A choose rejected a lawsuit by buyers who purchased virtually $1.eight billion worth of debt in what was as soon as the nation’s largest drug-testing firm shortly earlier than it filed for chapter.Trustees for the buyers sued JPMorgan Chase and Co. and the opposite banks that offered them the debt in 2014. The following 12 months, Millennium Well being LLC filed a chapter petition, and the value of the debt plummeted.
Of their lawsuit, the trustees accused the bank of violating federal safety legal guidelines by failing to inform them about Millennium’s issues, together with a Justice Division investigation of allegedly “flagrantly illegal” billing practices.
U.S. District Decide Paul Gardephe in Manhattan granted the banks’ request to dismiss the go well with in 37-page ruling issued Friday.He described the buyers as “highly sophisticated purchasers” who wouldn’t fairly contemplate the loans to be securities “subject to the attendant regulations and protections.”
“Instead, it would have been reasonable for these sophisticated institutional buyers to believe that they were lending money, with all of the risks that may entail,” the choose wrote.Among the many buyers had been roughly 400 mutual funds and hedge funds.The choose granted the trustees’ request to redraft their grievance and refile it.
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