Court Dismisses Claims Over Carlyle Capital Corp. Collapse

The U.S. District Court for the District of Columbia Aug. 13 dismissed a sprawling securities fraud lawsuit over the 2008 implosion of Carlyle Capital Corp., a Guernsey entity that used highly leveraged financing in the form of repurchase loan agreements to invest in residential mortgage-backed securities (Phelps v. Stomber).

“Essentially,” Judge Amy Berman Jackson declared, the litigation “is an attack on how CCC was managed, and ultimately, it questions the wisdom behind the business model in the first place. But chiding CCC with the benefit of hindsight for its failure to resist the stampede to purchase mortgage-back securities ...