Anwar et al v. Fairfield Greenwich Limited et al

Filing 959

ANSWER to Complaint. Document filed by Standard Chartered Bank International (Americas) Limited.(Nelles, Sharon)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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)
PASHA ANWAR, et al.,
)
)
Plaintiffs,
)
v.
)
)
)
FAIRFIELD GREENWICH LIMITED, et al.,
)
)
Defendants.
)
)
This Document Relates To: Jorge Asensio v. Standard
Chartered Bank International (Americas) Ltd., et al., No. )
)
11-CV-0908.
)
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Master File No. 09-CV-118 (VM)

Standard Chartered Bank International (Americas) Limited’s
Answer and Defenses to the Complaint
Defendant Standard Chartered Bank International (Americas) Limited (“SCBI”),
through its undersigned counsel, hereby responds as follows to the Complaint, based on present
knowledge. SCBI reserves the right to supplement and amend this Answer and to add additional
defenses of which it becomes aware.
I.

ANSWER
Nature of the Action
1.

SCBI denies the allegations of paragraph 1, except admits: (i) plaintiff was a

customer of SCBI; (ii) substantially all of the assets of Fairfield Sentry (“Sentry”) were invested
with Bernard L. Madoff Investment Securities (“BLMIS”); and (iii) plaintiff purports to allege
fraud and related common law causes of action. SCBI avers that, pursuant to stipulation of the
parties and order of the Court: (i) Standard Chartered PLC has been dismissed as a defendant;
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(ii) plaintiff’s claims for unjust enrichment and negligence have been dismissed; and
(iii) plaintiff has struck any allegations of misrepresentations made in the context of his breach of
fiduciary duty claim. (Dkt. No. 936.1)
2.

SCBI admits the allegations of paragraph 2.

3.

SCBI admits that the Complaint purports to characterize the allegations in the

complaint filed by the Securities and Exchange Commission captioned SEC v. Madoff, No. 08CV-10791 (S.D.N.Y. Dec. 11, 2008), and respectfully refers the Court to the SEC complaint for
a complete and accurate description of its contents.
4.

SCBI denies the allegations of paragraph 4.

5.

SCBI denies the allegations of paragraph 5, except admits that Sentry was

generally regarded as a sought-after fund.
6.

SCBI denies the allegations of paragraph 6.

7.

SCBI denies the allegations of paragraph 7, except admits: (i) plaintiff invested

approximately $300,000 in Sentry through his account at SCBI; and (ii) Sentry invested
substantially all of its assets in BLMIS.
8.

The allegations of paragraph 8 assert legal conclusions to which no response is

required. To the extent any response is deemed required, SCBI denies the allegations of
paragraph 8.
9.

SCBI denies the allegations of paragraph 9.

10.

SCBI denies the allegations of paragraph 10.

11.

SCBI denies knowledge or information sufficient to form a belief as to the truth of

the allegations of paragraph 11, and therefore denies them.
1

All citations to docket entries refer to the master docket, No. 09-118, unless otherwise
noted.
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Jurisdiction and Venue
12.

SCBI admits the allegations of paragraph 12.

13.

SCBI admits that plaintiff also purports to base jurisdiction of this action on 28

U.S.C. §§ 1331, 1337, and 1367.
14.

SCBI admits: (i) the amount in controversy in this action exceeds $75,000; (ii)

SCBI is a corporation organized under the laws of the United States; and (iii) plaintiff is a citizen
of a foreign state.
15.

SCBI denies the allegations of paragraph 15, except admits: (i) plaintiff purports

to base venue for this action on 28 U.S.C. § 1391(a)(2); and (ii) SCBI conducts business within
the Southern District of Florida.
16.

SCBI denies the allegations of paragraph 16, except admits that it conducts

business within the Southern District of Florida.
Parties
17.

SCBI admits: (i) plaintiff resides in Guatemala; and (ii) plaintiff held an account

at American Express Bank International (“AEBI”), later renamed SCBI.
18.

SCBI admits: (i) Standard Chartered PLC is organized under the laws of the

United Kingdom, with a place of business at 1 Aldermanbury Square, London, EC2V 7SB,
United Kingdom; (ii) Standard Chartered PLC is the ultimate parent corporation of Standard
Chartered Bank; and (iii) Standard Chartered Bank is the direct parent corporation of SCBI.
19.

SCBI admits: (i) Standard Chartered PLC is the direct parent of Standard

Chartered Holdings Limited; (ii) Standard Chartered Holdings Limited is the direct parent of
Standard Chartered Bank; and (iii) Standard Chartered Bank is the direct parent of SCBI.
20.

SCBI denies the allegations of paragraph 20, except admits: (i) SCBI is

authorized to do business in Florida, with a place of business at 1111 Brickell Avenue, Miami,
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Florida 33131; (ii) AEBI was renamed SCBI; and (iii) plaintiff’s account was serviced through
the Miami office of SCBI.
21.

SCBI denies the allegations of paragraph 21, except admits: (i) AEBI was an

Edge Act corporation that offered private banking services to individuals outside of the United
States; and (ii) AEBI had its headquarters in Miami.
Factual Allegations
22.

SCBI denies the allegations of paragraph 22, except admits that plaintiff opened

an account with AEBI in or around May 1996.
23.

SCBI denies the allegations of paragraph 23.

24.

SCBI denies the allegations of paragraph 24.

25.

SCBI denies the allegations of paragraph 25, except admits that Sentry had a

history of stable and steady returns.
26.

SCBI denies the allegations of paragraph 26, except admits that Sentry had

consistent returns.
27.

SCBI denies the allegations of paragraph 27.

28.

SCBI denies the allegations of paragraph 28.

29.

SCBI denies the allegations of paragraph 29, except admits that in or around

February 2004, plaintiff authorized a $100,000 investment in Sentry.
30.

SCBI denies the allegations of paragraph 30, except admits: (i) on or about

September 18, 2007, Standard Chartered PLC announced that it had reached an agreement to
acquire American Express Bank Ltd. (“AEBL”) from the American Express Company; and
(ii) Standard Chartered PLC acquired AEBL from the American Express Company in or around
February 2008.

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31.

SCBI admits that, in or around February 2008, AEBL was acquired by Standard

Chartered PLC. SCBI avers that AEBL was renamed Standard Chartered International (USA)
Ltd. and that AEBI was renamed SCBI.
32.

SCBI denies the allegations of paragraph 32, except admits that Standard

Chartered PLC acquired AEBL, which was the direct corporate parent of AEBI, which in turn
serviced plaintiff’s account.
33.

SCBI denies the allegations of paragraph 33.

34.

SCBI denies the allegations of paragraph 34, except admits that plaintiff remained

invested in Sentry after Standard Chartered PLC’s February 2008 acquisition of AEBL.
35.

Paragraph 35 of the Complaint is mistakenly identified as paragraph 40. SCBI

denies the allegations of paragraph 35, except admits that in or around May 2008, plaintiff
authorized an additional investment in Sentry. SCBI avers that plaintiff authorized an
investment of approximately $200,000.
36.

Paragraph 36 of the Complaint is mistakenly identified as paragraph 41. SCBI

denies the allegations of paragraph 36, except admits that plaintiff purchased additional shares of
Sentry.
37.

Paragraph 37 of the Complaint is mistakenly identified as paragraph 42. SCBI

denies the allegations of paragraph 37.
38.

Paragraph 38 of the Complaint is mistakenly identified as paragraph 35. SCBI

denies the allegations of paragraph 38.
39.

Paragraph 39 of the Complaint is mistakenly identified as paragraph 36. SCBI

denies the allegations of paragraph 39.

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40.

Paragraph 40 of the Complaint is mistakenly identified as paragraph 39. SCBI

denies the allegations of paragraph 40.
41.

Paragraph 41 of the Complaint is mistakenly identified as paragraph 43. SCBI

denies the allegations of paragraph 41.
42.

Paragraph 42 of the Complaint is mistakenly identified as paragraph 44. SCBI

denies the allegations of paragraph 42, except admits that Peter Talavera, William Solorzano and
Carolina Chan were employees of SCBI.
43.

Paragraph 43 of the Complaint is mistakenly identified as paragraph 45. SCBI

denies the allegations of paragraph 43.
44.

Paragraph 44 of the Complaint is mistakenly identified as paragraph 46. SCBI

denies the allegations of paragraph 44.
45.

Paragraph 45 of the Complaint is mistakenly identified as paragraph 47. SCBI

denies the allegations of paragraph 45, except admits that plaintiff gave instructions to sell a
portion of his shares of Sentry.
46.

Paragraph 46 of the Complaint is mistakenly identified as paragraph 30. SCBI

denies the allegations of paragraph 46, except admits that plaintiff was charged standard fees.
47.

Paragraph 47 of the Complaint is mistakenly identified as paragraph 31. SCBI

denies the allegations of paragraph 47, except admits that plaintiff was charged standard fees.
48.

SCBI admits that it was aware, based on due diligence and disclosures in the

Sentry Private Purchase Memorandum (“PPM”), that Sentry invested substantially all of its
assets with BLMIS and that Sentry’s investment strategy was disclosed in its PPM, of which
SCBI was aware.

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49.

SCBI denies knowledge or information sufficient to form a belief as to the truth of

the allegations of paragraph 49, and therefore denies them.
50.

SCBI denies the allegations of paragraph 50.

51.

SCBI denies the allegations of paragraph 51.

52.

SCBI denies the allegations of paragraph 52.

53.

SCBI denies the allegations of paragraph 53, except admits that plaintiff invested

in Sentry.
54.

SCBI denies the allegations of paragraph 54.

55.

SCBI denies the allegations of paragraph 55, except admits: (i) plaintiff purports

to describe events occurring in December 2008; (ii) Madoff was arrested on criminal charges of
securities fraud; and (iii) investments in Sentry substantially declined in value as a result of the
fraud perpetrated by Madoff and BLMIS.
AS AND FOR A FIRST CLAIM
(Breach of Fiduciary Duty Against All Defendants)
56.

SCBI repeats and realleges its responses to paragraphs 1 through 55 as if fully set

forth herein, except to the extent that the allegations in these paragraphs allege
misrepresentations made in breach of an alleged fiduciary duty, to which no response is required
because plaintiff has stipulated to strike those allegations (Dkt. No. 936).
57.

SCBI denies the allegations of paragraph 57.

58.

The allegations of paragraph 58 contain legal conclusions to which no response is

required. To the extent a response is deemed required, SCBI denies the allegations of
paragraph 58.

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59.

The allegations of paragraph 59 contain legal conclusions to which no response is

required. To the extent a response is deemed required, SCBI denies the allegations of
paragraph 59.
60.

The allegations of paragraph 60, including paragraphs 60(a)-(h), contain a legal

conclusion to which no response is required. To the extent a response is deemed required, SCBI
denies the allegations of paragraph 60.
61.

SCBI denies the allegations of paragraph 61.

62.

SCBI denies the allegations of paragraph 62.

63.

SCBI denies the allegations of paragraph 63, including by denying that plaintiff

suffered any damages as a result of conduct by SCBI.
AS AND FOR A SECOND CLAIM
(Negligence Against All Defendants)
64.

SCBI repeats and realleges its responses to paragraphs 1 through 63 as if fully set

forth herein.
65.

The allegations of paragraph 65 contain a legal conclusion and relate to plaintiff’s

claim for negligence, which has been dismissed; therefore, no response is required. To the extent
a response is deemed required, SCBI denies the allegations of paragraph 65.
66.

The allegations of paragraph 66 contain a legal conclusion and relate to plaintiff’s

claim for negligence, which has been dismissed; therefore, no response is required. To the extent
a response is deemed required, SCBI denies the allegations of paragraph 66.
67.

The allegations of paragraph 67, including paragraphs 67(a)-(i), contain a legal

conclusion and relate to plaintiff’s claim for negligence, which has been dismissed; therefore, no
response is required. To the extent a response is deemed required, SCBI denies the allegations of
paragraph 67.
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68.

The allegations of paragraph 68 relate to plaintiff’s claim for negligence, which

has been dismissed; therefore, no response is required. To the extent a response is deemed
required, SCBI denies that skepticism about BLMIS was widespread among those who looked
closely at its operations, and denies knowledge or information sufficient to form a belief as to the
truth of the remaining allegations of paragraph 68, and therefore denies them. SCBI respectfully
refers the Court to the unidentified article in PENSION & INVESTMENTS referenced by plaintiff in
paragraph 68 of the Complaint for a complete and accurate description of its contents.
69.

The allegations of paragraph 69 relate to plaintiff’s claim for negligence, which

has been dismissed; therefore, no response is required. To the extent a response is deemed
required, SCBI denies the allegations of paragraph 69, except admits that materials, including the
May 2001 MAR/HEDGE and BARRON’s articles referenced in paragraph 69 of the Complaint,
were publicly available, and respectfully refers the Court to those documents for a complete and
accurate description of their contents.
70.

The allegations of paragraph 70 relate to plaintiff’s claim for negligence, which

has been dismissed; therefore, no response is required. To the extent a response is deemed
required, SCBI denies the allegations of paragraph 70 and avers that certain of its affiliates
offered Sentry and/or Fairfield Sigma, among other investments, to customers.
71.

The allegations of paragraph 71 relate to plaintiff’s claim for negligence, which

has been dismissed; therefore, no response is required. To the extent a response is deemed
required, SCBI denies the allegations of paragraph 71.
72.

The allegations of paragraph 72 relate to plaintiff’s claim for negligence, which

has been dismissed; therefore, no response is required. To the extent a response is deemed
required, SCBI denies the allegations of paragraph 72.

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73.

The allegations of paragraph 73 relate to plaintiff’s claim for negligence, which

has been dismissed; therefore, no response is required. To the extent a response is deemed
required, SCBI denies the allegations of paragraph 73.
74.

The allegations of paragraph 74 relate to plaintiff’s claim for negligence, which

has been dismissed; therefore, no response is required. To the extent a response is deemed
required, SCBI denies the allegations of paragraph 74.
75.

The allegations of paragraph 75 relate to plaintiff’s claim for negligence, which

has been dismissed; therefore, no response is required. To the extent a response is deemed
required, SCBI denies that plaintiff suffered any damages as a result of conduct by SCBI and
therefore denies the allegations of paragraph 75.
AS AND FOR A THIRD CLAIM
(Negligent Misrepresentation Against All Defendants)
76.

SCBI repeats and realleges its responses to paragraphs 1 through 75 as if fully set

forth herein.
77.

The allegations of paragraph 77 contain a legal conclusion to which no response

is required. To the extent a response is deemed required, SCBI denies the allegations of
paragraph 77.
78.

SCBI denies the allegations of paragraph 78.

79.

SCBI denies the allegations of paragraph 79.

80.

SCBI denies the allegations of paragraph 80.

81.

SCBI denies the allegations of paragraph 81.

82.

SCBI denies the allegations of paragraph 82.

83.

SCBI denies the allegations of paragraph 83.

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84.

SCBI denies the allegations of paragraph 84, including by denying that plaintiff

suffered any damages as a result of conduct by SCBI.
AS AND FOR A FOURTH CLAIM
(Common Law Fraud Against All Defendants)
85.

SCBI repeats and realleges its responses to paragraphs 1 through 84 as if fully set

forth herein.
86.

SCBI denies the allegations of paragraph 86.

87.

SCBI denies the allegations of paragraph 87.

88.

SCBI denies the allegations of paragraph 88.

89.

SCBI denies the allegations of paragraph 89, including by denying that plaintiff

suffered any damages as a result of conduct by SCBI.
AS AND FOR A FIFTH CLAIM
(Gross Negligence Against the Standard Chartered Defendants)
90.

SCBI repeats and realleges its responses to paragraphs 1 through 89 as if fully set

forth herein.
91.

The allegations of paragraph 91 contain a legal conclusion to which no response

is required. To the extent a response is deemed required, SCBI denies the allegations of
paragraph 91.
92.

The allegations of paragraph 92 contain a legal conclusion to which no response

is required. To the extent a response is deemed required, SCBI denies the allegations of
paragraph 92.
93.

SCBI denies the allegations of paragraph 93, including paragraphs 93(a)-(d).

94.

SCBI denies the allegations of paragraph 94.

95.

SCBI denies the allegations of paragraph 95, including by denying that plaintiff

suffered any damages as a result of conduct by SCBI.
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AS AND FOR A SIXTH CLAIM
(Unjust Enrichment and Constructive Trust Against All Defendants)
96.

SCBI repeats and realleges its responses to paragraphs 1 through 95 as if fully set

forth herein.
97.

The allegations of paragraph 97 relate to plaintiff’s claim for unjust enrichment

and constructive trust, which has been dismissed (Dkt. No. 936); therefore, no response is
required. To the extent a response is deemed required, SCBI denies the allegations of
paragraph 97.
98.

The allegations of paragraph 98 relate to plaintiff’s claim for unjust enrichment

and constructive trust, which has been dismissed; therefore, no response is required. To the
extent a response is deemed required, SCBI denies the allegations of paragraph 98.
99.

The allegations of paragraph 99 relate to plaintiff’s claim for unjust enrichment

and constructive trust, which has been dismissed; therefore, no response is required. To the
extent a response is deemed required, SCBI denies the allegations of paragraph 99.
Denial of Prayer for Relief
SCBI denies that plaintiff is entitled to any of the relief prayed for on pages 23
and 24 of the Complaint.
Jury Trial Demand
Plaintiff’s demand for a trial by jury is subject to his account agreement(s) with
SCBI.

II.

DEFENSES
First Defense
Plaintiff fails to state a claim upon which relief can be granted.

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Second Defense
Any damages allegedly suffered by plaintiff were caused by the intervening act(s)
or omission(s) of persons or entities other than SCBI, and said act(s) or omission(s) superseded
any act or omission by SCBI for which it might be considered liable.
Third Defense
Plaintiff’s claims are barred, in whole or in part, because SCBI’s alleged conduct
was not the cause of plaintiff’s injuries.
Fourth Defense
The claims asserted in the Complaint are barred by the equitable doctrines of
laches, waiver, estoppel, unclean hands, and other equitable defenses that may appear upon
further discovery and investigation.
Fifth Defense
SCBI has not engaged in any conduct that would entitle plaintiff to an award of
punitive damages.
Sixth Defense
Plaintiff’s claims are barred, in whole or in part, because plaintiff knowingly and
voluntarily assumed the risks inherent in the investments at issue.
Seventh Defense
Plaintiff was contributorily and/or comparatively negligent.
Eighth Defense
Plaintiff’s claims are barred, in whole or in part, by the economic loss doctrine.
Ninth Defense
Plaintiff’s claims are barred, in whole or in part, because they are preempted by
the Securities Litigation Uniform Standards Act, 15 U.S.C. § 78bb(f)(1).
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Tenth Defense
Plaintiff did not justifiably or reasonably rely on any alleged representations, acts
or omissions by SCBI.
Eleventh Defense
Plaintiff’s claims are barred, in whole or in part, because SCBI, or any person or
entity acting or purporting to act on SCBI’s behalf, acted in good faith and with due care and
diligence.
Twelfth Defense
Plaintiff’s claims are barred, in whole or in part, by virtue of his account
agreement(s) with SCBI.
Thirteenth Defense
Plaintiff’s claims are barred, in whole or in part, by virtue of disclosures in the
applicable subscription agreement(s) and private placement memorandum applicable to
plaintiff’s purchase(s) of shares in Sentry.
Fourteenth Defense
SCBI was entitled to and did, reasonably and in good faith, rely on the acts and
representations of other third parties with respect to the transactions and events that are the
subject of plaintiff’s claims.
Fifteenth Defense
Any damages recoverable by plaintiff from SCBI are limited to the percentage of
fault attributable to SCBI, and thus would not include the percentage of fault attributable to atfault third parties, including but not limited to the defendants named in the Second Consolidated
Amended Complaint in Anwar v. Fairfield Greenwich Limited, No. 09-CV-0118.

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Sixteenth Defense
Any recovery by plaintiff against SCBI is to be offset, in whole or in part, by any
and all other recoveries (including, where applicable, redemptions) by plaintiff with respect to its
investments in Sentry.
Seventeenth Defense
SCBI is entitled to recover indemnity and/or contribution from others for any
liability they incur to plaintiff.
Eighteenth Defense
Any recovery by plaintiff against SCBI is to be offset by any and all debts,
liabilities or obligations owed by plaintiff to SCBI.

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WHEREFORE, SCBI respectfully demands judgment dismissing this action with
prejudice together with its costs and disbursements.

Respectfully submitted,
By: /s/ Sharon L. Nelles
Sharon L. Nelles
Bradley P. Smith
Patrick B. Berarducci
SULLIVAN & CROMWELL LLP
125 Broad Street
New York, New York 10004
Telephone: [phone]
Facsimile: [phone]
E-mail: [e-mail]
Diane L. McGimsey
SULLIVAN & CROMWELL LLP
1888 Century Park East
Los Angeles, California 90067
Telephone: [phone]
Facsimile: [phone]
Attorneys for Defendant
Standard Chartered Bank
International (Americas) Ltd.

October 12, 2012

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