Reed Smith Client Alerts

Key takeaways

  • In all cases of misrepresentation, there must be a link between the representation and the inducement, which is also referred to as “awareness” or "conscious thought"
  • There is no single universal test that can be applied to establish “awareness”, however the requirement always exists and is distinct from 'assumption'
  • Awareness cannot be established solely by reference to the "counterfactual of truth"

Loreley Financing (Jersey) No 30 Ltd v. Credit Suisse Securities (Europe) Ltd and others [2023] EWHC 2759 (Comm)

Background

Loreley Financing (Jersey) No 30 Limited (L30) paid US$100 million to the defendant, Credit Suisse (CS) for AAA rated notes which formed the basis of a synthetic collateralised debt obligation (CDO) transaction in late 2007.

Shortly thereafter, the financial crisis hit and L30 lost its money. L30 then brought a claim against CS claiming that, in selling the transaction, CS had, either deliberately or negligently, made representations about the businesses packaged within the CDO transaction which were false; and that if they had not been made, L30 would not have entered into the transaction. In total, L30 alleged that over 30 misrepresentations were made.