Seeger Weiss LLP announces that it filed a class action lawsuit today in the United States District Court for The Southern District of New York on behalf of all persons or entities who purchased and continue to hold auction rate securities (also known as auction rate preferred stock, auction market preferred stock, variable rate preferred securities, money market preferred securities, periodic auction rate securities and auction rate bonds) offered for sale by Deutsche Bank AG and Deutsche Bank Securities Inc. (‘Deutsche Bank’ or ‘the Company’ or ‘Defendants’) between March 17, 2003 and February 13, 2008, inclusive (the “Class Period”) The complaint seeks remedies for the class under the Securities Exchange Act of 1934 (the “Exchange Act”).
The Complaint charges Deutsche Bank violated sections 10(b) and 20(a) of the Exchange Act and Rule 10(b)-5, by issuing a series of material misrepresentations to the market during the Class Period. Deutsche Bank is a major broker-dealer in the auction-rate securities market.
According to the complaint, during the class period, the defendants failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) defendants represented to investors that auction rate securities were equivalent to cash or money market funds; were highly liquid, safe investments for short-term investing; and were suitable for any investor with at least $25,000 of available cash and as little as one week in which to invest. (2) Defendants knew, but failed to disclose that these auction rate securities were not cash alternatives, but were instead, complex, long-term financial instruments with 30 year maturity dates, or longer. (3) Defendants knew, but failed to disclose that auction-rate securities were only liquid at the time of sale because defendants were artificially supporting and manipulating the auction market to maintain the appearance of liquidity and stability. (4) Defendants knew, but failed to disclose that auction rate securities would become illiquid as soon as Defendants stopped maintaining the auction market.
On February 13, 2008, 87% of all auctions of auction rate securities failed when defendants and all other major broker-dealers refused to continue to support the auctions. As a result of the withdrawal of support by all of the major broker-dealers, the market for auction rate securities collapsed, leaving the holders of more than $300 billion in auction rate securities with no means of liquidating investments defendants offered and sold as a suitable alternative to money market funds and other short term cash management vehicles.
Seeger Weiss is a New York based law firm that is active in major complex litigations and class actions pending in federal and state courts throughout the United States. Seeger Weiss has taken a leading role in many important actions on behalf of defrauded investors, consumers and others and has recovered millions of dollars for clients and class members.