Anwar et al v. Fairfield Greenwich Limited et al

Filing 1444

ENDORSED LETTER addressed to Judge Victor Marrero from Andrew Gordon dated 11/4/2015 re: We represent the Citco Defendants in the above action. As directed by the Court, we respectfully submit this letter in response to the October 30, 2015 letter submitted by advisors to and representatives of certain investors (the "Deminor Investors") in the Fairfield Sentry Ltd., Fairfield Sigma Ltd. and Fairfield Lambda Ltd. funds. ENDORSEMENT: The Clerk of Court is directed to enter into the public record of this action the letter above submitted to the Court by the Citco Defendants. (Signed by Judge Victor Marrero on 11/6/2015) (lmb)

PAUL. WEISS, RIFKIN[), WHARTON & GARRISON LLP
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November 4, 2015

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The Honorable Victor Marrero)t..
United States District Judge
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BRAD R OKUN
KELLEY 0 PARKER
MARC E. PERLMUTTER
VALERIE E RADWANER
CARLL. REISNER
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Anwar, et al. v. Fairfield Greenwich Limited, et al.,
No. 09-cv-118 (S.D.N.Y.) (VM) (FM)
Dear Judge Marrero:
We represent the Citco Defendants in the above action. As directed by the
Court, we respectfully submit this letter in response to the October 30, 2015 letter
submitted by advisors to and representatives of certain investors (the "Deminor
Investors") in the Fairfield Sentry Ltd., Fairfield Sigma Ltd. and Fairfield Lambda Ltd.
funds.
In their letter to the Court, the Deminor Investors purport to offer their
"serious concerns and reserves" about the proposed settlement between plaintiffs and the
Citco Defendants. As we explain below, the Deminor Investors' supposed concerns and
reserves should be rejected as procedurally improper and substantively meritless.

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PAlfL, WEISS, RIFKIND. WHARTUN & (iARRISON LLP

The Honorable Victor Marrero

2

The Deminor Investors' Letter Is Procedurally Improper
As an initial matter, the Deminor Investors' letter is patently improper and
should be disregarded. The Deminor Investors acknowledge that they have filed timely
requests to be excluded from the proposed settlement. They concede, as they must, that
they are, as a result, precluded from objecting to the settlement. See Reid v. SuperShuttle
Int 'l, Inc., No. 08 Civ. 4854 (JG)(VVP), 2012 U.S. Dist. LEXIS 113117, at *6 n.l
(E.D.N.Y. Aug. 10, 2012) ("Some of the class members who have opted out filed letters
with the Court objecting in general terms to the settlement. However, by opting out,
these class members relinquished their standing to formally object to the settlement."); In
re Warner Comm. Sec. Litig., 618 F. Supp. 735, 753 (S.D.N.Y. 1985) (dismissing
purported objections from two opt-outs who objected to a proposed settlement because
the individuals were no longer class members and thus lacked "standing to challenge the
settlement"), ajf'd, 798 F.2d 35 (2d Cir. 1986).
The Deminor Investors purport to state "concerns and reserves" about the
settlement, arguing that the settlement supposedly does not provide "fair, reasonable and
adequate compensation." Such an argument, however, is a quintessential objection to the
terms of a proposed class action settlement. As the case law cited above makes clear, the
Deminor Investors have no standing to assert such an objection, or any other objection
for that matter. Their purported objections should be rejected on this ground alone.
The Deminor Investors' letter, in fact, makes clear the very reasons for the
rule barring opt-outs from objecting to class action settlements. Their letter was
submitted by two lawyers affiliated with Deminor Recovery Services, a firm that is part
of a Luxembourg-based group of companies and that bills itself as an "originator" and
"manager" of "actions on behalf of private and institutional investors." 1 The obvious
purpose of their letter is either to secure additional clients from the class or to scuttle the
proposed settlement, or both. The former interest is not an appropriate basis for an
objection, and the latter is an improper effort to interfere with a settlement in which the
Deminor Investors are not participating.
Further, any concerns on the part of the Deminor Investors that approval
of the proposed settlement could somehow interfere with the claims they acknowledge
they are pursuing against certain Citco entities in the Netherlands should be given no
weight. Those claims arise out of precisely the same circumstances that gave rise to this
matter and seek compensation for both their own and the relevant funds' alleged losses.
The Deminor Investors, however, cannot plausibly complain that the settlement in this
matter could somehow deny them recovery in their Dutch lawsuit. To be clear, Citco
intends to vigorously defend itself against those claims and is confident that its strong
factual and legal defenses will prevail. In the meantime, the Deminor Investors are free
to pursue their claims irrespective of the outcome of this matter.
See Deminor Recovery Services, Recovery of investment losses,
http://www.deminor.com/drs/en/services/recovery-of-losses (last visited Nov. 4, 2015).

PAll L, WEISS, RIFK IND, WHARTON & GARRISON LLP

The Honorable Victor Marrero

3

In Any Event, The Deminor Investors' Objections Are Meritless
Even if the Deminor Investors' objections to the settlement were
considered (and they should not be), they should be rejected on the merits because the
settlement is fair, reasonable, and adequate.
To begin with, the Deminor Investors' view of the proposed settlementwhich was the recommended settlement amount proposed by a highly regarded mediator
after several mediation sessions--evidently is not shared by the vast majority of other
class members. The Deminor Investors claim to have aggregate "Net Losses" of
approximately $155 million. That, however, is less than.five percent of the damages
claimed by plaintiffs in this matter. Significantly, the vast majority of the other class
members-those representing more than 95% of plaintiffs' claimed damages-apparently
agree that the settlement is fair, reasonable, and adequate.
Any class member who wished to opt out of the settlement had to do so by
October 16. As of that date, to the best of our knowledge only two class members
unaffiliated with the Deminor Investors had filed out-out notices. One of those opt-outs
had a Net Loss of only $1.5 million-amounting to only 0.05% percent of plaintiffs'
claimed losses-while the other opt-out was a net winner and thus had no claim. As of
today, both of those opt-outs have withdrawn their requests to be excluded from the class.
Accordingly, to the best of our knowledge not a single class member other than the
Deminor Investors has opted out of the class. The Deminor Investors' view of the
proposed settlement thus stands in marked contrast to the views of other class members,
who have chosen overwhelmingly to participate in the settlement.
Further, the only supposed support the Deminor Investors offer for their
argument that the settlement is supposedly unfair is the fact that class members will
receive, at a minimum, 2.5% of their Net Losses in th~: settlement. But, as the Deminor
Investors acknowledge, plaintiffs have shown, based on research from Cornerstone
Research, 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%." (ECF
No. 1423 iJ 87.) The Deminor Investors cannot rebut that showing by relying on nothing
more than their own ipse dixit that a 2.5% recovery is insufficient "based on the
specificities of this particular case"-"specificities" they do not even identify.
If anything, the "specificities of this particular case" confirm that the
proposed settlement is fair, reasonable, and adequate. As demonstrated in the Citco
Defendants' briefing in both this Court and the Second Circuit, and as explained by
plaintiffs in their motion for approval of the settlement (see ECF No. 1423 iii! 9-10),
plaintiffs face numerous factual and legal obstacles to any recovery on their claims
against the Citco Defendants. The Citco Defendants firmly believe that they would
prevail if this matter proceeded to trial. Moreover, even if plaintiffs prevailed on their
claims, any recovery would likely be years in the future. Under these circumstances, the

PAUL, WEISS, RIFKIN[), WHARTON & liARRISON LLP

The Honorable Victor Marrero

4

recovery class members will receive under the settlement is eminently fair, particularly
when compared with recoveries in other class action settlements in this District.
In sum, the Deminor Investors' objections, even if this Court chooses to
consider them (and it should not), should not stand in the way of the proposed settlement
in this matter.
Respectfully,

O
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Andrew Gordon
cc:

(via email)
Charles Demoulin
Joeri Klein
David A. Barrett
Stuart H. Singer
Victor E. Stewart
Robert C. Finkel
Sarah L. Cave
Timothy A. Duffy

The Clerk of Court is directed to enter into the public record
_j.this a~tion the _Iett~~ above submitted JO, the Court by

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