Institutional Investor in Auction Rate Securities Allowed to Proceed with $200 Million Claim Against Deutsche Bank


A federal judge has ruled that an institutional investor that lost over $200 million in auction rate securities sold by brokerage firm Deutsche Bank Securities can also bring a claim against that firm’s parent company, Deutsche Bank AG, according to a recent BNA article entitled “Deutsch Bank Loses Bid to Dismiss Control Person Claims by ARS Investor.”

Akamai Technologies Inc. (AKAM) may proceed against Deutsche Bank AG as a control person of Deutsche Bank Securities for over $200 million in losses on auction rate securities sold by Deutsche Bank Securities.

Judge Joseph L. Tauro ruled that Akamai established the necessary predicate for a control person claim by alleging a material misrepresentation or omission in violation of the relevant securities laws by Deutsche Bank Securities, and Deutsche Bank’s control over Deutsche Bank Securities.

Akamai allegedly instructed Deutsche Bank to invest in safe and liquid securities readily accessible to fund their operations. Deutsche Bank assured Akamai that ARS were highly liquid investments that met their requirements and that no auction for these securities had ever failed.

However, Deutsche Bank allegedly knew at the time that ARS were risky, demand for ARS was diminishing, there was a significant risks that ARS auctions would fail and investors’ money would be frozen, and Deutsche Bank and other financial institutions were surreptitiously propping up the ARS market.

Deutsche Bank Securities also allegedly reduced its own exposure to ARS while continuing to tout ARS to Akamai as safe and liquid.

In February 2008, the market for the ARS held by Akamai collapsed.

The case is pending in the U.S. District Court for the District of Massachusetts, styled as Akamai Technologies Inc. v. Deutsche Bank AG, D.C. Mass., No. 10-10254-JLT.

Page Perry has over 125 years collective experience representing institutional and individual investors in auction rate securities litigation and arbitration all over the country. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 40 occasions.