US/NETHERLANDS - Stichting Pensioenfonds ABP is suing Deutsche Bank for allegedly providing misleading statements about residential mortgage backed securities the scheme invested in.
The €242bn ($331bn) pension fund claims the bank provided "false and misleading statements of material facts and omissions of material facts" leading ABP to suffer "substantial damages".
The fund said the certificates it invested in were far riskier than Deutsche described them to be. The certificates were comprised of loans which had been deposited by Deutsche into trusts and repackaged as residential mortgage backed securities for sale to investors.
According to the suit, filed in the US this week, Deutsche had repeatedly touted the strength of their underwriting guidelines, of the underlying borrowers and of the originators of the loans. However, ABP says the originators of the loans did not follow stringent underwriting guidelines and Deutsche failed to carry out proper quality control.
Instead, "Deutsche knew of the wholesale and systematic abandonment of underwriting guidelines by both its own affiliated originators as well as various third party originators faced with Deutsche's demands that as many loans as possible be originated so they could be packaged and sold to investors like Plaintiff, thereby intentionally granting mortgage loans to borrowers whom it knew did not satisfy the eligibility criteria".
Officials at Deutsche said: "We intend to vigorously defend ourselves against this suit and believe it is without merit."
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Professional Pensions is holding a breakfast briefing on engaging defined contribution (DC) members on 7 February.
Panellists at a PP webinar discuss October's High Court judgment on GMP equalisation, how schemes have responded, what their strategies should be, and how the industry can approach it.