The Missing Week #1: lawsuits

The Wall Street Journal reports that Banco Santander SA, one of the largest Madoff "feeders," is the first such fund to offer money to settle possible legal claims brought by Irving Pickard, the bankruptcy trustee for Madoff Investment Securities.

10b-5 Daily reports that the Fourth Circuit reversed a district court's dismissal of a marketing-timing suit against Janus Capital (In re Mutual Funds Investment Litig. 2009 WL 1241574, 4th Cir. May 7, 2009). In the decision, the Circuit Court made several important holdings on fraud-on-the-market and scheme liability post-Stoneridge.

The City of Milan is suing UBS, Deutsche Bank, JPMorgan Chase and Depfa Bank for fraud related to the sale of 35 billion euros of derivatives. An Italian court seized $345 million belonging to the banks. NYT DealBook reports that the banks have decided to drop an appeal of the seizure.

D&O Diary reports that a subprime-related lawsuit against MoneyGram International has survived a dismissal motion. MoneyGram is accused by its shareholders of rigging its balance sheet to make its subprime investment losses look less catastrophic (In re MoneyGram International, Inc. Securities Litigation, 08-CV-00883, US Dist Ct. Dist. of Minn.)

D&O Diary brings to our attention another novel subprime suit that survived a motion to dismiss: Nomura Securities was sued over a securitization transaction it was involved in with LaSalle Bank. Nomura settled with LaSalle and then turned on their law firm (Cadwalader) suing them for malpractice. On May 21st, a New York Superior Court Judge let Nomura's suit against Cadwalader go forward. If you look at the original complaint on Westlaw (2006 WL 5426806) you will notice that Nomura's lawyer was Marc Dreier.