OppenheimerFunds Wins Dismissal of $700 million Claim, reports Susman Godfrey
NEW YORK, April 10, 2013 /PRNewswire/ -- OppenheimerFunds was granted summary judgment on a claim for over $700 million brought by a group of banks. The banks—through subsidiaries—invested over $1 billion in a special-purpose vehicle called AAArdvark Funding Limited IV, which was managed by OppenheimerFunds. The banks claimed that OppenheimerFunds committed fraud and breached various provisions of the relevant contracts in order to induce the banks to continue funding during 2007. The banks sought over $700 million from OppenheimerFunds.
Today, New York State Supreme Court Justice Charles E. Ramos granted OppenheimerFunds' motion for summary judgment and dismissed the claims. The ruling is particularly significant because similar suits, making almost identical allegations, have been filed over two other "AAArdvark" vehicles. In total, the damages sought in these cases potentially exceeded $2 billion.
OppenheimerFunds has contended that any alleged problems with the management of the AAArdvark vehicles did not result in any losses for the banks. The AAArdvark vehicles were designed to allow large commercial banks to arbitrage the difference between commercial paper interest rates, which prior to the financial crisis commercial banks could issue for very low rates, and the interest rates paid on longer term AAA-rated bonds. During late 2007, the commercial-paper market suffered a historic dislocation that altered the financial calculus of the deals. OppenheimerFunds has contended that the banks were using alleged technicalities to get out of deals.
OppenheimerFunds is represented by Stephen D. Susman, Harry Susman, Kathryn Hoek, Joseph Portera, Seth Ard, and Jacob Buchdahl of Susman Godfrey.
The banks involved in the AAArdvark IV transaction are Bank of Nova Scotia, HSBC, and National Australia Bank. The banks are represented by Kasowitz, Benson, Torres & Friedman, LLP and Phillips Lytle LLP.
SOURCE Susman Godfrey
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