Judge Miriam Goldman Cedarbaum
Foreign investors—plaintiffs in three related actions—alleged that offering materials for residential mortgage-based securities (RMBSs) contained misrepresentations and omissions about certain assignments. Capital One N.A., successor to Chevy Chase Bank FSB (CCB), was a defendant in each case. Although a "seller" in each case, CCB lacked direct contact with any ultimate buyer of the loans at issue. Despite defendants' assertion that 12 USC §632 governed plaintiffs' claims, district court remanded the three actions to state court. The three-pronged test in Am. Int'l Grp. v. Bank of Am(AIG) was not met. Despite doubts whether the sales at issue were "financial operations" there was no doubt that, whatever their nature, those sales lacked a sufficient connection to nationally chartered defendant Capital One. In AIG the Second Circuit held that a suit under the Edge Act must have a federally chartered corporation as a party, and must arise from an offshore banking or financial transaction of that federally chartered corporation. Analyzing Sealink Funding v. Bear Stearns, the court held the connection between the sale of the RMBSs and CCB too tenuous to provide the nexus needed to exercise federal jurisdiction.
