E*Trade v. Deutsche Bank

VERDICT

Trial
10/14/08 – 11/03/08

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Play button overlay 45f08f27c7337d189e8c31e635b5d0a0781b273131135cd77ee8b6f12366e7a2

Summary

Breach of contract and fraud claims by E*Trade against Deutsche Bank. E*Trade alleged that Germany's Deutsche Bank made an accounting error, by overlooking a $27M service fees deduction that should already have been taken, and as a result overstated by $15M the value of a business that Deutsche Bank sold to E*Trade in 2002. (The business that E*Trade bought, DRAFCO, held the equity interest in securitized recreational vehicle (RV) loans.)

E*Trade claimed that because the value of DRAFCO's deferred tax assets (DTA) was overstated and did not comply with GAAP, E*Trade paid about $15M more for DRAFCO than it should have pursuant to a stock purchase agreement. According to E*Trade, Deutsche Bank subsequently learned of the error, and tried to hide it.

Deutsche Bank claimed that E*Trade's accountant had a full chance to review the deferred tax asset, and that E*Trade failed in its due diligence duty. According to Deutsche Bank, the DTA was miscalculated long before the deal was contemplated, and therefore Deutsche Bank did not act with fraudulent intent.

Judge Sweet denied E*Trade's fraud claims, but ruled in favor of E*Trade on all of E*Trade's breach of contract claims, awarding E*Trade $18M in damages, plus costs and attorney fees.

Outcome

Damages: 18,000,000

Sessions

AM Session
Not in Session
0 Chapters
PM Session
Not in Session
0 Chapters
OCT
17
AM Session
Not in Session
0 Chapters
PM Session
Not in Session
0 Chapters
OCT
29
PM Session
Not in Session
0 Chapters
OCT
31

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