such comparisons among investments. See In re Donald J. Trump Sec. Litig., 793 F.Supp. at 559.
Similarly, to the extent that the plaintiffs simply challenge the Partnership’s decision to obtain only $75 million in capital contributions in comparison to the approximately $700 million in debt obligations, they plainly do not state a claim under the securities laws. It is well-established that the securities laws do not create liability for breaches of fiduciary duty or mismanagement. See Santa Fe Indus. v. Green, 430 U.S. 462, 477, 97 S.Ct. 1292, 1303, 51 L.Ed.2d 480 (1977). We have held that “[w]here the incremental value of disclosure is solely to place potential investors on notice that management is culpable of a breach of faith or incompetence, the failure to disclose does not violate the securities acts.” Craftmatic, 890 F.2d at 640. Accordingly, we hold that the plaintiffs’ challenges with respect to the Taj Mahal’s debt-equity ratio fail as a matter of law to state a claim under the federal securities laws.
D. Attracting Customers from Other Casinos
The plaintiffs also allege that the prospectus failed to disclose that the Taj Mahal would be unlikely to draw away enough customers from other casinos to generate sufficient income for the Partnership to repay its debts. Because the prospectus did in fact warn of the high level of competition for patrons that the Taj Mahal would face, we uphold the district court’s decision to dismiss these claims.[1]
The prospectus explicitly stressed the severity of competition the Taj Mahal would face. It twice stated that “[c]ompetition in the Atlantic City casino/hotel market is intense.” In addition, the prospectus specified with particularity the number of casinos in Atlantic City which would compete with the Taj Mahal, and their operators’ ongoing and projected efforts to expand their capacity and/or renovate their facilities. The prospectus disclosed that the “Atlantic City casino industry is currently experiencing a significant increase in capacity.” It warned that “[t]he Partnership believes that, based upon historical trends, casino win per square foot of casino space will decline in 1990 as a result of a projected increase in casino floor space, including the opening of the Taj Mahal.”
The prospectus, moreover, stated flatly: “Growth in Atlantic City casino win is expected to be restrained…. No assurance can be given with respect to either the future growth of the Atlantic City gaming market or the ability of the Taj Mahal to attract a representative share of that market.” Furthermore, the prospectus underscored that the Taj Mahal would compete with other Trump-owned casinos in Atlantic City and with other forms of legalized gambling in the vicinity as well as casino and other gambling in other regions (e.g., Las Vegas). In short, the prospectus extensively and graphically
- ↑ With respect to the same topic, the plaintiffs additionally submit that the prospectus did not disclose that the Taj Mahal would have to expend substantial resources to lure patrons to the Taj Mahal and away from competitors, which expenditures would detract from the profits the Taj Mahal could reap from the new customers. This allegation is without merit. The prospectus does in fact describe the marketing strategy which the Partnership planned to utilize to attract customers to the casino. For example, the prospectus reported that the Partnership would promote the Taj Mahal through the use of advertising, complimentary services and promotional programs. In conjunction with the statements concerning the intensity of inter-casino competition, see supra at 370–71; infra at 376–77, these disclosures sufficed to inform a reasonable investor that the Taj Mahal would need to spend substantial sums in its efforts to attract patrons from its competitors.
The plaintiffs also invoke the following statement from the prospectus:
The Partnership believes that the opening of the Taj Mahal [in] the proximity of the Showboat and Resorts Casino Hotel will attract an increased volume of patrons to the vicinity of the Taj Mahal.
Complaint at ¶ 38 (citing Prospectus at 34). It is unclear whether the plaintiffs found an allegation on this statement. In case they wished to allege that this statement is affirmatively and materially misleading because it fails to adjust the increased casino win for increased advertising and promotional expenditures, we note that the prospectus only states that the Taj Mahal’s close proximity to other casinos will result in a larger number of customers in the vicinity of the Taj Mahal, not that it will result in greater profits for the Taj Mahal itself. Hence it does not advance the plaintiffs’ position.
