27 August 2008
Abu Dhabi Commercial Bank (ADCB) is suing five US financial institutes for fraud, newswire Bloomberg reported yesterday.Morgan Stanley and Company, Bank of New York Mellon and three securities ratings services are named in the suit, for allegedly rating too highly a structured investment vehicle that collapsed last year during the global credit crisis, Bloomberg said.
ADCB is seeking unspecified money damages and class-action, or group, status on behalf of everyone who invested in the vehicle launched by Cheyne Finance from October 2004 to October last year, according to a complaint filed yesterday in federal court in Manhattan."The financial instruments the plaintiff purchased, which defendants represented had high investment-grade credit ratings, are now worth zero," lawyers for the bank said in the complaint.Cheyne's structured investment vehicle (SIV), premised on short-term borrowing to buy higher-yielding assets, collapsed last year.
Investors have recovered about 55 per cent of the face value of their holdings in an auction of Cheyne's assets.The SIV had owed about $5.7 billion in senior debt, according to its receivers at the accounting firm of Deloitte and Touche.Investors had the choice of cashing in their assets at the price given at the auction or transferring the assets to a new company set up by the Goldman Sachs Group.
Also named as defendants in the lawsuit are two units of the New York-based credit ratings firm Moody's, as well as the Standard and Poor's Ratings Services, a unit of the McGraw Hill Companies.Spokespeople for the banks and credit ratings firms declined to comment.
Abu Dhabi Commercial Bank (ADCB) is suing five US financial institutes for fraud, newswire Bloomberg reported yesterday.Morgan Stanley and Company, Bank of New York Mellon and three securities ratings services are named in the suit, for allegedly rating too highly a structured investment vehicle that collapsed last year during the global credit crisis, Bloomberg said.
ADCB is seeking unspecified money damages and class-action, or group, status on behalf of everyone who invested in the vehicle launched by Cheyne Finance from October 2004 to October last year, according to a complaint filed yesterday in federal court in Manhattan."The financial instruments the plaintiff purchased, which defendants represented had high investment-grade credit ratings, are now worth zero," lawyers for the bank said in the complaint.Cheyne's structured investment vehicle (SIV), premised on short-term borrowing to buy higher-yielding assets, collapsed last year.
Investors have recovered about 55 per cent of the face value of their holdings in an auction of Cheyne's assets.The SIV had owed about $5.7 billion in senior debt, according to its receivers at the accounting firm of Deloitte and Touche.Investors had the choice of cashing in their assets at the price given at the auction or transferring the assets to a new company set up by the Goldman Sachs Group.
Also named as defendants in the lawsuit are two units of the New York-based credit ratings firm Moody's, as well as the Standard and Poor's Ratings Services, a unit of the McGraw Hill Companies.Spokespeople for the banks and credit ratings firms declined to comment.
7Days 2008
