(Updates with excerpt from complaint in second paragraph.)
Oct. 6 (Bloomberg) -- Deutsche Bank AG, Germany’s biggest bank, was sued by Loreley Financing over $440 million worth of collateralized debt obligations purchased from 2005 to 2007.
The bank is accused of defrauding the plaintiffs into purchasing CDOs that were “destined -- and indeed, designed -- to fail,” Loreley Financing said in a complaint filed yesterday in New York State Supreme Court in Manhattan.
Each of the collateralized debt obligations was “a fraudulent investment vehicle created and exploited by defendants for their own benefit and the benefit of certain preferred Deutsche Bank clients looking to profit from the imminent collapse of the subprime mortgage market,” Loreley Financing said in the complaint.
Loreley Financing is a group of special purpose entities based in Jersey, the largest of the Channel Islands, a dependency of the U.K. with its own legislative assembly and known as a tax haven. The entities were formed for long-term investing in CDOs, pools of assets such as mortgage bonds packaged into new securities, Loreley Financing said in the complaint.
“We believe these claims are unfounded and will vigorously defend against them,” Frankfurt-based Deutsche Bank said in a statement.
The case is Loreley Financing (Jersey) No. 3 Ltd. v. Deutsche Bank Securities Inc., 652737/2011, New York State Supreme Court, New York County (Manhattan).
--Editors: Andrew Dunn, Stephen Farr
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