Bank of America executives, including CEO Brian Moynihan and former CEO Kenneth Lewis, must face claims that they misled investors about the bank’s risk of having to repurchase soured mortgages, a judge in Manhattan ruled Wednesday.

In a 13-page decision, U.S. District Judge William Pauley III denied a motion to dismiss the proposed securities class action filed by lawyers for the execs at Skadden, Arps, Slate, Meagher & Flom. The judge ruled that lead plaintiffs counsel Barrack Rodos & Bacine plausibly alleged that the defendants knew about alleged misstatements by the bank.

BofA has shelled out billions repurchasing soured mortgages originated by its Countrywide Financial unit. Barrack Rodos first sued BofA and its execs in 2011, alleging they hid the bank’s repurchase liability and failed to disclose that the bank’s reliance on allegedly shoddy record-keeping by Mortgage Electronic Registration Systems Inc. (MERS) was undermining its ability to foreclose on homes.

In their complaint, the plaintiffs pointed to statements Moynihan made to analysts in 2010, like "the worst of the crisis is behind us." They argued that those public statements contradicted sworn testimony Moynihan gave through his lawyer, Reginald Brown of Wilmer Cutler Pickering Hale and Dorr, in a 2010 letter to the Financial Crisis Inquiry Commission. In that letter, Brown "summarized the negative effects flowing from BoA’s overemphasis on generating loans for securitization without due regard to prudent lending," according to the complaint. The letter helped show scienter, or intent, the plaintiffs argued.

Pauley initially agreed to dismiss the individual defendants without prejudice in July, as we reported here. He noted that Moynihan’s 2010 letter to the FCIC was submitted on his behalf by his lawyer, so "there is no allegation that the Executive Defendants saw the letter or knew of its contents."

Barrack Rodos filed an amended complaint last August, this time explicitly stating that Moynihan surely must have known about the content of the FCIC letter. "No responsible attorney would provide a response that constituted part of his client’s testimony, which if false would subject the client to criminal prosecution, without having his client carefully review and approve of its contents," the firm’s lawyers wrote.

The amended complaint had what it took to survive Skadden’s latest dismissal bid. With regard Moynihan’s letter to FCIC, Pauley ruled that it "establishes that Moynihan had knowledge of the repurchase claims and renders his subsequent representations misleading." Pauley gave less weight to the evidence of scienter on the part of the other four defendants–Lewis, Joseph Lee Price II, Neil Cotty, and Charles Noski–but he ultimately allowed the claims against them to go forward. The plaintiffs plausibly alleged that the execs failed to adhere to generally accepted accounting principles and Securities and Exchange Commission regulations, and a culpable state of mind can be inferred from that conduct, Pauley ruled.

Jay Kasner of Skadden, who represents the BofA quintet, referred our request for comment to a BofA spokesperson, who declined to comment. We didn’t immediately hear back from plaintiffs counsel Mark Rosen of Barrack Rodos.