Pacific West Health Medical Center Inc. Employees Retirement Trust et al ...ld Greenwich Group et al Doc. 130 Att. 1 APPENDIX A 1. Stephenson v. Citco Group Ltd., No. 09 Civ. 00716(RJH), 2010 WL 1244007 (S.D.N.Y. Apr. 1, 2010) 2. Meridian Horizon Fund, LP v. Tremont Group Holdings, Inc., No. 09 Civ. 3708(TPG), 2010 WL 1257567 (S.D.N.Y. Mar. 31, 2010) 3. In re Tremont Sec. Law, State Law & Ins. Litig., 08 Civ. 11117(TPG), 2010 WL 1257580 (S.D.N.Y. Mar. 30, 2010) 4. Barron v. Igolnikov, No. 09 Civ. 4471(TPG), 2010 WL 882890 (S.D.N.Y. Mar. 10, 2010) 5. SEC v. Cohmad Sec. Corp., No. 09 Civ. 5680(LLS), 2010 WL 363844 (S.D.N.Y. Feb. 2, 2010) 6. Backus v. Conn. Cmty. Bank, N.A., No. 3:09-CV-1256, 2009 WL 5184360 (D. Conn. Dec. 23, 2009) 7. Levinson v. PSCC Servs., Inc., No. 3:09-CV-00269(PCD), 2009 WL 5184363 (D. Conn. Dec. 23, 2009) 8. CRT v. Merkin, No. 601052/09 (N.Y. Sup. Ct. May 5, 2010) Dockets.Justia.com 1 Page 1 --- F.Supp.2d ----, 2010 WL 1244007 (S.D.N.Y.) (Cite as: 2010 WL 1244007 (S.D.N.Y.)) invested partnership's funds in Ponzi scheme, were Only the Westlaw citation is currently available. derivative of those of partnership for standing pur- poses; limited partner did not allege an injury to himself independent of the injury to partnership. United States District Court, S.D. New York. G. Philip STEPHENSON, as Trustee of the Philip [2] Partnership 289 370 Stephenson Revocable Living Trust, Plaintiff, v. 289 Partnership CITCO GROUP LIMITED; CITCO Fund Services 289VIII Limited Partnership (Europe) BV; CITCO (Canada), Inc.; and Pricewa- 289k370 k. Actions Between Partners. Most terhousecoopers, LLP (an Ontario limited liability Cited Cases partnership), Defendants. Even if limited partner was a third party beneficiary of No. 09 CV 00716(RJH). contracts between investment partnership and part- nership's administrators and its independent auditor, April 1, 2010. his breach of contract claims against administrators and independent auditor based on their investment of Background: Limited partner in investment partner- partnership's funds in Ponzi scheme, were derivative ship which invested the investor's funds in a Ponzi of those of partnership for standing purposes; limited scheme brought a direct action against partnership's partner did not allege an injury to himself independent administrators and its independent auditor. Defen- of the injury to partnership. dants filed three separate motions seeking to dismiss the complaint in its entirety. [3] Partnership 289 370 Holdings: The District Court, Richard J. Holwell, J., 289 Partnership held that: 289VIII Limited Partnership (1) breach of fiduciary duty claims brought by limited 289k370 k. Actions Between Partners. Most partner were derivative of those of partnership for Cited Cases standing purposes; Limited partner's negligence and fraudulent induce- (2) Martin Act preempted limited partner's negligence ment claims against investment partnership's admin- and breach of fiduciary duty claims; and istrators and its independent auditor, which were (3) complaint against auditor did not adequately allege based on investment of partnership's funds in Ponzi scienter. scheme, were direct to the extent that they alleged violation of a duty owed to potential investors at large Motions granted. and that such violations induced limited partner to invest in the partnership, and therefore limited partner had standing to bring his inducement claims directly. West Headnotes [4] Accountants 11A 8 [1] Partnership 289 370 11A Accountants 289 Partnership 11Ak6 Contracts, Employment, and Compensa- 289VIII Limited Partnership tion 289k370 k. Actions Between Partners. Most 11Ak8 k. Performance of Contract; Duties and Cited Cases Liabilities. Most Cited Cases Breach of fiduciary duty claims brought by limited partner in investment partnership against partnership's administrators and its independent auditor, which Partnership 289 370 © 2010 Thomson Reuters. No Claim to Orig. US Gov. Works. Page 2 --- F.Supp.2d ----, 2010 WL 1244007 (S.D.N.Y.) (Cite as: 2010 WL 1244007 (S.D.N.Y.)) 289 Partnership 184I Deception Constituting Fraud, and Liability 289VIII Limited Partnership Therefor 289k370 k. Actions Between Partners. Most 184k2 Elements of Actual Fraud Cited Cases 184k3 k. In General. Most Cited Cases Martin Act, New York's blue sky statute, preempted limited partner's negligence and breach of fiduciary Fraud 184 4 duty claims against investment partnership's adminis- trators and its independent auditor based on their in- 184 Fraud vestment of partnership's funds in Ponzi scheme. 184I Deception Constituting Fraud, and Liability McKinney's General Business Law § 352-c. Therefor 184k2 Elements of Actual Fraud [5] Securities Regulation 349B 242 184k4 k. Intent. Most Cited Cases 349B Securities Regulation Fraud 184 50 349BII State Regulation 349BII(A) In General 184 Fraud 349Bk242 k. What Law Governs. Most 184II Actions Cited Cases 184II(D) Evidence Limited partner's claims against New York investment 184k50 k. Presumptions and Burden of partnership's administrators and its independent au- Proof. Most Cited Cases ditor for breach of fiduciary, negligence, gross negli- Under New York law, a fraud claim requires a ma- gence, and aiding and abetting breach of fiduciary terial misstatement, known by the perpetrator to be duty involved the sale of securities “within or from” false, made with an intent to deceive, upon which the New York for purposes of the New York's Martin Act; plaintiff reasonably relies and as a result of which he relevant securities were shares of the New York in- sustains damages; the requisite state of mind is a de- vestment partnership's fund, fund's shares were sold liberate intent to deceive, however, intent can be from New York to primarily domestic investors, and demonstrated by recklessness of sufficient degree to all of the general partners were located in New York. create an inference of intent. McKinney's General Business Law § 352-c. [8] Federal Civil Procedure 170A 636 [6] Federal Civil Procedure 170A 1772 170A Federal Civil Procedure 170A Federal Civil Procedure 170AVII Pleadings and Motions 170AXI Dismissal 170AVII(A) Pleadings in General 170AXI(B) Involuntary Dismissal 170Ak633 Certainty, Definiteness and Par- 170AXI(B)3 Pleading, Defects In, in Gen- ticularity eral 170Ak636 k. Fraud, Mistake and Con- 170Ak1772 k. Insufficiency in General. dition of Mind. Most Cited Cases Most Cited Cases Although under fraud pleading rule, scienter need not A claim has facial plausibility when the plaintiff be alleged with great specificity, plaintiffs are still pleads factual content that allows the court to draw the required to plead the factual basis which gives rise to a reasonable inference that the defendant is liable for the strong inference' of fraudulent intent. Fed.Rules misconduct alleged; if the factual averments permit no Civ.Proc.Rule 9(b), 28 U.S.C.A. reasonable inference stronger than the mere possibility of misconduct, complaint should be dismissed. Fed.Rules Civ.Proc.Rule 8(a)(2), 28 U.S.C.A. [9] Securities Regulation 349B 60.51(2) [7] Fraud 184 3 349B Securities Regulation 349BI Federal Regulation 349BI(C) Trading and Markets 184 Fraud 349BI(C)7 Fraud and Manipulation © 2010 Thomson Reuters. No Claim to Orig. US Gov. Works. Page 3 --- F.Supp.2d ----, 2010 WL 1244007 (S.D.N.Y.) (Cite as: 2010 WL 1244007 (S.D.N.Y.)) 349Bk60.50 Pleading 349Bk60.51 In General [12] Securities Regulation 349B 60.45(3) 349Bk60.51(2) k. Scienter. Most Cited Cases 349B Securities Regulation Mere receipt of compensation and the maintenance of 349BI Federal Regulation a profitable professional business relationship for 349BI(C) Trading and Markets auditing services does not constitute a sufficient mo- 349BI(C)7 Fraud and Manipulation tive for purposes of pleading scienter in securities 349Bk60.43 Grounds of and Defenses to fraud action. Securities Exchange Act of 1934, § Liability 21D(b)(2), 15 U.S.C.A. § 78u-4(b)(2); Fed.Rules 349Bk60.45 Scienter, Intent, Know- Civ.Proc.Rule 9(b), 28 U.S.C.A. ledge, Negligence or Recklessness 349Bk60.45(3) k. Accountants, [10] Securities Regulation 349B 60.45(3) Attorneys, Underwriters and Brokers. Most Cited Cases 349B Securities Regulation 349BI Federal Regulation Securities Regulation 349B 60.51(2) 349BI(C) Trading and Markets 349BI(C)7 Fraud and Manipulation 349B Securities Regulation 349Bk60.43 Grounds of and Defenses to 349BI Federal Regulation Liability 349BI(C) Trading and Markets 349Bk60.45 Scienter, Intent, Know- 349BI(C)7 Fraud and Manipulation ledge, Negligence or Recklessness 349Bk60.50 Pleading 349Bk60.45(3) k. Accountants, 349Bk60.51 In General Attorneys, Underwriters and Brokers. Most Cited 349Bk60.51(2) k. Scienter. Most Cases Cited Cases For an accountant to be found to have acted recklessly Failure by accountant to comply with generally ac- during an audit, its alleged misconduct must ap- cepted accounting principles (GAAP) or other such proximate an actual intent to aid in the fraud being irregularities are insufficient to establish recklessness perpetrated by the audited company. sufficient to give rise to strong inference of scienter in securities fraud action; to rise to the state of mind [11] Securities Regulation 349B 60.51(2) required, those allegations must be coupled with evi- dence of corresponding fraudulent intent.' Securities 349B Securities Regulation Exchange Act of 1934, § 21D(b)(2), 15 U.S.C.A. § 349BI Federal Regulation 78u-4(b)(2); Fed.Rules Civ.Proc.Rule 9(b), 28 349BI(C) Trading and Markets U.S.C.A. 349BI(C)7 Fraud and Manipulation 349Bk60.50 Pleading [13] Securities Regulation 349B 60.51(2) 349Bk60.51 In General 349Bk60.51(2) k. Scienter. Most 349B Securities Regulation Cited Cases 349BI Federal Regulation Securities fraud complaint against auditor of invest- 349BI(C) Trading and Markets ment partnership which invested its funds in Ponzi 349BI(C)7 Fraud and Manipulation scheme did not adequately allege scienter based on 349Bk60.50 Pleading failure in general to follow generally accepted ac- 349Bk60.51 In General counting principles (GAAP), failure to discover that 349Bk60.51(2) k.