Tag Archives: Magnetar

01 Jun
2012

Defendants Move to Dismiss “Magnetar” Suit Relating to CDO Allegedly Designed to Fail

As we blogged about before, an Italian bank that provided $180 million in credit protection on a CDO called “Pyxis” sued U.S. hedge fund Magnetar and others for allegedly conspiring to secretly place risky assets into Pyxis so that Magnetar could bet against the CDO and profit from its collapse. This evening, two [UPDATE: three] of the defendants moved to dismiss.

The CDO arranger, Credit Agricole, moved to dismiss because (among other reasons) the core allegation was based on speculation from news accounts relating to other deals:

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01 May
2012

German Bank Accuses Barclays of Selling a CDO Designed To Fail

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The complaint, which appeared yesterday on ECF, is here.  We have blogged about this type of fact pattern (sometimes called the “Magnetar Trade”) before.  That the alleged victim is a German bank will come as no surprise to Michael Lewis, who wrote a Vanity Fair article last fall about how, during the financial crisis, Germans “used their own money to enable foreigners to behave insanely.”

No judge has been assigned to the case yet.

12 Apr
2012

Magnetar Sued For “Magnetar Trade”

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An Italian bank that provided $180 million in credit protection on a CDO called “Pyxis” alleges in a complaint filed on April 6 that the U.S. hedge fund Magnetar and others conspired to secretly place risky assets into Pyxis so that Magnetar could bet against the CDO and profit from its collapse.   According to a Pulitzer-winning article by ProPublica in April 2010, this practice was widespread and known in the industry as ”The Magnetar Trade.”

In June 2011, JP Morgan paid $153.6 million to settle SEC allegations that it helped Magnetar with a “Magnetar Trade.” Goldman Sachs paid $550 million in July 2010 to settle similar allegations relating to a different hedge fund.

The case is before Judge Sweet.