On August 6th, the Second Circuit issued an opinion authored by U.S. District Court Judge Jed S. Rakoff, sitting by designation, reinstating investors' lawsuit against Aladdin Capital Management, the manager of a failed $100 million collateralized debt obligation ("CDO"). Plaintiffs alleged that Aladdin mismanaged the CDO, causing plaintiffs to lose their entire $60 million investment. Although plaintiffs were not parties to the contract naming Aladdin as the portfolio manager, plaintiffs argue they were intended third-party beneficiaries or alternatively, that Aladdin owed them a duty, which it breached in a reckless and grossly negligent fashion. The Court holds that plaintiffs plausibly alleged that they were intended beneficiaries of the CDO management contract, which Aladdin owed plaintiffs a duty to manage the investment on behalf of plaintiffs, and that Aladdin acted with gross negligence. Bayerische Landesbank, New York Branch v. Aladdin Capital Management LLC.