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ARTICLE · 28 MARCH 2011

US Second Circuit Restores Securities Class Action Against Global Asset Manager

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Plaintiffs brought a putative securities class action on behalf of investors who purchased the common units of the Blackstone Group, LP (Blackstone) at the time of its initial public offering (IPO) on June 21, 2007.

United StatesLitigation, Mediation & Arbitration
Joseph De Simone
Joseph De Simone
Domenic Cervoni
Domenic Cervoni
John Tharp, Jr.
John Tharp, Jr.
S. Christopher Provenzano
S. Christopher Provenzano
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Originally published March 18, 2011

Keywords: securities, class action, residential mortgage backed securities, RMBS, assets under management, AUM

Plaintiffs brought a putative securities class action on behalf of investors who purchased the common units of the Blackstone Group, LP (Blackstone) at the time of its initial public offering (IPO) on June 21, 2007. Plaintiffs alleged that Blackstone, and certain of its officers, failed to disclose facts relating to Blackstone's substantial investment in a monoline insurer that insured collateralized debt obligations (CDOs) backed by subprime mortgages to higher-risk borrowers, and residential mortgage backed securities (RMBS) linked to nonprime and subprime mortgages. The district court dismissed the action for failing to allege a material omission. On February 10, 2011, the US Court of Appeals for the Second Circuit reversed, concluding that the plaintiffs had plausibly alleged that material information was omitted

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