Aiding Abetting fraudulent or predatory lending--where is the law three years after Lehman's liability was upheld by the ninth circuit?

The determination by the Ninth Circuit that Lehman Brothers, Inc. could be liable under California common-law fraud for aiding and abetting the deceptive mortgage practices of First Alliance Mortgage Co. (First Alliance) - one of the early casualties of the subprime lending meltdown - was a landmark decision with considerable press coverage. In hindsight, however, the ruling announced in December 2006 was a harbinger of the mortgage lending crisis - which had many contributing causes - one of which was the rush to vertical integration of the entire process (of mortgage origination to ultimate securitization of the bundled loans as securities) which was engaged in by the largest investment banks and depository institutions in a series of deals mostly in the second half of 2006. This article discusses the seminal 2006 decision of In Re First Alliance and then explores a dozen subsequent decisions which have vetted the claim theory in various factual contexts. California and New York have been the dominant locations of this litigation, but other state tort laws are also implicated. Many of the reported cases are in the early stages and trials have not yet occurred, but some observations and conclusions are made at the end of this article.