Perhaps the bond holders didn’t read the prospectus. Perhaps they were too “uneducated” to read it. Perhaps they knew the warning signs and wanted to assume the risk anyway. Trump said that he was confident that the bond holders would be paid back, but there were many reasons to believe they wouldn’t be paid back.
The warnings signs included extremely high leverage in the deal (about 90% debt; only 10% equity); the risky business enterprise (an enormous casino called the Taj Mahal) and the promise of an outsized return (about 5% higher yield than quality corporate bonds).
Whatever the reason, these investors made their decision and the Court told them that they had to live with it. Choices have consequences. Case dismissed.
http://www.casebriefsummary.com/in-re-donald-j-trump-casino-securities-litigation/
What are the warning signs now?