United States District Court, E.D. Pennsylvania
FULTON BANK, NATIONAL ASSOCIATION, SUCCESSOR TO FULTON FINANCIAL ADVISORS, NATIONAL ASSOCIATION, Plaintiff,
NATCITY INVESTMENTS, INC. Defendant.
case arises out of the collapse of the market for Auction
Rate Securities (“ARS”). Plaintiff, Fulton Bank,
National Association, Successor to Fulton Financial Advisors,
National Association (“Fulton”), originally
brought this action in the Court of Common Pleas of Lancaster
County against Defendant NatCity Investments, Inc.
(“NatCity”) alleging violations of Pennsylvania
Securities Act (“PSA”) Sections 1-402 (Count I),
1-401 (Count II), and 1-403 (Count III), as well as claims
for equitable rescission (Count IV), negligent
misrepresentation (Count V), negligence (Count VI), breach of
fiduciary duty (Count VII), common law fraud (Count VIII),
and aiding and abetting common law fraud (Count IX).
Jurisdiction is based on diversity of citizenship. In a prior
decision, I granted NatCity's Motion to dismiss the three
PSA claims, the negligent misrepresentation claim, the claim
for common law fraud, and the claim for aiding and abetting
fraud. See ECF No. 27 (“the MTD
Opinion”). I denied the Motion to the extent that it
sought dismissal of the common law claims for negligence and
breach of fiduciary duty. Id. Thereafter, I granted
Fulton's uncontested Motion for leave to file an Amended
Complaint (“AC”). ECF No. 38. In the AC Fulton
reasserted its claims for negligence (“First Cause of
Action”) and breach of fiduciary duty (“Second
Cause of Action”) and alleged a new claim for violation
of PSA Section 1-501(a) (“Third Cause of
Action”). ECF No. 41.
filed a Motion for summary judgment on all of Fulton's
remaining claims. ECF No. 63. Fulton requests summary
judgment on the Section 1-501(a) claim. ECF 64. For the
following reasons, I grant summary judgment to NatCity on the
remaining PSA claim and deny Fulton's cross Motion on
that claim. I also deny NatCity's Motion in all other
judgment is appropriate where, viewing the record in the
light most favorable to the nonmoving party, there is no
genuine issue of material fact and the moving party is
entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a);
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247
(1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986) (“[S]ummary judgment is proper “if the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any,
show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a
matter of law.”). The Court must not “weigh the
evidence and determine the truth of the matter but . . .
determine whether there is a genuine issue for trial.”
Anderson, 477 U.S. at 249. The moving party has the
burden of establishing the basis of its motion and
identifying the portions of the record that demonstrate the
absence of a genuine issue of material fact. After the moving
party has made this initial showing, then the nonmoving party
must “make a showing sufficient to establish the
existence of [every] element essential to that party's
case, and on which that party will bear the burden of proof
at trial.” Celotex, 477 U.S. at 322;
Goldenstein v. Repossessors Inc., 815 F.3d 142, 146
(3d Cir. 2016) (citing Blunt v. Lower Merion Sch.
Dist., 767 F.3d 247, 265 (3d Cir. 2014)) (“[W]here
a non-moving party fails sufficiently to establish the
existence of an essential element of its case on which it
bears the burden of proof at trial, there is not a genuine
dispute with respect to a material fact and thus the moving
party is entitled to judgment as a matter of law.”).
SUMMARY JUDGMENT RECORD
and Fulton have filed statements of undisputed facts and
responses thereto. ECF Nos. 63-3, 64-6, 69-1, 70-1. Having
reviewed those submissions, I find the following facts are
undisputed. In June 2004, Fulton opened a securities
account with NatCity. February 20, 2015 Declaration of Robert
J. Lane, Jr. (“Lane Decl.”) Ex. A, April 11, 2014
Deposition of Jerome Goodrick (“Goodrick Dep.”)
at 25-26; Ex. D, May 30, 2014 Deposition of Jeff Suhanic
(“Suhanic Dep.”) at 41-42; Ex. E, June 4, 2014
Deposition of Keith McBride (“McBride Dep.”) at
times relevant to this litigation, Fulton marketed itself to
its clients as a financial institution offering investment
management services and specializing in handling fixed-income
portfolios. Def. Ex. A (11/21/2007 email) at FULPNC186472. In
2007, Fulton managed and administered $5.3 billion in assets.
Id. David M. Campbell, Fulton's Rule 30(b)(6)
designee, testified that Fulton may be fairly
characterized as a sophisticated investor since “we
have educated and experienced professionals, yes.”
Campbell Dep. at 189:1-19; see also Def. Ex. A at
FULPNC186463 (stating Fulton “provides managed
investment” services “tailored to the specific
needs of the client”).
offered an investment product known as a Cash Reserve
Investment Management (“CRIM”) account to
for-profit and non- profit institutions, municipalities, and
individuals. Def. Ex. D (Jan. 28, 2011 Deposition of Thomas
Downing in Fulton v. PNC Capital Markets, LLC No.
09-10838 (CCP Lanc. Cty) (“Downing Dep.”) at
31:2-6; Campbell Dep. at 53:3-12; Def. Ex. A at
FULPNC186463. Thomas Downing worked for Fulton Financial
Advisors or its predecessors from May 1999 until November
2008 and served as a portfolio manager in the fixed income or
money market area responsible for managing Fulton's CRIM
accounts. Among the investments he used for the CRIM accounts
were Auction Rate Securities. Downing Dep. at 8:24-9:1,
10:3-11:16, 12:7-12, 32:5-17.
designed the CRIM account as a liquidity-management product
through which its customers could invest excess cash that was
not needed for daily operations. Def. Ex. F at FULPNC185922;
Def. Ex. A at FULPNC186463. Fulton had discretion over the
investment of its CRIM customers' funds and had a
fiduciary relationship with its CRIM customers. Campbell Dep.
at 24:8-11, 72:4-75:1, 100:1-16; Downing Dep. at
122:16-123:19; Def. Ex. G (June 16, 2011 Deposition of Gerald
Larish (“Larish Dep.”) in
PNC) at 5:4-8. Fulton's CRIM customers did not
have day-to-day input into the investments that Fulton made
on their behalf. Campbell Dep. at 72:4-75:1, 100:1-16;
Downing Dep. at 122:16-123:19. Although Fulton may have
communicated with its CRIM customers from time to time, it
did not have to obtain day to day permission to invest those
customers' cash. Campbell Dep. at 72:4- 75:1, 100:1-16;
Downing Dep. at 122:16-123:19.
was “contracted to act as the investment manager, and
as such, [managed CRIM accounts] based on those guidelines
that are provided to the client.” Campbell Dep. at
72:4-12. CRIM accounts were not pooled investments. Downing
Dep. at 31:13- 20; Campbell Dep. at 35:11-13. Each CRIM
account was unique to each CRIM customer. Campbell Dep. at
35:7-10; Downing Dep. at 31:13-20. Fulton constructed CRIM
accounts that were specific to the CRIM customer's
investment objectives, risk tolerances, and liquidity needs.
Campbell Dep. at 24:15-25:7, 35:14-36:9, 51:8-52:14;
71:15-72:3; Downing Dep. at 31:2-32:4; Def. Ex. A at
FULPNC186463-186464. To do so, Fulton performed a customer by
customer needs analysis when constructing CRIM accounts.
Campbell Dep. at 24:15-25, 52:11-14.
had a responsibility to make appropriate and suitable
investments on behalf of its CRIM customers, given the
parameters and the investment objectives of the overall
portfolio. Campbell Dep. at 55:19-25, 56:17-20; Downing Dep.
at 90:9-91:9; Def. Ex. H (Fulton's Responses to PNC's
First Requests for Admissions (“Fulton's
PNC RFA Responses”)) at #15. Campbell
testified that Fulton had an obligation to “have a
general understanding” of how the investments into
which it placed its CRIM customers' money
“worked.” Campbell Dep. at 59:17-60:2. This
obligation included keeping up with market news in relation
to the investments into which it placed its CRIM
customers' money. Campbell Dep. at 58:14-59:7;
66:18-67:7; Def. Ex. A at FULPNC186471.
executives followed financial news concerning ARS by
monitoring news media and conversations with the brokerage
community and would hold weekly management committee meetings
to discuss market developments, particularly when ARS
auctions began to fail in the Summer of 2008. Downing Dep. at
65:16-67:11; Def. Ex. I at FULPNC186556; Def. Ex. L at
FULPNC186398-186399; Def. Ex. M at FULPNC185787-185788; Def.
Ex. N at NATCITY- FULTON-377940. At all times relevant to
this litigation, Fulton had access to the Bloomberg financial
news/data service but did not subscribe to it entire package.
Campbell Dep. at 115:23-117:4. That service provides access
to market news, information on particular issues including
municipal bonds, and prospectuses/official statements. Larish
Dep. at 28:12- 30:18. In addition to Bloomberg, Fulton had
access to other financial news sources, including the Wall
Street Journal, Barron's, and the American Banker.
Downing Dep. at 65:16-66:2; Larish Dep. at 25:5-26:3,
58:6-17; Def. Ex O (June 16, 2011 Deposition of Bevan
Kinney (“Kinney Dep.”) in
PNC) at 18:16-20, 20:23-21:16, 23:15-24:24; Campbell
Dep. at 152:24-153:9.
assembled a team of portfolio managers, who were designated
as sector analysts, and assigned each portfolio manager a
sector of the financial markets for which he or she was
expected to keep abreast of news and developments. Larish
Dep. at 11:20-12:7; Kinney Dep. at 18:13-21. The sector
analysts met weekly to, among other things, discuss market
news and to select securities for Fulton's internal
funds, like the CRIM accounts. Larish Dep. at 11:20-12:7;
Kinney Dep. at 18:13-20:13; Downing Dep. at 66:3-21.
began investing its customers in ARS sometime prior to 2004
and as early as 2002. Fulton's RFA Responses at #45;
Campbell Dep. at 187:16-23; Kinney Dep. at 17:4-9. Fulton was
acting as a fiduciary when it invested in ARS on behalf of
its CRIM customers. Fulton's RFA Responses at #14. Fulton
never provided its employees with any formal training on ARS.
Campbell Dep. at 90:22-91:15. Downing testified that his
understanding of how ARS and the ARS market functioned was
based primarily on discussions with the brokerage community.
Downing Dep. at 73:14-22. Downing testified that neither PNC
nor NatCity recommended that Fulton begin acquiring ARS as
opposed to alternative financial products. Downing Dep. at
50:23-51:6. Rather, the options were presented to Fulton with
“things to consider” about each. Id.
According to Downing, liquidity had never been a concern with
ARS because there “had never been a hiccup, so to
speak, in liquidity. . . . The concern was more credit
rating, the credit worthiness of the underlying
also studied the particular nuances of the credit rating of
ARS. It focused on the type of security, that it was normally
backed by student loans, and determined it had sufficient
credit worthiness to introduce into client portfolios.
Downing Dep. at 43:18-25. It conducted its own check of
background information on Bloomberg and did preliminary
reading about particular securities. Downing Dep. at
43:15-44:10. Fulton was chiefly interested in purchasing
securities that maintained high credit ratings, and thus,
focused upon any credit risks associated with ARS. Downing
Dep. at 43:15-25, 51:22-52:3. Fulton marketed ARS to its CRIM
customers as offering daily liquidity through, among other
things, “cross trades” or “crossing
transactions” between its clients' CRIM accounts,
i.e., if one client wanted to sell a position and another
wanted to buy a similar position, Fulton would execute the
trade within the organization to eliminate commissions and
provide the necessary liquidity or investment opportunity for
both clients. Campbell Dep. at 149:13-150:8, 158:14-159:15.
first opened an institutional investment account at NatCity
in 2004. Def. Ex. X; AC ¶ 12. Unlike Fulton's
relationship with its CRIM customers, NatCity needed
Fulton's approval in order to buy a security on
Fulton's behalf. Campbell Dep. at 72:4-75:1; Downing Dep.
at 41:24-42:12. Campbell, Fulton's Chief Administrative
Officer and later President, testified that, to his
knowledge, Fulton obtained ARS on the secondary market; i.e.,
it was not buying new public offerings of ARS. Campbell Dep.
at 55:25-56:3, 61:14-15.
kept the identities of its customers and those customers'
risk tolerances and investment objectives confidential.
Campbell Dep. at 69:24-70:21, 131:25-132:5. When purchasing
ARS through NatCity for discretionary investment in its
customers' CRIM accounts, Fulton would advise NatCity
that Fulton had a particular amount of money that needed to
be invested and would specify the investment parameters that
it was seeking. See Campbell Dep. at 133:11-134:3;
Downing Dep. at 54:1-10; Kinney Dep. at 37:19- 38:14; Def.
Ex. Y at NATCITY-FULTON-271622; Def. Ex. Z at
NATCITY-FULTON-294109; Def. Ex. AA at NATCITY-FULTON-070513.
NatCity asserts that it would relay investment options that
satisfied those investment parameters to Fulton. Campbell
Dep. at 134:5-10 (“Q. And then National City would -
would go out and look to see what's available and come
back to - to Fulton with options; is that right? A. I believe
that's a fair characterization.”); Downing Dep. at
54:11-15 (“Q. So once Ms. Kinney would convey the
parameters of what you were looking for, would PNC come back
to you with some options that fit your parameters? A.
disputes that NatCity simply relayed “investment
options.” Fulton asserts that NatCity made
recommendations, as that term is defined by FINRA and the
MSRB, to Fulton that NatCity believed were suitable based on
Fulton's investment objectives, risk tolerances and the
parameters conveyed to NatCity. It adds that it never
requested a specific security. See Pl.'s Resp.
to Rule 56.1 Statement (ECF No. 70-1) at ¶ 42 (citing
Goodrick Dep. at 37; Lane Decl. Ex. C, May 23, 2014 Dep. of
Antonio DiPietro (“DiPietro Dep.”) at 22-23, 87,
98; and March 15, 2015 Decl. of Elin Cherry (“Cherry
Decl.”), ECF 70-29, at ¶¶ 5-6.) I note that,
in the citation to the DiPietro Deposition, he testifies as
to the manner in which Fulton would typically place an ARS
order for one of its customers:
So it started with a phone call from Fulton. I have money to
spend. I would like X, Y, Z as far as parameters. She would
give me parameters, insured, tax free, taxable, whatever the
case may be. I then relay that to my trader and say this is
what Fulton's looking for. The trader would go on the
street, look for something that matches the parameters, come
back to me and say here's what's out there, here are
the levels. I then convey those levels to Fulton. They say
yes or no. If they say yes, I come back to my trader and say
okay, they want to buy this.
(DiPietro Dep. at 22.) Goodrick testified:
Q. . . . did you also talk to Fulton about the particular
characteristics and benefits of the auction rate security you
were bringing to its attention?
A. Yes, I would have.
Q. And it's also fair to say that you would also bring a
security to Fulton's attention if you thought it would
meet its need and be appropriate for its consideration,
A. That's correct.
Q. And did you communicate to Fulton in those circumstances
that the auction rate security you were presenting was in
your opinion appropriate for its purchase?
A. Would I tell them?
A. I would think I would, yes.
Goodrick Dep. at 37.
expert, Elin Cherry declares that, pursuant to NASD Rule
2310, which was in effect during 2005 to 2008 and is now
known as FINRA Rule 2111, a broker is considered to have
“recommended” a security when the broker
“brings a specific security to the attention of the
customer through any means, including but not limited to,
direct telephone communication, the delivery of promotional
material through the mail, or the transmission of electronic
messages.” Cherry Decl. ¶ 5 (quoting FINRA Rule
2111). She opines that whether a recommendation has been made
is an objective inquiry. Id. She opines further
that, based on her review of the record, NatCity made
recommendations to Fulton to purchase ARS, including student
loan backed ARS (“SLARS”), since both Goodrick
and DiPietro testified that (1) they selected the ARS issues
they provided to Fulton because they thought they were
suitable and appropriate, (2) they regularly sent Fulton a
list of specific securities they recommended; (3) Fulton
never asked for a specific issue; and (4) DiPietro conceded
that FINRA would characterize every trade he did for Fulton
as “solicited” and, therefore, every trade was
recommended. Cherry Decl. ¶ 6 (citing DiPietro Dep. at
agreed that the options that NatCity provided to Fulton were
within the parameters Fulton had provided. Campbell Dep. at
135:2-7. While NatCity asserts that “Fulton then would
choose among the options presented and request a specific
security at a specific amount, ” Fulton denies this
assertion. Campbell testified that he viewed the options
NatCity presented to be recommendations. Campbell Dep. at
134:11-14; but see Downing Dep. at 54:16-18
(agreeing that Fulton “would pick something from what
they were providing to you”).
testified that he did not believe that PNC or any of his
contacts there concealed or failed to inform him as a
representative of Fulton of anything material about the ARS
that he bought or sold through PNC. Downing Dep. at
165:15-21. While NatCity adds that “he did not identify
any way in which his dealings with NatCity in that regard
differed from his dealings with PNC, ” Fulton objects
that the testimony relates solely to PNC and is irrelevant to
its relationship with NatCity.
knew that it would not be provided with prospectuses/official
statements for the ARS that it purchased through NatCity on
the secondary market. Fulton's RFA Responses at #'s
35, 53. Fulton could obtain prospectuses/official statements
for the ARS that it purchased through NatCity from Bloomberg
and other sources. Larish Dep. at 28:12-30:18.
alleged in a November 18, 2009 letter to FINRA that it
acquired SLARS from NatCity issued by (1) the Higher
Education Loan Authority of the State of Missouri, CUSIP
606072JF4, (2) the Illinois Student Assistance Commission,
CUSIP 452281HQ4, (3) the Connecticut Student Loan Foundation,
CUSIP 207784AG4, (4) the State Board of Regents of the State
of Utah CUSIP 917546FL2, and (5) the Kentucky Higher
Education Student Loan Corp., CUSIP 41930NAD1, among others.
Def. Ex. CC at NATCITY- FULTON-389836-389842. The official
statements for these SLARS can be obtained from Bloomberg.
Def. Ex. DD (Decl. of Joseph P. Pohl III in Support of Def.
Mot. for Summ. Judg. (“Pohl Decl.”) at ¶ 9).
official statements contain extensive detailed disclosures
about the ARS, including disclosures about auction
procedures, interest rates on ARS, and risks associated with
owning ARS. Pohl Decl., Exs. 1, 2-6. For example, the
official statement governing CUSIP 606072JF4 issued by the
Higher Education Loan Authority of The State of Missouri
discloses that the “initial Broker Dealer” (in
this case UBS Securities LLC) is permitted, but not
obligated, to submit orders in Auctions and may
“routinely” do so in order to prevent “an
auction failure event.” Pohl Decl., Exs. 1, 2 at pp.
13-14. The official statement governing CUSIP 606072JF4
further contains the following disclosure under the heading
“Existing Holder's Ability to Resell Auction Rate
Securities May Be Limited”
Existing Holders will be able to sell the ARCs in an Auction
only if there are Bidders willing to purchase all the ARCs
offered for sale in the Auction. . . . Therefore,
“auction failure events” are possible, especially
if the security for the 2006 Bonds were to deteriorate, if a
market disruption were to occur or if, for any reason, the
Broker-Dealer were unable or unwilling to bid.
. . .
The ability to resell the ARCs will depend on various factors
affecting the market for the ARCs. . . . Demand for the ARCs
may change without warning, and declines in demand may be
short-lived or continue for longer periods.
Pohl Decl. Exs. 1, 2 at pp. 15-16.
official statement governing CUSIP 606072JF4 also explicitly
describes the interest rate to be paid in the event of a
failed auction. Pohl Decl. Exs. 1, 2. The Auction Procedures
attached as Ex. II to the official statement state at p. II-9
that “if Sufficient Clearing Bids have not been made .
. . the Auction Rate for the next succeeding Interest Period
shall be the Maximum Rate.” Id. The definition
of “Maximum Rate” is set forth in Appendix II (at
p. II - 3-4) and in the text of the official statement (at
iii, 9). Id. This definition states that, under
certain circumstances, the Maximum Rate may be limited to the
Net Loan Rate, which is based on the interest rate paid on
the student loans that fund interest payments on the ARS.
practice, Fulton did not review prospectuses/official
statements in relation to ARS in which it invested its CRIM
customers' money. Campbell Dep. at 55:25-56:3 (“we
have a responsibility to make appropriate investments on
behalf of our clients, given the parameters and the
investment objectives of the overall portfolio. Oftentimes,
securities are issued [sic] in the secondary market where
people don't read the prospectus, no matter who you are.
And so in the context of the CRIM portfolios, we, as a
practice, were not reviewing prospectuses and - nor do we
believe that was an obligation.”). Mr. Downing
testified that Fulton used Bloomberg to obtain prospectuses
and “that type of thing” after auctions started
to fail in 2008. Downing Dep. at 70:11-24. Fulton does not
dispute that this was Mr. Downing's testimony, but Fulton
does dispute that prospectuses for ARS were available to it
as part of Fulton's Bloomberg subscription. See Kinney
Dep. at 23:12-14; Downing Dep. at 43-15-44:10; Campbell Dep.
at 11:23-116:12. Mr. Downing testified that Fulton did not
ramp up its oversight of events in the ARS market until 2008.
Downing Dep. at 75:12-76:6. (“We would have followed it
summarily, overview. We did not ramp up our oversight of the
events in the market until ‘08.”).
provided information on SLARS in a document dated June 23,
2005 entitled “A Guide to Student Loan Auction Rate
Securities.” The document included how they functioned,
how their interest rates would be determined, what would
happen in the event of a failed auction, and what potential
risks they posed, such as available funds cap risk. Pohl
Decl. Ex. 13. In 2005, PricewaterhouseCoopers issued an
advisory stating that it was not appropriate to classify ARS
as cash equivalents due to, among other things, the risk of
auction failure. Def. Ex. EE. Fulton did not classify ARS as
cash equivalents. Campbell Dep. at 138:7-19; Kinney Dep. at
63:21-64:22; Fulton's RFA Responses at #'s 33, 34.
Fulton further states that it was NatCity's brokers and
“Auction Rate Securities Specialists” who
represented ARS as cash equivalents and it was NatCity that
sold ARS to customers as cash equivalents. See
Goodrick Dep. at 27-28, 47, 93, 133.
the market news regarding ARS that was available to Fulton
was a May 31, 2006 Consent Order between the United States
Securities and Exchange Commission and certain financial
institutions. Campbell Dep. at 92:2-95:3; Kinney Dep. at
54:2-5, 56:2-7; Def. Ex. FF (05/31/2006 Notice of Consent
Order); Def. Ex. GG (05/31/2006 Consent Order (“Consent
Order”)); see also MTD Opinion at 30-31 fn.
15. Fulton concedes that the Consent Order was publicly
available but notes that its witnesses testified that they
were unaware of it until after the ARS auction failures began
to occur in 2008. Kinney Dep. 54:6-10; 56:6-7. NatCity was
not a party to the Consent Order.
ARS auctions, their potential failure, and the resulting
interest rates, the Consent Order disclosed that “[i]f
there are not enough bids to cover the securities for sale,
then the auction fails, the issuer pays an above-market rate
set by a pre-determined formula described in the disclosure
documents, and all of the current holders continue to hold
the securities, with minor exceptions.” Consent Order
at 4. The Consent Order also stated that certain financial
institutions had violated certain securities laws by failing
to adequately disclose that they intervened in ARS auctions
by placing bids for their own accounts in order to prevent
auctions from failing, set a “market” rate, or
prevent all-hold auctions. Consent Order at 6; Kinney Dep. at
57:17-21. Bloomberg published at least two articles
discussing the Consent Order on May 31, 2006. Def. Ex. HH
(05/31/2006 Bloomberg articles). The Wall Street Journal
published an article discussing the Consent Order on June 1,
2006. Def. Ex. II (06/01/2006 Wall Street Journal article).
American Banker published an article discussing the Consent
Order on June 1, 2006. Def. Ex. JJ (06/01/2006 American
other things, the Consent Order ordered the financial
institutions to begin making such disclosures. Consent Order
at 9-11. PNC provided Fulton in August 2006 with a disclosure
that informed Fulton that there was no guarantee that ARS
could be resold at auction and no guarantee that the ARS
auctions would be supported by the underwriter and/or the
lead Contractual Broker-Dealer. Def. Ex. KK (08/23/2006
email) at FULPNC186004 (“[t]here is no assurance you
will be able to resell auction securities in the secondary
market on the terms you desire. . . . [T]here is no assurance
that your order will be accepted or that the auction will
clear at a rate that you consider acceptable.”).
Downing testified that he was aware of the substance of
PNC's disclosures. Downing Dep. at 64:7-14.
Mr. Kinney and Ms. Larish testified that, when Fulton was
purchasing ARS for its CRIM customers, they understood that
there was a risk of auction failure. Kinney Dep. at
48:21-49:5, 65:3-7 (“but I was also aware that no
auctions had failed”); Larish Dep. at 33:23-34:5
(“there could be a chance they could fail; but for
decades they have not”). On September 21, 2006, NatCity
provided Ms. Kinney with a PowerPoint that, among other
things, noted that a failed auction could occur and explained
how the interest rate typically is set in the event of a
failed auction. ...