U.S. District Judge Susan Illston in San Francisco yesterday refused to throw out Anschutz’s claims of market manipulation and fraud against Deutsche Bank and negligent misrepresentation against S&P, according to a March 27 ruling.
Banks running periodic auctions abandoned the $330 billion market for the securities in 2008 amid the fallout from the subprime market slump. Investors were stuck with the products. Denver-based Anschutz in 2007 bought $40 million of the securities underwritten and rated by the defendants, the ruling said.
“The case is without merit and we will defend ourselves vigorously,” Edward Sweeney, a spokesman for S&P, said in a statement.
In a separate lawsuit over auction rate securities, a federal judge in San Francisco today conditionally granted Deutsche Bank Securities’ request to dismiss claims by Louisiana Pacific Corp. while giving the building products company an opportunity to revise its lawsuit.
U.S. District Judge Jeffrey White gave Nashville, Tennessee-based Louisiana Pacific until April 29 to amend its case or face dismissal of most of the lawsuit, which seeks to recover damages from its $300 million purchase of auction-rate securities, according to a court filing.
Elizabeth Frolich, an attorney for Frankfurt-based Deutsche Bank, had no immediate comment.
The first case is Anschutz v. Merrill Lynch, 09-3780, U.S. District Court, Northern District of California (San Francisco). The second case is Louisiana Pacific v Money Market 1 Institutional Investment Dealer, 09-3529, U.S. District Court, San Francisco.
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