Anwar et al v. Fairfield Greenwich Limited et al

Filing 1423

DECLARATION of David A. Barrett, Robert C. Finkel and Victor E. Stewart in Support re: #1422 Memorandum of Law in Support,. Document filed by Harel Insurance Company, Ltd., Pacific West Health Medical Center, Inc. Employee's Retirement Trust, Securities & Investment Company Bahrain, St. Stephen's School. (Attachments: #1 Exhibit A, #2 Exhibit B, #3 Exhibit C, #4 Exhibit D)(Barrett, David)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
ANWAR, et al.,
Plaintiffs,
v.
FAIRFIELD GREENWICH LIMITED, et al.,

File No. 09 CV 118 (VM)

Defendants.
This Document Relates To: 09 cv 118 (VM)

JOINT DECLARATION OF LEAD COUNSEL IN SUPPORT OF
THE PROPOSED CITCO CLASS ACTION SETTLEMENT
AND FEE AND EXPENSE REQUESTS
David A. Barrett, Robert C. Finkel and Victor E. Stewart, being duly admitted to the
practice of law in the State of New York and to the Bar of this Court, do hereby declare under
the penalties of perjury of the State of New York and the United States of America, as follows:
I.

INTRODUCTION
1.

We are members of the law firms Boies, Schiller & Flexner LLP, Wolf Popper

LLP, and Lovell Stewart Halebian Jacobson LLP, respectively, and Co-Lead Counsel for the
Representative Plaintiffs (“Lead Counsel”).1 Our firms are responsible for the prosecution of
the claims in this Action.
2.

We make this Joint Declaration in support of the Representative Plaintiffs’

motion pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, for final approval of (i)

1

The Representative Plaintiffs are Pacific West Health Medical Center Employees Retirement Trust,
Harel Insurance Company Ltd., Martin and Shirley Bach Family Trust, Natalia Hatgis, Securities &
Investment Company Bahrain (“SICO”), Dawson Bypass Trust, and St. Stephen’s School. The
Representative Plaintiffs are referred to herein as “Plaintiffs.”

certification of the Citco Settlement Class2 for purposes of the Settlement as defined in ¶ 1(hh)
of the Stipulation, (ii) the Citco Stipulation of Settlement, dated August 12, 2015 (the
“Stipulation”) (Dkt No. 1398), providing for payment of $125,000,000 to establish a settlement
fund (the “Citco Settlement Fund”); (iii) the proposed Plan of Allocation of the Net Settlement
Fund among Settlement Class Members who submit valid claims as set forth in the Notice of
Proposed Partial Settlement mailed to Settlement Class Members (Dkt No. 1398-2 at 22-23);
and (iv) Lead Counsel’s application for an award of attorneys’ fees in the amount of 30% of the
Settlement Amount and reimbursement of expenses of $4,438,320. Also submitted herewith is
a Memorandum of Law In Support of Plaintiffs’ Motion for Final Approval of the Citco
Settlement and Award of Attorneys’ Fees and Expenses.
3.

The Stipulation is between the Plaintiffs, on behalf of the Citco Settlement

Class, and defendants Citco Fund Services (Europe) B.V., Citco (Canada) Inc., Citco Bank
Nederland N.V. Dublin Branch and Citco Global Custody N.V., Citco Fund Services (Bermuda
Limited), The Citco Group Limited, Brian Francoeur, and Ian Pilgrim (collectively “Citco” or
the “Citco Defendants”).
4.

The Stipulation defines the Citco Settlement Class as “all Persons who were

Beneficial Owners of shares or limited partnership interests in the Funds as of December 10,
2008 (whether as holders of record or traceable to a shareholder or limited partner account of
record) and who suffered a Net Loss of principal invested in the Funds, excluding (i) Opt-Outs,
(ii) any Persons who have been dismissed from this Action with prejudice or who are barred by
prior judgment or settlement from asserting any of the claims against the Citco Defendants set

2

Unless otherwise indicated, all capitalized terms are defined in the Citco Stipulation of Settlement filed
with the Court on August 12, 2015.

2

forth in the SCAC; (iii) Fairfield Sigma Limited; (iv) Fairfield Lambda Limited; and (v) the
Defendants and any entity in which the Defendants have a controlling interest, and the officers,
directors, affiliates, legal representatives, attorneys, immediate family members (as defined in
17 C.F.R. 240.16a-1(e)), heirs, successors, subsidiaries and/or assigns of any such individual or
entity in their capacity as such (except for any of the Citco Defendants in their role as nominee
or record shareholder for any investor).”
5.

The Stipulation resolves all direct claims against Citco that were asserted or

could have been asserted against Citco by limited partners or shareholders in the Fairfield
Sentry Limited (“Sentry”), Fairfield Sigma Limited (“Sigma”), Fairfield Lambda Limited
(“Lambda”), Greenwich Sentry L.P., and Greenwich Sentry Partners, L.P. (together the
“Funds”).
6.

Plaintiffs’ claims against Citco arise out of Citco’s role as the administrator and

subsequently as custodian of the largest group of feeder funds to the Bernard L. Madoff
Investment Securities (“Madoff” or “BLMIS”) Ponzi scheme from October 31, 1997 until
Madoff’s arrest in December 2008. Plaintiffs contend that as the administrator and custodian
of the Funds, Citco had fiduciary and professional responsibilities to verify the existence of the
Funds’ assets, including by contacting sources that were independent of Madoff. Plaintiffs
contend that Citco’s failure to verify the existence of those assets and misrepresentations and
omissions of material facts caused Plaintiffs’ losses.
7.

The $125 million Settlement is an excellent recovery against the Citco

Defendants’ determined opposition. To bring the case to this point, Plaintiffs were required to
succeed on four motions to dismiss and two motions for class certification on novel issues as
far ranging as (i) whether the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”)

3

precluded Plaintiffs’ claims under state law; (ii) whether New York’s Martin Act pre-empted
Plaintiffs’ New York state law non-fraud claims; (iii) whether the U.S. Supreme Court’s
decision in Morrison v. National Australia Bank, 130 S. Ct. 2869 (2010) barred application of
the U.S. securities fraud statutes against Citco; (iv) whether Plaintiffs’ claims against Citco
could be asserted directly or only derivatively on behalf of the Funds; (v) whether Citco had a
contractual or fiduciary obligation to verify account data provided by BLMIS and the Fairfield
Greenwich (FG) Defendants, or whether Citco was entitled to rely on that information in the
absence of manifest error; (v) whether Plaintiffs were third party beneficiaries of administrative
and custody agreements between the Citco Defendants and the Funds, and whether Citco
breached those agreements; (vi) whether class certification was not warranted, among other
things, because individual issues of reliance predominated over common issues of law or fact;
(vii) whether investors had conducted their own due diligence and were responsible for failing
to recognize the Madoff Ponzi scheme; (ix) whether other persons, including Madoff, the FG
Defendants, and the Funds’ auditors had a greater percentage of culpability for Plaintiffs’ losses
than Citco; and (xi) whether Plaintiffs’ losses were mitigated by the recovery in the FG and
GlobeOp Settlements, tax benefits, recoveries and anticipated recoveries in bankruptcy and
liquidation proceedings, and from the Madoff Victim Fund. Moreover, Plaintiffs litigated these
issues for over six years against three law firms, most recently Paul Weiss Rifkind Wharton &
Garrison LLP, one of country’s leading litigation firms.
8.

The issues described above not only required exhaustive legal research and

briefing of complex legal issues under U.S. and New York law, but under the law of multiple
foreign countries. In the course of litigation, Plaintiffs submitted declarations of eight foreign
law experts, and consulted with a number of others, including experts in the law of The

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Netherlands, British Virgin Islands, Great Britain and Commonwealth countries and many
European and Asian countries.
9.

Although Plaintiffs had significant arguments in opposition to Citco with respect

to all of the foregoing issues, and were and are confident of our position on these issues,
Plaintiffs recognized that serious litigation risks existed, including that they could lose one or
more of these issues at trial, or on appeal, and that there was a possibility that class members
would obtain no recovery whatsoever.
10.

In addition to significant risks of prevailing against the Citco Defendants’

factual and legal defenses, Lead Counsel also considered the likely difficulty of actually
recovering substantially more than $125 million from the Citco Defendants after a successful
trial and appeals. Such a judgment would have to be collected by means of execution in
foreign countries from companies that are subject to foreign banking regulations and to
potential intervention by government authorities. Moreover, it likely would have taken years to
defend a judgment in post-trial and appellate proceedings and to enforce a judgment overseas.
The Settlement, however, provides substantial and certain recovery now, as compared to
uncertain recovery years in the future.
11.

The Settlement was reached through mediation after six years of hard-fought

litigation, as a result of which Lead Counsel were fully familiar with the issues, strengths and
weaknesses of Plaintiffs’ claims, among other things, having (i) litigated the initial motions to
dismiss the SCAC, multiple motions to reargue the Court’s decision on that motion and two
motions and an appeal pertaining to class certification; (ii) having reviewed millions of pages
of documents produced by Citco and other parties, and having conducted 30 depositions of
Citco witnesses, as well as approximately 60 depositions of FG, PwC and third party witnesses;

5

and defending 18 depositions of Representative and other Named Plaintiffs; (iii) having worked
thousands of hours with eight expert liability and damages witnesses to prepare expert reports,
dissect the reports of Citco and PwC’s 13 expert witnesses, and take and defend depositions of
these experts; and (iv) having prepared three mediation statements, analyzed Citco’s mediation
submissions and met for three full day mediation sessions and conducted further extensive
communications in connection with mediation.
12.

Plaintiffs’ claims against the PwC Defendants (PricewaterhouseCoopers LLP

Canada and PricewaterhouseCoopers Accountants N.V.) (Netherlands) (collectively, “PwC”)
are not resolved by the Citco Settlement and will continue to be prosecuted. Lead counsel
believe that the Citco Settlement is further beneficial in that it will simplify continued litigation
of the Action and enable Plaintiffs to concentrate their efforts at trial against the PwC
Defendants.
13.

The Citco Settlement is the third partial settlement in this Action. The Court

previously approved settlement of Plaintiffs’ claims against the Fairfield Greenwich (“FG”)
Defendants (the “FG Settlement”) and GlobeOp Financial Services LLC (the “GlobeOp
Settlement”). Under the FG Settlement, $50,250,000, less approved attorneys’ fees and
expenses, has been distributed to class members and additional contingent cash consideration
of up to $30,000,000 continues to be held in escrow. The Court approved the FG Settlement by
Final Judgment and Order dated March 25, 2013 (Dkt No.1097), which was affirmed after
Plaintiffs prevailed on three appeals, including one by the BLMIS Trustee who sought to seize
the entire FG settlement fund. On November 22, 2013, the Court entered a Final Order
approving the settlement of Plaintiffs’ claims against GlobeOp (Dkt No. 1232) for $5,000,000;

6

that amount less fees and expenses has been distributed to investors in the Domestic Funds,
which were the only Funds to which GlobeOp provided services.
14.

Lead Counsel estimate that the $125,000,000 cash settlement is equivalent to

approximately 3.8% of provable damages against Citco based on the claims submitted in the
FG Settlement. It will add to the benefits that Citco Settlement Class members will receive
from the FG and GlobeOp Settlements, and further recoveries from the Funds’ bankruptcy and
liquidation proceedings, and from the Madoff Victim Fund. It is, in our view, an excellent
result given the certainty that continued litigation against Citco will entail years of delay, and
the legal, factual and practical obstacles to any greater recovery.
15.

Notice of the Citco Settlement was mailed to Citco Settlement Class Members

on August 27, 2015. In addition, a summary notice was published in the international editions
of The Wall Street Journal (excluding North America) on September 9 and 10, 2015 and was
issued over PR Newswire worldwide on September 9, 2015. See accompanying Affidavit of
Jason Rabe of Rust Consulting, Inc. dated September 29, 2015. Pursuant to 28 U.S.C. § 1715,
Citco provided notice of the settlement to the appropriate State and Federal officials on August
17, 2015.
16.

The last date to file objections to the proposed Settlement or the request for fees

and expenses is October 16, 2015. To date, there have been no objections filed to the proposed
settlement or to the request for fees and expenses.
17.

The Settlement, if consummated, will provide an immediate cash benefit to the

Settlement Class defined in the Stipulation, which counsel and the Representative Plaintiffs
believe significantly outweighs the risks and certain delay of continued litigation against Citco.

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18.

Lead Counsel have prosecuted this Action on a fully contingent basis and have

advanced or incurred all litigation expenses. The complex nature and broad scope of the facts
and law underlying the violations alleged and the protracted proceedings for over six years
required the investment of over 107,000 hours of attorney and paralegal time valued at over
$69.3 million. Lead Counsel compiled these hours from contemporaneous time records.
19.

The fee application for 30% of the $125,000,000 Settlement Fund is within the

range of fees awarded in these types of actions and is entirely justified in light of the substantial
benefits conferred on the Class, the exceptional risks undertaken, the quality of representation,
and the nature and extent of legal services performed.
20.

The 30% fee request represents a discount of over 30% to the uncompensated

lodestar of Plaintiffs’ Counsel for their work from inception of this Action through July 31,
2015.
21.

Plaintiffs’ Counsel also seek reimbursement from the Settlement Fund of

$4,438,320 in expenses incurred in prosecuting this Action through July 31, 2015. This amount
includes costs associated with experts on merits, damages and foreign law issues, electronic
hosting and reproduction of discovery materials, electronic research, scores of depositions
taken and defended and the ultimately successful mediation efforts. These expenses were
reasonably and necessarily incurred to successfully prosecute the Class claims and to obtain the
Settlement.
22.

Plaintiffs’ Counsel have excluded from the requested reimbursement in excess

of $1.4 million in expenses that are directly related to the prosecution of this Action against the
PwC Defendants, such as fees paid to consultants and experts with respect to the claims against
PwC.

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II.

HISTORY OF THE ACTION
A.

The Funds

23.

The Funds invested virtually all their assets with BLMIS. These investments

were lost because, as revealed in December 2008 when Madoff was arrested, BLMIS was
operating a Ponzi scheme and the assets purportedly controlled by BLMIS did not exist. Citco
acted as the administrator of Sentry beginning in October 1997, subsequently becoming the
custodian of Sentry’s assets and the administrator and custodian of Sigma and Lambda upon
their formation in the 2000s. Citco also became the administrator of Greenwich Sentry, L.P.
and Greenwich Sentry Partners, L.P, beginning in September 2006. Citco acted in those
capacities until Madoff’s arrest in December 2008.
B.

The Action and Consolidation

24.

Plaintiffs’ claims against Citco are part of the consolidated Anwar class action,

the first constituent action of which was filed on December 19, 2008, by plaintiffs Pasha S.
Anwar and Julia Anwar, on behalf of themselves and all others similarly situated, in the
Supreme Court of the State of New York, entitled Anwar v. Fairfield Greenwich Group, et al.,
No. 603769/2008 (“Anwar”). On January 7, 2009, Anwar was removed by Defendants to this
Court (Dkt No. 1).
25.

On January 30, 2009 the Court consolidated the three then-pending related

actions and appointed Boies, Schiller & Flexner LLP, Wolf Popper LLP, and Lovell Stewart
Halebian Jacobson LLP as Interim Co-Lead Counsel to act on behalf of all Plaintiffs in the
Action pursuant to Fed. R. Civ. P. 23(g)(3) (Dkt No. 40). Numerous other actions against
Defendants were subsequently filed and consolidated under the Anwar action.

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C.

The Initial Consolidated Complaint

26.

Lead Counsel conducted a detailed investigation of the facts, including the

disclosures and statements made to investors in the Funds and the conduct of the various
defendants in their duties in connection with the offering and management of the Funds.
Among other things, Lead Counsel investigated Citco’s relationship with the Funds, the
Fairfield Greenwich Group, and Madoff; Madoff’s role in the management and custody of the
Funds’ assets; and indicators of potential fraud in Madoff’s investment advisory and asset
management operation that were or should have been known to Citco and in many cases were
not known to investors. Lead Counsel also consulted with foreign law experts and analyzed
Citco’s legal obligations and duties and the potential causes of action available to Plaintiffs.
27.

On April 24, 2009, Lead Counsel filed the Consolidated Amended Complaint

(the “Consolidated Complaint”), asserting common law claims under New York law against
Citco (Dkt No. 116).
28.

On May 11, 2009, Lead Counsel on behalf of their respective clients, filed a

motion for appointment of lead plaintiff and approval of Lead Plaintiff’s selection of lead
counsel with respective to federal securities claims filed under the Private Securities Litigation
Reform Act (“PSLRA”). Dkt Nos. 133-35, 154, 163.
29.

On July 7, 2009, the District Court entered an order appointing certain of the

Plaintiffs the Lead Plaintiff in the federal securities actions and approving their selection of
Lead Counsel (Dkt No. 178).
30.

On September 29, 2009, Plaintiffs filed the SCAC, which consolidated federal

securities claims and claims against PwC and asserted claims in one consolidated complaint on
behalf of a proposed class of investors in the two Domestic Funds and two off-shore funds

10

against the FG Defendants, PwC, Citco and GlobeOp (Dkt No. 273). Plaintiffs asserted claims
against Citco in the SCAC for third- party beneficiary breach of contract (Count 20), breach of
fiduciary duty (Count 21), gross negligence (Count 22), negligence (Count 23), aiding and
abetting breach of fiduciary duty (Count 24), aiding and abetting fraud (Count 25), securities
fraud under Sections 10(b) (Count 26) and 20(a) of the Securities Exchange Act of 1934 (Count
27). The SCAC alleged that investors in the Funds would have avoided their ultimate losses if
the Citco Defendants had not breached their contractual and fiduciary duties and acted
fraudulently or negligently in their capacities as administrators and custodians of the Funds.
The claims asserted against Citco included investor and holder claims on behalf of all investors
who held shares in the Funds and who suffered a net loss on their investments as of December
10, 2008.
D.

Defendants’ Motions to Dismiss

31.

On December 22, 2009, all Defendants moved to dismiss the SCAC, filing

voluminous briefing and exhibits in support. Citco Fund Services (Europe) (the “Citco
Administrator”) in its motion to dismiss (Dkt Nos. 330, 331) asserted multiple arguments
including:
a.

Plaintiffs’ state law non-fraud claims were barred by the New York State Martin
Act;

b.

Plaintiffs failed to allege facts sufficient to support a claim of fraud or gross
negligence;

c.

Plaintiffs failed to adequately allege that Citco owed them a duty (fiduciary or
otherwise), which is an essential element of breach of fiduciary duty, negligence
and gross negligence claims;

d.

Plaintiffs’ claims were derivative and belonged to the Funds, and as such
Plaintiffs were required either to make a demand on the Funds or plead facts
demonstrating that such demand would be futile;

11

e.

The New York State economic loss rule barred Plaintiffs’ tort claims.

32.

The Citco Defendants also filed separate memoranda on behalf of Brian

Francoeur (Dkt No. 318), Citco Bank Nederland N.V. Dublin Branch and Citco Global
Custody N.V. (the “Citco Custodian”) (Dkt No. 340), Ian Pilgrim and Citco Fund Services
(Bermuda) Limited (Dkt No. 334), and the Citco Group (Dkt Nos. 345, 346).
33.

On March 23, 2010, Plaintiffs filed a 107-page opposition to all Defendants’

motions to dismiss the SCAC (Dkt No. 418), as well as separate oppositions to the Citco
motions (Dkt Nos. 419, 420). The principal opposition brief addressed the issues in common
among defendants’ motions, including Citco’s motions. Plaintiffs also filed the affidavit of a
foreign law expert. (Dkt No. 415).
34.

On May 21, 2010, Citco filed Reply Memoranda in Further Support of its

Motions to Dismiss (Dkt Nos. 453, 457, 458, 462, 464), and Plaintiffs subsequently filed a SurReply Brief (Dkt No. 476).
35.

On June 24, 2010, after Defendants’ motion to dismiss the SCAC was fully

briefed, the Supreme Court decided Morrison v. Nat’l Australia Bank Ltd., 130 S. Ct. 2869
(2010), holding that only sales of securities in the United States or on U.S. exchanges could be
challenged under U.S. securities laws. Defendants promptly raised the Morrison decision as a
further ground for dismissing the SCAC and the parties submitted letter briefs on the
application of Morrison (Dkt Nos. 500-02).
36.

Additional detail on Lead Counsel’s preparation of the SCAC and opposition to

the Defendants’ Motions to Dismiss is contained in the Joint Declaration of Lead Counsel in
support of the FG Settlement, which is respectfully incorporated herein. See Dkt Nos. 1038 at
¶¶ 34-52, 54, 57.

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E.

The Court’s Decisions on the Motions to Dismiss

37.

In July and August 2010, the Court granted in part and denied in part Citco’s

motions to dismiss the SCAC. The July 29, 2010 Order, 728 F. Supp. 2d 354, rejected
defendants’ arguments that the Martin Act preempted all of Plaintiffs’ common law claims
except for fraud. The August 18, 2010 Order, 728 F. Supp. 2d 372, addressed the balance of
the Citco Defendants’ motion to dismiss arguments, ruling, inter alia, that (i) Plaintiffs’ state
law claims were not pre-empted by SLUSA (at 397-99); (ii) Plaintiffs had standing to bring
direct actions against Citco, although the standing argument was “ripe for further factual
development and is more properly decided at the class certification or summary judgment
stage” (Id. at 400-02); (iii) Plaintiffs sufficiently set forth the factual bases for grouping certain
of Citco Defendants together (id. at 422-23); (iv) the SCAC sufficiently alleged primary and
control person federal securities liability (id. at 423-28); (v) Plaintiffs’ federal securities claims
were time-barred to the extent investments were made prior to January 12, 2004 (id. at 428);
(vi) Plaintiffs’ third-party beneficiary breach of contract claim could proceed against the Citco
Administrator but not against the Citco Custodian (id. at 428-31); (vii) Plaintiffs’ negligence,
gross negligence, and negligent misrepresentation claims were sustained against the
Administrator, but not against the Custodian (id. at 431-35); (viii) Plaintiffs’ claims for breach
of fiduciary duty, and aiding and abetting the breach of fiduciary duty and fraud were sustained
(id. at 437-38); and (ix) Plaintiffs’ holder claims were sustained (id. at 443-45). The Court
deferred ruling on Morrison pending the development of a further factual record. Id. at 405.
The Court dismissed the two individual Citco defendants.
38.

The Court on July 27, 2011 denied defendants’ motions to reargue the August

18, 2010 Order (800 F. Supp. 2d 571).

13

39.

On August 6, 2012, the Court granted renewed motions by the Citco Defendants

(and other Defendants) to dismiss all negligence-based claims made by initial investors in the
Funds. 884 F. Supp. 2d 92. Plaintiffs thereafter amended the SCAC to add further allegations
against the Citco Defendants, and on the basis of those amendments, the Court on May 13,
2014, reinstated Plaintiffs’ negligence-based claims for initial investments against the Citco
Defendants (Dkt No. 1267).
40.

In May 2015, in response to a decision by the Second Circuit Court of Appeals

in another Madoff feeder fund case concerning the application of SLUSA, In re Kingate
Management Ltd. Litig., 784 F.3d 128, Plaintiffs withdrew Count 25 of the SCAC (aiding and
abetting fraud) against the Citco Defendants. Thereafter, the Citco and PwC Defendants filed
renewed motions to dismiss Plaintiffs’ remaining non-federal claims pursuant to SLUSA (Dkt
No. 1386). Plaintiffs opposed that motion (Dkt No. 1387), which was sub judice at the time the
Settling Parties signed a term sheet to settle Plaintiffs’ claims against the Citco Defendants.3
F.

Plaintiffs’ Motion for Class Certification

41.

On January 11, 2012, the Representative Plaintiffs served a motion for class

certification requesting the Court to certify the Action as a class action and to appoint them as
class representatives (Dkt Nos. 775-78). That motion was accompanied by six separate
declarations of foreign law experts opining that various foreign jurisdictions were more likely
than not to give full faith and credit to a U.S. class action judgment (Dkt Nos. 779-84).
3

On July 29, 2015, the Court entered an Order on the PwC Defendants’ motion which dismissed
Plaintiffs’ claims of negligent misrepresentation and sustained Plaintiffs’ claims of negligence. In the
same decision, the Court sustained breach of fiduciary duty, negligence, and gross negligence claims
asserted by plaintiffs in the consolidated Standard Chartered cases. 2015 U.S. Dist. LEXIS 100773.
Thus, although it was not known by Plaintiffs at the time the settlement in principle with Citco was
reached, all of Plaintiffs’ claims, with the exception of negligent misrepresentation, likely would have
survived Citco’s renewed SLUSA motion.

14

42.

Defendants, including Citco, sought extensive discovery in connection with the

class certification motion, including from the proposed Representative Plaintiffs and additional
non-class representative Named Plaintiffs who had joined the SCAC in an individual capacity.4
43.

Plaintiffs opposed discovery of Named Plaintiffs other than the Representative

Plaintiffs and the parties exchanged letter briefs before Magistrate Judge Theodore Katz on
Defendants’ entitlement to take discovery of the non-Representative Plaintiffs.
44.

At a hearing on April 19, 2011, Judge Katz ordered that Defendants be limited

to identifying twenty non-Class Named Plaintiffs to respond to paper discovery. Plaintiffs
subsequently agreed to produce five of those twenty Named Plaintiffs for deposition. All told,
18 depositions of Representative Plaintiffs and Named Plaintiffs were defended by Lead
Counsel.
45.

Following the extensive discovery on class certification issues, all defendants,

including Citco, opposed the Motion for Class Certification, filing a joint brief in opposition, as
well as separate opposition briefs and voluminous exhibits on January 13, 2012 (filed under
seal). Included in the opposition papers were affidavits submitted by 13 foreign law experts
opining that certain foreign jurisdictions were not likely to give full faith and credit to a U.S.
class action judgment.
46.

Defendants, including Citco, in opposing class certification, repeated many of

the same arguments as on the motion to dismiss, including that certain of Plaintiffs’ claims
were derivative and belonged to the Funds. In addition, Citco argued that (i) individual issues
4

Because it was uncertain at various times whether the court would certify a class (or the composition
of that class), and whether the statute of limitations would have run against investors if a class was not
certified (or if those investors were not members of the certified class), Lead Counsel encouraged absent
Class Members to join the action as non-representative Named Plaintiffs. Thus, an additional 300
Named Plaintiffs were joined as plaintiffs in the SCAC, and by so ordered stipulations among the
parties. See Dkt Nos. 597, 600, 611, and 1169.

15

of reliance and damages precluded class certification; and (ii) individual issues precluded
certification of fiduciary duty or negligence claims.
47.

On April 27, 2012, the Class Representatives filed reply submissions in further

support of class certification (filed under seal). Defendants were permitted to file a Sur-Reply
dated May 29, 2012 (filed under seal).
48.

In a Decision and Order on February 25, 2013 (289 F.R.D. 105), this Court

certified a litigation class consisting of investors who had asserted claims against Citco and the
other defendants as follows:
All shareholders/limited partners in Fairfield Sentry Limited, Fairfield Sigma
Limited, Greenwich Sentry, L.P. and Greenwich Sentry Partners, L.P. as of
December 10, 2008 who suffered a net loss of principal invested in the Funds.5
The Court also appointed Plaintiffs’ Lead Counsel to serve in that capacity.
49.

On March 11, 2013, the Citco, PwC and GlobeOp Defendants filed motions

pursuant to Fed. R. Civ. P. 23(f) with the Second Circuit Court of Appeals seeking
interlocutory review of the February 25, 2013 Order. Because the FG Defendants had agreed
by that time to a settlement in principle, they did not appeal, and GlobeOp later withdrew its
motion after agreeing to a settlement. The Second Circuit granted the Citco and PwC motions
pursuant to Rule 23(f) and the appeal proceeded.
50.

On June 19, 2014, the Court of Appeals vacated the District Court’s class

certification order and remanded for additional factual findings. 570 F. App’x 37 (2d Cir.
2014). On August 1, 2014, Plaintiffs renewed their class certification motion against the Citco
and PwC Defendants (filed under seal). The Citco and PwC Defendants opposed that motion.

5

The class certification decision excluded from the litigation class investors from certain foreign
countries.

16

In an order and opinion dated March 3, 2015, this Court made additional factual findings and
further addressed legal issues, again finding that the class should be certified (306 F.R.D. 134).
51.

On March 16 and 17, 2015, the PwC and Citco Defendants, respectively, again

filed motions pursuant to Fed. R. Civ. P. 23(f) with the Second Circuit seeking interlocutory
review of the March 3, 2015 class certification order. The Citco Defendants’ motion was still
pending when, on July 20, 2015, Citco and Plaintiffs signed a term sheet agreeing to the instant
Settlement.
52.

The PwC Defendants’ Rule 23(f) motion is still pending in the Court of Appeals

and the Citco Defendants’ motion is being held in abeyance pending this Court’s decision on
approval of this Settlement (orders dated August 12 and 14, 2015; Second Circuit Dkt No. 15806).
G.

Merits Discovery

53.

Upon substantial denial of the motions to dismiss, the parties engaged in

extensive merits discovery. Among other things, the parties exchanged their initial disclosures
pursuant to Rule 26(a), and Plaintiffs served requests for the production of documents on the
defendants.
54.

Plaintiffs engaged in extensive negotiations with defense counsel (including

Citco’s counsel) concerning the scope, timing and procedure for the production of documents,
including the search terms to be used in conducting electronic discovery.
55.

Defendants subsequently produced, and Plaintiffs’ Counsel reviewed, more than

nine million pages of documents, produced by defendants and non-parties. Plaintiffs’ Lead
Counsel reviewed and produced to defense counsel more than 75,000 pages of documents on
behalf of the Representative Plaintiffs and other Named Plaintiffs.

17

56.

Because of the volume of defendants’ document production, Plaintiffs’ Counsel

established an electronic database with an outside vendor that allowed Plaintiffs’ Counsel to
review, code, organize, search, and retrieve the documents electronically. Examination and
analysis of the documents required a massive effort by teams of attorneys to review the
millions of pages of documents, to analyze, code, and organize them, to identify the documents
that proved Plaintiffs’ allegations, to identify relevant witnesses, and to establish and execute
procedures to identify and ascertain additional necessary information.
57.

Through the completion of merits discovery in 2013, Plaintiffs conducted or

participated in approximately ninety depositions of defendants and third-party witnesses,
including approximately 30 depositions of Citco witnesses.
58.

Defendants learned in discovery that Citco had serious suspicions that Madoff

was operating an illegal enterprise and was frustrated by its inability to verify the existence of
Fund transactions and assets as reported by Madoff. Notwithstanding these concerns, Citco
failed to investigate further, such as by verification with independent third parties. Nor did
Citco resign from its lucrative retention.
59.

Plaintiffs continually pressed Citco on discovery. Among other things, on May

28, 2013, Plaintiffs filed a letter brief seeking to compel Citco to produce documents relating to
Renger Boonstra, who served as general counsel of the Citco Administrator, but was not
admitted to the practice law in the Netherlands. On July 8, 2013, following briefing and
submission of expert affidavits on Dutch law, Magistrate Judge Frank Maas entered an order
compelling Citco to produce Boonstra’s documents. After further briefing, this Court affirmed
Judge Maas’s order on November 8, 2013. Citco also filed an unsuccessful mandamus petition
to the Second Circuit. See Dkt No. 1268. The Boonstra documents, and his continued

18

deposition that Plaintiffs thereby obtained, provided significant confirmatory evidence of
Citco’s culpability.
H.

Expert Discovery

60.

After the completion of merits discovery, Plaintiffs submitted reports from

expert witnesses on issues relating to the Citco Defendants’ liability6 and an expert report on
damages.7 Plaintiffs’ experts opined that it was industry practice for administrators and
custodians to obtain data from independent sources to verify occurrence of trades and the
existence of assets; and that in the absence of Citco’s ability or willingness to obtain such
information from parties other than Madoff, Citco should have resigned as administrator of the
Funds and custodian of the Funds’ assets. Plaintiffs’ experts further opined that the
information available to Citco was sufficient to demonstrate “manifest error” and that Citco
acted in reckless disregard of known facts.
61.

Plaintiffs’ experts opined that the information that Madoff provided to Citco

concerning the Funds’ purported transactions and holdings was replete with errors from which
a diligent administrator or custodian would have suspected fraud. Plaintiffs’ experts concluded
that Citco’s conduct fell far below industry standards and contractual requirements.
62.

Citco submitted reports from seven experts on liability issues, one expert on

damages and one expert on foreign law.8 Citco’s experts opined generally that Citco had no
duty by virtue of its agreements with the Funds to verify information provided by third parties
(including Madoff) in the absence of manifest error and that the financial information available

6

Plaintiffs’ liability experts were Tanya Beder, Glenn Sloat, Anthony J. Leitner and Howell E. Jackson.
Plaintiffs’ damages expert report was Marianne DeMario.
8
Citco’s liability experts were Boris Onefator, David K.A. Mordecai, Hans-Juergen Petersen, Joseph P.
Belanger, Louis J. Freeh, Raymond O’Neill, and Steve Thel. Citco’s damages expert was Paul
Gompers. The foreign law expert was Elizabeth Anne Weaver.
7

19

to Citco did not evidence manifest error. Citco’s experts further opined that it was accepted
industry practice for Citco to have relied on information provided to it by Madoff and the FG
Defendants, and by the PwC Defendants in the form of their annual “clean” audits of the
Funds’ financial statements. Citco’s experts (including Louis J. Freeh, a former director of the
FBI and former federal court judge) opined that Citco was exonerated because the SEC had
been unable to determine that Madoff was operating a Ponzi scheme, even though it had
subpoena power, had received substantial information casting suspicion on Madoff’s
legitimacy and had interviewed Madoff, and deposed and interviewed other persons.
63.

Citco’s damage expert opined, among other things, that because Plaintiffs’

experts had only concluded that Citco should have resigned as administrator and custodian,
Plaintiffs had not sufficiently demonstrated loss causation because other administrators or
custodians would have stepped in to act in those capacities.
64.

Plaintiffs, in response, submitted two rebuttal reports from additional experts

(Steven P. Feinstein and Robert J. Lindquist) and five rebuttal reports from their previously
designated experts. All seven of Plaintiffs’ experts and all eight of Citco’s liability and
damages experts were deposed at length in expert discovery. Plaintiffs and the PwC
Defendants also exchanged expert reports on liability and damages issues and conducted
depositions of each other’s experts.
I.

Summary Judgment and Trial

65.

On April 22, 2015, the Court entered an Order that scheduled September 1, 2015

as the deadline for the parties to file summary judgment motions and set January 4, 2016 as the
date for commencement of trial of the Action. Other dates were scheduled for filing of
Daubert motions, motions in limine, and a Pre-Trial Order (Dkt No. 1368). If not for the

20

Settlement, the Citco Defendants would have filed Daubert motions seeking to limit or exclude
Plaintiffs’ expert witnesses, and summary judgment motions and motions in limine seeking
dismissal or the limitation of the remaining Counts against them in the SCAC.9
II.

SETTLEMENT NEGOTIATIONS, STIPULATION AND PRELIMINARY
APPROVAL ORDER
A.

Negotiations

66.

Beginning in August 2013, at the suggestion of the Court and with the assistance

of retired U.S. District Judge Layn Phillips, a highly experienced mediator, Plaintiffs and the
Citco Defendants engaged in extensive arm’s-length negotiations, including three separate fullday meetings conducted over a two year period. In addition, Judge Phillips spoke repeatedly to
the parties, and counsel engaged in numerous communications, including meeting in person.
During the mediation process, Judge Phillips made a mediator’s proposal that was ultimately
accepted by the parties.
67.

On July 20, 2015, the Settling Parties signed a term sheet agreeing to fully and

finally settle the Action as against the Citco Defendants for $125 million. On August 12, 2015
the parties executed the Stipulation which formalized the settlement terms.
B.

The Stipulation of Settlement and Preliminary Approval

68.

On August 12, 2015, the Settling Parties filed the Stipulation of Settlement

providing for the settlement of all claims asserted against Citco in this Action (Dkt No. 1398),
and a letter request for preliminary approval of the Settlement. On August 13, 2015, the Court
entered a Preliminary Approval Order providing for class notice and scheduling a hearing to
consider final approval of the Settlement for November 20, 2015 (Dkt No. 1402).
9

By Order dated August 28, 2015 (Dkt No. 1406), the date to file motions for summary judgment and
certain other dates were extended because of the continued pendency of the PwC Defendants’ Rule
23(f) Petition in the Second Circuit; the trial date of January 4, 2016 was not changed.

21

69.

The Preliminary Approval Order appointed Rust Consulting, Inc. as the Claims

Administrator and directed the mailing of Notice and Proof of Claim forms, the publication of
Summary Notice in the international editions of The Wall Street Journal (excluding North
America) and issuance of a press release globally (including North America) over PR
Newswire.
70.

The Notice was mailed to over 4000 potential Settlement Class members by the

Claims Administrator on August 27, 2015. The Summary Notice was published in the
international editions of The Wall Street Journal on September 9 and 10, 2015 and over PR
Newswire (worldwide) on September 9, 2015. The mailed Notice provided investors with
detailed information with respect to the proposed Citco Settlement, and the request of
Plaintiffs’ Counsel for payment of fees and expenses. Among other things, Class Members
were advised of the dates to request exclusion from the Class (October 16, 2015), to object to
the proposed Settlement or fee and expense requests (October 16, 2015) and to file a Proof of
Claim (December 28, 2015).
71.

Being filed herewith is the Affidavit of Mailing of Jason Rabe of Rust

Consulting, dated September 29, 2015, attesting to the mailing and publication of the Notice
and Summary Notice pursuant to the Preliminary Approval Order.
72.

To date, Lead Counsel have received no objections to the proposed Citco

Settlement or requests for exclusion from the Class. The Preliminary Approval Order directs
that Lead Counsel respond to objections no later than November 6, 2015. Lead Counsel will
address any objections at that time, if necessary.

22

C.

Terms of the Stipulation

73.

Pursuant to the terms of the proposed Settlement, Citco paid $125,000,000 into

the Citco Settlement Fund on September 18, 2015. If the Settlement is approved, these funds
(less Court-approved attorneys’ fees and reimbursement of expenses) will be paid to the Citco
Settlement Class pursuant to the Plan of Allocation. The Citco Settlement Class is defined in
the Stipulation ¶ 1hh to include “all persons who were beneficial owners of shares or limited
partnership interests in the Funds as of December 10, 2008 (whether as holders of record or
traceable to a shareholder or limited partners account of record), who suffered a Net Loss of
principal invested in the Funds.”
74.

In addition to amounts that they will receive under the Citco Settlement, eligible

Settlement Class Members will have received distributions from the FG and GlobeOp
settlements; investors in the Domestic Funds have received distributions from the bankruptcy
proceedings for those funds; and investors in the off-shore funds are likely to receive additional
cash distributions from the liquidation proceedings in those funds.
75.

In addition, class members will receive additional recoveries from the Madoff

Victim Fund. In December 2012, the U.S. Department of Justice appointed Richard C.
Breeden to serve as its Special Master in administering the distribution of approximately $2.35
billion in forfeitures that had been obtained by the United States Attorney’s Office for the
Southern District of New York in cases related to the Madoff Ponzi scheme. On January 7,
2014 the U.S. Attorney announced an additional $1.7 billion would be paid to the Madoff
Victim fund from the settlement of criminal charges against JPMorgan Chase Bank, N.A.
relating to the bank’s nearly 20 year period as banker for Madoff Securities.
76.

The Madoff Victim Fund announced in May 2015, in an update on its website

23

(http://www.madoffvictimfund.com) that initial claims of $77.3 billion had been filed against
the Fund, but that approximately $18.5 billion of these claims already had been determined to
be ineligible. The maximum eligible claims under the Madoff Victim Fund are estimated to be
$58.8 billion and with current Fund assets of $4.05 billion, the minimum proration would be
approximately 6.9%.
77.

The Citco Settlement provides for a court order barring the Non-Settling

Defendants and other similarly situated Persons from asserting claims for contribution,
indemnification or other similar claims against Citco and other Released Parties. In light of the
release of these potential claims against Citco, the Stipulation provides, as is required by the
PSLRA and New York law, that any judgment obtained against the PwC Defendants “shall be
reduced, to the extent permitted by applicable law, by the greater of (i) the amount that
corresponds to the percentage of responsibility attributed to the [Citco Defendants]; or (ii) the
gross monetary consideration provided to such Representative Plaintiff or other Citco
Settlement Class Member or Members pursuant to this Settlement.” See Stipulation, ¶ 19.
Provisions of this nature are customary and were approved by this Court in entering the Final
Judgments for the FG and GlobeOp Settlements. See Dkt Nos. 1097, 1232.
78.

The Stipulation contains provisions that are intended to ensure that the

Settlement here will have no effect on pending or potential derivative or direct claims being
prosecuted by or on behalf of the Funds against Citco. Paragraph 4 of the Stipulation provides
that the Citco Defendants cannot seek indemnification or contribution from the Funds for costs
incurred in the Anwar litigation or for the Settlement payment. Paragraph 4 also states that it
does not preclude the Citco Defendants from arguing that the settlement proceeds in this case
are an offset against claims that may be made against them in other proceedings.

24

79.

Paragraph 16 of the Stipulation further provides:

This release does not include any claims asserted or which may be asserted by the
Funds, or the pending (though dismissed) derivative litigation brought in
connection with the Funds; provided, however, that to the extent that any such
claims have been or may be asserted, nothing in this paragraph or any provision
herein shall prevent the Released Parties from asserting any defenses or raising
any argument as to liability or damages with respect to such claims or, with the
exception of the provisions of paragraph 4, prevent the Released Parties from
asserting any rights, remedies or claims against the Funds or in the pending
(though dismissed) derivative litigation.10
80.

These provisions have been incorporated into the proposed Final Judgment and

Order of Dismissal (Dkt No. 1398-5 at ¶¶ 16 and 19).
D.

Citco’s Right to Terminate the Settlement

81.

Under the Stipulation, Citco Settlement Class Members may request exclusion

from the Settlement on or before October 16, 2015.
82.

The Stipulation provides for a customary “blow” provision that allows Citco to

terminate the Settlement in the event that Settlement Class Members with aggregate Net Losses
above a certain threshold request exclusion, since Citco did not want to settle Plaintiffs’ claims
for substantial consideration and still be subject to continuing litigation by investors with
substantial losses who may opt-out of the Settlement Class.

10

By letter dated August 21, 2015, the New Greenwich Litigation Trustee, LLC, as Successor Trustee
of the Greenwich Sentry and Greenwich Sentry Partners Litigation Trusts, sought to intervene in this
Action for purposes of objecting to ¶ 4 of the Stipulation on grounds that it somehow prejudiced the
Trustee’s rights in pending (albeit dismissed) litigation against Citco. By Decision and Order on
September 15, 2015, this Court denied the motion, holding that the Trustee’s arguments were
“speculative and thus not sufficient to demonstrate formal legal prejudice.” (Dkt No. 1413 at 6). Lead
Counsel confirm in this motion and will reconfirm at the Final Hearing that nothing in the Stipulation
was intended to prejudice whatever rights the Trustee has in litigation with Citco, or to take any position
on whether there are any offset effects of the Settlement on any other claims.

25

83.

Lead Counsel anticipate a number of exclusion requests may be filed by

members of a group pursuing litigation against Citco in The Netherlands; to date, two requests
have been received.
E.

Plaintiffs’ Percentage Recovery from the Settlement

84.

In connection with the FG Settlement, some 2,960 Settlement Class Members

filed Claim Forms aggregating to $3,265,638,105 of Net Losses. Citco Settlement Class
Members can elect to utilize the information that they submitted on FG Claim Forms to
participate in the Citco Settlement, as long as they confirm its accuracy and sign the Citco
Release. In the event that Settlement Class members with Net Losses of $3,265,638,105 file
claims in this Settlement, the proration, prior to payment of attorneys’ fees or expenses, would
be approximately 3.8%. If the Court approves the requested attorneys’ fees and expenses, and
assuming the same claims amount, the minimum net proration recovery would be
approximately 2.5%
85.

Any amounts received by Settlement Class Members from continued

proceedings against the PwC Defendants, from the FG Settlement Escrow Fund, and from
liquidation and bankruptcy proceedings concerning the Funds, as well as distributions from the
Madoff Victim Fund, would be in addition to the foregoing amounts from the Citco Settlement.
III.

REASONS FOR THE SETTLEMENT
86.

All seven Plaintiffs and all of Plaintiffs’ Lead Counsel, who have extensive

experience in securities and complex shareholder class-action litigation, believe that the
Settlement is fair, reasonable and adequate. Among other factors, the Settlement provides the
Settlement Class with real and certain benefits now and eliminates the risk of obtaining no
additional recovery after still more years of uncertain litigation, including disposition of class

26

certification appeals, a hotly contested trial, likely appeals and potential difficulties of
collecting a judgement. See, e.g., ¶¶ 9-10, supra. In addition, by reducing the number of
defendants and defense counsel in the litigation, and the factual and legal issues in dispute, the
Settlement will enhance Plaintiffs’ ability to successfully litigate the remaining claims against
the PwC Defendants.
87.

Cornerstone Research, a well-known firm that studies securities class actions, in

its Securities Class Action Settlements 2014 Review and Analysis,11 estimated that median
settlements as a percentage of “estimated damages” for 2014 was 2.2% and ranged for 2005
through 2014 between a high of 3.1% to a low of 1.8%. Id. at 8. Cornerstone also concluded
that cases with larger “estimated damages” statistically settle for a lower percentage of
“estimated damages,” and that from 2005-14, the median settlement percentage in cases with
estimated damages of between $1 billion and $4.999 billion was 1.1%. Id. at 9. The
Cornerstone data only takes into account settlements, and does not consider the large number of
cases that are dismissed with no recoveries for the plaintiff class. The settlement amounts used
by Cornerstone in its studies are amounts prior to deduction of attorneys’ fees and expenses.
88.

Here, excluding the $5 million GlobeOp settlement which related only to the

Domestic Funds, recoveries from the FG Settlement ($50 million, excluding $30 million held
in escrow) and the Citco settlement ($125 million) total 5.4% of the $3,265,638,105 in claims
approved in the FG Settlement. This is in addition to actual and anticipated recoveries in
bankruptcy and liquidation proceedings, the Madoff Victim Fund, or from the remaining PwC
claims. Thus, notwithstanding all of the challenges and complexities of this Action, Plaintiffs

11

Available at http://securities.stanford.edu/research-reports/1996-2014/Settlements-Through-122014.pdf.

27

have achieved a recovery that is about five times the median recovery in other actions with
estimated damages in a comparable range.
89.

For these, and a variety of other reasons, Plaintiffs’ Lead Counsel determined,

based on their assessment of the legal, factual and practical risks of continuing the Action
against Citco, proving their claims at trial, sustaining a judgment on appeal and actually
collecting damages from Citco, that the proposed settlement is in the best interests of the
Settlement Class.
IV.

THE PLAN OF ALLOCATION
90.

Pursuant to the Order Preliminarily Approving Settlement and Providing for

Notice of Proposed Settlement entered by this Court on August 13, 2015, and as set forth in the
Notice of Proposed Partial Settlement of Class Action and Settlement Fairness Hearing (at 8),
all Class Members who wish to participate in the distribution of the Citco Settlement Fund
must submit a valid Proof of Claim form so that it is received by the Claims Administrator no
later than December 28, 2015.
91.

Under the Plan of Allocation, the Net Loss for each Settlement Class Member

who submits a valid Proof of Claim is the Net Loss of principal with respect to each Fund. Net
Loss is defined in the Plan of Allocation as “the total cash investment made by a Claimant in a
Fund, directly or indirectly through one or more intermediaries, less the total amount of any
redemptions or withdrawals or recoveries by that Claimant from or with respect to the same
Fund.” If approved, the Plan of Allocation will govern how the proceeds of the Net Settlement
Fund will be distributed among Class Members who submit timely, valid Proof of Claim forms.

28

92.

Each Settlement Class Member will receive as their share of the Net Settlement

Fund the percentage amount derived from dividing such member’s Net Loss by the aggregate
Net Loss of all Settlement Class Members.
93.

Lead Counsel submit that the Plan of Allocation is fair, reasonable, and adequate

and should be approved by the Court.
V.

LEAD COUNSEL’S APPLICATION FOR ATTORNEYS’ FEES AND REQUEST
FOR REIMBURSEMENT OF EXPENSES IS REASONABLE
A.

Request for Attorneys’ Fees and Reimbursement of Expenses

94.

The Class Notice informed Settlement Class Members that Plaintiffs’

Lead Counsel would ask the Court to approve payment from the Settlement Fund of attorneys’
fees of up to 30% of the Settlement Fund and for reimbursement of expenses that were
advanced by Plaintiffs’ Counsel relating to litigation of the claims against Citco not to exceed
$5,500,000. Excluded from Plaintiffs’ expense request are those expenses relating directly to
the remaining PwC claims, such as fees related to accounting expert testimony. To date,
Plaintiffs have received no objections to the fee and expense request.
95.

The attorneys’ fees and expenses requested represent payment to Plaintiffs’

Lead Counsel and other counsel involved in the Action for their efforts in achieving this
Settlement and the risk in undertaking this representation on a wholly contingent basis. Since
the case began in 2008, Plaintiffs’ Counsel have undertaken enormous work necessary to
prepare the case against Citco for trial.
96.

Because the legal and factual issues with respect to Plaintiffs’ claims were

litigated in a single consolidated action, Plaintiffs’ Counsel did not keep separate time records
by defendant. Lead Counsel believe, however, that a great percentage of the work expended on
the Action since its inception contributed to the resolution of the claims against Citco, and that
29

most of the work on the case could not feasibly be separately allocated to the claims against a
particular defendant. During this time, Lead Counsel have, inter alia: (i) conducted an
extensive investigation of public and non-public information with respect to the Class’ claims
including the claims against Citco; (ii) prepared initial complaints, the Consolidated Amended
Complaint, and the subsequent SCAC; (iii) overcome in large part Citco’s motions to dismiss
the SCAC; (iv) served and responded to discovery demands, including third party subpoenas;
(v) conducted discovery and review of millions of documents produced by Defendants; (vi)
responded to detailed interrogatories served on the Representative Plaintiffs and some 20
additional Named Plaintiffs, (vi) conducted approximately 90 depositions of persons affiliated
with Defendants and non-party witnesses, including some 30 depositions of Citco witnesses,
and defended 18 depositions of Representative and other Named Plaintiffs; (vii) successfully
litigated twice the class certification motion; (viii) briefed three motions by Defendants to
reargue denial of dismissal of the SCAC; (ix) participated with defense counsel in dozens of
meet and confer sessions with respect to document, deposition, and other aspects of discovery;
(x) prepared letter-briefs and argued to Magistrate Judges Katz and Maas multiple discovery
disputes, including prevailing on the novel Boonstra motion to compel; (xi) retained and
consulted with experts on investment fund administration and damages, and assisted in the
preparation of expert reports, and as well as analyzing Defendants’ expert reports and
conducting and defending extensive expert depositions; (xii) successfully negotiated the
settlement with Citco and (xiii) otherwise vigorously represented the interests of putative class
members in this extraordinarily complex dispute.
97.

Accompanying this Joint Declaration as Exhibits A through C are lodestar and

expense charts for Boies, Schiller & Flexner LLP, Wolf Popper LLP, and Lovell Stewart

30

Halebian Jacobson LLP, respectively, through July 31, 2015, the approximate date on which
the Settling Parties signed an agreement in principle. We individually attest to the accuracy of
our respective law firm’s records. These charts provide the lodestar of the respective firm at
their standard hourly rates at the time this application is being made. The hours and lodestar of
Lead Counsel, in the aggregate, equals 107,798 and $69,376,217, respectively (see Exhibit D).
98.

In connection with the FG Settlement, by order entered March 27, 2013, this

Court previously awarded Plaintiffs’ Counsel attorneys’ fees of $12,562,500 and
reimbursement of $1,279,242 in expenses incurred through July 31, 2012 (Dkt No. 1099). In a
separate order dated November 22, 2013 (Dkt No. 1233), the Court awarded a fee of
$1,250,000 and expenses of $19,825.42 in connection with the GlobeOp settlement.
99.

The $37.5 million fee request is thus less than 70% percent of Lead Counsel’s

combined unreimbursed lodestar of $55,563,717 (excluding the lodestar of non-Lead Counsel).
100.

The fee application for 30% of the $125,000,000 Citco Settlement Fund is well

within the range of fees awarded in these types of actions and is entirely justified in light of the
substantial benefits conferred on the Class, the exceptional risks undertaken, the quality of
representation, and the nature and extent of legal services performed.
101.

Lead Counsel also are requesting reimbursement of $4,438,320 in unreimbursed

expenses relating to the prosecution of the claims against Citco. These expenses consist
primarily of deposition expenses, including transcripts, video recordings, and travel expenses
incurred subsequent to July 31, 2012 and attributable to the claims against Citco. The expenses
for which reimbursement is requested are detailed in Exhibits A-C and aggregated in Exhibit D.

31

102.

Plaintiffs’ Counsel made every reasonable attempt to allocate the work among

them, working closely to avoid duplication of effort and to ensure efficient prosecution. They
also worked to limit expenses.
103.

Plaintiffs’ Counsel may seek additional attorneys’ fees at a later date based on

future recoveries.
VI.

CONCLUSION
104.

Lead Counsel submit that this is an excellent settlement taking into

consideration all of the circumstances. We respectfully request the Court to approve the Citco
Settlement as fair, reasonable, and adequate to the Citco Settlement Class and approve the
requested attorneys’ fees and expenses.
Dated: October 1, 2015
__________________________________
David A. Barrett

__________________________________
Robert C. Finkel

___________________________________
Victor E. Stewart

32