A federal judge on Friday said that investors seeking to hold banks liable for helping underwrite more than $7.7 billion of mortgage-backed securities from the now-bankrupt subprime lender NovaStar Mortgage Inc. may pursue their claims as a group, Reuters reported today. In a 33-page decision, U.S. District Judge Deborah Batts in Manhattan granted class certification to investors led by the New Jersey Carpenters Health Fund against units of Royal Bank of Scotland Group Plc, Deutsche Bank AG and Wells Fargo & Co. Several former NovaStar executives are also defendants. NovaStar specialized in lower-quality residential mortgages, including many packaged into securities issued in 2006 and 2007.
