Chau v. Lewis

771 F.3d 118 (2nd Cir. 2014)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

The Big Short: Inside the Doomsday Machine, written by D looks at a small group of iconoclasts who 'shorted,' or bet against, the subprime mortgage bond market at a time when most investors thought real estate prices would continue to rise (i.e., were 'long'). The book spent 28 weeks on The New York Times best-seller list. Chapter 6 comprises twenty-four pages of the 270-page, and one-third of that chapter focuses on a dinner conversation that took place in January 2007. Eisman, one of the parties in the book, was in attendance and was seated next to P. P is the founder and owner of Harding Advisory LLC. He received a BA in economics from the University of Rhode Island and an MBA from Babson College. P spent twelve years of his career in structured finance. P set off on his own in 2006 and founded Harding Advisory. At the time of the January 2007 dinner, Harding was a top-ranked manager of Collateralized Debt Obligations2 (commonly known as 'CDOs') and was on its way to issuing more asset-backed CDOs by volume than any other CDO manager. The book recounts Eisman's interaction and discussions with P at that dinner and paints CDO managers in general, and P in particular, in a negative light. P sued Ds for twenty-six allegedly defamatory statements. Most of the comments were sarcastic, and condescending describing P as a sucker, fool, sleepy, dog shit investments, doesn’t do much of anything, less mentally alert, paid mainly on volume, and after the meal, they raised $550 million to short anything P was buying. The court dismissed the case, and P appealed.