US court finds in NAB’s favour
(25 June 2010 – USA) The US Supreme Court has ruled that foreign investors cannot proceed with a US lawsuit against National Australia Bank over its former mortgage unit, HomeSide.
HomeSide was accused of manipulating the value of it mortgage portfolio to meet over-inflated earnings targets.
The case was viewed as a benchmark on whether foreign shareholders' would be able to bring class-action securities claims against foreign businesses in American courts.
The ruling on the lawsuit by Justice Antonin Scalia was that the plaintiffs had no claim in the US based on the grounds that the securities were brought by Australian shareholders on the Australian exchange.
The shareholders argued that the case should have merit to be heard in the US because the executives of HomeSide are domiciled in the United States.
HomeSide, once the US's sixth-largest mortgage servicing business, had employed an incorrect mathematical model that resulted in overvaluation of its mortgage-servicing rights, according to NAB.
The bank said in July 2001 that a US$450 million (A$521 million) write-down on the value of the HomeSide rights would be incurred. A second write-down of US$1.75 billion was also announced in September 2001. The bank's shares plunged as a result.
The case was viewed as a benchmark on whether foreign shareholders' would be able to bring class-action securities claims against foreign businesses in American courts.
The ruling on the lawsuit by Justice Antonin Scalia was that the plaintiffs had no claim in the US based on the grounds that the securities were brought by Australian shareholders on the Australian exchange.
The shareholders argued that the case should have merit to be heard in the US because the executives of HomeSide are domiciled in the United States.
HomeSide, once the US's sixth-largest mortgage servicing business, had employed an incorrect mathematical model that resulted in overvaluation of its mortgage-servicing rights, according to NAB.
The bank said in July 2001 that a US$450 million (A$521 million) write-down on the value of the HomeSide rights would be incurred. A second write-down of US$1.75 billion was also announced in September 2001. The bank's shares plunged as a result.
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