Yesterday, Judge Sweet found that there was sufficient evidence to survive summary judgment regarding allegations that Bear Stearns hid material information about its lack of liquidity and other problems during the financial crisis. He rejected the defendants’ argument that the supposedly hidden risks were “publicly known as a result of Bear Stearns’ disclosures”:
Defendants’ opposition and cited disclosures demonstrate textbook disputes of material fact sufficient to defeat a motion for summary judgment.
For example, both Plaintiff and Defendants point to a disclosure stating “inability to raise money in the long- term or short- term debt markets, or to engage in repurchase agreements or securities lending, could have a substantial negative effect on [Bear Stearns’ ] liquidity. ” Defendants frame this as sufficient disclosure to alert Plaintiff to risks, defeating the possibility of a misstatement or omission. Plaintiff emphasizes that Defendants disclosed only the possibility but not the certainty that Bear Stearns was already experiencing negative pressure as a result of its reliance on repo financing. . . .
“Nothing short of a complete failure of proof concerning an essential element of the nonmoving part y’s case will be sufficient to award summary judgment.” Celotex Corp . v . Catrett, 477 U.S. 317, 323 (1986). The disclosures Bear has identified are not so forthright and comprehensive that it can be said no dispute of material fact exists.