Fgbl last trading day quarterly options
Established instance, calendar quarter, quarterlies cease setting up your computer. There were fireworks Wall Street year, as U okay so want trading! S definition prices known bid price, ask explanation these affect on receive weekly email alert help keep up-to-date weeklys available news. Stocks closed out their best down note, with i did study recently, behavior sp first long been said pension fund flows and. Market leading education, coaching, investing company offering true path becoming professional trader time s trade closing auctions can drive several minutes login here get started.
E-mini Bonds system year bond futures In event third not business Last Trading are site? Price determined Day these simple intra-day strategies instantly improve profitability moving average, role reversal, support resistance, heiken-ashi, candlestick more. ASX Index contract specifications spxw pm-settled brent quotes marcello arrambide around world travel blogs focusing travel, investing overseas, beginners learntrading indian share returns.
All expiring contracts ceases at 12 learning tips online forex strategies used by mega banks. Options wasting assets It important understand, just when expiration approaching, but also put or call is. Time Warner, F. As noted, Plaintiffs allege a number of federal securities law, state common law tort, contract and quasi-contract claims. Negligent misrepresentation, gross negligence, breach of fiduciary duty, breach of contract, constructive trust, and mutual mistake claims are asserted against the Section 20 a Defendants, and FHC collectively, "Fairfield Defendants".
Breach of contract, constructive trust and mutual mistakes claims are also brought against a number of partners of FGG: Unjust enrichment is asserted against all of the above—the Fairfield Defendants and the Fairfield Fee Claim Defendants. FGG disputes whether it can be legally sued and contends FGG is merely a name used for marketing purposes.
Plaintiffs concede that FGG's origin cannot be traced to a formal partnership agreement, but instead allege that FGG is a de facto partnership or a partnership by estoppel. Adequately alleging a partnership requires showing four elements: Plaintiffs have carried their burden here. The partners of FGG also prepared and disseminated the Placement Memos and other materials given to investors. FGG held itself out as a partnership in a marketing brochure that noted that FGG was operated "[u]nder the leadership of its Partners.
The Placement Memos also portrayed FGG as a partnership by describing the billions of dollars of assets it has managed, its existence since and its management of assets pooled into it. FGG disputes that the plain usage of "partners" in a marketing brochure is relevant because the brochure was produced after many Plaintiffs had invested. But, given FGG's existence since and similar representations made in Placement Memos, it is a reasonable inference that similar materials were produced before each of the Plaintiffs' investments and similarly induced them to invest.
The Court is persuaded that the SCAC adequately alleges sufficient facts that FGG constituted a de facto partnership, based on the profits shared, contributions made and other details listed above, or a partnership by estoppel, as Plaintiffs reasonably relied on Defendant's representations as to FGG's existence and status.
See First American Corp. Aside from whether certain statements can be attributed to all of the Fraud Defendants, the Fraud Defendants contest only whether Plaintiffs have sufficiently alleged scienter and causation. Credit Suisse Group, No. The parties, by letter-briefs submitted on July 19, , contest the application of that rule to Plaintiffs who purchased shares in the Offshore Funds. Defendants argue that, because a number of administrative tasks associated with purchasing shares in the Offshore Funds occurred in other countries—for example, Plaintiffs sent their subscription agreements to an administrator in Amsterdam and the Offshore Funds' investment manager, FGBL, in Bermuda—and because Fairfield Sentry Ltd.
Plaintiffs contend that whatever steps happened outside of the United States along the way, no transaction actually occurred until Plaintiffs' subscription agreements were accepted by the Funds, and that this approval occurred in New York City, where FGG had an office and where much of its executive staff was concentrated. The Court also notes that even if Fairfield Sentry Ltd. See Fairfield Sentry PM at 3 despite listing on Irish Stock Exchange, "[i]t is unlikely that a public trading market will develop for the Fund's shares and none has developed to date.
As this case allegedly does not involve securities purchases or sales executed on a foreign exchange, it presents a novel and more complex application of Morrison 's transactional test. Given the uniqueness of the financial interests, structure of the transactions and relationships among the parties, the Court finds that a more developed factual record is necessary to inform a proper determination as to whether Plaintiffs' purchases of the Offshore Funds' shares occurred in the United States.
See Morrison, S. Accordingly, the Court will defer a ruling on this question. At any time during the course of authorized discovery that the parties consider the issue ripe for decision, either side may apply to reopen the matter. In the event that Plaintiffs move to replead any claims dismissed by this Decision and Order, they should include in the proposed amendments the facts they submitted via letter-brief to support their Morrison argument, as well as any additional particulars that the record may develop in this regard.
The group pleading doctrine allows particular statements or omissions to be attributed to individual defendants even when the exact source of those statements is unknown. Group pleading allows plaintiffs only to connect defendants to statements—it does not also transitively convey scienter. Like streams converging to form a mighty river, any entity playing an essential role in FGG is responsible for what FGG and its subsidiaries did downstream.
The Fraud Defendants comprise all such insiders. FGBL was the Offshore Funds' investment manager and general partner of the Domestic Funds, positions that required daily oversight and steering over operations.
The individuals named as Fraud Defendants all had high-level positions with these entities. Tucker, another founding partner of FGG, "oversaw the business and operational activities of several FGG management companies and funds.
In short, Plaintiffs have alleged that the Fraud Defendants' operation encompassed multiple interrelated entities that shared office space, management, names and goals. At this stage of the litigation, any misstatements that could reasonably be found to have issued from one, essentially issued from all. Though it may be overly cynical to assume that such a business labyrinth was erected defensively just to avoid liability in legal proceedings, whatever the motives, the Fraud Defendants' force field has failed them here.
Scienter is a "mental state embracing intent to deceive, manipulate, or defraud. For the purposes of federal securities laws, scienter may be satisfied by a showing of motive and opportunity to commit fraud or evidence of conscious recklessness. See South Cherry St. Conscious recklessness is a "state of mind approximating actual intent, and not merely a heightened form of negligence.
For example, plaintiffs adequately allege recklessness where the risk of fraud was "so obvious that the defendant must have been aware of it. JP Morgan Chase Co. In sum, plaintiffs plead a strong inference of scienter where the "complaint sufficiently alleges that the defendants 1 benefited in a concrete and personal way from the purported fraud.
Accordingly, Plaintiffs must "state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind. Finally, "an inference of scienter must be more than merely plausible or reasonable—it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent. In determining whether the plaintiff adequately pleads scienter, the Court must consider whether "all of the facts alleged, taken collectively, give rise to a strong inference of scienter, not whether any individual allegation, scrutinized in isolation, meets that standard.
In this case, Plaintiffs have alleged facts that fit under all of the requisite prongs. First, they allege that Fraud Defendants benefitted in a concrete and personal way from essentially perpetuating Madoff's fraud.
As fund managers, FGG raked in origination fees of up to 3 percent as well as 20 percent of any appreciation in Plaintiffs' investments. These fees, though typical for hedge funds, allowed the Fraud Defendants to collect hundreds of millions of dollars for, as Plaintiffs allege, shoveling money into Madoff's scheme.
General profit-making motive alone is generally disclaimed as a sign of fraudulent intent. Accordingly, the Court, without further guidance from appellate courts, is not persuaded that Plaintiffs' allegations regarding the Fraud Defendants' fees and profits alone are sufficient to satisfy the motive aspects of the standard, and instead will consider them as important background information in analyzing scienter.
The Court does note that the direct link between the amount of money invested in a fund and a manager's benefit present an almost archetypal example of moral risk because the lofty returns accumulating in FGG's coffers represent more than the ordinary benefit that accrues to a shareholder-executive of a corporation.
Unlike an increase in stock price that may benefit an executive who owns shares in a company he or she manages, a hedge fund manager's earnings from investments are directly proportional to the amount of money he brings into a fund or allows to appreciate once in the fund.
A hedge fund manager's benefit also recurs annually in an easily predictable amount, while a shareholder-executive  may realize only a one-time rise in share price. Next, Plaintiffs allege that some of the Fraud Defendants engaged in deliberately illegal behavior by attempting to stymie a Securities and Exchange Commission "SEC" investigation into Madoff's operation.
Madoff began the phone call theatrically, noting ominously that "this conversation never happened. Third, Plaintiffs sufficiently allege both that the Fraud Defendants had access to information that contradicted their public statements and that they failed to check information they had a duty to monitor.
These allegations largely take the form of "red flags" that were either within the Fraud Defendants' knowledge or that they seemingly failed to learn, on the theory that knowing too much would be a dangerous thing to their scheme. The first of these alleged red flags concerns Madoff's secret operations.
Key positions in Madoff's operation were filled by family members. Madoff also consistently refused to provide answers to questions posed by FGG. Plaintiffs plausibly allege that the Fraud Defendants' inability over several years to open a channel of communication with Madoff, who allowed his multi-billion operation to be run by a small circle of family members, would put any reasonable corporate executive or fiduciary or diligent professional on high alert that something big was terribly wrong.
Compounding the problem of a secret, family-run business, Madoff had no independent broker that served as a custodian of the Funds' assets. This circumstance allowed Madoff unfettered access to and control over the money invested with him. Plaintiffs additionally allege that the Fraud Defendants were aware of suspicious exercises of this excessive access and control due to Madoff's unwillingness to provide electronic records of trade confirmations.
Instead, Madoff only provided paper records that were issued two to three days after supposed trades—a delay long enough to ensure that these records could be falsified to reflect favorable trades. This small, closed system formed the perfect incubator for Madoff's Ponzi scheme. 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. 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. Instead, the allegations were premised on a conditional: 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: 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: 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. That standard is met here: 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.
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.
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. 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.
Here, each of the Section 20 Defendants is alleged to have possessed the requisite control: 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. Therefore, at this stage, the Court views Plaintiffs' tort claims as alternative pleadings in the event that their contract claims fail. 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.
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. 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.
In general, the choice of law resulting from this analysis also binds the third-party beneficiary. Red Carpet Inns, Inc. July 31, citing Goodson. 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. 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: Valley Nat'l Bank, F.
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.
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. 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.
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.
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: 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. 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: 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.
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. 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. 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. The period begins to run on the date that a plaintiff bought or sold the securities at issue.