Anwar et al v. Fairfield Greenwich Limited et al
Filing
331
DECLARATION of Amanda M. McGovern in Support re: #329 MOTION to Dismiss Second Consolidated Amended Complaint.. Document filed by CITCO Fund Services (Europe) B.V., Citco Canada Inc.. (Attachments: #1 Exhibit A, #2 Exhibit B, #3 Exhibit C, #4 Exhibit D, #5 Exhibit E, #6 Exhibit F)(Mcgovern, Amanda)
Anwar et al v. Fairfield Greenwich Limited et al
Doc. 331 Att. 5
Exhibit E
Dockets.Justia.com
Private Placement Memorandum
FAIRFIELD SENTRY LIMITED
A British Virgin Islands International Business Company
Securities Offered: Redeemable, Voting Shares
Minimum Investment per Subscriber: Us. $100,000
Purchase Price per Share: Net Asset Value per Share
Investment Manager
Fairfield Greenwich (Bermuda) Ltd.
Administrator
Citco Fund Services (Europe) B. V.
Placement Agent Fairfield Greenwich Limited
SHARES OF THE FUND MAY BE OFFERED TO PERSONS WHO ARE NEITHER CITIZENS NOR RESIDENTS OF THE UNITED STATES. AND TO A LIMITED NUMBER OF UNITED STATES
INESTORS CONSISTING OF PENSION AND PROFIT SHARING TRUSTS, CHARITIES AND OTHER TAX-EXEMPT ENTITIES.
THE SHARES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. THEY HA VE NOT BEEN REGISTERED UNDER THE SECURITIES LA WS OF ANY JURISDICTION
AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE SHARES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRD OR RESOLD EXCEPT AS PERMITTED UNDER THE FUND'S ARTICLES OF ASSOCIATION THE
SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY REGULATORY AUTHORITY,
NOR HAS ANY SUCH AUTHORITY PASSED UPON OR ENDORSED THE MERITS OF THIS
OFFERING OR THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM
The date of
this Private Placement Memorandum is as of August 14,2006.
Fairfield Greenwich (Bermuda) Ltd.
Solicitation of Subscriptions
The Fund may use the assistance of affiiated or unaffiliated
placement agents and money managers, including FGL (as
defined below), to place the Shares. Such placement agents and intermediaries may charge their clients a placement fee of up to 5% of the total amount of the subscription for Shares sold with their assistance, and/or share in the fees earned from the Fund, which they may rebate to their clients. Placement fees charged
directly by FGL wil not exceed 3%. In certain instances, the
Fund may deduct the amount of the placement fee from the
subscription amount to pay to the placement agent and such
amounts wil not constitute part of the assets of the Fund.
Business Objective
The Fund seeks to obtain capital appreciation of its assets
principally through the utilzation of a nontraditional options
trading strategy described as "split strike conversion", to which
the Fund allocates the predominant portion of its assets. See
"INVESTMENT POLICIES".
Investment Manager
Fairfield Greenwich (Bermuda) Ltd. ("FGBL" or the "Investment Manager"), a corporation organized under the laws of Bermuda, serves as the Fund's investment manager. It is the wholly-owned
subsidiary of Fairfield Greenwich Limited which previously
served as the investment manager of the Fund and currently serves as the Fund's Placement Agent. Jeffrey H. Tucker, Walter
M. Noel, Jr. and Andres Piedrahita are the main principals of
FGL. Mr. Noel is also a Director of the Fund (see "MANAGEMENT OF THE FUN AND OTHER
RELATIONSHIPS"). Effective April 20, 2006, FGBL registered as an investment adviser with the United States Securities and Exchange Commission pursuant to the Investment Advisers Act
of 1940, as amended. The Investment Manager has claimed an
exemption under Commodity Futures Trading Commission
("CFTC") Rule 4.13(a)(3) from registration with the CFTC as a commodity pool operator and, accordingly, is not subject to certain regulatory requirements with respect to the Fund that would otherwise be applicable absent such an exemption.
Placement Agent
Fairfield Greenwich Limited, an exempted company incorporated under the laws of the Cayman Islands "FGL" or the "Placement
Agent"), is the Fund's Placement Agent. FGL oversees the
marketing of the Shares and is an affiiate of the Investment
Manager. FGBL and FGL are member companies of the
Fairfield Greenwich Group ("FGG"), which was established in 1983 and had, as of May 1, 2006, more than $9.0 bilion employed in alternative asset management funds. Throughout its history, FGG has internally managed its own alternative asset funds and selectively identified external managers for affiliations
where it serves as a managerial and distribution partner.
Directors
Walter M. Noel, Jr., Jan R. Naess and Peter P. Schmid are the Directors of the Fund. Mr. Noel is also a Director of FGL, an
affliate of
the Investment Manager.
2
THE
FUND
Description
The Fund was incorporated in the Territory of the British Virgin Islands ("BVI") as an international business company on October 30, 1990. The registered office of the Fund is located in Road Town,
Tortola, British Virgin Islands.
Shareholders wil have the right to redeem part or all of their Shares as of the last business day of any
month (See "TRANSFERS, REDEMPTIONS AND TERMINATION").
MANAGEMENT OF THE FUND AND OTHER RELATIONSHIPS
The Fund
The Fund's Board of Directors has overall management responsibilty for the Fund, including establishing investment, dividend and distribution policy, and having the authority to select and replace the Fund's administrator, registrar and transfer agent, custodian, any offcers of the Fund and other persons or entities with management or administrative responsibilties to the Fund. None of the Fund's Directors own an equity interest in the Fund.
The Directors of
the Fund are as follows:
Walter Noel has over thirt years of experience in the investment business. From 1959 to 1972, he was
associated with the Management Services Division of Arthur D. Little Inc., an industrial and management
consulting firm. From 1972 to 1974, Mr. Noel was President of Bahag Banking Ltd., in Lausane,
Switzerland. In 1974, Mr. Noel became Vice President of the International Private Baning Deparment
of Citbank, N.A., where he remained unti 1977 when he became Senior Vice President of the
International Private Banking Department of Chemical Bank. Mr. Noel remained at Chemical Bank unti 1983, where he shared primary responsibilty for developing its international private banking business. He founded The Fairfield Greenwich Group, an affliate of the Fund's investment manager, Fairfield Greenwich (Bermuda) Ltd., in 1983. Since founding The Fairfield Greenwich Group, Mr. Noel has been a director or general partner for a variety of its funds.
Jan R. Naess received a Bachelor of Arts degree in 1981 and a Masters degree in Economics in 1983
from the University of Oslo. From 1983 to 1987, he was employed in the Economic Research
Department ofR.S. Platou a.s. in Oslo, a leading shipbrokering firm. In 1987, Mr. Naessjoined with R.S. Platou a.s. to form R.S. Platou Asset Management a.s., which was instrumental in the sale and purchase of 15 bulk cariers from 1987 to 1989. In 1989, Mr. Naess liquidated his interest in R.S. Platou Asset Management a.s. and formed PAN Shipping Ltd., a shipowning/operating and project development fund,
which merged with Northern Navigation International Limited ("NNI") in 1991. Mr. Naess is a Vice
President of NNI, a Liberian corporation, which is in the business of investing in and managing shipping
assets.
Peter P. Schmid received a Swiss Federal Certificate of
Capacity in 1968. Mr. Schmid was employed by Credit Suisse from 1968 to 1986. From 1975 to 1977, he was employed in Credit Suisse's International Portfolio Management Department in Zurich. After a brief posting in Credit Suisse's New York offce,
Mr. Schmid was in charge of
the ban's representative offce in Rio de Janeiro from 1977 to 1984. From 1984 to 1986, Mr. Schmid was Vice President in charge of Credit Suisse's Latin American Private Baning Desk in Geneva. Mr. Schmid has been an independent investment adviser since April 1986. He
6
Peter Schmid (Portfolio Management), P. Schmid & Associés, S.A. and Armor S.A. Mr. Schmid is a Director of Inter Asset Management Inc.
is President of
The Investment Manager
The Fund's investment manager is Fairfield Greenwich (Bermuda) Ltd., a corporation organized under the
laws of
Bermuda ("FGBL" or the "Investment Manager"), which was incorporated on June 13,2003. It is
responsible for the management of the Fund's investment activities, the selection of the Fund's investments, monitoring its investments and maintaining the relationship between the Fund and its custodian, administrator, registrar and transfer agent. The Investment Manager is the wholly-owned
subsidiary of Fairfield Greenwich Limited, an exempted company organized under the laws of the
Cayman Islands ("FGL"), which previously served as the investment manager of the Fund and currently serves as the Fund's Placement Agent.
FGBL and FGL are member companies of the Fairfield Greenwich Group ("FGG"), which was established in 1983 and had, as of May 1, 2006, more than $9.0 bilion employed in alternative asset management funds. Throughout its history, FGG has internally managed its own alternative asset funds
and selectively identified external managers for affliations where it serves as a managerial and
distribution partner.
The Investment Manager and its affiiates currently serve as investment or administrative manager to more than twenty funds, and have exclusive distribution arrangements with several others. FGG
maintains its principal offce in New York, with a significant presence in London and Bermuda. Marketing and client support offces exist in other locations in the United States, Europe, and Latin America. FGG's London entity is licensed and subject to the supervision of the United Kingdom Financial Services Authority (the "FSA"). An affiliate of FGG is registered as a broker-dealer in the
United States.
Effective April 20, 2006, the Investment Manager registered as an investment adviser with the Securities and Exchange Commission under the Investment Advisers Act of 1940, as amended. In addition, the
Investment Manager has claimed an exemption under Commodity Futures Trading Commission
("CFTC") Rule 4.l3(a)(3) from registration with the CFTC as a commodity pool operator and, accordingly, is not subject to certain regulatory requirements with respect to the Fund that would
otherwise be applicable absent such an exemption.
Pursuant to the Investment Management Agreement between the Fund and the Investment Manager, the
Investment Manager and the Placement Agent is not liable for any error of judgment or for any loss incurred by the Fund, except a loss resulting from wilful malfeasance, bad faith or gross negligence in
the performance of its duties under such agreement. The Investment Management Agreement further
provides that the Investment Manager, the Placement Agent, their directors, officers, employees, agents and counsel wil be indemnified and held harmless by the Fund against any and all claims, liabilty and expenses for any loss suffered by the Fund arising out of any act or omission of such indemnified part, except to the extent an act or omission constitutes wilful misconduct or reckless disregard of the duties of
such indemnified part. The Investment Management Agreement may be terminated by either par
thereto on ten days' written notice prior to the end of any calendar quarter.
The Placement Agent
Fairfield Greenwich Limited ("FGL" or the "Placement Agent"), the Fund's placement agent, oversees the marketing of the Shares.
7
Amit Vijayvergiya is Managing Director of the Investment Manager and focuses on manager selection and risk management for the Fund. He has been employed by the Investment Manager since 2003. Mr. Vijayvergiya has over 12 years of experience in asset management, risk management and operations
research. Prior to joining the Investment Manager, from 2000 to 2003, Mr. Vijayvergiya managed MA V
Hedge Advisors, a family office investing in traditional and alternative investment managers. From 1998 to 2000, he was the General Manager of LOM Asset Management ("LOM AM"), where he oversaw the management of $160 milion in assets. At LOM AM, Mr. Vijayvergiya structured and managed several
multi-manager funds and served on the firm's management and investment committees. He began his
business career in 1994 with a position in operations research at Canadian National Railways. Mr. Vijayvergiya received a Masters in Business Administration from Schulich School of Business at York
University, a Bachelors of Science in Statistics from the University of Manitoba and a Bachelors of Arts in Economics from the University of Western Ontario. Mr.Vijayvergiya holds the Chartered Financial Analyst designation and the Financial Risk Manager certification.
INVESTMENT POLICIES
The Fund seeks to obtain capital appreciation of its assets principally through the utilzation of a
nontraditional options trading strategy described as "split strike conversion", to which the Fund allocates the predominant portion of its assets. Set forth below is a description of the "split strike conversion" strategies ("SSC Investments").
The establishment of a typical position entails (i) the purchase of a group or basket of equity securities that are intended to highly correlate to the S&P 100 Index, (ii) the purchase of out-of-the-money S&P 100 Index put options with a notional value that approximately equals the market value of the basket of equity
securities, and (ii) the sale of out-of-the-money S&P 100 Index call options with a notional value that
approximately equals the market value of the basket of equity securities. An index call option is out-ofthe-money when its strike price is greater than the current price of the index; an index put option is outof-the-money when the strike price is lower than the current price of the index. The basket typically
consists of
between 35 to 50 stocks in the S&P 100 Index.
The primary purpose of the long put options is to limit the market risk of the stock basket at the strike price of the long puts. The primar purpose of the short call options is to largely finance the cost of the put hedge and to increase the stand-stil rate of return.
This position in its entirety could be characterized as a bull spread which, presuming the stock basket highly correlates to the S&P 100 Index, is intended to work as follows: (i) it sets a floor value below which further declines in the value of the stock basket is offset by gains in the put options, (ii) it sets a ceilng value beyond which further gains in the stock basket are offset by increasing liabilty of the short potential market gain or loss, depending on how tightly the options collar calls, and (iii) defines a range of
is struck.
the strategy can be expressed at implementation by the selection ofthe strike prices in the S&P 100 Index put and call options. The farther away the strike prices are from the price of the S&P 100 Index, the more bullsh the strategy.
The degree ofbullsbness of
The Split Strike Conversion strategy is implemented by Bernard L. Madoff Investment Securities LLC
("BLM"), a broker-dealer registered with the Securities and Exchange Commission, through accounts maintained by the Fund at that firm. The accounts are subject to certain guidelines which, among other
things, impose limitations on the minimum number of stocks in the basket, the minimum market
9
stationery; telephone lines, usage and equipment and other items which might otherwise be treated as an
expense of the Investment Manager or the Non-SSC Investment managers. To the extent the Investment
Manager or the Non-SSC Investment managers utilze commissions to obtain items which would
otherwise be an expense of the Investment Manager or the Non-SSC Investment managers, such use of
commissions in effect constitutes additional compensation to the Investment Manager or the Non-SSC
Investment managers, as the case may be. Certain of the foregoing commission arangements are outside the parameters of Section 28( e) of the Securities Exchange Act of 1934, as amended which permits the
use of commissions or "soft dollars" to obtain "research and execution" services. Finally, since
commission rates are generally negotiable, selecting brokers on the basis of considerations which are not limited to applicable commission rates may result in higher transaction costs than would otherwise be obtainable.
ADMINISTRATOR, REGISTRAR AND TRANSFER AGENT
Pursuant to an administration agreement, dated February 20, 2003, between Citco Fund Services (Europe) B.V. ("Citco") and the Fund (the "Administration Agreement"), Citco serves as the administrator for the
Fund, under the overall direction of the Fund's Board of Directors. As administrator, Citco has the
responsibilty for furnishing the day-to-day administrative services which the Fund may require, such as: accounting services; maintaining the Fund's books and records; preparation of reports and accounts;
calculation of
Net Asset Value and fees; communications with shareholders and/or governental bodies;
paying the Fund's expenses; providing suitable facilties and procedures for handling dividends and
distributions (if any) and the orderly liquidation and dissolution of the Fund, if required. In consideration
of its services, Citco receives a monthly fee based on the Net Asset Value of the Fund as of the last
business day of each month at a commercially reasonable rate.
To the extent that Citco relies on information supplied by the Fund, any investee fund of the Fund or any brokers engaged by the Fund, in connection with making any of the aforementioned calculations, Citco's liabilty for the accuracy of such calculations is limited to the accuracy of its computations. Citco shall
not be liable for the accuracy of the underlying data provided to it.
Pursuant to the Administration Agreement, the Fund has agreed to indemnifY Citco, its subsidiaries,
affiiates, directors and other officers, shareholders, servants, employees, agents and permitted delegates under the Administration Agreement, against any and all liabilties, obligations, losses, judgments and expenses of any kind or nature whatsoever (collectively, the "Claims" and, individually, a "Claim") which may be imposed on, incurred by or asserted against any of them arising (other than by reason of negligence, bad faith, fraud or dishonesty on the part of Citco or such other indemnified part) out of the provision of services under the Administration Agreement. Similarly, Citco wil indemnify the Fund from and against any Claim which arises directly out of the negligence, bad faith, fraud or dishonesty of its obligations on the part of Citco in connection with its provision of services under the Administration Agreement. The Administration Agreement may be terminated by either part on 90 days' prior written notice; provided, however, that the Administration Agreement may be terminated forthwith by notice in the Administration Agreement the other part (a) commits a material breach of writing by either part if
and fails to cure such breach within 30 days after notice from the non-defaulting part; or (b) enters into
involuntary liquidation or if a receiver is appointed over any of its assets.
RISK FACTORS
The purchase of Shares in the Fund involves substantial risks that are incident to the Fund's allocation of assets to SSC and Non-SSC Investments.
17
1. Trading Risks. Substantial risks are involved in the trading of equity securities
and options. Market movements can be volatile and are difficult to predict. u.s. Government activities, paricularly those of the Federal Reserve Board, can have a profound effect on interest rates which, in turn, substantially affect securities and options prices, as well as the liquidity of such markets. Politics, recession, inflation, employment levels, trade policies, international events, war and other unforeseen events can also have significant impact upon the prices of securities and options. A variety of possible actions by various governent agencies also can inhibit the profitabilty of the Fund's business or can result in losses. Such events, which can result in huge market movements and volatie market conditions, create the risk of catastrophic losses for the Fund.
Various techniques are employed to attempt to reduce a portion of the risks inherent in the trading
strategies utilzed by or on behalf of the Fund. The abilty to achieve the desired effect through a
particular technique is dependent upon many factors, including the liquidity of the market at the desired time of execution. Thus, substantial risk remains that the techniques employed by or on behalf of the Fund cannot always be implemented or effective in reducing losses. At various times, the markets for exchange-listed equity securities and options and/or other securities may be "thin" or iliquid, making
purchases or sales of securities at desired prices or in desired quantities diffcult or impossible. In addition, options prices are extremely volatie. The volume and volatilty of trading in these markets
the liquidity provided by market-makers and specialists. The liquidity of
depends in part on general public interest and public opinion concerning economic conditions as well as the market may also be affected by a halt in trading on a particular futures or securities exchange or exchanges. Iliquid markets may make it diffcult to get an order executed at a desired price.
2. Trading Strategies May Not be SuccessfuL. There can be no assurance that
any trading method employed by or on behalf of the Fund wil produce profitable results, and the past performance of the Fund is not necessarily indicative of its future profitabilty. In that regard, certain of the managers receiving Non-SSC Investment allocations may not have investment records compiled while managing assets on their own. Profitable trading is often dependent on anticipating trends or trading
patterns. In addition, markets experiencing random price fluctuations, rather than defined trends or
patterns, may generate a series of losing trades. There have been periods in the past when the markets have been subject to limited and il-defined price movements, and such periods may recur. Any factor
which may lessen major price trends (such as governental controls affecting the markets) may reduce
the prospect for future trading profitabilty. Any factor which would make it diffcult to execute trades,
such as reduced liquidity or extreme market developments resulting in prices moving the maximum amount allowed in a single day, could also be detrimental to profits or cause losses.
3. Dependence upon Principals and Key Employees ofthe Investment Manager
and BLM. The services of the Investment Manager's principals and key employees and BLM are
essential to the continued operations of the Fund. If their services were no longer available, their absence
would have an adverse impact upon an investment in the Fund. The key employees of the Investment
Manager wil allocate a small portion of the Fund's assets between and among the Non-SSC Investment managers. The Fund wil be dependent on the continued presence of these key employees in connection the Non-SSC Investments. these allocations and the monitoring of the recipients of with identification of
4. Incentive Compensation. The payment of a percentage ofthe Fund's net profits to FGL (an affiiate of the Investment Manager) may create an incentive for the Investment Manager to cause the Fund to make investments that are riskier or more speculative than would be the case if this
payment were not made. Since the fee is calculated on a basis that includes unrealized appreciation of
assets, such fee may be greater than if it were based solely on realized gains.
18
14. Prohibition of Exercise Rights. The options markets have the authority to
prohibit the exercise of paricular options. If a prohibition on exercise is imposed at a time when trading in the option has also been halted, holders and writers of that option wil be locked into their positions until one of the two restrictions has been lifted.
15. Absence of Regulatory Oversight. While the Fund may be considered similar
to an investment company, it does not intend to register as such under the U.S. Investment Company Act of 1940, as amended, in reliance upon an exemption available to privately offered investment companies, and, accordingly, the provisions of that Act (which, among other matters, require investment companies to have disinterested directors, require securities held in custody to at all times be individually segregated from the securities of any other person and marked to clearly identifY such securities as the property of such investment company and regulate the relationship between the adviser and the investment company) wil not be afforded to the Fund or the shareholders. Effective April 20, 2006, the Investment Manager registered as an investment adviser under the Advisers Act.
16. Risks of Leverage. The Non-SSC Investment vehicles in which the Fund
invests may borrow funds in connection with their investment strategies. A particular Non-SSC Investment vehicle may not be subject to any limitation in the amount of its borrowings, and the amount of borrowings that the Non-SSC Investment vehicle may have outstanding at any time may be substantial
in comparison to its capital.
The use of leverage may provide the Non-SSC Investment vehicle with the opportunity for greater capital
appreciation, but at the same time wil increase the Non-SSC Investment vehicle's, and indirectly the Fund's, exposure to capital risk and higher current expenses. Moreover, if the assets of the Non-SSC Investment vehicle are not suffcient to pay the principal of, and interest on, the Non-SSC Investment loss of its investment in the Non-SSC Investment vehicle's debt when due, the Fund could sustain a total
vehicle.
17. Possibilty of Misappropriation of Assets. When the Fund invests utilzing the
"split strike conversion" strategy or in a Non-SSC Investment vehicle, it wil not have custody of the assets so invested. Therefore, there is always the risk that the personnel of any entity with which the
Fund invests could misappropriate the securities or funds (or both) of
the Fund.
18. Sole Proprietor Non-SSC Investment Managers. Some of the Non-SSC
Investment vehicles to which the Fund may allocate capital may consist of investment operations with
only one principaL. In such cases, if that individual's services became unavailable to the Non-SSC
Investment vehicle, the Fund might sustain losses.
19. Experience of Non-SSC Investment Managers. While certain of
the Non-SSC
Investment managers have had extensive experience in trading securities generally and within their
specific investment strategies, they may have had little experience in investing and trading on behalf of a pooled investment vehicle, in utilzing certain of the investment strategies to be employed on behalf of the Fund or in managing an account as large as that anticipated for the Non-SSC Investments. In that regard, as the assets of the Non-SSC Investment vehicles increase, it is not known what effect, if any, this wil have on the trading strategies utilzed on their behalf or their investment results.
20. Emerging Managers. As the Non-SSC Investment vehicles generally wil be in an early stage of formation or operation, this can pose a number of operational and other issues. For
example, in its early stages the Non-SSC Investment manager may have little capital available to cover
expenses and, accordingly, may have diffculty attracting qualified personneL. Competing investment
21
For the Exclusive Use of:
Copy
No.
Confidential Private Placement Memorandum
FAIRFIELD SIGMA LIMITED A British Virgin Islands International Business Company
Securities Offered: Redeemable Voting Shares
Minimum Investment per Subscriber: 200,000 EUR
Purchase Price per Share: Net Asset Value per Share
Investment Manager:
Fairfield Greenwich (Bermuda) Ltd.
Administrator:
Citco Fund Services (Europe) B. V.
THE DIRECT OR INDIRECT SALE OF SHARES OF FAIRFIELD SIGMA LIMITED TO CITIZENS, NATIONALS OR RESIDENTS OF, OR INSTITUTIONS OR OTHER ENTITIES ORGANIZED,
CHARTERED OR RESIDENT IN THE UNITED STATES OF AMERICA IS EXPRESSLY
PROHIBITED.
'¡,
THE SHARES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. THEY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES LAWS OF ANY JURISDICTION AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SUCH LAWS. THE SHARES ARE SUBJECT
TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRD OR RESOLD EXCEPT AS PERMTTED UNDER THE FUND'S ARTICLES OF ASSOCIATION.
THE SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY REGULATORY
AUTHORITY NOR HAS ANY SUCH A UTHORITY PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM.
This Private Placement Memorandum is
dated as of February 16,2006
Fairfeld Greenwich (Bermuda) Ltd.
of Subscriptions
the Fund or through the assistance of unaffliated placement agents
and money managers. Such unaffiiated placement agents and
money managers may charge their clients a placement fee of up to 5% of the total amount of the subscription for Shares sold with their assistance, and/or share in the fees earned by Fairfield Greenwich (Bermuda) Ltd. ("FGBL"), as Investment Manager, which they may
placement fee of up to 3% on such subscriptions, provided that total
rebate to their clients. FGBL or an affliate may also charge a
placement fees do not exceed 5%. In certain instances, the Fund
may deduct the amount of the placement fee from the subscription
amount to pay to the unaffiiated placement agent or FGBL and such amounts wil not constitute part of the assets of the Fund.
Business Objective
of
the Fund
The Fund wil seek to achieve capital appreciation of its assets by purchasing shares in Fairfeld Sentry Limited ("FSL"), a British Virgin Islands international business company, which principally utilzes an options trading strategy described as "split strike conversion". FSL is an affiiate of the Fund and the investment
manager, Fairfield Greenwich (Bermuda) Ltd.
The Fund wil allocate a small portion of its assets to a nonaffiliated bank (the "Bank") to provide a currency overlay program designed to hedge the currency exposure of its Shareholders resulting from the
Fund holding assets denominated in U.S. Dollars. The Fund's obligations to the Bank with respect to the currency hedging
activities may be collateralized from time to time through a pledge of the assets underlying the Shares (i.e., the Fund's shares in FSL). In order to perfect this pledge of assets, the Fund's shares in FSL may be held in the name of the Bank. In that event, the Bank wil be permitted to take any and all appropriate action with respect to these FSL shares at any time in the event of a default on the part of the Fund with respect to its obligations to the Bank.
Investment Manager
Fairfield Greenwich (Bermuda) Ltd. ("FGBL" or the "Manager"), a
corporation organized under the laws of Bermuda, serves as the
Fund's investment manager and is the Investment Manager of FSL.
It is the wholly-owned subsidiary of Fairfeld Greenwich Limited
("FGL"), an exempted company organized under the laws of the
Cayman Islands, which previously served as the investment manager
of H. Tucker, and Andres Piedrahita. Mr. Noel is also a Director of
the Fund. FGL's main principals are Walter M. Noel, Jr., Jeffrey the
Fund (see "MANAGEMENT OF THE FUND AND OTHER
RELATIONSHIPS"). FGBL expects to register as an investment adviser with the Securities and Exchange Commission under the Investment Advisers Act of 1940 in early 2006. The Manager has claimed an exemption under Commodity Futures Trading Commission ("CFTC") Rule 4.l3(a)(3) from registration with the
CFTC as a commodity pool operator and, accordingly, is not subject
to certain regulatory requirements with respect to the Fund that
2
persons or entities with management or administrative responsibilties to the Fund. None of the
Fund's Directors own an equity interest in the Fund.
The Directors of
the Fund are as follows:
Walter M. Noel, Jr., over 30 years of experience in the investment business. From 1959 to 1972, he was associated with the Management Services Division of Arthur D. Little Inc., an
industrial and management consulting firm. From 1972 to 1974, Mr. Noel was President of
Bahag
Banking Ltd., in Lausanne, Switzerland. In 1974, Mr. Noel became Vice President of the
International Private Banking Department of Citibank, N .A., where he remained until 1977 when he became Senior Vice President of the International Private Banking Departent of Chemical Bank.
Mr. Noel remained at Chemical Bank until 1983, where he shared primary responsibilty for
developing its international private banking business. Since founding The Fairfield Greenwich the Fund's investment manager, Fairfield Greenwich (Bermuda) Ltd., in 1983, Group, an affiliate of
Mr. Noel has been a director or general parter of a variety of its funds, including Fairfeld Sentry Limited, directing marketing activity, and originating various of The Fairfeld Greenwich Group's
business opportnities. Mr. Noel graduated from Vanderbilt University in 1952, received a Master of
Arts in Economics from Harvard University in 1953, and graduated from Harvard Law School in
1959.
Jan R. Naess, received a Bachelor of Arts degree in 1981 and a Masters degree in
Economics in 1983 from the University of Oslo. From 1983 to 1987, he was employed in the Economic Research Department of RS. Platou a.s. in Oslo, a leading shipbrokering firm. In 1987, Mr. Naess joined with R.S. Platou a.s. to form RS. Platou Asset Management a.s., which was instrmental in the sale and purchase of 15 bulk carriers from 1987 to 1989. In 1989, Mr. Naess liquidated his interest in RS. Platou Asset Management a.s. and formed PAN Shipping Ltd., a
shipowningloperating and project development company, which merged with Northern Navigation International Limited ("NNI") in 1991. Mr. Naess is a Vice-President of NNI, a Liberian corporation, which is in the business of investing in and managing shipping assets. He serves as a
Director of several funds with which The Fairfeld Greenwich Group is affiliated, including Fairfeld Sentr Limited.
Peter P. Schmid, received a Swiss Federal Certificate of Capacity in 1968. Mr. Schmid
was employed by Credit Suisse from 1968 to 1986. From 1975 to 1977, he was employed in Credit Suisse's International Portfolio Management Department in Zurich. After a brief posting in Credit the Bank's representative office in Rio de Suisse's New York offce, Mr. Schmid was in charge of Credit Janeiro from 1977 to 1984. From 1984 to 1986, Mr. Schmid was Vice President in charge of Suisse's Latin American Private Banking Desk in Geneva. Mr. Schmid has been an independent
investment adviser since April 1986. He is President of Peter Schmid (Portfolio Management), P.
Schmid & Associés, S.A., Rock Ltd. and Armor S.A. Mr. Schmid is a Director of several funds with which The Fairfeld Greenwich Group is affliated, including Fairfeld Sentr Limited.
The Investment Manager
The Fund's investment manager is Fairfield Greenwich (Bermuda) Ltd. ("FGBL or the "Manager"), a corporation organized in Bermuda, which was incorporated on June 13, 2003. It is
responsible for managing the Funds' investment activities, monitoring its investments and maintaining the relationship between the Fund and Fairfield Sentr Limited and with its escrow
agent, custodian, administrator and transfer agent. The Manager is the wholly-owned subsidiary of Fairfeld Greenwich Limited, an exempted company organized under the laws of the Cayman Islands
5
("FGL"), which previously served as the investment manager of the Fund and Fairfield Sentry
Limited.
The Fairfeld Greenwich Group ("FGG"), of which the Manager is an affliate, was established in 1983 and has approximately $9 bilion employed in alternative asset management funds. Throughout its history, the firm has internally managed its own alternative asset funds and selectively identified external managers for affliations where it serves as a marketing and
distribution partner, and obtains underlying portfolio inforiation for monitoring and client
communication purposes.
The Manager and its affiiates currently serve as investment or administrative manager to
approximately twenty funds, and have exclusive distribution arrangements with several others. FGG
maintains its offices in New York, with a significant prèsence in London. Marketing and client support offces are located elsewhere in the United States, Europe, and Latin America. FGG's London entity is licensed and subject to the supervision of FSA, and another FGG affliated entity is
registered as a broker-dealer in the United States.
The Manager expects to register as an investment adviser with the Securities and Exchange Commission under the Investment Advisers Act of 1940 in early 2006. In addition, the Manager has claimed an exemption under Commodity Futures Trading Commission ("CFTC") Rule 4.13(a)(3) from registration with the CFTC as a commodity pool operator and, accordingly, is not subject to
certin regulatory requirements with respect to the Fund that would otherwise be applicable absent
such an exemption.
Following is biographical information on the founders, principal officers and certain other
key employees of FGG:
Walter M. Noel Jr. His background is summarized under "MANAGEMENT OF THE
FUND AND OTHER RELATIONSHIPS -The Fund".
Andres Piedrahita founded Littlestone Associates in 1991, which merged with FGG in
1997. Mr. Piedrahita directs the Group's European and Latin American activities. Mr. Piedrahita has over 15 years of experience in the investment business. Prior to the merger, Mr. Piedrahita was the Director and President of Littlestone Associates, Inc. (1991-1997). He was previously a Vice President at Shearson Lehman Hutton, specializing in money management consulting for non-U.S. institutions and individuals (1987-1990). Before joining Shearson, Mr. Piedrahita was a financial
consultant with Prudential Bache Securities Inc. in New York (1981-1987). He received his
Bachelor of Arts degree from Boston University's School of
Communications.
Jeffrey Tucker has over 30 years of experience in investment related businesses. Mr.
Tucker was an attorney with the Securities and Exchange Commission from 1970 to 1978. From 1975 to 1978, he was an Assistant Regional Administrator of the SEC's New York regional office, with supervisory responsibilty for approximately half of its enforcement program. Mr. Tucker entered private practice in 1978 as a partner in the law firm Tucker, Globerman & Feinsand, where
he remained until
1987. He specialized in securities and transactional matters, with a principal focus
on limited partnership offerings. Mr. Tucker entered the securities industry in 1987 as a general
parter of Fred Kolber & Co. (Limited Partership) ("Kolber"), a registered broker-dealer. At
Kolber, Mr. Tucker was responsible for the development and administration of the firm's affliated private investment funds. FGG began its association with Kolber at that time as a marketing agent, and the firms subsequently merged activities. Throughout FGG's development, Mr. Tucker has been
6
Pursuant to the Investment Management Agreement between the Fund and
the Manager,
the Manager is not liable for any error of judgment or for any loss suffered by the Fund unless such
loss resulted from the Manager's wilful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties. (See "RISK FACTORS").
INESTMENT POLICIES
The Fund seeks to obtain capital appreciation of its assets by primarily investing in
Fairfeld Sentr Limited, a British Virgin Islands corporation ("FSL"). FSL principally utilzes a
nontraditional options trading strategy described as "split strike conversion". This strategy has
defined risk and profit parameters which may be ascertained when a particular position is established. the "split strike conversion" strategy. Set forth below is a description of
The establishment of a typical position entails (i) the purchase of a group or basket of
equity securities that are intended to highly correlate to the S&P 100 Index, (ii) the sale of out of the
money S&P 100 Index call options in an equivalent contract value dollar amount to the basket of
equity securities, and (ii) the purchase of an equivalent number of out of the money S&P i 00 Index put options. An index call option is out of the money when its strike price is greater than the current price of the stock; an index put option is out of the money when the strike price is lower than the current price of the index. The basket typically consists of approximately 35 to 40 stocks in the S&P
100.
The logic of this strategy is that once a long stock position has been established, selling a call against such long position wil increase the standstil rate of return, while allowing upward the money put, funded with part or movement to the short call strike price. The purchase of an out of all of the call premium, protects the equity position from downside risk.
A bullsh or bearish bias of the positions can be achieved by adjustment of the strike prices
in the S&P 100 Index puts and calls. The further away the strike prices are from the price of the S&P
100 Index, the more bullsh the strategy. However, the dollar value underlying the put options always approximates the value of the basket of stocks.
The options transactions executed for the benefit of FSL, and indirectly, the Fund, may be
effected in the over-the-counter market or on a registered options exchange. (See "POTENTIAL CONFLICTS OF INTEREST").
The Split Strike Conversion strategy is implemented by Bernard L. Madoff Investment Securities ("BLM") through accounts maintained at that firm. The accounts are subject to certain guidelines which, among other things, impose limitations on the minimum number of stocks in the basket, the minimum market capitalization of the equities in the basket, the capitalization weightings of each security in the basket, the minimum correlation of the basket against the S&P 100 Index, and
the permissible range of option strike prices. Subject to the foregoing guidelines, BLM is authorized to determine the price and timing of stock and option transactions in the account. The services of
BLM and its personnel are essential to the continued operation of the Fund, and its profitability, if
any.
Currency Hedge
has established an account at a nonaffiliated bank (the "Bank") to hedge the currency exposure of
In an effort to manage the U.S. Dollar exposure of the Fund's shareholders, the Manager the
8
Brokerage
It is expected that the Manager and the Non-SSC Investment managers wil generally allocate
brokerage business on the basis of best available execution and in consideration of such brokers'
provision of brokerage and research services. The Manager and the Non-SSC Investment managers may also utilze brokers with which the Non-SSC Investment managers are affiiated.
In selecting brokers or dealers to execute transactions, the Manager and the Non-SSC Investment managers typically wil not solicit competitive bids and wil not have an obligation to
seek the lowest available commission cost. It generally wil not be the practice of
the Manager or the
Non-SSC Investment managers to negotiate "execution only" commission rates, and thus the Fund may be deemed to be paying for research and other services provided by the broker which are included in the commission rate. Research furnished by brokers may include, but is not limited to, written information and analyses concerning specific securities, companies or sectors; market, financial and economic studies and forecasts; financial publications; statistic and pricing services, as
well as discussions with research personnel, along with hardware, softare, data bases and other
technical and telecommunication services and equipment utilzed in the investment management
process. Research services obtained by the use of commissions arising from such transactions may
be used by the Manager or the Non-SSC Investment managers in their other investment activities.
The Manager and the Non-SSC Investment managers may also be paying for services other than research that are included in the commission rate. These other services may include, without limitation, office space, facilties and equipment; administrative and accounting support; supplies and stationery; telephone lines, usage and equipment and other items which might otherwise be treated as
an expense of
the Manager or the Non-SSC Investment managers. To the extent the Manager or the
Non-SSC Investment managers utilizes commissions to obtain items which would otherwise be an expense of the Manager or the Non-SSC Investment managers, such use of commissions in effect
constitutes additional compensation to the Manager or Non-SSC Investment managers. Certain of
the foregoing commission arrangements are outside the parameters of Section 28( e) of the Securities Exchange Act of 1934 which permits the use of commissions or "soft dollars" to obtain "research and execution" services. Finally, since commission rates are generally negotiable, selecting brokers on the basis of considerations which are not limited to applicable commission rates may result in higher transaction costs than would otherwise be obtainable.
ADMIISTRATOR, REGISTRA AN TRASFER AGENT
Pursuant to an agreement between Citco Fund Services (Europe) BV ("Citco" or the "Administrator") and the Fund, Citco serves as the administrator for the Fund, under the overall direction of the Fund's Board of Directors. As administrator, Citco has the responsibilty for
furnishing the day to day administrative services which the Fund may require, such as: accounting
services; maintaining the Fund's books and records; preparation of reports and accounts; calculation Net Asset Value and fees; communications with shareholders and/or governmental bodies; paying of the Fund's expenses; providing suitable facilties and procedures for handling dividends and required. the Fund, if any) and the orderly liquidation and dissolution of distributions (if
To the extent that Citco relies on information supplied by the Fund, any investee fund of the Fund or any brokers engaged by the Fund, in connection with making any of the aforementioned calculations, Citco's liabilty for the accuracy of such calculations is limited to the accuracy of its
computations. Citco shall not be liable for the accuracy of
the underlying data provided to it.
16
Pursuant to the Administration Agreement, dated as of
February 20,2003, between the Fund
and Citco, the Fund has agreed to indemnifY Citco its subsidiaries, affliates, directors and other
offcers, shareholders, servants, employees, agents and permitted delegates under the Administration liabilties, obligations, losses, judgments and expenses of any kind or nature whatsoever (collectively, the "Claims" and, individually, a "Claim") which may be imposed negligence, bad faith, them arising (other than by reason of on, incurred by or asserted against any of
Agreement, against any and all
fraud or dishonesty on the part of Citco or such other indemnified part) out of the provision of
services under the Administration Agreement. Similarly, Citco wil indemnifY the Fund from and against any Claim which arises directly out of the negligence, bad faith, fraud or dishonesty of its obligations on the part of Citco in connection with its provision of services under the Administration Agreement. The Administration Agreement may be terminated by either part on 90 days' prior written notice; provided, however, that the Administration Agreement may be terminated forthwith
by notice in writing by either part if the other part (a) commits a material breach of the
Administration Agreement and fails to cure such breach within 30 days after notice from the nondefaulting part; or (b) enters into involuntary liquidation or if a receiver is appointed over any of its
assets.
RISK FACTORS
Among the substantial risk factors involved in a purchase of Shares in the Fund are the
following:
1. Trading Risks. Substantial risks are involved in the trading of equity securities and options. Market movements can be volatile and are diffcult to predict. U.S. Governent activities, paricularly those of the Federal Reserve Board, can have a profound effect on interest rates which, in
turn, substantially affects securities and options prices, as well as the liquidity of such markets. Politics, recession, inflation, employment levels, trade policies, international events, war and other unforeseen events can also have significant impact upon the prices of securities and options. A variety of possible actions by various governent agencies also can inhibit the profitabilty of the Fund's business or can
result in losses. Such events, which can result in huge market movements and volatile market conditions,
create the risk of catastrophic losses for the Fund.
Various techniques are employed to attempt to reduce a portion of the risks inherent in the trading strategies utilized on behalf of the Fund. The abilty to achieve the desired effect through a particular technique is dependent upon many factors, including the liquidity of the market at the desired time of
execution. Thus, substantial risk remains that the techniques employed on behalf of the Fund by FSL
and the Non-SSC Investment managers cannot always be implemented or effective in reducing
losses. At various times, the markets for exchange-listed equity securities and options and/or other
securities may be "thin" or iliquid, making purchases or sales of securities at desired prices or in desired quantities diffcult or impossible. In addition, options prices are extremely volatile. The trading in these markets depends in par on general public interest and public volume and volatilty of opinion concerning economic conditions as well as the liquidity provided by marketmakers and specialists. The liquidity of the market may also be affected by a halt in trading on a particular futures or securities exchange or exchanges. Iliquid markets may make it difficult to get an order
executed at a desired price.
2. Dependence Upon Principals and Key Employees of the Manager and BLM. The
services of the Manager's principals and key employees and BLM are essential to the continued operations of FSL and the Fund. If their services were no longer available, their absence would have an adverse impact upon an investment in the Fund. The key employees of the Manager wil allocate a small
17
14. Prohibition of Exercise Rights. The options markets have the authority to prohibit the
exercise of particular options. If a prohibition on exercise is imposed at a time when trading in the option has also been halted, holders and writers of that option wil be locked into their positions until one of the two restrictions has been lifted.
15. Compensation Arrangements of Non-SSC Investments. The Non-SSC Investment
managers wil generally be compensated through incentive arangements. Under these arrangements, the Non-SSC Investment manager may benefit from appreciation, including unrealized appreciation in the value of the Non-SSC Investment, but may not be similarly penalized for decreases in the value of such investment vehicle. Such fee arrangements may create an incentive for the Non-SSC Investment managers to make purchases that are unduly risky or speculative. In most cases, however, the Fund anticipates that FSL wil invest in Non-SSC Investments where the manager is required to recoup prior
losses before any performance-type 'fee is payable in respect of current gains.
To the extent that an accrual for an incentive fee is reflected in the net asset value of shares of a Non-SSC
Investment vehicle, then, if such accrual is reversed by the Non-SSC Investment vehicle as a result of
subsequent depreciation in the value of such investment, all of the shares of FSL and, accordingly, the
Fund, wil benefit from the reversal of the accrual, including Shares purchased after the Non-SSC
Investment vehicle made the accrual. Further, to the extentthat the FSL Performance Fee is reduced by the Non-SSC Investment Loss amount, then if such reduction is repaid in part or in whole by FSL due to
recoupment of losses by Non-SSC Investment vehicles, the net asset value of all shares of FSL and,
accordingly, the Fund then outstanding wil be reduced, including Shares purchased after the reduction of the FSL Performance Fee.
16. Risks of Leverage. The Non-SSC Investment vehicles in which the Fund invests may borrow funds in connection with their investment strategies. A particular Non-SSC Investment vehicle may not be subject to any limitation in the amount of its borrowings, and the amount of borrowings that
the Non-SSC Investment vehicle may have outstanding at any time may be large in comparison to its
capitaL.
The use of leverage may provide the Non-SSC Investment vehicle with the
opportunity for greater capital appreciation, but at the same time wil increase the Non-SSC
Investment vehicle's, and indirectly the Fund's, exposure to capital risk and higher current expenses. Moreover, if the assets of the Non-SSC Investment vehicle are not sufficient to pay the principal of, and interest on, the Non-SSC Investments vehicle's debt when due, the Fund could sustain a total
loss of its investment in the Non-SSe Investment vehicle.
In addition, the Fund may enter into borrowing arrangements on a short-term basis, including through the use of a line of credit. Such borrowing may result in the borrower taking custody of, or placing liens on, the assets of the Fund.
17. Possibilty of Misappropriation of Assets. When FSL invests with Bernard L. Madoff
Investment Securities or in a Non-SSC Investment vehicle, it wil not have custody of the assets so
invested. Therefore, there is always the risk that the personnel of any entity with which the Fund invests could misappropriate the securities or funds (or both) of the Fund.
18. Sole Proprietor Non-SSC Investment Managers. Some of the Non-SSC Investment
vehicles to which FSL may allocate capital wil consist of investment operations with only one principaL.
In such cases, if that individual's services became unavailable to the Non-SSC Investment vehicle, the Fund might sustain losses.
20
./--,
:)
NO.
GREENWCH SENTRY, L.P.
clo Citco (Canada) me.
Att: Invesor Relations Group
2 Bloor Street East, Suite 2700
Toronto, Ontao M4W lA8
caada
Phone (416) 969.6700
Fax (416) 966.0925
CONFENTI OFFERIG MEMORAUM
GREENWCH SENTY, L.P., is a private investent limited partership which seeks to obtain capital appreciation of its assets
pricipally though the utilization of a nontraditional options
trading strategy descn'bed as IIsplit stre conversion", to which the Partership allocates the predomiant porton of its assets. Ths Confidential Offerig Memorandum (the "Memorandum") relates
to the offering of liited parership interests (the "Interests").
Prospective Limited Parers should carefully read and retain ths Memorandum.
THE INTERESTS OF GREENWCH SENTY, L.P. AR SPECULATIVE AN INOLVE A mGH DEGREE OF RISK. THSE SECURS HAVE NOT BEEN
FILED WITH OR APPROVED OR DISAPPROVED BY TH SECURIES AN
EXCHGE COMMSSION OR AN OTHR STATE OR FEDERA
GOVERNNTAL AGENCY OR AN NATIONAL SECUIES EXCHAGE, NOR
HAS ANY SUCH AUTHORIY PASSED UPON THE ACCURACY OR ADEQUACY OF
TIS MEMORADUM OR THE MERIS OF AN INSTMNT IN THE INTEREST OFFERED HEREBY. AN REPREENTATION TO TH CONTRAY IS A
CRIAL OFFNSE.
THESE SECURITIS HAVE NOT BEEN REGISTERE UNER AN SECURITIES LAWS AN AR BEING OFFERED AN SOLD IN RELIACE ON EXEMPTIONS
ARE SUBJECT TO RESTRICTION ON TRSFER
FROM THE REGISTRATION REQUIMENTS OF SUCH LAWS. TH SECUTIES AN RESALE AN MAY NOT BE
TRASFERRD OR RESOLD EXCEPT AS PERMTID UNER APPLICABLE
SECURIIES LAWS, PURUANT TO REGISTRTION OR EXEMPTION
THEREFROM. INVESTORS MAY BE REQUID TO BEAR THE FIANCIAL
RISKS OF THI INESTMNT FOR AN INEFIITE PERIOD OF TIME.
Dated: August 2006
")
SECURIES RIK
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DISCLOSURE
PROSPECTIV INSTORS SHOULD NOTE THT THE INS1MNT STRTEGY EMPLOYED ON BEHAF OF TH PAR1NRSHI INOLVES
SIGNIICANT RISKS AS DESCRIED UNER "RISK FACTORS" IN TIDS
MEMORADUM.
THE LIMITED PAR1NRSID INTERESTS OFFERED HEREBY HA VB NOT BEEN
REGISTERED UNER TH SECUTIES ACT OF 1933, AS AMED (TH "ACT"), SINCE THY WIL BE OFFRED ONLY TO A UMITED NUBER OF QUALIFIED
INSTORS. IT is ANCIPATED THT TH OFFERIG AN SALE OF SUCH
INRESTS wiLL BE EXEMPT FROM REGISTRATION PURUANT TO REGULATION D TH ACT. OF
THSE INTERESTS HAVE NOT BEEN APPROVED OR DISAPPROVED BY TH
SECURITIS AND EXCHAGE COMMSSION, NOR HAS THE SECURTIS AN EXCHAGE COMMSSION OR AN STATE SECURITIS COMMSSION OR OTHR REULATORY AUTHORI PASSED UPON TH ACCUCY OR ADEQUACY OF THSE OFFERIG MATERIS. AN RERESENTATION TO TI CONTRAY is A CRIAL OFFENSE.
IN MAG AN INSTMNT DECISION, INSTORS MUST RELY ON THEIR
OWN EXAATION OF TH ISSUER AN TH TERMS OF TH OFFERIG,
\, .'
INCLUDING ur :MTS AN RISID INOLVED. THSE SECUTIS HA VB NOT BEEN RECOMMEED BY AN FEDERA OR STATE SECURTIES COMMSSION OR
REGULATORY AUTORITY. FURTHERMORE, TH FOREGOING AUlHORITIS HAVE
NOT CONFD TH ACCUCY OR DETERMD TH ADEQUACY OF THESE OFFRIG MATERIS. AN REPRESENATION TO THE CONTRAY IS A
CRIAL OFFENSE.
THSE SECUTIS AR SUBJECT TO RESTRICTIONS ON TRASFERAILIT
AN RESALE AN MAY NOT BE TRASFERRD OR RESOLD EXCEPT AS
PERMITED UNER TH ACT, AN THE APPLICABLE STATE SECURTIES LAWS, PURUANT TO REGISTRATION OR EXEMPON THEREFROM. INESTORS SHOULD BE AWAR THAT THEY wiLL BE REQUIRD TO BEAR THE FINANCIAL RISKS OF THS INSTMENT FOR AN INEFINTE PERIOD OF TIME.
THIS MEMORAUM DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN AN STATE OR OTHR JUSDICTION IN wmCH AN OFFER OR SOLICITATION is
NOT AUTHORID.
NO RERESENTATIONS OR WARTIES OF AN KI AR INTENDED OR SHOULD BE INERRD WI RESPECT TO THE ECONOMIC RE OR THE TAX CONSEQUENCES FROM AN INSTMT IN TH PARTNERSHIP. NO ASSURCE
CAN BE GIVEN THT EXISTIG LAWS WIL NOT BE CHGED OR INTERPRETED
". .,"
(-~ì \) ADVERSELY TO THE PARTNRSIl OR TH PARTNRS. PROSPECTIV INSTORS
AR NOT TO CONSlRUE THS :MMORAUM AS LEGAL OR TAX ADVICE. EACH INSTOR SHOULD CONSULT HIS OR HER OWN COUNSEL AN ACCOUNTANT FOR
ADVICE CONCERNG TH VAROUS LEGAL, TAX AN ECONOMIC
CONSIDERATIONS RELATING TO HIS OR HER INSTMNT.
NO PERSON OTHR TH THE GENERA PARTNR HAS BEEN AUTHORID TO MA REPRESENTATIONS, OR GIV AN INORlTION, WITH RESPECT TO
THSE LIMTED PARTNRSll INTERESTS, EXCEPT TH INORMTION CONTAID HEREIN, AN AN INORMTION OR REPRESENTATION NOT CONTAID HEREIN OR OTHRWIE SUPPLIED BY TH GENRA PARTNR IN WRTIG MUST NOT BE REIED UPON AS HAVIG BEEN AUTORIED BY TH PARTNRSHI OR AN OF ITS PARmERS. ANY FUTHR DISTRUTON OR
REPRODUCTION OF THIS MEMORAUM, IN WHOLE OR IN PART, OR TH DIVLGENCE OF AN OF ITS CONTS, is PROHIITED.
A PROSPECTI INSTOR SHOULD NOT SUBSCRBE FOR LIMTED PARTNSHI INRESTS UNESS SATISFIED THAT TH PROSPECTI INSTOR
ALONE OR TOGETHER WI HIS OR HER INSTM REPRESENTATIVE HAVE ASKED FOR AN RECEIVD ALL INORlTION WHCH WOULD ENABLE TH INSTOR OR BOTH OF THM TO EVALUATE THE MERITS AND RISKS OF TH PROPOSED INSTMNT.
\ ./
\
HER
TH P ARlNRSHI WIL MA AVAILE TO EACH INSTOR OR HIS OR AGEN, DURG THIS OFFERIG AN PRIOR TO TH SALE OF AN INTERESTS,
TH OPPORTITY TO ASK QUETIONS OF AN REEIV ANSWERS FROM
REPRESENTATIVS OF TH GENERA PARlNR CONCERNG AN ASPECT OF TH PARTNRSIl AN ITS PROPOSED BUSINSS AN TO OBTAI AN ADDITIONAL RELATED INORMTION TO TH EXTNT TH PARmERSHIP POSSESSES SUCH
INORMTION OR CAN ACQUI IT WITHOUT UNASONABLE EFFORT OR
EXPENSE.
WHNEVER TH MASCULIN OR FEMI GENER is USED IN THIS
MEMORAUM, IT SHAL EQUALLY, WHRE TH CONTEXT PERMTS, INCLUDE
THE OTHER, AS WELL AS INCLUDE ENTITIS.
SPECIAL NOTICE TO FLORIA INSTORS:
TIE FOLLOWIG NOTICE is PROVIED TO SATISFY THE NOTIFICATION REQUIMENT SET FORTH IN SUBSECTION l1(A)(S) OF SECTION 517.061 OF THE
FLORIDA STATUTES, 1987, AS AMED:
ii
::)
UPON THE ACCEPTANCE OF FIVE (5) OR MORE FLORIA INESTORS. AND IF THE
FLORIA INSTOR is NOT A BAN A TRUST COMPAN. A SAVIGS
INSTITUTION, AN INSURACE COMPANY. A DEALER, AN INSTMENT COMPAN AS DEFIND IN TI INSTMENT COMPAN ACT OF 1940, A PENSION OR PROFITSHAG TRUST. OR A QUALIFmn INSTITUTIONAL BUYR (AS DEFIND IN RULE
144A UNER TH SECURTIES ACT OF 1933), THE FLORIA INSTOR
ACKNOWLEDGES THAT AN SALE OF AN INTEREST TO THE FLORIDA INSTOR
is VOIDABLE BY THE FLORIDA INSTOR EITHER WITHIN THRE DAYS AFTER
TH FIRST TENDER OF CONSIDERATION is MADE BY TI FLORIA INSTOR TO THE ISSUER, OR AN AGENT OF THE ISSUER, OR WITH THRE DAYS AFTER THE
AVAIABILITY OF THT PRIEGE IS COMMCATED TO TH FLORIA
INSTOR, WHICHEVER OCCURS LATER.
(
"
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SUMY
The following suary is qualified in its entirety by the more detailed informtion set forth herein and by the items and conditions of the Amended and Restated Limted Parership Agreement (the "Partership Agreement''), each of which should be read carefully by
prospective investors.
THE PARTNERSHI
Greenwich Sentr, L.P. (the "Partership") is a Delaware limted partership which was organized on December 27, 1990 under the
name AspeGreenwich Limited
Partership. Its name was changed to Greenwich Sentr, L.P. on December 4,
1992. Its offce is located at 919 Third
Avenue, New York, New York 10022.
INSTMNT OBmCTIVE
The Parership seeks to obtain capita appreciation of its assets pricipally though
the utilization of a nontraditional options
tradig stategy described as "split strke
conversion", to which the Parership allocates the predominant portion of its
/
..
assets. (See "INSTMENT
PROGRA).
The Parership commenced operations in
January 1993.
GENERA PARTN
Effectve March I, 2006, Fairfield
Greenwich (Benuda) Ltd., a corporation
organized under the laws of Bermuda on
June 13, 2003 became the general parter of
the Parership (the "General Parer"). The
General Parter is responsible for directing
the Partership's investment and trading
activities. It is the wholly-owned subsidiar
of Fairfield Greenwich Limited, an
exempted company organzed under the
laws of the Cayman Islands ("FGL"), which
served as the general parter of the
Partership from July 2003 to February
2006. Walter M. Noel, - Jr., Jeffrey H.
Tucker and Andres Piedrahita are the main
pnncipals ofFGL. Messrs. Noel and Tucker
served as the Partership's general parters
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from its inception in 1990 until January
1998.
ADMISTRTOR
Citco Fund Serices (Europe) B.V. a limited
liabilty company incorporated under the
laws of The Nether1ands~ serves as the
Parership's administrator and wil perform
cerin admnistrative and accounting
services for the Parership. The
Admstrator has delegated certin
fuctions to the Sub-Adminstrtor~ Citeo
(Canada) Inc. All correspondence should be
addressed to the Sub-Adinnistrator at their
address shown in tms document.
BROKER-DEALER: CUSTODIAN
The Parership's brokerage account is
maintained at Bernard L. Madoff Investent Securities LLC~ which also seres as the
custodian of
the Partershp's assets.
TERM
i' \~
Though December 3l~ 2112. However~ the
Partership at any tie and for any reason.
General Pamer may terinate the
$L~OOO,OOO minimum~ subject to the discretion of the General Parer to
". J
INTIA CAPITAL CONTRIUTIONS
accept lesser amounts.
SALES COMMSSIONS
There will be no sales commissions charged
or paid on sales of limted parership
interests (the "Interests") to the Limited Pamers.
ADMISSION OF NEW PARTNRS
The Partership wil offer the Interests on a
continuous basis.
ADDITIONAL CAPITAL CONTRIBUTIONS
Subscriptions or additional capital
contributions by Parters received at least
thee (3) business days before the end of any
month
wil ordinary be accepted as of the opening of business of the first day of the following month~ i.e.~ subscriptions or
additional capital contrbutions received
between December 29 and January 28 wil
2
i~-.\
\, )
USE OF PROCEEDS
The entire net proceeds from the sale of
the limited partership interests (the "Interests")
wil be available to the Partership. The General Parer does not intend to pay any
commissions or fees to broker"dealers in connection with the offenng. However, in the event
any fees or commssions are paid, they wil be paid by the General Parter rather than the
Parership.
The Partership wil not make any loans to affiliated entities nor will it invest in any foreign governent securities.
INSTMENT PROGRA
The Partership seeks to obtain capita appreciation of its assets principally though the
utiization of a nontraditional options trading strategy descnbed as "split stike conversion", to
which the Partership allocat~s the predomiant porton of its assets. Set fort below is a
description of
the "split stre conversion" sttegies ("SSC Investments").
The establishment of a tyical position entails (i) the purchase of a group or basket of equity secunties that are intended to highly correlate to the S&P 100 Index, (ii) the purchase of out"of-the-money S&P 100 Index put options with a notional value that approximately equals the
\
market value of the basket of equty securities, and (üi) the sale of out-of-the-money S&P 100
Index call options with a notional value that approxiately equals the market value of the basket of equity securities. An index cal option is out-of
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