Pacific West Health Medical Center Inc. Employees Retirement Trust et al v. Fairfield Greenwich Group et al

Filing 96

DECLARATION of Robert C. Finkel in Opposition re: (318 in 1:09-cv-00118-VM-THK) MOTION to Dismiss Second Consolidated Amended Complaint., (344 in 1:09-cv-00118-VM-THK) MOTION to Dismiss Second Consolidated Amended Complaint., (66 in 1:09-cv-02222-VM, 360 in 1:09-cv-00118-VM-THK, 54 in 1:09-cv-02410-VM, 76 in 1:09-cv-02269-VM, 10 in 1:09-cv-08500-VM, 62 in 1:09-cv-04031-VM, 87 in 1:09-cv-00134-VM, 103 in 1:09-cv-02366-VM, 74 in 1:09-cv-00301-VM) MOTION to Dismiss., (75 in 1:09-cv-00301-VM, 55 in 1:09-cv-02410-VM, 67 in 1:09-cv-02222-VM, 11 in 1:09-cv-08500-VM, 104 in 1:09-cv-02366-VM, 77 in 1:09-cv-02269-VM, 63 in 1:09-cv-04031-VM, 361 in 1:09-cv-00118-VM-THK, 88 in 1:09-cv-00134-VM) MOTION to Dismiss., (325 in 1:09-cv-00118-VM-THK) MOTION to Dismiss Second Consolidated Amended Complaint., (86 in 1:09-cv-00134-VM, 359 in 1:09-cv-00118-VM-THK, 61 in 1:09-cv-04031-VM, 73 in 1:09-cv-00301-VM, 102 in 1:09-cv-02366-VM, 9 in 1:09-cv-08500-VM, 65 in 1:09-cv-02222-VM, 53 in 1:09-cv-02410-VM, 75 in 1:09-cv-02269-VM) MOTION to Dismiss., (340 in 1:09-cv-00118-VM-THK) MOTION to Dismiss Second Consolidated Amended Complaint., (329 in 1:09-cv-00118-VM-THK) MOTION to Dismiss Second Consolidated Amended Complaint., (316 in 1:09-cv-00118-VM-THK) MOTION to Dismiss the Second Consolidated Amended Complaint., (334 in 1:09-cv-00118-VM-THK) MOTION to Dismiss Second Consolidated Amended Complaint., (356 in 1:09-cv-00118-VM-THK) MOTION to Dismiss the Second Consolidated Amended Complaint., (321 in 1:09-cv-00118-VM-THK) MOTION to Dismiss.. Document filed by Pasha S. Anwar. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4)Filed In Associated Cases: 1:09-cv-00118-VM-THK et al.(Finkel, Robert)

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·

PR~VILEGED

AND

CONFIDENTLAL

Certain

Hedge Fund Trading Practices
Jeffrey H. Tucker January 30, Testimony 2006

- NY-07563-A

[Start

exhibits

at

No.

7]

Before
Warnings

going on the record:
(will repeat
testimony;

on the
at any

record):
time, either completely or to

voluntary

can

discontinue
with Mr.

consult

McKeefry.

If

do decide
can

to proceed,
be

important
if

that
they

your
are

answers a record,
the tape;

be

truthful

consequences

not.

Related

point:
the

because
court reportr

we are
to

creating
change during

import~nt important
time for

for us to talk one person at a time; to verbalize; may need to stop from time to
is "off-the-record"
conversations

Nothing
substantive

- we will
we had

summarize
breaks,

any
and we

have

the

practice

of asking
were the

on the

record,
the

after
staff.

a

break, whether conversations

there between

anysubstantive witness and

The investigation
that we obtain
of our

is non-public:
as non-public

we treat

the information
and we request

information,

that
content

you too not discuss,
discussions.

other
a chance

than with your counsel,
to review it before

the

Form
coming

1662:
here?

Did

you

have

ENF

NY-07563

SUHS

012404

PRIVILEGED

AND CONFIDENTIAL

Opening

the Record
at pm on January 30, 2006.

On therecord

I am Simona

Suh and here

with

me are

Meaghan

Cheung

and Peter

Lainore. We are members of the staff of the Northeast Regional Office of the United States Securities and Exchange Commission. Your testimony today has been requested an informal investigation In the matter by the staff as part of of Certain Hedge Fund

Trading Practices,
constitute
laws.

been violations of certain laws. However, the facts
violations

NY-07563-A, to determine
of other federal

provisions of the federal securities developed in this investigation might
or civil or criminal

whether there

have

Your testimony

is not pursuant

to a subpoena.

Accordingly,

you
There

should understand that your appearance here is voluntary. is no formal order of investigation in thismatter. Mr. Tucker, do you understand that you need not answer any

question

and that you may leave at any time you want?
to being placed under oath?

Do you consent

Notary Public,
the jurisdiction

please

identify

yourself

for the record, and swear
in the

state

in which you are commissioned

as a notary

public
witness.

and when that
state and spell

commission expires,
your full name for

Please

the record.

Prior to the opening of the record you were provided with a copy of the Commission supplemental information form. A copy of that
form has been marked as NY-7563 Exhibit No. i.

Mr. Tucker,
1?

have you had the opportunity

to read NY-7563 Exhibit

Do you have any questions
Mr. Tucker, Counsel, are

concerning

this

exhibit?

you represented identify yourself.

by counsel?

please

Mr. McKeefry, are representing
Other person present, please

Mr. Tucker as his counsel today?
identify yourself.

ENF

NY-07563

SUHS

012405

PRIVILEGED

AND

CONFIDENTLAL

Background
From FGG Website:

· · · ·

Founding Member Director

Partner of FGG's for to

of FGG Executive FGG funds

Committee and of
broker-

many

management
Prior
Kolber & Co.

company
FGG L.P.

entities
Partner
a

General with

Fred

("FKC"),

dealer

that fund
to 1987:

merged

FGG in

1989,

where
trading
· 1978

he helped

develop
Partner

an options
in the law firm

of

Tucker,

Globerman

& Feinsand

P.C.,

where direct
limited

he specialized participation
partnership

in advising offerings
interests

on and

·

Began his
Exchange
Enforcement

career
in

in the
1970 and

Securities
of of
1975. Syracuse
became

and
the

Commission's Regional
Regional of

Division Administrator
Office in from

Assistant
New York · Bachelor University

Arts degree in 1966

·

Juris
School

Doctor
in 1969

degree

from

Brooklyn

Law

From

FSL

RFPs:

In 1987, tenants

Fred Kolber in the office

and Jeffrey space of

Tucker the

were

consulting
which advised
with their alternative

firm

of
offshore

Waiter
in Kolber

M. Noel,
in
US-based andTucker

Jr.,
connection

clients

investments assets.

launched domestic

the Greenwich hedge fund.

Options Fund (GOF), Tucker was a minority

a

partner of the fund providing assistance
and
and

management business, in the administration
In 1988, Noel, fund
to

marketing
Kolber

of
created

GOF. an

Tucker

Fairfield

Investment

Fund,
a
and

Ltd.

(FIL),

offshore

toGOF.

Subsequently,
mandate
then

the
from their

three

sought

and received
outsource

clients

the

management
formed

of a portion
FGG.

of the

funds,

ENF

NY-07563

SUHS

012406

PRIVILEGED

AND

CONFIDENTLAL

Are
Tucker?

or

have

you

ever

been

known

by any

names

other

than

Jeffrey

Date

of

birth

[CRD:
SSN

1/1/46]

[CRD:

071-36-9847]

Residential

address,

telephone 10035

number Fifth Avenue, NY, NY 10028]

Cell

phone

Business

address,

telephone
[919

number
Third Avenue, New York, NY 10022]

Educational

background

Professional Employment

licenses history

or

registrations

ENF

NY-07563

SUHS

012407

PRIVILEGED

AND

CONFIDENTIAL

Role

at

FGG

Responsibilities,

positions;

whom supervises,
Fairfield b-d;
of of

to whom reports
Heathcliff
Greenwich Investment

[CRD: Registered Rep of Capital LLC, a registered
Direct advisors ~ indirect LLC, RIA, owner and

Fairfield Redstone

Management

LP,

RIA in

Berwyn,

PA]

Responsibilities/role

concerningFairfield
- one of Greenwich three principals Limited, an

Sentry
of exempted

Ltd.
Fairfield Cayman of BSL. Island (FSL

co.
RFPs)
role

and

the

parent
Ltd., the

of

Fairfield

Greenwich

(Bermuda)

manager

-

"Investment

idea

generation/Research'
Noel,
(FSL

(together
Piedrahita, Harold

with

Waiter

Andres
RFPs)

Greisman)

Responsibilities/role-

concerning
GSLP inception
Tucker are the

Greenwich
in
GPs

Sentry,
to 1998:

L.P.
Noel and

1990

1998
affiliate

to

12/01:
of

FSLP's
Messrs.

GP is
Noel,

"a

corporate
and

Tucker

Piedrahita."

1/02

to

6/03:

GSLP's

GP is
(FGL);

Fairfield
is one of

Greenwich

Limited

Tucker

its
Noel

`main
and

principals",
Andres Piedrahita.

together

with

Waiter

6/03: FGBL is subsidiary of

formed as a wholly-owned FGL and become the GP of

GSLP.

12/17/04: Greenwich Bermuda Limited is formed, becomes the·GP of GSLP, and delegates all responsibility for the investment and trading decisions to FGBL, which now becomes a "Special General
Partner."

ENF

NY-07563

SUHS

012408

PRIVILEGED

AND

CONFIDENTIAL

-what
the

was
GSLP

the
GPs?

rationale

for

changing

ENF

NY-07563

SUHS

012409

PRIVILEGED

AND

CONFIDENTIAL

FGG-BLM Relationship
From FSL RFPs:

`In

1989,

FGG became

acquainted

with

the

split
1989,
Bernard

strike
L.

conversion
its
Madoff Investment

strategy.
relationship the
And,
Fund

... In April
with strategy into

FGGstarted and
the

Securities,

Inc.,
1990

it

incorporated
fund.
Limited

a multi-strategy
Fairfield

in

December
was

officially launched fund employing the
strategy."

as a single-strategy split-strike conversion

What is your understanding
between FGG and BLM?

of the nature
develop?

of the relationship

How did

the of

relationship

Who approached
discussions

whom? What was your role?
occurred? Who from to funds BLM?

What kind
Who from FGG?

What

did

BLM tell

you

about

its

trading

model?

How?

What made this model attractive convince FGG that allocating satisfactory returns?

BLM? How did BLM to BLM would yield

What changes,
How are the

if any,
terms of

have occurred
this relationship
TAD (equities

in the relationship?
documented?
only) FSL, GSL

New

New Options Old Tad

Terms

and and

Conditions options)

- FSL, - FSL,

GSL

(equities

GSL

How generated?
Who How determines does FGG

How negotiated?
the bulleted parameters? determine whether the

bulleted
its
other

parameters
Testing? role them? in
parameters?

are

appropriate
Testing of these

for

clients?

What FGG's agreements? Who signed

developing

Change
did it

from
come

one
about?

document
Why?

to

two:

how

ENF

NY-07563

SUHS

012410

PRIVILEGED

AND

CONFIDENTIAL

With whom at BLM do you interact
business?

concerning

the

Sentry

funds'

TO your knowledge,
funds' accounts? -

who else
names,

is involved
responsibilities

in servicing
inquiries?
these

the Sentry

To whom at
How are

BLM does

FGG go with
documented?

complaints?

thesecontacts

Who maintains

records?

Any other
principals?

relationships

between

FGG and BLM? Between

Are you aware of any BLMofficers,
invest
FGG

owners or employees
Sentry funds? In any

who
of other

or
funds?

invested

in

any

of

the

ENF

NY-07563

SUHS

012411

PRIVILEGED

AND

CONFIDENTIAL

SSCStrategy

What is

the

nature

of the

strategy

that

BLM implements

for

FGG?

How did you first
why attractive) What is the

learn
of

about
using

this

strategy?
implement

(From whom, how,
the strategy

advantage

BLM to

instead

of doing

it

yourself?

Doing it

through about

another them?
To the

b-d?

Changes in the strategy?
Did FGG contribute
model development?

How do you learn
strategy

to the

development?

trading

How does

BLM implement

the

strategy:

- what

drives the
the

the

decision

to buy the of a basket
model)?

basket? determined?

To sell

the

basket?
- how is
other

(anything
than

other

than the computer created?

model)?
(anything

composition
computer

- how is the options
how are strike prices

collar

Within

the stated

limits,

determined

or negotiated?

What role,
of the

if any,

does FGG play
anybodyat to seek

in each specific
- when to

implementation
implement the

strategy?

Does BLM consult

FGG about:

strategy?
What strike

When to sell?
price

What stocks
for the

to put in the basket?

hedge?

what kind of information does FSL receive about these trading decisions? How often? In what form? How is it documented? [ask to produce, if relevant] How does
assets are

FG~ know that
in fact in

the
the

trades
accounts?

in

fact

happened?

That

the

Are you familiar
What is

with
it?

a model entitled
Who developed Model MA2.06 it?

Model MA2.06?
What the does option it do? aspect What of

input
exists
the

data
strategy?

does it use? What connection,
and

if any, What kind of
the

between

How have you learned
documentation has

about

the model?
to

BLM provided

FGG regarding

model?
etc.?)

(spreadsheets?,

specifications,

formulas,

ENF

NY-07563

SUHS

012412

PRIVILEGED

AND

CONFIDENTIAL

What is your understanding each implementation of the
information did BLM provide)

of the role strategy? what
have

that BMadoff plays (how know, what if any, for BMadoff's this

in

Do you have
death or

an understanding
would

effect,

incapacity

on the

strategy?-

Do you know if
contingency?

BLM has

any procedures
about or such procedure plans in

or plans
or

Has Does

FGG ever FGG have

inquired any plan

procedures? for this

place

contingency? FSL RFP, p. 15

"The Fund's investment process is not driven by fundamental research, but rather market timing." - who performs this market timing
function and how?

Financial

statements

of

the

Sentry·funds

for

2003-2005

show

that

the

strategy

was

in

cash

as

of

each

reporting

date

(FSL-

12/31/03, - why is
cash as

6/30/04, that? Is
of certain

12/31/04, 6/30/05; GSLP - 12/31/031 12/31/04) there any policy with respect to being in
dates?

ENF

NY-07563

SUHS

012413

PRIVILEGED

AND

CONFIDENTIAL

Authority
Who has·the
BLM?

over

BLM accounts
to direct a trade for a FSL account at

authority

What
in

is

the

scope

of

BLM's

authority

with

respect

to

the

trading

FSL

accounts?

How is

this
TADs

documented?

Options
Customer

T&C
Agreement

Options
FSL RFP

agreement
(Tab 15, at 24):

Question:

"Who

among

the

Firm's

employees among the
execute a

can authorize a trade? Who firm's employees can actually
trade?"

Answer: Piedrahita, Lipton." - accurate

"Amit Vijayverigiya, Jeffrey Tucker, description of
How? to

Andres Dan these

employees'
is trade described

authority?
here

What
Have

authority
you ever

exercised
with

the

authority execute

to
BLM

authorize
accounts?

a How?

respect

The

authorityto

a trade?

To you knowledge, employees listed
If go
FSL

have any done this?
do that,

of
how

the
would

other
you

you wanted about it?
RFP (Tab

to

15,

at

24):

Question:
communicated

`How
to

are
the

authorized
trader?

trades
What

instructions

are

given,

and

who

are

unauthorized
detected?"

trades

prevented

and/or

Answer: `Trades require two signatures. The Investment Manager maintains a non-discretionary brokerage account with a registered broker dealer in New York that has trading parameters
outlined. This broker dealer has

ENF

NY-07563

SUHS

012414

PRIVILEGED

AND

CONFIDENTIAL

discretion and timing. reconciled

onlywith respect Trade confirms immediately."

to are

price

Does FSL need to specifically makes? Who, how? What about SSCS - does FSL need to give
Who is authorized to withdraw

authorize each trade each new implementation a go-ahead each time?
assets?

that of

BLM the

Todeposit

assets?

What is

the

process?

How is
Chanae

this
in

documented?
allocation form

ENF

NY-07563

SUHS

012415

PRIVILEGED

AND

CONFIDENTIAL

Custody Where
What
What

Arrangements are the
the
the

Sentry
nature
role of

funds'
of
the

assets
arrangement?

custodied?
How is
Of sub-custodian?

is
is

this

it

documented?

custodian?

ENF

NY-07563

SUHS

012416

PRIVILEGED

AND

CONFIDENTLAL

SSC

Returns

and

BLM Fees

How are

the

returns

calculated?

What communications, concerning the Sentry

if any, Funds'

occur between returns?

BLM and

FGG

Is the business
profitability?
What
What

profitable
What are
is
fees?

to FGG? Why? What drives
the costs?
compared to? performance

the

benchmarks
are BLM's

BLM's

How was this

fee

structure

negotiated?

Changed

over

time?

Who

participated
etc.

indiscussions, what factors

when, what factors drives this

affected

it, from

Any understanding
BLM's perspective?

fees structure

Fee rates:

how negotiated?

Any understanding

How does BLMmake

money on this
discussions,

business?
when, what

Changed over time?
factors affected it,

Who participated
etc.

in

Do you have any understanding
to BLM? Why BLM chooses
Were there i-nstances factors, when the

whether the business
return-based
from the returns

is profitable
fees?
business

not to charge

strategy

were,
based

in FGG's view,
on what

unsatisfactory?

Worse than

in previous

periods?

What did FGGdo then?

Whomakes these decisions,
how implemented?

how communicated~,

To you knowledge, is the fee structure driven by any regulatory considerations?
considerations?

for the BLMaccounts .Any compliance

ENF

NY-07563

SUHS

012417

PRnrILEGED

AND

CONFIDENTIAL

FGG

Disclosures
FSL RFP

re

BLM

p. 19:
approved
investment

"For the OTCoptions,
counterparties.
banks are is used reviewed as

there

is a list
capitalized
bank's require

of
There

Only well
limits
regularly.

counterparties.

are

counterparty

trading

and the process

creditworthiness

Question:

"Does the

investment

computer
it be Answer,
manually."

technology
performed old version, Which part
tried to

to allow

its

implementation

or can

manually in large part? p : `It can be performed of the
reproduce

- how?
FGG ever

process

is

referenced?

Has of

SSC manually?

Answer,

new version, trade

p.

27:

"The implementation

the split-strike
sophisticated
FSL PPM, 10/1/04

conversion
execution

strategy
systems."

requires

pp. 9-10:
monitored

Investment
for BLM

restrictions
#12, "Trading

- how enforced,
Decisions Based on

accounts?

p. 18:
Trend

Risk factor
Analysis":

"Certain of the trading decisions of the based on are based on the use of computer models to identify apparently overpriced

Fundare pricing or

underpriced
norm."

options

in relationship

to an assume fluctuations computers

"In addition, analyses over time may be relied
in order
what what

of price andother upon which utilize
predict
refer

to

discern

and

trends."
to?

does each statement models are referenced?

- who performs

these

analyses?

ENF

NY-07563

SUHS

012418

PRIVILEGED

AN

FSL

$SLPPM,711/00: Summary,BusinObiectiveof Summarv,Business ess
the Company, 6: P Obiective, 1-2: p.

_ -I:-F~~PP~ ~20~
P. i:

)FSbP-t~i
P. 2.

I Summary, Business Obiective,Summary I

"The Company seek will to achievcapital e appreciation of
to an accountat BernardL. MadoffInvestmentSecurities

itsassets allocating assets itsassets allocating by its by its
assetsto an accountat BernardL. Madoff

"The Fund seek will to Same 10/1104. as achieve capital appreciation of
I

TheFund w capital app

securitiesp I an options

through th

('BLM')a registered , brokerdealerin NewYork,which employs options an trading
conversion'. The LnvestmentManaRer,p. 10:

registered broker-dealer, whichemploys options an
I 'split strike conversion'."
(samesubstanceas~

InvestmentSecurities, ) Inc.,a
I

conversio I BLM]

I describea

strategydescribedas 'split strike tradingstrategydescribedas
The Investment Mana~er, p.

The Investment Mananer, D. 5: The Invest

"FLGhasdelegatedthe
investment activities to Bemard L. MadoffInvestment Securities,

m

5:
management of the Fund's investment activities,

Samein substance 10/1/04. as

no reference

anagement of the Company's "It is responsiblefor the a registeredbroker-dealer in
New York."

includingthe allocation of
the Fund's I maintained Madoff assets to a L,

m
Z I

I managed account
at Bernard Investment

Securities, ,,, ," Inc.,
U1.

V)

PRIVILEGED

AN

~
"

FSL PPMI 71~0

:i::(:~SI, P~.::i~O/l~_:-;;:i:'
Investment Policies, p. 6:

-

i

;FSL PP~ Jan~Ua~~;aOBI
Investment Policies, T>. 6-7:

:::
Investment

nv~n~nTP~
TheManager established has a

Samein substance 711/00. Sameas 10/1/04, as otcept
includesthe following
concluding sentence:

Noreferen

discretionary accountfor Sentry
at Bernard L. MadoffInvestment

Securities ('BLM'),a registered
broker-dealer in New York, who

"TheFundmaintains its
securities brokerage account at

utilizesa strategydescribedas

BemardL. MadoffInvestment

'splitstrikeconversion'. All ...
investment decisions in the

Securities, registered a brokerdealer in New York, New

account at BLM are effected

York, which also serves as the

by personsassociated with BLM." (emphasis added)

custodian the securities of underlying Fund's'split the
strike conversion' activities."

m

z
TI

Z

b
U1

V)

C I V)
O IU P IU O

PRIVILEGED

AN

PSL P~~, W1~ -:: i- : :--

-.i:ll :;: -.-.;:..;.
': ::

I:E`%B:~
Risk Factors, 12-13, p.

U~on Princi~als Bemar_d De~endence Princi~als De~endence and L. U~on onPrinci~als Depende and
MadoffInvestment Securities: andKeyEmployees the of "Theservices ofhlessrs.Tucker Manager Bernard and L.
and Noel and Bernard L,
Madoff Investment Securities are essential to the continued

RiskFactors, 18,De~endenceRisk n. Factors, 13, P.

Risk Fact

KeyEmployees the of Manager:- reference no to

RevEmpl Manager
BLM.

MadoffInvestment Securities:( BLM;same as 10/1/04.
"The services of the Manager's principals and key

operationsoftheManager. If any of their serviceswere no longeravailable,their absence
would have an adverse impact

employeesand BernardL. MadoffInvestmentSecurities are essentialto the continued
operations of the Fund. If

upon an investmentin the their serviceswere no longer Company. The manager has available,their absencewould delegated all investment have an adverseimpactupon management duties to Bernard an investmentin the Fund.
L, Madoff Investment The Manager has allocated

Securities. As a result, the

the predominant portion of the

Company is subject to the Fund's assetsto a managed judgment, decisionsand account at BemardL. Madoff trading opinions of Bernard L, InvestmentSecurities.As a
Madoff Investment Securities result, the Fund is subject to

and has no control over the

the judgment, decisions and

decisions implemented by
m
Z

trading opinions of Bernard
L, MadoffInvestment
Securities
control

Bernard L, MadoffInvestment
Securities."

and has no

over the decisions

implementedBernard by L,
b I I MadoffInvestment

2~ /

Securities." [no referenceto ( delegation]

PRIVILEGED

AN

FSL 7~140 P~~

i.FSL 10/1~ PP~ i ;

::I:IFSL PP1M,~n~~ : IFSL 3003 f~0/
:;: - ::- i-:
;:

RisFactors, Conflicts k a.18. of
Interest: References to BLM's and its ciDals' affiliations.

ofInterest: no reference to BLM, same as 10/1/04.

Risk Factor Interest.

No referenc

Risk Factors, p. 18, Conflicts of

Interest-TransactioExecution: n "BernardL. MadoffInvestinent as principal. Bernard L, Madoff Investment Securities
also makes the investment

Risk Factors, p. 13, Conflicts

Risk Factors, p. 13, Conflicts

This disclo

of Interest-Transaction Executions:

of Interest-Transaction Executions"- changesare in
bold: "Bernard L.Madoff

version)is of Interest

Securities, in its role as a market- Bernard L. Madoff

and of Pote

maker, tradeswiththecompany Investment Securities, its in
role as a market-maker, effectstransactions equity in
securities with the Fund as

Investment Securities, the
registered broker-dealer through which the Fund conducts its 'split strike

Interest (s

"The brok whichthe

decisions behalfof the on

principal.The firm also

conversion' transactions,in

SSCInve

Company througha grantof discretionarauthority y over

theCompany's account at
Securities."

makes investment the decisions behalfofthe on

Bernard Madoff L. Znvestment discretionary authorityover asprincipal.~-Et~w~z~t~fe mayprov
the Fund's accountat Bernard mnlrn, +bn;nrrnE~+mn~+
L. MadoffInvestment ",,:,:,,, ," ~n~nlF nF ~n

Fundthrough grantof a

itsroleasa market-maker, market-m mayeffect transactions in transacti

equity securities theFundIwith F with the

with the a

assets to e

Securities." [samein
substance as 7/1/00]

r~..,~ +~,,..rr~ n nu~~+ ,F
rl:o~mt:~~n~rln··,~nunr
+kn ~j~,,,~,,,,,,,,,+ a~v~nrrl~dadnff ,+

marketma

m
/ I I ·

I
I

( r~rm~~mn~~ cn~h~t;n~ This
/ may provide such broker
dealer with the ability to use

b;

I the Fund's assets to enhance I its equities market-making

2~

function."

P

PRIVILEGED

AN

ESLP~M; 711/06
principals' affi~ations.

: : :-:

: -:

:::::

~FS~FPd· Januarv:%ODa i: I- · IBSLjq~ :: :: ::
Conflicts

Potential Conflicts of Znterest, p.

Potential

of Interest,

Potential Connicts oflnterest,Potential
16-17. reference BLM. no to (2~21):

C

20:References BLM'sandits t~.17:References BLM's to to [samein substance 7/1/00] as

and principals' its affiliations

Nogener

affiliatio

bollowing f roker-deal
Investment a

fund conduc

s a marke transaction with the F

may provi with the a

assets to e market-ma (no other r

m

Z
TI

Z

b
ul o,

v,

C I v,
o lu p lu

PRIVILEGED

AN

GSLP

GSL PP~;.- ~'

.-. : -.. : :I:I- :: -:::I-::::1- :- :I:·~~ ~~-:_~__~~gllB~:: : : : : '! -:::i:::-: i-~

Summary. Investment Obiective (viii)

Summary. Investment Obiective (1):
"The Partnership's investment objective is to

Summ

"The Partnership's investment objective is to of achieve capital appreciation through the allocation of achievecapitalappreciation its assets its assets to an account at Bernard L. Madoff through the purchase and sale of securities

Obiect

Samea

InvestmentSecurities('BLM'), a registeredbrokerdealerin New York,New York,which employsan

utilizingan optionstradingstrategydescribed as 'split strikeconversion.'...." (1)

options trading strategy described 'split strike as
conversion' .... BLM is employedsolelyas the Partnership's agent. BLM does not sharein the profitsof the Partnershipand while it has sole
authority for the investments made by the

[references BLM,includingto BLMbeing to
an agent of the partnership and having authority over partnership investments, I removed]

Partnership, it otherwise has no role in the management of the Partnership." (viii) (emphasis
added)

Investment Pro~am (6):

InvestmentPronram(6). "The Partnership

Inves
Same

o "The Partnership seeks to obtain capital appreciation seeks to obtain capital appreciation of its assets

f its assetsthrough utilization a the of nontraditional options tradingstrategy.A
discretionary accounthas been establishedfor the Partnerships BernardL. MadoffInvestment at
Securities ('BLM'), a registered broker-dealer in
m
Z

through utilization a nontraditional the of options trading strategy described 'split as
strikeconversion'."jno references to discretionary account at BLM]

New York, New York, which utilizes a strategy described as 'split strike conversion'. ... 411
investment decisions in the account at BLM are

effected by persons associated with BLM."
(emphasis added)

PRIVILEGED

AN

GSLPP~:-31~~98

i:::: I_GSL P
Partner"- no references to BLM,

RiskFactors, Il, "Dependence Princi~als Risk p. UT~on Factors, 12,"Det~endence the n. Ut~on

and Bemard MadoffInvestment L. Securities":
"The servicesof Messrs.Tuckerand Noel and

Princi~als Rev and Em~lovees General "De~ ofthe

RiskF

Princi

Bernard L, MadoffInvestment Securities are

Empl

essential thecontinued to operations the of

PartnershiIf.any their p of services nolonger were
available, their absence would have an adverse

Limit

refer

as 7/1/

impactupon an investmentin the Partnership.The
General Partner has delegated all investment

maqagement decisions to Bernard L, Madoff
Investment Securities, As a result, the

Partnership is subject to the judgment, decision add trading opinions of Bernard L, Madoff
Investment Securities and has no control over the

decisions implemented by Bernard L, Madoff
Investment Securities." (Il.)(emphasis added)

Risk Factors, Il, Conflicts Interest. p. of Reference Risk Factors, 12-13, p. Conflicts Interest of to BLM's itsprincipals' and affiliations. no reference BLM. to

Risk F Conf
7/1/03

referen

v,

c v,

PRIVILEGED

AN

GS~P~~ - ~1/88'
Risk Factors, p. 12, "Conflicts of Interest -

Transaction Executions": "BernardL. Madoff

: - :: : i : Risk Factors,n. 13, "Conflictsof InterestTransaction Executions": "The broker-dealer

Risk F "Conf

Znvestment Securities, in its roleas a market Inc.,
maker, trades with the Partnership as principal. The firm also makes the investment decisions on

through whichthePartnership conducts its
'split strikeconversion'activities,in its role as
a market maker, may effect transaction in

Transa

same a

behalfof the Partnershipthrough a grant of discretionary authorityoverthe Partnership's
account at Bernard L, MadoffInvestment

equitysecurities thePartnership with as principal.Thismayprovide broker-dealer such
with the ability to use the Partnership's assets to

Securities. As a result of this discretionary
has the ability to use the Partnership's assets to
enhance its market making function and no ann's-

enhanceits equitiesmarker-making [sic]
discretionary authorityl

authority, Bernard MadoffInvestment L. Securities function."[noreferencesto BLMand its
lengthrelationshipexistsbetweenthe Companyand
Bernard L. MadoffInvestment Securities in the

execution of stock and options transactions for the
P ip's account." (12.) ( hasis added)

Potential Conflicts Interest, 15- Reference of p. to
BLM'sanditsprincipals' affiliations.

Potential Conflicts ofInterest, 16- no p.
references BLM. to

Poten
7/1/03.

Intere

PRIVILEGED

AND

CONFIDENTIAL

Account

Statements
statement
is it? what

(Maybe)
produced to enf. Staff -

GSLP

- how generated,
how often

for
ending
to

what
balance?
determine

purpose,

to

whom disseminated,

- how
if

is
one that

the
wanted

the

value

of

GSLP

assets

at

BLM from
would

thesetwo
be

reports,

would

that

be

possible?

How

accomplished?

ENF

NY-07563

SUHS

012427

PRIVILEGED

AND

CONFIDENTZAL

Concluding

Questions

What is your current
Who isinvolvedin

compensation?
determining your

How are bonuses
compensation and

determined?
bonus?

Are you an officer
adviser?

or director
or directoror US federal

of a broker dealer
any public any state
regulator?

or investment

Are you an officer

company? agency, and stock

Have you testified
staff,
exchange

in an investigation
agency,
NASD? Any foreign

by the Commission or its

any other
or the

Have you been named asdefendant
brought by the Commission,

or respondent
federal

in an action
government agency,

any other

any state
any foreign civil

securities
securities

agency, any stock exchange or the NASD, or
regulator?

Have you been named a defendant
litigation related to

or appeared
laws?

as a witness a guilty

in any

securities

Have you been indicted, this investigation?

convicted

or entered

plea?

Have you spoken withanyone

other than your counsel regarding
subject o~ conversation)

- (names,

Have you spoken with anyone other than your counsel regarding your appearance here? - (names, subject of conversation)
Did you discuss what your testimony would be?

Do you know anyone else who either to testify in this investigation?
Did you discuss with anyone

testified or has been asked (who, how learned about this)
else what that person's

testimonywas

or would be?

(who, what was discussed)

Did you discuss
of another
Conclusion

your testimony
any intermediary?

or the past or proposed testimony
[what does this mean??]

with

Mr. Tucker,
the statements

do you wish to clarify
you made today?

anything

or add anything questions?

to

Mr. McKeefry,

do you wish to ask any clarifying

ENF

NY-07563

SUHS

012428

PRIVILEGED

AND CONFIDENTIAL

We have

no

further

questionsat

this

time.

Wemay,

however,

call

you again

to testify
contact

in this
your

investigation.
counsel.

Should this

be

necessary,

we will

ENF

NY-07563

SUHS

012429

PRIVILEGED

AND CONFIDENTIAL

FNA: Fifth

Am. Priv.

Script

"I AM NOT AUTHORIZED TO COMPEL YOU TO GIVE EVIDENCE OR TESTIMONY AS TO WHICH YOU ASSERT YOUR PRIVILEGE AGAINST SELF-INCRIMINATION AND I HAVE NO INTENTION OF DOING SO. IN ADDITION, I DO NOT HAVE THE AUTHORITY TO COMPEL YOUR TESTIMONY BY GRANTING YOb IMMUNITY FROM PROSECUION. ANY

QUESTION THAT I ASK HEREAFTER WILL BE WITH THE
UNDERSTANDING THAT IF YOU WISH TO ASSERT YOUR PRIVILEGE, YOU NEED MERELY STATE THAT YOU REFUSE TO ANSWER ON THE GROUNDS THAT YOUR ANSWER MIGHT INCRIMINATE YOU. IN OTHER

WORDS, YOU ARE NOT COMPELLEDTO ANSWERANY FURTHER

QUESTIONSIF YOUBELIEVE THATA TRUTHFUL ANSWER THE TO QUESTIONMIGHT. SHOW THATYOU COMMITTED CRIME, AND YOU A
WISH TO ASSERT YOUR PRIVILEGE
SO VOLUNTARILY.

AGAINST SELF-INCRIMINATION.
THIS?

ACCORDINGLY, IF YOU ANSWERANY QUESTIONS, YOU WILL BE DOING
DO YOU UNDERSTAND

"YOU SHOULD BE AWARE THAT,

IF YOU REFUSE TO ANSWER A

QUESTIONBASEDON YOURFIFTH AMENDMENT PRIVILEGE, A JUDGE
OR A JURY MAY TAKE AN ADVERSE INFERENCE AGAINST YOU IN A CIVIL ACTION THAT THE SEC MAY DETERMINE TO BRING AGAINST YOU. THAT MEANS THAT THE JUDGE OR JURY WOULD BE PERMITTED TO INFER THAT YOUR ANSWER TO THE QUESTIONS MIGHT
INCRIMINATE YOU. DO YOU UNDERSTAND THIS?"

ENF

NY-07563

SUHS

012430

PRIVILEGED

AND

CONFIDENTIAL

FNB:
Elements
-

Attorney-Client
of
in an

and Work Product
privilege

Privilege
are the following:

the

attorney-client

a
to

communication;
confidence; attorney;

made

- by

a client;

- for
advice;
not

the
and
waived.

purpose

of

seeking

or obtaining

primarily

legal

Preliminary questions you may want to adapt inquiry into the basis of the privilege:
- who prepared
who sent the

when making

your

the
the

document;
document sent;

document;

to

whom

was

- what

was

the

date

of

the

communication;

- what

was

the

date

on the

document,

or

if

none,

the

date

the

document

was prepared,

sent

and/or

received;
memorandum, letter,

- who are the attorney - what was the nature

and client involved; of the document (i.e.,

telegram, etc., and generic - who are parties indicated
notations or otherwise

subject matter); on the document through
to receive the

carbon

copy
all

who were

document,

and

parties
was

that

in fact

received

or saw the document;
of the communication

- who was present during the communication; - who are the parties to whom the substance
conveyed;

- would all of the communication, if disclosed to the staff, reveal or tend to reveal a communication from a client (made with the intention of confidentiality) to his/her attorney in connection with clients seeking legal services or legal advice at a time when the attorney was retained by that client;

- would
exist

any segregable
if so, exist; what

part
is the

of that
date of

communication
such agreement;

not

reveal
client

or

tend not to reveal - did a retention
and

such a confidential agreement between

communication; the attorney and

- during
relationship

what
with was what

period fee
the

of time the
matter

did

the

attorney-client by the
the

- was a legal
connection

charged

client

attorney paid; if

in
if so,

involving

communication;

howmuch,
charged,

and how, when and by whom was it
onediscussed;

no fee

was and

- what
during

was the
time

general
period;

nature

of legal

services

rendered,

- did
between

the
the

communication
attorney and

primarily
client;

involve

a business

dealing

ENF

NY-07563

SUHS

012431

PRNILEGED

AND

CONFIDENTIAL

- did
advice; the

the
and

communication

involve

the

client's

seeking

business

was the communication
attorney to act upon.

a grant

of authority
as set

or instruction
forth in F.R.C.P.

for

Elements
26(b) (3)

of
are

the
the

work

product

doctrine

following:

- documents

and

tangible

things;

- prepared
- by or for
representative; for which
cannot be

in anticipation
anotherparty
there
obtained

of litigation
or by or for
need,
hardship.

or for trial;
that
i.e.,

party's
the information

and is

substantial
undue

without

The following
assertion of - who prepared
- when were the

are
the

some suggested
prepared;

questions
doctrine:

for

testing

the

work-product the documents;
documents

- why were
- is
some

the
source.

documents

prepared;
in

and
the documents available from

the
other

information

contained

ENF

NY-07563

SUHS

012432