These factual allegations, which are more fully detailed in the 81-page complaint, provide sufficient details to inform Citigroup of the alleged fraudulent conduct. Citigroup participated in this deception in order to earn lucrative fees for arranging the transaction.' Because Morgan Stanley had been unable to sell many of its RMBS directly and needed to offload its exposure to them, it colluded with Citigroup to create the Jackson CDOs-which were purportedly arranged by Citigroup, but were actually constructed by Morgan Stanley to permit it to buy protection on the very toxic securities it had created and could not sell. Also like Citigroup, Morgan Stanley learned through non-public due diligence reports that a substantial percentage of these loans did not conform to applicable underwriting guidelines, thus rendering the RMBS it was selling much riskier than their credit ratings suggested. ('Morgan Stanley') purchased subprime loans that it packaged into RMBS for sale to unsuspecting investors. Like Citigroup, Morgan Stanley & Co., Inc. 'Lacerta was not the only CDO that Citigroup arranged at the behest of a short investor. None of this was disclosed to Plaintiffs. In short, Citigroup helped Magnetar stack the deck in its favor so that Magnetar would win no matter what cards were dealt. In 2012, plaintiffs commenced this action accusing Citigroup of defrauding plaintiffs into purchasing 'fraudulent caused the Lacerta CDO to, in effect, sell CDS contracts to Magnetar at below-market prices.

(CGMI) and Citigroup Global Markets Limited (CGML), were the underwriters and direct sellers of the Lacerta, Jackson, Cookson, Pinnacle Peak, ABSynth and Plettenberg Bay CDOs purchased by plaintiffs in 20. In this case, Citigroup's affiliates, Citigroup Global Markets Inc. At the time of these transactions, Citigroup and its affiliates were reportedly major players at multiple levels of the subprime capital market Citigroup acted as a mortgage originator, an underwriter of subprime RMBS, and an arranger of structured finance products, like CDOs, that invested in RMBS. Between September 2006 and June 2007, through their investment advisors, nonparties IKB Deutsche Industries Bank AG and IKB Credit Assets Management GmbH, plaintiffs invested in nearly $1 billion of CDOs backed by RMBS: Lacerta, Jackson, Cookson, Pinnacle Peak, ABSynth and Plettenberg Bay. 32 Ltd.) are companies organized under the laws of Jersey, Channel Islands. Plaintiffs Loreley Financing Ltd.(s) (Jersey No.

But there is a limit to the efficacy of those disclaimers, as this case aptly demonstrates. Usually, comprehensive disclaimers contained in carefully drafted documents executed by sophisticated commercial parties are sufficient to insulate sellers from tort liability ( see e.g. The main issue here is whether the seller's disclaimers and disclosures in the offering documents preclude the purchasers from establishing the reasonable reliance element of the fraud claim.

This appeal stems from an action alleging fraud with respect to an investment bank's sale of collateralized debt obligations (CDOs) which depended upon the positive performance of residential mortgage-backed securities (RMBS).

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