deutsche bank sued
17 June 2008
A US bank part-owned by billionaire Warren Buffett is suing Deutsche Bank over risky financial investments of the kind that caused the sub-prime crisis, the Wall Street Journal reported. A Deutsche Bank spokes person contacted by the newspaper declined to comment.
M&T Bank is suing Deutsche over a US$82-million investment in mortgage securities known as collateralised debt obligations (CDOs) that went sour, the paper said. M&T, in which Buffett's Berkshire Hathaway company owns six percent, accuses Germany's biggest bank of fraud, it said. Money manager HBK Investments is also named in the suit.
It alleges that Deutsche Bank "withheld from the ratings agencies material information about the quality and default problems" that Deutsche was experiencing with CDOs that the bank had manufactured from risky consumer loans.