WaMu Will Face Trial in November Over $4 Billion of Low-Ranking Securities

Washington Mutual Inc., the ex-owner of the biggest U.S. bank to fail, will face a November trial in an investor lawsuit over ownership of $4 billion in low-ranking debt known as trust-preferred securities, a judge said.


U.S. Bankruptcy Judge Mary F. Walrath in Wilmington, Delaware, scheduled a trial for Nov. 1, the first day of a confirmation hearing on WaMu’s reorganization plan.

Shareholders claim that the holding company’s bank should never have been seized by regulators and sold to JPMorgan Chase & Co. in 2008.


In July, a group of investors sued WaMu and JPMorgan over the way the trust-preferred securities were converted from debt- like investments into equity. The investors, who bought $1 billion of the trust-preferred securities, got preferred equity in WaMu when the exchange happened just before WaMu collapsed.