Dodona I, LLC, invested $ 4 million in two securities offerings from Goldman, Sachs & Co. The investments were in collat-eralized debt obligations ( CDOs). Their value depended on residential mortgage- backed securities ( RMBS), whose value in turn depended on the performance of subprime residential mortgages. Before marketing the CDOs, Goldman had noticed several “ red flags” relating to investments in the subprime market, in which it had invested heavily. To limit its risk, Goldman began betting against subprime mortgages, RMBS, and CDOs, including the CDOs it had sold to Dodona. In an internal e- mail, one Goldman official commented that the company had managed to “ make some lemonade from some big old lemons.” Nevertheless, Goldman’s marketing materials provided only boilerplate statements about the risks of investing in the securities. The CDOs were later down-graded to junk status, and Dodona suffered a major loss while Goldman profited. Assuming that Goldman did not affirmatively misrepresent any facts about the CDOs, can Dodona still recover under SEC Rule 10b- 5? If so, how?
Answer to relevant QuestionsKarel Svoboda, a credit officer for Rogue Bank, evaluated and approved his employer’s extensions of credit to clients. These responsibilities gave Svoboda access to nonpublic information about the clients’ earnings, ...The Investment Company Act prohibits a mutual fund from engaging in certain transactions when there may be a conflict of interest between the manager of the fund and its shareholders. Under rules issued by the Securities and ...Bank of America hired Atlantic Resource Management, LLC, to collect a debt from Michael E. Engler. Atlantic called Engler’s employer and asked his supervisor about the company’s policy concerning the execution of ...What If the Facts Were Different?Suppose that DuPont had 45 percent of the market and Kolon and numerous other competitors had the remaining 55 percent. Would the appellate court have ruled the same way? Why or why not? Nora, an accountant, prepares a financial statement as part of a registration statement that Omega, Inc., files with the Securities and Exchange Commission before making a public offering of securities. The statement ...
Post your question