Credit Suisse Cannot Use 'Boilerplate Disclaimers' to Avoid Over $1.6 Billion
in Claims
Court Rejects CSFB's Motion to Dismiss Claims Arising from Collapse of AAA
Rated Asset-Backed Notes issued by NCFE
HOUSTON, Dec. 23 /PRNewswire/ -- In a sweeping decision issued today, the
Honorable James Graham of the United States District Court for the Southern
District of Ohio denied in virtually every respect motions to dismiss over
$1.6 billion in claims filed against Credit Suisse First Boston ("CSFB") by
investors who formerly held "AAA" rated notes issued by now-defunct National
Century Financial Enterprises of Columbus, Ohio ("NCFE"). The largest group of
investors is represented by Gibbs & Bruns L.L.P. of Houston.
The Court's ruling is highly significant for purchasers of asset-backed
notes, an area of keen recent interest in light of the sub-prime loan crisis.
The court categorically rejected Credit Suisse's argument that disclaimers
included in the offering memorandum required the dismissal of Plaintiffs'
fraud claims: "the disclaimers in the offering materials ... do not preclude
Plaintiffs from showing that they justifiably relied on Credit Suisse's
alleged misrepresentations." The opinion held that CSFB's disclaimer stating
that it had done no independent investigation of its own "would seem beyond
credulity," particularly to investors who knew that CSFB "had helped devise
the note programs [and] helped draft the offering materials." The Court noted
that "it would defeat the securities laws if parties could escape liability
for their own deliberate misrepresentations by including boilerplate
disclaimers into offering materials."
Among the investor plaintiffs were major banks, mutual funds, and
insurance companies, along with the State of Arizona and a number of Arizona
government entities. Kathy Patrick of Gibbs & Bruns, lead counsel for
plaintiffs who held over $1.6 billion in NCFE notes, said that her clients
feel vindicated: "Our clients are very pleased that the Court has rejected
Credit Suisse's efforts to avoid responsibility for its actions by relying on
technicalities. The securities laws require sellers of securities to tell the
truth. We look forward to presenting these claims to a jury."
Columbus Ohio-based NCFE, which securitized healthcare receivables,
collapsed in late 2002. Several of NCFE's officers and employees have pled
guilty to fraud or other federal crimes, while the company's president, Lance
Poulsen, and other top officers have been indicted and await trial in Ohio.
The complaints and criminal indictments allege that NCFE raised billions of
dollars that were supposed to be invested only by purchase of valid healthcare
receivables, but substantial amounts of the money were diverted to other uses.
The company's collapse is one of the largest defaults of "AAA" rated debts
securities in decades. Credit Suisse marketed $3 billion of NCFE's
asset-backed securities.
About Gibbs & Bruns L.L.P.
Gibbs & Bruns L.L.P., founded in 1983, is a leading boutique law firm
engaging exclusively in high-stakes commercial litigation. The firm is
renowned for its representation of both plaintiffs and defendants in complex
matters, including securities, professional malpractice, intellectual
property, energy, trade secret, construction, antitrust, lender liability,
contract, and partnership disputes. The firm is routinely recognized as a top
commercial litigation firm in the U.S. For more information, please visit
http://www.gibbs-bruns.com.
SOURCE Gibbs & Bruns L.L.P.
Kathy D. Patrick of Gibbs & Bruns L.L.P., office, +1-713-751-5253, cell,
+1-713-972-4695, kpatrick@gibbs-bruns.com
