A New York appeals court tossed out on Tuesday a key argument in an early lawsuit related to the implosion of U.S. subprime-mortgage market. The appeals court said that HSH Nordbank could not claim it was fraudulently induced into investing some $500 million in a collateralized debt obligation from Swiss investment bank UBS, which was represented by firm Paul Hastings in the case.
The court said that HSH was aware of the risks related to the investments and was sophisticated and big enough to perform its own due diligence.
“HSH is complaining that UBS — which HSH agreed was not acting as its advisor or fiduciary in this matter — induced it to enter into a deal that would enable UBS to exploit, at HSH’s expense, a feature of the relevant securities market that was common knowledge among participants in that market. This does not constitute a legally sufficient cause of action for fraud, certainly not when pleaded by a sophisticated business entity that disclaimed reliance on the party it now accuses of fraud...”
Read all about it at http://blogs.wsj.com/deals/2012/03/27/court-tosses-argument-against-ubs-in-2008-cdo-suit/?mod=google_news_blog
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