Nomura Holdings of Japan successfully defended itself against a $22 million suit filed in a London High Court by Germany's WestLB, over a structured note deal "that went south."  WestLB claimed damages over valuations given in the structured credit transaction dating from 2003, and accused Nomura of “irrational” behavior. 

WestLB also was denied the right to appeal, but it said it was considering an appeal, nonetheless.  The sensitive nature of such deal means the case has been closely watched, and may affect future litigation. 

“It’s a prima facie example of over-engineered financial instruments created with a view to fees rather than content. It’s happened a lot these last few years.”

Nomura, that bought Lehman Brothers’ international operations in 2008, had produced structured paper and sold it in 2003 while serving as a so-called calculation agent - estimating the value of shares in an unidentified private investment fund, shares that were the basis for the structured credit instrument called a variable redemption note.  The redemption was a bit too variable for WestLB’s taste, however - when the it called on Nomura in 2008 to pay it the value of the notes, Nomura did, but the value it gave the notes was zero. 

    Where WestLB's Argument Flagged.   The court found that WestLB had failed to prove that Nomura was responsible for losses realized in late 2008, when the credit derivatives matured shortly after the fall of Lehman Brothers.  [NYT Dealbook, 11/12]