Anwar et al v. Fairfield Greenwich Limited et al

Filing 1435

ENDORSED LETTER addressed to Judge Victor Marrero from Charles Demoulin and Joeri Klein dated 10/30/2015 re: The Investors suffered significant losses on their investments in the Funds as a result of the fraud committed by Bernard Madoff ("Madoff") and Bernard Madoff investment Securities ("BMIS"). ENDORSEMENT: The Citco Parties are directed to respond by 11-4-15, by letter not to exceed three (3) pages to the matter set forth above by the Investors referred to. (Signed by Judge Victor Marrero on 10/30/2015) (kl)

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15:34:41 30-10-2015 0032 2 6747120 Q " . - d e 1n i n o r Yl RECOVERY SERVICES c=:::::::::::::=::-~-._· ~~~ :=::._:::::::::::;::::::::;;~ .lJ&DC SD\ ·1· DOCL'\ IF\ !' ITECTRO.\!C \LI Y rlIJD ! f)Q(' #: . The Honorable Victor Marrero United States District Court Soutbem District of New York ~DAr=~L!fl_:_--__,_~_,____, 500 Pearl Street New York, New York 10007 United States of America By express delivery service Brussels, October 30'\ 2015 Subject: Anwar, et al. v. Faidit:ld Gn:cnwicb limi~ ct al. - Request& for exclusion from Proposed Partial Class Settlement ~r et/I/~ Dear Judge Marrero, We respectfully submit you this Jetter in our capacity of advisor to and representative of a large number of investors (the "Investors'') in Fairfield Sentry Ltd, Fairfield Sigma Ltd and/or Fairfield Lambda Ltd (the ''Funds"). The Investors suffered significant losses on their investments in the Funds as a result of the fraud committed by Bernard Mad off r'Madoff") and BemardLMi!doffinvestment Securities ('13MIS''). We are aware of the proposed partial class settlement (the "Citco Settlement") between Citco (as well as other entities of their group) and the Representative Plaintiffs in the class action pending before your Court entitled PO!ha Anwar, ti aL 11. Faitfitld Gmmwh Limiltd, ti aL (the "Class Action"). The vast majority of the Investors, at least 562 of them, have timely filed a request for exclusion from the Citco Settlement which you preliminarily approved by Order of August 13, 2015. Together they represent ''Net Losses" (as calculated according to the Stipulation of Settlement) ofUSD 155,376,353.83. Other Investors may have also filed a request for exclusion. These other Investors represent at least up to USO 11,944,208.29 of ''Net Losses". We found it useful to inform you about some of the serious concerns and reserves regarding the Gtco Settlement that explain such a high level of "opt outs". Although members of the proposed "Class" who elect to request exclusion from the Citco Settlement cannot file objections, we still believe that it is important to share this information with you in anticipation of your Settlement Hearing on November 20, 2015. DRS Belgium SCRL I CVBA •Avenue Vari NJeuwerlhuyse Laan, 6b8 • 1180 Bruxelles-Brussel TEL +32 (O) 2 674 71 33 •FAX +32 (0) 2 874 71 20 •RPM BruxeUes APA Brussel• TVA BlW BE 0452.511.928 ING BANK 310-108895Nl8 • IBAN BESS 3101 0689 5708 • BIC BBRUBEBB , /3 15:34:54 30-10-2015 0032 2 6747120 We understand that the reaction of a class to a class settlement is a significant factor to be weighed in considering its adequacy. Accordingly, we consider that the fact that a significant number of potential beneficiaries of the Citco Settlement representing a significant amount of "Net Losses" have filed requests for exclusion is relevant information for your Court. ·n1e Investors are involved in court actions pending in the Netherlands. One of these court actions has been filed in 2010 against Citco Bank Nederland, Citco Group Custody and Citco Fund Services (Europe) (together "Citco''). TI1e court action against Citco is cu1Tcntly pending before the court of first instance (rerhtbo11k) of Amsterdam. 111e Investors hold Citco liable for its role as custodian, depositar:y and administrator of the Funds. They claim a compensation for their own losses suffered on investments in the Funds. Urtder Dutch law, the losses suffered by the Investors could be different than the "Net Losses" as defined in the Stipulation of Settlement. We understand that the Oass Action has been ongoing for many years, many motions filed, extensive discovery took place and you already rendered several orders, decisions and opinions. We are also aware that the Citco Settlement wns the result of a mediation that you had suggested and that this mediation took some time before the parties could come to an agreement. Although they knew of the court action filed by the Investors in the Netherlands, our role as advisor and representative of the Investors and the size of their group in tenns of members and losses, Citco never tried to involve us in their discussions 'With the Representative Plaintiffs. We do not know why they chose to deliber:ately exclude the Imrestors and their representative from those discussions. We find it awkward that a large group of investors actively litigating in court was not invited to discussions with the purpose of reaching a settlement for the benefit of the entire proposed "Oass". This leads us to believe that the "Settlement Class" as defined in the Stipulation of Settlement should not be certified by your Court. Secondly, we do not agree with the argument that the Citco Settlement would provide for a sufficiently fair, reasonable and adequate compensation. Based on assumptions and figures provided by the parties to the Citco Settlement, members of the proposed "Class" could expect a net recovery of approximately 2.5% of their "Net Losses'" (after deduction for the requested attorneys' fees and expenses). We believe that references to statistics from Cornerstone Research are not relevant to assess the fairness of the compensation W1der the Citco Settlement and the potential 2.5% recovery under the Citco Settlement should not be compared with "median settlement percentages" as published by this firm. The fairness of the compensation should rather be assessed bnsed on the specificities of this particular case. We explained to the Investors why we believe that the Citco Settlement does not provide for a reasonable compensation for their losses. Considering their reaction we can only conclude that they agree with us. For many years, Derninor has been advising and representing investors who suffered losses on their investments as a result of the Madoff fraud. With respect to liability claims against service provjders similar to Citco, Deminor advised investors in a European fund that had invested with BMIS. Our clients settled with a service provider for a compensation representing a significant multiple of the compensation the Investors could expect with the proposed Citco Settlement. We are of course willing to share more information about this settlement with your Court in case you 11 C Ill II 0 I' ~u.... to tl1e Honol'ilbl< Voctor ~ • Orto brr 3o", 201!5 • Page 213 2 /3 15:35:15 30-10-2015 3 /3 0032 2 6747120 would be interested. It may be worth adding that, in that other case, the US District Court for the Southern District of N cw Yorlc had previously denied a motion seeking preliminary approval of a partial settlement. In these circumstances it is not surprising that such a high number of Investors have explicitly confirmed that they are not willing to accept an expected compensation representing only 2.5% of their "Net J osscs" and that they want to pursue their claims against Citco in the Netherlands. ... They also find it difficult to accept that Citco could be entitled to benefit from the consequences of a "class settlement" while it is explicitly rejected by a such a significant number of the members of the proposed "Class" representing a significant amount of the ''Net Losses". Finally, we would like inform you that the lawyers representing the Investors in the Dutch court action will confirm to the Dutch lawyers representing Citco that, to the extent some of the Investors would not have filed a (timely) request for exclusion in accordance with the Citco Settlement, they are nevertheless going to pursue their claims against Citco in the Netherlands. We trust that you will give due consideration to the foregoing in your fina] decision on the proposed Citco Settlement We arc available should you want us to provide you with more information. Respectfully yours ~~~l -mail: Tel: +32 2 674 71 33 cl l' 111 n o r · Era.ail~} ·klem@dC!ll! -m : ioen. · Tel : +32 2 674 71 33 i..tter lo th• Honor•ble Victor Ma""'1"0 • OctoLcr 301' . 201.5 • Page 3f3

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