A U.S. district court on Tuesday rejected that bond insurer Ambac Financial was liable for allegedly overly optimistic and misleading statements it had made about its insured Puerto Rico bonds.

The ruling came in a suit filed by Ori Wilbush, who had invested in Ambac’s stocks. The suit filed on Nov. 23, 2016 was against Ambac, Ambac chief executive officer Nader Tavakoli, chairman of the board Jeffrey Stein, former chief executive officer Diana Adams, chief financial officer David Trick, and former head of portfolio and credit risk management Cathy Matanle.

A judge found that Ambac had given warnings of Puerto Rico's potential danger to its bond portfolio.

Wilbush filed the suit for himself and “on behalf of all others similarly situated.”

United States District Judge Richard Berman dismissed the case Tuesday. In a 37 page decision and order in the U.S. District Court for the Southern District of New York, Berman rejected most of Wilbush’s arguments.

According to Berman, Wilbush had contended that in the defendants’ discussions of their Puerto Rico bond portfolio, they had made six types of false statements or omissions. Among these, in its Securities and Exchange Commission filings Ambac had only reported net par outstanding for its Puerto Rico bonds and not mentioned the considerable interest associated with the bonds. Also, on earning conference calls from November 2013 to March 2014 Adams had stated that Ambac didn’t expect losses on Puerto Rico debt.

Berman rejected Wilbush’s argument about nondisclosure of interest, noting that the reporting just of net par exposure was standard practice among bond insurers. Berman also said the plaintiff’s argument failed because it doesn’t show where Ambac diverged from Generally Accepted Accounting Principles.

Last, Berman noted that in July 2014 Ambac began prominently indicating principal and interest exposure on its Puerto Rico bonds on its website.

As for Adams’ statements on its conference calls that it didn’t expect Puerto Rico losses, Berman wrote that Wilbush hadn’t “adequately alleged that Adams’ statements … were false or misleading.”

Berman said that each investors call started with warnings that statements about the future were subject to uncertainty. Berman noted that in Ambac’s 3rd quarter 2013 form 10-Q the company indicated that a loss of market access by Puerto Rico could lead to defaults in its portfolio.

Berman also said that Wilbush hadn’t provided evidence that that Adams had made her statements knowing that they were untrue, as the law would require for damages to be awarded.

In general Wilbush’s complaint hadn’t provided sufficient evidence to show evidence of conscious misbehavior or recklessness, Berman said.

Ambac didn’t respond to a request for comment for this story.

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