The allegations in the case center on Washington Mutual’s residential lending practices. The plaintiffs contend that the bank’s standards were relaxed to meet consumer demand and bolster the company’s stock price. While Judge Pechman found the first complaint “verbose” and “disorganized,” she described the allegations in the 267-page amended complaint as “cogent and concise.”
Chad Johnson, a partner at Bernstein Litowtiz, said in an e-mail to us: “We are pleased that the judge took a pragmatic approach to the matter and agreed that the case can move forward because the complaint already shows a strong indication of fraud at the top level of WaMu’s management–and the judge similarly sustained the complaint against Wall Street investment banks and the auditor Deloitte, all of whom failed in their duty to protect investors from the fraud at WaMu.”
The lineup for the defendants includes Simpson Thacher & Bartlett attorneys Barry Ostrager and Rob Pfister for former WaMu officers; Ronald Berenstain of Perkins Coie for former WaMu outside directors; Barry Kaplan of Wilson Sonsini Goodrich & Rosati for former WaMu CEO Kerry Killinger; Peter Wald of Latham & Watkins for Deloitte; and Jonathan Dickey of Gibson Dunn & Crutcher for the underwriters.
We left messages for each camp. So far, we’ve heard back from Ostrager, who had no comment. And Wald, an attorney for Deloitte, reminded us that at this stage, the court “was required to assume that the allegations in plaintiffs’ complaint were true” and that “under the minimum pleading requirements found applicable, the court held that plaintiffs had alleged enough to proceed to discovery.” He added, “Deloitte believes that the claims asserted against it are meritless and intends to defend this case vigorously.”