Kasowitz Brings Fraud Action Against Deutsche Bank on Behalf of CDO Investor
On October 5, 2011, Kasowitz commenced an action in the Supreme Court of the State of New York on behalf of Loreley Financing, a CDO investor, for fraud, unjust enrichment and fraudulent conveyance, in connection with the sale to Loreley Financing of almost $440 million in collateralized debt obligations backed by residential mortgage-backed securities. Loreley Financing alleges that defendant Deutsche Bank knew the collateral underlying the CDOs to be far riskier and far more prone to default than it had represented to Loreley Financing. The complaint also alleges that Deutsche Bank was using the CDOs as an opportunity to remove troubled assets – that its own head of CDO trading referred to as “pigs” and “crap” – from its own balance sheet at plaintiffs’ expense, while providing opportunities for short-trading on the part of Deutsche Bank and certain preferred clients. Kasowitz partners Marc E. Kasowitz and Sheron Korpus represent Loreley Financing in this matter.