In re Herald, Primeo and Thema Funds Securities Litigation

Filing 33

REPLY MEMORANDUM OF LAW in Support re: #19 MOTION to Appoint Repex Ventures S.A. and Radovan Fijember to serve as lead plaintiff(s) and Approving Selection of Lead Counsel.. Document filed by Repex Ventures S.A. (Burke, Timothy)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK REPEX VENTURES S.A., on Behalf of Itself and All Others Similarly Situated, Plaintiff, v. BERNARD L. MADOFF; BANK MEDICI S.A.; SONJA KOHN; PETER SCHEITHAUER; HERALD USA FUND; HERALD LUXEMBURG FUND; BANK AUSTRIA CREDITANSTALT; UNICREDIT S.A.; PRIMEO SELECT FUND; PRIMEO EXECUTIVE FUND; PIONEER ALTERNATIVE INVESTMENTS; THEMA INTERNATIONAL FUND PLC; ERNST & YOUNG S.A., AND HSBC SECURITIES SERVICES, S.A., Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Civil Action No. 09-CV-289-RMB CLASS ACTION ECF CASE

REPLY IN FURTHER SUPPORT OF THE MOTION OF THE REPEX GROUP FOR APPOINTMENT AS LEAD PLAINTIFF PURSUANT TO § 21D(A)(3)(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND APPROVAL OF SELECTION OF LEAD COUNSEL

I.

ARGUMENT Movants Repex Ventures S.A. ("Repex") and Radovan Fijember (jointly, the "Repex

Group" or "Movant") submit this reply in support of their motion to be appointed Lead Plaintiff. This reply addresses two points. First, because the May 4, 2009 deadline for the application for appointment of lead plaintiff in the related action, Leonhardt v. Madoff, et al., Case No. 09-cv-2032, (filed March 5, 2009), is undisturbed, Movant requests that ruling upon the various pending lead plaintiff motions in the present case be heard at the same time as the expected motions in the Leonhard action. In the alternative, Movant requests that Court order the pending lead plaintiff motions to be refiled on May 4, 2009. Putting the lead plaintiff motions in the present case on the same track as the expected motions in the related Leonhard action will conserve judicial resources. If the Court appoints lead plaintiffs in the present action prior to May 4th, that decision may need to be revisited if motions to be appointed lead plaintiff are filed in the Leonhard action on May 4th. Staying the pending lead plaintiff motions, or ordering them to be refiled on May 4th, will avoid having this Court hear and decide two separate rounds of motions to appoint lead plaintiffs in these related actions. Furthermore, no one will be prejudiced by a short delay in appointing lead plaintiffs in the present action, especially when there may be future movants in the Leonhard action. Second, if the Court wishes to endure two separate rounds of lead plaintiff motions, then Repex Ventures should now be appointed Co-Lead Plaintiff to represent purchasers of the Herald Funds. While the other movants, Nürnberger Versicherung Aktiengesellschaft Österreich ("Nürnberger") and Dr. Shmuel Cabilly, can be appointed lead plaintiffs for purchasers of the Primeo Funds, they cannot satisfy Rule 23(a)'s "typicality" requirement to represent Herald 1

Fund purchasers because they lack standing to sue on their behalf. Nürnberger and Dr. Shmuel Cabilly lack standing to bring claims on behalf of Herald Fund purchasers because neither of them purchased or sold any Herald Funds. Ont. Pub. Serv. Emples. Union Pension Trust Fund v. Nortel Networks Corp., 369 F.3d 27, 31 (2d Cir. 2004). As the Herald Funds and the Primeo Funds each had different issuers, Bank Medici and Pioneer respectively, and these issuers are located in different countries, investors who purchased funds from these different issuers should have different lead plaintiffs appointed to represent their respective interests. Here, investors in the Primeo Funds cannot serve as lead plaintiffs for investors in the Herald Funds because they do not have standing. Hoffman v. UBSAG, 591 F. Supp. 2d 522, 531 (S.D.N.Y. 2008)(plaintiffs lack standing for claims relating to funds that plaintiffs did not own); In re Merrill Lynch Inv. Mgmt. Funds Sec. Litig., 434 F. Supp. 2d 233, 236 (S.D.N.Y. 2006)(plaintiffs who only owned shares in Merrill Lynch mutual funds do not have standing to assert claims on behalf of shareholders of other funds). While courts often appoint purchasers of one type of securities to represent purchasers of other types of securities of the same issuer where the interests of those purchasers are aligned, (Lifschitz v. Hexion Specialty Chems., 08 Civ. 6394, 2009 U.S. Dist. LEXIS 21933 at * 4-5 (S.D.N.Y. Mar. 19, 2009) (emphasis added)), here the required "same issuer" does not exist. Instead of having the same issuer, the Herald Funds and Primeo Funds have different issuers, which require that investors who purchased securities from these two different issuers each have their own co-lead plaintiff. 434 F. Supp. 2d at 236. In the present case, it is appropriate to appoint a co-lead plaintiff from the Herald Fund purchasers and a co-lead plaintiff from the Primeo Fund purchasers to serve as lead plaintiffs. When the possibility that conflicts could arise exists, it is appropriate to protect the interests of the class by appointing a co-lead plaintiff. 2

Davidson v. E*Trade Fin. Corp., Civil Action No. 07 Civ. 10400, 2008 U.S. Dist. LEXIS 61265 at *21 (S.D.N.Y. July 16, 2008). Nürnberger argues that the Repex Group is somehow prohibited from serving a lead plaintiff because it is a two-member group. See Nürnberger Opposition at p. 9. The Repex Group consists of a single purchaser of Herald Funds and a single purchaser of Primeo Funds. Thus, such a group serving as co-lead plaintiffs is exactly what is required in the present case to ensure that the lead plaintiff will satisfy Rule 23's adequacy and typicality requirements for purchasers of both the Herald and Primeo Funds. While Radovan Fijember will not be co-lead plaintiff because he admittedly has not suffered the largest losses among the purchasers of Primeo Funds, Repex should still be appointed co-lead plaintiff to represent Herald Fund purchasers and serve along with whoever the Court appoints to as co-lead plaintiff from the Primeo Fund purchasers. Dated: April 9, 2009 Respectfully submitted, STULL, STULL & BRODY . By: s/ Timothy J. Burke Timothy J. Burke (Admitted Pro Hac Vice) 10940 Wilshire Boulevard Suite 2300 Los Angeles, CA 90024 Tel: [phone] Fax: [phone] // // //

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STULL, STULL & BRODY Jules Brody (JB-9151) Patrick K. Slyne (PS-1765) James E. Lahm (JL-4335) 6 East 45th St. New York, NY 10017 Tel: [phone] Fax: [phone] Counsel for Movant the Repex Group and Proposed Lead Counsel For Plaintiffs and The Class

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CERTIFICATE OF SERVICE I hereby certify, this 9th day of April, 2009, that I caused a true and correct copies of the REPLY IN FURTHER SUPPORT OF THE MOTION OF THE REPEX GROUP FOR APPOINTMENT AS LEAD PLAINTIFF PURSUANT TO § 21D(a)(3)(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND APPROVAL OF SELECTION OF LEAD COUNSEL to be served via First Class Mail and First Class International Mail on all parties listed on the attached service list. Dated: April 9, 2009 STULL, STULL & BRODY By: s/ Timothy J. Burke . Timothy J. Burke (Admitted Pro Hac Vice) 10940 Wilshire Boulevard, Suite 2300 Los Angeles, CA 90024 Tel: [phone] Fax: [phone]

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SERVICE LIST William P. Hammer, Esq. ERNST & YOUNG LLP 5 Times Square 36th Floor New York, NY 10036-6530 Tel: [phone] Fax: [phone] Lawrence J. Zweifach, Esq. GIBSON, DUNN & CRUTCHER LLP 200 Park Avenue New York, NY 10166-0193 Tel: [phone] Direct Fax: [phone] William J. O=Brien, Esq. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP Four Times Square New York, NY 10036-6522 Tel: [phone] Fax: [phone] Steven J. Toll Daniel S. Sommers 1100 New York Avenue, N.W. Suite 500, West Tower Washington, DC 20005 Tel: [phone] Fax: [phone] Catherine A. Torell COHEN MILSTEIN SELLERS & TOLL PLLC 150 East 52nd Street 30th Floor New York, NY 10022 Tel: [phone] Fax: [phone]

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Samuel H. Rudman David A. Rosenfeld COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP 58 South Service Road Suite 200 Melville, NY 11747 Tel: [phone] Fax: [phone] Sabrina E. Tirabassi COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP DOUGLAS WILENS 120 E. Palmetto Park Road Suite 500 Boca Raton, FL 33432-4809 Tel: [phone] Fax: [phone] JOHNSON BOTTINI, LLP Frank A. Bottini 655 W. Broadway Suite 1400 San Diego, CA 92101 Tel: [phone] Fax: [phone] Jacob Sabo, Esq. The Tower # 3 Daniel Frisch St. Tel Aviv Israel Tel: [phone] Fax: [phone] Bank Austria Creditanstalt 1010 Wien, Schottengasse 6-8 A-1010 Vienna Austria Bank Medici S.A. Operngasse 6/4 Vienna, 1010 Austria

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Stéphane Benbassat 7, rue Versonnex CH-1207 Geneva Switzerland Gerald J. P. Brady Birch Hollow Upper Kilmacud Road Dundrum Dublin 14 Ireland Ernst & Young Global Limited Becket House, 1 Lambeth Palace Rd. London SE1 7EU United Kingdom Ernst & Young S.A. 7 Parc d=Activite Syrdall Munsbach L5365 Luxembourg Helmuth E. Frey Operngasse 6/4 Vienna, 1010 Austria Friehling & Horowitz 337 North Main Street New City, NY 10956-4310 Genevalor, Benbassat & Cie 7, rue Versonnex CH-1207 Geneva Switzerland Herald Luxemburg Fund Operngasse 6/4 Vienna, 1010 Austria Herald USA Fund Operngasse 6/4 Vienna, 1010 Austria 8

HSBC Holdings plc c/o Chris Wilcockson Managing Director, HSS 40 Avenue Monterey B.P. 413, L-2014 Luxembourg HSBC Institutional Trust Services (Ireland) Limited c/o Ronnie Griffin 1 Grand Canal Square Grand Canal Harbour Dublin 2 Ireland HSBC Securities Services S.A. c/o Chris Wilcockson 40 Avenue Monterey B.P. 413, L-2014 Luxembourg HSBC Securities Services (Ireland) Limited c/o Rosemary Leahy 1 Grand Canal Square Grand Canal Harbour Dublin 2 Ireland Daniel Morrissey William Fry Solicitors Fitzwilton House Wilton Place Dublin 2 Ireland Franco Mugnai Via Leone XIII_ n.27 I-20145 Milan Italy Friedrich Pfeffer WFE-Consulting Fuhrenweg 27 D-31515 Wunstorf Germany

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Pioneer Alternative Investments 1 George=s Quay Plaza George=s Quay Dublin 2 Ireland PricewaterhouseCoopers, Chartered Accountants One Spencer Dock North Wall Quay Dublin 1 Ireland PricewaterhouseCoopers International Limited 1 Embankment Place London WC2N 6RH United Kingdom Primeo Executive Fund Attention: Mrs. R. Scott 13 Rue Goethe, B P 413 L-2014 Luxembourg Primeo Select Fund Attention: Mrs. R. Scott 13 Rue Goethe, B P 413 L-2014 Luxembourg Peter Scheithauer Operngasse 6/4 Vienna, 1010 Austria David T. Smith c/o Equus Asset Management Partners Bermudiana Arcade 27 Queen Street Hamilton HM 11 Bermuda

Thema International Fund plc c/o NCB Stockbrokers 3 George=s Dock IFSC Dublin 1 Ireland Unicredit S.A. Piazza Cordusio 20123 Milan Italy