Scott Douglass & McConnico attorneys Casey Dobson, Asher Griffin, and John Gasink won a motion to dismiss before the New York Supreme Court in New York County regarding a collateralized debt obligation (CDO) note buyer’s purchase of Subordinated Notes from an investment bank. The firm represents the plaintiff, Basis Yield Alpha Fund (Master), which sued Morgan Stanley for common law fraud and fraudulent concealment. The primary issue before the Court involved whether the risk disclosures and reliance disclaimers in the CDO offering documents barred the plaintiff from pursuing its claims against Morgan Stanley. The Court refused to grant the motion to dismiss, finding that the reliance disclaimers and risk disclosures were an insufficient basis for barring the plaintiff’s claims given the allegations concerning Morgan Stanley’s peculiar knowledge of the problems with the CDO and its underlying assets, which were predominantly residential mortgage-backed securities (RMBS). The Court also rejected all of Morgan Stanley’s arguments concerning pre-investment due diligence, actionable misrepresentations, and loss causation. This is one of a number of cases in which the firm has represented domestic and international clients in fraud matters relating to structured finance securities such as CDOs, RMBS, and SIVs (structured investment vehicles). The Court's opinion can be found here.