In litigation arising from the financial crisis, financial institutions have repeatedly argued, often with success, that they can’t be blamed for investors’ losses because the market crash was the real culprit. In a ruling Wednesday that could make it easier for investors to sue, the U.S. Court of Appeals for the Second Circuit rejected that argument. It held that the Financial Guaranty Insurance Co. can pursue claims against Putnam Advisory Company LLC if it alleges sufficient facts to raise a “reasonable inference” that the defendant caused a portion of its losses.
The unanimous ruling reversed a decision by Manhattan U.S. District Judge Robert Sweet, who dismissed FGIC’s case in September 2013.
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