• U.S Second Circuit Restores Securities Class Action Against Global Asset Manager
  • March 22, 2011 | Authors: Domenic C. Cervoni; Joseph De Simone; John J. Tharp
  • Law Firms: Mayer Brown LLP - New York Office ; Mayer Brown LLP - Chicago Office
  • Plaintiffs brought a putative securities class action on behalf of investors who purchased the common units of the Blackstone Group, LP (Blackstone) at the time of its initial public offering (IPO) on June 21, 2007. Plaintiffs alleged that Blackstone, and certain of its officers, failed to disclose facts relating to Blackstone’s substantial investment in a monoline insurer that insured collateralized debt obligations (CDOs) backed by subprime mortgages to higher-risk borrowers, and residential mortgage backed securities (RMBS) linked to nonprime and subprime mortgages. The district court dismissed the action for failing to allege a material omission. On February 10, 2011, the US Court of Appeals for the Second Circuit reversed, concluding that the plaintiffs had plausibly alleged that material information was omitted from defendants’ IPO registration statement and prospectus in violation of Sections 11 and 12(a)(2) of the Securities Act of 1933. Litwin v. Blackstone Group LP, Case No. 09-4426 (2d. Cir. Feb. 10, 2011)