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On March 30, 2011, the Honorable Barbara S. Jones of the United States District Court for the Southern District of New York dismissed the amended complaint in a securities action, Fried v. Lehman Brothers Real Estate Associates III, L.P., without leave to replead.  Fried was commenced by limited partners in Lehman-affiliated real-estate partnerships against, among others, current and former Lehman officers represented by STB.  Plaintiffs alleged that Defendants omitted or misstated material information in the private placement memoranda and failed to adhere to the terms of the partnership agreements.  Specifically, Plaintiffs alleged that the Lehman officers knew and failed to disclose that commercial real-estate assets transferred to the partnerships would result in major losses for the limited partners because the properties had lost significant value since their acquisition by Lehman, yet their value had never been written-down.  The Court held that Plaintiffs had failed to plead facts supporting an inference of scienter, and that in fact, the Defendants had made substantial disclosures to prospective investors regarding the properties and investment risks.  The Court dismissed the federal securities claims with prejudice, and dismissed the state law claims for lack of supplemental jurisdiction. 

The STB team consisted of Mike Chepiga, Libby McGarry, Erika Burk and former STB associates Ihsan Dogramaci and Caleb Edwards, with valuable assistance from paralegals Tim Lobdell, Mary Beichert and Brittany Oei.  Libby McGarry argued the motion to dismiss for STB’s clients.