Anwar et al v. Fairfield Greenwich Limited et al

Filing 1255

ENDORSED LETTER addressed to Judge Victor Marrero from David A. Barrett dated 3/24/14 re: In sum, the August 6, 2012 Order was clear, and there was no basis then, nor is there now, for Citco to avail itself of a ruling applicable only to the PwC Defendants. ENDORSEMENT: The Clerk of Court is directed to enter into the public record of this action the letter above submitted to the Court the Anwer Plaintiffs. (Signed by Judge Victor Marrero on 3/27/2014) (mro)

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03/24/2014 18 23 FAX B 0 212 448 2350 I E S, b75 L.E:XII,JGTON It! 002/0()4 BOlE:; :;CHILLER S CHI L L E R & F LEX N E R L L P A\lENUI::' 7TH rLOOR' NEW 'fORK, NY 10022' Prl, 212 4462300 • "AX 212.446,2350 .. ~ " March 24, 2014 'li}L' Slr, 'f '. [Jl)CL;\ll::\ \ r . ,r:LECTRO~IC,\LLY i . ~)UC #: 3L . FItfio ." l~\~:,-FlIXD: ·]11/1$. U BY FACSIMIL~: Judge Victor Mdrrero United States Distri(;t Court Southern District of New York 500 Pearl Street New York, New York 10007 Re: Anwar, et al. v. Fairfield Greenwich Limited, et a/. Master File No. 09-CV -00118 (VM) (FM) Dear Judge Marrero: We wrik on behalf of The An-war Plaintiffs in response to the Citeo Defendants' Mareh 19, 20141etter (the "Letter") to Your Honor requesting "clarification" of the Court's August 6, 2012 Decision and Ordcr. 884 F. Supp. 2d 92 (S.D.N.Y 2012) (the "Order"). The Order modified the Cou.rt's decision in Anwar 11. in light ofThe Second Circuit's then-recent decision in Stephenson v. PricewaterhouseCoopers. LLP, 482 Fed. App'x 618 (2d Cir. June 13.2012), to limit negJigence-based claims against the pwC Defendants to subsequent investments made by existing investors in the Fair±ield Funds. In this regard, the Order relied on PlaintiH's' al:knowledgement that the PwC Defendants did not know the identity of prospective investors and thus Plaintiffs could not satisfy the Credit Alliance test as to PwC w1th respect to Plaintiffs' initial investments. Order at 97. Plaintiffs' concession was explicitly limited, however, to the PwC Defendants, and did not apply to the eiteo or Fairfield Defendants, all of v.,;hom had joined in P\,,,'C's letter brief. We believe that the Order - which contains no discussion oftacts concerning the Citco Or Fairfield Defendants on this issue clearly applics only to claims against "defendants PwC Canada and PwC Netherlands," whose motion was "granted in part." Id. at 100. Thus, Citco is wrong in arguing that the reasoning of the Order supportS dismissal of negligence-based claims against Citco arising from Plaintiffs' initial investments on grounds that Citco was not in near-privity ·'hejiJre those investors made their initial investment decisions to invest in the fLlDds." See l.etter at 4 (emphasi::; in original). rfCitco believes that the factual record now availahle through discovery suppons its position - and Plaintiffs belicve thal the record shows exactly the opposite - it can make that argument in a summary .i udgment motion due to be .tiled wilhin a couple of months. WWW 8S" LLi" COM 08/24/2014 18 28 FAX 212 446 2350 BOIES. I4J O()3/(J04 BOIES SCHILLER SCHILLER & FLEXNER LLP Judge Victor ~'larn.:ro March 24. 2014 P3gc 2 A. The Order Granted, in Part, the Motion of the PwC Defendants, Not All Defend.mts I·hc Orck:r granced the motion to di.srniss, in part. only d.') to the PwC Dcfendant~. Near the beginning of the Order, the Court stated: "For the reasons discussed helow. the PwC Defendants' motion tor reconsideration is GRANTED in part and DENIED in part." Order at 95. This was repealed at the cnd of the Order: "Ordered thattht> motion (Docket Nos. 8&6 and 901) of defendants PwC Canada and PwC NerheTlands for reconsideration is hereby GRANTED in part and DENIED in part in accordance with this Decision and Order," Jd. at 100. The Order contains no language that grants any motion made by the Citeo Defendant<; or "Detendants" generally. This distinction is meaningful. While "Defendants" was defined in the Order as including Citca and the Fairfield Detendants (ld. at 94), in neither of the two operative decretal sentences quoted above did the Court use the term '"Defendants" - rather, it specifically referred to the PwC Defendants. Moreover, it would have made no sense to grant relief to all "Defendants," since that term included the Fairtic!d Deitmdants who indisputably solicited and were directly involved in the initial investment process. Nor would it have made sense to grant such relief to Cilco without discussion. The Order referred to Plaintiffs' June 4.2012 Jetter [Dkt. No. 908), which conceded that damages arc not available "from PwC for the class negligent misrepresentation cause of action with respect to new investors making initial investments:' See Order at 97. Plaintiffs' letter expressly distinguished claims relating to Citco, arguing that, although the Fairfield Defendants and Citeo hadjoined in the PwC letter, the Stephenson case "says nothing inconsistent "vith the Court's holding in Anwar ff that Plaintiffs have properly alleged initial investment claims againsllhe Fund administrators to whom' potential investors ... were known parties. ", Dkt. No. 908 at 1-2 n.2 (cilingAnwar lJ, 728 F. Supp. 2d 372, 434 (SD.N.Y. 2010». Citco never disputed this, and nowhere did the Order discuss Plainrirrs' claims against Citco. Indeed, the discovery record now confinns Plaintiffs' allegations that Citco knew and communicated with investors in connection with initial investments in the Funds, and investors necessarily relied, among other things, on Citco's utterly false calculation of Net Asset Value. B. The Reasoning of the Order Does Not Apply to Cilco Citco's letter ignores that the Court pre\'iously rejected precisely the same arguments raised by Citco \\I'hen it denied Citco's initial motion to dismiss "prospective investor" claim.'; as part of the Am'lIar II decision addressing Plainti frs' Second Consolidated Amended Complaint ("SCAC"). In Anwar If. the Court sustain~d Plaintiff:;' claims against th<: Citco Administrators arising hom both initial and :'tlbscq L1ent imestments: fit)\V The Cum! 11m)" that Plaintiffs sufficiently .::tllegc thm these pru:::>Pl:C!l \'e investors. to which the Administrators sent certain linancial documents, were "known" Jor 03/24/2014 16 23 FAX BOIES, I4J 0(J4/(I04 BOIES SCHILLER 212 446 2350 SCHILLER &. FLEXNER LLP Judge Victor Mamero March 24, 2014 Pagl: 3 the purpose:> of the Credit Alliance test. Plaintith allege that the Administrators c'induced Plaintitls to make their initial investments in the Funds" (SCAC f' 534) and that "Plaintiffs sent their subscription documents directly to Citco , , , ." (/d '1 328.) Plaintiffs also allege that the Administrator::; "knt'w that Plaintiffs would rely upon the 1~1lsc NA V and account balance statements for the particular purpose of deciding whether to invest in the Funds." (ld. 'ii 535.) At this point, thc Court finds that Plaintiffs adequately allege that there was a discrete group of potential investors, not simply a faceless mob. who were known parties to the Administralor~, and that the Administrators intended those inve~tors to rely upon the N A V and account balance statements to invest in the Funds." Anwar II. 728 F. Supp. 2d at 434 (citation omitted): see Jd at 424 ("The Administrators disagree with Plalntitls' allegations, claiming that they did not communicate with prospective investors and that therefore Plaintiffs could not possibly have relied upon the Administrators' statements in their decisions (0 invest in [he Funds. But given that the Court must accept Plaintiffs' factual allegations as true and resolve doubts in their tavor. the A.dministrators' factual protests arc irrelevant at this time.") (citing SCAC ~ 333; emphasis added), or Thus, the SCAC pleaded that all aspects the Credit Alliance test were ~atisfied as to Citco \.vith respect to initial a..... well as subsequent investments. Citeo knew the specific identity or investors prior to their initial investments in the Funds because Citco received and processed their subscription documents and payments for Fund subscriptions. If Citeo seeks to argue otherwise, it may do so in upcoming summary judgment motion practice. In sum, the August 6,2012 Order Wa'l clear. and there was no ha.<;i~ then, nor is there now, for Citco to avail it5elf of OJ. ruling applicable only to the PwC Defendants. Respectfully yours,~ M(l{jJm4 David l\.. Barrett CC: All counsel in Anwar (by email) SO ORDERED. 03/24/20~4 18 22 FAX BOIE~ 212 448 2350 ~O(11/r)()4 ~CHlLLER Boies, Schiller & Flexner LLP 575 Lexington Avenue New York., New York 10022 012) 446-2300 Facsimile: (212) 446-2350 FACSIMILE COVER SHEET PRIVILEGED AND CONFIDENTIAL (212) 805-6382 TO: Judge Victor Marrero FAX: FROM: David A. Barrett CLIENTIMA.TIER: DATE: March 24, 2014 5579.001 TOTAL NUMBER Of PAGES: 4 (Including thi~ cover sheel) IF YOU DO NOT RECEIVE ALL THE PAGES INDICATED ABOVE, PLEASE CONTACT US AS SOON AS POSSIBLE AT (212) 446-2300 MESSAGE: o DO NOT DISTRIBUTE WIfEN BOX IS CHECKED TIns fac:;imilc Irftl1smissioll conm.i.n~ confidl!.rti.ll allJ/c)r h:!!;"lly pn\'li~g~-J mformadon ITom the law firm BOIC.!i, SchIller & Flexner LI ,p imencl:rl only for usc of [he indi~idual(;) O<llllcu till th" lnllhmissltln ~h~'Cl, If you lIrc no! the imended recil'ienL J"-- ~_ .... l._.... l.) •. ~ ... :i1...J. 1.1._t _'] ... 1I,J.... 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