Anwar et al v. Fairfield Greenwich Limited et al

Filing 965

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: Saca et al. v. Standard
)
Chartered Bank International (Americas) Ltd., et al.,
)
No 11-CV-3480.
)
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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 Case
1.

SCBI denies the allegations of paragraph 1, except admits that plaintiffs bring an

action against SCBI. SCBI avers that, pursuant to the Court’s September 12, 2012

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Order, plaintiffs’ claims for negligence, including their claim for negligent misrepresentation,
have been dismissed. (Dkt. No. 937.1)
2.

SCBI denies the allegations of paragraph 2.

3.

SCBI admits that plaintiffs assert claims under Florida law for negligent

misrepresentation, negligence, breach of fiduciary duty, and gross negligence.
Jurisdiction and Venue
4.

SCBI admits the allegations of paragraph 4.

5.

SCBI admits the allegations of paragraph 5.
The Parties

6.

SCBI admits the allegations of paragraph 6.

7.

SCBI admits the allegations of paragraph 7.

8.

SCBI admits the allegations of paragraph 8.

9.

SCBI admits the allegations of paragraph 9.

10.

SCBI denies the allegations of paragraph 10, except admits that SCBI conducts

business in the Southern District of Florida.
11.

SCBI denies the allegations of paragraph 11, except admits: (i) SCBI is

authorized to do business in Florida; (ii) SCBI offered private banking services to individuals
outside of the United States; and (iii) on or about February 2008, American Express Bank
Limited was acquired by Standard Chartered PLC.
12.

SCBI denies the allegations of paragraph 12, except admits that plaintiffs purport

to refer to predecessors, successors, parents, subsidiaries, affiliates and divisions of SCBI.
Plaintiffs’ Purchases
1

All citations to docket entries refer to the master docket, No. 09-118, unless otherwise
noted.
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13.

SCBI denies the allegations of paragraph 13, except admits (i) plaintiff Saca

opened an account with American Express Bank International (“AEBI”) in or around June 2001;
and (ii) AEBI was renamed SCBI.
14.

SCBI denies the allegations of paragraph 14, except admits that on or around

April 8, 2005, plaintiff Lancaster opened an account with AEBI.
15.

SCBI denies the allegations of paragraph 15, except admits that on or around

August 14, 2002, plaintiff Deika opened an account with AEBI.
16.

SCBI denies the allegations of paragraph 16, except admits that on or around

March 11, 2004, plaintiff Saca authorized a $250,000 investment in Fairfield Sentry Limited
(“Sentry”).
17.

SCBI denies the allegations of paragraph 17, except admits that plaintiff Saca

authorized an additional $250,000 investment in Sentry.
18.

SCBI denies the allegations of paragraph 18, except admits that on or around

June 29, 2007, plaintiff Saca authorized an investment of 405 Sentry shares for approximately
$506,821.05.
19.

SCBI denies the allegations of paragraph 19, except admits that on or around

February 20, 2004, plaintiff Deika authorized an investment of approximately $150,000 in
Sentry.
20.

SCBI denies the allegations of paragraph 20, except admits that on or around

July 29, 2008, plaintiff Lancaster authorized a $100,000 investment in Sentry.
Factual Allegations
21.

SCBI denies the allegations of paragraph 21, except admits that plaintiffs

purchased shares in Sentry for approximately $1.3 million.

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22.

SCBI denies the allegations of paragraph 22, except admits that William

Solorzano was a relationship manager at AEBI who interacted with plaintiffs.
23.

SCBI denies the allegations of paragraph 23.

24.

SCBI denies the allegations of paragraph 24.

25.

SCBI denies the allegations of paragraph 25.

26.

SCBI denies the allegations of paragraph 26.

27.

SCBI denies the allegations of paragraph 27, except admits that, at the time of

plaintiffs’ purchases of Sentry, Sentry shares had a history of steady returns and lower volatility
and risk than certain other investments.
28.

SCBI denies the allegations of paragraph 28, except admits: (i) SCBI, in the

referenced investment proposal, informed plaintiff Saca of a range of available investment
products; (ii) Sentry was included amongst the range of products from which plaintiff Saca—
using his exclusive authority to invest for his account—could choose; and (iii) at the time of
plaintiffs’ purchases of Sentry, Sentry shares had a history of steady returns and lower volatility
and risk than certain other investments.
29.

SCBI denies the allegations of paragraph 29.

30.

SCBI denies the allegations of paragraph 30.

31.

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

the allegations of paragraph 31 and therefore denies them, except admits: (i) SCBI sent plaintiffs
account statements; and (ii) the Sentry valuations therein exceeded the value of the Sentry
purchase price.
32.

SCBI denies the allegations of paragraph 32, including by denying that plaintiffs

suffered any damages as a result of conduct by SCBI.

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33.

SCBI denies the allegations of paragraph 33, except admits that on or around

November 30, 2008, plaintiff’s account statement dated November 30, 2008, valued Saca’s
shares at approximately $1,135,568.40.
34.

SCBI denies the allegations of paragraph 34, except admits: (i) investments in

Sentry substantially declined in value as a result of the fraud perpetrated by Bernard L. Madoff
and Bernard L. Madoff Investment Securities, LLC (“BLMIS”); and (ii) plaintiff Saca’s account
statement dated December 31, 2008 valued Saca’s shares of Sentry at approximately $8.41.
AS AND FOR A FIRST CLAIM
(Negligent Misrepresentation)
35.

SCBI repeats and realleges its responses to paragraphs 1 through 34 as if fully set

forth herein.
36.

The allegations of paragraph 36 contain a legal conclusion and relate to plaintiffs’

claims for negligence, which the Court dismissed on September 12, 2012 (Dkt No. 937);
therefore, no response is required. To the extent an answer is deemed required, SCBI denies the
allegations of paragraph 36.
37.

The allegations of paragraph 37 contain a legal conclusion and relate to plaintiffs’

claims for negligence, which the Court dismissed on September 12, 2012; therefore, no response
is required. To the extent an answer is deemed required, SCBI denies the allegations of
paragraph 37.
38.

The allegations of paragraph 38 relate to plaintiffs’ claims for negligence, which

the Court dismissed on September 12, 2012; therefore, no response is required. To the extent an
answer is deemed required, SCBI denies the allegations of paragraph 38.

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39.

The allegations of paragraph 39 relate to plaintiffs’ claims for negligence, which

the Court dismissed on September 12, 2012; therefore, no response is required. To the extent an
answer is deemed required, SCBI denies the allegations of paragraph 39.
40.

The allegations of paragraph 40 relate to plaintiffs’ claims for negligence, which

the Court dismissed on September 12, 2012; therefore, no response is required. To the extent an
answer is deemed required, SCBI denies the allegations of paragraph 40.
41.

The allegations of paragraph 41 relate to plaintiffs’ claims for negligence, which

the Court dismissed on September 12, 2012; therefore, no response is required. To the extent an
answer is deemed required, SCBI denies or denies knowledge or information sufficient to form a
belief as to the truth of the allegations of paragraph 41.
AS AND FOR A SECOND CLAIM
(Negligence)
42.

SCBI repeats and realleges its responses to paragraphs 1 through 41 as if fully set

forth herein.
43.

The allegations of paragraph 43 contain a legal conclusion and relate to plaintiffs’

claims for negligence, which the Court dismissed on September 12, 2012 (Dkt. No. 937);
therefore, no response is required. To the extent a response is deemed required, SCBI denies that
plaintiffs suffered any damages as a result of conduct by SCBI and therefore denies the
allegations of paragraph 43.
44.

The allegations of paragraph 44 contain a legal conclusion and relate to plaintiffs’

claims for negligence, which the Court dismissed on September 12, 2012; therefore, no response
is required. To the extent a response is deemed required, SCBI denies the allegations of
paragraph 44.

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45.

The allegations of paragraph 45 relate to plaintiffs’ claims for negligence, which

the Court dismissed on September 12, 2012; therefore, no response is required. To the extent a
response is deemed required, SCBI denies knowledge or information sufficient to form a belief
as to the truth of the allegations of paragraph 45, and therefore denies them, except admits that
(i) materials, including the May 2001 MAR/HEDGE and BARRON’s articles referenced in
paragraphs 45(A) and 45(B) of the Complaint were publicly available and respectfully refers the
Court to those documents for a complete and accurate description of their contents; and (ii) in
2005 Harry Markopolos wrote a confidential letter to the SEC, the conclusions of which were
rejected. SCBI denies that it did not conduct reasonable due diligence on Sentry. SCBI avers
that the SEC conducted investigations of Madoff and BLMIS and did not conclude that Madoff
was committing fraud. SCBI therefore denies that reasonable due diligence would have led
SCBI to draw the same conclusions that were drawn by Markopolos.
46.

The allegations of paragraph 46 relate to plaintiffs’ claims for negligence, which

the Court dismissed on September 12, 2012; therefore, no response is required. To the extent a
response is deemed required, SCBI denies the allegations of paragraph 46.
47.

The allegations of paragraph 47 relate to plaintiffs’ claims for negligence, which

the Court dismissed on September 12, 2012; therefore, no response is required. To the extent a
response is deemed required, SCBI denies that plaintiffs suffered any damages as a result of
conduct by SCBI and therefore denies the allegations of paragraph 47.
AS AND FOR A THIRD CLAIM
(Breach of Fiduciary Duty)
48.

SCBI repeats and realleges its responses to paragraphs 1 through 47 as if fully set

forth herein.
49.

SCBI denies the allegations of paragraph 49.
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50.

SCBI denies the allegations of paragraph 50.

51.

SCBI denies the allegations of paragraph 51.

52.

Paragraph 52 contains legal conclusions to which no response is required. To the

extent a response is deemed required, SCBI denies the allegations of paragraph 52.
53.

Paragraph 53 contains legal conclusions to which no response is required. To the

extent a response is deemed required, SCBI denies the allegations of paragraph 53.
54.

SCBI denies that plaintiffs suffered any damages as a result of conduct by SCBI

and therefore denies the allegations of paragraph 54.
AS AND FOR A FOURTH CLAIM
(Gross Negligence)
55.

SCBI repeats and realleges its responses to paragraphs 1 through 54 as if fully set

forth herein.
56.

The allegations of paragraph 56 contain a legal conclusion and relate to plaintiffs’

claims for negligence, which the Court dismissed on September 12, 2012 (Dkt. No. 937);
therefore, no response is required. To the extent a response is deemed required, SCBI denies the
allegations of paragraph 56.
57.

The allegations of paragraph 57 relate to plaintiffs’ claims for negligence, which

the Court dismissed on September 12, 2012; therefore, no response is required. To the extent a
response is deemed required, SCBI denies the allegations of paragraph 57.
58.

The allegations in paragraph 58 relate to plaintiffs’ claims for negligence, which

the Court dismissed on September 12, 2012; therefore, 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 relate to plaintiffs’ claims for negligence, which

the Court dismissed on September 12, 2012; therefore, 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 contain legal conclusions and relate to plaintiffs’

claims for negligence, which the Court dismissed on September 12, 2012; therefore, no response
is required. To the extent a response is deemed required, SCBI denies the allegations of
paragraph 60.
61.

The allegations of paragraph 61 relate to plaintiffs’ claims for negligence, which

the Court dismissed on September 12, 2012; therefore, no response is required. To the extent a
response is deemed required, SCBI denies the allegations of paragraph 61.
62.

The allegations of paragraph 62 relate to plaintiffs’ claims for negligence, which

the Court dismissed on September 12, 2012; therefore, no response is required. To the extent a
response is deemed required, SCBI denies that plaintiffs suffered any damages as a result of
conduct by SCBI and therefore denies the allegations of paragraph 62.
Denial of Prayer for Relief
SCBI denies that plaintiffs are entitled to any of the relief prayed for on pages 22
and 23 of the Complaint.
Jury Trial Demand
Plaintiffs’ demand for a trial by jury is subject to their account agreement(s) with
SCBI.

II.

DEFENSES
First Defense
Plaintiffs fail to state a claim upon which relief can be granted.
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Second Defense
Any damages allegedly suffered by plaintiffs 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
Plaintiffs’ claims are barred, in whole or in part, because SCBI’s alleged conduct
was not the cause of plaintiffs’ 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 plaintiffs to an award of
punitive damages.
Sixth Defense
Plaintiffs’ claims are barred, in whole or in part, because plaintiffs knowingly and
voluntarily assumed the risks inherent in the investments at issue.
Seventh Defense
Plaintiffs were contributorily and/or comparatively negligent.
Eighth Defense
Plaintiffs’ claims are barred, in whole or in part, by the economic loss doctrine.
Ninth Defense
Plaintiffs’ 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
Plaintiffs did not justifiably or reasonably rely on any alleged representations, acts
or omissions by SCBI.
Eleventh Defense
Plaintiffs’ 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
Plaintiffs’ claims are barred, in whole or in part, by virtue of their account
agreement(s) with SCBI.
Thirteenth Defense
Plaintiffs’ claims are barred, in whole or in part, by virtue of disclosures in the
subscription agreement(s) and the private purchase memoranda applicable to plaintiffs’
purchase(s) of shares of 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 plaintiffs’ claims.
Fifteenth Defense
Any damages recoverable by plaintiffs 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 plaintiffs against SCBI is to be offset, in whole or in part, by any
and all other recoveries (including, where applicable, redemptions) by plaintiffs with respect to
their investments in Sentry.
Seventeenth Defense
SCBI is entitled to recover indemnity and/or contribution from others for any
liability they incur to plaintiffs.
Eighteenth Defense
Any recovery by plaintiffs against SCBI is to be offset by any and all debts,
liabilities or obligations owed by plaintiffs 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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