This week, U.S. District Judge Alvin K. Hellerstein announced that the securities arm of Deutsche Bank AG will have to defend itself against a lawsuit alleging that it lost almost $1.6 million in auction-rate securities.
Xethanol Corp., which filed the securities lawsuit, alleges that Deutsche Bank Securities let the alternative-energy company buy the securities even though it didn’t fulfill the requirements for the transaction to take place as a private investment. Xethanol says it ended up selling its positions in two auction-rate securities at a $1.59 million loss last September. The company claims it acquired the positions for $13.3 million last June.
However, Deutsche Bank Securities says it never interacted directly with Xethanol. A third-party broker bought the securities from Deutsche Bank before selling them to Xethanol. The broker is not named as a defendant in the case.
Hellerstein’s order allows for one claim of selling unregistered securities, which violated securities laws, to move forward against Deutsche Bank Securities. The federal judge, however, dismissed the claims of common law fraud and the claim that the firm’s securities unit issued misleading and false statements related to the sale of auction-rate securities.
Our stockbroker fraud law firm is committed to helping individual and institutional investors recover losses that occur because of the inappropriate actions of investment firms and their employees. Contact Shepherd Smith Edwards & Kantas LTD LLP today, and ask for your free consultation.
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