown it to you."