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MDCM Holdings, Inc. v. Credit Suisse First Boston Corporation

U.S. District Court, Southern District of New York
216 F.Supp.2d 251 (2002)

Written by Mary Pfotenhauer, JD

Facts

Mortgage.com, a company now known as MDCM Holdings, Inc. (MDCM) (plaintiff), entered into an underwriting contract with Credit Suisse First Boston Corporation (Credit Suisse) (defendant) to underwrite its initial public offering of stock (IPO). Pursuant to the agreement, MDCM sold 7,062,500 shares of common stock to Credit Suisse for seven percent less than the public offering price. MDCM’s stock almost doubled in value within two weeks after the IPO. MDCM brought a class action against Credit Suisse on behalf of companies that hired Credit Suisse to underwrite their IPO, whose securities increased at least 15 percent in value above the original offering price within 30 days after the IPO. The complaint alleges four state law claims against Credit Suisse, including breach of the express terms of the underwriting agreement, violation of the implied covenant of good faith and fair dealing, and unjust enrichment. Credit Suisse now moves to dismiss the complaint, arguing that MDCM’s state law claims are barred by the Securities Litigation Uniform Standards Act (SLUSA).

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Holding and Reasoning (Scheindlin, J.)

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