Global financial institution defends novel vicarious liability claim under False Claims Act

Client(s) Global financial institution

Jones Day represents a global financial institution in a federal False Claims Act action in which relators allege that the bank, as trustee of residential mortgage-backed securities trusts, is vicariously liable for the purportedly unlawful conduct of a loan servicer—despite alleging no independent wrongdoing by the bank. The case presents a claim of first impression seeking to extend False Claims Act liability to RMBS trustees through vicarious liability, carrying significant potential exposure and broad implications for the securitization industry.