On November 16, 2012, the United States Securities and Exchange Commission ("SEC") issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order ("Order") against Credit Suisse Securities (USA) LLC, DLJ Mortgage Capital, Inc., Credit Suisse First Boston Mortgage Acceptance Corp., Credit Suisse First Boston Mortgage Securities Corp., and Asset Backed Securities Corporation ("Respondents") in connection with Respondents' First Payment Default Practice, described in the Background section below.
The Order provided for a fair fund to be created for the disgorgement, interest and penalties paid by Respondents ("FPD Practice Fair Fund"). Respondents have paid disgorgement of $10,056,561, prejudgment interest of $2,200,000, and a civil penalty of $6,000,000, for a total of $18,256,561 to be distributed to harmed investors.
In late 2006, Respondents underwrote two RMBS transactions that were collateralized by approximately $1.9 billion of subprime mortgages. In connection with its efforts to market and sell these securities, Respondents made misleading statements regarding a key investor protection known as the First Payment Default ("FPD") covenant, which required the originators of the loans to repurchase certain delinquent loans or otherwise cure breaches of the covenant. Notwithstanding this provision, Respondents, without disclosure, did not ensure the removal of all FPD loans originated by one originator (the "Originator"). As a result of this conduct, investors in these RMBS trusts ("Trusts") lost approximately $10,056,561 on the mortgage loans that improperly remained in the Trusts. The SEC ordered Respondents to pay, jointly and severally, a total of $18,256,561 in disgorgement, prejudgment interest, and civil money penalties.
The SEC's findings involving the First Payment Default Practice related to two RMBS offerings underwritten by Credit Suisse in late 2006 (ABSC AMO 2006-HE7 and ABSC MO 2006-HE6). A complete list of Eligible Harmed Trusts and Certificates can be found as Exhibit A to the Plan, which is posted at www.CreditSuisseFPDPracticeFairFund.com.
The Plan of Allocation
The FPD Practice Fair Fund less any taxes that may be assessed against it ("Net Available Fair Fund") will be allocated among the Harmed Trusts based on the proportion of the mortgage collateral in each Harmed Trust that was originated by the Originator. Exhibit B to the Plan, which is available at www.CreditSuisseFPDPracticeFairFund.com, shows the percentage of the Net Available Fair Fund allocated to each of the Harmed Trusts.
Preliminary calculations will be made for all Eligible Claimants in each Harmed Trust on a pro-rata basis determined by the Eligible Claimant's investment in the Harmed Trust divided by the sum of all Eligible Claimants' investments in the Harmed Trust. Recognized Claim amounts will be calculated for all Eligible Claimants in each Harmed Trust whose preliminary calculation amount exceeds a $250 Distribution De Minimus, as set forth in the Plan.
How to Participate
If you believe you are an Eligible Claimant and would like to participate, you must submit a Proof of Claim Form by November 15, 2016. If you have not received a copy of the notice materials, you may download a copy at www.CreditSuisseFPDPracticeFairFund.com, or request a copy by calling the Fund Administrator at (844) 887-8765 or writing to:
Credit Suisse FPD Practice Fair Fund
c/o Gilardi & Co. LLC
PO Box 30226
College Station TX 77842-3226
For More Information
This notice is a summary only. It is strongly recommended that you read the Distribution Plan, including the Plan of Allocation, and other relevant case documents in their entirety for more complete details. The documents can be found at www.CreditSuisseFPDPracticeFairFund.com. You may also visit www.sec.gov/enforce, call the dedicated toll-free number at (844) 887-8765, or send an email to info@CreditSuisseFPDPracticeFairFund.com.
Special Notice to Brokers and Nominees
Brokerage firms, banks and/or other persons or entities who held Certificates for the benefit of others are asked to view the full Notice at www.CreditSuisseFPDPracticeFairFund.com to review additional instructions from the SEC.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/credit-suisse-fpd-practice-fair-fund-administrator-announces-distribution-plan-notice-of-credit-suisse-first-payment-default-practice-fair-fund-300302944.html
SOURCE Credit Suisse FPD Practice Fair Fund Administrator