Datatreasury Corporation v. Wells Fargo & Company et al

Filing 537

RESPONSE to Motion re #524 MOTION to Compel Certain Documents Relating to Defendant HSBC North America Holdings Inc.'s Jurisdictional Challenge filed by HSBC North America Holdings Inc. (Attachments: #1 Exhibit #2 Exhibit #3 Exhibit #4 Exhibit #5 Exhibit #6 Exhibit #7 Exhibit #8 Exhibit #9 Exhibit #10 Exhibit #11 Exhibit)(Boudreaux, Glen)

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Datatreasury Corporation v. Wells Fargo & Company et al Doc. 537 Att. 1 Case 2:06-cv-00072-DF-CMC Document 537 Filed 02/23/2007 Page 1 of 43 Margo Hickman CONFIDENTIAL February 2, 2007FOR ATTORNEYS' EYES ONLY Page 1 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS MARSHALL DIVISION DATATREASURY CORPORATION, Plaintiff, VS WELLS FARGO & COMPANY, et al., Defendants. )( )( )( )( )( )( )( )( )( )( CIVIL ACTION NO. 2:06-CV-72 (DF) VIDEOTAPED ORAL DEPOSITION OF MARGO HICKMAN FEBRUARY 2, 2007 VIDEOTAPED ORAL DEPOSITION OF MARGO HICKMAN, produced as a witness at the instance of the Plaintiff, and duly sworn, was taken in the above-styled and above-numbered cause on the 2nd day of February, 2007, from 9:06 a.m. to 3:09 p.m., before Lisa J. Gretarsson, CSR in and for the state of Texas, reported by machine shorthand, at the offices of Katten Muchin, 525 West Monroe Street, located in the city of Chicago, state of Illinois, pursuant to the Federal Rules of Civil Procedure and the provisions stated on the record. (903) 758-2183 * (903) 758-4890 Fax Gretchen Shore Court Reporting & Litigation Support E-mail: gretchenshore@gretchenshore.com Dockets.Justia.com fee6c41c-b962-439e-8599-e362d5a91e8a Case 2:06-cv-00072-DF-CMC Document 537 Filed 02/23/2007 Page 2 of 43 Margo Hickman CONFIDENTIAL February 2, 2007FOR ATTORNEYS' EYES ONLY Page 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 APPEARANCES FOR THE PLAINTIFF: Anthony Bruster, Esq. R. Benjamin King, Esq. NIX PATTERSON & ROACH, L.L.P. 2900 St. Michael Drive, Suite 500 Texarkana, Texas 75503 Telephone: 903-223-3999 Facsimile: 902-223-8520 E-mail: akbruster@nixlawfirm.com benking@nixlawfirm.com FOR THE DEFENDANT, HSBC NORTH AMERICA HOLDINGS, INC./ HSBC BANK USA: Tim S. Leonard, Esq. Edward J. "Nick" Nicholas, Esq. BOUDREAUX, LEONARD, HAMMOND & CURCIO, P.C. Two Houston Center 909 Fannin, Suite 2350 Houston, Texas 77010 Telephone: 713-757-0000 Facsimile: 713-757-0178 E-mail: tleonard@blhc-law.com nnicholas@blhc-law.com FOR THE DEFENDANT, UNION BANCAL CORP. Ross R. Barton, Esq. PILLSBURY, WINTHROP, SHAW, PITTMAN, LLP 1650 Tysons Boulevard McLean, Virginia 22102 Telephone: 703-770-7900 Facsimile: 703-770-7901 E-mail: ross.barton@pillsburylaw.com ALSO PRESENT: Allison Shank, HSBC in-house counsel Lauren Ragin, Video Technician Brooke Berry, Document Technician (continued on following page) INDEX PAGE Appearances........................................ 2-3 WITNESS: MARGO HICKMAN Examination by Mr. Bruster.................... 7 Examination by Mr. Leonard.................... 160 Examination by Mr. Bruster.................... 162 Corrigendum Page................................... 164 Reporter's Certificate............................. 166 Page 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 APPEARANCES (continued from previous page) LIVENOTE CONNECTIONS VIA THE INTERNET: Amr Aly Irah Donner Meera Marti David Curcio Anthony Bruster Ben King Shephard Lane Dalton Young Sunja Smith Ed Hohn Kelli Hearne CiCi Williams John Hiles George Shipley Rod Cooper Chris Sampson Kellie Goolsby Ed Chin Amy Wise Alison Ross Karl Rupp Jacala Hoffman WEBCAST CONNECTIONS VIA THE INTERNET: Dalton Young David Curcio Sunja Smith Amr Aly Irah Donner Meera Marti Chris Sampson Amy Wise EXHIBITS NO. DESCRIPTION MARKED 3 HSBC website printout......................... 47 4 Form 20-F..................................... 61 5 Letter to government agencies, from Janet Burak, dated July 16, 2004.................... 69 6 HSBC North America Holdings, Inc.,'s Objections, Assertions of Privilege and Responses to DataTreasury Corporation's First Set of Requests for Admission Regarding Jurisdictional Discovery............ 85 HSBC North America Holdings, Inc.'s Objections, Assertions of Privilege and Responses to DataTreasury Corporation's First Set of Requests for Production Regarding Jurisdictional Discovery............ 103 Defendant HSBC North America Holdings, Inc.'s Objections, Assertions of Privilege and Responses to Plaintiff DataTreasury Corporation's First Set of Interrogatories Regarding Jurisdictional Discovery............ 108 7 8 9 Defendant HSBC North America Holdings, Inc.'s Supplemental Objections, Assertions of Privilege and Answers to Plaintiff DataTreasury Corporation's First Set of Interrogatories Regarding Jurisdictional Discovery..................................... 118 10 Document entitled Consolidated Financial Statements for Bank Holding Companies FR Y-9C (Bates stamped HNAH-JURIS-0012)............... 125 11 Document entitled Report of Income for Bank Holding Companies Schedule HI Consolidated Income Statement (Bates stamped HNAH-JURIS-0013)............... 126 (exhibit index continued on following page) 2 (Pages 2 to 5) (903) 758-2183 * (903) 758-4890 Fax Gretchen Shore Court Reporting & Litigation Support E-mail: gretchenshore@gretchenshore.com fee6c41c-b962-439e-8599-e362d5a91e8a Case 2:06-cv-00072-DF-CMC Document 537 Filed 02/23/2007 Page 3 of 43 Margo Hickman CONFIDENTIAL February 2, 2007FOR ATTORNEYS' EYES ONLY Page 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 8 09:07 09:07 09:07 09:07 09:07 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 EXHIBITS (exhibit index continued from previous page) NO. DESCRIPTION MARKED 12 Schedule HI Continued (Bates stamped HNAH-JURIS-0014)............... 128 13 Notice of Intention to Take Oral and Video Deposition of a 30(b)(6) Representative of HSBC North America Holdings, Inc........... 132 14 Affidavit of Margo Hickman.................... 146 15 North America - Bank Holding Company Structure..................................... 160 (exhibit index concluded) Q. Have you ever given a deposition before? A. Yes. Q. How many times? A. Many. I don't know how many, but more than ten, I would say. Q. More than ten. Okay. When was the last time you gave a deposition? A. I don't believe I gave any in 2006 so probably 2005. Q. So 2006 falls into the category of one of the better years in your life? A. Yes. Q. Okay. Well, I'm sure you're very familiar with this routine. Just so you know, if you need a break for any reason, let us know, we're happy to accommodate you. You'll hear the lawyers, and me, probably, talking, but if you can try and answer my questions directly, I'll try and ask proper questions, and if you don't understand one, let me know, okay? A. Yes. Q. You understand the testimony you're giving here today is the same as if you were sitting in a courtroom in Marshall, Texas. A. Yes. Page 7 08:20 09:06 09:06 09:06 09:06 09:06 09:06 09:07 09:07 09:07 09:07 09:07 09:07 09:07 09:07 09:07 09:07 09:07 09:07 09:07 09:07 09:07 09:07 09:07 09:07 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 9 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:08 09:09 09:09 09:09 09:09 09:09 09:09 09:09 09:09 09:09 09:09 09:09 09:09 09:09 09:09 09:09 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PROCEEDINGS THE VIDEOGRAPHER: We're on the record. MARGO HICKMAN, having been first duly sworn, testified as follows, to wit: EXAMINATION BY MR. BRUSTER: Q. Good morning. A. Good morning. Q. Tell us your name, please. A. Margo Hickman. Q. Ms. Hickman, will you tell us your address, both business and personal, please. A. My home address is 1444 Prairie Trail in YSLake, Illinois, which is YSLake, one word. My business address is 2700 Sanders Road, Prospect Heights, Illinois. Q. And what do you do for a living? A. I am the senior vice president of insurance for HSBC North America Holdings. Q. Senior vice president of insurance for HSBC North America Holdings. How long have you served in that position? A. I was appointed to that position, I think, in 2004 sometime. Q. That you're sworn to tell the truth here under penalties of perjury. A. Yes. Q. Okay. You said that you first became the senior vice president of insurance for HSBC North America Holdings, Inc. in 2004, and that you were appointed to that position; is that correct? A. Yes. Q. Okay. Who appointed you to that position? A. I believe it was the board, or they affirmed the appointment. Q. The board of directors? A. Yes. Q. And is that the board of directors of HSBC North America Holdings? A. I believe so, yes. Q. Prior to your appointment to the position of senior vice president of insurance for that entity, what did you do? A. I was the vice president of insurance for HSBC Finance Company, Inc. Q. HSBC Finance Company, Inc.? A. I think that's what we -- I think that's what it's called. It's HBIO, the acronym. Q. Okay. And how long had you been serving as 3 (Pages 6 to 9) (903) 758-2183 * (903) 758-4890 Fax Gretchen Shore Court Reporting & Litigation Support E-mail: gretchenshore@gretchenshore.com fee6c41c-b962-439e-8599-e362d5a91e8a Case 2:06-cv-00072-DF-CMC Document 537 Filed 02/23/2007 Page 4 of 43 Margo Hickman CONFIDENTIAL February 2, 2007FOR ATTORNEYS' EYES ONLY Page 10 09:09 09:09 09:09 09:09 09:09 09:09 09:10 09:10 09:10 09:10 09:10 09:10 09:10 09:10 09:10 09:10 09:10 09:10 09:10 09:10 09:10 09:10 09:10 09:10 09:10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 12 09:12 09:12 09:12 09:12 09:13 09:13 09:13 09:13 09:13 09:13 09:13 09:13 09:13 09:13 09:13 09:13 09:13 09:13 09:13 09:13 09:13 09:13 09:14 09:14 09:14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the vice president of insurance for that entity? A. For HSBC, as of the date of the acquisition in March of 2003, I believe. Q. And when you say the date of the acquisition, tell me what you're referring to. A. The date that HSBC, PLC acquired Household International. Q. You said the date that HSBC, PLC acquired Household International? A. Yes. Q. Okay. And prior to that acquisition, had you been working with the Household International entities, as opposed to the HSBC entities? A. Yes. Q. Okay. What position did you hold with Household International prior to that acquisition? A. Vice president of insurance. Q. Are there any difference -- differences in job duties that you have between when you served as the vice president of insurance for HSBC Finance Company, Inc. and your current role as senior vice president of insurance for HSBC North America Holdings, Inc.? A. Yes. Q. Okay. What are the differences? A. I have responsibility for the insurance A. Yes, HBUS. Q. HBUS? Tell me -- tell me what that stands for. A. HSBC -- we just call it HBUS. I guess it's the -- the bank subsidiary, HSBC Bank something. Sorry, but I don't know exactly. Q. So those people work for the banking subsidiary of HSBC. A. That's -- that's where they're headquartered, yes. Q. The banking subsidiary here in North America. A. Yes. Q. Okay. And those five people report directly to you? A. Shirley and Tim report directly to me, and then Barbara reports to Tim, Mike reports to Shirley, and Joe reports to me. Q. Do you know what Tim's title is? A. Director of insurance. Q. And do you know what specific legal entity he's director of insurance for? A. Well, the way we handle it is we work as a team, the 11 people. And we divide the duties for the insurance procurement and administrative duties for North America between the 10 people. So he does -- his Page 11 09:10 09:10 09:11 09:11 09:11 09:11 09:11 09:11 09:11 09:11 09:11 09:11 09:11 09:11 09:11 09:11 09:11 09:11 09:11 09:12 09:12 09:12 09:12 09:12 09:12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 13 09:14 09:14 09:14 09:14 09:14 09:14 09:14 09:14 09:14 09:14 09:14 09:14 09:14 09:14 09:14 09:14 09:14 09:15 09:15 09:15 09:15 09:15 09:15 09:15 09:15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 procurement and administrative duties for all of North America. And I also am responsible for oversight of the insurance for Central and South America. Q. Any other differences? A. I have a few more people reporting to me than I did before. Q. Anything else? A. Not material. Q. How many people report directly to you? A. Ten. Q. Do all of the people that report to you work for HSBC North America Holdings, Inc.? A. No. Q. If you could, walk through with me who the people are that report to you and who they work for. A. I have -- would you like all ten names? Q. Sure, and who they work for. A. For HBIO, which is the finance company portion of the company, I have Karen Lemanski, Bill Silva, Randy Goodman, Cathy Ellingen and Kristin Kinder. For HBUS, which is the bank business in Buffalo, I have Tim O'Connor, Shirley Galioto, Mike Benzino, Jill Peterson and Barbara Glaspy. Q. And those five people that you just listed, you use an acronym, HBUS? What was that? duties are not defined by where he's located. Q. Okay. And I guess that same kind of teamwork mentality, insofar as procurement of insurance, would go for all the 10 people you mentioned, plus yourself -A. Yes. Q. -- across all those entities? A. Yes. Q. Okay. How many senior vice presidents are there that work for HSBC North America Holdings, Inc., same company that you work for? A. I don't know. I'm sure we can provide that information to you, but I don't know. Q. Are there more than five? A. I really can't tell you. I haven't paid attention to that. Q. Can you name any others, as you sit here this morning, any other people that are senior vice presidents of some category, like yours is insurance, that work for HSBC North America Holdings, Inc.? A. The only one that I -- that I'm fairly certain of is Cliff Mizialko in the accounting -- in an accounting role, but I'm not sure his exact title. Q. Other than Mr. Mizialko -- is that how you say that? A. Yes. 4 (Pages 10 to 13) (903) 758-2183 * (903) 758-4890 Fax Gretchen Shore Court Reporting & Litigation Support E-mail: gretchenshore@gretchenshore.com fee6c41c-b962-439e-8599-e362d5a91e8a Case 2:06-cv-00072-DF-CMC Document 537 Filed 02/23/2007 Page 5 of 43 Margo Hickman CONFIDENTIAL February 2, 2007FOR ATTORNEYS' EYES ONLY Page 14 09:15 09:15 09:15 09:15 09:15 09:15 09:15 09:15 09:15 09:16 09:16 09:16 09:16 09:16 09:16 09:16 09:16 09:16 09:16 09:16 09:16 09:16 09:16 09:16 09:16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 16 09:18 09:18 09:18 09:18 09:18 09:18 09:18 09:18 09:18 09:19 09:19 09:19 09:19 09:19 09:19 09:19 09:19 09:19 09:19 09:19 09:19 09:19 09:19 09:19 09:19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Okay. Are there any other people that -- do you know how many people there are that work in accounting for HSBC North America Holdings, Inc.? A. No. Q. Are there more than ten? A. I don't know, but I -- I wouldn't think so, but I'm not positive. Q. Do you know how many total employees there are for HSBC North America Holdings, Inc.? A. I'm not positive, but I think it's less than 50. Q. Less than 50 total employees? A. I think so. Q. We have you, who is in charge of insurance, and you've mentioned Mr. Mizialko, who deals with accounting. What other kind of broad business categories like that are there departments of at HSBC North America Holdings, Inc.? A. My understanding is that the categories are what we would call staff functions, which are support functions for the corporation, accounting, tax, insurance, those types of functions. Q. Are there any others that you can think of as you sit here today? A. Probably legal. automobiles, general liability, things like slips and falls and accidents that customers might have in our various premises. We buy, you know, coverage on -- to protect the assets of the corporation. Those are some of the categories. Q. How many premises does HSBC North America Holdings, Inc. own? A. Well, I don't know exactly. It changes, actually, day to day, but as -- probably 2,000 or a little more. Q. Okay. Are those premises owned by any other HSBC entities in joint ownership with HSBC Holdings North America, Inc.? A. Well, they're not owned at all by HSBC North America Holdings, Inc. They're owned or leased by the subsidiary companies. Q. Maybe I asked an unclear question, but a moment age I asked you how many premises North -- HSBC North America Holdings, Inc. owns, you said approximately 2,000, so was that an incorrect statement? A. Yes, it is, and I apologize for mis -misrepresenting that. Q. How many premises does HSBC North America Holdings, Inc. own? A. None, to my knowledge. Page 15 09:16 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:17 09:18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 17 09:19 09:19 09:19 09:19 09:19 09:20 09:20 09:20 09:20 09:20 09:20 09:20 09:20 09:20 09:20 09:20 09:20 09:20 09:20 09:20 09:20 09:20 09:20 09:20 09:20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Legal? A. But beyond that I wouldn't be able to say. Q. Would risk management fall in the category of legal, or is that a separate department? A. That's a separate department. Q. Does -- does HSBC North America Holdings, Inc. have a risk management department? A. I guess I'm not positive where -- you know, where that is housed exactly in the company. I'm sure we can provide that to you if we haven't already. Q. If we can just kind of focus in on -- on your line of business, the insurance line of business, since that's what you probably know the most about. You mentioned earlier that your responsibility is for insurance procurement and administrative duties for all of North America -A. Yes. Q. -- as one of your job responsibilities. A. (Nods head affirmatively.) Q. Tell us -- tell the jury what you mean by insurance procurement and administrative duties for all of North America. What does that mean? A. Well, the corporation purchases insurance to protect itself against certain types of risk, including workers' compensation, insurance coverage on property, Q. Who owns the headquarter building that HSBC North America Holdings, Inc. operates out of in Prospect Heights, Illinois? A. I don't know. I know it's a lease facility and it's been sold a couple of times. I'm not sure who the current owner is. Q. Who's the lease -- the lessee on that facility? A. I don't know for sure. Q. So your testimony to the jury now is that HSBC North America Holdings, Inc. doesn't own any premises whatsoever in North America? A. That is my testimony. Q. Okay. If HSBC North America Holdings, Inc. doesn't own any property anywhere in North America, why does it go get insurance for properties all across this country? (Allison Shank enters the deposition room.) A. The reason that we include HSBC North America Holdings, Inc. as an insured on our insurance policies is so that in the event they are named in a lawsuit they are provided coverage under the policy. The insurance policies are designed to protect all of the operating subsidiaries, as well as 5 (Pages 14 to 17) (903) 758-2183 * (903) 758-4890 Fax Gretchen Shore Court Reporting & Litigation Support E-mail: gretchenshore@gretchenshore.com fee6c41c-b962-439e-8599-e362d5a91e8a Case 2:06-cv-00072-DF-CMC Document 537 Filed 02/23/2007 Page 6 of 43 Margo Hickman CONFIDENTIAL February 2, 2007FOR ATTORNEYS' EYES ONLY Page 18 09:21 09:21 09:21 09:21 09:21 09:21 09:21 09:21 09:21 09:21 09:21 09:21 09:21 09:21 09:21 09:21 09:21 09:22 09:22 09:22 09:22 09:22 09:22 09:22 09:22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 any holding companies that we have in North America. We 09:23 09:23 buy the coverage in a broad way to protect the entire 09:23 North American operation. Q. (BY MR. BRUSTER) Does HSBC Bank operate in 09:23 09:23 Texas? 09:23 A. I -- when you said -- I -- I think so. 09:23 Q. Do the insurance policies, that you purchase on behalf of HSBC North America Holdings, Inc., provide 09:23 09:23 insurance for accidents that might happen in Texas? 09:23 A. They provide insurance for accidents that 09:24 could happen anywhere in North America. 09:24 Q. Is there any reason that these insurance 09:24 policies weren't produced as part of the document 09:24 production in this case, to your knowledge? 09:24 A. I can't answer that question. 09:24 Q. Just so we're clear, all of these insurance 09:24 policies that provide coverage even for accidents in Texas for HSBC Bank customers, all of those policies are 09:24 purchased by HSBC North America Holdings, Inc., correct? 09:24 09:24 A. They are procured by us, yes, and then -09:24 well, go ahead. 09:24 Q. Are they purchased by that company? 09:24 A. It's a difficult question. The way the -- the 09:24 way the system works is that they are purchased, and 09:24 then the cost for the insurance is allocated to each Q. Do they just -- okay. Sorry. I didn't mean to cut you off. Does HSBC Bank own the building in Buffalo? A. No. Q. They lease that building? A. Yes. Q. Okay. What about in New York City? Do they own that building? A. I believe we do own that building. Q. You've been responsible for HSBC North America Holdings, Inc. for procuring insurance on that building, correct? A. Yes. Q. Now, earlier you were talking about -- let me back up real quick. Separate and apart from procurement, negotiation, entering into contracts for insurance, all of which you do on behalf of HSBC North America Holdings, Inc., who actually pays the insurance company for the policy that they issue? A. The premiums are paid by either HSBC Bank or HSBC Finance Corporation. Q. Not by HSBC North America Holdings, Inc.? A. No. Page 19 09:22 09:22 09:22 09:22 09:22 09:22 09:22 09:22 09:22 09:23 09:23 09:23 09:23 09:23 09:23 09:23 09:23 09:23 09:23 09:23 09:23 09:23 09:23 09:23 09:23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 21 09:24 09:24 09:24 09:24 09:24 09:24 09:25 09:25 09:25 09:25 09:25 09:25 09:25 09:25 09:25 09:25 09:25 09:25 09:25 09:25 09:25 09:25 09:25 09:25 09:26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 operating subsidiary according to its own risk in that category. So if HSBC Bank has a bank branch and they paid the cost of the insurance for that bank branch, the cost is not held at HSBC North America Holdings. Q. HSBC North America Holdings negotiates for that insurance, correct? A. Yes. Q. I mean, that's what you do, right? A. That's what I do. Q. Okay. And HSBC North America Holdings enters into the contract for insurance, correct? A. Yes. Q. And those contracts for insurance, that HSBC North America Holdings, Inc. enters into, provide coverage for accidents that might happen in Texas, correct? A. Yes. Q. Okay. You mentioned earlier the bank subsidiaries, the people that report to you are officed in Buffalo; is that correct? A. Yes. Q. Is that the headquarters of HSBC Bank? A. I think the headquarters is officially New York City, but it might -- I'm not sure. I guess it depends on the subsidiary. Q. Does HSBC North America Holdings, Inc. have a bank account? A. I don't know. Q. Do you get a paycheck? A. I do. Q. Who is listed as the check writer on your paycheck? A. Well, I actually never see it because it's direct deposit. But the way payroll is handled for the United States is through an affiliated company that handles -- it's HSBC Payroll Services, I believe, and it handles all of the payroll and tax -- employee payroll and tax filings. Q. When you say handles payroll and tax filings, you're talking -- are you talking about preparation? A. And -Q. Administration? A. Yes. I mean, you know, making sure everybody gets paid. Q. Is HSBC Payroll Services the payor on your paycheck? A. Well, it used to be. And I guess I haven't seen one for a long time so I apologize, I'd have to go look at it again, but the last time I looked, yes. Q. We've talked about one half of what you 6 (Pages 18 to 21) (903) 758-2183 * (903) 758-4890 Fax Gretchen Shore Court Reporting & Litigation Support E-mail: gretchenshore@gretchenshore.com fee6c41c-b962-439e-8599-e362d5a91e8a Case 2:06-cv-00072-DF-CMC Document 537 Filed 02/23/2007 Page 7 of 43 Margo Hickman CONFIDENTIAL February 2, 2007FOR ATTORNEYS' EYES ONLY Page 22 09:26 09:26 09:26 09:26 09:26 09:26 09:26 09:26 09:26 09:26 09:26 09:26 09:26 09:26 09:26 09:27 09:27 09:27 09:27 09:27 09:27 09:27 09:27 09:27 09:27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 mentioned earlier as your duties, insurance procurement 09:29 09:29 for all of North America. Tell me about that other 09:29 broad little topic you mentioned, administrative duties. 09:29 What does that entail? 09:29 A. Well, when you -- there would be claims 09:29 associated with the insurance policies, and it's our job 09:29 to make sure that the claims are reported correctly, and 09:29 that we follow through as they are settled or adjusted 09:29 with the person who filed the claim against us. 09:29 We have responsibility for reporting some 09:29 of the various parts of our insurance program to the parent company. We have to make sure that the premiums 09:29 09:29 get paid. I mean, those are the administrative-type 09:29 duties. Certificates of insurance have to be issued. 09:29 Q. All those things that you just mentioned you 09:29 do as part of your job as the senior vice president for insurance of HSBC North America Holdings, Inc., correct? 09:30 09:30 A. Those are done by my staff, yes -09:30 Q. By your staff. 09:30 A. -- in our department. 09:30 Q. Okay. Who do you report to? 09:30 A. I report to Jack McGinnis. 09:30 Q. McGinnis? 09:30 A. Yes. 09:30 Q. Do you know his title? A. I did say that I believe that's true. Q. And what do you mean by that? A. Well, again, it's the type of operation that consolidates information from operating subsidiaries for reporting purposes. Q. How many people are in the tax department at HSBC North America Holdings, Inc.? A. I have no idea. Q. Approximately. A. I really don't know. Q. Well, we have less than 50 total employees, correct? A. Yeah, so -- but I don't know how many of them are tax and legal and -- I don't know. Q. What does the legal -- legal department do at HSBC North America Holdings, Inc.? A. Well, I honestly don't know. Q. Who's the general counsel? A. Ken Robin. Q. Okay. Do you know how many assistant general counsel there are? A. I know the -- I don't know at HSBC North America Holdings, Inc. If you get down to the subsidiary level, there are many different titles and I don't know what they are, but there are, throughout the Page 23 09:27 09:27 09:27 09:28 09:28 09:28 09:28 09:28 09:28 09:28 09:28 09:28 09:28 09:28 09:28 09:28 09:28 09:28 09:28 09:28 09:28 09:29 09:29 09:29 09:29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 25 09:30 09:30 09:30 09:30 09:30 09:30 09:30 09:30 09:31 09:31 09:31 09:31 09:31 09:31 09:31 09:31 09:31 09:31 09:31 09:31 09:31 09:31 09:31 09:31 09:32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. I think it's executive vice president/controller for HSBC North America Holdings. Q. And if you were to describe to someone what Mr. McGinnis does, what his job duties are, what would they be? A. I have only a very general understanding of that. And it's my understanding that he helps facilitate the consolidation of the accounting material for HBIO and HBUS on all North American entities. Q. Helps facilitate the consolidation of the accounting -A. Uh-huh (affirmative). Q. -- for those entities? A. That's my understanding. Q. And the acronyms you use, that's the finance company arm of HSBC and the banking, correct? A. Correct, yes. Q. Okay. And so we're clear, HSBC Bank has its accounting consolidated and reports up through HSBC North America Holdings, Inc., correct? A. Yes, I believe so. Q. Is that -- you mentioned earlier that -- that tax was another job function performed by HSBC North America Holdings, Inc. on behalf of the subsidiary companies; is that correct? organization, quite a few lawyers. Q. Of the 50 employees of HSBC North America Holdings, Inc., do you know how many of those folks are lawyers? A. No, I really don't. And I don't honestly know that there are 50. I said I think 50 or less. Q. I understand. I'm not trying -- I'm not trying to pin you down on that. Do you serve on the board of directors of HSBC North America Holdings, Inc.? A. No. Q. Do you know how many members there are of the board of directors? A. No, I don't know exactly. I'm sure we must have told you that. Q. How many members of the board of directors can you name, as you sit here today? A. I don't know. Three or four probably. Q. Name those for me, if you would. A. Michael Geoghegan, Stephen Green, Bobby Mehta, I think Salvatore or -- I can't -- I'm not sure I'm pronouncing that correctly -- I believe is on the board for HNAH Holdings, Inc. I don't remember who the other outside directors are. Q. Do you know how many members of the board of 7 (Pages 22 to 25) (903) 758-2183 * (903) 758-4890 Fax Gretchen Shore Court Reporting & Litigation Support E-mail: gretchenshore@gretchenshore.com fee6c41c-b962-439e-8599-e362d5a91e8a Case 2:06-cv-00072-DF-CMC Document 537 Filed 02/23/2007 Page 8 of 43 Margo Hickman CONFIDENTIAL February 2, 2007FOR ATTORNEYS' EYES ONLY Page 26 09:32 09:32 09:32 09:32 09:32 09:32 09:32 09:32 09:32 09:32 09:32 09:32 09:32 09:32 09:32 09:33 09:33 09:33 09:33 09:33 09:33 09:33 09:33 09:33 09:33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 28 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:35 09:36 09:36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 directors of HSBC North America Holdings, Inc. also serve on the board of directors of any of the HSBC banking subsidiaries? A. No. I'd have to look at it. I mean, did we not provide that to you? Q. I'm just curious, where would you look to find that out? A. The company has lists of people serving on the boards of the various operating subsidiaries, so I would go to the secretary, the corporate secretary's office and ask for that information. Q. Are there any executives from the operating subsidiaries of HSBC, in the banking subsidiaries, that serve on the board of directors of HSBC North America Holdings, Inc.? A. The only one that I -- that might -- and again, I'm sure we've told you this, but if -- the only one I can think of that might would be Sandra Derickson. Q. And what position does Sandra Derickson hold in the banking subsidiary? A. She was recently appointed, I think, as CEO of HSBC Bank. Q. Do you know when she was appointed CEO of HSBC Bank? A. Not exactly, but it was in -- sometime in Q. Who's the CEO of HSBC North America Holdings, Inc.? A. Bobby Mehta. Q. Bobby Mehta? A. Uh-huh (affirmative). Q. And can you spell that last name for the court reporter? A. M-e-h-t-a. Q. And Mr. Mehta is one of the individuals you mentioned who's also on the board of directors, correct? A. Yes. Q. Do you know whether or not Mr. Mehta holds a board seat on any of the banking subsidiaries? A. I believe that he does. Q. Do you know how many banking subsidiaries Mr. Mehta holds a board seat on? A. No. Q. Is HSBC Bank USA one of the entities that he holds a board seat on? A. I believe so. Q. Who's the CFO of HSBC North America Holdings, Inc.? A. Just -- someone new just came into that job. His name is Chris -- I can't remember his last name. He came in at the end of the year. He's an interim CFO. Page 27 09:33 09:33 09:33 09:33 09:33 09:33 09:33 09:34 09:34 09:34 09:34 09:34 09:34 09:34 09:34 09:34 09:34 09:34 09:34 09:34 09:34 09:34 09:34 09:34 09:35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 29 09:36 09:36 09:36 09:36 09:36 09:36 09:36 09:36 09:36 09:36 09:36 09:36 09:36 09:36 09:37 09:37 09:37 09:37 09:37 09:37 09:37 09:37 09:37 09:37 09:37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 either the late third quarter or early forth quarter of 2006, I believe. Q. And it's your testimony that you believe she might be on the HSBC North America Holdings, Inc. board of directors? A. I could certainly ask counsel. I'm sure they could make sure that I, you know, am telling you if that's true or not, but I don't have anything with me and I don't remember. Q. Okay. Anybody else that's an executive, an officer of a banking subsidiary that serves on the board of directors of HSBC North America Holdings, Inc.? A. Not that I know of. Q. Are there officers of HSBC North America Holdings, Inc. that are -A. Yes. Q. -- that are not on the board of directors? A. Yes. Q. Okay. Who are the officers of HSBC North America Holdings, Inc.? A. Well, for instance, I'm an officer -Q. Okay. A. -- and I'm not on the board. I don't -- I don't know how many there are, who they are, but anyone in my level presumably is not on the board. Q. To your knowledge, does he hold any -A. I think his last name is Spooner. I'm sorry. Q. Chris Spooner? A. I believe so, yes. Q. Does Mr. Spooner, to your knowledge, hold any board positions or executive positions in the banking subsidiaries? A. I don't know. Q. Are there any other chairman level or chief level officer positions for HSBC North America Holdings, Inc.? A. Well, not chairman, I don't believe. I think the subsidiaries -- I believe Sandy Derickson, for instance, is the chief executive officer for HSBC Bank, and I'm not sure what the other senior executive titles are. Q. Maybe I asked an unclear question. Are there any other chief positions, such as a COO a CTO a CIO -A. Oh, I'm sorry. Q. -- for HSBC North America Holdings, Inc.? A. I'm not sure what the titles are. I'd have to go back and look. If you want me to do that, I'd be glad to -Q. Okay. 8 (Pages 26 to 29) (903) 758-2183 * (903) 758-4890 Fax Gretchen Shore Court Reporting & Litigation Support E-mail: gretchenshore@gretchenshore.com fee6c41c-b962-439e-8599-e362d5a91e8a Case 2:06-cv-00072-DF-CMC Document 537 Filed 02/23/2007 Page 9 of 43 Margo Hickman CONFIDENTIAL February 2, 2007FOR ATTORNEYS' EYES ONLY Page 30 09:37 09:37 09:37 09:37 09:37 09:37 09:37 09:37 09:38 09:38 09:38 09:38 09:38 09:38 09:38 09:38 09:38 09:38 09:38 09:38 09:38 09:39 09:39 09:39 09:39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 09:40 A. -- respond later. 09:40 Q. Sure. That would be great. 09:40 Are there any other folks, other than 09:40 Sandy Derickson and Mr. -- how do you -09:40 A. Mehta. 09:40 Q. -- Mehta -- that, to your knowledge, serve on 09:40 both -- in both either board or executive level 09:40 positions with HSBC North America Holdings, Inc. and 09:40 with HSBC Bank subsidiaries? 09:40 A. I believe Janet Burak is on both boards, but I 09:40 don't think that her title includes the word chief. 09:41 Q. Okay. Anyone else that would serve in both 09:41 levels but you're not sure their position? 09:41 A. No. I just -- I'm not sure. I don't know. 09:41 Q. And tell me Ms. Burak's title at HSBC North 09:41 America Holdings, Inc. 09:41 A. I don't know her exact title. She's an 09:41 attorney, but I'm not positive of her title. 09:41 Q. Is she an attorney in the legal department, or 09:41 serving in some other executive capacity? 09:41 A. She's in the legal department. 09:41 Q. Does HSBC North America Holdings, Inc. have 09:41 the -09:41 MR. BRUSTER: Strike that. Q. (BY MR. BRUSTER) HSBC North America Holdings, 09:41 A. Yes. Q. Which, as you've defined it, is another holding company here in the US, correct? A. Yes. Q. And your testimony is that that company then owns 100 percent of the stock out of HSBC Bank USA, the banking subsidiary. A. I'm not sure if -- I don't think that it does, no. Whatever the company below HSBC North America, Inc. is, which I can't remember the exact structure, but I think HSBC Bank is three or four tiers down. Q. So there might be another wholly owned subsidiary sandwiched in between them before you get to the bank. A. Right. Q. Okay. Does HSBC North America Holdings, Inc. have the authority to vote the shares of stock that it owns in HSBC North America, Inc.? MR. LEONARD: Objection: Form. Q. (BY MR. BRUSTER) You may answer. A. Yes, I believe so. Q. Does HSBC North America, Inc. have the authority to vote the shares of stock that it owns in the wholly owned subsidiary below it that is related to the banking operations? Page 31 09:39 09:39 09:39 09:39 09:39 09:39 09:39 09:39 09:39 09:39 09:39 09:39 09:39 09:40 09:40 09:40 09:40 09:40 09:40 09:40 09:40 09:40 09:40 09:40 09:40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 33 09:41 09:41 09:41 09:41 09:41 09:41 09:41 09:42 09:42 09:42 09:42 09:42 09:42 09:42 09:42 09:42 09:42 09:42 09:42 09:42 09:42 09:42 09:42 09:42 09:43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Inc. owns stock in the banking subsidiaries of HSBC Bank, correct? A. Not directly, no. Q. Okay. It has indirect stock ownership in the subsidiaries, HSBC Bank, correct? A. Well, it's the holding company. It owns the stock of, you know, HSBC North America, Inc., I think is the official name, which then owns the stock of the subsidiaries that it's the parent of. Q. I hate to interject utter confusion into things, but I'm going to try to walk through that ownership structure you just defined. The parent company of the entire HSBC operation is HSBC Group, PLC, correct? A. Yes. Q. Which is a London-based organization, correct? A. Yes. Q. Okay. And its subsidiary that you work for is HSBC North America Holdings, Inc., which is a direct wholly owned subsidiary of that London-based PLC, correct? A. Yes. Q. And then your company owns 100 percent of the stock of a company called HSBC North America, Inc., correct? MR. LEONARD: Objection: Form. Q. (BY MR. BRUSTER) You may answer. A. Well, I think that as long as it gets to vote those shares of its own wholly owned subsidiary, which owns the shares of the wholly owned subsidiary below it, and so on, that it just flows that direction and so it votes the shares. Q. Do you know who determines the membership of the board of directors of HSBC Bank? A. No. Q. Do you know what influence the parent company HSBC North America Holdings, Inc. has on that selection? MR. LEONARD: Objection: Form. Q. (BY MR. BRUSTER) You may answer. A. I'm really not familiar with the selection process. Q. Do you know how -- you're going to have to tell me Bobby's last name once again. I'm going to write it out phonetically so I don't keep asking you. A. Mehta. Q. Mehta. Do you know how Mr. Mehta was selected or elected to serve on the board of HSBC Bank? A. No. Q. Do you know the amount of influence that -- 9 (Pages 30 to 33) (903) 758-2183 * (903) 758-4890 Fax Gretchen Shore Court Reporting & Litigation Support E-mail: gretchenshore@gretchenshore.com fee6c41c-b962-439e-8599-e362d5a91e8a Case 2:06-cv-00072-DF-CMC Document 537 Filed 02/23/2007 Page 10 of 43 Margo Hickman CONFIDENTIAL February 2, 2007FOR ATTORNEYS' EYES ONLY Page 34 09:43 09:43 09:43 09:43 09:43 09:43 09:43 09:43 09:43 09:44 09:44 09:44 09:44 09:44 09:44 09:44 09:44 09:44 09:44 09:44 09:44 09:44 09:44 09:44 09:44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 36 09:46 09:46 09:46 09:46 09:46 09:46 09:46 09:46 09:46 09:46 09:46 09:47 09:47 09:47 09:47 09:47 09:47 09:47 09:47 09:47 09:47 09:47 09:47 09:47 09:47 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that board members, like Ms. Derickson and Mr. Mehta, that are board members of both HSBC North America Holdings, Inc. and HSBC Bank, do you know how much influence they have on the direction of HSBC Bank? A. Well, in their roles as, you know, the leaders of the corporation and its -- and its subsidiaries, they have -- you know, certainly they have influence over the direction of the corporation in general. Q. Okay. Is there any kind of non-board committee, that's within HSBC North America Holdings, Inc., that is comprised of executives from the subsidiary company; for example, a management committee, or something like that, where the executives or officers of the subsidiary corporations meet within HSBC North America Holdings, Inc.? A. I'm not familiar with that sort of committee. Q. Are you familiar with any time within which officers or executives of HSBC North America Holdings, Inc. -MR. BRUSTER: Strike that. Back up. Erase that. I was getting off to a bad start. Q. (BY MR. BRUSTER) Are you familiar with anytime where officers or executives of the banking subsidiaries of HSBC meet with the board or the executives of HSBC North America Holdings, Inc.? operations. They might be for -- it might be the headquarters for consumer lending, but I'm not positive of that. Q. Are any of the staff members from any of the HSBC Bank subsidiaries officed at the Prospect Heights location? A. Not to my knowledge. Q. And you've never sat in on one of these strategy and planning meetings where folks come up and make presentations -- folks from the subsidiaries come up and make presentations to Mr. Mehta? A. No, I haven't. Q. Those meetings occur outside the presence of the board of directors, though? A. I believe so, yes. Q. Do you know how many people from the HSBC Bank subsidiaries come and make those presentations to Mr. Mehta? A. No. Q. Did I already ask you what time of year that goes on? A. Yes, you asked me. Q. Okay. A. I still don't know. Q. That's what I thought. I thought that Page 35 09:45 09:45 09:45 09:45 09:45 09:45 09:45 09:45 09:45 09:45 09:45 09:45 09:45 09:45 09:45 09:45 09:45 09:45 09:45 09:45 09:45 09:46 09:46 09:46 09:46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 37 09:47 09:47 09:48 09:48 09:48 09:48 09:48 09:48 09:48 09:48 09:48 09:48 09:48 09:49 09:49 09:49 09:49 09:49 09:49 09:49 09:49 09:49 09:49 09:49 09:49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. LEONARD: Objection: Form. Q. (BY MR. BRUSTER) You may answer. A. I know that once a year there's like, you know, a strategy and planning meeting that -- where presentations are made by the operating subsidiaries to Mr. Mehta and whoever he chooses to have there. Q. Does that occur approximately the same time every year? A. I'm not involved in it and so I'm not sure what the schedule is. Q. Have you ever attended the strategy and planning meetings? A. No, I have not. Q. Where do those take place? A. The ones that I'm aware of have taken place in Prospect Heights. Q. At the corporate headquarters of HSBC North America Holdings, Inc.? A. Yes. Q. Okay. Do any of the other HSBC companies share the Prospect Heights location as a corporate headquarters? A. We do have staff members from other operating subsidiaries housed in that facility. I don't know for sure if they're considered the headquarters for those intervening two minutes may have just jogged your memory. How does HSBC North America Holdings, Inc. earn money? A. Earn money? Q. Yes, ma'am. A. We don't have any operations, so any money, which I don't know that there is any, but any money in the corporation would be dividended from, you know, the direct -- you know, a direct subsidiary. Q. You're talking about HSBC North America, Inc.? A. Yes. Q. Okay. In other words, to pay your salary, is it your understanding that that's a result of dividends from the wholly owned subsidiary of HSBC North America Holdings, Inc.? A. Well, it's my understanding that, because HSBC North America Holdings, Inc. doesn't -- you know, it doesn't perform any revenue-generating activities, that the money to pay my salary does come from its operating subsidiary. Q. So the subsidiary below your company, which is a wholly owned subsidiary, correct -A. Yes. Q. -- and which, down its chain of ownership, 10 (Pages 34 to 37) (903) 758-2183 * (903) 758-4890 Fax Gretchen Shore Court Reporting & Litigation Support E-mail: gretchenshore@gretchenshore.com fee6c41c-b962-439e-8599-e362d5a91e8a Case 2:06-cv-00072-DF-CMC Document 537 Filed 02/23/2007 Page 11 of 43 Margo Hickman CONFIDENTIAL February 2, 2007FOR ATTORNEYS' EYES ONLY Page 38 09:49 09:49 09:49 09:49 09:49 09:49 09:49 09:49 09:50 09:50 09:50 09:50 09:50 09:50 09:50 09:50 09:50 09:50 09:50 09:50 09:50 09:50 09:50 09:50 09:50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 40 09:52 09:52 09:52 09:52 09:52 09:52 09:52 09:52 09:52 09:52 09:52 09:52 09:52 09:52 09:52 09:52 09:52 09:52 09:52 09:53 09:53 09:53 09:53 09:53 09:53 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 holds the stock of HSBC Bank, correct -A. Well, somewhere down there, yes. Q. -- it pays dividends to HSBC North America Holdings, Inc., correct? A. That's my understanding, yes. Q. What does -- how does HSBC North America, Inc., your direct wholly owned subsidiary, earn a revenue? A. I don't believe it has any operations or revenue-generating operations either, so it would also have whatever money it has as a result of dividends from the operating subsidiaries. Q. Isn't it -- isn't it true that the operating subsidiaries generate the revenue that is then dividended -- if that's a word -- up the chain all the way to HSBC North America Holdings, Inc.? A. Yes, that's my understanding. Q. In other words, the operating subsidiary, HSBC Bank, generates the revenue that pays your salary -MR. LEONARD: Objection. Q. (BY MR. BRUSTER) -- isn't that true? MR. LEONARD: Objection: Form. A. I -- I could not tell you which one of the operating subsidiaries pays my salary or how that's all consolidated. operate so, no, I don't think so. Q. Well, you procure insurance for HSBC Bank, correct? A. Yes. Q. Okay. And HSBC Bank is pretty far down the chain from you, correct -A. Yes. Q. -- according to your testimony. A. Yes. Q. But you don't think it would be logical for your company to enter into credit arrangements for HSBC Bank? A. I would think that -- I -- I really am not the right person to answer that question. Q. I understand. Earlier, when you were talking about your insurance procurement and how that was expensed, you mentioned that the expense of obtaining the insurance was allocated to the operating subsidiaries on the financial statements, that were then consolidated up through and to your company, HSBC North America Holdings, Inc., correct? A. Yes. Q. Okay. Does HSBC North America Holdings, Inc. allocate general and administrative expenses to its Page 39 09:50 09:50 09:50 09:51 09:51 09:51 09:51 09:51 09:51 09:51 09:51 09:51 09:51 09:51 09:51 09:51 09:51 09:51 09:51 09:51 09:52 09:52 09:52 09:52 09:52 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 41 09:53 09:53 09:53 09:53 09:53 09:53 09:53 09:53 09:53 09:53 09:53 09:53 09:53 09:53 09:53 09:54 09:54 09:54 09:54 09:54 09:54 09:54 09:54 09:54 09:54 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. (BY MR. BRUSTER) As a general principle, the profits of the operating subsidiaries flow upwards through dividends to HSBC North America Holdings, Inc., correct? A. Yes. Q. Does HSBC North America Holdings, Inc. arrange for financing with regard to its -- to the HSBC Bank subsidiary? MR. LEONARD: Objection to form. A. I don't think I understand your question. Q. (BY MR. BRUSTER) For example, does HSBC North America Holdings, Inc. enter into any credit arrangements for the benefit of the HSBC Bank subsidiary? A. I have no idea. I don't know. Q. Who would know the answer to that? A. I would expect one of the, you know, CFO or treasury people could answer that question for you. Q. To your knowledge, you don't know whether or not HSBC North America Holdings, Inc. has ever entered into any kind of revolving credit facility or any other provision of credit to HSBC Bank. A. I don't think it would because it's -- HSBC Bank is too far down the chain. I just -- I can't see that that would be a logical way for the company to subsidiaries across the board on its financial statement? A. I don't know. MR. LEONARD: Objection to form. Q. (BY MR. BRUSTER) You may answer. A. I don't know. Q. Who would know the answer to that? A. Again, someone in the CFO position, I would say. Q. Other than accounting, tax, legal, and insurance, can you tell the jury any other ways that HSBC North America Holdings, Inc. assists the HSBC Bank subsidiaries? A. As I testified earlier, I really don't remember any other areas. I don't know. Q. Does HSBC North America Holdings, Inc. have a technology department? A. There is a technology subsidiary, but I don't believe that it's -- it's not -- HNAH Holdings, Inc. is not the company that provides the technology services in North America. Q. What's the name of that company, that subsidiary? A. I think it's HSBC Technology Services, something like -- something like that. I'm not positive 11 (Pages 38 to 41) (903) 758-2183 * (903) 758-4890 Fax Gretchen Shore Court Reporting & Litigation Support E-mail: gretchenshore@gretchenshore.com fee6c41c-b962-439e-8599-e362d5a91e8a Case 2:06-cv-00072-DF-CMC Document 537 Filed 02/23/2007 Page 12 of 43 Margo Hickman CONFIDENTIAL February 2, 2007FOR ATTORNEYS' EYES ONLY Page 42 09:54 09:54 09:54 09:55 09:55 09:55 09:55 09:55 09:55 09:55 09:55 09:55 09:55 09:55 09:55 09:55 09:55 09:55 09:55 09:55 09:55 09:55 09:55 09:56 09:56 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 44 09:58 09:58 09:58 09:58 09:58 09:58 09:58 09:58 09:58 09:58 10:13 10:16 10:16 10:16 10:16 10:16 10:16 10:16 10:16 10:16 10:16 10:16 10:16 10:16 10:17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of the exact name. Q. Do you know whether or not contracts for things such as telecommunications, that touch a lot of different states within the HSBC Bank operations, do you know whether contracts for telecommunications are negotiated on an enterprise-wide level? A. It's my understanding that a group of people, which are internally called vendor management, negotiate that type of contract. Q. And when you say internally called vendor management, is that a group that's internal to HSBC North America Holdings, Inc.? A. No. Q. Internal to who? A. I am not sure who's -- where that company resides, but I know it's not HSBC North America Holdings, Inc. Q. How do you know it's not HSBC North America Holdings, Inc.? A. Well, there's a lot of people involved and there aren't very many people at Household -- HSBC North America Holdings, Inc., so just by virtue of the personnel counts it wouldn't be possible. And I just don't know. I can't tell you which -- which -- where they report to. Q. So based on that understanding and your answer previously given, you wouldn't think that HSBC North America, Inc. would be engaged in any marketing. A. I wouldn't think so, no. MR. BRUSTER: We've been going about an hour. Why don't we take a short break and then we'll -MR. LEONARD: Great. MR. BRUSTER: -- restart. THE VIDEOGRAPHER: We're off the record. (Recess taken 9:58 to 10:16) THE VIDEOGRAPHER: Back on the record. Q. (BY MR. BRUSTER) All right. We're back after a short break. Are you ready to continue? Oh, sorry, I'll let you quick BlackBerrying. MR. LEONARD: Yes. Q. (BY MR. BRUSTER) I get caught in that dilemma all the time. A. Okay. Q. Ready? A. Uh-huh (affirmative). Q. Before we left off, we were talking about HSBC North America, Inc., which is the wholly owned -- direct wholly owned subsidiary right under HSBC North America Holdings, Inc., correct? A. That's my recollection, yes. Page 43 09:56 09:56 09:56 09:56 09:56 09:56 09:56 09:56 09:56 09:56 09:57 09:57 09:57 09:57 09:57 09:57 09:57 09:57 09:57 09:57 09:57 09:57 09:58 09:58 09:58 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10:17 Q. Can you tell the jury whether or not there's a 10:17 person like yourself at HSBC North America Holdings, 10:17 Inc. that has oversight of things like that? 10:17 A. No, I can't tell you. I don't know. 10:17 Q. Do you know of any loans, as opposed to 10:17 securing credit, do you know of any loans that HSBC North America Holdings, Inc. has made to the HSBC Bank 10:17 10:17 subsidiaries? 10:17 A. No. I have no idea if there are any or not. 10:17 I wouldn't think so. 10:17 Q. Is there a marketing department at HSBC North 10:17 America Holdings, Inc.? 10:17 A. Not that I'm aware of, no. 10:17 Q. Where is the -- where are the marketing decisions for HSBC's North American operations made? 10:17 10:17 MR. LEONARD: Objection: Form. 10:18 Q. (BY MR. BRUSTER) You may answer. 10:18 A. Well, it's my understanding that each of the 10:18 operating subsidiaries has its own marketing strategy 10:18 and staff, and so those decisions are made at the 10:18 operating subsidiary level, to the best of my knowledge. 10:18 Q. Do you consider HSBC North America, Inc. an 10:18 operating subsidiary? 10:18 A. America, Inc., I don't believe so. I believe 10:18 it's a holding company. Q. And you described that company as another holding company? Is that your testimony? A. Yes. Q. Okay. And I think I asked you whether or not that company had any operations and you said that you didn't believe they did; is that right? A. Well, holding companies are intended not to be operating companies, so that would be my understanding. Q. Does HSBC North America Holdings, Inc. run a website? A. I don't know, actually. Q. What about HSBC North America, Inc., do they have a website? A. The website that I'm familiar with is HSBC.com. Q. Who's responsible for the content of that website? A. I don't know. Q. You don't know whether it's HSBC North America Holdings, Inc. or not? A. Well, what do you mean by responsible for content? Q. How would you understand that question? A. Well, I would think that the technology group would have -- the group that runs the websites for the 12 (Pages 42 to 45) (903) 758-2183 * (903) 758-4890 Fax Gretchen Shore Court Reporting & Litigation Support E-mail: gretchenshore@gretchenshore.com fee6c41c-b962-439e-8599-e362d5a91e8a Case 2:06-cv-00072-DF-CMC Document 537 Filed 02/23/2007 Page 13 of 43 Margo Hickman CONFIDENTIAL February 2, 2007FOR ATTORNEYS' EYES ONLY Page 46 10:18 10:18 10:18 10:18 10:18 10:18 10:18 10:18 10:18 10:18 10:19 10:19 10:19 10:19 10:19 10:22 10:22 10:22 10:22 10:22 10:22 10:22 10:22 10:23 10:24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 company would be the primary place, you know, that would 10:27 10:27 be responsible for it. 10:27 Q. Does HSBC North America Holdings, Inc. have 10:27 any input into the content that's displayed on the 10:27 HSBC.com website? 10:27 A. I have no idea how that all happens in the 10:27 company. I don't know how that works. Q. Do you know whether or not HSBC North America, 10:27 10:27 Inc. has any locations in Texas where it does business? 10:27 A. Again, as a holding company, I don't believe 10:27 it does business. 10:27 MR. BRUSTER: Hey, Brooke, let's pull up 10:28 and mark as Exhibit 3 ... 10:28 (Off-the-record discussion between 10:28 Mr. Bruster and Miss Berry.) 10:28 Q. (BY MR. BRUSTER) Is the screen in front of 10:28 you working? 10:28 A. You know, it's working, but there's a terrible 10:28 glare and I can't see it. 10:28 Q. It should be able to adjust anyway you want 10:28 it. 10:28 A. Okay. Pull this up, or how does it -10:28 (Interruption in the proceedings.) 10:28 THE VIDEOGRAPHER: We're off the record. 10:28 (Recess taken 10:22 to 10:25.) HSBC website? A. I've never seen it before, but it certainly appears to be that, yes. Q. You've spent time on the HSBC website, right? A. Not looking for jobs. Q. Sure, since you have a job. A. Yes. Q. Let me ask you about -- if you could, pause it right there, and do you see where the location for this job is? A. Lewisville, Texas. Q. Do you know where Lewisville, Texas is? A. I think I've been there once. Is it a subsidiary of Dallas? Q. Suburb. A. I mean a suburb? I'm sorry. Q. Close enough but, yes, it is. A. They both start with s-u-b. Q. Do you see the description of the job there? A. Yes, I do. Q. And do you see where it says, Make the right move and join a winning team. Build your career with us. HSBC North America is part of HSBC Group, one of the largest banking and financial services organizations in the world. Do you see that? Page 47 10:24 10:25 10:25 10:25 10:25 10:25 10:25 10:25 10:25 10:25 10:25 10:26 10:26 10:26 10:26 10:26 10:26 10:26 10:27 10:27 10:27 10:27 10:27 10:27 10:27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 49 10:28 10:28 10:28 10:28 10:28 10:28 10:28 10:28 10:28 10:28 10:28 10:29 10:29 10:29 10:29 10:29 10:29 10:29 10:29 10:29 10:29 10:29 10:29 10:29 10:29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (Exhibit Number 3 marked.) THE VIDEOGRAPHER: We're on the record. Q. (BY MR. BRUSTER) Ma'am, we've handed you what's been marked as Exhibit 3 to your deposition. And if you see that mouse, that's sitting there in front of you, you've got the ability to control this document as well, if you wish to. I can show you that it's a -yeah, there you go. You can scroll through it and look. It's a two-page document. A. Oh, okay. MR. BRUSTER: Do you have it? MR. LEONARD: We're not getting it over here. MISS BERRY: I'm getting it. I'm sorry. It'll be just a few seconds. Q. (BY MR. BRUSTER) We'll wait until their up. I didn't realize they weren't up. Go ahead and look through it. A. (Reviewing document.) It's actually a one-page document. It says two, I know, but I'm only getting one. Q. Weird. Don't worry about it. We're only using page 1 anyway. A. Okay. Q. Do you recognize this as a printout from the A. Yes. Q. If HSBC North America is a holding company with no operations, as you've just testified to, do you know why it is that they're advertising for a job in Lewisville, Texas here? A. Well, the company that's the holding company is HSBC North America Holdings, Inc., so I would not assume that that's the company advertising for this job. Q. You wouldn't assume that that's the company advertising for the job even though it says, To build your career with us, HSBC North America? A. Correct. Q. Why wouldn't you make that assumption? A. Because I think there's a company named HSBC North America that's not the same as HSBC North America Holdings, Inc. Q. HSBC North America, Inc. is a wholly owned direct subsidiary of HSBC North America Holdings, Inc., correct? A. That's my understanding. Q. Okay. And you testified a few minutes ago that HSBC North America, Inc. was just a holding company with no operations, right? A. I did. Q. And here we're looking at a web page where 13 (Pages 46 to 49) (903) 758-2183 * (903) 758-4890 Fax Gretchen Shore Court Reporting & Litigation Support E-mail: gretchenshore@gretchenshore.com fee6c41c-b962-439e-8599-e362d5a91e8a Case 2:06-cv-00072-DF-CMC Document 537 Filed 02/23/2007 Page 14 of 43 Margo Hickman CONFIDENTIAL February 2, 2007FOR ATTORNEYS' EYES ONLY Page 50 10:29 10:29 10:29 10:29 10:29 10:29 10:29 10:29 10:29 10:30 10:30 10:30 10:30 10:30 10:30 10:30 10:30 10:30 10:30 10:30 10:30 10:30 10:30 10:30 10:30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10:36 HSBC North America is advertising for a job in 10:36 Lewisville, Texas, aren't we? 10:36 A. We are. 10:36 Q. If they're a holding company with no 10:36 operations, why would they be offering employment to 10:36 people in Lewisville, Texas? 10:36 A. I can't answer that question. 10:36 Q. And for further clarification, I'll scroll 10:36 down here to the bottom of page 1. Oh, never mind. 10:36 We'll leave it at that. 10:36 Do you think that a person in the general 10:36 public, if they were on this website, looking at this, would come the conclusion that HSBC North America was 10:36 10:36 offering jobs in Lewisville, Texas? 10:36 MR. LEONARD: Objection: Form. 10:36 Q. (BY MR. BRUSTER) You may answer. 10:36 A. Yes. 10:36 Q. Doesn't that seem entirely inconsistent with 10:36 your testimony a few minutes ago, that it's a holding 10:36 company with no operations? 10:36 A. Yes. 10:36 MR. LEONARD: Objection: Form. 10:36 THE WITNESS: Sorry. 10:36 A. Yes. 10:36 Q. (BY MR. BRUSTER) It does, doesn't it? 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 52 MR. BRUSTER: Counsel, what I'd to do, if it's all right with you guys, is use some paper copies for a minute or two to keep going, and we can pencil those in as the same Exhibit Number that we can then go back and stamp the electronic copies just to say consistent. MR. LEONARD: Sure. MR. BRUSTER: In other words, we use paper 3, 4, 5, we'll go back and electronically stamp 3, 4 and 5 so that it's all together. Is that all right with you guys? MR. LEONARD: Will you go ahead and mark the paper copies? MR. BRUSTER: You bet, yeah. I mean, we'll just kind of write it in there and circle it since we're stamping the electronic -MR. LEONARD: Just so we can later make sure we have the same one. Q. (BY MR. BRUSTER) If you want to go ahead and circle in a 3 on that copy right there that we're using of this document, that would be perfect. A. (Complies.) Q. And while you're sitting there looking at Exhibit 3, Ms. Hickman, on the second page of that document, you see down at the bottom on the second page Page 51 10:30 10:30 10:30 10:30 10:30 10:31 10:31 10:31 10:31 10:31 10:31 10:31 10:31 10:31 10:31 10:31 10:31 10:31 10:31 10:31 10:31 10:36 10:36 10:36 10:36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 53 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 10:37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Yes. And you can't explain that, can you? No. Now, you also testified that -MR. BRUSTER: Hold on just a minute. MR. NICHOLAS: Counsel, we can't access the Exhibit right now. MISS BERRY: Can y'all not see it at all? MR. NICHOLAS: Well, it's down on the white part, where you didn't have anything and couldn't move it back up. MISS BERRY: I can scroll down for you, if you'd like to. MR. NICHOLAS: Can you just release control of the document? MISS BERRY: You have complete control over there. I'm not doing anything with it. MR. BRUSTER: Let's go off the record for just a minute. THE VIDEOGRAPHER: Off the record. (Recess taken 10:31 to 10:36) THE VIDEOGRAPHER: Back on the record. Q. (BY MR. BRUSTER) All right. Your screen should be about as light as midnight and the -- we're going to convert some documents over here. A. Q. A. Q. where it lists a copyright? A. I do. Q. Okay. And who is the copyright holder for this particular web page? A. HSBC North America, Inc. Q. Okay. And HSBC North America, Inc. is who you testified a few minutes ago you didn't believe to have any operations, correct? A. Yes. Q. Okay. Do you know why this purported holding company, with no operations, has a copyright on the Internet and is advertising jobs? A. I do not. Q. Okay. Does HSBC North America Holdings, Inc. own any copyrights? A. Not that I'm aware of, no, I don't believe so. Q. Did you know that HSBC North America, Inc. held any copyrights before I just showed you the one here in Exhibit 3? A. No. Q. So what you're telling the judge and jury is that HSBC North America Holdings, Inc. might have copyrights, might not, you just don't know. That's true, isn't it? MR. LEONARD: Objection: Form. 14 (Pages 50 to 53) (903) 758-2183 * (903) 758-4890 Fax Gretchen Shore Court Reporting & Litigation Support E-mail: gretchenshore@gretchenshore.com fee6c41c-b962-439e-8599-e362d5a91e8a Case 2:06-cv-00072-DF-CMC Document 537 Filed 02/23/2007 Page 15 of 43 Margo Hickman CONFIDENTIAL February 2, 2007FOR ATTORNEYS' EYES ONLY Page 54 10:37 10:38 10:38 10:38 10:38 10:38 10:38 10:38 10:38 10:38 10:38 10:38 10:38 10:38 10:38 10:38 10:38 10:38 10:38 10:38 10:38 10:38 10:39 10:39 10:39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 56 10:40 10:40 10:40 10:40 10:40 10:40 10:40 10:40 10:41 10:41 10:41 10:41 10:41 10:41 10:41 10:41 10:41 10:41 10:41 10:41 10:41 10:41 10:41 10:41 10:41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. As I testified, yes, I don't know. Q. (BY MR. BRUSTER) Can you think of a reason why HSBC North America Holdings, Inc. would have any copyrights if it purportedly doesn't have any operations? A. No. Q. The job location that's advertised here in Lewisville, Texas -A. Yes. Q. -- are you familiar with the address or the office building where that job is being offered? A. I'm not certain. I have visited the Lewisville, Texas facility, but it was many years ago and I'm not certain that they haven't moved, but if it's the same one, I've been there. Q. Have you procured insurance for the facility located in Lewisville, Texas? A. Yes. Q. Okay. When you've done that, you've done that in your

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