The phrase “sophisticated investor” sounds like a compliment. But for plaintiffs in complex financial disputes, the designation can be a handicap, suggesting they should have foreseen the risks of gambling large sums with other big, self-interested institutions. That became even truer two years ago, when an intermediate appeals court in New York sided with Goldman Sachs & Co. in a high-profile fraud lawsuit brought by ACA Financial Guaranty Corp., in part citing ACA’s status as sophisticated investor.
On Thursday, ACA counsel Marc Kasowitz of Kasowitz Benson Torres & Friedman persuaded the state’s highest court to reverse that ruling—reviving ACA’s case and potentially making it easier for other sophisticated plaintiffs to bring fraud claims over soured transactions.
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