Proctor & Gamble Co. v. Bankers Trust Co. and BT Securities Corp.
United States District Court for the Southern District of Ohio
925 F. Supp. 1270 (1996)
- Written by Steven Pacht, JD
Facts
Proctor & Gamble Co. (P&G) (plaintiff) and Bankers Trust Co. and BT Securities Co. (collectively, BT) (defendants) entered into two interest-rate-swap contracts pursuant to which they agreed to pay each other cash flows over a set period of time. The cash flows were based on the amount of the principal of certain debt nominally underlying the transactions, known as the notional amount. Under the contracts, one party paid a fixed interest rate and the other party paid a floating rate based on a number of factors. The parties’ respective interest payments were the only monies meant to change hands; neither party was obligated to pay or repay the notional amount. P&G sued BT, claiming that the swap agreements were evidence of indebtedness, and thus securities, because they contained mutual promises to pay money based on the notional amounts. P&G further argued that the terms “notes” and “evidence of indebtedness” in the relevant statute must have different meanings because the terms otherwise would be redundant.
Rule of Law
Issue
Holding and Reasoning (Feikens, J.)
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