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A federal magistrate judge on Thursday moved to toss out a Justice Department lawsuit over a soured mortgage deal at Bank of America, dealing a potential setback to the government’s pursuit of Wall Street misdeeds.
The ruling, by Judge David S. Cayer, is nonbinding. A US District Court judge in Charlotte, N.C., will decide whether to accept or reject the recommendation to dismiss the lawsuit.
But if the judge adopts Cayer’s suggestion, and judges often do, it could inspire other banks to test their luck in the courtroom. Ultimately, it could also undercut the Justice Department’s use of a novel legal theory against Wall Street.