Anwar et al v. Fairfield Greenwich Limited et al

Filing 1282

ENDORSED LETTER addressed to Judge Victor Marrero from David A. Barrett dated 6/12/2014 re: We write once again on behalf of the Anwar Plaintiffs in response to repeated requests by the Standard Chartered Bank Defendants ("SCB"), most recently by letter of June 9, 2014. ENDORSEMENT: The Clerk of Court is directed to enter into the public record of this action the letter above submitted to the Court by plaintiffs. (Signed by Judge Victor Marrero on 6/16/2014) (tn)

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June 12, 2014

BY HAND
Judge Victor Marrero
United States District Court
Southern District of New York
500 Pearl Street
New York, New York 10007

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Anwar, et al. v. Fairfield Greenwich Limited, et al.
Master File No. 09-cv-00118 (VM) (FM)

Dear Judge Marrero:
We write once again on behalf of the Anwar Plaintiffs in response to repeated requests by
the Standard Chartered Bank Defendants ("SCB"), most recently by letter of June 9, 2014 (Dkt.
No. 1276), for dismissal, on grounds of SLUSA preemption, of the claims against them in the
Standard Chartered Cases that are consolidated with the Anwar Action. For the reasons stated in
our prior letters (Dkt. Nos. 1225 and 1248), as well as discussed below, we respectfully submit
that there is no reason for the Court to address the SLUSA issue at this time in any of the
consolidated cases. 1
If the Court were inclined to address SLUSA now, however, it should do so on full
briefing that would enable all parties in the consolidated cases to address comprehensively the
multiple recent decisions of the Supreme Court, the Second Circuit and other District Judges that
may bear on the issue. 2 The Anwar Defendants previously agreed that it is appropriate to await
1

Although SCB previously has asserted (see Dkt. No. 1236 at 1) that its requested SLUSA
dismissal does not "ask nor require this Court to reconsider its decision [in Anwar II, 728
F.Supp.2d 372, 397-99 (S.D.N.Y. 2010)] not to apply SLUSA to dismiss the claims asserted in
the Anwar class action," the sweeping argument that SCB makes in the next paragraph of that
letter plainly suggests otherwise (e.g., "For claims brought by investors in Madoff feeder funds,
the 'in connection with purchase or sale of a covered security' element is met so long as
defendants' alleged wrongdoing relates to the securities that Madoff purported to purchase on
behalf of those investors.").
2

Respectfully, the truncated submissions in the parties' various letters cited at p.2 n.1 of SCB' s
June 9 letter do not provide a complete picture of the still-changing landscape involving
SL USA' s applicability to Madoff feeder fund cases.

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Judge Victor Marrero
June 12, 2014
Page2
the Second Circuit's decision in In re Kingate Management Limited Litig., No. 11-1397, before
addressing SLUSA, because "Kingate, like Anwar, is an action by investors in so-called Madoff
'feeder funds' against, among other defendants, the administrator and the independent auditors
for the funds." (Dkt. No. 1248). While there are differences between Kingate and Anwar, we
believe it does make sense to await the ruling in Kingate. Indeed, in Monday's telephone
conference with the Court, the Anwar Defendants identified SL USA as a basis for their
upcoming summary judgment motions. In that context, the issue can be comprehensively
addressed, presumably with further appellate guidance and on a full record.
In full briefing on the SLUSA issue, Plaintiffs will demonstrate that Anwar fits squarely
within the Supreme Court's recent holding that SLUSA does not apply to class actions where, as
here, "plaintiffs allege (1) that they 'purchase[d]' uncovered securities [i.e., feeder fund shares], .
. . but (2) that the defendants falsely told the victims that the uncovered securities were backed
by covered securities." Chadbourne & Parke LLP v. Troice, 134 S, Ct. 1058, 1062 (2014)
(emphasis in original). As the Supreme Court found, "the only issuers, investment advisers, or
accountants that today's decision will continue to subject to state-law liability are those who do
not sell or participate in selling securities traded on U.S. national exchanges," id at 1068
(emphasis in original) - which are precisely the type of claims brought in the Anwar Action.
In addition, if necessary, such briefing can include detailed analysis of both the legal
reasoning and facts of Herald and other cases in which the funds are "not alleged in the ...
complaints as anything other than intermediaries" that funneled investors' money to Madoff. See
In re Herald, 2014 WL 2199774, at *2 (2d Cir. May 28, 2014). In contrast, and by way of
example, this Court already has recognized that Fairfield Sentry Fund had hundreds of millions
of dollars in investments that were wholly unrelated to Madoff. See Anwar II, 728 F.Supp.2d at
398 ("[T]he Funds were not a cursory, pass-through entity. The Funds also placed up to 5
percent of their assets in non-Madoff investments, a relatively small portion overall but
representing many millions of dollars.").
Finally, as this Court recognized in Anwar II, "even if the multiple layers between [the
Anwar] Plaintiffs' investments and the purported purchase of covered securities fell under
SLUSA's ambit, only the fraud and negligent misrepresentation common law causes of action
would be dismissed." Anwar II, 728 F.Supp.2d at 399 n.7. Other common law claims sustained
by the Court (id at 421-45; 454-56) would not be precluded.
In sum, further consideration at this time of the Court's application of SL USA in the
context of the Fairfield Greenwich funds is premature and, depending on further appellate
developments, may be completely unnecessary.

A:/_Jij;;;;rDavid A. Barrett

BOIES,

SCHILLER

Judge Victor Marrero
June 12, 2014
Page 3

cc:

All counsel in Anwar (by email)
Sharon L. Nelles, Esq. (by email)
Richard E. Brodsky, Esq. (by email)

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