MILWAUKEE, Feb. 9, 2010 (GLOBE NEWSWIRE) -- The law firm of Shepherd, Smith, Edwards & Kantas, LLP (www.sseklaw.com) announces that the firm and its Milwaukee, Wisconsin based co-counsel, Kravit, Hovel & Krawczyk, SC, defeated Motions to Dismiss filed by the Royal Bank of Canada and Stifel Nicolaus & Co., Inc. A Milwaukee judge has ruled that claims filed by five Wisconsin school districts and their Other Post Employment Benefits ("OPEB") Trusts can go forward against the investment banks that district officials say misled them to invest two hundred million dollars into risky investments using mostly borrowed money.
The ruling delivered by Milwaukee County Circuit Court Judge William W. Brash III denied all motions to dismiss claims in the lawsuit filed against Stifel, Nicolaus & Co. Inc. (NYSE:SF), Royal Bank of Canada Capital Markets and RBC Europe, subsidiaries of Royal Bank of Canada (NYSE:RY). The judge also rejected an argument by RBC Holdings that claims against it should be dismissed because it did not have "control" over the other RBC entities.
The Kenosha, Kimberly, Waukesha, West Allis-West Milwaukee and Whitefish Bay School Districts and those districts' OPEB Trusts sued these banks in September of 2008, asserting legal claims that include violation of state securities law, fraud, misrepresentation and breach of contract among others.
Stifel Nicolaus and Royal Bank of Canada filed motions to dismiss every claim in the lawsuit, arguing, for example, that the districts hadn't provided enough specifics to support their claims of fraud; that they had been warned about the potential risks of the investments and/or that the banks could not be held liable for the losses.
At hearings last November on these motions, an attorney for the Royal Bank of Canada, claimed the lawsuit was just a way to cast blame for potential losses, that what happened was a once-in-a-lifetime economic meltdown no one saw coming. That argument and others advanced by the defendants failed to persuade the Court to dismiss the lawsuit at this stage of the proceedings. Judge Brash denied all of the Defendants' motions and is permitting the lawsuit to go forward on all counts, against all defendants.
"The lawsuit alleges that the Plaintiffs were led to believe that they were investing in a portfolio of AA/AAA bonds that would be used to help fund their OPEB liabilities," said William Shepherd, a former investment banker himself and the managing partner of the lead law firm representing the Plaintiffs. "Instead, what was sold were synthetic collateralized debt obligations ("CDOs") which are in essence 'Credit Default Swaps', the same type of highly complex and risky investment that caused the collapse of Lehman Brothers." Those investments are now virtually worthless.
"We are not surprised that our clients' case survived dismissal, but we are especially satisfied that today's rulings served to defeat every motion filed by these financial firms," said Shepherd. "Today's decision demonstrates that the law recognizes the adequacy and legitimacy of their claims as plead. We are now even more optimistic that our clients will prevail in this suit." Attorney for the Plaintiffs, Robert Kantas added that "this is a wonderful victory for the School Districts, their OPEB Trusts, and the teachers, students and taxpayers of Wisconsin."
If you are a trustee or business or finance manager for a municipality or other governmental entity, or the COO/CFO of a corporate entity and you were advised to purchase CDOs or enter into Credit Default Swaps that you believe were misrepresented or not suitable for you, your organization may be entitled to compensation. Shepherd Smith Edwards & Kantas LLP has a team of attorneys, consultants and staff with more than 100 years of combined experience in the securities industry and in securities law. Since 1990, we have represented thousands of investors nationwide to recover losses. We have represented clients in Federal and state courts, and in arbitration through the Financial Industry Regulatory Authority (FINRA), the New York Stock Exchange Inc. (NYSE), the American Arbitration Association (AAA) and in private arbitration actions. Call today for your free consultation.