Case: 2:10-cv-01160-ALM-TPK Doc #: 1 Filed: 12/22/10 Page: 1 of ...

Case: 2:10-cv-01160-ALM-TPK Doc #: 1 Filed: 12/22/10 Page: 26 of 36 PAGEID #: 26 Moody’s placement of Sigma’s Senior Notes on review for downgrade onFebruary 27, 2008, and corresponding statement that Sigma’s reliance onrepo agreements increased the risk associated with Sigma; S&P’s March 18, 2008, statement that they were considering a downgradefor Sigma lowering its AAA rating; Failure to inform SERS that Wachovia had bids for Sigma in May 2008and discuss whether SERS should sell Sigma at that time – particularly inlight of Wachovia’s knowledge of Sigma’s struggles; Wachovia’s failure to inform SERS in June 2008 that Wachovia knewSigma was “operating on a day to day basis”; Wachovia’s failure to inform SERS in June 2008 that it had placed Sigmaon an internal “Credit Watch List”; Wachovia’s failure to timely inform SERS that in August 2008, creditorsof Sigma sought advice concerning the ability to recover theirinvestments if Sigma was unable to pay the $8.6 billion of debt maturingby September 30, 2008; Wachovia’s failure to inform SERS that on August 11, 2008, Sigmacreditors formed a committee to assess Sigma’s ability to pay its debts;and Wachovia’s failure to inform SERS that on August 21, 2008, it receivedbids on Sigma that were in the low 90s.78. On October 1, 2008, Sigma ceased trading and appointed a receiver towind down the investment vehicle. On October 2, 2008, Gorman advised SERS thatSigma’s “financial situation deteriorated precipitously over the past 2 days” ultimatelyleading to a Sigma announcement on October 1, 2008 that it had ceased trading andexpected the appointment of a receiver and would not be making any further payments tocounterparties. Gorman’s representation that Sigma’s “financial situation deterioratedprecipitously over the past 2 days” was, of course, false. Sigma’s financial situation hadbeen deteriorating since the middle of 2007. However, Gorman was attempting to coverthe fact that Wachovia had failed to timely advise SERS of the deteriorating financialsituation at Sigma for all that time.26