Decision affirms long-standing market convention.

On May 22, 2020, Judge Gardephe of the US District Court for the Southern District of New York held that syndicated term loans do not constitute securities under various states’ securities laws (“blue sky laws”), using an analysis developed under US federal law. In so ruling, Judge Gardephe dismissed claims brought against arrangers of syndicated loans for alleged material misstatements and omissions contained in the marketing materials relating to the loans. In dismissing the claims, Judge Gardephe assumed the truth of the plaintiff’s allegations and provided the plaintiff leave to amend its complaint to add claims for fraudulent misrepresentation, fraud, and conspiracy to defraud.