#AceFinanceNews – UNITED STATES (New York) – August 14 – The Government has been told it can sue French banking giant Societe Generale for allegedly mis-selling financial products to Northern Rock that were partly to blame for UK lender’s collapse.
A court in New York has ruled that Northern Rock Asset Management (NRAM), the UK taxpayer-owned institution salvaged from the ashes of the collapsed bank, should be allowed to take legal action against SocGen for mis-selling $34m of mortgage products in the run-up to the financial crisis, in a case which is expected to pave the way for a flurry of similar lawsuits.
SocGen has tried to have the case thrown out of court on the grounds that it warned Northern Rock in its small print that it could not be held accountable for many of the statements in its marketing material.
However, the New York Supreme Court has ruled that there was "no precedent for allowing an offerer of securities to use such a mechanic to amble away from liability for key misrepresentations".
The products, which included collateralised debt obligations, were one of the factors which triggered Northern Rock’s implosion in 2007, and the start of the financial crisis in Britain.
Debt Obligations on PDF at this link