OppenheimerFunds wins end of $767 mln AAArdvark lawsuit

Thu Apr 11, 2013 10:39am EDT
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* Lenders say misled into funding arbitrage system

* Judge finds no losses were incurred

By Jonathan Stempel

April 11 (Reuters) - OppenheimerFunds Inc has won the dismissal of a $767 million lawsuit by lenders that said it fraudulently induced them to fund an arbitrage system known as AAArdvark, despite knowing of several breaches that excused the funding.

In a decision made public on Wednesday, New York State Supreme Court Justice Charles Ramos said Oppenheimer, a unit of Massachusetts Mutual Life Insurance Co, could not be liable because the lenders had failed to show losses from AAArdvark Funding Limited IV ("AAArdvark IV").

Oppenheimer's law firm said the decision could affect the outcome of two similar lawsuits in the same court over other AAArdvark vehicles, where the requested damages top $2 billion.

The AAArdvark IV lawsuit was brought in 2010 by Bryant Park Funding LLC, Liberty Street Funding LLC and TSL (USA) Inc. Their funding agents included National Australia Bank Ltd, Bank of Nova Scotia and HSBC Holdings Plc.

Aaron Marks, a lawyer for the banks, did not immediately respond on Thursday to requests for a comment.

According to the complaint, the lenders agreed in September 2006 to provide up to $1.3 billion of funding for AAArdvark IV, in exchange for periodic interest payments.   Continued...