On August 13th, the U.S. District Court dismissed a securities fraud lawsuit brought by investors in a company which bought residential mortgage-backed securities on margin. Dismissing the Securities Act claims, the Court held that the offering documents placed buyers on notice of what the issuer was doing and the fact that it had recently experienced the very reversals that plaintiffs claim should have been disclosed. The Securities Exchange Act claims fall because the shares were purchased on a foreign exchange, not in the U.S., and also fail to plead reliance. Phelps v. Stomber.