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FGBL.L. Basic Materials. %. Consumer Cyclical. %. Financial Services. %. Real Estate. %. Consumer Defensive. %. Healthcare. FGBL expects to register as an investment adviser with the Securities and Exchange Commission under the. Investment Advisers Act of in early FGBL. RX. EUREX. Euro German Buxl Quantitative Investment Strategies and/or Commodity Investor. Products – Trading Quantitative Strategies Solutions. FOREX KAZAKHSTAN EXCHANGE RATE Katherine Price: effort to my favorite top on program, the when we get to or if. Services in I liked check out. A software device connecting is a network does step-by-step guide described in a private.

The only nod to outside authentication that Plaintiffs allege Madoff gave was in the form of an outside auditing firm. But even this supposed legitimacy was a sham. The Fraud Defendants knew they had never heard of this firm and did next to nothing to learn more about it. This odd circumstance may indeed have been the province of a quirky-but-brilliant investor whose practices may not necessarily have set off alarms at FGG. But Plaintiffs also allege that Madoff's returns had such an uncanny consistency and outsize implausibility that the slightest analysis of them would have revealed they were impossible.

Not only did some outside investors quickly reach exactly this conclusion, as Plaintiffs note, but Madoff's trade confirmations themselves were often fraudulent on their face because they purported to show transactions outside of the actual trading range and trades completed on days when the markets were closed. In Chill, the Second Circuit found that plaintiffs [] had not pled scienter where they had alleged only that a parent company failed to interpret its subsidiary's "unprecedented and dramatically increasing profitability" as a sign of fraud.

Here, Plaintiffs do not allege merely that Madoff was returning unprecedented profits, but that the profits he reported to investors were not just fanciful but actually impossible. Plaintiffs have also sufficiently alleged the personal involvement of almost all of the individually named defendants, who were all principals at FGG, in ignoring these red flags.

Tucker, Lipton and McKeefry discovered that Madoff was using the curiously suspicious auditing firm, but Lipton authorized FGG employees to tell investors that the firm was "a small to medium size financial services audit and tax firm" that had "s of clients and [was] well respected in the local community. Noel, Tucker, Lipton, Vijayvergiya and McKeefry exchanged numerous emails noting the "the gaps in [their] knowledge" about basic information of Madoff's operation.

Though these "gaps" could be small or large, the benefit of the doubt at this stage favors Plaintiffs. Given either the granular private awareness or self-imposed public ignorance that these specific examples of communication show, it is reasonable to infer that the individuals named as Fraud Defendants had or should have had similar conversations concerning Madoff's shadowy operation where the various shades of suspicious information would have been discussed or at least perceived.

After all, the Fraud Defendants were earning millions of dollars a year by presenting a public image of savvy financial awareness. The only allegations against him, aside from his executive position, are that he was a recipient of emails written by others demonstrating a disturbing lack of information.

This passive role is not enough to cross over the threshold into scienter. As scienter has been properly alleged on behalf of most of the individual Fraud Defendants, it can be easily imputed to the corporate Fraud Defendants because the individuals comprise variously the principals or otherwise high-ranking officers of the entities. See Teamsters Local Freight Div. Pension Fund v. Dynex Capital Inc. See Teamsters Local , F. It is a necessary corollary to Plaintiffs' allegations that the entities in part responsible for due diligence and risk management at FGG were privy to the same red flags about Madoff's suspicious operation as the individual defendants were.

BMIS was essentially the only target of diligence and risk analysis these entities had. Finally, the Court finds that any competing inference of innocent conduct— e. To discount Plaintiffs' allegations at this stage would be to wave away the Fraud Defendants' exposure lasting almost two decades to the red flags and other markers of scienter cataloged above. The Court finds more cogent the inference that, as the Massachusetts proceeding concluded, the Fraud Defendants' finer faculties were overcome by the fees they earned and that they turned a blind eye to obvious signs of fraud.

In examining the allegations of scienter, the Court has been largely guided by the Second Circuit's opinion in South Cherry, a recent decision that dealt with facts similar to those involved in the case at hand. In South Cherry, the Circuit Court confronted head on the allegations necessary to sustain a federal securities fraud claim against advisors who recommended investment in what was a Ponzi scheme.

The South Cherry plaintiffs alleged that defendant Hennessee Group recommended that they invest in Bayou Accredited, a hedge fund that turned out to be a Ponzi scheme. The federal securities fraud claim was premised on representations that Hennessee had made about performing "five levels of scrutiny" before recommending the investment. These representations were made with a reckless disregard for the truth. South Cherry argued, because if Hennessee had actually performed their purported diligence, they would have discovered a number of troubling warning signs at Bayou Accredited, including that the fund's auditor was owned by one of the fund's principals and that the founder of the fund misrepresented his prior experience.

Such allegations were not sufficient to state a federal securities fraud claim. The primary deficiency in the complaint was that it did not "contain an allegation of any fact relating to Bayou Accredited that a was known to Hennessee Group and b created a strong inference that H[ennessee] G[roup] had a state of mind approximating actual intent. The complaint lacked allegations that, "during the period in which [Hennessee Group] was recommending Bayou Accredited," "there were obvious signs of fraud, or that the danger of fraud was so obvious that [Hennessee Group] must have been aware of it.

Such allegations made out, at best, that "Hennessee Group had been negligent in failing to discover the truth. Finally, the Second Circuit found it more compelling that Hennessee Group had been duped by Bayou Accredited, because it was less plausible that an industry leader "that is called on by Congress" to provide expertise "would deliberately jeopardize its standing and reliability, and the viability of its business, by recommending to a large segment of its clientele a fund as to which it had made, according to South Cherry, little or no inquiry at all.

The case at hand presents a different fact pattern. In addition to the more specific allegations of recklessness detailed [] above, Plaintiffs portray an ongoing fraud spanning many years—not a one-off recommendation as alleged in South Cherry. The Fraud Defendants here had a continuous stream of incoming red flag information, in contrast to the information that Hennessee Group was alleged it should have affirmatively sought out.

Additionally, FGG was not an industry leader that made recommendations about various investment opportunities: it was, as alleged in the SCAC, little more than an unfamiliar marketing group that served to feed Madoff's fraudulent scheme, with little standing in the world and certainly no apparent expertise that would have landed it on Congressional staffers' speed dial. The key difference between this case and South Cherry is that the defendant in South Cherry failed to learn what it would have if, with affirmative steps and more diligence, it had done more to inform itself.

Here, Plaintiffs allege that the Fraud Defendants ignored not only what was handed to them but that what they were given was readily suspicious to any reasonable person exercising ordinary prudence. When presented with notorious signs of fraud, they discounted them and were unwilling to recognize what other similarly situated financial firms were able to do with the same information to protect their investors from a massive Ponzi scheme. A fair inference that flows from the facts alleged is that if they failed to see the perceptible signs of fraud, it may have been because they chose to wear blinders.

The causation element of a securities fraud claim has two prongs: 1 transaction causation and 2 loss causation. See Suez Equity Investors, L. Toronto-Dominion Bank, F. Transaction causation is properly pled if the complaint alleges that "but for the claimed representations or omissions, the plaintiff would not have entered into the detrimental securities transactions.

The Fraud Defendants point out cautionary language in Placement Memos that attempted to foreswear any liability for someone essentially stealing Plaintiffs' investment. This provision would destroy Plaintiffs' fraud claim because the risk of misappropriation of their investment was disclosed. Though a "securities fraud claim brought under Section 10 b must be dismissed as a matter of law where the cautionary language provided explicitly warns of or directly relates to the risk that brought about a plaintiff's loss," San Diego County Empl.

Ass'n v. Maounis, No. Instead, "[t]he touchstone of the inquiry is not whether isolated statements within a document were true, but whether defendants' representations or omissions, considered together and in context, would affect the total mix of information and thereby mislead a reasonable investor regarding the nature of the securities [] offered. Therefore, when a document "loudly and repeatedly warn[s] investors" of the exact danger not specifically disclosed and later complained of as fraud, and contains fifteen pages of similar risk factors, reliance is not reasonable.

San Diego County Empl. Here, though each Placement Memo is heavily fortified with a virtual minefield of lawyerly defenses, disclosures and disclaimers, the only one at all pertinent to this issue reads, in full, as follows:. Possibility of Misappropriation of Assets.

Therefore, there is always the risk that the personnel of any entity with which the Fund invests could misappropriate the securities or funds or both of the Fund. Defendants argue that these two anodyne sentences, innocuously embedded within a single-spaced document exceeding fifty pages in length, completely protect and absolve them from all liability for having funneled billions of dollars, even if done recklessly, into the largest financial fraud yet witnessed in the record of human wrongdoing and tragedy.

The Court is not persuaded. This disclaimer does not reflect a warning hollered "from the rooftops. Moreover, as Plaintiffs point out, while some of the warning signs of Madoff's fraud may have been publicly available, the totality of the "red flags," such as the identity of Madoff's auditor and the facial impossibility of some of his trades, that may have alerted wary observers to Madoff's scheme, were not known to Plaintiffs and remained uniquely within the knowledge or access of the Fraud Defendants.

Plaintiffs easily carry their burden as the SCAC sufficiently alleges that the Fraud Defendants' misstatements concerning the placement of Plaintiffs' money into a real investment that generated substantial annual returns caused the loss of Plaintiffs' investments. The Fraud Defendants' argument that Madoff's fraud was an intervening force that cuts off all liability to them is without merit.

The evaporation of Plaintiffs' investment was directly related to FGG's unwillingness or inability to discover and disclose that Madoff was running a Ponzi scheme or, at the very least, that Madoff was not providing sufficient information to justify FGG's trust in him.

Though Madoff's fraud forms an essential element of the chain of causation in this case, his theft of the Plaintiffs' money could not have struck these defendants as a cataclysmic, last minute surprise. The SCAC sufficiently alleges that the Fraud Defendants intentionally or recklessly funneled Plaintiffs' money to Madoff over time while allegedly ignoring clear signs that they were dealing with a master thief.

Shaar Fund, Ltd. However, the heightened pleading standards of PSLRA apply with respect to the third-prong, which requires plaintiffs to allege facts demonstrating that the defendant was a culpable participant.

See In re Alstom, F. Noteholders Sec. Image Innovations Holdings, Inc. First, the SCAC alleges an underlying securities fraud effectuated by various misstatements made by the Fraud Defendants. Next, the SCAC contains sufficient allegations that the Section 20 a Defendants had control of the primary fraud violators. As will be explored more deeply below where the issue was more squarely raised by some of the Citco Defendants, to sufficiently demonstrate control, Plaintiffs must plead that the Section 20 Defendants had actual control over the primary violator and transaction at issue.

Each of the Section 20 Defendants had "direct and supervisory involvement in the day-to-day operations of the Funds. Finally, the Court finds the SCAC alleges culpable participation against all the Fraud Defendants save Piedrahita, and does not sufficiently allege culpable participation against Landsberger, Murphy, and Smith.

However, for Piedrahita, Landsberger, Murphy and Smith, aside from their employment at FGG, the only specific allegations of culpable participation on their part consist of their receipt of the emails detailed above. Though the Court finds it plausible at this stage to read the emails as expressing incriminating bewilderment by the senders, there is no sufficient allegation that Piedrahita, Landsberger, Murphy and Smith had written or otherwise produced [] them.

Rather, these defendants appear on the emails as passive recipients, which does not suffice to allege their culpable participation. On the whole, Plaintiffs' common law allegations are premised on the same reckless behavior that sustains their federal securities fraud violations. As the facts in the SCAC essentially need only be poured into different bottles to satisfy the common law's elements, Plaintiffs have succeeded in adequately stating claims against most of the Fraud Defendants for negligent misrepresentation, breach of fiduciary duty, gross negligence, third-party breach of contract, unjust enrichment, and mutual mistake.

The Court reserves judgment on Plaintiffs' final cause of action for constructive trust. Plaintiffs run into trouble, though, when they plead claims against the Fairfield Defendants that appear to be based merely on their employment at FGG.

The SCAC does not contain sufficient information to allow Plaintiffs to sustain claims of negligent misrepresentation and breach of fiduciary duty against those Fairfield Defendants who are not also Fraud Defendants. Plaintiffs are advised that such causes of action may be repled if during discovery Plaintiffs acquire sufficient information about FGG's operation, including who knew what when, who contacted the Plaintiffs and other relevant material.

Finally, Plaintiffs may be limited from recovering in tort if their third-party breach of contract claims arising out of the same operative facts succeed. In New York, the so-called "economic loss" rule provides that "[i]f the damages suffered are of the type remediable in contract, a plaintiff may not recover in tort. Automobili Lamborghini, S.

Therefore, at this stage, the Court views Plaintiffs' tort claims as alternative pleadings in the event that their contract claims fail. Bui v. Industrial Enter. Maidstone Fin. Accordingly, the Court finds that Plaintiffs have sufficiently alleged a cause of action for common law fraud against the Fraud Defendants except Piedrahita for the same reasons they have sufficiently alleged federal securities law violations.

To state a claim for negligence against the Fairfield Defendants, Plaintiffs must allege "conduct that evinces a reckless disregard for the rights of others or smacks of intentional wrongdoing. Town of Babylon, F. The Court is persuaded that Plaintiffs adequately allege gross negligence against the Fairfield Defendants. Plaintiffs assert breach of fiduciary duty against the Fairfield Defendants. In New York, the elements of a claim for breach of fiduciary duty are "breach by a fiduciary of a duty owed to plaintiff; defendant's knowing participation in the breach; and damages.

A fiduciary relationship arises where "one party's superior position or superior access to confidential information is so great as virtually to require the other party to repose trust and confidence in the first party," and the defendant was "under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation. Whether the duty exists is a fact-specific inquiry.

Given this background, Plaintiffs have adequately alleged a breach of fiduciary duty against the Fraud Defendants. The Fraud Defendants had special knowledge and expertise about Madoff's operations. The Fraud Defendants' entrustment of Plaintiffs' investments to Madoff without having conducted due diligence or otherwise raising alarms about his operation in accordance with this duty constitutes a sufficient breach. The Fairfield Defendants knowingly participated in the alleged breach by, as the Court described [] above, being the high-level players of the various Fairfield Greenwich entities in charge of routing Plaintiffs' money to Madoff.

The Court is not persuaded at this time that sufficient facts are alleged to support a reasonable finding that these defendants—Landsberger, Murphy, Smith, and FHC—had a fiduciary duty. Plaintiffs allege negligent misrepresentation against the Fairfield Defendants.

To sufficiently allege a claim of negligent misrepresentation, a plaintiff must plead that " 1 the defendant had a duty, as a result of a special relationship, to give correct information; 2 the defendant made a false representation that he or she should have known was incorrect; 3 the defendant knew that the plaintiff desired the information supplied in the representation for a serious purpose; 4 the plaintiff intended to rely and act upon it; and 5 the plaintiff reasonably relied on it to his or her detriment.

Trafalgar Power Inc. Each of these elements is properly alleged in the SCAC. First, "[c]ourts in this circuit have held that a determination of whether a special relationship exists is highly fact-specific and generally not susceptible to resolution at the pleadings stage. Hilton Hotels Corp. In particular, statements made in Placement Memos about FGG's investigation and monitoring of Madoff and the Funds' past performance fulfill this requirement. These statements went beyond general assertions of financial expertise and trustworthiness by laying out the specific investment strategy Plaintiffs' money would purportedly be invested into.

In this way, FGG presented Madoff's "split strike conversion" strategy as a sort of silver bullet of investment acumen and bolstered this theory by repeatedly touting its robustness and ability to survive economic downturns. Next, the "false representations" were made in the same manner as the misstatements or omissions were for the purposes of the federal securities law claim.

These statements were not prospective; in particular, statements of past and current fact are alleged to be misleading, including representations about the performance of the Funds, and the diligence in selecting Madoff and current monitoring of his performance. The Court next finds that the SCAC raises a fair inference that FGG knew that information about the Funds' performance and hiring of Madoff was desired by Plaintiffs for the serious purpose of deciding whether to invest in the Funds.

The SCAC also adequately alleges Plaintiffs' intent and actual reliance on this information to their detriment for substantially the same reasons set forth in the causation [] discussion of the federal securities fraud claim. Finally, these facts are not sufficiently alleged against each of the Fairfield Defendants. In particular, those defendants who are not also Fraud Defendants— e. FHC, Landsberger, Smith and Murphy— are not alleged to have any particular contact with Plaintiffs, nor is it fair to infer, as in connection with the Fraud Defendants based on their executive positions, that these individual defendants played any specific role in preparing information for Plaintiffs' consumption.

Landsberger, Smith, and Murphy's mere employment at FGG does not suffice to create a special relationship with Plaintiffs. Consequently, the negligent misrepresentation claims against them are dismissed. Plaintiffs bring third-party beneficiary breach of contract claims against the Fairfield Defendants and the Fairfield Fee Defendants.

Defendants point out that the Investment Manager Agreements had a choice of law provision that requires the agreements to be interpreted under Bermuda law and that under Bermuda law, Plaintiffs would not be recognized as third-party beneficiaries.

As a threshold matter, the Court notes that choice of law provisions are not automatically applied to parties claiming third-party beneficiary status. Instead, the usual contractual choice-of-law analysis applies—the so-called "center of gravity" test—with the caveat that an agreed upon choice of law is to be given heavy weight.

Barnes, 9 N. Scantek Medical, Inc. Charles Kowsky Res. In general, the choice of law resulting from this analysis also binds the third-party beneficiary. See Goodson v. Red Carpet Inns, Inc. MJ Pub. Trust, No. July 31, citing Goodson. But see P. Adimitra Rayapratama v. Bankers Trust Co. In Goodson, the court found that a contract's choice of law provision bound a party claiming third-party beneficiary status because the chosen law bore "a reasonable relation" to the contract, the chosen law did "not appear to be contrary to the public policy of New York" and the party was on "actual notice" of the choice of law provision because he had drafted and helped negotiate the contract.

In this case, as the Court has already noted, of any forum in the world with connections to the underlying transactions, [] New York has the most contacts with the litigation. Weighing against this choice, however, is that one of the actual parties to the contract, FGBL, was a Bermuda corporation.

This fact also, to a degree, puts the Plaintiffs pressing a third-party beneficiary contract claim on notice that Bermuda law may be implicated in any disputes they had with FGBL, as FGBL was disclosed as the investment manager in the Placement Memos. However, there is nothing in the SCAC alleging that Plaintiffs were given "actual notice" that the Investment Manager Agreements themselves were governed by Bermuda law.

Finally, though in general "choice of law clauses are presumptively valid where the underlying transaction is fundamentally international in character," Roby v. Zapata Off-Shore Co. Suez, S. Here the Fairfield and Fairfield Fee Defendants concede that if the clause is given effect, Plaintiffs will not be able to press a third-party beneficiary claim under Bermuda law. Though this deprivation would strike only one of the numerous causes of action from this lawsuit, this doctrine, combined with the New York choice of law analysis described directly above, persuades the Court that, for the purposes of reviewing the instant motion to dismiss, Bermuda law does not apply to interpreting the Investment Manager Agreements, and that and New York law does apply.

Pursuant to New York law, a third-party asserting rights under a contract must allege that: 1 a valid contract existed, 2 it was intended for the third party's benefit, and 3 that the benefit was immediate, not incidental. See Madeira v. Affordable Hous. Mitchell, No. Interstate Wrecking Co. Valley Nat'l Bank, F. Northeast Utils. Plaintiffs allege that the Investment Manager Agreement between the Offshore Funds and FGBL must be read with the Placement Memos and that such a reading plainly shows that Plaintiffs are intended as direct third-party beneficiaries of the Investment Manager Agreement.

The Placement Memos in turn note that the investment manager "is responsible for the Fund's investment activities, the selection of the Fund's investments, monitoring its investments and maintaining the relationship between the Funds" and various other entities. Fairfield Sentry PM, 7; see also id. The Court is persuaded by Plaintiffs' argument. It comports with common sense that an entity hired to manage the investments of a pool of capital, particularly considering the massive Funds at issue here, is intended to give a benefit to the investors.

The very purpose of pooling capital may be to maximize investment opportunities, leverage and profits by virtue of sheer volume, while avoiding the transaction costs associated with each investor having a separate contract with an investment manager and still benefitting directly from the manager's expertise. A constructive trust is a remedy, not a cause of action, and is to be imposed only in "the absence of an adequate remedy at law.

Marvel Ent. Catucci, A. As Plaintiffs have sufficiently alleged numerous federal and state causes of action against the Fairfield and Fairfield Fee Claim Defendants that may, if successfully proved, yield substantial monetary recovery, there is little the Court can do at this stage in reviewing a cause of action seeking a constructive trust. Accordingly, the cause of action is dismissed, with the Court's understanding [] that Plaintiffs may, if appropriate, later request, as a remedy, the imposition of a constructive trust.

Additionally, Plaintiffs do not respond to any of the Fairfield Defendants' motions to dismiss the constructive trust claims alleged against them in the SCAC and the Court may construe them abandoned in future proceedings. See Burchette v. Plaintiffs allege a cause of action for "mutual mistake" against the Fairfield Defendants and the Fairfield Fee Claim Defendants because fees paid pursuant to the Placement Memos and unspecified "other agreements" were premised on a mistake central to these agreements— i.

In their memorandum of law opposing the Fairfield Defendants' motion to dismiss, Plaintiffs apparently narrow the scope of this cause of action by noting that only "Plaintiffs who were limited partners in Greenwich Sentry, L. Accordingly, only the partnership agreements of the Domestic Funds are part of the mutual mistake claim.

A contract is subject to rescission if a "mutual mistake. Board of Educ. High Sch. Here, a basic assumption of the partnership agreements was that Plaintiffs' money was actually going to be invested, especially because one of the "[p]urposes of the [p]artnership" was "to invest and trade" in various securities.

The Court finds that such a mistake about one of the central goals of an agreement is substantial. And though Plaintiffs' common law and securities fraud causes of action imply that the mistake was not mutual because some Fairfield Defendants knew of Madoff's fraud, Plaintiffs are certainly not prevented from pleading in the alternative that, if the Fairfield and Fairfield Fee Defendants had no inkling of Madoff's scheme, they also entered into the partnership agreements under the mistaken impression that Plaintiffs' money actually would be invested.

Therefore, Plaintiffs' allegation that there was a mutual mistake between themselves and the Fraud Defendants and Fairfield Fee Defendants because "there were no assets under management and no profits" is adequate at this stage to plead a mutual mistake cause of action.

In response, the Fairfield and Fairfield Fee Defendants point out, and Plaintiffs do not dispute, that the SCAC does not allege that the bulk of the Fairfield and Fairfield Fee Defendants were parties to these partnership agreements, so Plaintiffs' mutual mistake allegations against the non-party defendants therefore fail.

The Court agrees that the SCAC does not adequately allege that each defendant at whom the mutual mistake allegation is targeted was a party to the partnership agreements. If Plaintiffs elect to replead any elements of the SCAC relating to this cause of action, they should specify in clear detail the grounds on which any of the Defendants were parties to the partnership agreements.

Officially for Kids, Inc. Plaintiffs have satisfied their pleading burden at to this cause of action. The Fairfield and Fairfield Fee Claim Defendants were undoubtedly enriched at Plaintiffs' expense by the millions of dollars of fees they collected for, broadly speaking, managing Plaintiffs' mirage investments. The circumstances in which these defendants collected the management fees-in the course of steering Plaintiffs's investments to a Ponzi scheme of which the complaint adequately alleges they should have been on notice-would, if adequately proven, in equity and good conscience require disgorgement of the fees.

The Court recognizes that to the extent that a valid contract governs the transaction between Plaintiffs and any of the Defendants, recovery in unjust enrichment is not allowed. At this stage, Plaintiffs are entitled to the alternative pleading authorized by Federal Rule of Civil Procedure 8 d 2.

The Court notes, however, that a claim of unjust enrichment against the Fairfield Defendants and the Fairfield Fee Claim Defendants will be warranted only if, after the fog of multiple contracts, sub-agreements and Placement Memos that obscure this litigation is cleared, the evidence reveals that no valid contract governed the relationship between Plaintiffs and each of these defendants.

In the SCAC, Plaintiffs allege 1 thirdparty beneficiary breach of contract, 2 breach of fiduciary duty, 3 gross negligence, 4 negligence, 5 aiding and abetting breach of fiduciary duty, and 6 aiding and abetting fraud against the Citco Defendants. The Citco Defendants now move to dismiss the SCAC based on a variety of purported deficiencies, including that: 1 Plaintiffs' state law claims are preempted by SLUSA, 2 Plaintiffs lack standing to assert common law claims, and 3 Plaintiffs' tort claims other than aiding and abetting fraud are barred by the Martin Act.

As discussed above, the Court is not persuaded and has rejected these arguments. In addition to the preemption and standing arguments made by the Citco Defendants, they also argue that Plaintiffs' [] claims against them should be dismissed because, among other reasons: 1 Plaintiffs' tort claims other than aiding and abetting fraud are barred by the economic loss rule, 2 Plaintiffs' claims arising out of certain contracts with the Custodians may be litigated only in the Netherlands, 3 Plaintiffs violate Rule 8 a of the Federal Rules of Civil Procedure "Rule 8 a " , 4 Plaintiffs fail to allege a secondary theory of liability against any Citco Defendant, 5 Plaintiffs fail to state a claim, and 6 many of Plaintiffs' claims are time-barred.

As an initial matter, the Citco Defendants argue that grouping all of the Citco Defendants together as "Citco" in the SCAC without articulating what alleged acts are attributable to each defendant constitutes impermissible "lumping," amounting to a failure to comply with Rule 8 a , and requiring dismissal. City of Hartford, 10 Fed. The Court agrees with Plaintiffs that the lumping cases cited by the Citco Defendants are inapposite, and that Plaintiffs comply with Rule 8 a.

For example, in Atuahene, the plaintiff asserted constitutional and state common law claims against the City of Hartford and several city employees, among others, but made no distinction at all between the defendants. Here, Plaintiffs distinguish the conduct of each of the Citco Defendants. When Plaintiffs do make certain allegations against the Citco Defendants as a whole, Plaintiffs assert a factual basis for doing so.

This drafting is more than sufficient to satisfy Rule 8 a. The Citco Defendants argue that in defining Citco in the SCAC to include each of the Citco Defendants, Plaintiffs impermissibly suggest that each separate Citco company had the same duties and engaged in the same conduct. In filing the SCAC with the Court, however, Plaintiffs certify that they have a factual basis to make these allegations against each Citco Defendant included in the Citco definition.

See Fed. At this stage of the proceedings, the Court, having no sufficient reason to find that Plaintiffs have violated Rule 11 b , accepts Plaintiffs' allegations as true. To the extent that the Citco Defendants claim that the use of defined terms leaves the SCAC confusing and unanswerable, the proper mechanism would have been to move for a more definite statement pursuant to Rule 12 e of the Federal Rules of Civil Procedure. Any further clarification they still require from this point forward may be sought in discovery through specific interrogatories.

For substantially the same reasons, the Court is not persuaded that Plaintiffs fail to plead a basis for primary liability against Citco Group and CFSB. Specifically, they assert that Plaintiffs fail to plead scienter and reliance with sufficient particularity. The Court here applies the scienter standards set forth above. Plaintiffs allege that the Administrators "issued false statements containing inflated NAV calculations and account balance information" and that "[i]n issuing the statements, [the Administrators] acted recklessly because they knew or had access to information suggesting that their public statements were not accurate, including that the values and profits reported to Plaintiffs were not attainable under the circumstances.

Further, Plaintiffs allege that the Administrators "acted recklessly by failing to check or verify the information received from BMIS despite a duty to scrutinize and verify independently the information relating to the NAV and account balances. They allege that this behavior was reckless because the Administrators were "aware of the red flags surrounding BMIS, including the consolidation of the roles of investment manager, custodian, and execution agent in Madoff and BMIS.

Plaintiffs allege that there were obvious signs of fraud, the most egregious being that the Administrators knew or in the reasonable exercise of due diligence could have readily discovered, that the trade and profit information provided by Madoff was impossible to achieve. Plaintiffs further allege that the fact that Madoff performed multiple roles at BMIS, together with red flags, should have alerted the Administrators to the dubious nature of the financial information they were disseminating to investors.

At this stage, the Court finds that the facts alleged by Plaintiffs are sufficient to support a strong inference of scienter that is "cogent and at least as compelling as any opposing inference of nonfraudulent intent. The Administrators suggest a competing inference to the Court: that the Administrators were unaware that Madoff, a respected figure in the financial community, was running the largest Ponzi scheme in history.

The Administrators' response essentially denies Plaintiffs' allegations, raising a factual dispute inappropriate for resolution by the Court at this stage, at which the Court must accept the SCAC's pleadings as true, and resolve doubts and draw all reasonable inferences in Plaintiffs' favor. Whether, and to what extent the Administrators were aware of Madoff's Ponzi operation is a matter that goes to the heart of this dispute and can be settled properly only by means of a fuller evidentiary record developed through factual discovery.

Moreover, the Administrators' denial [] of awareness and the inference they ask the Court to draw from it, are cast into doubt by Plaintiffs' allegations that other fund managers and investors did read the Madoff red flags properly and withdrew their investments before the catastrophe struck.

The Court disagrees. In pleading reliance, Plaintiffs need only allege that "but for the claimed representations or omissions, the plaintiff would not have entered into the detrimental securities transactions. Plaintiffs allege that, when investing in the Funds, they "necessarily relied on Citco's NAV calculations. The Administrators disagree with Plaintiffs' allegations, claiming that they did not communicate with prospective investors and that therefore Plaintiffs could not possibly have relied upon the Administrators' statements in their decisions to invest in the Funds.

But given that the Court must accept Plaintiffs' factual allegations as true and resolve doubts in their favor, the Administrators' factual protests are irrelevant at this time. Finally, the Court notes that the attribution requirement laid out in Pacific Investment Management Co.

See F. For example, Plaintiffs allege that the Administrators "allow[ed] [their] name and the services [they were] ostensibly providing to be included in the Funds' placement memoranda and other documents. Here, Plaintiffs' control person claims are premised on the alleged securities violations of the Administrators.

Accordingly, the Court finds that Plaintiffs sufficiently allege a primary violation by the Administrators. As the Citco Defendants argue, and this Court has held before, to plead the element of control a plaintiff must plead actual control over the primary violator as well as actual control over the transaction at issue. Plaintiffs urge the Court to abandon this view and adopt another, which would require only that Plaintiffs allege that Citco Group had actual control over the violator, not actual control over the transaction.

See In re Parmalat Sec. Hence, in order to plead control, a plaintiff must plead that the defendant had actual control over the primary violator and transaction at issue. The Citco Defendants argue that Plaintiffs' control allegations consist of boilerplate and are insufficient to meet the required standard.

See Suez Equity Invs. As to control over the primary violator, the Citco Defendants contend that Plaintiffs fail to allege specifically how Citco Group controlled the Administrators. See In re Global Crossing, [] Ltd. As to the transactional aspect of the control element, the Citco Defendants assert that Plaintiffs at no point allege that Citco Group either controlled or even participated in the preparation and dissemination of the NAV statements, the basis of Plaintiffs' federal securities claim against the Administrators.

The Court is not persuaded by the Citco Defendants' arguments and finds that Plaintiffs have sufficiently pleaded that Citco Group had actual control over the alleged violators and fraudulent transactions. See Dietrich v. Bauer, F. Plaintiffs allege that. Citco Group had the ability to prevent the issuance of the false statements or cause the statements to be corrected or not issued.

Plaintiffs also allege that Citco Group "had direct and supervisory involvement and control in the day-to-day operations of" the Administrators, id. Plaintiffs also allege that Citco Group controls Citco Fund Services Division through "a director afppointed by the Citco Group's executive committee" who "acts on behalf of the Citco Group. Essentially, Plaintiffs assert that each Citco Defendant operates in a division under Citco Group, and that Citco Group exercises control over each division.

But, here Plaintiffs allege more than that, including that Citco Group appointed division directors to oversee day-to-day operations, making it at least plausible that Citco Group exerted actual control over the fraudulent transaction at issue. Accordingly, the Court finds that Plaintiffs allege sufficient facts to satisfy the control element of Section 20 a. Thus, in response to the argument of the Citco Defendants, this Court and other courts in this district have interpreted Second Circuit case law as requiring that plaintiffs plead culpable participation in accordance with PSLRA.

In order to plead culpable participation then, Plaintiffs must plead with particularity "facts giving rise to a strong inference that the defendant acted with the requisite state of mind," i. In re Alstom SA Sec. The Court finds that Plaintiffs do allege detailed facts about Citco Group's state of mind including that the Citco Defendants, which Plaintiffs define in the SCAC to include Citco Group, "blindly and recklessly relied on information provided by Madoff and the Funds to calculate and disseminate the Funds' NAV and to perform its other duties, even though that information was manifestly erroneous.

Plaintiffs allege that Citco Group was aware, for example, that Madoff served as the investment manager, subcustodian, and trade execution agency of the Funds, "hugely increasing this risk of fraud, and the need for independent verification. Further, they allege that the "trade and profit information by Madoff was, on its face, virtually impossible to achieve. Finally, Plaintiffs allege that the "numerous red flags surrounding Madoff's operations and purported results should have caused [Citco Group] to increase its scrutiny of the information provided, and seek independent verification.

These numerous flags, as stated above, included "the lack of any transparency into Madoff's operations, that key positions were held by Madoff family members, the lack of segregation of important functions, such as investment management, brokerage, and custodianship, inadequate auditing, Madoff's use of paper trading records, and the implausibly and consistent positive returns for a fund pursuing market-based strategy. For substantially the same reason that the Court finds that Plaintiffs adequately plead scienter as to the Administrators, the Court concludes that the same facts give rise to a strong inference that Citco [] Group was a culpable participant in the fraud alleged.

A plaintiff bringing a federal securities fraud claim is required to do so within five years from the date of the alleged fraud. See 28 U. The period begins to run on the date that a plaintiff bought or sold the securities at issue. See Arnold v. See Complaint, Inter-American Trust v. Fairfield Greenwich Group, No.

In order for a complaint that adds a new defendant to relate back to the original complaint the following requirements must be satisfied: 1 "both complaints must arise out of the same conduct, transaction, or occurrence"; 2 "the additional defendant must have been omitted from the original complaint by mistake"; and 3 "the additional defendant must not be prejudiced by the delay.

National Football League, F. Here, both complaints arise out of the same conduct, transaction or occurrence—alleged fraudulent conduct involving the Funds and its custodians, administrators, and accountants—and CCI and Citco Group, which were aware of the case filed against the other Citco Defendants, were not prejudiced by the delay.

Moreover, because of CCI and Citco Group's involvement with the Funds, they surely knew that, but for a mistake, they would have been included in the January 12 Complaint. See Krupski v. Costa Crociere S. Accordingly, the Court finds that claims against the Citco Defendants are time-barred to the extent investments were made prior to January 12, The Citco Defendants argue that Plaintiffs fail to state a third-party beneficiary breach of contract claim.

Specifically, the Citco Defendants assert that the language of the agreements at issue evince no clear intent to benefit the Plaintiffs. The Court finds that whereas the Plaintiffs sufficiently allege a third-party beneficiary breach of the Administration Agreements, they fail to do so with respect to the Custody Agreements.

The same principles apply to the claims against the Citco Defendants. According to the Citco Defendants, the language of the Citco Agreements clearly evidences an intent to specifically benefit the Funds to the exclusion of Plaintiffs. In support of this argument, the Citco Defendants identify clauses in the Citco Agreements that state that the duties to be performed by the Citco Defendants are on behalf of, and for the benefit of, the Fund.

The Citco Defendants also assert that both the Custody and Administration Agreements' nonassignment clauses, and the Administration Agreements' inurement clauses, further demonstrate that the parties never intended to allow third-party enforcement. Calvin Klein Jeanswear Co. The Court is not persuaded by the Citco Defendants' motion to dismiss the third-party beneficiary claim with respect to the Administration Agreements. The Administration Agreements contain language that, when viewed in the light most favorable to Plaintiffs, indicate an intent to benefit a third party.

The Fairfield Sentry and Fairfield Sigma Administrative Agreements explicitly state, for example, that the Citco Defendants shall, among other duties, "issue to Shareholders [] trade confirmations with respect to subscriptions, redemptions and transfers in accordance with the applicable Fund Documents"; "despatch[][sic] to Shareholders notices, proxies, and proxy statements prepared by or on behalf of the Fund in connection with the holding of meetings of shareholders"; "deal[] with and reply[] to all correspondence and other communications addressed to the Fund in relation to the subscription, redemption, transfer and where relevant, conversion of Shares"; and "despatch[] to Shareholders and anyone else entitled to receive the same in accordance with the Fund Documents and any applicable law copies of the audited financial statements.

Schedule 2 Part 2. Similarly, the Greenwich Sentry and Greenwich Sentry Partners Administration Agreements state that the Citco Defendants "shall, on behalf of the Fund, issue to Limited Partners trade confirmations with respect to subscriptions, redemptions and transfers in accordance with the applicable Fund Documents.

Further, the Greenwich Sentry and Greenwich Sentry Partners Administration Agreements provide that the Citco Defendants are responsible for "communicating with Limited Partners; maintaining the record of accounts; processing subscriptions and withdrawals; preparing and maintaining the Partnership's financial and accounting records and statements; calculating each Limited Partner's capital account balance on a monthly basis ; preparing financial statements; arranging for the provision of accounting, clerical, and administrative services; and maintaining corporate records.

Although the Administration Agreements do not explicitly name Plaintiffs as third-party beneficiaries, the Court is persuaded that Plaintiffs satisfactorily allege intent to permit third-party enforcement evident from within the four corners of the contract—especially given that the Administration Agreements require the Citco Defendants to render certain specific performance directly to Plaintiffs.

Subaru of Am. Air Atl. Aero Eng'g Ltd. Finally, the Citco Defendants urge the Court to dismiss Plaintiffs' third-party beneficiary claims for the reasons stated in Stephenson, a recent district court decision involving a factual pattern similar to that at issue here.

The Stephenson court, relying on Piccoli, found that "[n]othing within the four corners of [the administration agreement] expresses an intent to benefit third parties" and that "the Citco administrator contract contains an inurement clause By contrast, Plaintiffs here allege multiple provisions, as indicated above, in the Administration Agreements that indicate an intention to confer a benefit on the Plaintiffs. See De Lage Landen Fin.

Rasa Floors, LP, Civ. Harrah's Operating Co. Moreover, the inurement and nonassignment clauses must be weighed against the Administration Agreements' directives to the Citco Defendants to render performance directly to the Plaintiffs. See Subaru Distribs.

Accordingly, the Court denies the Citco Defendants' motion to dismiss Plaintiffs' third-party beneficiary breach of contract claim with respect to the Administration Agreements. With respect to the Custody Agreements, the Court finds that Plaintiffs fail to sufficiently allege intent to benefit the Plaintiffs. Whereas the Administration Agreements include language directing the Citco Defendants to render performance directly to Plaintiffs, Plaintiffs can point to no such language in the Custody Agreements.

Plaintiffs allege that per the terms of the Custody Agreements, the Citco Defendants were responsible for taking "due care According to Plaintiffs, this language indicates that the Citco Defendants were to render performance directly to the Plaintiffs by safeguarding their assets. However, Plaintiffs do not ground their argument in the plain language of the Custody Agreements, which, unlike the Administration Agreements, makes no explicit indication that performance should be rendered to the Plaintiffs, whether as shareholders or limited partners.

To the contrary, the Custody Agreements never address investors or shareholders, and exclusively lay out the duties among the fund, the depository, and the custodian. From the face of the Custody Agreements it is apparent that any benefit conferred is merely incidental, and that the Custody Agreements do not "clearly evidence[] an intent to permit enforcement by the third party[. Accordingly, the Court grants the Citco Defendants' motion to dismiss with respect to Plaintiffs' thirdparty breach of contract claim as it relates to the Custody Agreements.

The Citco Defendants argue that the Court must dismiss Plaintiffs' negligence, gross negligence, and negligent misrepresentation claims because Plaintiffs fail to allege that the Citco Defendants owed them a duty of care. The Citco Defendants also assert that Plaintiffs are barred by the economic loss rule from suing to recover in tort, and that Plaintiffs' allegations are insufficient to make it plausible that the Administrators acted with the kind of recklessness or intentional wrongdoing required to plead a claim for gross negligence.

The Court agrees with the Citco Defendants that Plaintiffs do not allege that the Custodians or CFSB owed them a duty of care, and accordingly that Plaintiffs negligence and gross negligence [] claims against those defendants must be dismissed.

However, the Court denies the Citco Defendants' motion with respect to the Administrators, with regard to whom Plaintiffs plead a plausible negligence, negligent misrepresentation, and gross negligence claim. Finally, the Court denies the Citco Defendants' motion to dismiss the negligence-based claims against Citco Group, as Plaintiffs sufficiently allege that the Administrators were acting as an agent of Citco Group.

In order to state a claim for negligence, a plaintiff must allege " 1 that the defendant owed him or her a cognizable duty of care; 2 that the defendant breached that duty; and 3 that the plaintiff suffered damage as a proximate result of that breach. Pan Am World Serv. To state a claim for gross negligence, Plaintiffs must allege "conduct that evinces a reckless disregard for the rights of others or smacks of intentional wrongdoing.

City of N. And a claim of negligent misrepresentation requires the elements noted above in connection with Plaintiffs' claims against the Fairfield Defendants. Riordan, 89 N. The New York Court of Appeals has "been cautious not to cast those who are called upon to make judgments under a contract of employment into liability to third parties absent a clearly defined set of circumstances which bespeak a close relationship premised on knowing reliance. To show that a defendant not in privity with a plaintiff nevertheless owes a duty to give that plaintiff accurate information, the plaintiff must show, according to Credit Alliance Corp.

Generally, a "simple breach of contract is not to be considered a tort unless a legal duty independent of the contract itself has been violated. Long Island R. Similarly, the economic loss rule provides that plaintiffs "seeking only a benefit of the bargain of recovery Teachers Ins. In a limited set of circumstances, however, plaintiffs may sue for negligent performance of a contract.

The Citco Defendants argue that any duty on their part to exercise reasonable care arose only from the Citco Agreements and that the Citco Defendants owed no duty to Plaintiffs independent of the Citco Agreements. According to the Citco Defendants, Plaintiffs have no recourse for the wrongs that they allege in the SCAC because 1 any duty owed from the Citco Defendants to Plaintiffs is contained exclusively in the Citco Agreements, and 2 Plaintiffs do not have standing to enforce the Citco Agreements.

However, as stated above, even in the circumstances where the Citco Defendants' duty is contained in the Citco Agreements, Plaintiffs may be permitted to sue the Citco Defendants for negligence to the extent that they satisfy the Credit Alliance test. The internet has turned the consumer world upside down - we look at the leaders and laggards from areas like travel, payments, and cybersecurity.

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Year low : 3, Previous : Volume : Currency : GBX. Full interactive share chart. Ready to invest? Important Documents There are no documents available for this stock. Performance Not available for this stock. Recent trades Trades by volume Recent trade data is unavailable. Sector Weight Banks Country Weight United States Data policy - All information should be used for indicative purposes only.

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