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Fulton Bank, National Association v. NatCity Investments, Inc.

United States District Court, E.D. Pennsylvania

January 20, 2017

FULTON BANK, NATIONAL ASSOCIATION, SUCCESSOR TO FULTON FINANCIAL ADVISORS, NATIONAL ASSOCIATION, Plaintiff,
v.
NATCITY INVESTMENTS, INC. Defendant.

          MEMORANDUM

          STENGEL, J.

         The case arises out of the collapse of the market for Auction Rate Securities (“ARS”[1]). 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.

         NatCity 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 respects.

         I.STANDARD OF REVIEW

         Summary 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.”).

         II. THE SUMMARY JUDGMENT RECORD

         NatCity 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.[2] 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 44-46.

         At all 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, [3]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”).

         Fulton 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[4]; 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.

         Fulton 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[5] (“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.

         Fulton 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.

         Fulton 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.

         Fulton 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[6] (“Kinney Dep.”) in PNC) at 18:16-20, 20:23-21:16, 23:15-24:24; Campbell Dep. at 152:24-153:9.

         Fulton 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.

         Fulton 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 collateral.” Id.

         Fulton 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.

         Fulton 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.

         Fulton 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. Yes.”).

         Fulton 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, correct?
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?
Q. Yes.
A. I would think I would, yes.
Goodrick Dep. at 37.

         Fulton's 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 22-23, 28-29).[7]

         Campbell 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”).

         Downing 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.

         Fulton 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.

         Fulton 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).

         The 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.

         The 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. Id.

         As a 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.”).

         Citigroup 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.

         Among 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.

         Regarding 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 Banker article).

         Among 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.

         Both 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. ...


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