Anwar et al v. Fairfield Greenwich Limited et al

Filing 979

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: Eduardo Child Escobar, et al. )
)
v. Standard Chartered Bank International (Americas)
)
Ltd., No. 11-cv-23120.
)
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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 that plaintiff Eduardo

Child Escobar (“Child”) invested in Fairfield Sentry (“Sentry”). SCBI avers that, pursuant to the
Court’s September 12, 2012 Order, plaintiffs’ claims for fraudulent concealment and negligence

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have been dismissed. (Dkt. No. 937.1) SCBI also avers that Standard Chartered PLC acquired
American Express Bank Ltd. (“AEBL”) from the American Express Company in February 2008.
SCBI avers that AEBL was renamed Standard Chartered International (USA) Ltd. and that
American Express Bank International (“AEBI”) was renamed SCBI.
2.

SCBI denies the allegations of paragraph 2, except admits that plaintiffs purport

to describe events occurring in December 2008 regarding the fraud perpetrated by Bernard L.
Madoff and BLMIS.
3.

SCBI denies the allegations of paragraph 3.

4.

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

the allegations of paragraph 4, and therefore denies them.
5.

SCBI denies the allegations of paragraph 5.

6.

SCBI denies the allegations of paragraph 6.

7.

SCBI denies the allegations of paragraph 7, except admits that plaintiff Child was

charged standard fees.
8.

SCBI denies the allegations of paragraph 8.
Parties, Jurisdiction and Venue

9.

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

the allegations of paragraph 9 and therefore denies them.
10.

SCBI denies the allegations of paragraph 10, except admits that it is a corporation

is authorized to do business in Florida, with a place of business at 1111 Brickell Avenue, Miami,
Florida 33131.

1

All citations to docket entries refer to the master docket, No. 09-118, unless otherwise
noted.
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11.

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.
12.

SCBI admits the allegations of paragraph 12.

13.

SCBI denies the allegations of paragraph 13, except admits: (i) plaintiffs purport

to base venue for this action on 28 U.S.C. § 1391; and (ii) SCBI conducts business within the
Southern District of Florida.
14.

SCBI denies the allegations of paragraph 14, except admits that it conducts

business within the Southern District of Florida.
Factual Allegations
15.

SCBI admits: (i) plaintiff Child was a client of Schroder & Co. Trust Bank

(“Schroder”); and (ii) in or around 1999, Tirso Morales was an account manager at Schroder.
16.

SCBI denies the allegations of paragraph 16.

17.

SCBI admits: (i) the private banking division of Schroder was sold to AEBL; and

(ii) Tirso Morales was a relationship manager at AEBI.
18.

SCBI denies the allegations of paragraph 18, except admits: (i) Standard

Chartered PLC acquired AEBL from the American Express Company in February 2008; and (ii)
Tirso Morales was a relationship manager at SCBI.
19.

SCBI denies the allegations of paragraph 19, except admits that plaintiff Child

held accounts at Schroder, AEBI and SCBI.
20.

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

the allegations of paragraph 20 and therefore denies them, except admits that Tirso Morales met
with plaintiff Child.
21.

SCBI denies the allegations of paragraph 21.
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22.

SCBI denies the allegations of paragraph 22.

23.

SCBI denies the allegations of paragraph 23.

24.

SCBI denies the allegations of paragraph 24, except admits that Sentry was

generally regarded as a safe investment.
25.

SCBI denies the allegations of paragraph 25, except admits that AEBI conducted

due diligence on Sentry.
26.

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

generally regarded as a safe investment.
27.

SCBI denies the allegations of paragraph 27.

28.

SCBI denies the allegations of paragraph 28, except admits that Sentry invested

substantially all of its assets with BLMIS.
29.

SCBI denies the allegations of paragraph 29.

30.

SCBI denies the allegations of paragraph 30, except admits that in or around

2004, plaintiff Child purchased approximately 228.4 shares of Sentry for approximately
$250,000.
31.

SCBI denies the allegations of paragraph 31.

32.

SCBI denies the allegations of paragraph 32.

33.

SCBI denies the allegations of paragraph 33.

34.

SCBI denies the allegations of paragraph 34.

35.

SCBI denies the allegations of paragraph 35.

36.

SCBI denies the allegations of paragraph 36, except admits that plaintiff Child

invested in Sentry.
37.

SCBI denies the allegations of paragraph 37.

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38.

SCBI denies the allegations of paragraph 38, except admits that plaintiff Child

was invested in Sentry as of December 2008.
39.

SCBI denies the allegations of paragraph 39.

40.

The allegations of paragraph 40 contain a legal conclusion to which no response

is required. To the extent a response is deemed required, SCBI denies the allegations of
paragraph 40.
41.

The allegations of paragraph 41 contain a legal conclusion to which no response

is required. To the extent a response is deemed required, SCBI denies the allegations of
paragraph 41.
42.

The allegations of paragraph 42 contain a legal conclusion to which no response

is required. To the extent a response is deemed required, SCBI denies the allegations of
paragraph 42.
43.

SCBI denies the allegations of paragraph 43.

44.

SCBI denies the allegations of paragraph 44, except admits that plaintiff purports

to describe certain information reflected on a website entitled “STEP Wealth Directory.” SCBI
respectfully refers the Court to the unnamed portions of this website for a complete and accurate
description of their contents.
45.

SCBI denies the allegations of paragraph 45, including paragraphs 45(a)-(e),

except admits that plaintiff purports to describe certain information reflected on Standard
Chartered Bank’s website. SCBI respectfully refers the Court to the unnamed portions of this
website for a complete and accurate description of their contents.
46.

SCBI denies the allegations of paragraph 46, except admits that plaintiff purports

to describe certain information reflected on Standard Chartered Bank’s website. SCBI

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respectfully refers the Court to the unnamed portions of this website for a complete and accurate
description of their contents.
47.

SCBI denies the allegations of paragraph 47, except admits that plaintiff purports

to describe certain information reflected on Standard Chartered Bank’s website under a heading
entitled “Responsible Selling and Marketing.” SCBI respectfully refers the Court to this website
for a complete and accurate description of its contents.
48.

SCBI denies the allegations of paragraph 48.

49.

SCBI denies the allegations of paragraph 49.

50.

SCBI denies the allegations of paragraph 50.

51.

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

the allegations of paragraph 51, and therefore denies them, except admits that Sentry placed
substantially all of its assets in BLMIS.
52.

SCBI denies the allegations of paragraph 52.

53.

SCBI denies the allegations of paragraph 53.

54.

SCBI denies the allegations of paragraph 54.

55.

The allegations of paragraph 55 contain an opinion to which no response is

required. To the extent a response is deemed required, SCBI denies the allegations of paragraph
55.
56.

The allegations of paragraph 56 contain an opinion to which no response is

required. To the extent a response is deemed required, SCBI denies the allegations of paragraph
56.

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57.

The allegations of paragraph 57 contain an opinion to which no response is

required. To the extent a response is deemed required, SCBI denies the allegations of paragraph
57.
58.

SCBI denies the allegations of paragraph 58.

59.

SCBI denies the allegations of paragraph 59.

60.

SCBI denies the allegations of paragraph 60.

61.

SCBI denies the allegations of paragraph 61.
AS AND FOR A FIRST CLAIM
(Breach of Fiduciary Duty)
SCBI repeats and realleges its responses to paragraphs 1 through 61 as if fully set

forth herein.
62.

SCBI denies the allegations of paragraph 62.

63.

SCBI denies the allegations of paragraph 63.

64.

The allegations of paragraph 64 contain a legal conclusion to which no response

is required. To the extent a response is deemed required, SCBI denies the allegations of
paragraph 64.
65.

SCBI denies the allegations of paragraph 65.

66.

SCBI denies the allegations of paragraph 66.

67.

SCBI denies the allegations of paragraph 67.

68.

The allegations of paragraph 68, including paragraphs 68(a)-(i), contain a legal

conclusion to which no response is required. To the extent a response is deemed required, SCBI
denies the allegations of paragraph 68, including paragraphs 68(a)-(i).
69.

The allegations of paragraph 69 contain a legal conclusion to which no response

is required. To the extent a response is deemed required, SCBI denies the allegations of
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paragraph 69, including by denying that plaintiff Child suffered any damages as a result of
conduct by SCBI.
AS AND FOR A SECOND CLAIM
(Fraudulent Concealment)
SCBI repeats and realleges its responses to paragraphs 1 through 69 as if fully set
forth herein.
70.

The allegations of paragraph 70 contain a legal conclusion and relate to plaintiffs’

claim for fraudulent concealment, 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 70.
71.

The allegations of paragraph 71, including paragraphs 71(a)-(d), contain a legal

conclusion and relate to plaintiffs’ claim for fraudulent concealment, 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 71, including paragraphs 71(a)-(d).
72.

The allegations of paragraph 72 contain a legal conclusion and relate to plaintiffs’

claim for fraudulent concealment, 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 72.
73.

The allegations of paragraph 73 contain a legal conclusion and relate to plaintiffs’

claim for fraudulent concealment, 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 73.
74.

The allegations of paragraph 74 contain a legal conclusion and relate to plaintiffs’

claim for fraudulent concealment, which the Court dismissed on September 12, 2012; therefore,
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no response is required. To the extent a response is deemed required, SCBI denies the
allegations of paragraph 74, including by denying that plaintiff Child suffered damages as a
result of conduct by SCBI.
AS AND FOR A THIRD CLAIM
(Negligence)
SCBI repeats and realleges its responses to paragraphs 1 through 74 as if fully set
forth herein.
75.

The allegations of paragraph 75 contain a legal conclusion and relate to plaintiffs’

negligence claim, 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 75.
76.

The allegations of paragraph 76, including paragraphs 76(a)-(h), contain a legal

conclusion and relate to plaintiffs’ negligence claim, 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 76, including paragraphs 76(a)-(h).
77.

The allegations of paragraph 77 contain a legal conclusion and relate to plaintiffs’

negligence claim, 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 77, including by denying that plaintiff Child suffered any damages as a result of
conduct by SCBI.
Denial of Prayer for Relief
SCBI denies that plaintiffs are entitled to any of the relief prayed for on pages 1416 of the Complaint.

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Jury Trial Demand
Child’s demand for a trial by jury is subject to his account agreement(s) with
SCBI.

II.

DEFENSES
First Defense
Plaintiffs fail to state a claim upon which relief can be granted.
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.
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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).
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 plaintiffs’ account
agreement(s) with SCBI.
Thirteenth Defense
Plaintiffs’ claims are barred, in whole or in part, by virtue of disclosures in the
applicable subscription agreement(s) and private placement memoranda applicable to plaintiffs’
purchase(s) of shares in Sentry.

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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.
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
Child’s 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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