Reuters: Regulatory News: UPDATE 1-Natixis ends MBIA lawsuit; BofA, SocGen remain

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UPDATE 1-Natixis ends MBIA lawsuit; BofA, SocGen remain May 8th 2012, 15:40 Tue May 8, 2012 11:40am EDT * Lawsuits challenged bond insurer's 2009 restructuring * Banks claim were short-changed by split of MBIA units * B of A, Societe Generale are only remaining plaintiffs * May 14 trial planned May 8 (Reuters) - A lawsuit challenging MBIA Inc's 2009 restructuring now has just two plaintiffs remaining among the original 18 banks and financial companies that sued, after France's Natixis SA dropped out. Natixis' decision to discontinue its case was disclosed in a filing Monday in the New York State Supreme Court in Manhattan. No reason was given. Bank of America Corp and Societe Generale are the only plaintiffs remaining in the case, which is scheduled to go to trial on May 14 before Justice Barbara Kapnick. Once the largest U.S. bond insurer, Armonk, New York-based MBIA in February 2009 received permission from New York's insurance department to restructure after incurring big losses from insuring mortgage debt. The restructuring split MBIA's troubled structured finance business from its traditional municipal bond insurance business. Bank plaintiffs contended that the split was intended to defraud policyholders by leaving the MBIA Insurance unit undercapitalized, and siphoning $5 billion from that unit at their expense. The trial would address claims involving the insurance department, which is now part of the New York State Department of Financial Services. It has been expected to last two to four weeks. A spokesman for the bank plaintiffs, which included Natixis, said Bank of America and Societe Generale are confident that trial evidence "will demonstrate that the unlawful restructuring of MBIA Insurance must be annulled." MBIA spokesman Kevin Brown declined to comment. David Neustadt, a spokesman for the financial services department, also did not immediately respond to a request. MBIA shares were unchanged at $9.60 on Tuesday morning on the New York Stock Exchange. The cases are ABN Amro Bank NV et al v. MBIA Inc et al, New York State Supreme Court, New York County, No. 601475/2009; and ABN Amro Bank NV et al v. Dinallo et al in the same court, No. 601846/2009. Link this Share this Digg this Email Reprints

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