Page:In re Donald J. Trump Casino Securities Litigation.pdf/18



The complaint also includes allegations that the prospectus omitted material facts. More specifically, the plaintiffs contend that the prospectus was materially misleading due to its failure to disclose certain facts which, for purposes of this appeal, we assume are all true: 1) the precarious nature of Trump’s personal finances; 2) the fact that the Taj Mahal would require an average daily casino win of $1.3 million in order to repay the bonds in full; 3) the thinly-capitalized nature of the Taj Mahal; 4) the expense necessary to attract customers from other casinos to the Taj Mahal and the improbability that the Taj Mahal would be successful in such an effort; and 5) the likely effect of the already weakened economy on the future success of the Taj Mahal. Analyzing each in turn, we reject the plaintiffs’ contention that these allegations state actionable securities fraud claims.

A. Trump’s Personal Finances

We can readily dispose of the plaintiffs’ allegation that the prospectus made a material omission in its failure to disclose that Trump’s financial condition was “precarious” because he had made or was planning to make various financial guarantees on projects unrelated to the Taj Mahal. Complaint at ¶ 34. The prospectus made clear that Trump was only obligated to contribute $75 million of his own funds toward the completion of the Taj Mahal and that he had promised to lend the venture up to $25 million under specified circumstances. It did not even suggest that Trump would contribute more of his personal wealth to the venture in order to repay the bondholders or otherwise to ensure the Taj Mahal’s successful completion and operation. Given the explicit limitations on Trump’s financial obligations toward the Taj Mahal as well as the fact that he, in fact, contributed the amounts he had promised, we fail to see the materiality of his actions or intentions with respect to the balance of his personal assets.

B. Average Daily Casino Win

We also reject the plaintiffs’ argument that they state an actionable claim through their allegation that the prospectus failed to disclose that, for the Partnership to repay all of its debts, the Taj Mahal would require a $1.3 million average daily casino win. See Complaint at ¶ 33(a)–(b). As we discussed above, the prospectus went to