CDO Case May Not Be Foretaste of Suits to Come
February 26, 2008, Financial Times

Financial Times reported on the possible repercussions HSH Nordbank’s intention to sue UBS might have.  UBS structured and managed a series of collateralized debt obligations (CDO) and HSH Nordbank will sue over subprime losses that resulted from the CDOs. 

"Generally, we see litigation trends starting in the US and then spreading over here," says John Reynolds, a partner at in the Litigation Practice at White & Case in London.  "There has been quite a lot of legal action related to the credit crunch already in the US, a large number being municipal or retail-type investors bringing mis-selling cases.  These are not easy cases to bring and in any event the markets are rather different over here, so I would be surprised if we saw actions like that in the UK, but it depends greatly on how bullish the banks want to be in their own defense, and of course in the current environment, what they can afford."

Reynolds stated that in the UK most banks work out their differences out of court.  "But this can change if there is one big case," he added.  “Nobody wants to be first to go public, but if somebody does and the stigma is removed, then you could see more cases follow. At the moment, I don't see a coming tidal wave of litigation."