Summary judgment for FHFA is appropriate. CONCLUSION For the reasons stated above, FHFA respectfully requests that the Court grant its motion for partial summary judgment against Defendants with respect to Defendants’ limitations defenses under Section 13 and D.C. Code § 31-5606.05(f)(2)(B). Case 1:11-cv-06201-DLC Document 838 Filed 10/03/14 Page 31 of 32 26 Respectfully submitted, DATED: New York, New York August 25, 2014 By: /s/ Philippe Z. Selendy _____ Philippe Z. Selendy Jon Corey Adam M. Abensohn Andrew R. Dunlap David B. Schwartz QUINN EMANUEL URQUHART & SULLIVAN, LLP 51 Madison Avenue, 22nd Floor New York, New York 10010 (212) 849-7000 Attorneys for Plaintiff Federal Housing Finance Agency, as Conservator for Fannie Mae and Freddie Mac Case 1:11-cv-06201-DLC Document 838 Filed 10/03/14 Page 32 of 32

Plaintiff also brings “control person” allegations against defendants Bank of America Corporation, Bank of America, National Association, and the individual defendants under the 1933 Act and the D.C. and Virginia securities laws. FAC ¶¶ 223–236, 255–268, 287–300; 15 U.S.C. § 77o(a) (2006); D.C. Code § 31-5606.05(c); Va. Code Ann. § 13.1-522(C).35 To state a “control” liability claim, a plaintiff “must allege (1) a primary violation of the Securities Act and (2) ‘control’ by the defendant.” N.J. Carpenters Health Fund v. Residential Capital, LLC, No.

That is because the “control person” defense under these laws is substantively identical to the reasonable care defense under Section 12. Compare 15 U.S.C. § 77l(a)(2) (requiring Section 12 defendant to show “that he did not know, and in the exercise of reasonable care could not have known, of such untruth or omission”), with D.C. Code § 31-5606.05(c) (requiring control person defendant to show “that he or she did not know, and in exercise of reasonable care could not have known, of the existence of the facts by reason of which the liability is alleged to exist”), and Va. Code Ann. § 13.1-522(C) (same). 65 CONCLUSION For the reasons set forth above, FHFA respectfully requests that the Court grant its motion for partial summary judgment.

Bank, 551 F.2d at 527 (underwriter “failed to exercise reasonable professional care in assembling and evaluating the financial data … no matter how honestly but mistakenly [underwriter’s belief in the accuracy of the financial data was] held”); Univ. Hill Found., 422 F. Supp. at 902 (defendant, treated as underwriter under Section 11, could not meet Section 12 “reasonable care” defense where its “exclusive reliance on publicly available data and the unverified representations of management [was] inadequate to meet [defendant’s] obligations to 35 Both the D.C. and the Virginia Blue Sky Acts contain language that is identical to Section 12’s “reasonable care” defense, see D.C. Code § 31-5606.05(a)(1)(B); Va. Code Ann. § 13.1-522(A)(ii), and this Court has held that, where the statutory language in the two Blue Sky Acts is identical to Section 12, “the D.C. and Virginia securities laws are generally interpreted in accordance,” FHFA v. Bank of America Corp., 2012 WL 6592251, at *7 n.8 (S.D.N.Y. Dec. 18, 2012). See also FHFA v. HSBC N. Am. Holdings Inc., --- F. Supp. 2d ----, 2013 WL 6588249, at *2, *4 (S.D.N.Y. Dec.

(collecting cases)); Dunn, 369 F.3d at 428-29 (reasoning that “judicial constructions of section 12(2) of the federal Securities Act of 1933” are “instructive” because the statute is “substantially identical” to the Virginia Blue Sky law). The knowledge language of the Virginia Blue Sky Act is identical to that of Section 12 in this respect, see Va. Code Ann. § 13.1-522(A)(ii) (“the purchaser not knowing of such untruth or omission”); 15 U.S.C. § 77l(a)(2) (same), and the D.C. Blue Sky Act is nearly so, see D.C. Code § 31-5606.05(a)(1)(B) (“the buyer does not know of the untruth or omission”). 10 In short, as this Court previously concluded, to avoid liability under the Securities Act or the Virginia or D.C. Blue Sky laws, Defendants must show “that the GSEs had actual knowledge that the specific representations in the prospectus supplements issued by the defendants were false.”

In addition to the three-year absolute period of repose, Section 13 of the Securities Act also provides that "[n]o action shall be maintained to enforce any liability created under [Section 11 or Section 12(a)(2)] unless brought within one year after the discovery of the untrue statement or omission, or after such discovery should have been made by the exercise of reasonable diligence."26 15 U.S.C. § 77m.27 In __________________________ 26 The D.C. Securities Act's statute of limitations – which is modeled after the Securities Act – also expires one year "after the discovery of the untrue statement or omission or after the discovery should have been made by the exercise of reasonable diligence," D.C. Code § 31-5606.05(f)(2)(B) (2009), and thus Plaintiff's claims under that statute are barred for the same reasons. 27 FHFA has an affirmative burden to plead and prove facts demonstrating its compliance with the one-year discovery rule.

fense because “far from seeking to ensure that [a] transaction was properly accounted for in the Registration Statement, [the defendants] instead actively facilitated its improper accounting treatment”). III. MLPFS AND MLMI DID NOT EXERCISE REASONABLE CARE AS A MATTER OF LAW Likewise, summary judgment is appropriate on MLMI and MLPFS’s “reasonable care” defense under Section 12 of the Securities Act or under the Virginia and D.C. Blue Sky laws, because neither defendant ever analyzed the loans in each Securitization’s actual SLGs, reviewed the statements in the Prospectus Supplements, or did anything more than rely on the untrustworthy assurances of originators and third-party due diligence firms.42 While Section 12’s “reasonable care” defense is less “exacting” than Section 11’s “reasonable 42 Both the D.C. and the Virginia Blue Sky Acts contain language that is identical to Section 12’s “reasonable care” defense, see D.C. Code § 31-5606.05(a)(1)(B); Va. Code Ann. § 13.1-522(A), and this Court has held that, where the statutory language in the two Blue Sky Acts is identical to Section 12, “the D.C. and Virginia securities laws are generally interpreted in accordance,” FHFA v. Bank of America Corp., 2012 WL 6592251, at *7 n.8 (S.D.N.Y. Dec. 18, 2012).

Whether Defendants made “untrue statement[s]” regarding the underwriting guideline-compliance, LTV ratios, and occupancy status of the loans underlying the Certificates cannot be proven or disproven with GSE-specific evidence. 15 U.S.C. § 77l(a)(2); D.C. Code § 31-5606.05(a)(1)(B); Va. Code § 13.1-522(A)(ii). The Court ruled the GSEs did not have “access to the files or data that would give them knowledge that those detailed representations 1 Appendix A to this letter identifies specific categories of documents FHFA asks the Court to exclude, which were taken from Nomura’s and RBS’s exhibit list.

These generic documents are entirely irrelevant to the question of whether Defendants made “untrue statement[s]” in the offering materials for the At-Issue Certificates. 15 U.S.C. § 77l(a)(2); D.C. Code § 31-5606.05(a)(1)(B). B. The GSE Exhibits Are Not Relevant to Materiality “Materiality is ‘an objective standard,’ determined with reference to a reasonable ‘PLS trader’—not a reasonable GSE, or a reasonable PLS trader with plaintiff’s idiosyncratic regulatory restrictions and purchasing goals.”

1 At trial, plaintiff bears the burden of proving that there are misstatements in the Offering Documents for the at-issue Securitizations and that those misstatements were material. 15 U.S.C. § 77l(a)(2); D.C. CODE § 31-5606.05; V.A. CODE § 13.1-522(A)(ii). To prove materiality, plaintiff must show that the “representations or omissions, considered together and in context, would affect the total mix of information and thereby mislead a reasonable investor 1 Defendants have withdrawn from their exhibit list interview memoranda, interview transcripts and written testimony to the Financial Crisis Inquiry Commission.