Alfandary et al v. Nikko Asset Management Co., Ltd. et al
Filing
52
OPINION: re: 30 MOTION to Dismiss the Amended Complaint. filed by Nikko Asset Management Co., Ltd., Takumi Shibata, Sumitomo Mitsui Trust Holdings, Inc., Sumitomo Mitsui Trust Bank, Limited. In light of the above, personal jur isdiction may be exerted over Nikko, Shibata, SMTB and SMTH. Defendants' motion to dismiss for lack of jurisdiction is denied. For the foregoing reasons, the Defendants' motion to dismiss is denied. It is so ordered. (Signed by Judge Robert W. Sweet on 10/4/2018) (js)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------x
CHRISTINA ALFANDARY , JEFFREY
HANSEN, LAURIE VICARI, TIMOTHY
MCCARTHY, BILL WILDER , FREDERICK
REIDENBACH, and GREGORY ATKINSON,
Plaintiffs ,
- againstNIKKO ASSET MANAGEMENT CO. , LTD .
TAKUMI SHIBATA , SUMITOMO MITSUI
TRUST BANK, LIMITED, and SUMITOMO
MITSUI TRUST HOLDINGS , INC. ,
Defendants.
--------------------------------------x
APPEARANCES :
Attorneys for Plaintiffs
KASOWITZ , BENSON , TORRES LLP
1633 Broadway
New York , NY 10019
By : Daniel J. Fetterman , Esq.
David J. Mark , Esq.
CROSBY & HIGGINS LLP
14 0 Broadway, 4 6 t h Floor
New York , NY 10005
By : Todd A. Higgins, Esq .
Attorneys for Defendants
SHEARMAN & STERLING LLP
599 Lexington Avenue
New York , NY 10022
By : Adam S . Hakki , Esq .
John Gueli , Esq .
Elizabeth J . Stewart , Esq .
H. Miriam Farber, Esq .
17 Civ . 5137 (RWS)
OPINION
Sweet, D.J .
Defendants Nikko Asset Management Co. , Ltd .
( "Nikko "
or the " Company"), Takumi Shibata (" Shibata " ) , Sumitomo Mitsui
Trust Bank , Limited ("SMTB") , and Sumitomo Mitsui Trust
Holdings , Inc .
( " SMTH " )
(collectively , the " Defendants " ) have
moved on grounds of forum non conveniens and l ack of personal
jurisdiction to dismiss the First Amended Complaint (" FAC " ) of
plaintiffs Christina Alfandary ("Alfandary") , Jeffrey Hansen
(" Hansen " ) , Laurie Vicari (" Vicari " ), Timothy McCarthy
("McCarthy " ) , Bill Wilder (" Wilder " ) , Frederick Reidenbach
("Reidenbach " ) , and Gregory Atkinson ("Atk i nson")
(collectively ,
the "Plaintiffs " ) seeking to enforce certain stock acquisition
rights
("SARs " ) . Upon the conclusions set forth below , the
motion is denied .
I.
Prior Proceedings
On July 7 , 2017 , the Plaintiffs filed their Complaint .
On September 20 , 2017 filed their First Amended Complaint
(" FAC " ) of 81 pages alleging the Defendants '
FAC
~~
77 - 156 , and ten causes of action :
fraudulent scheme ,
(1) violations of
Section 10 (b) and Rule 10 (b) (5) by Hansen , id .
all Plaintiffs , id.
~~
172 - 85 ;
~~
157 - 71 ;
(2) by
(3) violations by Shibata of
1
Section 20 of the Securities and Exchange Act
186 - 89 ;
(" SEA" ) , id . i i
(4&5) violations by SMTB and SMTH of Section 20 of the
SEA , id. i i 190 - 95 ;
(6) common law fraud id . i i 212 - 16 ;
conspiracy to commit common l aw fraud , id . i i
2 1 7 - 24 ;
(7)
(8) breach
of contract , id . i 22 5 ;
( 9) breach of contract aga i nst Nikko ,
id . i i 263 - 65 ; and (10)
for declaratory judgment , id. i i 266 - 70 .
The instant motion was heard and marked fully
submitted on April 11 , 20 1 8 .
II .
The Facts
The parties submitted substantial affidavits with
exhibits in support of and in opposition to the pending motion
from which the following account of re l ationships and events is
drawn , see Kitaru Innovations Inc . v. Chandaria , 698 F . Supp. 2d
386 , 389 - 90
(S . D. N. Y. 2010)
(courts may consider the pleadings ,
affidavits , and exhibits in deciding a motion to dismi ss on
forum non conveniens grounds).
The dispute between these sophisticated , well - advised
parties concerns a series of complicated interrelated intra corporate transactions .
2
During the relevant time period , Plaintiffs Alfandary ,
Vicari , and Hansen (collectively , the " NAMA Plaintiffs " ) were
all senior executives of Nikko Asset Management of America , Inc .
(" NAMA") in New York , a wholly owned subsidiary of Nikko . FAC ! !
10 - 12 , 20 . Specifically , Al fandary was United States Business
Head of NAMA , Hansen was NAMA ' s Senior Fund Manager and
Managing , and Vicari was NAMA ' s Chief Compl i ance Of ficer . Id . ! !
10 - 12 . Plaintiffs McCarthy , Reidenbach , W lder , and Atkinson
i
were senior executives of Nikko . Id . ! ! 13 - 16 . Specifical l y ,
McCarthy was Nikko ' s Chairman and Chief Executive Officer ,
Reidenbach was Nikko ' s Chief Financial Officer and Chief
Operating Of f icer, Wilder was Nikko ' s President , and Atkinson
was Nikko ' s Head of Global Trading . Id .
Defendants are Japanese nationals that maintain
extensive contacts with the United States through an elaborate
corporate structure.
Nikko , a privately- he l d investment advisor and asset
manager , i s incorporated in Japan and has its principa l off i ces
in Tokyo . Id . ! 17. Nikko has $165 b i llion under management , and
is registered with the Securities and Exchange Commission
("SEC " ) , though it has no secur i ties listed on any United States
exchange . Id .; Sayato Deel. ! 4. Nikko files periodic and
3
continuous Form 13F reports with the SEC, as is required f o r
"institutional investment managers that use the U.S. mails and
exercise investment discretion ove r $100 million," as well as
Form PF rep o rts, which "must be filed by SEC-registered
investment advisors that , with their related persons , have at
least $150 million in private fund assets under management ."
Sayato Deel .
~
4.
Defendant SMTB is an institutional investment manager
that owns 91 . 6 % of Nikko. FAC
~
18 . As part o f that ownersh ip,
SMTB ove rsees and controls Nikko's business operations, and
consol idates the Company ' s financial results with its own . Id.
~~
17-1 8 . SMTB filed Form 13F-NT with the SEC under Cen tral
Index Key Number 00010460 17. Id .
Defendant SMTH is a publicly traded company that owns
100 % of the shares of SMTB, and its ADRs are traded in the
United States . Id .
~
19. The majority of SMTH's o ffi cers are
also off i cers or executives of SMTB. Id.
Defendant Shibata was educated in the United States
and is a Japanese cit izen and resident. Shibata Deel .
~~
3, 5 .
Shibata joined Nikko as Executive Chairman in July 2013 , and
4
assumed the roles o f Representative Director, President and CEO
in April 2014. Shibata Deel. !
2.
In 2009 , after SMTB acquired Nikko from Citibank , the
Company established a stock option plan (the " 2009 Plan") to
retain exist ing emp l oyees and attract new talent. FAC !
31-32 .
Two years later, Nikko established a second plan to advance the
same purpose (the "2011 Plan," and together with the 2009 Plan,
the "Plans" ) . Id. !
42. SMTB worked with Nikko's senior
management team, including Plaintiffs McCarthy and Wilder, to
develop the Plans. Id. ! ! 31 , 42. The governing documents for
both Plans were substantively identical and included (1) an
" Allotment Agreement" signed on behalf of Nikko and by each
grantee , and (2) accompanying "Terms and Conditions " describing
the Plans. Id. ! ! 36 -41, 43-49. Th ose documents -
including the
Allotment Agreements signed by each of the Plaintiffs - were
written in Japanese . Defs.' Mot. to Dismiss ("De fs .' Br."), at
2.
Under the Plans' similar terms, Plaintiffs were
awarded units of stock acquisition rights
(" SARs "), FAC ! ! 50-
59 , which provided for an exercise period of up to 10 years, id.
! ! 126, 261.
In the event the Company did not implement an IPO
5
by a designated date,
1
the Plans granted participants the right
to liquidate their vested SARs. Id.
~~
248, 261. Specifically,
participants would have the option, but not the obligation, to
sell their SARs back to Nikko at the "fair market value" of the
Company less a pre-identified strike price. 2 Id.
~~
35 , 43. To
calculate "fair market va lu e ," the Plans required Nikko to
obtain opinions fr om three independent evaluators twice a year ,
commencing approximately six months after the designated date.
Id .
~
36 -3 8 , 44. In the event Nikko did implement an IPO before
the designated date, the process for exercise was more
straightforward. Participants were to be granted t h e right to
exercise their SARs at the strike price, and if the market price
exceeded the strike price, the participant could reasonably
expect to profit from the transaction.
Id.
~~
34 , 43.
Under the terms of both Plans , participants who left
the Company prior to exercising their rights were expressly
permitted to retain their vested options . The Plans' Terms and
Conditi ons provided that , in the event an employee left after
1
Namely, January 2015 for the 2009 Plan and October 2016 for
the 2011 Plan. FAC ~~ 37 , 45.
2
The strike price for the 2009 Plan was set at 625¥ per
share based on the price SMTB paid to acquire Nikko at the
height of the financial crisis. FAC ~ 34. The strike price for
the 2011 Plan was considerably higher -- 737¥ per share -- and
reflected Nikko 's increasing va lue. Id. ~ 43.
6
the Company went public , the employee had to exercise his rights
within three months of departure . See Defs .' Exs. 2, 4 , 6 . If an
employee left before an IPO , he had until three months after the
IPO to exercise his rights , provided however that during this
three month period , Nikko could require former employees to sell
their rights back , thereby allowing Nikko to control the size of
the float in a public offering. See ECF No. 32 - 2 , Section
2 (10) (v) (b) . The Plans did not , however , provide that the
Company could force a sale before an IPO . On the contrary ,
Section 2(10) (iii) explicitly states that Nikko "must have
implemented the IPO at the time of the exercise of the Stock
Acquisition Rights ." Id .
All Plaintiffs were participants in either the 2009
Plan, the 2011 Plan , or both. Plaintiffs began to receive
information about their rights under the 2009 Plan in early
2010 , and received similar information on the 2011 Plan one year
later (the "Allotment Packages " ) . FAC
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?