CREDIT SUISSE CANNOT USE “BOILERPLATE DISCLAIMERS” TO AVOID $1.6+ BILLION IN CLAIMS

Court Rejects CSFB’s Motion to Dismiss Claims Arising from Collapse of AAA Rated Asset-Backed Notes issued by NCFE

HOUSTON, December 20, 2007 – In a sweeping decision issued today, the Honorable James Graham of the United States District Court for the Southern District of Ohio denied in virtually every respect motions to dismiss over $1.6 billion in claims filed against Credit Suisse First Boston (CSFB) by investors who formerly held “AAA” rated notes issued by now-defunct National Century Financial Enterprises of Columbus, Ohio (NCFE).  The largest group of investors is represented by Gibbs & Bruns LLP of Houston.

The Court’s ruling is highly significant for purchasers of asset-backed notes, an area of keen recent interest in light of the sub-prime loan crisis.  The Court categorically rejected CSFB’s argument that disclaimers included in the offering memorandum required the dismissal of Plaintiffs’ fraud claims: “the disclaimers in the offering materials … do not preclude Plaintiffs from showing that they justifiably relied on Credit Suisse’s alleged misrepresentations.”  The opinion held that CSFB’s disclaimer stating that it had done no independent investigation of its own “would seem beyond credulity,” particularly to investors who knew that CSFB “had helped devise the note programs [and] helped draft the offering materials.”  The Court noted that “it would defeat the securities laws if parties could escape liability for their own deliberate misrepresentations by including boilerplate disclaimers into offering materials.”

Among the investor plaintiffs were major banks, mutual funds, and insurance companies along with the State of Arizona and a number of Arizona government entities.  Kathy Patrick of Gibbs & Bruns, lead counsel for plaintiffs who held over $1.6 billion in NCFE notes, said that her clients feel vindicated:  “Our clients are very pleased that the Court has rejected Credit Suisse’s efforts to avoid responsibility for its actions by relying on technicalities.  The securities laws require sellers of securities to tell the truth.  We look forward to presenting these claims to a jury.”

Columbus Ohio-based NCFE, which securitized healthcare receivables, collapsed in late 2002.  Several of NCFE’s officers and employees have pleaded guilty to fraud or other federal crimes, while the company’s president, Lance Poulsen, and other top officers have been indicted and await trial in Ohio.  The complaints and criminal indictments allege that NCFE raised billions of dollars that were supposed to be invested only by purchase of valid healthcare receivables, but substantial amounts of the money were diverted to other uses.  The company’s collapse is one of the largest defaults of “AAA” rated debts securities in decades.  CSFB marketed $3 billion of NCFE’s asset-backed securities.

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Gibbs & Bruns LLP, founded in 1983, is a leading boutique law firm engaging exclusively in high-stakes commercial litigation.  The firm is renowned for its representation of both plaintiffs and defendants in complex matters, including securities, professional malpractice, intellectual property, energy, trade secret, construction, antitrust, lender liability, contract, and partnership disputes.  The firm is routinely recognized as a top commercial litigation firm in the U.S.  For more information, please visit www.gibbsbruns.com.

For more information, please contact:
Tanya K. Urban
Director of Client Relations
Gibbs & Bruns LLP
713.758.6055
[email protected]