US Judge Tosses Class Action Lawsuit Certification Versus Deutsche Bank

US Judge Tosses Class Action Lawsuit Certification Versus Deutsche Bank

By Dominic Rivera

A U.S. District Judge Katherine Forrest refused to certify a proposed class action lawsuit filed in 2011 by shareholders alleging that Deutsche Bank AG misrepresented the risks of mortgage-related investments.

The lawsuit alleged that the bank packaged and sold mortgage-backed securities and collateralized debt obligations that it knew were riskier than what  it told the market.

The alleged misrepresentations enabled Deutsche Bank to allegedly inflate its stock price and maximize its profits. As the bank began announcing losses in 2008, its stock price fell 87 percent to $21.27 in January 2009 from $159.59 in May 2007.

According to the ruling, the named plaintiffs are inadequate as class representatives.  The judge also ruled that Michael Marek, the expert brought by the shareholders for an opinion, was unqualified with a flawed methodology.

The judge said that Marek’s expertise came from acting as an expert in securities class action which was insufficient and that he “had not been specially trained by academics in the field; he has not written articles, taught any courses, or conducted any relevant research.”

“For this court to rely on testimony from someone who lacks real expertise asks this Court to dispense with the need for real qualifications.” Forrest said. The judge also said that Marek’s analysis suffered from “certain significant flaws.”

The ruling may have ended the hope of shareholders to proceed as a group but they can still file individually.

The case is IBEW Local 90 Pension Fund v. Deutsche Bank AG, et al, U.S. District Court, Southern District of New York, No. 11-04209.

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