Opinion ID: 2793872
Heading Depth: 3
Heading Rank: 2

Heading: Sufficiency of Other Fraud Allegations

Text: On appeal, Putnam asserts other, separate grounds on which to affirm the District Court’s judgment: that the SAC fails to allege a strong inference of fraudulent intent and fails to plead an actionable misrepresentation or omission. These arguments are meritless and warrant little discussion. Putnam contends that FGIC does not provide a “plausible explanation for why Putnam would engage in a billion‐dollar fraud.” Brief for Defendant‐Appellee at 38. The SAC specifically alleges, however, that Putnam was motivated to cooperate with Magnetar’s scheme in exchange for unusually lucrative collateral management fees and additional business. See SAC ¶¶ 6, 46‐52, 110‐ 12; J.A. 186, 201‐03, 227‐28. Although Putnam argues that these fees did not provide a financial incentive to commit fraud, such an argument raises a factual dispute that is inappropriate for resolution on a motion to dismiss. ‐27‐ FIN. GUAR. INS. CO. V. PUTNAM ADVISORY CO. We also reject Putnam’s argument that FGIC fails to allege an actionable misrepresentation or omission by Putnam. As described above, FGIC has alleged that Putnam represented that it would select and manage the assets for the Pyxis portfolio independently and in the interests of long investors, representations that FGIC contends were false.