Allen v. Bank of America Corporation
Court Docket Sheet

2nd Circuit Court of Appeals

2016-03327 (ca2)

BRIEF, on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren Pepicelli in 16-3327, Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren J. Pepicelli in 16-3571, FILED. Service date 01/09/2017 by CM/ECF.[1943368] [16-3327, 16-3571] [Entered: 01/09/2017 04:39 PM]

No. 16-3327 UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT Doris Sue Allen, Donna S. Lucas, Dana Kellen, Hedy L. Anselman, Timothy R. Garrett, Jonathan G. Axelrod, John A. Boardman, Warren J. Pepicelli, Plaintiffs – Appellants v. Credit Suisse Securities (USA) LLC, Deutsche Bank AG, Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Capital Services LLC, Credit Suisse AG, Bank Of America Corporation, Bank of America, N.A., Barclays PLC, Barclays Bank PLC, Barclays Capital Inc., Citibank, N.A., Citigroup Inc., The Goldman Sachs Group, Inc., Goldman, Sachs & Co., HSBC Holdings PLC, HSBC Bank PLC, HSBC North America Holdings Inc., HSBC Bank USA, N.A., JPMorgan Chase Bank, N.A., JPMorgan Chase & Co., The Royal Bank Of Scotland PLC, The Royal Bank Of Scotland Group PLC, RBS Securities Inc., UBS AG, UBS Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BNP Paribas Group, BNP Paribas North America, Inc., UBS Investment Bank, UBS Investment Bank, Americas, UBS Group AG, Merrill Lynch Capital Services, Inc., Barclays Group US Inc., Defendants – Appellees, Credit Suisse Group AG, Credit Suisse Securities (Europe) Limited, Does, 1-30, Does, 1-40, BNP Paribas Securities Corp., Citicorp, Citigroup Global Markets Inc., BNP Prime Brokerage Inc., Defendants. Appeal from Order and Judgment of the United States District Court for the Southern District of New York, 15 Civ. 04285-LGS APPELLANTS' BRIEF J. Brian McTigue Regina M. Markey McTigue Law LLP McTigue Law LLP 4530 Wisconsin Ave., NW, Ste. 300 4530 Wisconsin Ave., NW, Ste. 300 Washington, DC 20016 Washington, DC 20016 Tel: 202-364-6900 Tel: 202-364-6900 Attorneys for Plaintiffs-Appellants TABLE OF CONTENTS TABLE OF AUTHORITIES ................................................................................... iii STATEMENT OF JURISDICTION..........................................................................1 THE ISSUES ON APPEAL.......................................................................................1 STATEMENT OF THE CASE ..................................................................................2 I. PRELIMINARY STATEMENT ....................................................................2 II. NATURE OF THE ACTION.........................................................................4 III. PROCEDURAL HISTORY ...........................................................................5 IV. RELEVANT FACTS .....................................................................................9 SUMMARY OF ARGUMENT ...............................................................................18 STANDARD OF REVIEW .....................................................................................20 ARGUMENT ...........................................................................................................20 I. ERISA Legal Background............................................................................20 II. ISSUE 1: The District Court Erred in Finding The Complaint Did not Sufficiently Allege that The Banks Acted As Functional Fiduciaries In the FX Schemes ............................................................................................21 A. Pleading Standard ......................................................................................21 B. ERISA's Fiduciary Standard For Handling Plan Assets ...........................22 1. ERISA Definition of a Fiduciary..........................................................22 2. When A Person Handles Plan Assets, ERISA Establishes A Lower Threshold for Fiduciary Status .............................................................24 3. A Service Provider Controlling the Disposition of Plan Assets to Control the Amount of Its Fees is an ERISA Functional Fiduciary ....26 C. The District Court Failed to Apply ERISA's Fiduciary Standard in Finding the Complaint Failed to State A Claim ........................................29 1. The District Court Failed to Apply the Controlling Standard For An ERISA Fiduciary ..................................................................................31 a) The FX Transactions Involved Plan Assets ..................................31 i b) The FX Transactions Involved the Banks' Control over the Disposition of Plan Assets ............................................................33 c) Control over Plan Assets Does Not Require Authorization or a Contractual Relationship ...............................................................34 d) The Banks' Control Over and Use of ERISA Plans' Order Information Was Adequately Pled ................................................38 2. The Complaint Sufficiently Alleges the Banks Secretly Transferred Plan Assets to Themselves ...................................................................40 3. The Common Law Analysis of the District Court is Arbitrary and Wrong ...................................................................................................43 III. ISSUE 2: The District Court Erred In Finding the Complaint Did not Allege The Banks Committed ERISA § 502(a)(3) Violations In A Non- Fiduciary Capacity .......................................................................................47 IV. ISSUE 3: The District Court Erred When It Refused The Plaintiffs' Request to Amend Their Complaint ............................................................50 CONCLUSION ........................................................................................................53 ii TABLE OF AUTHORITIES Cases Alcatel-Lucent USA, Inc. v. Borlabi, Civ. Act. No. 13-4543, 2016 WL 3406227 (D.N.J. June 16, 2016) ..........................................................................................38 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ...................................................... 21, 22, 30 B & M Linen, Corp. v. Kannegiesser, USA, Corp., 679 F. Supp. 2d 474 (S.D.N.Y. 2010) .....................................................................................................................47 Bd. of Trs. of Bricklayers & Allied Craftsmen Local 6 of N.J. Welfare Fund v. Wettlin Assocs. Inc., 237 F.3d 270 (3d Cir. N.J. 2001) .......................................25 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) ...........................................22 Bernhard v. Cent. Parking Sys. of N.Y., Inc., 282 F.R.D. 284 (E.D.N.Y.2012) .....22 Bissell v. Merrill Lynch & Co., 937 F. Supp. 237 (S.D.N.Y. 1996) .......................45 Blatt v. Marshall & Lassman, 812 F.2d 810 (2d Cir. 1987) ............................ passim Bodnar v. John Hancock Funds, Inc., No. 2:06-cv-87 (PS), 2008 WL 155019 (N.D. Ind. Jan. 15, 2008) ......................................................................................28 Bombardier Aerospace Emp. Welfare Benefits Plan v. Ferrer, Poirot and Wansbrough, 354 F.3d 348 (5th Cir. 2003) ..............................................50 Bouboulis v. Transp. Workers Union of Am., 442 F.3d 55 (2d Cir. 2006) ..... 23, 36 Braden v. WalMart Stores, Inc., 588 F.3d 585 (8th Cir. 2009) ...............................41 Brock v. Hendershott, 840 F.2d 339 (6th Cir. 1988) ...............................................35 Capital Mgmt. Select Fund v. Bennett, 680 F.3d 214 (2d Cir. N.Y. 2012).............46 Cellular South Inc. v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., 516 Fed. Appx. 30 (2d Cir. 2013) .......................................................................................41 Chao v. Day, 436 F.3d 234 (D.C. Cir. 2006) .................................................... 26, 35 Conway v. Icahn & Co., 16 F.3d 504 (2d Cir. 1994) ..............................................45 iii David P. Coldesina, D.D.S., P.C., Empl. Profit Sharing Plan & Trust v. Estate of Simper, 407 F.3d 1126 (10th Cir. 2005) ..............................................................42 Donovan v. Bierwirth, 680 F.2d 263 (2d Cir. 1982) ........................................ 20, 21 F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d (2d Cir. 1987)....... passim F.W. Webb Co. v. State St. Bank & Trust Co., No. 09-Civ. 1241 (RJH), 2010 U.S. Dist. LEXIS 82759 (S.D.N.Y. Aug. 12, 2010).....................................................25 Faber v. Metro. Life Ins., 648 F.3d 98 (2d Cir. 2011) .............................................32 Finkel v. Romanowicz, 577 F.3d 79 (2d Cir. 2009) ................................................26 Flanigan v. General Elec. Co., 242 F.3d 78 (2d Cir. 2001) .....................................24 Forgione v. Gaglio, No. 13 CIV. 9061 (KPF), 2015 WL 718270 (S.D.N.Y. Feb. 13, 2015) .....................................................................................................................34 FX3X Fund, L.P., et al v. Deutsche Bank, AG, No. 14-CV-8400, 2016 WL 1169514 (S.D.N.Y. Mar. 22, 2016) ............................................................... 46, 47 Global Enter. Group Holding, S.A. v. Ottimo, 07-CV-4904 (TCP)(WDW), 2010 U.S. Dist. LEXIS 145126 (E.D.N.Y. June 8, 2010) .............................................46 Goldman v. McMahan, Brafman, Morgan & Co., No. 85 Civ. 2236 (PKL), 1987 WL 12820 (S.D.N.Y. June 17, 1987) ...................................................................46 Haddock v. Nationwide. Fin. Serv., Inc., 419 F. Supp. 2d 156 (D. Conn. 2006) ............................................................................................. 24, 36 Harris Trust & Sav. Bank v. John Hancock Mut. Life Ins. Co., 302 F.3d 18 (2d Cir. 2002) ................................................................................................ 29, 35 Harris v. Mills, 572 F.3d 66 (2nd Cir. 2009) ...........................................................40 Harzewski v. Guidant Corp., 489 F.3d 799 (7th Cir. 2007) ....................................41 Hayden v. Paterson, 594 F.3d 150 (2d Cir. 2010) ...................................................22 Herman v. Goldstein, 224 F.3d 128 (2d Cir. 2000) .................................................28 Herman v. Solidarity of Labor Orgs. Health & Welfare Fund, 95 Civ. 7247 (KMW) (RLE), 1999 U.S. Dist. LEXIS 8780 (S.D.N.Y. June 9, 1999).............43 iv Hi-Lex Controls, Inc. v. Blue Cross Blue Shield, 751 F.3d 740 (6th Cir. 2014) ....43 ILGWU Nat'l Ret. Fund v. Levy Bros. Frocks, Inc., 846 F.2d 879 (2d Cir. 1988) ..............................................................................................................................21 In re Austin Capital Mgmt. Ltd. Sec. & Empl. Retirement Income Sec. Act (ERISA) Litigation, No. 09 M.D.2075, 2012 WL 6644623 (S.D.N.Y. Dec. 21, 2012) ......................................................................................................22 In re Beacon Assoc. Litigation, 818 F. Supp. 2d 697 (S.D.N.Y. 2011) ..................48 In re Citigroup ERISA Litigation, 104 F. Supp. 3d 599 (S.D.N.Y. 2015) ....... 11, 23 In re Luna, 406 F.3d 1192 (10th Cir. 2005) .............................................................25 In re Xerox Corp. ERISA Litig., 483 F. Supp. 2d 206 (D. Conn. 2007) .................50 Int.'l Painters and Allied Trades Indus. Pension Fund v. Aragones, 643 F. Supp. 2d 1329 (M.D.Fla. 2008) ......................................................................................35 IT Corp. v. General Am. Life Ins. Co., 107 F.3d 1415 (9th Cir. 1997) .................25 Kwiatkowski v. Bear, Stearns & Co., 306 F.3d 1293 (2d Cir. 2002) ......................45 LaScala v. Scrufari, 479 F.3d 213 (2d Cir. 2007) ....................................................20 Lehman Bros. Commercial Corp. v. Minmetals Int'l Non-Ferrous Metals Trading Co., 179 F. Supp. 2d 118 (S.D.N.Y. 2000) ..........................................................45 Leimkuehler v. Am. United Life Ins. Co., 713 F.3d 905 (7th Cir. 2013)................25 LoPresti v. Terwilliger, 126 F.3d 34 (2d Cir. 1997) ................................................25 Market St. Ltd. Partners v. Englander Capital Corp., No. 92 CIV 7434 (LMM), 1993 WL 212817 (S.D.N.Y. June 14, 1993) ..........................................45 Mary Jo C. v. N.Y. State & Local Ret. Sys., 707 F.3d 144 (2d Cir. 2013) .............51 Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (1985) ......................... 21, 42, 44 McCarthy v. Pelino & Lentz, P.C., Civ. A. No. 94-4861, 1995 WL 347001 (E.D. Pa. June 6, 1995).................................................................................. 26, 28 Mertens v. Hewitt Assocs., 508 U.S. 248 (1993).................................. 23, 26, 36, 44 v Metzner v. D.H. Blair & Co., 663 F. Supp. 716 (S.D.N.Y. 1987) ..........................35 N.L.R.B. v. Amax Coal Co., 453 U.S. 322 (1981) ..................................................43 Nat'l Sec. Sys. v. Iola, 700 F.3d 65 (3d Cir. 2012) ..................................................43 New York State Psychiatric Ass'n v. UnitedHealth Grp., 798 F.3d 125 (2d Cir. 2015) .....................................................................................................................48 Panther Partners Inc. v. Ikanos Communs., Inc., 681 F.3d 114 (2d Cir. 2012) ................................................................................................ 20, 52 Papelino v. Albany College of Pharm. of Union Univ., 633 F.3d 81 (2d Cir. 2011) .......................................................................................................20 Pension Ben. Guar. Corp. ex rel. St. Vincent Catholic Med. Centers Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705 (2d Cir. 2013) ................. 21, 41 Perez v. Eye Ctrs. of Tenn., LLC, Case No. 2:14-cv-0115, 2016 U.S. Dist. LEXIS 156248 (M.D. Tenn. Nov. 10, 2016) .................................................................43 Press v. Chemical Inv. Servs. Corp., 166 F.3d 529 (2d Cir. 1999) .........................45 Romita v. Anchor Tank Lines, LLC, No. 11 CIV. 9641 DAB, 2014 WL 1092867 (S.D.N.Y. Mar. 17, 2014) .....................................................................................22 Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) ..................................................20 Sirna, Jr. P.C. Profit Sharing Plan et al. v. Prudential Sec., Inc., 964 F. Supp. 147 (S.D. N.Y. 1997)............................................................................................ 28, 36 Three Crown Ltd. Partnership v. Caxton Corp., 817 F. Supp. 1033 (S.D.N.Y. 1993) .....................................................................................................................46 U.S. v. Glick, 142 F.3d 520 (2d Cir. 1998) ..................................................... passim United States v. King, 10 Cr. 122 (JGK), 2011 U.S. Dist. LEXIS 45467 (S.D.N.Y. Apr. 26, 2011) .....................................................................................25 United States v. Szur, 289 F.3d 200 (2d Cir. 2002).................................................45 United Teamster Fund v. MagnaCare Admin. Servs. LLC, 39 F. Supp. 3d 461 (S.D.N.Y. 2014)................................................................................. 27, 28, 29, 36 vi Varity Corp. v. Howe, 516 U.S. 489 (1996) ............................................................44 Yee v. Escondido, 503 U.S. 519 (1992) ..................................................................50 Statutes 28 U.S.C. §1291 .........................................................................................................1 29 U.S.C. § 1002(14)(A), (B) ..................................................................................48 29 U.S.C. § 1002(21)(A) .................................................................................. 23, 27 29 U.S.C. § 1104 ......................................................................................................30 29 U.S.C. § 1106 ......................................................................................... 30, 43, 49 29 U.S.C. §1001b .....................................................................................................20 29 U.S.C. §1104(a)(1)(B) ........................................................................................21 29 U.S.C. §1132(a) ................................................................................................1, 4 29 U.S.C. §1132(e)(1) ................................................................................................1 29 U.S.C. §1144 .......................................................................................................44 ERISA § 3(21)(A) ............................................................................................ passim ERISA § 406(a) ........................................................................................... 43, 48, 49 ERISA § 406(b) ................................................................................................ 43, 50 ERISA § 502(a)(3) ........................................................................................... passim ERISA §§ 408(b)(2) and (c)(2) ................................................................................43 ERISA §§404 and 406 .............................................................................................39 Exchange Act, Section 15(g), 15 U.S.C. § 78o .......................................................40 Other Authorities H.R. Rep. No. 1280, 93d Cong., 2d Sess. ...............................................................23 vii In re Fleet Specialist, Inc., U. S. Securities & Exchange Commission Release No. 49,499, Mar. 30-, 2004, File No. 3-1146..............................................................45 U.S. Code Cong. & Admin. News 1047 ..................................................................44 Webster's Third New International Dictionary (2002) ............................................25 Rules Fed. R. Civ. P. 23 .......................................................................................................5 Fed. R. Civ. Pro 12 (b)(1) ..........................................................................................6 Fed. R. Civ. Pro 12(b)(6) .....................................................................................6, 52 Fed. R. Civ. Pro. 15(a)(2) ........................................................................................50 Fed. R. Civ. Pro. 8 ....................................................................................................40 Regulations 29 C.F.R. § 2509.75-5 ..............................................................................................27 29 C.F.R. §2550.408b-2(e)(1)..................................................................................43 29 CFR § 2510.3-21(e) ............................................................................................38 DOL Advisory Op. No. 93 (May 5, 1993)........................................................ 32, 39 viii STATEMENT OF JURISDICTION The district court's jurisdiction arose from ERISA, 29 U.S.C. §1132(e)(1), which grants federal courts jurisdiction over claims asserted under 29 U.S.C. §1132(a). This appeal is from two final orders and a judgment that dispose of all parties' claims. This Court's jurisdiction thus arises from 28 U.S.C. §1291, which grants appellate jurisdiction over final decisions of district courts. The district court's order dismissing the action against three of the Defendants issued August 23, 2016 [SPA1], and judgment was entered August 24, 2016. [SPA21.] Plaintiffs filed a timely notice of appeal September 22, 2016. [II:A439.] The district court's order dismissing the claims against the remaining nine Defendants issued September 20, 2016 [SPA22], for which Plaintiffs filed a timely notice of appeal on October 20, 2016. [II:A442.] THE ISSUES ON APPEAL 1. Whether the district court erred in holding that Plaintiffs failed to allege sufficient facts to support an allegation that Defendant banks were ERISA fiduciaries, where (i) ERISA makes a fiduciary any entity that exercises control with respect to disposition of plan assets, (ii) the complaint included seven appendices consisting of 76 pages that listed specific dates and amounts for 1 approximately 2400 individual foreign currency transactions that Defendants executed with the assets of the named Plaintiffs' plans, and (iii) the complaint alleged that Defendants enriched themselves by misappropriating plan assets in the course of executing these transactions by secretly manipulating foreign currency exchange rates and trades? 2. Whether the district court erred in dismissing Count V of Plaintiffs' complaint, alleging Defendants' liability for knowingly participating in ERISA- prohibited transactions as a party in interest, on the grounds that none of the Defendant banks were ERISA fiduciaries, where Plaintiffs had alleged sufficient facts to meet ERISA requirements for fiduciary status for Defendant banks? 3. Whether the district court erred in refusing to grant Plaintiffs 60 days to obtain additional facts to amend the complaint on the grounds that any such amendment would be futile, where the district court's own opinion dismissing the complaint indicated that an allegation of an agreement between Defendants and the named Plaintiffs' plans would likely have cured the alleged pleading deficiency? STATEMENT OF THE CASE I. PRELIMINARY STATEMENT Plaintiffs allege the existence of a broad and systematic financial scheme orchestrated by 12 international banking groups. These banking groups dominate the foreign currency market – the largest financial market in the world. Through 2 their schemes these groups secretly and systematically misappropriated hundreds of millions of dollars of the retirement and other savings of workers throughout the country, over an 11 year period, to enrich themselves. To implement their schemes these banking groups used sophisticated computers, specialized knowledge of complex financial markets, and access to exclusive "cyber" chat rooms. Plaintiffs assert their claims under the Employee Retirement Income Security Act of 1974 ("ERISA"). Such abuse and self-dealing was the very type of conduct Congress sought to combat when it enacted ERISA. Congress created ERISA to be a powerful tool to combat financial manipulation and fraud, and, in particular, ERISA imbues any person that exercises control respecting the disposition of plan assets with fiduciary duties to plan participants and beneficiaries. Those duties are the "highest known to the law." The Appellants here ask this Court to apply the statutory ERISA fiduciary definition, as defined in its two-part U.S. v. Glick test, and find, contrary to the District Court, that the Complaint allegations sufficiently allege that the Banks were ERISA fiduciaries. To hold otherwise would effectively limit ERISA's reach to old methods of raiding plan assets; but the language of ERISA is broad enough to apply to parties using complex modern technologies to transfer employees' retirement savings to their own coffers. 3 II. NATURE OF THE ACTION This case is an ERISA civil enforcement action brought pursuant to 29 U.S.C. §1132(a). It seeks to recoup millions of dollars that Defendant banking entities ("Banks" or "Defendants"), acting as ERISA fiduciaries, misappropriated from ERISA retirement plans across the country via their foreign exchange trading schemes. Each Defendant is alleged to have undertaken these schemes collectively, and in addition, some Defendants are further alleged to have pursued certain manipulative schemes of the foreign currency market rates individually, without the participation of other Defendants. As is discussed in the statement of facts, some Defendants have already admitted to the essential facts of the schemes, which are gleaned from investigations, settlement agreements and announcements by financial regulators and enforcement bodies, including the U.S. Department of Justice, as well as media reports. Plaintiffs are participants, beneficiaries, and trustees of ERISA-covered plans that were injured by the schemes between 2003 and 2014.1 1 (I:A71-74, ¶¶35-42.) The named Plaintiffs are Doris Sue Allen, Donna S. Lucas, Dana Kellen, Hedy L. Anselman, Timothy R. Garrett, Jonathan G. Axelrod, John A. Boardman, and Warren J. Pepicelli. Plaintiffs are participants, beneficiaries, or trustees of the following ERISA plans: The Caterpillar Inc. Retirement Income Plan, the Caterpillar Inc. Retiree Benefit Program, the Bridgestone Americas Salaried Employees Retirement Plan, the Health Corporation of America 401(k) Plan, the Hospital Corporation of America Retirement Plan, the Baker Hughes Incorporated Thrift Plan, and the International Ladies Garment Workers Union 4 Pursuant to ERISA, the named Plaintiffs brings the action on behalf of their respective ERISA-covered plans, and, pursuant to Fed. R. Civ. P. 23, as a class action on behalf of participants, beneficiaries, and named fiduciaries of all other ERISA plans subject to Defendants' scheme. III. PROCEDURAL HISTORY Plaintiffs filed their complaint on June 3, 2015 in the Southern District of New York against 11 banking groups, alleging ERISA claims.2 On November 16, 2015, Plaintiffs filed an amended complaint which added an additional banking group.3 [Dkt.98.] Plaintiffs filed a second amended complaint ("SAC") with leave of the court on April 6, 2016.4 [I:A61, ¶257; III:A531, ¶257.] Death Benefit Fund 2 and predecessor plans. Plaintiffs sue on behalf of themselves, their ERISA plans, and a class of participants, beneficiaries, and trustees of similarly situated ERISA plans. 2 Each group of related Appellee/Defendant banks (hereinafter "Defendants") are referred to herein as a single banking group; there are 12 banking groups in total. A description of each Defendant and those 12 banking groups appears in the SAC. [I:A11-17, ¶¶43-54]. (References to the Appendix will be in this form, where "I" indicates the volume number, and "A11" indicates the appendix page number.) 3 The additional plaintiffs, defendants included a twelfth defendant banking group, comprising BNP Paribas Group and BNP Paribas North America, Inc. 4 The SAC added additional defendants, but no new banking groups. 5 On May 19, 2016, three of the 12 Defendant banking groups ("Group One Defendants")5 filed a motion to dismiss the SAC for lack of jurisdiction and failure to state a claim under Fed. R. Civ. Pro 12 (b)(1) and (b)(6).6 [I:A258.] On June 1, 2016, the district court ordered the Plaintiffs to file a third amended complaint ("TAC") by July 15, 2016, that "bases its claims on collusive conduct related to FX instruments." [Dkt. 199.] The court had preliminarily approved settlement agreements that nine of the Defendant bank groups ("Group Two Defendants")7 had reached in separate case involving antitrust violations 5 This group is referred to by the district court as the "Non-Settling Defendants", because, on December 15, 2015, the court preliminarily approved settlements involving those bank groups in the separate FOREX litigation. It includes Credit Suisse AG; Credit Suisse Securities (USA) LLC; Deutsche Bank AG; Morgan Stanley; Morgan Stanley Capital Services LLC; and Morgan Stanley & Co., LLC. 6 Also on that date, Plaintiffs voluntarily dismissed their claims against Defendants Credit Suisse Group AG and Credit Suisse Securities (Europe) Limited, which the court approved. [Dkt. 195, 198.] ("Dkt.---" refers to docket numbers in the district court docket in this action.) 7 This group is referred to by the district court as the "Settling Defendants," and it includes Bank of America Corporation; Bank of America, N.A.; Merrill Lynch, Pierce, Fenner & Smith Inc.; Merrill Lynch Capital Services, Inc.; Barclays PLC; Barclays Bank PLC; Barclays Group US Inc.; Barclays Capital Inc.; BNP Paribas Group; BNP Paribas North America, Inc.; Citibank, N.A.; Citigroup, Inc.; The Goldman Sachs Group, Inc.; Goldman, Sachs & Co.; HSBC Holdings PLC; HSBC Bank Plc; HSBC North America Holdings, Inc.; HSBC Bank USA, N.A.; JPMorgan Chase Bank, N.A.; JPMorgan Chase & Co; Royal Bank Of Scotland Group PLC; Royal Bank Of Scotland PLC; RBS Securities, Inc.; UBA AG; UBS Securities, LLC; UBS Investment Bank; UBS Investment Bank, Americas. 6 related to collusive manipulation of FX benchmarks. ("FOREX").8 [Id.] The court subsequently amended that order [Dkt. 203] directing Plaintiffs to incorporate in the TAC the SAC's "allegations and claims as to the Non-Settling Defendants [Group One Defendants]" and requiring that these claims "shall not be repeated or further amended." 9 [I:A263.]" Plaintiffs timely filed the TAC as ordered by the court. [II:A266.] (In this brief, "Complaint" refers to the SAC, which fully describes all claims against all Defendants.) On August 23, 2016, the district court granted the Group One Defendants' motion to dismiss the Complaint for failure to state a claim (Counts I-V). The court held Plaintiffs had failed to plead those Defendants' ERISA fiduciary status. [SPA1.]10 A judgment in Group One Defendants' favor was entered the next day. [SPA21.] 8 FOREX alleged collusive manipulation of foreign currency benchmarks involving banks that included the banking groups named in Plaintiffs' complaint. In re Foreign Exchange Benchmark Rates Antitrust Litigation, 13 Civ. 7789 (LGS) (S.D.N.Y). 9 Further, the district court instructed that the SAC's "enjoined claims" against the Settling Defendants [Group Two Defendants] shall be incorporated by reference in the TAC and shall not be repeated or further amended." [Id.] On June 1, 2016, the court had enjoined the Plaintiffs from prosecuting collusive claims referenced the nine FOREX settlement agreements it had preliminarily approved in that separate matter. [Dkt. 199.] 10 "SPA" refers to the Special Appendix. 7 Plaintiffs subsequently filed a letter motion asking the district court to grant them 60 days to file a motion for leave to file an amended complaint against the Group Two Defendants -- the remaining defendant bank groups in the action below -- to allow Plaintiffs the opportunity to conduct additional factual investigation to meet the standards for pleading fiduciary status identified in the district court's dismissal opinion. [II:A433.] Plaintiffs further informed the court that, after consultation with the Group Two Defendants, the parties "appear to agree that additional briefing on a motion to dismiss based upon the current complaint is unnecessary and would be unproductive." [Id.] Plaintiffs therefore requested in the alternative, if the court denied the request for time to amend, that the court grant leave for the parties to file a joint proposed stipulation in seven days dismissing all claims against the Group Two Defendants (Counts I-IX) and preserving all appeal rights. The purpose of the stipulation would be to consolidate and expedite appeals of all claims (Counts I-IX) against all Defendants to this Court.[Id.] The district court denied the Plaintiffs' request for additional time to amend their complaint against the Group Two Defendants to meet the newly announced pleading standards, but granted leave to file the stipulation of dismissal. [II;A436.] The district court approved the stipulated dismissal, authorizing voluntary dismissal of actions. The stipulation and order dismissed all claims against the Group Two Defendants "in their entirety with prejudice for the reasons stated in 8 the Court's August 23, 2016 Order, which shall be deemed to apply fully to such claims". [SPA22.] That order left no matter pending before the district court against any Defendant in this case. [SPA34.] On September 22, 2016, Plaintiffs timely filed a notice of appeal as to the August 24, 2016 judgment as to all claims against the Group One Defendants. [II:A439.] On October 20, 2016, Plaintiffs timely filed a notice of appeal as to the September 20, 2016 order dismissing all claims against the Group Two Defendants. [II:A442.] Plaintiffs subsequently moved this Court to consolidate the appeals, [Appeal Dkt. 28],11 and the motion was granted, [Appeal Dkt. 33.] IV. RELEVANT FACTS The facts underlying the foreign exchange ("FX") schemes alleged in the Complaint have been widely publicized. The U.S. Commodity Futures Trading Commission ("CFTC") announced fines totaling $1.4 billion in November 2014 against five Defendant Banks for their "egregious behavior" manipulating, and "aiding and abetting" other bank traders manipulation of, the FX markets against their own clients between 2009 through 2012.12 [I:A127-28, ¶¶185-86.] That same day the United Kingdom Financial Conduct Authority announced $1.7 billion in 11 Referring to this consolidated appeal's docket. 12 Citigroup ($310 million); JPMorgan ($310 million); RBS ($290 million); UBS ($290 million) and HSBC ($275 million). [I:A127-28, ¶188.] 9 fines in connection with its investigation against the same five banks for the same manipulation and client deceit from 2008 to 2013. [I:A128-29, ¶¶188.] The same day the Swiss regulator FINMA ordered Defendant UBS AG to disgorge the equivalent of $138 million after its own investigation found UBS had participated in similar secretive and illegal activity between 2008 through September 2013. [I:A128, ¶¶190-91.] The stream of government announcements continued on May 20, 2015. U.S. Attorney General Loretta Lynch announced a record $2.7 billion in penalties and criminal plea agreements the U.S. Department of Justice reached with five Defendant Banks,13 who had "for years participated in a brazen display of collusion and foreign exchange rate market manipulation," noting that "these unprecedented figures appropriately reflect the conspiracy's breathtaking flagrancy, its systemic reach and its significant impact." [I:A133-33 ¶¶193-97.] The Attorney General described the Banks' improper collusion to manipulate the FX Spot Market benchmark rates, including the WM/Reuters Closing Spot rate and the European Central Bank FX rate. [Id.] That same day the Board of Governors of 13 Barclays ($650 million); Citigroup ($925 million); JPMorgan ($550 million); RBS ($395 million), and UBS ($203 million). [I:A132, ¶196.] 10 the Federal Reserve announced consent orders entered with six Defendant Banks,14 and fines among the largest it ever handed down, citing failures "to detect and address illegal agreements among traders to manipulate benchmark currency prices." [I:A133-35, ¶¶200-04.] That same day the New York State Department of Financial Services pulled no punches: "Put simply, Barclays employees helped rig the foreign exchange market. They engaged in a brazen 'heads I win, tails you lose' scheme to rip off their clients. While today's action concerns misconduct in spot trading, there is additional work ahead." [I:A135-36, ¶¶206-08.] The department announced fines that contributed to the $1.32 billion charged to Barclays that day for that manipulation. [Id.] Government officials' outrage over the banking community's manipulation of the foreign currency markets continued. [I:A136-38, ¶¶209-15.] Plaintiffs allege that the 12 Defendant banking groups, through benchmark rigging and other FX Schemes, transferred hundreds of millions of dollars of workers' retirement and other savings to themselves. [I:A159, ¶291.] Prior to disclosure of the scheme, ERISA Plans and their Investment Managers believed FX benchmarks were set through impersonal market forces. [I:A87, ¶77; I:A88-89, ¶83.] ERISA Plans were led to believe that the Banks' FX pricing involved no 14 Bank of America ($205 million), Barclays ($342 million), Citigroup ($342 million), JPMorgan ($342 million), RBS ($274 million), and UBS ($342 million). [I:A132-33, ¶200.] 11 discretion on the Banks' part. [Id.] Instead, as Attorney General Lynch described, the Banks enriched themselves in their "brazen display of collusion" against their clients, including the ERISA Plans. [I:A159, ¶291.] The global currency market is the largest financial market in the world; for instance in April 2013 it averaged $5.3 trillion in transactions per day. [I:A65, ¶6.] The FX benchmarking schemes were enabled by technological advances that increasingly concentrated the FX market activities among fewer trading institutions. [I:A90, ¶88; I:A92, ¶¶91-93.] Defendants have dominated this highly unregulated market, acting as counterparties in approximately 98% of the spot transactions in the United States. [I:A84, ¶68; I:A91, ¶89; I:A93, ¶94.] Spot transactions are one type of FX Transaction that ERISA Plans and their Managers seek for currency exchanges, and are vital to an ERISA Plans' participation in the international markets and to the management of currency risk. [I:A84, ¶¶67-68; I:A139, ¶217] The FX Schemes were possible because the Banks recognized that knowledge of their own customers' order flows and those of competing Banks' customers was highly profitable. [I:A93, ¶96.] The Banks used this knowledge to secretly increase the Banks' own compensation at the expense of their clients, by, for instance, manipulating the FX benchmarks against their clients. [I:A66, ¶8.]. 12 The ERISA Plaintiffs' plans were clients to the Banks who were injured by the FX Schemes. [Id.] The Complaint appendices list approximately 2,400 individual FX Transactions that the Banks executed with the assets of the named Plaintiffs' plans. [I:A175, ¶257] ERISA plans also enter "standing instruction" FX agreements with the Defendants [I:A87, ¶77], and American Depositary Receipt agreements. [I:A139-40, ¶¶220-23; I:A146-47, ¶¶250-57.] The Plaintiffs allege that the Banks, through their FX Schemes, manipulated the FX market against the interest of ERISA Plans collusively (Counts I-V) and individually (Counts VI-IX). [I:A156-72, ¶¶286-353.] The FX Schemes as described in the Complaint include the following four practices: • Benchmark Manipulation: Defendants exchanged confidential customer order information and trading positions with each other, in part to agree on strategies for trading in and around the setting of fixing rates, known as benchmarks. [I:A108-09, ¶¶132-34.] One popular benchmark is the WM/Reuters Closing Spot Rates, which were calculated using the median of a snapshot of bid and ask order rates and actual spot transactions in the 30 seconds before and the 30 seconds after 4:00 p.m. London time (11:00 a.m. in New York). [I:A87-88, ¶¶78-80.] In the benchmark FX Scheme, Defendants amassed large positions in a currency to "build ammo" and then 13 traded those positions, or unloaded the ammo, just before or during the fix. [I:A67, ¶15.] Defendants sold currency before the "fix" to help other Defendants build ammo to influence the fix rate. [Id.] The Banks used tactics known as "banging the close," "painting the screen," and "reaching deep into the book" to amplify the impact of their collusive sharing of information – again, often for the purpose of manipulating benchmark exchange rates at which their customers' orders were slated to be priced. [I:A110, ¶137.] These activities often took place in closed network chat rooms with revealing names such as "The Cartel," "The Bandits' Club," and "The Mafia." [I:A66-67, ¶10, I:A97-100, ¶¶106-12.] Benchmark manipulation can also be carried out alone by an individual Bank. • Front-running: If a Bank knew that a particularly large customer order (or the aggregate orders of its customers) would move the market, or affect a benchmark rate, the Bank could use that information to trade ahead of, or "front run", the order. [I:A94-97, ¶¶ 97-104.] Bank FX traders "front run" on customer information when they receive customer orders that could move the market by trading their own proprietary currency positions before executing their 14 customers' market-moving trades. [Id.] Defendants could and did act alone to front run large orders, or they could act collusively. • Limit and Stop Orders: The Banks also secretly "worked" limit and stop orders at levels (i.e., prices) better than the limit order price, so that the Bank would earn a spread or markup in connection with its execution of such orders. [I:A115, ¶156.] Limit and stop FX orders are conditioned on an exchange rate moving across a particular threshold level. [Id.] Five Defendants admitted to such practices in plea agreements with the U.S. Department of Justice. [I:A115-116, ¶¶156-57.] • Electronic Trading Manipulation: Defendant Barclays routinely abused customers who traded over electronic trading platforms, and in particular customers who traded on single bank, proprietary platforms. [I:A121-27, ¶¶168-83.] For instance, Barclays built a "hold" period into its propriety platform, "BARX." [I:A121-22, ¶¶169-170.] Barclays used this "latency," which was often measured in milliseconds, to reject customer orders in cases where the market moved in favor of the customer during the "hold" period. [I:A121-22, ¶169.] In cases where the market was neutral or moved in favor of Barclays during the latency period, Barclays allowed the orders to go 15 through. [I:A70, ¶28.] Barclays did not disclose this system, known as "Last Look," to its customers, and sometimes actively misled customers who asked why their orders had been rejected. [Id.] Barclays admitted that from at least 2009 through 2014, it engaged in such improper practices in a consent agreement with the New York State Department of Financial Services. [I:A121-23, ¶¶168-72.] The Scheme to manipulate the benchmarks enabled the Banks to exchange FX at more favorable rates to themselves, and less favorable to their clients. [I:A100-05, ¶¶111-22.] The Banks controlled how much more favorable that exchange rate would be for them and the other Banks. [Id.] Chat room transcripts expose, for example, how an HSBC trader in London and three traders at other banks manipulated the WM/Reuters Closing Spot Rate to their mutual advantage, and to the disadvantage of their clients. [I:A100-02, ¶¶113-17.] The CFTC investigation describes how Barclays and UBS FX traders determined that they were all trading in the "same direction" and then shared that each trader separately "scored" (i.e., profited) between $60,000 and $220,000: In another chat, traders for Bank W and three other Banks exchanged positions leading into the WM/R 4 p.m. fix. The Bank Y trader said "it cant be a good day to be [right hand side]." Once the four traders determined they were all the same direction, the Bank W trader asked if "we gonna be able to get it to 05" to which the Bank Y trader responded "is that the troyal fkn we." After the fixing window closed the Bank X trader said "nice call" and the chat room members gave their "scores" or profits from the fix. The chat room members each claimed they made between $60,000 and $220,000. 16 [I:A103, ¶119.] The front-running FX Scheme resulted in the ERISA Plans paying a less favorable FX exchange rate, effectively exacting a secret fee out of plan assets [I:A94-97, ¶¶ 97-104] The Bank (or Banks) exclusively controlled the difference in that FX rate. One example of front-running in the Complaint details how a trader, armed with knowledge of a customer's order to exchange U.S. dollars for £600m in British pounds (sterling) at the benchmark rate, could earn the trader $300,000 in secret profits in the 15 minutes before the 4:00 p.m. London fix. [I:A95-97, ¶¶102-104] The trader gained $300,000 on the £50m "front running" side bet based on its knowledge of its clients' order, plus an additional $1.5 million as a direct cost to its customer by manipulating the benchmark. The total secret profit earned the trader from the FX Schemes would be $1.8 million. [Id.] In manipulating limit and stop orders, certain Banks executed the FX at an exchange rate that was less favorable than the ERISA Plans had instructed.[I:A115, ¶156.] The participating Banks thus created their own profit at the direct expense of the ERISA Plan for which it conducted the FX Transaction. [Id.] Again, each Bank exclusively controlled its additional compensation. In the "Last Look" FX Scheme, Barclays effectively took a secret "option contract" for itself to possibly delay any transaction with an ERISA Plan. That secret option contract, though it may have lasted less than a second, permitted 17 Barclays to reject an FX order, fill it at the original price, or fill it at a different price. [I:A121-27, ¶¶168-83.] Barclay's secret option allowed it to exact compensation through only executing FX Transactions in which the market had moved in its favor during that "latency" period. [I:A123, ¶174.] Barclays did not pay the Plans for that option, and as such, it increased its own compensation by the value of that option. [Id.] SUMMARY OF ARGUMENT Issue 1 (ERISA fiduciary status): The district court erred in finding that Plaintiffs did not allege sufficient facts establishing Defendant banks' ERISA fiduciary status. The district court erroneously assumed that ERISA fiduciary status requires being named a fiduciary, being given responsibility for plan administration, or an express agreement with a plan granting an entity discretion over plan affairs. ERISA's definition of fiduciary was designed to be broader than the traditional common law definition to facilitate fiduciary enforcement. All ERISA requires for fiduciary status is that an entity have control over disposition of plan assets. Controlling case law makes clear that this requirement is satisfied if a plan service provider exercises discretion over the amount of its own compensation when dealing with plan assets, U.S. v. Glick, 142 F.3d 520, 527-28 (2d Cir. 1998) (defendant was ERISA fiduciary because he "had full discretion in selecting the amount of [his] commission," which was paid out of plan assets, that 18 he took for signing up new participants to health plan); F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d 1250, 1259 (2d Cir. 1987). Plaintiffs alleged precisely this in their complaint — that Defendant banks exercised discretion in determining the amount of their own compensation when conducting tens of thousands of foreign currency trades with ERISA plan assets, providing thousands of examples. Specifically, Defendants secretly manipulated foreign currency benchmarks and trades to increase their own compensation and misappropriate plan assets to enrich themselves. In so doing, they acted as ERISA fiduciaries. Issue 2 (non-fiduciary liability): The district court dismissed Count V of the Complaint, which alleged in the alternative that certain Defendants were liable as non-fiduciaries for participating in illicit transactions with fiduciaries, on the grounds that none of the other Defendants with whom they conducted the transactions were fiduciaries. Since the latter finding was erroneous for the reasons discussed with respect to Issue 1, the district court also erred in dismissing Count V. Issue 3 (denial of request for time to amend): After dismissal of the Complaint against certain Defendants, Plaintiffs requested 60 days to file an amended complaint. Plaintiffs noted in their request that they needed the additional time to attempt to secure from the trustees copies of written agreements governing foreign exchange trading between Defendants and the plans' investment managers, 19 which, based on previous experience, they believed would exist. The district court found that any such amendment would be futile. This was error and an abuse of discretion, since the district court's own dismissal opinion had held that pleading existence of an appropriate agreement would be one way to establish fiduciary status. STANDARD OF REVIEW The Court reviews de novo a district court's grant of a motion to dismiss. Papelino v. Albany College of Pharm. of Union Univ., 633 F.3d 81, 88 (2d Cir. 2011). The Court reviews "a district court's denial of leave to amend for abuse of discretion, unless the denial was based on an interpretation of law, such as futility, in which case [it] review[s] the legal conclusion de novo." Panther Partners Inc. v. Ikanos Communs., Inc., 681 F.3d 114, 119 (2d Cir. 2012). ARGUMENT I. ERISA LEGAL BACKGROUND A core purpose of ERISA is to protect employees' retirement security and benefits. 29 U.S.C. §1001b; Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90 (1983). In accordance with this purpose, ERISA's fiduciary standards of conduct are "the highest...known to the law." LaScala v. Scrufari, 479 F.3d 213, 219 (2d Cir. 2007), (quoting Donovan v. Bierwirth, 680 F.2d 263, 272 n.8 (2d Cir. 1982), cert. denied, 20 459 U.S. 1069, 103 S. Ct. 488, 74 L. Ed. 2d 631 (1982)). Furthermore, "because ERISA...[is a] remedial statute[], [it] should be liberally construed in favor of protecting the participants in employee benefits plans." ILGWU Nat'l Ret. Fund v. Levy Bros. Frocks, Inc., 846 F.2d 879, 885 (2d Cir. 1988) (quotation marks and citation omitted). The two fundamental ERISA fiduciary duties are the duty of loyalty and the duty of prudence. Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 143 n.10 (1985). The duty of loyalty requires that a fiduciary's "decisions must be made with an eye single to the interests of the participants and beneficiaries." Donovan v. Bierwirth, 680 F.2d at 271. The duty of prudence requires fiduciaries to act with the care, skill, diligence, and prudence of a person familiar with such matters (i.e. not a layperson). 29 U.S.C. §1104(a)(1)(B). II. ISSUE 1: THE DISTRICT COURT ERRED IN FINDING THE COMPLAINT DID NOT SUFFICIENTLY ALLEGE THAT THE BANKS ACTED AS FUNCTIONAL FIDUCIARIES IN THE FX SCHEMES A. Pleading Standard "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Pension Ben. Guar. Corp. ex rel. St. Vincent Catholic Med. Centers Ret. Plan v. Morgan Stanley Inv. Mgmt. Inc., 712 F.3d 705, 717 (2d Cir. 2013) (quoting Iqbal, 556 U.S. at 678 (quoting Bell Atlantic Corp. v. Twombly, 550 21 U.S. 544, 570 (2007))). This Court takes a two-pronged approach to this standard. First, the Court reviews the complaint "for allegations that are conclusory and thus are not entitled to the assumption of truth." Hayden v. Paterson, 594 F.3d 150, 161 (2d Cir. 2010). The Court next applies the "facial plausibility" prong, Id., in which "a court should determine whether the 'well-pleaded factual allegations,' assumed to be true, 'plausibly give rise to an entitlement to relief.'" Id. at 72 (quoting Iqbal, 556 U.S. 679). The "determination of whether one is a ... fiduciary is fact-based and generally inappropriate to resolve on a motion to dismiss." In re Austin Capital Mgmt. Ltd. Sec. & Empl. Retirement Income Sec. Act (ERISA) Litigation, No. 09 M.D.2075, 2012 WL 6644623 (S.D.N.Y. Dec. 21, 2012) (citing Bernhard v. Cent. Parking Sys. of N.Y., Inc., 282 F.R.D. 284, 288 (E.D.N.Y.2012)). Romita v. Anchor Tank Lines, LLC, No. 11 CIV. 9641 DAB, 2014 WL 1092867, at *3 (S.D.N.Y. Mar. 17, 2014). B. ERISA's Fiduciary Standard For Handling Plan Assets 1. ERISA Definition of a Fiduciary ERISA defines a "fiduciary" as follows: [A] person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control 22 respecting management of such plan or exercises any authority or control respecting management or disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan. ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A) (italics added).15 "Congress intended the term [fiduciary] to be broadly construed." Bouboulis v. Transp. Workers Union of Am., 442 F.3d 55, 64 (2d Cir. 2006) (quoting Blatt v. Marshall & Lassman, 812 F.2d 810, 812 (2d Cir. 1987)) (brackets in original). "'[T]he definition includes persons who have authority and responsibility with respect to the matter in question, regardless of their formal title.'" Blatt, 812 F.2d at 812 (alteration in original) (quoting the Congressional Record, H.R. Rep. No. 1280, 93d Cong., 2d Sess.). Unlike common trust law, which limited fiduciary status to named trustees, "ERISA. . . defines 'fiduciary' not in terms of formal trusteeship, but in functional terms of control and authority over the plan, thus expanding the universe of persons subject to fiduciary duties" beyond the common law of trusts. Mertens v. Hewitt Assocs., 508 U.S. 248, 262 (1993) (emphasis in original, internal citation omitted). "[A] person may be an ERISA fiduciary with respect to certain matters but 15 An ERISA fiduciary can also be named under the plan. In re Citigroup ERISA Litigation, 104 F. Supp. 3d 599, 613 (S.D.N.Y. 2015). 23 not others, for he has that status only 'to the extent' that he has or exercises the described authority or responsibility." F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d 1250, 1259 (2d Cir. 1987) (citing ERISA § 3(21)(A)). A functional fiduciary's duties are limited to its actions, and not to particular plan assets, i.e. duties "apply only to decisions by [a person] acting in its fiduciary capacity." Flanigan v. General Elec. Co., 242 F.3d 78, 87 (2d Cir. 2001). A person need not have absolute authority or control with respect to plan assets to be considered a fiduciary. Blatt, 812 F.2d at 812. Even "indirect" or "attenuated" control of plan assets are sufficient to make an entity an ERISA fiduciary. Haddock v. Nationwide. Fin. Serv., Inc., 419 F. Supp. 2d 156, 165 (D. Conn. 2006) (denying summary judgment because contracts between ERISA plan investment providers and mutual funds could be deemed a "guise" to enable the provider to earn fees for offering the mutual funds to the plans), citing Blatt, 812 F.2d at 813. 2. When A Person Handles Plan Assets, ERISA Establishes A Lower Threshold for Fiduciary Status Congress established a "a lower threshold for fiduciary status where control of assets is at stake" in defining an ERISA functional fiduciary in the second half of provision § 3(21)(A)(i) ("exercises any authority or control respecting management or disposition of its assets"). Bd. of Trs. of Bricklayers & Allied 24 Craftsmen Local 6 of N.J. Welfare Fund v. Wettlin Assocs. Inc., 237 F.3d 270, 274-75 (3d Cir. N.J. 2001).16 This clause contrasts with the other functional fiduciary standards identified in § 3(21)(A) that address the general management and administration of an ERISA plan and require the exercise of discretion. "The statute treats control over the cash differently from control over administration." Id. at 274 quoting IT Corp. v. General Am. Life Ins. Co., 107 F.3d 1415, 1421 (9th Cir. 1997) 17 Applying § 3(21)(A), this Court has found that plan sponsors can be functional fiduciaries. Blatt, 812 F.2d at 812 (employer refusing to timely process a form necessary for former employee to receive his plan distribution deemed to exercise control over plan assets); LoPresti v. Terwilliger, 126 F.3d 34, 40 (2d Cir. 1997) (officer and owner of closely-held corporation who commingled plan assets with company funds and decided which creditors would 16 "Disposition" is defined as "the act or power of disposing. . . [as in] placing elsewhere, a giving over to the care or possession of another, or a relinquishing." In re Luna, 406 F.3d 1192, 1204 n. 10 (10th Cir. 2005) (quoting Webster's Third New International Dictionary 654 (2002)) (quotations and brackets as appearing). 17 See also F.W. Webb Co. v. State St. Bank & Trust Co., No. 09-Civ. 1241 (RJH), 2010 U.S. Dist. LEXIS 82759, 15-16 (S.D.N.Y. Aug. 12, 2010)("the second prong of this subsection plainly does not require that a person exercise discretion over the disposition of plan assets"); United States v. King, 10 Cr. 122 (JGK), 2011 U.S. Dist. LEXIS 45467 (S.D.N.Y. Apr. 26, 2011) (requiring only authority or control over plan assets); Leimkuehler v. Am. United Life Ins. Co., 713 F.3d 905, 913 (7th Cir. 2013) (citing cases). 25 be paid).18 Courts apply the clause in § 3(21)(A)(i) to find third party service providers are functional fiduciaries. McCarthy v. Pelino & Lentz, P.C., Civ. A. No. 94- 4861, 1995 WL 347001, at *5 (E.D. Pa. June 6, 1995) (accountant to a plan sponsor who engaged in improper accounting techniques that withheld ERISA benefits and reports may be a functional fiduciary if he had a discretionary role in the decision to engage in the improper techniques and in exceeding his role as an independent auditor). But ERISA § 3(21)(A)(i) will not "extend fiduciary status to every person who exercises mere possession, or custody" over plan assets, but instead predicates the finding on the exercise of authority or control over plan assets. Chao v. Day, 436 F.3d 234, 237, 369 (D.C. Cir. 2006) (internal quotation marks removed). 3. A Service Provider Controlling the Disposition of Plan Assets to Control the Amount of Its Fees is an ERISA Functional Fiduciary When a service provider "retains control over factors that determine its compensation" out of plan assets, it is held to control the disposition of plan 18 Contrast cases where fiduciary status was not found: Finkel v. Romanowicz, 577 F.3d 79, 86-87 (2d Cir. 2009) (a corporate officer's failure to make employer contributions to an ERISA plan); Mertens v. Hewitt Assocs., 948 F.2d 607, 610 (9th Cir. 1991) (actuary who incorrectly estimated the actuarial value of plan assets in providing its services). 26 assets and becomes a functional fiduciary to the extent it sets that compensation. United Teamster Fund v. MagnaCare Admin. Servs. LLC, 39 F. Supp. 3d 461, 469, 470 (S.D.N.Y. 2014) (citing F.H. Krear & Co. v. Trustees of Local 69 Pension Fund, 810 F.2d 1250, 1259 (2d Cir. 1987).19 This Court applies the two-step test appearing in U.S. v. Glick, to determine when a service provider becomes a functional fiduciary by so controlling the factors that determine its compensation: (1) did the monies from which fees were taken constitute ERISA plan assets, and (2) did the person have any authority or control over those assets. Glick, 142 F.3d at 527-28 (brokerage firm owner depositing participant contributions into firm's bank account and then issuing checks transferring the contributions to an ERISA fund after deducting firm's fees, the size of which he determined, held to be a functional fiduciary), as cited in United Teamster Fund, 39 F. Supp. 3d at 469. The Glick test essentially recites the second clause of ERISA § 3(21)(A)(i) that deems any person to be a fiduciary "with respect to a plan to the extent (i) he. . . exercises any authority or control respecting. . . disposition of its 19 Attorneys, accountants, actuaries, or consultants that provide services to an ERISA plan are not generally held to be fiduciaries in performing their traditional functions, but will become fiduciaries if they perform a function described in ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A). See 29 C.F.R. § 2509.75-5. 27 assets". For instance, the district court in United Teamster Fund, applying the Glick test, found that MagnaCare Administrative Services, a third-party administrator to two ERISA health benefit plans, acted as a functional ERISA fiduciary when it paid itself undisclosed fees out of plan assets. Id. at 470–71. The court held that no matter what services MagnaCare did or did not provide to the plans, by hiding the full extent of the fees that it charged for laboratory diagnostic services and durable medical equipment claims, MagnaCare exercised enough authority or control over plan assets to make it a functional ERISA fiduciary as to the fees. Id. at 469 n.4.20 See also Herman v. Goldstein, 224 F.3d 128 (2d Cir. 2000) (applying Glick test to affirm district court that third-party administrator unilaterally determining its fees was a fiduciary).21 20 An ERISA plan service provider becomes an ERISA fiduciary even if its authority and responsibility over setting its fees is authorized in a service contract negotiated with an ERISA plan at arms-length. See Krear, 810 F.2d at 1259; see also Glick, 142 F.3d at 527–528. 21 See also Bodnar v. John Hancock Funds, Inc., No. 2:06-cv-87 (PS), 2008 WL 155019 (N.D. Ind. Jan. 15, 2008) (service provider charging an undisclosed transfer fee to a 401(k) ERISA plan could be a functional fiduciary); McCarthy, Civ. A. No. 94-4861, 1995 WL 347001, *5; (E.D. Pa. June 6, 1995) (accountant engaging in improper accounting techniques that withheld ERISA benefits and reports may be a functional fiduciary if he had a discretionary role in the decision to engage in the improper techniques and in exceeding his role as an independent auditor). Compare Sirna, Jr. P.C. Profit Sharing Plan et al. v. Prudential Sec., Inc., 964 F. Supp. 147, 148-49, (S.D. N.Y. 1997) where an agreement was reached as to 28 A service provider handling plan assets, in contrast, will not be deemed a functional fiduciary "[w]hen a person who has no relationship to an ERISA plan is negotiating a contract with that plan." F.H. Krear, 810 F.2d at 1259 (finding "no authority over or responsibility to the plan" and inability "to exercise any control over the trustees' decision whether or not, and on what terms, to enter into an agreement with him"). Similarly, service providers that merely receive "contractually-established commission rates" out of plan assets are not fiduciaries as to their compensation. United Teamsters Fund, 39 F. Supp. 3d at 470 (citing Glick, 142 F.3d at 528; Harris Trust & Sav. Bank v. John Hancock Mut. Life Ins. Co., 302 F.3d 18, 28 (2d Cir. 2002)). C. The District Court Failed to Apply ERISA's Fiduciary Standard in Finding the Complaint Failed to State A Claim Rather than applying Glick and ERISA to determine if the Banks acted as functional fiduciaries in the FX Schemes, the district court concluded that the Complaint merely describes the FX Schemes as a "counterparty relationship between [the] bank and the plan to transact at a specified rate," in which "the plan has not granted the bank any control or authority over [the FX] rate." [SPA16.] the frequency of "sweeps" of unencumbered plan assets in a brokerage account that was more advantageous to the broker, which earned interest on the cash, instead of the ERISA profit sharing plan. The broker was not held to be an ERISA functional fiduciary. Id. at 152. 29 According to the district court, the Complaint "does not allege any facts concerning such authority or control" and instead "merely states that 'many investment managers of ERISA Plan assets arranged with Defendant banks to conduct FX Transactions with ERISA assets.'" [SPA13]; "The Complaint's allegations concerning Defendants' fiduciary status are no more than "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements," that are insufficient to survive motion to dismiss" citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). [SPA13.] The court conducts a common law analysis to suggest that under ERISA, the FX transactions were mere "[o]rdinary, arms-length commercial arrangements between sophisticated parties" that do not embody the "extraordinary circumstances" necessary to trigger a fiduciary relationship [SPA14.] The district court held "[b]ecause the Moving Defendants were never named as fiduciaries in any of the Plans and did not exercise fiduciary functions with respect to the challenged transactions, they are not subject to ERISA liability under either 29 U.S.C. § 1104 or § 1106." [SPA12.] The district court's failure to apply ERISA § 3(21)(A)(i) and U.S. v. Glick to the factual allegations in the Complaint was error, especially because the court found that the Complaint alleges that the "Defendants influenced the fees or compensation they received on a transaction-by-transaction basis." [SPA15, citing 30 I:A147-48, ¶258.] The Complaint avers that the entire purpose of the FX Scheme was the diversion of plan assets from the ERISA Plans and their Investment Managers to the Banks, and as such, the Banks operated as ERISA functional fiduciaries. 1. The District Court Failed to Apply the Controlling Standard For An ERISA Fiduciary The Complaint does more than make "'[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.'". [SPA13.] Though the court acknowledges "the Complaint alleges that. . . Defendants influenced the fees or compensation they received on a transaction-by-transaction basis," [SPA15-16, citing I:A147-48, ¶258], the basis of the benchmarking scheme allegation, the court nonetheless held such "influence" does not constitute control over the disposition of plan assets under ERISA §3(21)(A). But applying the two-step Glick test to the allegations in the Complaint, the Complaint describes that the Banks exercised unauthorized control over the disposition of plan assets through the FX Schemes. a) The FX Transactions Involved Plan Assets The first prong of the Glick test – asking if the Banks' secret compensation from the FX Schemes was collected out of ERISA plan assets – is satisfied by the allegations in the Complaint. [I:A139-40, ¶¶218-22; I:A147-48, ¶¶258-59.] The 31 Complaint further included seven appendices consisting of 76 pages that list specific dates and amounts for approximately 2,400 individual FX Transactions that the Banks executed with the assets of the named Plaintiffs' plans. [I:A175, ¶257]. The district court does question whether Investment Managers handling plan assets are to be distinguished from ERISA Plans handling plan assets in its analysis. [SPA13.] But neither ERISA § 3(21)(A) nor the case law consider the title of the person controlling plan assets in determining their functional fiduciary status. See Blatt, 812 F.2d at 812. Similarly, the Complaint alleges the FX order information the Banks used in the FX Schemes to their advantage was a plan asset. [I:A66-67, ¶¶10-12; I:A107, ¶128; I:A108-09, ¶¶130-134; I:A128, ¶188; I:A148, ¶259; I:A157-58, ¶¶288-89; I:A165-66, ¶326]. An ERISA plan asset is identified based on "ordinary notions of property rights," Faber v. Metro. Life Ins., 648 F.3d 98, 105 (2d Cir. 2011), and it includes "any property, tangible or intangible, in which the plan has a beneficial ownership interest," considering "any contract or other legal instrument involving the plan, as well as the actions and representations of the parties involved." Id. (citing DOL Advisory Op. No. 93-14A (May 5, 1993)). The court does not dispute the Complaint's allegation that FX order information constitutes a plan asset. 32 b) The FX Transactions Involved the Banks' Control over the Disposition of Plan Assets The district court's disagreement with the Plaintiffs is with the second prong of the Glick test – whether the Complaint alleges that Banks exercise "control" over those plan assets. For example, the court states that "the Complaint alleges that 'Defendants had fiduciary duties under ERISA because they exercised discretionary authority or control over management of the ERISA Plans, or exercised authority or control with respect to the disposition of Plan assets,' but does not allege any facts concerning such authority or control." (emphasis added) [SPA13.] The Complaint repeatedly alleges that the Banks exercised discretion and control over the disposition of plan assets by secretly transferring plan assets to themselves and thereby covertly increasing their own compensation for providing the FX services to the ERISA Plans and their Investment Managers. [IA93-94, ¶96; I:A107, 127.] The Complaint alleges that through intentional manipulation of the benchmarks and other prices after receiving the FX orders, the Banks exercised control over plan assets by determining the exchange rate of the FX transactions. [I:A97-121, ¶¶105-167.] The Complaint alleges that hundreds of millions of dollars in plan assets were transferred to the Banks through their control of plan assets in the FX Schemes, by setting the FX exchange rates, and through the use of the knowledge of the FX orders. [I:A159, ¶291.] Such specific allegations of 33 control have been found sufficient, from a pleading standpoint, to survive a motion to dismiss. See, for instance, Forgione v. Gaglio, No. 13 CIV. 9061 (KPF), 2015 WL 718270, **8-9 (S.D.N.Y. Feb. 13, 2015) (complaint alleging that defendants provided specific services to an ERISA plan held sufficient to plead fiduciary status, but the allegations regarding a separate defendant stating mere conclusory assertions held insufficient). The district court's analysis is silent as to whether controlling the amount of one's own compensation constitutes control over the disposition of plan assets, i.e. the second prong of the Glick test. The District Court instead concluded "[T]he Complaint does not allege any indicia of control over Plan assets. . . ." [SPA16.] c) Control over Plan Assets Does Not Require Authorization or a Contractual Relationship The district court erred in finding that the Bank's enrichment at the expense of ERISA participants and beneficiaries cannot constitute control over plan assets without authorization from the ERISA Plans or their Investment Managers to transfer of authority or control of plan assets to the Banks (see, e.g., "The Complaint. . . does not allege that the Plans ever granted Defendants any agreed-to control over their compensation"). [SPA16.] But neither § 3(21)(A)(i) nor Glick require any "agreed-upon" control over their compensation to establish functional fiduciary status. Congress intended that ERISA functional fiduciary status can be transactional in nature, and not necessarily be predicated on long-term 34 relationships. See, for instance, 29 U.S.C. §1106 which describes certain "prohibited transactions" that "supplement[] the fiduciary's general duty of loyalty to the plan's beneficiaries" Harris Trust & Sav. Bank v. Salomon Smith Barney, Inc., 530 U.S. 238, 241-242 (2000) (internal quotation marks and citation omitted; emphasis added).22 The District Court's opinion quotes this Court's F.H. Krear decision as authority for requiring a contractual relationship with a plan to confer a service provider's fiduciary status: "after a person has entered into an agreement with an ERISA-covered plan, the agreement may give it such control over factors that determine the actual amount of its compensation that the person thereby becomes an ERISA fiduciary with respect to that compensation". [SPA14-15.] But F.H. Krear does not limit ERISA's plain language, which does not require a contract; the F.H. Krear court merely applies § 3(21)(A) to that fact pattern. 22 See also 29 CFR 2510.3-21(e) (ERISA regulation stating that securities brokers and dealers can become functional ERISA fiduciaries without mention of an authorization requirement). See also cases finding functional fiduciary status: Chao v. Day, 436 F.3d 234, 237-38 (D.C. Cir. 2006) (insurance broker that "solicited, accepted, and then pilfered the plans' assets by reneging on his promise to purchase insurance for the plans' members"); Metzner v. D.H. Blair & Co., 663 F. Supp. 716, 720 (S.D.N.Y. 1987) (broker's unauthorized trading on ERISA accounting holding plan assets) Brock v. Hendershott, 840 F.2d 339, 342 (6th Cir. 1988) (union official who used his "considerable influence" over local unions to direct them to choose a particular dental plan); Int.'l Painters and Allied Trades Indus. Pension Fund v. Aragones, 643 F. Supp. 2d 1329, 1336-37 (M.D.Fla. 2008) (plan participant who without authorization refused to return benefit overpayment). 35 The district court similarly cites United Teamsters Fund, 39 F. Supp. at 469- 71 for the same proposition, noting that that case involved a vendor contract with a clause requiring the exercise of specific fiduciary duties. [A: (15).] But the United Teamsters Fund finding of the vendor's fiduciary status is based on § 3(21(A)(i) and not on that contract clause. Id. at 468-71. In holding a contract is required to find vendor fiduciary status, the district court did not "broadly" construe ERISA's definition of fiduciary, as required by this Court, Bouboulis, 442 F.3d at 64, and did not sufficiently consider that functional fiduciary status is predicated on the existence of functional control and authority over a plan and its assets. Mertens v. Hewitt Assocs., 508 U.S. 248, 262 (1993). It failed to appreciate that even "indirect" or "attenuated" control of plan assets by a person is sufficient to make an entity an ERISA fiduciary. Haddock v. Nationwide Fin. Serv. Inc., 419 F. Supp. 2d 156, 165, citing Blatt, 812 F.2d at 813. The district court failed to recognize that ERISA functional fiduciary status can be transactional in nature, and need not be predicated on long-term relationships. The district court, in limiting its analysis to "agreed-to control" over the Banks' compensation [SPA16], applies a cramped understanding of the statute and its remedial purpose.23 23 The district court cites with approval an interpretation of F.H. Krear by the district court in Sirna v. Prudential Sec. Inc., 964 F. Supp. 147 (S.D.N.Y.1997) that 36 The district court looks to the Complaint to find facts supporting the authorization of control over plan assets to the Banks in a contract ("the Complaint here does not allege either that Defendants served as plan administrators or had long-term contracts with any Plan" [SPA15], and "the Complaint does not allege any indicia of control over Plan assets or an ongoing contractual relationship between any Plan and any Defendant in which Defendant bank unilaterally decided when to enter into FX transactions and at what prices, the Complaint does not adequately plead Defendants' authority over Plan assets.") [SPA16.] But again, neither § 3(21)(A)(i) nor Glick require the existence of such a contract to establish functional fiduciary status. The district court's requirement is a radical departure from ERISA's statutory language. See, e.g., the Department of Labor regulation defining when a broker/dealer becomes an ERISA fiduciary, which hinges on the exercise of control over the disposition of plan assets and other functions defined in § "[t]he touchstone [for administrative service provider liability] was a "transfer of control over the plan or its assets from the plan to the provider which would enable the provider to manipulate the plan or its assets to its own benefit." [SPA16.] But this quote is entirely consistent with the presentation of ERISA functional fiduciary status in the Complaint. 37 3(21)(A), and not on the existence of a contract. 29 CFR § 2510.3-21(e) (applying to brokers and dealers handling securities).24 Despite not being necessary to state a claim, in fact, the Complaint does allege the existence of certain written agreements between ERISA Plans (or their Managers) and Banks to transact future FX exchanges. See, e.g., in defining FX Transactions, [I:A85, ¶67, I:A87, ¶77, ], describing "standing instruction" FX agreements [I:A87, ¶77], and averments as to American Depositary Receipt agreements. [I:A139-40, ¶¶220-23.] Further the 76 pages in the Complaint appendices listing specific dates and amounts for approximately 2400 individual FX Transactions that the Banks executed with the assets of the named Plaintiffs' plans [I:A175-257] They suggest the plans' long-term relationships with the Banks, and the existence of contractual agreements, be they written express, or implied. d) The Banks' Control Over and Use of ERISA Plans' Order Information Was Adequately Pled 24 See cases where functional ERISA fiduciary status was found absent a contract: Hendershott, 840 F.2d at 342 (high-ranking union representative who used his "considerable influence" over local unions to direct them to choose a particular dental plan); Aragones, 643 F. Supp. 2d at 1336-37 (plan participant refusing to return benefit overpayment); Alcatel-Lucent USA, Inc. v. Borlabi, Civ. Act. No. 13-4543, 2016 WL 3406227, *3 (D.N.J. June 16, 2016) (same). 38 The Complaint also amply alleges that the Banks exercised control over the disposition of plan assets by using the FX order information of ERISA Plans and their Managers to collectively and individually augment their "covert" compensation out of the plan assets exchanged in the FX transactions. (See, e.g., "[I]f a bank knew that a particularly large customer order (or the aggregate orders of its customers) would move the market, or affect the benchmark rate, the bank could use that information to trade ahead of, or "front run," the order.") [I:A94, ¶98.] See also [I:A68, ¶21; I:A93-97 ¶¶96–104; I:A, ¶¶ 128–40.] These allegations (as admitted by some Banks [I:A109, ¶134]), though an element of certain FX rate manipulation allegations ("[o]ne of the main purposes of sharing information was to manipulate benchmark rates" [I:A108, ¶130]), comprise additional, separate ERISA §§404 and 406 violations. By definition that confidential information is a plan asset, (DOL Advisory Op. No. 93-14A (May 5, 1993)), and the Banks' improper use of it rendered the Banks' control over generating the "covert" compensation, individually and collectively, functional fiduciary acts under § 3(21)(a)(i) and the Glick test. The Complaint makes repeated allegations as to how the Banks used knowledge of the FX orders of ERISA Plans to manipulate the FX benchmarks on which they would be priced, after receiving those orders. [I:A94, ¶99; I:A96-97, 39 ¶¶103-04; I:A100-02, ¶¶111-17; I:A106, ¶126; I:A123-25, ¶¶173-74 and ¶¶178- 79.] ERISA's barring such use of an investor's confidential order information against plan participants and beneficiaries would parallel such prohibitions in other financial statutes and regulations.25 2. The Complaint Sufficiently Alleges the Banks Secretly Transferred Plan Assets to Themselves These allegations of the Banks' control over the disposition of ERISA plan assets are not "threadbare recitals of the elements of a cause of action, supported by mere conclusory statements. . . ." Harris v. Mills, 572 F.3d 66, 72 (2nd Cir. 2009). They describe particular facts directly supporting the ERISA violation and meet Rule 8 pleading requirements and entitle the ERISA Plaintiffs to discovery. Fed. R. Civ. Pro. 8. "ERISA plaintiffs generally lack the inside information 25 See The Federal Reserve Bank of New York's "Guidelines for Foreign Exchange Trading Activities" (May 2008) ("[i]t is inappropriate to disclose, or to request others to disclose, proprietary information relating to a customer's involvement in a transaction. . . .") (available at https://www.newyorkfed.org/medialibrary/microsites/fxc/files/2010/tradingguideli nesNov2010.pdf, at 5 [I:A107, ¶129]. See also the Exchange Act, Section 15(g), 15 U.S.C. § 78o (requiring every registered broker or dealer to "establish, maintain, and enforce written policies and procedures reasonably designed" to "prevent the misuse [] of material, nonpublic information. . ."); Order, In the Matter of Merrill Lynch, Pierce, Fenner & Smith Inc. U.S. Securities and Exchange Commission, Release No. 63760, January 25, 2011, File No. 3-14204, (finding improper sharing of client confidential information). 40 necessary to make out their claims in detail unless and until discovery commences." St. Vincent, 712 F.3d at 718 (quoting) Braden v. WalMart Stores, Inc., 588 F.3d 585, 596 (8th Cir. 2009). These secret profits that the Banks controlled and transferred to themselves in the FX Schemes, as the Complaint alleges, came from somewhere – and that is workers' retirement and other savings. This transfer happened without those workers' consent or the consent of their Plans or Investment Managers. Cf. Cellular South Inc. v. Merrill, Lynch, Pierce, Fenner & Smith, Inc., 516 Fed. Appx. 30, 33 (2d Cir. 2013) ("The gravamen of manipulation [under federal securities law] is deception of investors into believing that prices at which they purchase and sell securities are determined by the natural interplay of supply and demand, not rigged by manipulators.")26 The district court should have held the Bank Defendants acted as fiduciaries on the facts alleged by intentionally self-dealing with ERISA plan assets by manipulation of FX exchange rates, which is exactly the type of abuse Congress targeted when it enacted ERISA. "A fair contextual reading of [ERISA] makes it abundantly clear that its draftsmen were primarily 26 As the Seventh Circuit has noted, "[t]he burden of proving fraud [under securities law] is heavier than that of proving a breach of fiduciary duty [under ERISA]….". Harzewski v. Guidant Corp., 489 F.3d 799, 805-806 (7th Cir. 2007) (J. Posner). 41 concerned with the possible misuse of plan assets. . . .". Mass. Mut. Life Ins. Co., 473 U.S. at 142-43. No other analysis makes sense. Neither the ERISA Plans, the Investment Managers, nor impersonal market forces caused the transfer of plan assets to the Banks through the FX Schemes. The "covert" payments of plan assets to the Banks over 11 years, as alleged, were solely caused by the Banks' intentional acts. That transfer was the Banks' only purpose in the FX Schemes. To say alternatively, as did the district court, that the Banks did not control that transfer of plan assets in the FX Schemes "is to say that no one had control during that time." David P. Coldesina, D.D.S., P.C., Empl. Profit Sharing Plan & Trust v. Estate of Simper, 407 F.3d 1126, 1134 (10th Cir. 2005) (accountant with exclusive check-writing authority over account holding plan assets controlled those assets and was held to be a functional fiduciary). Compare John Hancock Mut. Life Ins. Co., 302 F.3d at 29 (when outside market forces rendered an arm's-length contract disadvantageous to an ERISA plan, insurer service provider was under no duty to act contrary to the non-discretionary contract terms agreed upon with the ERISA plan). This Court should rule that the Banks acted as ERISA fiduciaries in the FX Schemes by secretly diverting plan assets to their own accounts. This would comport with Congress' intent in enacting ERISA. "One facet of plan misuse particularly troubling to Congress was self-dealing by fiduciaries." Nat'l Sec. Sys. 42 v. Iola, 700 F.3d 65, 96 (3d Cir. 2012), citing N.L.R.B. v. Amax Coal Co., 453 U.S. 322, 333-34 (1981). Congress' special aversion to self-dealing is reflected in ERISA's §§ 408(b)(2) and (c)(2) statutory exemptions from the per se "prohibited transactions" listed in § 406. 29 U.S.C. §§ 1106, 1108(b)(2) 1108(c)(2). Those exemptions, which are met when, inter alia, "reasonable compensation" is paid for services, are available only for § 406(a) violations involving third parties who are "parties-in-interest", and not for the fiduciary self-dealing prohibitions listed in § 406(b).27 In effect, an ERISA fiduciary cannot "self-deal" even if its own compensation -- over which it exercises control paid out of plan assets -- is reasonable. 3. The Common Law Analysis of the District Court is Arbitrary and Wrong Contrary to ERISA, the district court likened the relationship between Defendants and the Investment Managers to "arm's-length counterparties" under common law fiduciary standards, stating that "courts have consistently refused 27 29 C.F.R. §2550.408b-2(e)(1) See also Herman v. Solidarity of Labor Orgs. Health & Welfare Fund, 95 Civ. 7247 (KMW) (RLE), 1999 U.S. Dist. LEXIS 8780, *11 (S.D.N.Y. June 9, 1999) ("the § 408(b)(2) exemption does not apply to the self-dealing, prohibited transactions."); Iola, 700 F.3d at 94 (same as to §§ 408(b)(2), (c)(2)); Hi-Lex Controls, Inc. v. Blue Cross Blue Shield, 751 F.3d 740, 751 (6th Cir. 2014) (same, where vendor controlled its own compensation); Perez v. Eye Ctrs. of Tenn., LLC, Case No. 2:14-cv-0115, 2016 U.S. Dist. LEXIS 156248 (M.D. Tenn. Nov. 10, 2016) ("ERISA contains an 'absolute bar against self dealing'"). 43 to impose fiduciary duties on arm's-length counterparties under the common law." [SPA13-14.] But ERISA pre-empts any state law claims involving ERISA Plans that would otherwise arise under state fiduciary common law. 29 U.S.C. §1144. The court's analysis indeed misses the mark, because ERISA is grounded in the common law of trusts, not in generic common law fiduciary standards. Mass. Mut. Life Ins. Co., 473 U.S. at 152-153 ("The fiduciary responsibility section, in essence, codifies and makes applicable to. . . fiduciaries certain principles developed in the evolution of the law of trusts") (quoting the Congressional Record, U.S. Code Cong. & Admin. News 1047, pp. 4639, 4865). In enacting ERISA, Congress recognized that "the common law of trusts did not offer completely satisfactory protection," Varity Corp. v. Howe, 516 U.S. 489, 497 (1996), and "expand[ed] the universe of persons subject to fiduciary duties" beyond the scope of common trust law. Mertens v. Hewitt Assocs., 508 U.S. 248, 262 (1993). Moreover, even applying generic common law fiduciary standards, the Complaint alleges facts establishing the Banks' violation of common law duties in the FX Schemes. Inquiries into fiduciary relationships are fact-based and "New York courts typically focus on whether one person has reposed trust or confidence in another who thereby gains a resulting superiority or influence over 44 the first." Lehman Bros. Commercial Corp. v. Minmetals Int'l Non-Ferrous Metals Trading Co., 179 F. Supp. 2d 118, 151 (S.D.N.Y. 2000) (citation and internal quotation marks omitted). A broker is a fiduciary to its client as to the specific duties undertaken by the broker.28 The fiduciary duty owed by brokers under the common law is also applied to market makers and specialists (a special type of market maker) when they conduct a client transaction for compensation.29 When a broker participates in financial 28 United States v. Szur, 289 F.3d 200, 211 (2d Cir. 2002) ("[A] relationship of trust and confidence does exist between a broker and a customer with respect to those matters that have been entrusted to the broker."); Conway v. Icahn & Co., 16 F.3d 504, 510 (2d Cir. 1994) ("A broker, as agent, has a duty to use reasonable efforts to give its principal information relevant to the affairs that have been entrusted to it."); Press v. Chemical Inv. Servs. Corp., 166 F.3d 529, 536–37 (2d Cir. 1999) (distinguishing cases on the scope of the common law broker fiduciary duty to a client); Bissell v. Merrill Lynch & Co., 937 F. Supp. 237, 247 (S.D.N.Y. 1996) (holding a broker is under a fiduciary duty to execute transactions at the best prices reasonably available). But cf. de Kwiatkowski v. Bear, Stearns & Co., 306 F.3d 1293, 1307 (2d Cir. 2002) (brokers' normal duty to use reasonable care in executing each transaction for a customer's nondiscretionary account is not a general fiduciary duty to provide ongoing investment advice between transactions, absent special circumstances). 29 Market St. Ltd. Partners v. Englander Capital Corp., No. 92 CIV 7434 (LMM), 1993 WL 212817, *9 (S.D.N.Y. June 14, 1993); Cf. In re Fleet Specialist, Inc., U. S. Securities & Exchange Commission Release No. 49,499, Mar. 30-, 2004, File No. 3-1146, (under federal securities laws, "[w]hether acting as brokers or dealers, specialists are required to hold the public's interests above their own and, as such, are prohibited from trading for their dealers' accounts ahead of pre-existing customer buy or sell orders that are executable against each other"). 45 manipulation against its own client as to the specific broker responsibilities, a common law fiduciary duty is implicated.30 The Complaint describes just such self-dealing by the Banks against their clients' interests – violating "a relationship of trust and confidence" existing between the Banks on the one hand and the ERISA Plans and their Investment Managers "with respect to those matters that have been entrusted" to Defendants, i.e. the faithful execution of FX transactions for the ERISA Plans based on the benchmark market price. The two cases cited by the district court are distinguishable, in addition to being inapplicable to a federal statutory ERISA complaint. [SPA13-14.] In Integra FX3X Fund, L.P., et al v. Deutsche Bank, AG, No. 14-CV-8400, 2016 WL 1169514, at *4 (S.D.N.Y. Mar. 22, 2016), a prime broker,31 alleged to have made 30 Goldman v. McMahan, Brafman, Morgan & Co., No. 85 Civ. 2236 (PKL), 1987 WL 12820, *22 (S.D.N.Y. June 17, 1987) (broker that fabricated securities transactions and resultant fictitious trading losses held to owe a common law duty to client "at least equal to that of a fiduciary"); Global Enter. Group Holding, S.A. v. Ottimo, 07-CV-4904 (TCP)(WDW), 2010 U.S. Dist. LEXIS 145126, **40–41 (E.D.N.Y. June 8, 2010) (allegation of broker's excess trading of customer account in violation of its fiduciary duty adequately states a claim). Cf. Three Crown Ltd. Partnership v. Caxton Corp., 817 F. Supp. 1033, 1049 (S.D.N.Y. 1993) (holding a duty is recognized under common law fraud theory to disclose self-dealing market rigging to a client, regardless of the existence of a fiduciary or confidential relationship). 31 A "prime broker" is a "registered broker-dealer that clears and finances the customer trades executed by one or more other registered broker-dealers at the behest of the customer." Capital Mgmt. Select Fund v. Bennett, 680 F.3d 214, 232 46 an erroneous margin call to a customer to fund the customer's account was held not to have been acting as a fiduciary when he made the margin call. Integra FX3X is inapposite to the instant case because it involves market losses in the volatile and often speculative foreign exchange derivative market and a dispute over the calculation method the defendant used to demand additional funds to replenish the investor's account over a 29-day period. Id. at **10-11. The Complaint instead involves direct exchanges of one foreign currency for another that the Banks routinely offered to transact at the market benchmark rate, and alleges intentional self-dealing. The district court also cites B & M Linen, Corp. v. Kannegiesser, USA, Corp., 679 F. Supp. 2d 474, 477-78 (S.D.N.Y. 2010), but it describes a supplier alleged to have failed to provide functioning laundry equipment to a commercial purchaser, hardly an apt analogy to an FX Transaction involving the exchange of one currency for another. III. ISSUE 2: THE DISTRICT COURT ERRED IN FINDING THE COMPLAINT DID NOT ALLEGE THE BANKS COMMITTED ERISA § 502(A)(3) VIOLATIONS IN A NON-FIDUCIARY CAPACITY Based on its flawed ERISA analysis finding the Banks were not ERISA functional fiduciaries, the district court then dismissed Count V of the Complaint (2d Cir. 2012) (quoting the United States Securities and Exchange Commission) (citation and internal quotation marks omitted). 47 seeking equitable relief, including the disgorgement of profits.32 [SPA17-19.] Count V alleges the Banks' non-fiduciary liability pursuant to ERISA § 502(a)(3) every time any Bank Defendant knew or should have known it was enriching itself through participation in an underlying ERISA violation, for which another Bank is held to be an ERISA fiduciary. [I:A164-65, ¶¶317-23.] Count V is limited to Banks participating in FX Transactions in which the Banks cooperated (the collusive FX Schemes) and describes the fiduciary Banks' party-in-interest violations33 under § 406(a). Id. The district court agreed with the Plaintiffs that ERISA violations are appropriately brought against non-fiduciaries under ERISA § 502(a)(3), as alleged in Count V (citing Salomon Smith Barney Inc., 530 U.S. at 245-51). [SPA18.] But the district court dismissed Count V because of what it viewed as the Complaint's failure to allege any ERISA fiduciary caused or had actual or constructive knowledge of the underlying § 406(a) violation, a necessary element of the Count V claim when based on such a party-in-interest violation ("the failure to allege a 32 Equitable relief under § 502(a)(3) includes profits "alleged to result from the improper use of [the ERISA] Plaintiffs' property." In re Beacon Assoc. Litigation, 818 F. Supp. 2d 697, 707-708 (S.D.N.Y. 2011); New York State Psychiatric Ass'n v. UnitedHealth Grp., 798 F.3d 125, 134-135 (2d Cir. 2015). 33 A party-in-interest to an ERISA plan includes "any fiduciary (including, but not limited to, any administrator, officer, trustee, or custodian) . . . [or] a person providing services" to an ERISA plan. See 29 U.S.C. § 1002(14)(A), (B). 48 Plan fiduciary with actual or constructive knowledge of a § 406 violation is fatal to Plaintiffs' claim.) [SPA19.]. The ERISA Plaintiffs agree with the district court that an underlying § 406(a) violations alleged as a basis of the § 502(a)(3) relief requires a knowing fiduciary that caused the § 406 violation. 29 U.S.C. § 1106(a)(1). However, the Plaintiffs strongly disagree with the district court's dismissal of Count V based on the district court's separate finding that no Bank acted as a functional fiduciary in the FX Schemes. [SPA19.]). As described supra, the banks acted as functional fiduciaries in the FX Schemes. Assuming the Court agrees, it should find the Complaint adequately alleges that the Banks "caused" underlying alleged fiduciary violations every time any Bank participated in and profited from collusive FX Schemes in which another Defendant Bank manipulated an FX Transaction of its ERISA client. For instance, see actual chat room conversations of the Bank traders manipulating the WM/Reuters Closing Spot Rate to their mutual advantage, and against each others' clients' interest. [I:A100-02), ¶¶113-17.] The Complaint adequately pleads the § 502(a)(3) violation whether the underlying ERISA infraction the fiduciary Bank Defendant committed was in violation of § 406(a) (Count IV) or in violation of ERISA's other fiduciary 49 provisions: § 404 (Count I), § 406(b)(1) (Count II), or § 406(b)(2) (Count III).34 The Supreme Court made clear in Solomon Smith Barney that a plaintiff that properly presents a § 502(a)(3) equitable claim, may plead an ERISA § 404 or § 406 violation in support of that claim. Solomon Smith Barney, Inc., 530 U.S. at 245, n.2, citing Yee v. Escondido, 503 U.S. 519, 534, (1992). This Court, upon correctly reversing the district court's error and holding the Banks to be functional fiduciaries in the FX Schemes, should properly reverse the district court's holding and find Count V does state a claim for the Banks' non- fiduciary liability under ERISA § 502(a)(3). IV. ISSUE 3: THE DISTRICT COURT ERRED WHEN IT REFUSED THE PLAINTIFFS' REQUEST TO AMEND THEIR COMPLAINT The district court also erred when it refused Plaintiffs 60 days leave to amend the Complaint. A district court "should freely give leave [to amend] when justice so requires. Fed. R. Civ. Pro. 15(a)(2). "[W]hen a motion to dismiss is granted, the usual practice is to grant leave to amend the complaint." Mary Jo C. v. N.Y. State 34 See In re Xerox Corp. ERISA Litig., 483 F. Supp. 2d 206, 216 (D. Conn. 2007) (holding in Harris is not limited to cases where a non-fiduciary was a party in interest to a prohibited transaction, though those were the facts in Harris); Bombardier Aerospace Emp. Welfare Benefits Plan v. Ferrer, Poirot and Wansbrough, 354 F.3d 348, 353 (5th Cir. 2003) (the non-fiduciary defendant did not have to be a "party in interest" to be subject to liability under Harris). 50 & Local Ret. Sys., 707 F.3d 144, 166 (2d Cir. 2013) (internal citation and quotation marks omitted). Plaintiffs requested additional time to amend the Complaint against the Group Two Defendants, after the district court issued its dismissal opinion of the claims against the Group One Defendants, based on the same Complaint. [II: A433.] Plaintiffs requested the time to file the motion to amend to allow them the opportunity to conduct additional factual investigation to meet the standards for pleading fiduciary status identified in the district court's dismissal opinion. In particular, Plaintiffs wished to search for: existing contracts between Defendants and the ERISA Plans in this case or their agents, that would form the basis of allegations satisfying the Court's request for allegations that show "indicia of control over Plan assets or an ongoing contractual relationship between any Plan and any Defendant" with respect to FX transactions. Plaintiffs ask for 60 days because it will take Plaintiffs some time to attempt to identify such facts for specific plans and attempt to locate such documents. [II: A434.] Plaintiffs also noted that they believed such documents exist "based upon their experience with previous [similar foreign currency] cases." Id. The district court denied Plaintiffs' motion for additional time to amend on the grounds that "Plaintiffs have submitted nothing in support of the application, and nothing to suggest that a further amendment would be anything but futile." [II:A436.] This Court reviews "a district court's denial of leave to amend for abuse of discretion, unless the denial was based on an interpretation of law, such as futility, 51 in which case [it] review[s] the legal conclusion de novo." Panther Partners Inc. v. Ikanos Communs., Inc., 681 F.3d 114, 119 (2d Cir. N.Y. 2012). "Futility is a determination, as a matter of law, that proposed amendments would fail to cure prior deficiencies or to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure." Id. The district court's contention that adding allegations relating to "existing contracts" to show "indicia of control over Plan assets" would be "futile" makes no sense. Its Order dismissing the Complaint against the Group One Defendants is clear that the lack of averments as to "existing contracts between Defendants and the ERISA Plans in this case or their agents" was central to its decision. [SPA11- 16.]. Logically, adding allegations of such contracts would remedy what the district court found to be a fatal deficiency. Given the complexity of the issues in the Complaint, the equities involved, the fact that such an amendment would not be futile, and particularly because of the district court's novel reasoning that evidence of "contractual relationships" is necessary to establish a fiduciary relationship, the district court's denial of Plaintiffs' request for additional time to amend the Complaint was erroneous as a matter of law as well as an abuse of discretion. 52 CONCLUSION Plaintiffs respectfully urge this Court to reverse the district court, and find that the Banks acted as ERISA fiduciaries in secretly diverting plan assets to their own accounts. This ruling would ensure that, despite technological advances and the increased sophistication of global financial markets, ERISA continues to protect the retirement savings of workers and retirees from predatory service providers. Respectfully submitted, _\s\J. Brian McTigue________ J. Brian McTigue Regina M. Markey McTigue Law LLP 4530 Wisconsin Avenue, NW Suite 300 Washington, DC 20016 bmctigue@mctiguelaw.com rmarkey@mctiguelaw.com Tel. (202) 364-6900 Attorneys for Plaintiffs-Appellants 53 CERTIFICATE OF COMPLIANCE The foregoing brief complies with the type-volume limitation provided in Fed. R. App. P. 32(a)(7)(B) because this brief contains 12,431 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(f). /s/J. Brian McTigue Counsel for Plaintiffs- Appellants 54 CERTIFICATE OF SERVICE On January 9, 2017, a copy of Appellants' Brief was filed with the Court and served via this Court's electronic filing system on all counsel of record, and on that same day bound, hard copies of the foregoing brief, together with true and correct copies of Joint Appendix, Volumes 1-3, and the Special Appendix were also filed with the Court by overnight delivery. /s/J. Brian McTigue Counsel for Plaintiffs- Appellants 55

REPLY BRIEF, on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren J. Pepicelli in 16-3327, 16-3571, FILED. Service date 04/11/2017 by CM/ECF. [2009362] [16-3327, 16-3571] [Entered: 04/11/2017 06:01 PM]

16-3327(L) 16-3571(CON) UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT Doris Sue Allen, Donna S. Lucas, Dana Kellen, Hedy L. Anselman, Timothy R. Garrett, Jonathan G. Axelrod, John A. Boardman, Warren J. Pepicelli, Plaintiffs – Appellants v. Credit Suisse Securities (USA) LLC, Deutsche Bank AG, Morgan Stanley, Morgan Stanley & Co. LLC, Morgan Stanley Capital Services LLC, Credit Suisse AG, Bank Of America Corporation, Bank of America, N.A., Barclays PLC, Barclays Bank PLC, Barclays Capital Inc., Citibank, N.A., Citigroup Inc., The Goldman Sachs Group, Inc., Goldman, Sachs & Co., HSBC Holdings PLC, HSBC Bank PLC, HSBC North America Holdings Inc., HSBC Bank USA, N.A., JPMorgan Chase Bank, N.A., JPMorgan Chase & Co., The Royal Bank Of Scotland PLC, The Royal Bank Of Scotland Group PLC, RBS Securities Inc., UBS AG, UBS Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BNP Paribas Group, BNP Paribas North America, Inc., UBS Investment Bank, UBS Investment Bank, Americas, UBS Group AG, Merrill Lynch Capital Services, Inc., Barclays Group US Inc., Defendants – Appellees, Credit Suisse Group AG, Credit Suisse Securities (Europe) Limited, Does, 1-30, Does, 1-40, BNP Paribas Securities Corp., Citicorp, Citigroup Global Markets Inc., BNP Prime Brokerage Inc., Defendants. Appeal from Order and Judgment of the United States District Court for the Southern District of New York, Case No. 15 Civ. 04285-LGS APPELLANTS' REPLY BRIEF J. Brian McTigue Regina M. Markey McTigue Law LLP McTigue Law LLP 4530 Wisconsin Ave., NW, Ste. 300 4530 Wisconsin Ave., NW, Ste. 300 Washington, DC 20016 Washington, DC 20016 Tel: 202-364-6900 Tel: 202-364-6900 Attorneys for Plaintiffs-Appellants TABLE OF CONTENTS TABLE OF AUTHORITIES ................................................................................................. iii ARGUMENT .............................................................................................................................. 1 I. ISSUE 1: Plaintiffs have Sufficiently Alleged That Defendants Acted As ERISA Functional Fiduciaries When Manipulating the FX Benchmarks And Increasing Their Fees ......................................................................................... 4 A. Glick and Krear Control and Require A Finding That Defendants Were ERISA Fiduciaries.......................................................................................4 1. The Complaint Sufficiently Alleges That Defendants Acted As Functional Fiduciaries Under This Court's Glick Test ..........................5 2. Defendants Were Not Mere "Trading Counterparties" When They Secretly Increased Their Fees.................................................................9 3. The Fiduciary Status of an Entity Directly Handling Plan Assets Requires Neither Direct Participation in Plan Administration nor a Contract with an ERISA Plan...............................................................11 4. Sirna is Consistent with Plaintiffs' Assertion of Defendants' Fiduciary Status to the ERISA Plans....................................................14 B. U.S. Department of Labor Authority Support Plaintiffs' Position That Defendants Were ERISA Fiduciaries........................................................16 1. ERISA FX Prohibited Transaction Exemptions ..................................17 2. DOL Authority on Broker-Dealers and Futures Commission Merchants .............................................................................................19 C. Under the Common Law Defendants Would Be Fiduciaries ...................22 II. ISSUE 2: Because Defendants Are Sufficiently Alleged to Have Acted as ERISA Functional Fiduciaries, The District Court's Dismissal of the § 502(a)(3) Non-Fiduciary Liability Claims Should Be Vacated ...................... 23 i III. ISSUE 3: Plaintiffs Should be Permitted to Amend Their Complaint, Should this Court Accept the District Court's New Standard for an ERISA Fiduciary ........................................................................................................ 25 CONCLUSION ........................................................................................................................ 28 ii TABLE OF AUTHORITIES Cases City of Pontiac Policemen's and Firemen's Retirement System v. UBS AG, 752 F.3d 173 (2d Cir. 2014) .................................................................................26 Coulter v. Morgan Stanley & Co. Inc., 753 F.3d 361 (2d Cir. 2014)........................7 Cox v. Blackberry Ltd., 660 F. App'x 23 (2d Cir. 2016) ................................. 26, 27 F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d 1250 (2d Cir. 1987) ...................................................................................................................... passim F.W.Webb Co. v. State St. Bank & Trust Co., No. 09-Civ. 1241 (RJH), 2010 U.S. Dist. LEXIS 82759 (S.D.N.Y. Aug. 12, 2010).......................................................7 Hecker v. Deere & Co., 556 F.3d 575 (7th Cir. Wis. 2009) ......................................8 Hoai v. Vo, 935 F.2d 308 (D.C. Cir. 1991) .............................................................26 Lehman Bros. Commercial Corp. v. Minmetals Int'l Non-Ferrous Metals Trading Co., 179 F.Supp.2d 118 (S.D.N.Y. 2000)...............................................22 McCaffree Financial Corp. v. Principal Life Insurance Co., 811 F.3d 998 (8th Cir. 2016) ............................................................................................... 10, 11 McCarthy v. Pelino & Lentz, P.C., Civ. A. No. 94-4861, 1995 WL 347001 (E.D. Pa. June 6, 1995) .........................................................................................12 Miller v. New York Produce Exchange, 550 F.2d 762 (2d Cir. 1977)....................21 Nieto v. Ecker, 845 F.2d 868 (9th Cir. 1988) ..........................................................11 Renfro v. Unisys Corp., 671 F.3d 314 (3d Cir. 2011) .............................................11 Sanders v. Grenadier Realty, Inc., 367 F. App'x. 173 (2d Cir. 2010) .....................27 Sirna, Jr. P.C. Profit Sharing Plan et al. v. Prudential Sec., Inc., 964 F. Supp. 147 (S.D. N.Y. 1997)................................................................................... i, 14, 15, 16 United States v. Glick, 142 F.3d 520 (2d Cir. 1998) ....................................... passim United States v. Szur, 289 F.3d 200 (2d. Cir. 2002)................................................22 iii United Teamster Fund v. MagnaCare Administrative Services LLC, 39 F. Supp. 3d 461 (S.D.N.Y 2014) ...................................................................5, 8 Statutes 29 U.S.C. §1002(21)(A)(i) .........................................................................................3 29 U.S.C. §§1108 (b)(18)(A), (B)............................................................................18 29 U.S.C. §1002(14)(B) ...........................................................................................17 29 U.S.C. §1108(b)(18)............................................................................................17 29 U.S.C. §1144 .......................................................................................................22 ERISA §502(a)(3) ................................................................................................ i, 23 ERISA §3(14)(B) .....................................................................................................17 ERISA §3(21)(A) ............................................................................................. passim ERISA §3(21)(A)(i) ......................................................................................... passim ERISA §404 .................................................................................................. 9, 16, 19 ERISA §406 ..................................................................................................... passim ERISA §408(b)(18) ........................................................................................... 17, 21 ERISA §503(a)(3) ............................................................................................. 23, 28 Rules Fed. R. Civ. P. 8 .........................................................................................................6 Regulations 29 C.F.R. §2509.75-5 ...............................................................................................12 29 C.F.R. §2510.3-21(e) ............................................................................. 19, 20, 21 U.S. DOL Prohibited Transaction Exemption 94-20, 59 Fed. Reg. 8022, (Dep't Labor Feb. 17, 1994) .................................................................... 17, 18, 23 iv U.S. DOL Prohibited Transaction Exemption 98-54, 63 Fed. Reg. 63503 (Dep't Labor Nov. 13, 1998) ................................................................... 17, 18, 21 Administrative Agency Authority DOL Advisory Opinion No. 82-49A (Sept. 21, 1982) ..................................... 20, 21 DOL Field Assistance Bulletin 2002–03 (November 5, 2002) ...............................16 DOL Letter to the American Bankers Association, August 11, 1994 .....................16 In re: Kirlin Securities, Inc. et al, S.E.C. Rel. No. 61135 (December 10, 2009) ....21 In the Matter of: Barclays PLC, et al, C.F.T.C. No. 15-25, 2015 WL 2445060 (May 20, 2015) .....................................................................................................21 v ARGUMENT Defendants' arguments in support of the district court's decision reveal a fundamental misunderstanding of foreign currency transactions and ERISA's strict rules for handling plan assets. Defendants' arguments do not justify the district court's errant dismissal of Plaintiffs' claims, which wrongly held Defendants were not ERISA fiduciaries.1 Defendants err by equating routine foreign currency exchanges with their highly unusual foreign currency exchanges that they transacted with ERISA Plans through their secret and systematic FX manipulation schemes ("Scheme"). Defendants strenuously argue that each benchmark FX transacted in the Scheme merely involved a "counterparty relationship" in which Defendants exercised no control over plan assets. [Defendants' Brief ("DB") 21-29; Special Appendix ("SPA") 16]. Defendants argue they were acting only as "arm's length counterparties" to the ERISA Plans because they agreed to purchase or sell foreign 1 Plaintiff-Appellants, the ERISA plaintiffs below, are referred to as "Plaintiffs." Defendants-Appellees, the bank defendants below, are the "Defendants" or "Banks." "ERISA Plans" or "Plans" refers to the putative class, and are meant to include their Investment Managers who, acting as fiduciaries to the Plans, entered the benchmark FX agreements with Defendants involving plan assets. See definition of the putative class. [I:A152-53, ¶276 (subject FX include "foreign currency transactional services provided to collective investment funds or separately managed accounts that held the Plans' assets. . . .").] 1 currency, e.g. at the 4:00 p.m. benchmark rate. Accepting Defendants' flawed arguments below, the district court dismissed the Complaint.2 But Defendants understandably did not inform their fund clients that they, for instance, manipulated the exchange rates to inflate their income on virtually every transaction. Such FX transactions are not truly negotiated, which would have required an independent ERISA fiduciary directing a bank to exchange a specific amount of currency at a specific exchange rate ("Directed FX").3 The Scheme involved no such Directed FX. Instead, it was Defendants who determined the FX exchange rate for transactions with ERISA Plans in their Scheme, after learning of the ERISA Plans' FX orders, and after, for instance, Defendants manipulated the benchmark exchange rate to their favor, armed with the knowledge of those orders. [Appendix Volume I ("I") A93–111, ¶¶96–140.] This sequence of events created a relationship between Defendants and the ERISA Plans that goes well beyond a Directed FX transaction. Defendants exercised authority and control within this relationship respecting the disposition of plan assets in that Defendants set the FX exchange rate, and as such increased their fees. Under the definition of functional fiduciary for entities handling ERISA plan 2 "Complaint" refers to the Second Amended Complaint [I:A61–257], which fully describes all claims against all Defendants. 3 U.S. DOL Prohibited Transaction Exemption 94-20, 59 Fed. Reg. 8022, §IV(f) (Dep't Labor Feb. 17, 1994) ("PTE 94-20"). 2 assets, Defendants were ERISA fiduciaries. 29 U.S.C. §1002(21)(A)(i); ERISA §3(21)(A)(i). The correct analysis of Defendants' fiduciary status must strictly apply the definition at ERISA §3(21)(A)(i). Defendants cannot obscure the analysis by creating their own definition of an "arm's length" negotiation with an ERISA Plan which, according to Defendants, would allow Defendants to determine the FX exchange rate of a future FX transaction yet avoid fiduciary status. A correct analysis must focus instead on whether Defendants exercised authority and control over the disposition of plan assets. Applying that analysis to service provider fees, the United States Department of Labor ("DOL") and the case law from this Court make clear that to avoid ERISA fiduciary status, service provider fees must at a minimum be disclosed to, and approved by, an independent ERISA fiduciary. Here, Defendants' secret fees were not disclosed, underlining their functional fiduciary status as to those fees. Defendants' argument is cast in terms that depart from the governing ERISA analysis. Contrary to Defendants' assertions, ERISA is clear that the "counterparties," "broker-dealers," and "futures commission merchants" handling ERISA assets will qualify as ERISA functional fiduciaries if they exercise control and authority over those ERISA plan assets. Similarly, ERISA provides no blanket exemption under which attorneys, accountants, or service providers to ERISA 3 plans absolutely avoid ERISA fiduciary status. Further, ERISA fiduciary status does not require a contract between a service provider and an ERISA plan, as the district court seemed to require. As discussed below, strictly applying the second clause of §3(21)(A)(i) and this Court's precedent to the Complaint, Defendants clearly acted as ERISA functional fiduciaries when they secretly determined the FX exchange rates for currency transactions for ERISA Plans in their manipulation Scheme. The district court erred in accepting the flawed arguments which Defendants seek to justify in their brief. The district court's decision should be vacated and remanded.4 I. ISSUE 1: PLAINTIFFS HAVE SUFFICIENTLY ALLEGED THAT DEFENDANTS ACTED AS ERISA FUNCTIONAL FIDUCIARIES WHEN MANIPULATING THE FX BENCHMARKS AND INCREASING THEIR FEES A. Glick and Krear Control and Require A Finding That Defendants Were ERISA Fiduciaries 4 Plaintiffs have appealed the dismissal of every count in their Complaint, Counts I–IX. In response to Defendants' brief, this Reply brief focuses on the Complaint's ERISA violations alleged as to FX benchmark manipulation. However, the analysis equally applies to the other alleged ERISA violations that are, as the benchmark manipulation, based on the Banks acting on their knowledge of Plan FX orders to increase Bank fees. These similar claims include the allegations that the Defendants increased their fees through manipulating execution of stop and limit FX orders, and generally through trading on client FX order information (e.g. banging the close and front-running). In contrast, Plaintiffs do not appeal the dismissal of their claims to the extent they are based on the Complaint's averments that Defendants charged undisclosed fees to ERISA Plans through markups of FX bid/ask quotes, and through collusive manipulation of FX bid/ask spreads. [I:A111–21, ¶¶141–148, 150–55, 158–162, 164–66.] 4 Defendants acted as fiduciaries by exercising authority and control respecting the disposition of plan assets within their relationships with ERISA Plans in their Scheme. This is evident by evaluating the facts under the controlling authority—ERISA's §3(21) statutory definition of a functional fiduciary, and this Court's interpretation of that definition as found in F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d 1250 (2d Cir. 1987) and United States v. Glick, 142 F.3d 520 (2d Cir. 1998). 1. The Complaint Sufficiently Alleges That Defendants Acted As Functional Fiduciaries Under This Court's Glick Test This Court's two-step test for functional fiduciary status is clearly laid out in Glick: (1) did the money from which the fees were taken constitute plan assets, and (2) did the service provider have any authority or control over those assets. See United Teamster Fund, 39 F. Supp. 3d 461, 469 (S.D.N.Y 2014) (citing Glick, 142 F.3d at 527–28). The Glick test embodies the second clause of ERISA §3(21)(A)(i), which states that "a person is a fiduciary with respect to a plan to the extent" that he "exercises any authority or control respecting management or disposition of its assets."5 5 Defendants wrongly attempt to change the standard in §3(21)(A)(i) by adding a required "ability to guide a Plan's investment strategies." [DB21.] This is not required to meet the definition. 5 Defendants do not dispute the FX transactions involved plan assets. They instead deem Plaintiffs' allegations that the Banks were "compensated from Plan assets" to be "conclusory" and insufficiently pled, as did the district court. [DB32; SPA13.] But the Complaint describes in detail how the Banks' manipulation increased their compensation at the expense of their customers. [Plaintiffs' Appellate Brief ("PB") 12–18; I:A127–38, ¶¶185–215 (providing links to government investigative reports and settlements with the Banks describing the practices).] For instance, the Banks earned secret fees in a benchmark currency exchange with a Plan after collectively moving the 4 p.m. London close benchmark in their favor. This allowed Defendants to exchange currency at a better rate than they would have absent the manipulation (for instance, receiving €1.02 for each $1.00 USD exchanged with the Plan, rather than €1.01 for each $1.00 USD exchanged). This manipulation was "at the expense of the client." [I:A64 n1 (May 19, 2015 Consent Order, p.4).] These are not "threadbare" recitals, and are sufficient to meet the Rule 8's notice pleading standard. Fed. R. Civ. P. 8. [PB21- 22, 40-41 (citing cases).] The first prong of the Glick test is met. Defendants largely devote their brief to establishing that they did not exert control over those ERISA plan assets involved in the FX transactions so as to increase their own compensation—the second prong of Glick. Defendants argue they negotiated at arm's length with an independent ERISA fiduciary which would 6 not confer fiduciary status. [DB21-29.] Defendants, however, cannot refute that they did not negotiate to set the FX exchange rate at a certain benchmark rate (e.g. the 4 pm. London close). They cannot refute that they merely negotiated to conduct an FX transaction for their client at some future time at a benchmark rate, whatever that exchange rate might be. By then manipulating that rate and transacting the benchmark FX orders, the transactions were not undertaken at arm's length. Under Glick, Defendants acted as ERISA fiduciaries Defendants present no case law contrary to Plaintiffs' position. [DB21–29.] Instead, Defendants cite to inapposite cases. For example, in Coulter v. Morgan Stanley & Co. Inc., 753 F.3d 361, 367 (2d Cir. 2014), this Court held that an employer did not perform a fiduciary function when contributing company stock to an ERISA plan rather than cash because the stock was not a plan asset until contributed. Coulter did not involve plan assets, and fails to meet the first prong of Glick, unlike here, where the Banks do not dispute they were handling plan assets in their Scheme. F.W.Webb Co. v. State St. Bank & Trust Co., No. 09-Civ. 1241 (RJH), 2010 U.S. Dist. LEXIS 82759, *20 (S.D.N.Y. Aug. 12, 2010), is also distinguishable because it does not involve plan assets. The defendant bank's selection of a "big menu" of investment options, from which plan administrators choose a "small menu" of investment options to offer plan participants, was deemed too attenuated 7 from the final choice to comprise "control" over plan assets. Similarly inapposite is another investment option determination case, Hecker v. Deere & Co., 556 F.3d 575, 583 (7th Cir. Wis. 2009). Here, Defendants were not "two layers of decision- making" away from the disposition of plan assets. Defendants directly transferred plan assets to themselves, e.g. while participating in secret chatrooms. Defendants also attempt to avoid their fiduciary status by trying to distinguish United Teamster Fund v. MagnaCare Administrative Services, LLC, 39 F. Supp. 3d 461 (S.D.N.Y.), inferring that case was decided on contract rather than ERISA law. [DB31.] But the court in United Teamster determined on ERSIA fiduciary principles that a plan administrator hiding fees that it charged for medical-related services became an ERISA fiduciary as to those hidden fees. Id. at 468–71. The same analysis should be applied here. Defendants wrongly suggest that because the Complaint avers that ERISA plan Investment Managers entered the FX transactions with the Defendants, rather than with the ERISA Plans directly, that somehow the "Plans retained control over" the terms of the FX transactions. [DB25.] But ERISA fiduciary status can be solely predicated on the handling of plan assets, and is not confined to the action of a particular ERISA plan. §3(21)(A)(i). Glick, 142 F.3d at 527-28. Accordingly, the second prong of Glick is also met. 8 2. Defendants Were Not Mere "Trading Counterparties" When They Secretly Increased Their Fees Defendants' analysis of this Court's Krear decision confuses a key issue before this Court: the distinction between (i) a service provider negotiating its fees at arm's length with an ERISA plan (not a fiduciary action), versus (ii) a service provider secretly exercising control over the disposition of plan assets to increase its own compensation (a fiduciary action). Krear held that a service provider negotiating its fees is not acting as a fiduciary. 810 F.2d at 1259 (holding a service provider handling plan assets will not be deemed a functional fiduciary "[w]hen a person who has no relationship to an ERISA plan is negotiating a contract with that plan"). Krear contrasts such arm's length negotiation over fees with a situation that does create an ERISA functional fiduciary: "[A]fter a person has entered into an agreement with an ERISA-covered plan, the agreement may give it such control over factors that determine the actual amount of its compensation that the person thereby becomes an ERISA fiduciary with respect to that compensation." Id. (emphasis added). Under Krear, such control over those factors triggers functional fiduciary status and its concomitant §404 and §406 duties. Here, Defendants fall under the second Krear category. Defendants, and not an independent ERISA fiduciary, set the exact exchange rate for the FX benchmark transactions. Defendants directly exercised control over the FX exchange rate of 9 those "sales from the Plans to Defendants". [DB26.] Rather than "negotiating a contract with that plan," Krear, 810 F.2d at 1259, the Banks were in "control over factors that determine[d] the actual amount of its compensation." 6 Id. Under Krear, Defendants are functional ERISA fiduciaries. Defendants argue they did not decide the exchange "price." [DB27-28 ("Defendants did not decide whether, how, when or to whom the Plan assets would be sold, or at what price.")] But the Complaint avers otherwise. Defendants could not have reaped hundreds of millions of dollars out of ERISA plan coffers if they had not exerted control over the FX "price" based on their knowledge of the Plans' FX orders. [I:A159, ¶¶289(c), 291.] The district court suggests that the Plans must have "granted" the Banks "control or authority" over the FX exchange rate to establish a fiduciary duty. [SPA16.] But §3(21)(A)(i) contains no such requirement. The Banks fail to present any case law in which a defendant service provider setting the rate for a transaction with ERISA plan assets is held not to be an ERISA fiduciary. McCaffree Financial Corp. v. Principal Life Insurance Co., 811 F.3d 998 (8th Cir. 2016) is easily distinguishable because the plaintiff there did not allege that the defendant insurance company exercised control over plan assets to increase 6 Defendants suggest that Krear interprets "control" over compensation to mean "full discretion" or "unilateral control" over compensation. [DB29, 31.] But "full discretion" is not required. §3(21)(A)(i). [See cases, PB24.] 10 its own fees, as the lower court found. McCaffree Fin. Corp. v. Principal Life Ins. Co., 65 F. Supp. 3d 653, 672 (S.D. Iowa 2014) ("Defendant had the contractual discretion to raise Management Fees up to 3%, but Plaintiff does not allege Defendant exercised its discretion to do so." (emphasis added)), aff'd 811 F.3d 998. McCaffree's fact pattern does not meet the second category described in Krear (finding fiduciary status when a service provider was "exercising control over the disposition of plan assets to increase its own compensation"), unlike Defendants who exercised control and authority over the FX benchmark exchange rates. Defendants also cite Renfro v. Unisys Corp., 671 F.3d 314 (3d Cir. 2011), but Renfro held that a service provider was not acting in a fiduciary capacity when an independent ERISA fiduciary agreed to those fees, even if those fees were excessive. Renfro is entirely consistent with Plaintiffs' application of Krear, and the case does not help Defendants. 3. The Fiduciary Status of an Entity Directly Handling Plan Assets Requires Neither Direct Participation in Plan Administration Nor a Contract with an ERISA Plan Defendants suggest that ERISA functional fiduciary duties are confined to "run[ning] the plan" or to "administrative service providers." [DB28, 31; see also DB22 n.12.] But ERISA is clear that plan administration is only one path to ERISA fiduciary status. §3(21)(A). 11 The Banks similarly try to eliminate their fiduciary role by likening their actions to that of plan attorneys and accountants (e.g. citing Nieto v. Ecker, 845 F.2d 868, 870 (9th Cir. 1988). But attorneys and accountants, unlike Defendants conducting FX transactions, typically do not handle plan assets directly. DOL does not consider attorneys and accountants performing typical functions to be ERISA fiduciaries, 29 C.F.R. § 2509.75-5, but when they go beyond their typical functions and handle plan assets, they can meet the definition of an ERISA fiduciary. See, e.g., McCarthy v. Pelino & Lentz, P.C., Civ. A. No. 94-4861, 1995 WL 347001, at *5 (E.D. Pa. June 6, 1995) (holding accountant who engaged in improper accounting techniques that withheld ERISA benefits and reports may be a functional fiduciary). The Banks go so far as to aver they were not even service providers to the ERISA Plans when they transacted FX exchanges for them. [DB31 ("Plaintiffs have not alleged that Defendants were 'service providers' but merely that Defendants transacted in FX products with the Plans.")] This argument strays far afield from ERISA's black letter law, which finds fiduciary status can be based solely on "authority or control respecting. . . disposition of [plan] assets," a standard even lower than that for the "management" of ERISA plans. §3(21)(A)(i). [See PB24–26.] 12 Regarding the district court's apparent departure from ERISA's statutory language in requiring a contractual relationship to establish a functional ERISA fiduciary, Defendants respond with somewhat contradictory positions. [DB30–31.] On the one hand, Defendants dismiss Plaintiffs' interpretation of the decision, opining that the district court did not require the existence of a contractual relationship to find functional fiduciary status, but it was merely one of several "factors to consider." [DB31.] But Defendants then aver that an "ongoing relationship with ERISA plans" is required to meet the "authority and control" fiduciary definition. [DB31.] This implies some sort of contract was likely entered with the ERISA Plan. Ultimately, ERISA is clear that no contract is required to meet the "authority or control respecting. . . disposition of [plan] assets" definition of an ERISA functional fiduciary. [PB34–38.] Here, the Banks exercised the requisite control when, upon entering agreements, whether written or otherwise, with ERISA Plans or their Investment Managers to price FX transactions, for instance, at the benchmark exchange rate, they then manipulated those benchmark rates, and they then priced the FX exchanges. That "ongoing relationship with ERISA plans" is sufficient to create functional fiduciary status. The Complaint adequately avers such control, and, in fact, avers the existence of certain contracts "among the Plans and Defendants" and ongoing relationships. [PB38.] Defendants boldly but 13 wrongly assert that Plaintiffs have "not alleged any fact supporting a claim that the Plains had ongoing relationships with Defendants." 7 [DB32.] Defendants hyperbolically warn that finding them to be functional fiduciaries would "transform nearly every ERISA Plan counterparty or vendor into an ERISA fiduciary," effectively "upending the dynamics of countless commercial and financial transactions." [DB27.] But ERISA carefully circumscribes functional fiduciary status. Glick and Krear create a clear dividing line for fiduciary and non- fiduciary activities as to a service provider's compensation. The Banks would not have crossed into ERISA functional fiduciary territory absent their own "brazen display of collusion and foreign exchange rate market manipulation" pursued with "breathtaking flagrancy." [I:A132–33, ¶¶193–97 (quoting former U.S. Attorney General Loretta Lynch).] 4. Sirna is Consistent with Plaintiffs' Assertion of Defendants' Fiduciary Status to the ERISA Plans The Defendants offer Sirna, Jr. P.C. Profit Sharing Plan et al. v. Prudential Sec., Inc., 964 F. Supp. 147, 148–49, (S.D. N.Y. 1997) as support for the district court's finding they were not functional fiduciaries—a case the district court cited. [DB23, 30; SPA16.] But Sirna's facts are very different from the instant case. In 7 To the extent that this Court finds that a contract is required, and to the extent the Complaint's factual assertions are incomplete, Plaintiffs have appealed the district court's denial of an opportunity to seek leave to amend their complaints to further identify such contracts. [PB50–52.] 14 Sirna, brokerage firm Prudential Securities was alleged to have violated its ERISA fiduciary duties by failing to "sweep" the unencumbered cash of a plan's brokerage account into a money market account as quickly as possible. Id. at 148. This deprived the plan of the ability to earn interest, and allowed Prudential to earn interest on the "float." Id. The plaintiff ERISA plan alleged that Prudential was a fiduciary because it "unilaterally fixed the sweep policy that it offered to its customers and retained the right to alter that policy." Id. at 149. Applying Krear, the Sirna court properly dismissed this argument because the Sirna plan itself agreed to the frequency of the "sweeps" after full disclosure. Prudential therefore exercised no discretion as to the frequency of the "sweeps." Id. at 150. Sirna is easily distinguishable, because in the Scheme here no disclosure was made to ERISA Plans of the FX benchmark manipulation and Defendants' other secret fees. The Sirna court also rejected a second argument that Prudential Securities became a fiduciary as to the "sweeps" by virtue of managing the "sweep" account, but the court found, inter alia, managing the account does not implicate such a duty. Id. at 149. The plaintiffs in Sirna did not allege that Prudential's fiduciary status was triggered because a Prudential manager itself would generate the "float" income for Prudential. Perhaps that is because DOL authority is clear that "float" income is 15 proper service provider compensation and does not involve "authority or control" over plan assets, so long as such "float" compensation is "determined and approved by a fiduciary independent of the service provider. . . ." DOL Field Assistance Bulletin 2002–03 (November 5, 2002) ("FAB"). If a bank "openly negotiated with an independent plan fiduciary to retain float [] as part of its overall compensation, then [] the bank would not be exercising its fiduciary authority or control for its own benefit." Id. (quoting DOL Letter to the American Bankers Association, August 11, 1994). The Sirna "float" income compensation presents very different facts and analyses from Defendants' manipulated FX exchange rate compensation. However, even if an analogy could be made, Defendants here could not meet DOL's FAB directive. It is undisputed that the Banks did not disclose, and no independent ERISA fiduciary approved, the Banks' secret transfer of hundreds of millions of dollars in additional compensation out of the coffers of retirement and other ERISA Plans. Sirna does not support the Banks' position. B. U.S. Department of Labor Authority Supports Plaintiffs' Position That Defendants Were ERISA Fiduciaries Defendants argue in vain that various DOL regulations and advisory opinions support the district court's opinion and Defendants' claim they did not act as ERISA fiduciaries in the FX Scheme. [DB24, 26.] But, in fact, Defendants' own 16 authorities fully support Plaintiffs' assertion that Defendants acted as fiduciaries and violated their ERISA §404 and §406 duties. 1. ERISA FX Prohibited Transaction Exemptions Defendants argue that the three exemptions available for banks and broker- dealers providing FX services "suggest that FX transactions between broker dealers do not ordinarily create a fiduciary relationship." [DB24 (emphasis in original) (citing U.S. DOL Prohibited Transaction Exemption 98-54, 63 Fed. Reg. 63503 (Dep't Labor Nov. 13, 1998) ("PTE 98-54"); U.S. DOL Prohibited Transaction Exemption 94-20, 59 Fed. Reg. 8022, (Dep't Labor Feb. 17, 1994) ("PTE 94-20"); 29 U.S.C. §1108(b)(18), ERISA §408(b)(18)).] Whether or not this is true, the FX benchmark manipulation Scheme described in the Complaint involved anything but "ordinary" FX services. On the facts alleged, those FX transactions could not meet the requirements of any of these party-in-interest exemptions, if meeting these exemptions are proxies for what is "ordinary." Defendants' authorities provide no support for Defendants' claim that they were not acting as ERISA functional fiduciaries. The three exemptions are available for a bank or broker-dealer transacting foreign currency with ERISA plan assets from certain ERISA §406 prohibited transaction violations if certain standards are met. Absent meeting an exemption, an FX transaction with a party-in-interest service provider is a per se ERISA §406 17 violation. Service providers to ERISA plans are parties-in-interest to that ERISA plan. 29 U.S.C. §1002(14)(B); ERISA §3(14)(B). Here, Defendants were acting as parties-in-interest to the ERISA Plans because, for example, they agreed to provide FX transactions at the benchmark rate to the Plans, and after so agreeing, and armed with knowledge of the ERISA Plan benchmark orders, manipulated the benchmark, exercised authority and control over plan assets, and controlled the factors that determined the FX exchange rates and their compensation. Importantly, to meet any of the §406 exemptions for FX transactions, the bank or broker dealer must transact the currency exchange at the best rate generally available in the market.8 This requirement essentially eliminates the bank or broker-dealer's ability to exercise its discretionary authority and control over the disposition of plan assets to set the FX exchange rate against its clients and in its own favor. The language reflects ERISA's strict oversight over FX exchanges between ERISA plans and parties-in-interest. 8 The party seeking the exemption bears the burden of establishing that, at the time of the FX transaction, the FX terms provided were "not less favorable to the plan than the terms generally available in comparable arm's length foreign exchange transactions between unrelated parties" and in those "afforded by the bank or broker-dealer." PTE 98-54, §III (a), (b); PTE 94-20, §§II(a), III(a). See similar language, 29 U.S.C. §§1108 (b)(18)(A), (B). 18 This pricing requirement is particularly significant for non-Directed FX, because no independent ERISA fiduciary has agreed to the specific FX exchange rate. See PTE 94-20 (defining Directed FX as requiring an ERISA fiduciary directing the bank or broker-dealer to buy or sell currency at a specific exchange rate [PTE 94-20, §IV(f)] (e.g. €1.00 exchanged for $1.02 USD)). As stated supra, no independent ERISA fiduciary agreed to a specific FX exchange rate in Defendants' FX Scheme. These FX were not Directed FX. Regardless of whether, as the Banks argue, FX transactions between ERISA plans and FX providers do not "ordinarily" create a fiduciary relationship, here Defendants did not act "ordinarily." The FX exchange rates in the Scheme were "less favorable" to the ERISA Plans than the terms generally available in "comparable arm's length foreign exchange transactions between unrelated parties." [I:A93–111, ¶¶96–140.] At least five Defendants (Citigroup, Barclays, JPMorgan, RBS, and UBS) have admitted to such FX benchmark rate manipulation against their clients in 2015 criminal settlements. [I:A132, ¶¶193– 196.] In Defendants' FX manipulation Scheme, they controlled the specific FX exchange rate, exercised discretion with and control of plan assets, acted as ERISA fiduciaries, and violated their §406 and §404 duties. 2. DOL Authority on Broker-Dealers and Futures Commission Merchants 19 Defendants also errantly suggest that 29 C.F.R. §2510.3-21(e), the DOL's rule on the fiduciary status of securities broker-dealers, applies to the "very context at issue here" and, as applied, would find they were not fiduciaries. [DB24.] This rule, however, is not applicable here. That rule is limited to "the purchase or sale of securities," (see §2510.3-21(e)), and currency is not a security. Similarly, Defendants cite DOL Advisory Opinion No. 82-49A (Sept. 21, 1982) ("AO 82- 49A"), a DOL advisory opinion on the fiduciary status of futures commission merchants ("FCMs") handling routine securities and futures contract transactions to support their position. [DB26.] But the FCM described operated in the market for futures contracts and not for FX spot transactions.9 Though inapplicable, both §2510.3-21(e) and AO 82-49A contain language that is nonetheless consistent with Defendants' fiduciary status in the FX Scheme. Both state that, to avoid fiduciary status, the discretionary authority and control of the broker-dealer or FCM handling plan assets must be highly restricted, such that their activities must be conducted "pursuant to instructions of a plan fiduciary." §2510.3-21(e)(1); AO 82-49A (Answer 5) ("it would appear that the FCM acts as 9 "[D]ealings in futures contracts may lawfully occur only in a 'contract market' designated by the Commodity Futures Trading Commission (CFTC) and governed by the CFTC's regulations." AO 82-49A, at *2. 20 an agent of the independent fiduciary.")10 The Banks could not meet that standard if applied to the FX Scheme, because, as alleged in the Complaint, the Banks secretly and systematically influenced the FX exchange rate that determined their compensation and exercised such control to increase their fees out of plan assets. It is worth noting that § 2510.3-21(e) and AO 82-49A concern broker- dealers and FCMs who operate in heavily regulated markets in which price manipulation is strictly forbidden. See, e.g., In re: Kirlin Securities, Inc. et al, S.E.C. Rel. No. 61135 (December 10, 2009) (sustaining a finding the broker-dealer who had manipulated the securities market violated statutory and regulatory rules); In the Matter of: Barclays PLC, et al, C.F.T.C. No. 15-25, 2015 WL 2445060 (May 20, 2015) (futures commission merchant "engaged in repeated acts of attempted manipulation in violation of Sections 6(c), 6(d), and 9(a)(2) of the Act"); Miller v. New York Produce Exchange, 550 F.2d 762, 768 (2d Cir. 1977) (FCM is bound by provisions of the Commodity Exchange Act that bar commodities market manipulation). Clearly, when DOL issued §2510.3-21(e) and AO 82-49A, it was 10 While the DOL securities broker-dealer regulation does permit instruction from the independent ERISA fiduciary to include a "price range" and still not trigger ERISA functional fiduciary status, §2510.3-21(e)(1), this is not analogous to what occurred in the FX Scheme. In the benchmark Scheme, the independent ERISA fiduciary authorized Defendants to exchange FX at the benchmark rate in the future, and the FX provider was bound to provide the best rate available if the burden to meet PTE 98-54 and §408(b)(18) was to be met to avoid a §406 violation. 21 not passing on the fiduciary status of any broker-dealer or FCM who was brazenly manipulating a market, as that would have been illegal. DOL most certainly was not opining on the fiduciary status of banks and broker-dealers manipulating FX exchange rates to secretly extract increased fees from ERISA plan assets in the largely unregulated FX market. C. Under the Common Law Defendants Would Be Fiduciaries Defendants assert that "[c]ommon law precedent offers further support for the district court's conclusion that Defendants, acting as arm's length trading counterparties, are not fiduciaries under ERISA." [DB33.] First, it is clear that common law standards are inapplicable here, given ERISA pre-emption. See 29 U.S.C. §1144. Second, applying the common law, Defendants would be held to be fiduciaries. Plaintiffs have cited more than a half dozen cases where courts have determined whether or not to apply common law fiduciary standards. [PB44–46.] In each of these cases, courts looked not only at the relationship of the parties (e.g a broker-customer relationship) but at the "trust and confidence" that has been entrusted. See, e.g., United States v. Szur, 289 F.3d 200, 211 (2d. Cir. 2002); Lehman Bros. Commercial Corp. v. Minmetals Int'l Non- Ferrous Metals Trading Co., 179 F.Supp.2d 118, 151 (S.D.N.Y. 2000). Here, Defendants have violated the trust and confidence given to them by the ERISA 22 Plans by secretly manipulating benchmark prices and engaging in other self- dealing schemes. Defendants wholly fail to engage with any of these arguments and assert that no common law fiduciary obligations can be applied here merely because the parties were "arm's length trading counterparties." [DB33.] But Defendants and the ERISA Plans were not in any sense typical "arm's length trading counterparties" in the FX transactions at issue. [DB33.] The Complaint is clear that Defendants' Scheme required Defendants set the FX exchange rate after knowing of the Plans' FX orders. As described supra, such FX transactions could not qualify as arm's length non-discretionary currency exchanges of the type DOL describes as Directed FX in PTE 94-20. Those same FX transactions similarly cannot meet any common-law test for a negotiated arm's length transaction that would not create a fiduciary relationship. II. ISSUE 2: BECAUSE DEFENDANTS ARE SUFFICIENTLY ALLEGED TO HAVE ACTED AS ERISA FUNCTIONAL FIDUCIARIES, THE DISTRICT COURT'S DISMISSAL OF THE § 502(A)(3) NON-FIDUCIARY LIABILITY CLAIMS SHOULD BE VACATED This district court held that Plaintiffs' "failure to allege a Plan fiduciary with actual or constructive knowledge of a §406 violation is fatal" to Count V, and dismissed it. [SPA19.] Claim V is a claim requesting equitable relief under §503(a)(3) against the Defendants who were unjustly enriched in the Scheme while acting as non-fiduciaries. [SPA17–19.] 23 Count V is based on each Defendant assisting other Defendants carrying out the Scheme. [PB47–50.] Count V claims that, in a particular FX transaction, a Defendant who had not entered into a particular benchmark agreement with a particular ERISA Plan may nonetheless have participated in and benefited from the Scheme, for instance, the benchmark manipulation that caused an ERISA Plan to pay increased fees. Such Defendants reaped the financial rewards of the transfer of plan assets resulting from the collusive exchange rate manipulation.11 Therefore, if this Court decides Issue 1 in Plaintiffs' favor and finds Defendants were acting as ERISA fiduciaries in the FX benchmark Scheme, and vacates the dismissal of Counts I–IV, and VI–IX, then Plaintiffs did plead a fiduciary committed ERISA violations. In that event, the Court should similarly vacate the dismissal of Count V and remand to the district court to further consider the Defendants' non-fiduciary liability. Plaintiffs have not abandoned Count V, that Defendants acted as non- fiduciary parties-in-interest, as Defendants state. [DB36.] 11 Contrary to Defendants' assertion [DB11], Count V is predicated on Defendants' fiduciary status, but asserts non-fiduciary liability against a Defendant who was not an FX transaction counterparty with an ERISA Plan on a particular currency exchange. That non-fiduciary Defendant participated in and benefited from the fiduciary Defendants' ERISA violations as to that transaction, i.e. with their own separate FX transactions based on the manipulated rate. The fiduciary Defendants acting as counterparties to ERISA Plans in the particular FX transaction had constructive knowledge of their violation because, as alleged, their rate manipulation was intentional. 24 III. ISSUE 3: PLAINTIFFS SHOULD BE PERMITTED TO AMEND THEIR COMPLAINT, SHOULD THIS COURT ACCEPT THE DISTRICT COURT'S NEW STANDARD FOR AN ERISA FIDUCIARY Defendants argue that this Court should uphold the district court's denial of Plaintiffs' request for leave to amend their Complaint to include contract evidence. Defendants argue that Plaintiffs "failed to specify what new facts they would have alleged, much less why those facts would have demonstrated that their Complaint stated a claim. [DB40 (citation and internal quotation marks omitted).] Defendants also claim Plaintiffs "have provided no indication (either to the district court or to this Court) that any such contracts exist and if they did, how they could possibly create a fiduciary duty in connection with executing FX transactions." [DB40.] But Plaintiffs explicitly explained in their request to the district court that the new facts they would have alleged were "existing contracts between Defendants and the ERISA Plans in this case or their agents." [Appendix II ("II") A434.] Plaintiffs told they district court they believed such contracts existed, based on their experiences in other cases. [Id.] These contracts were necessary to establish Defendants' control over Plan assets in accordance with the new standard for fiduciary liability set forth by the district court.12 [II:A434.] 12 Plaintiffs did aver in their complaint the existence of such contracts. [See PB38.] However, the district court either failed to consider them or found them insufficient, prompting Plaintiffs, facing a filing deadline for appellate review, to 25 The district court below erroneously ruled Plaintiffs had not sufficiently pled that the Banks were functional ERISA fiduciaries reasoning that Plaintiffs had not pointed to any agreements between the Banks and Plaintiffs granting the Banks power over plan assets or indicating any "indicia" of control. [SPA16.] This ruling appears to hold that functional fiduciary liability under ERISA §3(21)(A)(i) only attaches when an "ongoing contractual relationship" exists. [SPA16.] This novel interpretation of ERISA law is incorrect, as explained in Plaintiffs' opening brief, [PB22–29], and supra. Given the court's unexpected interpretation, Plaintiffs immediately and rightly sought to amend their complaint to reflect this interpretation. See, e.g., Cox v. Blackberry Ltd., 660 F. App'x 23, 25 (2d Cir. 2016) (stating that a change in law can justify the grant of a motion for leave to amend); Hoai v. Vo, 935 F.2d 308, 315 (D.C. Cir. 1991) (same). Defendants also argue that Plaintiffs' request for time to amend the Complaint was properly denied because it had been previously amended. [DB39.] But Defendants cases on that point are easily distinguishable. In City of Pontiac Policemen's and Firemen's Retirement System v. UBS AG, 752 F.3d 173, 188 (2d Cir. 2014), the court denied a motion for leave to amend not just because the plaintiffs had already been granted several amendments, but because "plaintiffs seek a reasonable 60-day leave search for the type of contracts the district court required with its new standard. 26 have identified no additional facts or legal theories they might assert if given leave to amend." 752 F.3d at 188. In Sanders v. Grenadier Realty, Inc., 367 F. App'x. 173, 176-77 (2d Cir. 2010), the district court determined that an amendment would be futile because the plaintiffs were going to essentially replead "the same deficient, conclusory allegations that led the district court to dismiss the complaint." 367 F. App'x. at 177. Here, Plaintiffs have identified additional facts not repetitive to those already made in the complaint and that the district court had specifically stated would cure any deficiencies in light of the new legal theory Plaintiffs were required to address under the court's novel interpretation. Cox v. Blackberry Ltd., 660 F. App'x at 25. Finally, Defendants argue that inclusion of such contracts in an amended complaint "would not establish a fiduciary relationship in light of the arm's length- nature of the transactions" [DB40], a fundamentally incorrect argument Plaintiffs amply refute in their opening brief. Should this Court uphold both the district court's novel interpretation of the requirements for meeting ERISA functional fiduciary status under §3(21)(A)(i), and its finding that the existing Complaint fails to allege such contracts, this Court should overturn the district court's decision denying Plaintiffs' request for additional time to amend the complaint and permit Plaintiffs the opportunity to 27 include additional contractual evidence for the purpose of meeting this new standard. CONCLUSION For all the above reasons, Plaintiffs ask this Court to vacate the district court's grant of Defendants' Rule 12(b)(6) motion to dismiss their Counts I–IV and VI-IX, and reverse the court's finding that Plaintiffs have not adequately pled that Defendants were acting as ERISA fiduciaries when Defendants extracted secret fees in providing foreign currency services to Plaintiffs' ERISA plans. Second, Plaintiffs ask the Court to vacate the district court's dismissal of Count V alleging ERISA §503(a)(3) non-fiduciary liability for Defendants' unjust enrichment through their FX schemes, based on this Court's reversal of the district court's finding that Defendants were not ERISA fiduciaries, as described. Third, to the extent the Court finds Plaintiffs were required to plead that individual contracts existed between ERISA Plans and Defendants to establish Defendants' ERISA fiduciary status, and that the existence of such contracts was not adequately pled, Plaintiffs ask the Court to vacate the district court's order dismissing all Counts in their complaints, vacate the district court's order denying Plaintiffs 60 days to identify such contracts and amend their operative complaints, and direct the district court to so grant them leave. 28 Respectfully submitted, \s\ J. Brian McTigue________ J. Brian McTigue Regina M. Markey McTigue Law LLP 4530 Wisconsin Avenue, NW Suite 300 Washington, DC 20016 bmctigue@mctiguelaw.com rmarkey@mctiguelaw.com Tel. (202) 364-6900 Attorneys for Plaintiffs-Appellants 29 CERTIFICATE OF COMPLIANCE The foregoing brief complies with the type-volume limitation provided in Fed. R. App. P. 32(a)(7)(B) because this brief contains 6,481 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(f). /s/J. Brian McTigue Counsel for Plaintiffs- Appellants 30 CERTIFICATE OF SERVICE On April 11, 2017, a copy of Appellants' Reply Brief was filed with the Court and served via this Court's electronic filing system on all counsel of record, and on that same day bound, hard copies of the foregoing brief were also filed with the Court by overnight delivery. /s/J. Brian McTigue Counsel for Plaintiffs- Appellants 31

FRAP 28(j) LETTER, dated 05/09/2018, on behalf of Appellee Credit Suisse AG, Credit Suisse Securities (USA) LLC, Deutsche Bank AG, Morgan Stanley, Morgan Stanley & Co. LLC and Morgan Stanley Capital Services LLC, RECEIVED. Service date 05/09/2018 by CM/ECF.[2298752] [16-3327] [Entered: 05/09/2018 11:18 AM]

Case 16-3327, Document 103-1, 05/09/2018, 2298752, Page1 of 2 CAHILL GoR.DON & REINDEL LLP EIGHTY PINE STREET NEW YoRK, NY 10005-1702 L. HOWARD ADAMS CHARLES A. GILMAN TELEPHONE: (212) 701-3000 GEOFFREY E. LIEBMANN MICHAEL A. SHERMAN ROBERT A. ALESSI ARIEL GOLDMAN WWW.CAHILL.COM BRIAN T. MARKLEY DARREN SILVER HELENE R. BANKS JASON M. HALL WILLIAM J. MILLER JOSIAH M. SLOTNICK ANIRUDH BANSAL WILLIAM M. HARTNETT NOAH B. NEWITZ RICHARD A. STIEGLITZ JR. DAVID L. BARASH NOLA B HELLER 1990 K STREET, N.W. MICHAEL J. OHLER SUSANNA M. SUH LANDIS C. BEST CRAIG M. HOROWITZ WASHINGTON, DC 20006-1181 DAVID R. OWEN ANTHONY K. TAMA BRADLEY J. BONDI DOUGLAS S. HOROWITZ JOHN PAPACHRISTOS JONATHAN D. THIER (20 2) 86 2-8900 BROCKTON B. BOSSON TIMOTHY B. HOWELL LUIS R. PENALVER SEAN P. TONOLLI* KEVIN J. BURKE DAVID G. JANUSZEWSKI KIMBERLY PETILLO-D ECOSSARD JOHN A. TRIPODORO CAHILL GORDON & REINDEL <UK> LLP JAMES J. CLARK ELAI KATZ SHEILA C. RAMESH GLENN J. WALDRIP, JR. 24 MONUMENT STREET SEAN M. DAVIS BRIAN S. KELLEHER MICHAEL W. REDDY HERBERT S. WASHER LONDON EC3R BAJ OLEG REZZY MICHAEL B. WEISS STUART G. DOWNING RICHARD KELLY ADAM M. DWORKIN CH ERIE R. KISER* +44 (0)20 7920 9800 JAMES ROBINSON S. PENNY WINDLE ANASTASIA EFIMOVA JOEL KURTZBERG THORN ROSENTHAL DAVID WISHENGRAD JENNIFER B. EZRING TED B. LACEY TAMMY L. ROY COREY WRIGHT WRITER'S DIRECT NUMBER JONATHAN A. SCHAFFZIN JOSHUA M. ZELIG JOAN MURTAGH FRANKEL MARC R. LASHBROOK JONATHAN J. FRANKEL ALIZA R. LEVINE JOHN SCHUSTER DANIEL J. ZUBKOFF PIERRE M. GENTIN JOEL H. LEVITIN (212) 701-3352 *ADMITTED IN DC ONLY May 9, 2018 Re: Allen v. Bank ofAmerica Corporation, Nos. 16-3327 (L); 16-3571(Con) Dear Ms. Wolfe: I write, pursuant to FRAP 28(j), on behalf of Appellees, to advise this Court that its decision last week in United States v. Litvak, No. 17-1464-CR, (2d Cir. May 3, 2018), further supports affirmance of the order dismissing Appellants' complaint. In Litvak, the Court considered the relationship between a broker-dealer and a counterparty to a transaction in the RMBS bond market. This Court explained that it is "settled law that those at either end of an arms-length transaction are acting only in their own self­ interest," Litvak, slip op. at 10, and, accordingly, "[a] broker-dealer is not. . . an agent for its counterparties in these trades and owes them no special or fiduciary duty," id at 32; see also id at 27-28 ("Appellant acted as a principal; Jefferies bought the bond from one party, held it for a brief period of time, and then sold it to Invesco. The transaction was at arms-length, and appellant owed no fiduciary duty to the buyer."). Here, the District Court correctly held that broker-dealer Defendants owed no fiduciary duty to ERIS A plan Plaintiffs, who were counterparties to FX transactions. Although Litvak involved RMBS, not FX transactions, for all relevant purposes those two markets are analogous: • The alleged victims in both cases transacted through broker-dealers, as both markets are primarily over-the-counter and do not have centralized exchanges (Litvak, at 6; I.A82, � 60); • Both Jefferies and the Defendants here are expected to act in their own interest, including by: (1) tracking "potential buyers and sellers, their interests Case 16-3327, Document 103-1, 05/09/2018, 2298752, Page2 of 2 GAHILL GORDON & REINDEL LLP -2- in particular kinds of [financial products], and their ongoing acceptable price ranges" (Litvak, at 9; I.A86, � 73); or (2) attempting to profit "by buying low and selling high" (Litvak, at 9; I. A85-86, �� 71-72); and • The alleged victims in both cases may protect their interests by exercising their discretion in declining to do business with a particular dealer (Litvak, at 10-11; Appellees' Br. at 25). Accordingly, Appellees' transactions with the Appellant ERIS A plans did not give rise to any fiduciary duty. Without a fiduciary duty, all of Appellants' claims here fail. Respectfully submitted, David G. Januszewski The Honorable Catherine O'Hagan Wolfe Clerk of the Court U.S. Court of Appeals for the Second Circuit Thurgood Marshall United States Courthouse 40 Foley Square New York, New York 10007 Enclosure cc: All Counsel of Record (by ECF) Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page1 Page1of of38 40 17-1464-cr United States v. Litvak 1 UNITED STATES COURT OF APPEALS 2 FOR THE SECOND CIRCUIT 3 August Term, 2017 4 (Argued: December 11, 2017 Decided: May 3, 2018) 5 Docket No. 17-1464-cr 6 ---------------------------------- 7 UNITED STATES OF AMERICA, 8 Appellee, 9 v. 10 JESSE C. LITVAK, 11 Defendant-Appellant. 12 - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - 13 B e f o r e: WINTER, CHIN, Circuit Judges, and KORMAN, Judge.* 14 Appeal from a conviction by a jury in the United States District Court for 15 the District of Connecticut (Janet C. Hall, Chief Judge), on one count of securities * Judge Edward R. Korman, of the United States District Court for the Eastern District of New York, sitting by designation. 1 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page2 Page2of of38 40 1 fraud. Appellant principally argues that his misstatements were, as a matter of 2 law, immaterial to a reasonable investor in the market for residential mortgage- 3 backed securities. We hold that his misstatements could be found by a jury to be 4 material. However, the district court materially erred in admitting evidence that 5 the counterparty representative in the sole transaction underlying the count of 6 conviction mistakenly believed that appellant was his agent. Accordingly, we 7 vacate the judgment of conviction and remand. 8 KANNON K. SHANMUGAM, Williams & 9 Connolly LLP (Dane H. Butswinkas, Allison Jones 10 Rushing, Masha G. Hansford, Meng Jia Yang, on 11 the brief) Washington, D.C., for Defendant- 12 Appellant. 13 14 JONATHAN C. FRANCIS, Assistant United 15 States Attorney (Heather Cherry, William J. 16 Nardini, Sandra S. Glover, Assistant United States 17 Attorneys, on the brief), for John H. Durham, 18 United States Attorney for the District of 19 Connecticut, New Haven, Connecticut, for 20 Appellee. 21 22 WINTER, Circuit Judge: 23 Jesse Litvak appeals from his conviction, after a trial by a jury before Chief 24 Judge Hall, on one count of securities fraud pursuant to 15 U.S.C. §§ 78j(b), 78ff. 25 This is the second time this matter has been before us. In the first appeal, see 2 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page3 Page3of of38 40 1 United States v. Litvak, 808 F.3d 160 (2d Cir. 2015) ("Litvak I"), appellant 2 challenged his convictions on ten counts of securities fraud and various other 3 counts of fraud and false statements. We reversed the convictions for fraud and 4 false statements. We vacated the securities fraud counts and remanded them for 5 a new trial. Id. at 190. This appeal follows the second trial on ten counts of 6 securities fraud. Appellant was acquitted on nine of the ten counts, each 7 involving transactions similar to the one for which he was convicted. 8 He challenges his conviction on the one count principally on the ground 9 that his misstatements were, as a matter of law, immaterial to a reasonable 10 investor in the market for residential mortgage-backed securities ("RMBS"). We 11 reject that argument. However, the district court erred in admitting evidence 12 that the individual representing the counterparty in the transaction for which 13 appellant was convicted believed appellant to be an agent acting on the 14 counterparty's behalf. All parties agree that the belief in an agency relationship 15 was erroneous and that appellant acted solely as a principal in the transaction 16 underlying this appeal. Indeed, the testimony of the counterparty's 17 representative indicated that the counterparty, his employer, had informed him 3 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page4 Page4of of38 40 1 that no agency relationship existed but that the representative disagreed. The 2 district court instructed the jury that no agency relationship existed. 3 Because the applicable materiality test is an objective one, evidence of the 4 idiosyncratic and erroneous belief of the counterparty's representative was 5 irrelevant. The belief of the counterparty's representative in an agency 6 relationship was, as discussed infra, the only evidence distinguishing appellant's 7 count of conviction from those of the nine transactions on which he was 8 acquitted. The evidence was, therefore, prejudicial, as our earlier opinion in this 9 proceeding foreshadowed, id. at 187, and we cannot conclude with fair assurance 10 that the jury would have convicted appellant absent such evidence. See United 11 States v. Rosemond, 841 F.3d 95, 112 (2d Cir. 2016). Accordingly, we vacate the 12 judgment of conviction and remand. 13 BACKGROUND 14 This case has a lengthy procedural history. In January 2013, the 15 government filed an indictment charging appellant with eleven counts of 16 securities fraud in violation of 15 U.S.C. §§ 78j(b), 78ff (Counts 1-11), one count of 17 fraud against the Troubled Asset Relief Program ("TARP") in violation of 18 4 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page5 Page5of of38 40 1 U.S.C. § 1031 (Count 12), and four counts of making false statements in violation 2 of 18 U.S.C. § 1001 (Counts 13-16). 3 The instruments involved in the alleged fraud were RMBS. Our decision 4 on the first appeal reversed the TARP fraud and false statements counts 5 involving government agencies. Litvak I, 808 F.3d at 190. It vacated the 6 securities fraud counts on the grounds that the district court erroneously 7 excluded evidence relevant to appellant's defense that his misstatements were 8 not material to a reasonable investor in the RMBS market. Id. at 179-85. 9 a) The RMBS Market 10 Understanding the RMBS market is critical to this appeal. What follows in 11 this section of the opinion is materially undisputed on this record. 12 Appellant worked as a bond trader at Jefferies & Company ("Jefferies"), an 13 investment banking firm and securities broker-dealer. Appellant bought and 14 sold RMBS. RMBS are large and complex aggregations of residential mortgages 15 and home equity loans. "Typically, an entity (such as a bank) will buy up a large 16 number of mortgages from other banks, assemble those mortgages into pools, 17 securitize the pools (i.e., split them into shares that can be sold off), and then sell 18 them, usually as bonds, to banks or other investors." City of Pontiac Policemen's 5 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page6 Page6of of38 40 1 & Firemen's Ret. Sys. v. UBS AG, 752 F.3d 173, 177 n.7 (2d Cir. 2014) (quoting 2 Litwin v. Blackstone Grp., L.P., 634 F.3d 706, 710 n.3 (2d Cir. 2011)). A pool of 3 mortgages may also be divided into tranches, sold as bonds, that have varying 4 risk profiles and returns to investors. Holders of RMBS receive coupon 5 payments derived from homeowner payments on mortgages. RMBS are bought 6 and sold at very high prices. For example, the single bond involved in the sole 7 count of conviction was conveyed for over $23 million. 8 RMBS are marketed to large, sophisticated financial institutions. Because 9 RMBS are not homogeneous -- each has unique features affecting its value -- they 10 are not publicly traded on an exchange like NASDAQ or the New York Stock 11 Exchange. At any given time, therefore, there is no public list of RMBS available 12 for sale or of the financial terms of ongoing transactions. As a result, investors do 13 not buy and sell RMBS directly. Instead, when institutional investors are 14 interested in buying or selling RMBS, they contact registered broker-dealers such 15 as Jefferies to find interested buyers or sellers. Investors may also buy and sell 16 RMBS directly with broker-dealers that hold RMBS in their own accounts. 17 Most, if not all, institutional investor-buyers use computer models to 18 establish the highest amount at which they would be willing to buy or sell a 6 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page7 Page7of of38 40 1 particular RMBS. These analyses can be quite complex. Factors considered 2 include the priority level of the bond, the likely number of individuals that will 3 prepay their mortgages, the likely number of mortgage defaults, the potential 4 severity of the loss on a defaulted mortgage, the locations of the real property 5 mortgaged, unemployment rates in those locations, the effectiveness of the home 6 loan servicer in receiving payments, and the credit scores of individual 7 homeowners. 8 RMBS are bought or sold through three methods, styled as: "inventory 9 trades," "order trades," or "bids-wanted-in-competition trades" ("BWIC trades"). 10 In an inventory trade, an investor buys a bond already held in a broker-dealer's 11 account. In an order trade, a broker-dealer communicates with an interested 12 buyer and seller and, if successful, effectuates a transaction in which a RMBS is 13 transferred. A RMBS investor may approach a broker-dealer to express interest 14 in buying or selling a RMBS in a certain price range. Or a broker-dealer may 15 approach an investor to gauge its interest in buying or selling a bond in a certain 16 price range. The broker-dealer owns the bond, but usually briefly, in 17 consummating the transaction between the two investors. 7 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page8 Page8of of38 40 1 A BWIC trade was involved in the sole count on which appellant was 2 convicted. A BWIC trade is similar to an order trade, except that a BWIC trade 3 involves an auction in which a putative seller sends a bid-list to multiple broker- 4 dealers. These broker-dealers solicit expressions of interest and price ranges 5 from potential buyers. The broker-dealer then places a bid in the auction of a 6 particular security. The bid price is selected by the broker-dealer and may well 7 differ from prices suggested by putative buyers. If the broker-dealer's bid is 8 successful, the broker-dealer buys the bond and then offers to sell it to the 9 interested investor. Communications are generally carried out through online 10 instant messages. 11 There are various quirks to how bond prices are quoted among market 12 participants. First, bond prices are quoted in terms of the price per $100 of face 13 value, not the total price. Second, bond prices that are not whole numbers are 14 represented in "ticks," 1/32 of a dollar or approximately $0.03. For example, a 15 bond priced at $79.75 is represented as 79-24. Further, a broker-dealer is 16 compensated with reference to either the "all-in" or "on-top" price. An "all-in" 17 price is the total price the investor is (the broker-dealer hopes) to pay a broker- 18 dealer for a bond. It does not refer to the price at which the broker-dealer 8 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page9 Page9of of38 40 1 purchased the bond. An "on-top" price refers to the difference between the price 2 the broker-dealer paid for the bond and the price at which the broker-dealer will 3 sell the bond –- the "on-top" price is the broker-dealer's profit. In "on-top" 4 trades, the broker-dealer's profit is sometimes referred to colloquially as a 5 "commission," "markup," or "spread." In general, inventory trades are quoted 6 as "all-in" prices. Negotiations over order or BWIC trades may refer to the 7 broker-dealer's acquisition cost and the "on-top" price. 8 An essential feature of all of these trades, however, is that the broker- 9 dealer acts solely in its own interest as a principal. The broker-dealer continually 10 tracks potential buyers and sellers, their interests in particular kinds of RMBS, 11 and their ongoing acceptable price ranges. It seeks to profit from transactions in 12 the securities by buying low and selling high. The size of the year-end 13 discretionary bonus given to each broker-dealer's trader is largely based on the 14 profitability of the individual's trades. The broker-dealer assumes the risk of 15 buying the bond, and an institutional investor can refuse to purchase a bond held 16 by the broker-dealer even when the investor caused the broker-dealer to 9 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page10 Page10of of38 40 1 purchase it by an expression of interest, i.e., in an order or BWIC trade.1 Such an 2 investor may also have no investment purpose but may intend to resell the bond 3 immediately, and at a higher price, to another institution it knows to be 4 interested. 5 A broker-dealer is not, therefore, an agent for its counterparties in these 6 trades and owes them no special or fiduciary duty. In a sale by a counterparty to 7 a broker-dealer, the counterparty has no legitimate expectation that the broker- 8 dealer will resell the bond at the price paid to the counterparty. Similarly, in a 9 purchase, the counterparty has no legitimate expectation of purchasing a bond at 10 the price paid by the broker-dealer. Rather, the broker-dealer and counterparty 11 each have their own price ranges in which they will consummate their ends of 12 the transactions. The final price is determined in an arms-length negotiation and, 13 if agreed upon, will be somewhere in the overlap of price ranges. 14 Market participants protect themselves against behavior that departs from 15 market norms of good faith largely without resort to expensive and 1 The price to be paid by the investor is usually determined by a negotiation with the broker-dealer only after the broker-dealer has purchased the bond. Of course, evidence of an investor's promise to buy a bond at a particular price might create a contractual liability for breach of contract if the promise was not kept. 10 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page11 Page11of of38 40 1 time-consuming litigation. Institutional investors simply refuse to do business 2 with perceived bad actors for either a period of time or indefinitely. This is 3 referred to in the industry as placing an individual or firm in the "penalty box," 4 Tr. at 174, and is "not out of the ordinary," id. For example, after 5 AllianceBernstein discovered appellant's misstatements, the firm put Jefferies in 6 the "penalty box" for approximately one month. There was also testimony that 7 AllianceBernstein "still [doesn't] do business with Jefferies very much at all." Id. 8 at 176. Jefferies fired appellant shortly after AllianceBernstein's discovery. 9 b) The First Trial and Appeal 10 In the first trial, appellant was convicted on all counts apart from Count 11 Seven, which had been dismissed before trial. Litvak I, 808 F.3d at 166-69. 12 Appellant appealed, and we reversed the judgment of conviction on the counts 13 alleging fraud against TARP and making false statements. Id. at 190. 14 Ten transactions were involved in the remaining securities fraud counts. 15 In each count, appellant was accused of lying about the price at which Jefferies 16 had bought or sold the particular RMBS involved. These misstatements were 17 made to increase Jefferies's profits. For example, by overstating to a proposed 11 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page12 Page12of of38 40 1 counterparty the amount he paid for a bond, appellant sought to increase the all- 2 in price paid by the counterparty and Jefferies's profit on the transaction. 3 We also vacated his convictions on the securities fraud counts but 4 remanded for a new trial on those counts. Id. In both trials, the government 5 sought to prove the element of materiality in the securities fraud counts through 6 the testimony of representatives of appellant's counterparties. They generally 7 testified that they considered appellant's misstatements to be important in 8 deciding whether to sell or buy the RMBS in question. On the first appeal, we 9 held that the district court erred in excluding the testimony of two experts 10 proffered by the defense as to how reasonable investment managers value RMBS, 11 id. at 182-88, and as to how the profit sought by the broker-dealer was so minor 12 compared to the bond price that misstatements regarding that profit were not 13 material to a reasonable investor, id. at 184-85. 14 The excluded experts were also to testify as to the "arm's-length nature of 15 the relationship between a broker-dealer and counterparty." Id. at 186. This 16 testimony was offered by the defense to rebut a purported agency relationship 17 testified to by some representatives of the counterparties. See id. Because the 18 exclusion of the expert testimony on how RMBS are valued required vacaturs of 12 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page13 Page13of of38 40 1 all the securities fraud convictions, id. at 184, we declined to determine whether 2 the exclusion of appellant's proferred expert testimony on agency relationships, 3 while error, was harmless. Id. at 188. At the time of our opinion, there was 4 uncertainty as to whether the agency issue would even arise at a second trial 5 because, at the oral argument of the first appeal -- the proverbial eleventh hour -- 6 the government abandoned any claim of an agency relationship. See id. at 187 7 n.32. With regard to the agency issue, however, we noted that the existence of an 8 agency relationship was of "great import," id. at 187, because, if such a 9 relationship existed, appellant's misstatements would have been more important 10 to a reasonable investor while, if such a relationship was lacking, the 11 misstatements would have been less so. Id. 12 c) The Second Trial and Appeal 13 Appellant was retried on the ten securities fraud counts in early 2017. The 14 jury convicted appellant on Count Four and acquitted him on all other counts. 15 The following evidence, viewed in the light most favorable to the government, 16 United States v. Brock, 789 F.3d 60, 63 (2d Cir. 2015), is relevant to appellant's 17 conviction on Count Four. 13 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page14 Page14of of38 40 1 Appellant, on behalf of Jefferies, was involved in selling a RMBS in a BWIC 2 trade to Invesco Ltd., an investment management company with nearly $1 trillion 3 of assets under management. On July 1, 2010, having received a bid-list of bonds 4 from a putative seller, appellant circulated the bid-list to, inter alia, Brian Norris, 5 who represented Invesco. Invesco's credit research team determined that 6 Invesco would make a worthwhile profit on a particular RMBS on the list, SARM 7 2005-21 7A1, if the purchase price were at, or under, $80 per $100 of face value. 8 Norris then suggested to appellant that he bid 79-24 for the bond, and further 9 told appellant that he had "some room" to bid higher than 79-24. Tr. at 748, 772. 10 Appellant purchased the bond and informed Norris that Jefferies won the 11 auction, stating in an online chat that "[I] bid your level," Joint App'x at 723, that 12 is, he bid 79-24. In fact, however, appellant had bid and purchased the bond for 13 79-16. Norris then proposed to buy the bond from appellant for 79-30, asking "6 14 ticks cool? 79-30 to me?" Id. Appellant accepted, saying "6/32s is great."2 Id. 2 The entire conversation read: Norris: we can bid 79-24 on the SARM 05-21 7A1 Litvak: using.....brb.... Norris: thx, got some room too Litvak: winner bro....he had 2 other guys that were at 79 and trying to improve...but he just sold em to us...i bid your level...so will work for whatever you want big man... 14 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page15 Page15of of38 40 1 The difference between fourteen ticks and six amounts to $73,018.53. Gov't Br. at 2 11. The total amount Invesco paid Jefferies for the bond was approximately $23.6 3 million. 4 Before appellant's second trial, appellant made motions in limine to bar 5 counterparty representatives from testifying that they believed appellant was 6 acting as their agent. Notwithstanding the concession at oral argument on the 7 first appeal, the government proposed to offer such testimony, and the district 8 court allowed it. The court stated that such testimony was "plausibly. . . part of 9 the government's efforts to establish the materiality of the information 10 [appellant] misrepresented, and could likewise contribute[] to the inference that 11 [appellant] was acting with fraudulent intent." United States v. Litvak, No. 13-cr- 12 19, Order on Motion in Limine (D. Conn. June 28, 2016), at 4 (internal quotation 13 marks and citation omitted). Furthermore, the court reasoned that "because Norris: wow...that was fast. nice work. 6 ticks cool? 79-30 to me? Litvak: ure timing was perfect.....3pm bwic and he is good about trading things fast...so we got in there right at the right time.....good teamwork....6/32s is great...thanks BN Norris: thanks. nice we finally got something done. Litvak: appreciate it...im due for a trip down there....i will talk to defife about that Norris: sounds good. wait until churchill's fall meet. Joint App'x at 723. 15 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page16 Page16of of38 40 1 these witnesses are testifying to their own point of view -- i.e., what they 2 understood their relationship to [appellant] to be, based on the events leading up 3 to these trades as they experienced them -- this testimony is unlikely to confuse 4 the jury or to be unduly prejudicial to [appellant]." Id. 5 Norris then testified that he believed appellant to be his agent, and that 6 broker-dealers "serve as an agent in between [buyers and sellers]." Tr. at 748. 7 Joel Wollman, who worked for a different firm and was a counterparty 8 representative to two transactions on which appellant was acquitted, also 9 testified that appellant was "acting as [his] agent." Id. at 859. 10 Certainly, by the end of the second trial, if not much earlier, it was clear 11 that appellant had never been Norris's (or Wollman's) agent, and an agency 12 relationship did not exist in such transactions. Indeed, Invesco's compliance 13 personnel had informed Norris (before the transaction) that broker-dealers were 14 not agents of bond buyers in BWIC trades. During its summation, the 15 government labeled the agency issue a "red herring." Id. at 1456. It stated that it 16 "never claimed. . . that. . . Litvak was ever acting as an agent," id., and that a 17 "broker-dealer is not acting as someone's agent," id. at 1457. Instead, the 18 prosecution argued that the critical point of this testimony was to show how 16 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page17 Page17of of38 40 1 appellant "ch[]ose to establish a relationship of trust to lead them all to think that 2 he was trustworthy." Id.3 Finally, the district court instructed the jury that 3 appellant was not an agent of Norris or Invesco. 4 After a motion for a judgment of acquittal or a new trial was denied, the 5 court sentenced appellant to 24 months' imprisonment, three years of supervised 6 release, and a $2 million fine. This appeal followed. 7 DISCUSSION 8 Appellant challenges his conviction on two principal grounds. First, he 9 argues that, as a matter of law, the government did not prove that his 10 misstatements were material. Because the materiality of a defendant's 11 misstatements to a reasonable investor is an element of the charged crime, our 12 adoption of any variation of this argument would preclude a new trial. See 13 United States v. Robinson, 545 F.2d 301, 304 n.5 (2d Cir. 1976). However, we 14 disagree. Second, he argues that the district court erred in admitting testimony 15 on Norris's erroneous belief that appellant acted as Invesco's agent. We agree, 16 vacate the conviction, and remand. 17 3 The government cites no evidence that appellant created Norris's or Wollman's belief that he was acting as their agent. See Note 2, supra. 17 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page18 Page18of of38 40 1 a) Materiality 2 To prove securities fraud in a civil action under Section 10(b) of the 3 Securities Exchange Act of 1934, codified as 15 U.S.C. § 78j(b),4 the government 4 must prove that, "in connection with the purchase or sale of a security the 5 defendant, acting with scienter, made a material misrepresentation (or a material 6 omission if the defendant had a duty to speak) or used a fraudulent device.5 In 7 order to impose criminal liability, the government must also prove that the 8 defendant willfully violated the law." United States v. Vilar, 729 F.3d 62, 88 (2d 9 Cir. 2013) (internal quotations and citations omitted). This appeal focuses largely 10 on the element of materiality. 11 A misstatement in a securities transaction is material so long as there is "a 12 substantial likelihood that a reasonable investor would find the. . . 13 misrepresentation important in making an investment decision." Id. at 89; see 14 United States v. Contorinis, 692 F.3d 136, 143 (2d Cir. 2012). A misrepresentation 4 The other provision under which appellant was convicted, 15 U.S.C. § 78ff, provides penalties for violating the Securities Exchange Act. 5 The phrase "fraudulent device" is a term of art inapplicable in this matter, Schreiber v. Burlington N., Inc., 472 U.S. 1, 6-7 (1985), and the defendant's misstatements are the sole basis of criminal liability. 18 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page19 Page19of of38 40 1 is important if there is "a substantial likelihood that the disclosure of the omitted 2 fact would have been viewed by the reasonable investor as having significantly 3 altered the 'total mix' of information made available." Basic Inc. v. Levinson, 485 4 U.S. 224, 231-32 (1988). 5 The standard of a "reasonable investor," like the negligence standard of a 6 "reasonable man," is an objective one. See TSC Indus., Inc. v. Northway, Inc., 426 7 U.S. 438, 445 (1976); Long v. Abbott Mortg. Corp., 459 F. Supp. 108, 116-17 (D. 8 Conn. 1978) (citing cases). The standard may vary, therefore, with the nature of 9 the traders involved in the particular market. See Basic, 485 U.S. at 236; Michaels 10 v. Michaels, 767 F.2d 1185, 1197 (7th Cir. 1985). The reasonable investor in a 11 market in which many individual investors trade will be deemed to be somewhat 12 less schooled and sophisticated than a reasonable investor in a market, like the 13 one now before us, in which only institutions trade with the help of complex 14 computer programs and professional traders. See, e.g., Marini v. Adamo, 995 F. 15 Supp. 2d 155, 184 (E.D.N.Y. 2014), aff'd, 644 F. App'x 33 (2d Cir. 2016); In re 16 Initial Pub. Offering Sec. Litig., 241 F. Supp. 2d 281, 377 n.142 (S.D.N.Y. 2003); 17 Lenz v. Associated Inns & Rest. Co. of Am., 833 F. Supp. 362, 375-76 (S.D.N.Y. 18 1993). 19 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page20 Page20of of38 40 1 The objective nature of the "reasonable investor" standard is of particular 2 importance in this case. To prove materiality, the government relied heavily on 3 the testimony of counterparty traders -- purported victims -- that they considered 4 appellant's misstatements to be an important factor, among others, in their 5 investment decisions. The district court believed it important that counterparty 6 traders testify to "their own point of view." Litvak, No. 13-cr-19, Order on 7 Motion in Limine, at 4. This approach is permissible in a case like this, but only 8 so long as the testimony about the significance of the content of a defendant's 9 misstatements and each trader's "own point of view" is shown to be within the 10 parameters of the thinking of reasonable investors in the particular market at 11 issue. In other words, there must be evidence of a nexus between a particular 12 trader's viewpoint and that of the mainstream thinking of investors in that 13 market. Materiality cannot be proven by the mistaken beliefs of the worst 14 informed trader in a market. 15 A finding of materiality does not require proof of "actual reliance." Vilar, 16 729 F.3d at 89. Materiality requires proof only that a reasonable investor would 17 deem the content of a misstatement a substantial factor to be considered in the 18 making of the particular investment decision. Unlike common law fraud or a 20 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page21 Page21of of38 40 1 civil action for damages where an investor seeks compensatory damages, proof 2 of harm is not necessary in a criminal prosecution under Section 10(b), so long as 3 materiality, intent to defraud, and a connection to a securities transaction are 4 shown. 5 b) Materiality and Value 6 Appellant challenges the government's proof of materiality as legally 7 insufficient. We review the sufficiency of the evidence de novo. United States v. 8 Coplan, 703 F.3d 46, 62 (2d Cir. 2012) (citing United States v. Yannotti, 541 F.3d 9 112, 120 (2d Cir. 2008)). "As a general matter, a defendant challenging the 10 sufficiency of the evidence bears a heavy burden, as the standard of review is 11 exceedingly deferential." Brock, 789 F.3d at 63 (citing Coplan, 703 F.3d at 62). 12 The evidence must be viewed "in the light most favorable to the [g]overnment, 13 crediting every inference that could have been drawn in the [g]overnment's 14 favor, and deferring to the jury's assessment of witness credibility and its 15 assessment of the weight of the evidence." Id. (citing Coplan, 703 F.3d at 62). A 16 conviction will be upheld "if any rational trier of fact could have found the 17 essential elements of the crime beyond a reasonable doubt." Id. (internal 18 quotation marks and citations omitted). 21 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page22 Page22of of38 40 1 Appellant contends that, as to the count of conviction, the government 2 presented evidence showing only that Norris agreed to a price for the bond that 3 was based on Invesco's internal analysis of value completed before he spoke to 4 appellant. According to appellant, Norris "was primarily interested in obtaining 5 the bond, not in minimizing Jefferies'[s] profit." Appellant Br. at 43. 6 However, on Count Four, there was sufficient evidence for a rational jury 7 to find appellant's misstatements material beyond a reasonable doubt, whether 8 or not Norris paid "the price he proposed to pay." Id. at 44. As noted, the 9 determination of the materiality of a misstatement or omission "is an objective 10 one, involving the significance of an omitted or misrepresented fact to a 11 reasonable investor." TSC Indus., 426 U.S. at 445; see Amgen Inc. v. Conn. Ret. 12 Plans & Trust Funds, 568 U.S. 455, 459 (2013) ("materiality is judged according to 13 an objective standard. . ."). A finding of materiality, therefore, requires a 14 showing only of importance, not "actual reliance." Vilar, 729 F.3d at 89. 15 In Litvak I, we held that the testimony of various counterparty 16 representatives was sufficient to sustain a finding of materiality on the counts of 17 securities fraud. See 808 F.3d at 175-76 ("The trial record includes testimony 18 from several representatives of Litvak's counterparties that his 22 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page23 Page23of of38 40 1 misrepresentations were important to them in the course of the transactions on 2 which the securities fraud charges were predicated. . .") (internal quotation 3 marks and citations omitted). In that regard, we also held that exclusion of 4 appellant's experts' testimony was not harmless because the government was 5 relying on the subjective views of "purported victims," id. at 184, and the expert 6 testimony was intended to show that, under an objective materiality test, the 7 misstatements would not have been deemed significant by a reasonable investor, 8 id. 9 In the first trial, the district court excluded expert testimony that minor 10 price variations would be irrelevant to sophisticated investors. We held that this 11 exclusion was also error, although we did not reach the harmlessness issue. Id. at 12 185. Therefore, some misstatements may be so "obviously unimportant" as to be 13 immaterial as a matter of law.6 Feinman v. Dean Witter Reynolds, Inc., 84 F.3d 14 539, 540-41 (2d Cir. 1996) (quoting Goldman v. Belden, 754 F.2d 1059, 1067 (2d 15 Cir. 1985)); see also TSC Indus., 426 U.S. at 450 (applying "obvious" standard to 6 According to the government's brief, Gov't Br. at 11, 37, Jefferies's gain in the transaction attributable to the misstatement for which appellant was convicted was $73,000, or about .3% of the purchase price paid by Invesco. Assuming Norris would have paid only an additional six ticks over appellant's purchase price, the misstatements increased Jefferies' profit by about $73,000 on a security purchased by Invesco for approximately $23.6 million. 23 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page24 Page24of of38 40 1 definition of materiality for purposes of Section 14(a) of the Securities Exchange 2 Act). 3 In Feinman, brokers added transaction fees of a few dollars that may have 4 "exceed[ed] the broker[s'] actual handling charges." 84 F.3d at 541. However, 5 the brokers "did not mislead their customers as to what portion of the total 6 transaction cost was going toward purchasing securities." Litvak I, 808 F.3d at 7 176. Here, unlike the market in Feinman, "competition among the firms in the 8 labeling and pricing of their services," id. at 177 (quoting Feinman, 84 F.3d at 9 541), is not available. Further, the Feinman transaction occurred in an open 10 market, but a misrepresentation in the RMBS market is "virtually 11 undiscoverable." Id.7 12 Appellant also argues that his misstatements cannot, as a matter of law, be 13 material because they were not relevant to the intrinsic value of the bond, at best 14 affecting only "the negotiation over price." Appellant Br. at 30. This argument 7 The government adds that the jury was entitled to find appellant's misstatements to be material based on his own actions and statements to counterparties after his misstatements were uncovered. This evidence primarily bears on the counts of securities fraud for which appellant was acquitted and is not considered here because we conclude that there was otherwise legally sufficient evidence to convict appellant on Count Four. 24 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page25 Page25of of38 40 1 appears to have been considered and rejected in Litvak I. See Litvak I, 808 F.3d at 2 175-78. Nothing in the record of the second trial causes us to reach a different 3 result. 4 We cannot agree that, because statements about the price paid by the 5 broker-dealer for a RMBS are not intended, or understood, as relevant to the 6 intrinsic value of the bond, such assertions are not material as a matter of law.8 7 When the broker-dealer seeks a profit for its role in procuring and selling a 8 security desired by a buyer, the profit becomes part of the price paid by the 9 buyer. The value of the security may be the most important factor governing the 10 decision to buy, but the price must be considered in determining whether the 11 purchase is deemed profitable.9 The broker-dealer's profit is part of the price and 12 lies about it can be found by a jury to "significantly alter[] the 'total mix' of 13 information. . . available." Basic, 485 U.S. at 231-32 (internal citation omitted). 8 We assume, for purposes of this discussion, that the trier of fact has found that the misstatements as to the broker-dealer's purchase price would not be deemed relevant to a reasonable investor's valuation of the bond in question. In some circumstances, the amount of that purchase price might cause reconsideration of the computer's valuation. The government does not claim that the price actually paid by Jefferies for the bond at issue would have caused such a reconsideration. 9 Norris testified as follows: "So a higher price means a lower yield and a lower price means a higher yield. And yield is the return that we would expect to get on a particular investment." Tr. at 806. 25 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page26 Page26of of38 40 1 (c) Evidentiary Rulings 2 Appellant argues that the district court erred by admitting Norris's 3 testimony that appellant was Invesco's agent, and that this evidence may have 4 tipped the balance in favor of the jury's conviction on that count. We agree. 5 (i) Error 6 "We review a district court's evidentiary rulings under a deferential abuse 7 of discretion standard, and we will disturb an evidentiary ruling only where the 8 decision to admit or exclude evidence was 'manifestly erroneous.'" United States 9 v. McGinn, 787 F.3d 116, 127 (2d Cir. 2015) (quoting United States v. Samet, 466 10 F.3d 251, 254 (2d Cir. 2006)). Even if a decision was "manifestly erroneous," we 11 will affirm "if the error was harmless." Id. (citing United States v. Miller, 626 12 F.3d 682, 688 (2d Cir. 2010)). 13 In the first trial, the issue of whether appellant was acting as a principal or 14 as an agent in the various charged transactions was disputed. Only at oral 15 argument of the first appeal did the government concede that appellant was 16 acting as a principal. Nevertheless, in the second trial and at the government's 17 urging, the district court again admitted testimony from Norris that appellant 18 was acting as Invesco's agent during the trade. The district court held that the 26 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page27 Page27of of38 40 1 testimony was relevant to the materiality of appellant's misstatements and to 2 appellant's fraudulent intent. The court also noted that the testimony was 3 unlikely to confuse or prejudice the jury because it went only to Norris's "own 4 point of view."10 Litvak, No. 13-cr-19, Order on Motion in Limine, at 4. 5 In Litvak I, we noted the importance of an agency relationship to the 6 materiality issue. We stated that testimony about whether appellant was the 7 buyer's agent was relevant because it might cause a jury to 8 construe [Litvak's misstatements] as having great 9 import to a reasonable investor if coming from the 10 investor's agent. If, on the other hand, Litvak was 11 acting on his own behalf (i.e., as a principal), and not as 12 the purported victims' agent, a jury may well construe 13 that relationship as providing a distance between Litvak 14 and a reasonable investor, which may tend to show that 15 his statements could not have been reasonably viewed 16 as important in the course of a transaction. 17 18 Litvak I, 808 F.3d at 187 (citation omitted) (emphasis in original). 19 It is now undisputed that appellant never acted as Invesco's or Norris's 20 agent during the trade in question. Appellant acted as a principal: Jefferies 21 bought the bond from one party, held it for a brief period of time, and then sold it 10 We focus on the testimony of Norris since the trade between Norris and appellant is the basis for appellant's sole count of conviction. The testimony of Wollman is addressed with regard to harmlessness infra. 27 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page28 Page28of of38 40 1 to Invesco. The transaction was at arms-length, and appellant owed no fiduciary 2 duties to the buyer. As the owner of the bond, Jefferies did not have to convey 3 the bond to Invesco and assumed the risk that Invesco would walk away from 4 the deal after Jefferies had bought the bond. 5 To repeat, the lack of an agency relationship is undisputed. The district 6 court instructed the jury that Litvak was not Invesco's agent. Indeed, the 7 government argued in summation that the agency issue was a "red herring" and 8 that it had never claimed that Litvak was Invesco's agent. Tr. at 1456. 9 Evidence is relevant if "(a) it has any tendency to make a fact more or less 10 probable than it would be without the evidence; and (b) the fact is of 11 consequence in determining the action." Fed. R. Evid. 401. Relevancy is a "very 12 low standard." United States v. White, 692 F.3d 235, 246 (2d Cir. 2012) (quoting 13 United States v. Al-Moayad, 545 F.3d 139, 176 (2d Cir. 2008)). "To be relevant, 14 evidence need not be sufficient by itself to prove a fact in issue, much less to 15 prove it beyond a reasonable doubt." United States v. Abu-Jihaad, 630 F.3d 102, 16 132 (2d Cir. 2010). 17 At the government's urging, the district court admitted Norris's testimony 18 as relevant to the materiality issue. It believed that any prejudice was unlikely 28 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page29 Page29of of38 40 1 because Norris would be "testifying to [his] own point of view." Litvak, No. 13- 2 cr-19, Order on Motion in Limine, at 4. On appeal, the government argues that 3 Norris's belief in an agency relationship was relevant to whether the "victims 4 trusted Litvak." Gov't Br. at 48. It adds that "[e]vidence as to whether and why 5 victims trusted Litvak or believed his representations was probative as to what 6 an objectively reasonable investor would have thought, and thus relevant to the 7 disputed issue of materiality." Id. at 49-50. If trust exists, the government 8 argues, a jury could interpret misstatements by appellant as more likely to be 9 material. 10 However, the materiality standard is an objective one and centers on the 11 views of a hypothetical, reasonable investor in the market at issue. See Amgen, 12 568 U.S. at 467 ("[t]he question of materiality. . . is an objective one, involving the 13 significance of an omitted or misrepresented fact to a reasonable investor") 14 (quoting TSC Indus., 426 U.S. at 445); Chris-Craft Indus., Inc. v. Piper Aircraft 15 Corp., 480 F.2d 341, 363 (2d Cir. 1973) ("The materiality test is concerned only 16 with whether a prototype reasonable investor would have relied."). It can hardly 17 be the law that the "point of view," Litvak, No. 13-cr-19, Order on Motion in 18 Limine, at 4, of an investor who is admitted to be wrong -- the government, in 29 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page30 Page30of of38 40 1 putting the best face on it, describes Norris as "confused" and "incorrect" -- is 2 relevant to prove what a reasonable investor, neither confused nor incorrect, 3 would have deemed important. The agency issue raised by the government's 4 proffer of Norris's testimony was indeed an irrelevant "red herring." Tr. at 1456. 5 While the individual views of a counterparty trader may usually be 6 relevant to the nature of the market involved and as to the beliefs of a reasonable 7 investor, a reasonable investor would not misperceive the role of a broker-dealer 8 in the RMBS market. See Litvak I, 808 F.3d at 187 n.32. In fact, Norris received 9 material from Invesco's legal and compliance department stating that, in 10 transactions such as the one here, broker-dealers act as principals. His 11 disagreement with that advice was unreasonable. Norris's indisputably 12 idiosyncratic and unreasonable viewpoint is not, therefore, probative of the 13 views of a reasonable, objective investor in the RMBS market. Even if Norris's 14 testimony had relevance,11 the district court abused its discretion under Rule 403. 15 Relevant evidence may be excluded "if its probative value is substantially 16 outweighed by a danger of one or more of the following: unfair prejudice, 11 The district court admitted Norris's testimony on an agency relationship partly on the grounds that it might "contribute[] to the inference that [appellant] was acting with fraudulent intent." Litvak, No. 13-cr-19, Order on Motion in Limine, at 4. On appeal, the government does not rely on this ground. 30 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page31 Page31of of38 40 1 confusing the issues, misleading the jury, undue delay, wasting time, or 2 needlessly presenting cumulative evidence." Fed. R. Evid. 403. At best, Norris's 3 testimony about the supposed agency relationship had a high probability of 4 confusing the jury by asking it to consider as relevant the perception of a 5 counterparty representative that was entirely wrong. At worst, Norris's 6 testimony on an agency relationship would mislead the jury based on the 7 government's argument that a perceived relationship of trust showed materiality. 8 This argument itself is flawed because it equates an indisputably incorrect 9 personal belief with an objective test of materiality. 10 In its summation to the jury, the government sought to cabin the effect of 11 Norris's testimony by emphasizing that it never claimed that appellant acted as 12 an agent.12 It further labeled the defense's emphasis on the agent-principal 13 distinction a "red herring," a remark that all but concedes irrelevance. Tr. at 14 1456. It argued in summation that appellant created the perception of acting as 15 an agent and that he aimed to establish a "relationship of trust." Id. at 1457. But 12 The government also argues that the testimony of Norris was relevant because his "confusion was bound to be used against them by the defense to show that they were not reasonable investors." Gov't Br. at 50. But it was the government that opposed the defense's motion in limine to preclude evidence of Norris's "confusion." 31 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page32 Page32of of38 40 1 the government points to no evidence that appellant was the source of Norris's 2 mistaken belief in an agency relationship or took steps sufficient to cause Norris 3 to disregard the common knowledge of the market, much less the information 4 provided Norris by Invesco's legal and compliance department.13 The 5 government's concept of subjective trust as evidence of materiality became a back 6 door for the jury to apply the heightened expectations of trust that an agency 7 relationship carries. The government's argument similarly ignores the settled 8 law that those at either end of an arms-length transaction are acting only in their 9 own self-interest. See In re Mid-Island Hosp., Inc., 276 F.3d 123, 130 (2d Cir. 10 2002) ("[W]hen parties deal at arms length in a commercial transaction, no 11 relation of confidence or trust sufficient to find the existence of a fiduciary 12 relationship will arise absent extraordinary circumstances.") (quoting Pan Am. 13 Corp. v. Delta Air Lines, Inc., 175 B.R. 438, 511 (S.D.N.Y. 1994)) (alteration in 14 original). 15 13 An investor may be deceived into believing that an arms-length relationship is one of special trust, but the means of deception must be of a character that would deceive an objectively reasonable investor, i.e., more than a salesman's banter. We note, though, that the banter appellant employed with Norris in the transaction did not in any way suggest that an agency relationship existed. See Note 2, supra. 32 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page33 Page33of of38 40 1 (ii) Harmlessness Analysis 2 The jury's verdict prevents us from viewing the admission of the agency 3 testimony as harmless because we cannot "conclude with fair assurance that the 4 error[] did not substantially influence the jury." Rosemond, 841 F.3d at 112 5 (internal quotation marks and citations omitted). The following factors are 6 weighed in determining whether the admission of evidence was harmless: "(1) 7 the overall strength of the prosecutor's case; (2) the prosecutor's conduct with 8 respect to the improperly admitted evidence; (3) the importance of the wrongly 9 admitted testimony; and (4) whether such evidence was cumulative of 10 other properly admitted evidence." McGinn, 787 F.3d at 127-28 (quoting United 11 States v. Gomez, 617 F.3d 88, 95 (2d Cir. 2010)). Applying this test, we conclude 12 that: (1) the government's case on materiality was not overwhelming and was 13 vigorously contested; (2) the government proffered the testimony in question -- 14 although admitting that the testimony was based on factual and legal error and 15 was a "red herring" -- and argued to the jury that a "relationship of trust" 16 existed; (3) the error was of great importance in view of the verdict, as discussed 17 infra; and (4) the testimony was not cumulative of properly admitted testimony. 33 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page34 Page34of of38 40 1 Returning to McGinn factor (3), introduction of the evidence was evidently 2 of great importance to the jury. The acquittals were almost certainly based on the 3 jury's acceptance of the defense's materiality theory that was largely suppressed 4 in the first trial. On Count Four, Norris's testimony about a perceived agency 5 relationship was the only rational reason for the jury to have convicted appellant 6 on that count of securities fraud while acquitting him on all other counts. 7 The amount of money lost was not a differentiating factor between the 8 counts. Four counts on which appellant was acquitted involved gains that were 9 much larger than the $73,000 plausibly at issue in Count Four. Count Two 10 involved a plausible gain of $602,000. Count Six involved a gain of $212,000. 11 Count Eight involved a gain of $229,000. Count Ten involved a gain of $180,000. 12 The government's "relationship of trust" argument, based largely on 13 Norris's testimony, contributed to the prejudice on Count Four by stressing the 14 personal view of Norris. In seven of the charged trades, the counterparty 15 representative either did not testify, or stated that, in general, they viewed 16 statements by broker-dealers with suspicion and did not consider appellant to be 17 their agent. For example, a counterparty representative, Michael Canter, an 18 employee of AllianceBernstein, stated that information volunteered by traders 34 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page35 Page35of of38 40 1 should be viewed with skepticism. He also noted that he understood that 2 appellant was trading as a representative of a principal. His testimony as to any 3 trust of appellant was admittedly personal. Katherine Corso of York Capital 4 abandoned plans to set up an auction to sell a bond in favor of selling it to 5 appellant for what she considered to be an agreeable price, i.e., a better deal than 6 an auction. Corso further understood that appellant was acting as a 7 representative of a principal in the transaction with all the accompanying risk 8 that status entailed.14 Vladimir Lemin, representing Magnetar Capital, testified 9 that information in the market "could be less than truthful." Tr. at 736. 14 Corso testified on cross-examination as follows: Q. And when Jefferies acquires a bond, it bears the risk of what happens with that bond? A. Yes. Q. For example, if this other transaction falls through, that's Jefferies'[s] problem? A. Yes. Q. That can happen? A. Yes. Q. When Jefferies buys a bond, it owns it as a principal? A. Yes. Q. It can hold it or sell it? A. Yes. Q. It is entitled to every cent of the profit it earns if it sells it? A. Yes. Tr. at 542. 35 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page36 Page36of of38 40 1 According to him, such negotiations had to be approached with care. Three 2 other counterparty representatives in charged trades failed to testify. In 3 acquitting on these counts, the jury appears to have credited the substantial 4 evidence that investment managers view with suspicion statements by broker- 5 dealers in the context of arms-length transactions. 6 The acquittals on Counts Nine and Ten -- which involved two trades in 7 addition to the seven charged trades discussed above -- call for particular 8 scrutiny because they involved trades with Wollman, the only counterparty 9 representative apart from Norris to testify that he believed appellant was acting 10 as his agent. The government argues that these two acquittals show that the jury 11 was not swayed by the testimony on agency in convicting appellant. Instead, it 12 argues, if the jury was swayed, "one would have expected convictions on every 13 trade in which either one [Norris or Wollman] was the victim." Gov't Br. at 52. 14 However, Wollman's credibility in that regard was severely weakened. 15 Wollman admitted that he viewed negotiations with broker-dealers with 16 skepticism. He also admitted that, in particular, he viewed appellant's 17 statements during one of the transactions with suspicion. There was also 18 evidence that, during that same transaction, Wollman concealed relevant 36 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page37 Page37of of38 40 1 information from appellant. Wollman did not tell appellant that he intended to 2 immediately resell half of the bond to Royal Bank of Scotland Securities ("RBS 3 Securities") for a higher price. While negotiating, Wollman told appellant that 4 the bond would have an acceptable return at one purchase price, yet he had 5 agreed with RBS Securities that the bond would have the same return at a higher 6 purchase price. On redirect, Wollman admitted that this behavior may have 7 misled appellant: "If [appellant] knows that I, then, went ahead and sold it to 8 [RBS Securities], he likely misses out on that future transaction. And he would 9 have reason to be upset about not getting to partake in that future transaction." 10 Tr. at 1007. This conduct is not consistent with the view that appellant was 11 Wollman's agent. 12 The defense also introduced online chats claiming that Wollman engaged 13 in other deceptive practices -- if true, likely criminal acts under the government's 14 theory of this case -- not involving appellant. Wollman was said by the defense -- 15 Wollman denied the inference -- to have told a broker-dealer to invent a seller -- 16 who was presumably interested in selling a bond to Wollman at an attractive 17 price -- to coax an individual into selling a bond. And Wollman, when trying to 37 Case16-3327, Case 17-1464,Document Document103-2, 91-1, 05/03/2018, 05/09/2018,2294031, 2298752,Page38 Page38of of38 40 1 sell a bond in a BWIC auction, may have made up a bid to stoke interest in the 2 sale. 3 While Norris acknowledged that transactions in the RMBS market 4 generally had to be approached with skepticism, his credibility was not similarly 5 impeached. A jury invited by the government's "relationship of trust" argument 6 to consider the subjective views of counterparty representatives might well 7 convict on the count involving Norris while acquitting on the counts involving 8 Wollman. 9 In light of the jury's verdict, therefore, we cannot "conclude with fair 10 assurance," Rosemond, 841 F.3d at 112, that Norris's testimony did not 11 "substantially influence the jury," id., in convicting appellant. We conclude that 12 the district court's error in admitting testimony on agency was not harmless and 13 requires a vacatur. 14 CONCLUSION 15 Accordingly, we vacate and remand the judgment of conviction. Because 16 appellant is currently incarcerated, we order that he be released on appropriate 17 bond pending further proceedings. 38 Case Case 17-1464, 16-3327, Document Document 91-2,05/09/2018, 103-2, 05/03/2018,2298752, 2294031,Page39 Page1 of of140 United States Court of Appeals for the Second Circuit Thurgood Marshall U.S. Courthouse 40 Foley Square New York, NY 10007 ROBERT A. KATZMANN CATHERINE O'HAGAN WOLFE CHIEF JUDGE CLERK OF COURT Date: May 03, 2018 DC Docket #: 3:13-cr-19-1 Docket #: 17-1464cr DC Court: CT (NEW HAVEN) Short Title: United States of America v. Litvak DC Judge: Hall BILL OF COSTS INSTRUCTIONS The requirements for filing a bill of costs are set forth in FRAP 39. A form for filing a bill of costs is on the Court's website. The bill of costs must: * be filed within 14 days after the entry of judgment; * be verified; * be served on all adversaries; * not include charges for postage, delivery, service, overtime and the filers edits; * identify the number of copies which comprise the printer's unit; * include the printer's bills, which must state the minimum charge per printer's unit for a page, a cover, foot lines by the line, and an index and table of cases by the page; * state only the number of necessary copies inserted in enclosed form; * state actual costs at rates not higher than those generally charged for printing services in New York, New York; excessive charges are subject to reduction; * be filed via CM/ECF or if counsel is exempted with the original and two copies. Case Case 17-1464, 16-3327, Document Document 91-3,05/09/2018, 103-2, 05/03/2018,2298752, 2294031,Page40 Page1 of of140 United States Court of Appeals for the Second Circuit Thurgood Marshall U.S. Courthouse 40 Foley Square New York, NY 10007 ROBERT A. KATZMANN CATHERINE O'HAGAN WOLFE CHIEF JUDGE CLERK OF COURT Date: May 03, 2018 DC Docket #: 3:13-cr-19-1 Docket #: 17-1464cr DC Court: CT (NEW HAVEN) Short Title: United States of America v. Litvak DC Judge: Hall VERIFIED ITEMIZED BILL OF COSTS Counsel for _________________________________________________________________________ respectfully submits, pursuant to FRAP 39 (c) the within bill of costs and requests the Clerk to prepare an itemized statement of costs taxed against the ________________________________________________________________ and in favor of _________________________________________________________________________ for insertion in the mandate. Docketing Fee _____________________ Costs of printing appendix (necessary copies ______________) _____________________ Costs of printing brief (necessary copies ______________ ____) _____________________ Costs of printing reply brief (necessary copies ______________) _____________________ (VERIFICATION HERE) ________________________ Signature

OPINION, affirming the judgment of the district court, by DJ, PNL, RR, FILED.[2341215] [16-3327, 16-3571] [Entered: 07/10/2018 09:27 AM]

Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page1 of 29 16‐3327‐cv (L) Allen v. Credit Suisse Secs. (USA) LLC In the United States Court of Appeals for the Second Circuit AUGUST TERM 2016 Nos. 16‐3327‐cv (L), 16‐3571‐cv (CON) DORIS SUE ALLEN, DONNA S. LUCAS, JONATHAN G. AXELROD, DANA KELLEN, HEDY L. ANSELMAN, TIMOTHY R. GARRETT, WARREN J. PEPICELLI, JOHN A. BOARDMAN, Plaintiffs‐Appellants, v. CREDIT SUISSE SECURITIES (USA) LLC, DEUTSCHE BANK AG, MORGAN STANLEY, MORGAN STANLEY & CO. LLC, MORGAN STANLEY CAPITAL SERVICES LLC, CREDIT SUISSE AG, BANK OF AMERICA CORPORATION, BANK OF AMERICA, N.A., BARCLAYS PLC, BARCLAYS BANK PLC, BARCLAYS CAPITAL INC., CITIBANK, N.A., CITIGROUP INC., THE GOLDMAN SACHS GROUP, INC., GOLDMAN, SACHS & CO., HSBC HOLDINGS PLC, HSBC BANK PLC, HSBC NORTH AMERICA HOLDINGS INC., HSBC BANK USA, N.A., JPMORGAN CHASE BANK, N.A., JPMORGAN CHASE & CO., THE ROYAL BANK OF SCOTLAND PLC, THE ROYAL BANK OF SCOTLAND GROUP PLC, RBS SECURITIES INC., UBS AG, UBS SECURITIES LLC, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, BNP PARIBAS GROUP, BNP PARIBAS NORTH AMERICA, INC., UBS INVESTMENT BANK, UBS INVESTMENT BANK, AMERICAS, Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page2 of 29 UBS GROUP AG, MERRILL LYNCH CAPITAL SERVICES, INC., BARCLAYS GROUP US INC., Defendants‐Appellees, CREDIT SUISSE GROUP AG, CREDIT SUISSE SECURITIES (EUROPE) LIMITED, DOES, 1–30, DOES, 1–40, BNP PARIBAS SECURITIES CORP., CITICORP, CITIGROUP GLOBAL MARKETS INC., BNP PRIME BROKERAGE INC., Defendants. On Appeal from the United States District Court for the Southern District of New York ARGUED: JUNE 22, 2017 DECIDED: JULY 10, 2018 Before: JACOBS, LEVAL, RAGGI, Circuit Judges ___________ On appeal from a judgment entered in the United States District Court for the Southern District of New York (Schofield, J.), dismissing plaintiffs' ERISA complaint for failure to state claims for which relief can be granted, see Fed. R. Civ. P. 12(b)(6), plaintiffs fault the district court for failing to recognize that the defendant banks acted as ERISA functional fiduciaries in conducting the foreign currency exchange transactions here at issue and, thus, that their alleged manipulation of the foreign exchange market breached ERISA fiduciary duties owed to plaintiffs' employee benefit plans. Plaintiffs further fault the 2 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page3 of 29 district court's denial of their request for a 60‐day adjournment and leave to file a fourth amended complaint. AFFIRMED. REGINA M. MARKEY (J. Brian McTigue, on the brief), McTigue Law LLP, Washington, D.C., for Plaintiffs‐Appellants. DAVID G. JANUSZEWSKI (Herbert S. Washer, Elai Katz, Jason M. Hall, Sheila C. Ramesh, on the brief), Cahill Gordon & Reindel LLP, New York, New York, for Defendants‐ Appellees Credit Suisse AG and Credit Suisse Securities (USA) LLC. MATTHEW A. SCHWARTZ (Yvonne S. Quinn, David H. Braff, on the brief), Sullivan & Cromwell LLP, New York, New York, for Defendants‐Appellees Barclays PLC, Barclays Bank PLC, Barclays Capital Inc., and Barclays Group US Inc. Adam S. Hakki, Richard F. Schwed, Jeffrey J. Resetarits, Shearman & Sterling LLP, New York, New York, for Defendants‐ Appellees Bank of America Corporation, Bank of America, N.A., Merrill Lynch, Pierce, Fenner & 3 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page4 of 29 Smith Incorporated, and Merrill Lynch Capital Services, Inc. David C. Esseks, Laura R. Hall, Rebecca Delfiner, Allen & Overy LLP, New York, New York; John Terzaken, Allen & Overy LLP, Washington, D.C., for Defendants‐ Appellees BNP Paribas Group and BNP Paribas North America, Inc., and Defendants BNP Paribas Securities Corp. and BNP Prime Brokerage, Inc. Andrew A. Ruffino, Covington & Burling LLP, New York, New York; Alan M. Wiseman, Thomas A. Isaacson, Andrew D. Lazerow, Julie M. Edmond, Jamie A. Heine, Covington & Burling LLP, Washington, D.C., for Defendants‐Appellees Citibank, N.A. and Citigroup Inc. Joseph Serino, Jr., Eric F. Leon, Latham & Watkins LLP, New York, New York, for Defendant‐Appellee Deutsche Bank AG. Thomas J. Moloney, George S. Cary, Sue S. Guan, Cleary Gottlieb Steen & Hamilton LLP, New York, New York, for Defendants‐ Appellees The Goldman Sachs Group, Inc. and Goldman, Sachs & Co. 4 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page5 of 29 Gregory T. Casamento, Locke Lord LLP, New York, New York; Roger B. Cowie, Locke Lord LLP, Dallas, Texas; J. Matthew Goodin, Julia C. Webb, Locke Lord LLP, Chicago, Illinois, for Defendants‐Appellees HSBC Holdings PLC, HSBC Bank PLC, HSBC North America Holdings Inc., and HSBC Bank USA, N.A. Peter E. Greene, Boris Bershteyn, Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York; Stephen L. Ratner, Russell L. Hirschhorn, Proskauer Rose LLP, New York, New York, for Defendants‐ Appellees JPMorgan Chase & Co. and JPMorgan Chase Bank, N.A. Jonathan M. Moses, Bradley R. Wilson, Wachtell, Lipton, Rosen & Katz, New York, New York, for Defendants‐Appellees Morgan Stanley, Morgan Stanley & Co. LLC, and Morgan Stanley Capital Services LLC. Joel M. Cohen, Melissa C. King, Davis Polk & Wardwell LLP, New York, New York, for Defendants‐Appellees The Royal Bank of Scotland PLC, The Royal Bank of Scotland Group PLC, and RBS Securities Inc. 5 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page6 of 29 D. Jarrett Arp, Melanie L. Katsur, Gibson Dunn & Crutcher LLP, Washington, D.C.; Mark A. Kirsch, Indraneel Sur, Gibson Dunn & Crutcher LLP, New York, New York, for Defendants‐Appellees UBS AG, UBS Group AG, UBS Securities LLC, UBS Investment Bank, and UBS Investment Bank, Americas. REENA RAGGI, Circuit Judge: In this civil action under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1132(a)(2) and (a)(3), the named plaintiffs, acting on behalf of a putative class of trustees, beneficiaries, and participants of various ERISA Employee Benefit Plans ("Plans"),1 sue twelve banks and their affiliates for breach of ERISA fiduciary duties owed to the Plans or, in the alternative, for defendants' knowing participation in prohibited transactions as non‐ fiduciary parties‐in‐interest. Plaintiffs here appeal from judgments entered in the United States District Court for the Southern District of New York (Lorna G. Schofield, Judge) on August 24, 2016, and on 1 Plaintiffs bring their claims on behalf of the participants and beneficiaries of their Plans, including the Caterpillar Inc. Retirement Income Plan, the Caterpillar Inc. Retiree Benefit Program, the Bridgestone Americas Salaried Employees Retirement Plan, the Health Corporation of America 401(k) Plan, the Hospital Corporation of America Retirement Plan, the Baker Hughes Incorporated Thrift Plan, and the International Ladies Garment Workers Union Death Benefit Fund 2 and predecessor plans, as well as on behalf of participants, beneficiaries, and named fiduciaries of all other similarly situated Plans. 6 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page7 of 29 September 20, 2016, dismissing the complaint for failure to state a claim for which relief can be granted. See Fed. R. Civ. P. 12(b)(6). Both judgments were based on the same reasoning. First, the district court determined that defendants' alleged fraudulent conduct in conducting foreign currency exchange ("FX") market transactions for plaintiffs' Plans was insufficient to plead the banks' ERISA functional fiduciary status. See Allen v. Bank of Am. Corp., No. 15 Civ. 4285 (LGS), 2016 WL 4446373, at *6–8 (S.D.N.Y. Aug. 23, 2016). Second, the district court ruled that the alternative party‐in‐interest claim failed in the absence of any allegation that non‐party Plan fiduciaries (i.e., the investment managers who arranged the transactions with the defendant banks) had actual or constructive knowledge of the banks' fraud. Id. at *9–10. In challenging dismissal, plaintiffs argue that defendants acquired functional fiduciary status under ERISA by exercising control over the disposition of Plan assets. Specifically, plaintiffs contend that defendants manipulated the benchmark rates to which the subject FX transactions were tied, effectively allowing them to determine their own compensation for each transaction. Moreover, on appeal, plaintiffs recast their alternative party‐in‐interest claim, urging that it, too, is supported by defendants' acquisition of ERISA functional fiduciary status with regard to the subject transactions. Defendants respond that the subject transactions were ordinary FX transactions between arms' length counterparties and, as such, did not give rise to functional fiduciary status. Defendants emphasize that they had no influence over the Plans' decisions to enter into the 7 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page8 of 29 transactions, which were executed pursuant to written instructions negotiated between defendants and the Plans' investment managers. Defendants submit that these instructions, which dictated their compensation and the terms of the transactions' execution, could not confer sufficient control over the disposition of Plan assets to make them fiduciaries, regardless of their alleged misconduct. In appealing dismissal, as well as the district court's denial of their request for adjournment and leave to amend, plaintiffs fault the district court for imposing a novel contract‐evidence requirement for identifying ERISA functional fiduciary status. On de novo review of the challenged dismissal, we reject plaintiffs' argument and reach the same conclusion as the district court, i.e., that plaintiffs fail to state plausible ERISA claims because the facts alleged do not show that defendants exercised the control over Plan assets necessary to establish ERISA functional fiduciary status. Because we further identify no abuse of discretion in the district court's denial of adjournment or leave to file a fourth amended complaint, we affirm the challenged judgments in all respects. BACKGROUND I. Factual Background This ERISA action challenges the conduct of twelve banks and their affiliates in the FX market from January 2003 through 2014. For purposes of this appeal, in discussing this conduct, we credit 8 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page9 of 29 allegations contained in the Second Amended Complaint, which plaintiffs describe as fully capturing all claims against defendants.2 The FX market is the world's largest and most actively traded financial market, with defendants holding a combined global market share of 84%. Indeed, as of 2013, defendants acted as counterparties in approximately 98% of United States spot transactions in the FX market. By way of background, trading in the FX market has a seller exchanging one currency that it holds for another currency that it wishes to acquire. A customer contacts a dealer bank, which provides a "bid," i.e., the price at which the customer can sell the currency it holds, and an "ask," i.e., the price at which the customer can purchase the currency it desires. The difference between these prices is the "bid/ask spread," which forms the basis for the dealer bank's compensation. In an untainted market, competition for customers' orders serves to narrow bid/ask spreads. A "spot transaction" exchanges a sum of currency at a settled exchange rate on a value date that is within two business days of the transaction. The most basic spot transaction is an order for immediate execution by which a customer purchases or sells currency at the quoted price. Another type of spot transaction, sometimes called a "benchmark transaction," is executed on the basis of a daily fixing rate 2 The alleged conduct has been the subject of several federal civil and criminal enforcement actions detailed in the pleadings, but with the exception of one antitrust action, we do not discuss these further here as they are not relevant to this appeal. 9 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page10 of 29 (i.e., a benchmark), which is a published exchange rate for a pair of currencies that is calculated by various third parties at a daily specified time. One of the most commonly used rates for benchmark transactions is the WM/Reuters "4:00 p.m. fix," which is published each day at 4:00 p.m. London time. Fixing rates are presumably determined automatically and anonymously using the median price of actual FX transactions in the 30 seconds before and after a certain time (the "fixing window"). When arranging a benchmark transaction, the dealer guarantees execution at the fixing rate, or at a rate determined by reference to the fixing rate, and derives its compensation based on an agreed‐upon markup. ERISA Plans often trade currency to settle their purchases and sales of foreign securities, or to repatriate dividends, interest, and redemptions that are paid in foreign currencies, rather than as a mode of investment. Thus, the investment managers who invested assets on behalf of plaintiffs' Plans "authorized FX [t]ransactions with Plan assets when [the managers'] investment strategies for a Plan required the exchange of one currency for another." App'x 523, ¶ 218. The Plans' managers would "arrange[] with [d]efendant banks to conduct [an] FX transaction[]," id., ¶ 219, which the banks would then execute pursuant to a direction or written authorization from the managers, each of whom was "an independent pension plan fiduciary," id. at 470, ¶ 75 n.28. 10 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page11 of 29 Plaintiffs here allege that defendants took advantage of their dominant positions in both the wholesale and retail FX markets3 to capitalize on their knowledge of customers' order flows as well as to collude with one another to benefit collectively from customer order information, all of which was to the detriment of their customers, including plaintiffs' ERISA Plans. Plaintiffs allege that, toward these ends, defendants manipulated benchmark fixing rates and, in particular, used three primary techniques to exploit vulnerabilities in methods for calculating those rates.4 First, defendants individually used or shared customer orders and trading positions to devise strategies for trading in and around the benchmarks. By exchanging information about net customer orders, defendants were able to ascertain likely directional movement of the fixing rate, enabling them to trade so as to amplify that movement. Defendants allegedly employed the following tactics to this purpose: (a) they "cleared the decks" of contrary trade orders sufficiently in advance of the fixing window to eliminate or, at least, diminish the effect of such orders on the fixing rate, id. at 451, ¶ 13; (b) they matched or "netted out" customers' buy and sell orders to 3 In this context, the "wholesale market" is the market between banks, whereas the "retail market" is that between banks and non‐bank customers, including ERISA plans. The trades in both markets are "over‐the‐counter," which means that they do not occur on a central exchange containing records of all daily transactions and their prices. 4 One example of a vulnerability is that present in the calculation of the WM/Reuters Closing Spot Rates. These fixing rates are determined by reference to the median value of the transactions alone and weigh all transactions equally. This calculation's failure to account for the notional size of the quotes and transactions rendered it susceptible to defendants' manipulation through artificial increases or decreases in trading volume. 11 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page12 of 29 prevent contrary orders from affecting the fixing rate, id., ¶ 14; (c) they amassed large proprietary currency positions that they traded just before or during the fixing window, see id., ¶ 15; (d) certain defendants sold positions before the fixing window or failed to fill, or delayed filling, orders to manipulate the fixing rate, see id., ¶ 16; (e) defendants broke up large orders into smaller trades, timing them relative to the fixing window to increase their effect on fixing rate calculations, see id., ¶ 17; and (f) they placed orders with each other before the fix to create the appearance of increased trading in the desired direction, a practice known as "paint[ing] the screen," whereupon they would reverse the trades after the fixing window closed, id. at 452, ¶ 19. Second, defendants independently front‐ran market‐moving customer orders by trading proprietary currency positions before executing significant trades, buying before the customer's order increased the fixing rate or selling before that order decreased the fixing rate. Third, one defendant bank, Barclays, implanted a mechanism in its electronic trading platform to give itself the functional equivalent of an option contract on any currency trade, in that the platform rejected orders where the market was moving to the customer's benefit during an artificial hold period, but executed orders where the market was neutral or moving to Barclays's benefit. Plaintiffs further allege that, separate from benchmark manipulation, defendants coordinated the bid/ask spread for various 12 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page13 of 29 currency pairs, effectively eliminating competition and fixing prices. Moreover, defendants quoted customers different bid/ask spreads based on what they understood a customer was buying or selling, and imposed undisclosed markups or markdowns on the price FX traders quoted to FX sales employees. Defendants also manipulated limit and stop orders5 at levels above the limit order price to earn a greater spread or markup with their execution. II. Procedural History Plaintiffs filed their initial complaint in this action on June 3, 2015. They filed their First Amended Complaint on November 16, 2015, and, by leave of court, their Second Amended Complaint on April 6, 2016. The Second Amended Complaint pleads nine claims. Claims I and VI allege defendants' breach of fiduciary duties of prudence and loyalty in violation of ERISA § 404, see 29 U.S.C. § 1104; Claims II and VII allege self‐interested transactions with Plan assets in violation of ERISA § 406(b)(1), see id. § 1106(b)(1); Claims III and VIII allege action on behalf of a party with interests adverse to those of the Plans in violation of ERISA § 406(b)(2), see id. § 1106(b)(2); Claims IV and IX allege action causing party‐in‐interest transactions in violation of ERISA § 406(a)(1), see id. § 1106(a)(1); and Claim V alleges knowing participation as non‐fiduciaries in party‐in‐interest transactions in 5 Limit and stop orders are trades conditioned on an exchange rate moving past a particular threshold level. 13 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page14 of 29 violation of ERISA § 406(a)(1)(A) & (D), see id. §§ 1106(a)(1), 1132(a)(3).6 On May 19, 2016, three of the defendant banks and their affiliates ("Group One Defendants")7 moved to dismiss the Second Amended Complaint for lack of subject matter jurisdiction, see Fed. R. Civ. P. 12(b)(1), and for failure to state a claim, see Fed. R. Civ. P. 12(b)(6). Meanwhile, the district court had granted preliminary approval to settlements involving the remaining nine defendant banks and their affiliates ("Group Two Defendants") in the related FOREX antitrust litigation, and had enjoined further prosecution of this action against those defendants because plaintiffs' ERISA Plans were members of the settling classes.8 Thus, on June 1, 2016, while 6 Claims VI through IX were not asserted against any Group One Defendant. See Definition of "Group One Defendants," infra note 7. 7 This subset of defendants, which consists of Credit Suisse AG, Credit Suisse Securities (USA) LLC, Deutsche Bank AG, Morgan Stanley, Morgan Stanley Capital Services LLC, and Morgan Stanley & Co., LLC, was referred to by the district court as the "Non‐Settling Defendants," because they were not parties to the preliminarily approved settlement agreement in In re Foreign Exchange Benchmark Rates Antitrust Litigation, 13 Civ. 7789 (LGS) (S.D.N.Y. filed Nov. 1, 2013) ("FOREX antitrust litigation"), an antitrust case predicated on the same facts as this case and also assigned to Judge Schofield. In their appellate briefs, the parties refer to this subset of defendants as the "Group One Defendants," a designation we adopt in this opinion. Group Two Defendants comprise Bank of America Corporation; Bank of America, N.A.; 8 Merrill Lynch, Pierce, Fenner & Smith Incorporated; Merrill Lynch Capital Services, Inc.; Barclays PLC; Barclays Bank PLC; Barclays Group US Inc.; Barclays Capital Inc.; BNP Paribas Group; BNP Paribas North America, Inc.; Citibank, N.A.; Citigroup Inc.; The Goldman Sachs Group; Goldman, Sachs & Co.; HSBC Holdings PLC; HSBC Bank PLC; HSBC North America Holdings Inc.; HSBC Bank USA, N.A.; JPMorgan Chase Bank, N.A.; 14 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page15 of 29 the Group One Defendants' motion to dismiss was pending, the district court ordered plaintiffs to file a third amended complaint removing allegations of collusive activity by the Group Two Defendants in order to conform with the preliminary FOREX antitrust litigation settlement. The Third Amended Complaint, filed on July 15, 2016, incorporated all allegations against the Group One Defendants asserted in the Second Amended Complaint. As such, the parties agreed that no new briefing was necessary for the district court to rule on the pending motion to dismiss. On August 23, 2016, the district court dismissed the complaint against the Group One Defendants pursuant to Fed. R. Civ. P. 12(b)(6). See Allen v. Bank of Am. Corp., 2016 WL 4446373, at *6–10.9 At an August 31, 2016 conference, the parties agreed that the Group Two Defendants would file a motion to dismiss all counts against them on the same basis. On September 9, 2016, however, plaintiffs requested a 60‐day adjournment to allow them to consider further amendment, positing that there "may be. . . existing contracts" to support their claims. App'x 433–34. The district court denied the request, observing that the complaint had already been amended several times and that JPMorgan Chase & Co.; The Royal Bank of Scotland PLC; The Royal Bank of Scotland Group PLC; RBS Securities Inc.; UBS AG; UBS Securities LLC; UBS Investment Bank; UBS Investment Bank, Americas; and UBS Group AG. The district court denied that portion of the Group One Defendants' motion seeking 9 dismissal for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1). See Allen v. Bank of Am. Corp., 2016 WL 4446373, at *2–6. 15 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page16 of 29 plaintiffs had not proffered adequate justification for further amendment or delay. Instead, the district court granted plaintiffs' alternative request, to which the Group Two Defendants consented, to file a joint stipulation of dismissal of any outstanding claims. Thus, on September 20, 2016, the district court so‐ordered a stipulation from the parties for dismissal of all claims against those defendants. This timely appeal followed. DISCUSSION On appeal, plaintiffs primarily challenge the district court's determination that the defendant banks were not functional fiduciaries under ERISA, an error plaintiffs maintain requires reversal of the dismissal of their ERISA fiduciary breach claims and non‐ fiduciary ERISA party‐in‐interest claims.10 In any event, plaintiffs maintain that the district court erred in denying them an adjournment and leave to file a fourth amended complaint. We review de novo the dismissal of a complaint pursuant to Fed. R. Civ. P. 12(b)(6), accepting the alleged facts as true and drawing all reasonable inferences in plaintiffs' favor. See Allco Fin. Ltd. v. Klee, 861 F.3d 82, 94 (2d Cir. 2017). In doing so, we are mindful that a complaint must plead sufficient "factual content" to allow a factfinder "to draw Plaintiffs challenge dismissal of their claims insofar as they are based on defendants' 10 alleged manipulation of fixing rates and stop and limit orders, but plaintiffs do not appeal dismissal of their claims to the extent they are predicated on allegations that defendants charged undisclosed markups to FX bid/ask quotes or engaged in collusive manipulation of FX bid/ask spreads. 16 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page17 of 29 the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "[B]ald assertions and conclusions of law will not suffice" to avoid dismissal, Spool v. World Child Int'l Adoption Agency, 520 F.3d 178, 183 (2d Cir. 2008) (internal quotation marks omitted), nor will factual "allegations that are wholly conclusory," Krys v. Pigott, 749 F.3d 117, 128 (2d Cir. 2014). I. Fiduciary Duty Claims With the exception of Claim V, which is discussed in Part II, all claims asserted in the Second Amended Complaint require a showing that defendants engaged in conduct breaching an alleged ERISA fiduciary duty. See 29 U.S.C. §§ 1104, 1106(a)(1), (b)(1), (b)(2). "In every case charging breach of ERISA fiduciary duty, . . . the threshold question is not whether the actions of some person employed to provide services under a plan adversely affected a plan beneficiary's interest, but whether that person was acting as a fiduciary (that is, was performing a fiduciary function) when taking the action subject to complaint." Pegram v. Herdrich, 530 U.S. 211, 226 (2000). Accordingly, the question presented by this appeal is whether the banks were performing a fiduciary function when they executed FX transactions for the Plans so as to give rise to ERISA fiduciary status and attending fiduciary duties. "The definition of 'fiduciary' under ERISA focuses on the exercise, as well as the possession, of authority or control" over a pension plan's assets, without regard to the title of the person 17 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page18 of 29 exercising such control. Blatt v. Marshall & Lassman, 812 F.2d 810, 812– 13 (2d Cir. 1987); accord Bouboulis v. Transp. Workers Union of Am., 442 F.3d 55, 64–65 (2d Cir. 2006). Specifically, under ERISA, even if a person is not a named fiduciary of an ERISA plan,11 it can be a de facto fiduciary if it "exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets." 29 U.S.C. § 1002(21)(A); see Coulter v. Morgan Stanley & Co., 753 F.3d 361, 366 (2d Cir. 2014).12 Mindful that "Congress intended that ERISA function as a comprehensive remedial statute," Layaou v. Xerox Corp., 238 F.3d 205, 210 (2d Cir. 2001), we construe this definition liberally, see Frommert v. Conkright, 433 F.3d 254, 271 (2d Cir. 2006); see also David P. Coldesina, D.D.S. v. Estate of Simper, 407 F.3d 1126, 1132 (10th Cir. 2005) (holding that "[i]n Congress's judgment, and consistent with general trust law, parties controlling plan assets are automatically in a position of confidence by virtue of that control, and as such they are obligated to act accordingly" (emphasis in original)). Here, there is no question that the FX transactions at issue ERISA defines "person" as "an individual, partnership, joint venture, corporation, 11 mutual company, joint‐stock company, trust, estate, unincorporated organization, association, or employee organization." 29 U.S.C. § 1002(9). A person can also be a fiduciary if it "renders investment advice for a fee or other 12 compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so," or "has any discretionary authority or discretionary responsibility in the administration of such plan." 29 U.S.C. § 1002(21)(A). Because these statutory provisions are not the basis for plaintiffs' functional fiduciary argument, we do not discuss them further. 18 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page19 of 29 involved monetary assets of plaintiffs' Plans.13 Thus, the determinative question is whether plaintiffs pleaded facts sufficient to demonstrate defendants' control or authority over these assets. Like the district court, we conclude that plaintiffs did not. Our analysis begins with the basic proposition, applicable in both the ERISA context and more generally, that "a relationship of trust is established when one acquires possession of another's property with the understanding that it is to be used for the owner's benefit, and in these circumstances an obligation arises on the part of the one in possession to act in the owner's best[] interests rather than his own." David P. Coldesina, D.D.S. v. Estate of Simper, 407 F.3d at 1134; see United States v. Skelly, 442 F.3d 94, 98 (2d Cir. 2006) (explaining relationship of trust and confidence exists with respect to matters entrusted to another's discretion). From this, it necessarily follows that an entity has a fiduciary duty to an ERISA plan if the entity possesses or exercises "actual control over the disposition of plan assets." Blatt v. Marshall & Lassman, 812 F.2d at 813 (emphasis in original). Whether this control was explicitly granted is irrelevant; what matters is whether the putative fiduciary actually exercised Although plaintiffs cursorily argue that order information for an FX transaction also 13 constitutes a Plan asset, they support that proposition only with a citation to a Department of Labor Advisory Opinion that is irrelevant to the issue. See Department of Labor Advisory Op. No. 93‐14A (May 5, 1993) (discussing whether assets of trust established by employer as potential source of premium payments for ERISA plan's health insurance were plan assets). Thus, because this issue is not properly presented, see Fed. R. App. P. 28(a)(8)(A), we need not address it here, see In re Tustaniwsky, 758 F.3d 179, 184 (2d Cir. 2014) ("[I]ssues not sufficiently argued in the briefs are considered waived and normally will not be addressed on appeal." (internal quotation marks omitted)), and we focus our control discussion on the Plans' monetary assets involved in the FX transactions. 19 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page20 of 29 control. See Bouboulis v. Transp. Workers Union of Am., 442 F.3d at 63– 64. The principle is not, however, without limit. An entity "must exercise the requisite degree of control and discretion to be held liable" for breach of fiduciary duty. Geller v. Cty. Line Auto Sales, Inc., 86 F.3d 18, 21 (2d Cir. 1996); see Bell v. Pfizer, Inc., 626 F.3d 66, 74 (2d Cir. 2010) (identifying examples of conduct not implicating fiduciary duty). Plaintiffs argue that insofar as the defendant banks fraudulently manipulated benchmark rates to maximize the profit they reaped from each FX transaction, they exercised a sufficient degree of control over the disposition of the Plans' assets plausibly to be denominated ERISA functional fiduciaries. The argument fails to persuade for a combination of reasons. To begin, even assuming the alleged manipulation of FX transactions, as well as an attendant increase in costs to the Plans, one factor weighing against the conclusion that the defendant banks controlled the Plans' assets is that the transactions at issue were initiated not by the banks but at the discretion of the Plans' independent investment managers. Thus, this case is not akin to Bricklayers & Allied Craftworkers Local 2, Albany, N.Y. Pension Fund v. Moulton Masonry & Const., LLC, 779 F.3d 182, 189 (2d Cir. 2015), in which we identified as an ERISA functional fiduciary a party who determined which of the corporate defendant's creditors to pay, exercised control over money owed to the plans at issue, and failed to remit to those plans assets under his control. Nor is it akin to LoPresti v. Terwilliger, 126 F.3d 34, 40 (2d Cir. 1997), wherein we identified as an ERISA functional fiduciary a defendant who 20 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page21 of 29 determined which creditors would be paid from a company account on which he was a signatory and which commingled general assets and employee plan contributions. Rather, the relationship here was "salesmanship," with defendants "matching the customer's desires"—as conveyed by their investment managers—"with available inventory," but otherwise lacking "authority to exercise control unilaterally over a portion of a plan's assets." Farm King Supply, Inc. Integrated Profit Sharing & Tr. v. Edward D. Jones & Co., 884 F.2d 288, 292 (7th Cir. 1989); cf. United States v. Litvak, 889 F.3d 56, 61 (2d Cir. 2018) (explaining that, in context of arms' length, over‐the‐ counter transactions in RMBS bond market, broker‐dealer "acts solely in its own interest as a principal," is not agent for its counterparties, and "owes them no special or fiduciary duty"). Such arms' length dealings do not admit an inference that the banks controlled disposition of the Plans' assets so as thereby to be deemed ERISA functional fiduciaries of the Plans. No different conclusion is warranted by plaintiffs' characterization of defendants as service providers. That characterization, which defendants dispute, usually applies to accountants, lawyers, and investment advisors, and derives from their contracts or agreements with ERISA plans. As this court has observed, [w]hen a person who has no relationship to an ERISA plan is negotiating a contract with that plan, he has no authority over or responsibility to the plan and presumably is unable to exercise any control over the trustees' decision whether or not, and on what terms, to 21 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page22 of 29 enter into an agreement with him. Such a person is not an ERISA fiduciary with respect to the terms of the agreement for his compensation. . . . On the other hand, after a person has entered into an agreement with an ERISA‐covered plan, the agreement may give it such control over factors that determine the actual amount of its compensation that the person thereby becomes an ERISA fiduciary with respect to that compensation. F.H. Krear & Co. v. Nineteen Named Trustees, 810 F.2d 1250, 1259 (2d Cir. 1987). No allegations here indicate that defendants were able to exercise any control over the Plans' trustees' or investment managers' decisions to enter into FX transactions with defendants. See id. Nor do any allegations suggest that agreements stating the managers' instructions for execution of the FX transactions gave defendants "such control over factors that determine the actual amount of [their] compensation." Id.14 Indeed, plaintiffs conceded at oral argument that defendants would not be fiduciaries if they followed the Plans' investment managers' instructions in executing the transactions at issue. See McCaffree Fin. Corp. v. Principal Life Ins. Co., 811 F.3d 998, 1003 (8th Cir. 2016) (collecting cases recognizing that "service provider's adherence to its agreement with a plan administrator does 14 Rather, averments as to the existence of such agreements confirm that defendants themselves did not cause the Plans to enter into any of the transactions at issue, which is an essential element of Claims IV and IX. See Lockheed Corp. v. Spink, 517 U.S. 882, 888–89 (1996). 22 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page23 of 29 not implicate any fiduciary duty where the parties negotiated and agreed to the terms of that agreement in an arm's‐length bargaining process"). Plaintiffs do not allege defendants' violation of any specific instructions. Insofar as plaintiffs rely on allegations of fraud in defendants' conduct of FX transactions to support their fiduciary claims, this court, as well as sister circuits, have held that wrongdoing in performing non‐fiduciary services does not transform the alleged wrongdoer into a fiduciary. See Geller v. Cty. Line Auto Sales, Inc., 86 F.3d at 19–21 (holding that employer who performed only ministerial functions for plan was not transformed into fiduciary by fraud in carrying out his functions that resulted in some dissipation of plan assets); see also Rutledge v. Seyfarth, Shaw, Fairweather & Geraldson, 201 F.3d 1212, 1220 (9th Cir. 2000) (holding that law firm's alleged overcharge for traditional attorney services did not make it ERISA fiduciary); Reich v. Lancaster, 55 F.3d 1034, 1049 (5th Cir. 1995) (stating that, in absence of "actual decision making power," "even miscreant professionals. . . who provide necessary services to ERISA plans" are not automatically fiduciaries); Pappas v. Buck Consultants, Inc., 923 F.2d 531, 538 (7th Cir. 1991) (rejecting argument that consultants become ERISA fiduciaries by "perform[ing] professional functions in a tortious manner, regardless of what capacity they are acting in when their tortious deeds occur"). Thus, while defendants' alleged fraudulent exploitation of vulnerabilities within the system for calculating benchmark rates could raise other legal concerns— whether in tort, contract, etc.—we have no reason to consider that 23 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page24 of 29 possibility on this appeal. We here conclude only that the alleged wrongdoing did not afford defendants the control over the Plans' assets necessary to make them ERISA functional fiduciaries. Plaintiffs nevertheless maintain that the district court erred in failing to cite and apply the functional fiduciary standard referenced in United States v. Glick, 142 F.3d 520 (2d Cir. 1998). The argument does not persuade. Plaintiffs acknowledge that Glick, a criminal sentencing appeal, merely restates the statutory standard, which, as we have already observed supra at 18–20, asks whether the funds involved were Plan assets and whether defendants had any authority or control over those assets. See United States v. Glick, 142 F.3d at 527 (citing 29 U.S.C. § 1002(21)(A)). Because this is the standard the district court applied, see Allen v. Bank of Am. Corp., 2016 WL 4446373, at *6–8, there was no error in its failure explicitly to reference Glick. Moreover, Glick does not support plaintiffs' urged attribution of functional fiduciary status in this case. It cautioned that, the mere deduction of an agent's commission from welfare fund assets does not, in itself, create a fiduciary relationship between the agent and the fund. The fiduciary relationship in this case [was] created because the agent exercised unhampered discretion in setting the commission rate. Conversely, an agent with a contractually‐established commission rate is not, without other indicia, a fiduciary to the plan. United States v. Glick, 142 F.3d at 528. The facts pleaded here do not admit an inference that defendants "exercised unhampered 24 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page25 of 29 discretion" in establishing their compensation for the FX transactions at issue. Id. Even assuming that defendants' alleged market manipulations allowed them to secure higher compensation for the FX transactions they conducted than a free market would have indicated, the scheme nevertheless depended on so many different persons and manipulations as to preclude an inference that defendants had an unfettered ability to dictate their compensation for each transaction. Moreover, such an inference is belied by the fact, already noted, that the Plans' independent investment managers initiated the FX transactions at issue and provided instructions for their execution, which themselves informed defendants' compensation. Accordingly, because the complaint fails plausibly to allege that defendants exercised the control over the disposition of Plan assets necessary to make them ERISA functional fiduciaries, we affirm dismissal of plaintiffs' breach of fiduciary duty claims (Claims I through IV and Claims VI through IX). II. Party‐In‐Interest Claim On appeal, plaintiffs tie the fate of their party‐in‐interest claim (Claim V) to that of their fiduciary claims by arguing that the former is predicated on a recognition of ERISA functional fiduciary status as to at least some of the defendant banks and their affiliates. Conceding that their party‐in‐interest claim, which is premised on violations of ERISA § 406(a)(1)(A) & (D), requires knowledge of fraud, see 29 U.S.C. § 1106(a)(1), plaintiffs urge non‐fiduciary liability for certain 25 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page26 of 29 defendant banks as a result of their knowing participation in FX transactions with other defendant banks that were acting as functional fiduciaries and knew of the benchmark manipulations.15 For the reasons explained in Part I of this opinion, we conclude that no defendant was a functional fiduciary with respect to the transactions at issue and, thus, conclude that plaintiffs cannot secure relief from dismissal on the theory urged in this court. See Lotes Co. v. Hon Hai Precision Indus., 753 F.3d 395, 413 (2d Cir. 2014) (observing that "Court may affirm on any basis for which there is sufficient support in the record, including grounds not relied on by the district court" (internal quotation marks omitted)).16 III. Denial of Adjournment and Leave To Amend The district court denied plaintiffs' September 9, 2016 request for a 60‐day adjournment to conduct further investigation and, potentially, to amend their complaint, explaining that plaintiffs had amended their complaint "repeatedly," and had "submitted nothing in support of the application, and nothing to suggest that a further amendment would be anything but futile." App'x 436. We review denials either of adjournment or of leave to amend for abuse of By contrast, in the district court, plaintiffs argued party‐in‐interest in the alternative in 15 the event no bank was found to be a fiduciary. Because they do not pursue that theory on appeal, we deem it abandoned. See State St. Bank & Tr. Co. v. Inversiones Errazuriz Limitada, 374 F.3d 158, 172 (2d Cir. 2004). Insofar as plaintiffs urge non‐fiduciary, party‐in‐interest liability based on violations of 16 other ERISA provisions, Claim V of the Second Amended Complaint specifically pleads only violations of 29 U.S.C. § 1106(a)(1) and, therefore, we do not consider those newly raised claims here. See Harrison v. Rep. of Sudan, 838 F.3d 86, 96 (2d Cir. 2016). 26 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page27 of 29 discretion, see TechnoMarine SA v. Giftports, Inc., 758 F.3d 493, 505 (2d Cir. 2014); Farias v. Instructional Sys., Inc., 259 F.3d 91, 99–100 (2d Cir. 2001), unless "denial was based on an interpretation of law," such as futility, in which case our review is de novo, Pyskaty v. Wide World of Cars, LLC, 856 F.3d 216, 224 (2d Cir. 2017) (internal quotation marks omitted). Plaintiffs argue that it was legal error for the district court to conclude that further amendment would be futile in light of their counsel's professed belief that further investigation "may" reveal "existing contracts between Defendants and the ERISA plans" that would show "an ongoing contractual relationship between any Plan and any Defendant[] with respect to FX transactions" or "indicia of [defendants'] control over Plan assets." App'x 434 (internal quotation marks omitted). They maintain that, "[l]ogically, adding allegations of such contracts would remedy what the district court found to be a fatal deficiency" of contract evidence. Appellant Br. at 52. The argument fails because the district court did not impose a contract‐evidence requirement only to conclude that an amendment pleading contract evidence would be futile. Rather, read in context, the district court's futility statement is properly understood to reference plaintiffs' speculative suggestion that they could identify further contracts within the requested adjournment time and, thus, the futility of adjournment. In reaching that conclusion, the district court highlighted plaintiffs' failure to support their motion. Indeed, plaintiffs' application only speculates, based on their counsel's unspecified "experience with previous cases," that there "may be. . . 27 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page28 of 29 existing contracts" supporting further amendment. App'x 434. Nowhere, even on this appeal, do plaintiffs explain what those contracts might show that would warrant amendment. See TechnoMarine SA v. Giftports, Inc., 758 F.3d at 505 ("A plaintiff need not be given leave to amend if it fails to specify either to the district court or to the court of appeals how amendment would cure the pleading deficiencies in its complaint."). Nor do they proffer any excuse for their lack of diligence in searching for such contracts earlier, a particularly egregious omission given that they filed their initial complaint on June 3, 2015, proceeded to amend it on November 16, 2015, April 6, 2016, and July 15, 2016, but only proposed to look for further contracts on September 12, 2016. Plaintiffs can hardly profess ignorance of the significance of such contracts because courts routinely consider contract terms as indicators of discretion or control over ERISA plan assets. See, e.g., Flanigan v. Gen. Elec. Co., 242 F.3d 78, 87 (2d Cir. 2001); Lowen v. Tower Asset Mgmt., Inc., 829 F.2d 1209, 1219 (2d Cir. 1987); see also City of Pontiac Policemen's & Firemen's Ret. Sys. v. UBS AG, 752 F.3d 173, 188 (2d Cir. 2014) (stating that, although plaintiffs' prior amendment was not in response to a motion to dismiss identifying particular pleading defects, "it is unlikely that the deficiencies raised with respect to the Amended Complaint were unforeseen by plaintiffs when they amended"). On this record, we identify neither legal error nor abuse of discretion in the district court's denial of adjournment in anticipation of further amendment, and, therefore, affirm the challenged judgment. 28 Case 16-3327, Document 108-1, 07/10/2018, 2341215, Page29 of 29 CONCLUSION To summarize, we conclude as follows: 1. Plaintiffs fail to allege facts showing that the defendant banks and their affiliates exercised the requisite level of control over the disposition of Plan assets so as to warrant their identification as ERISA functional fiduciaries with respect to the FX transactions at issue. 2. Because plaintiffs here pursue their party‐in‐interest claim not in the alternative to, but in reliance on, their functional fiduciary theory, the claim necessarily fails for lack of the requisite proof of control. 3. The district court neither committed legal error nor abused its discretion in denying plaintiffs an adjournment to conduct further investigation in anticipation of amending their complaint for a fourth time. Accordingly, the judgments of dismissal are AFFIRMED. 29 Case 16-3327, Document 108-2, 07/10/2018, 2341215, Page1 of 1 United States Court of Appeals for the Second Circuit Thurgood Marshall U.S. Courthouse 40 Foley Square New York, NY 10007 ROBERT A. KATZMANN CATHERINE O'HAGAN WOLFE CHIEF JUDGE CLERK OF COURT Date: July 10, 2018 DC Docket #: 15-cv-4285 Docket #: 16-3327cv DC Court: SDNY (NEW YORK Short Title: Allen v. Bank of America Corporation CITY)DC Docket #: 15-cv-4285 DC Court: SDNY (NEW YORK CITY) DC Judge: Schofield BILL OF COSTS INSTRUCTIONS The requirements for filing a bill of costs are set forth in FRAP 39. A form for filing a bill of costs is on the Court's website. The bill of costs must: * be filed within 14 days after the entry of judgment; * be verified; * be served on all adversaries; * not include charges for postage, delivery, service, overtime and the filers edits; * identify the number of copies which comprise the printer's unit; * include the printer's bills, which must state the minimum charge per printer's unit for a page, a cover, foot lines by the line, and an index and table of cases by the page; * state only the number of necessary copies inserted in enclosed form; * state actual costs at rates not higher than those generally charged for printing services in New York, New York; excessive charges are subject to reduction; * be filed via CM/ECF or if counsel is exempted with the original and two copies. Case 16-3327, Document 108-3, 07/10/2018, 2341215, Page1 of 1 United States Court of Appeals for the Second Circuit Thurgood Marshall U.S. Courthouse 40 Foley Square New York, NY 10007 ROBERT A. KATZMANN CATHERINE O'HAGAN WOLFE CHIEF JUDGE CLERK OF COURT Date: July 10, 2018 DC Docket #: 15-cv-4285 Docket #: 16-3327cv DC Court: SDNY (NEW YORK Short Title: Allen v. Bank of America Corporation CITY)DC Docket #: 15-cv-4285 DC Court: SDNY (NEW YORK CITY) DC Judge: Schofield VERIFIED ITEMIZED BILL OF COSTS Counsel for _________________________________________________________________________ respectfully submits, pursuant to FRAP 39 (c) the within bill of costs and requests the Clerk to prepare an itemized statement of costs taxed against the ________________________________________________________________ and in favor of _________________________________________________________________________ for insertion in the mandate. Docketing Fee _____________________ Costs of printing appendix (necessary copies ______________) _____________________ Costs of printing brief (necessary copies ______________ ____) _____________________ Costs of printing reply brief (necessary copies ______________) _____________________ (VERIFICATION HERE) ________________________ Signature

NEW CASE MANAGER, Yenni Liu, ASSIGNED.[2341225] [16-3327, 16-3571] [Entered: 07/10/2018 09:31 AM]

United States Court of Appeals for the Second Circuit Thurgood Marshall U.S. Courthouse 40 Foley Square New York, NY 10007 ROBERT A. KATZMANN CATHERINE O'HAGAN WOLFE CHIEF JUDGE CLERK OF COURT Date: July 10, 2018 DC Docket #: 15-cv-4285 Docket #: 16-3327cv DC Court: SDNY (NEW YORK Short Title: Allen v. Bank of America Corporation CITY)DC Docket #: 15-cv-4285 DC Court: SDNY (NEW YORK CITY) DC Judge: Schofield NOTICE OF CASE MANAGER CHANGE The case manager assigned to this matter has been changed. Inquiries regarding this case may be directed to 212-857-8541.

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1
09/23/2016
NOTICE OF CIVIL APPEAL, with district court docket, on behalf of Appellants Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren Pepicelli, FILED. [1873285] [16-3327] [Entered: 09/28/2016 03:51 PM]
2
09/23/2016
PAYMENT OF DOCKETING FEE, on behalf of Appellants Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren Pepicelli, district court receipt # 0208-12790801, FILED.[1873320] [16-3327] [Entered: 09/28/2016 04:02 PM]
3
09/23/2016
DISTRICT COURT JUDGMENT, dated 08/24/2016, RECEIVED.[1873322] [16-3327] [Entered: 09/28/2016 04:03 PM]
4
09/23/2016
ELECTRONIC INDEX, in lieu of record, FILED.[1873324] [16-3327] [Entered: 09/28/2016 04:04 PM]
7
10/06/2016
FORM C, on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren Pepicelli, FILED. Service date 10/06/2016 by CM/ECF.[1879371] [16-3327] [Entered: 10/06/2016 05:48 PM]
8
10/06/2016
FORM D, on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren Pepicelli, FILED. Service date 10/06/2016 by CM/ECF.[1879372] [16-3327] [Entered: 10/06/2016 05:49 PM]
12
10/10/2016
ACKNOWLEDGMENT AND NOTICE OF APPEARANCE, on behalf of Appellee Deutsche Bank AG, FILED. Service date 10/10/2016 by CM/ECF.[1880312] [16-3327] [Entered: 10/10/2016 10:25 AM]
13
10/10/2016
NOTICE OF APPEARANCE AS ADDITIONAL COUNSEL, on behalf of Appellee Deutsche Bank AG, FILED. Service date 10/10/2016 by CM/ECF. [1880313] [16-3327] [Entered: 10/10/2016 10:28 AM]
14
10/11/2016
ACKNOWLEDGMENT AND NOTICE OF APPEARANCE, on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren Pepicelli, FILED. Service date 10/11/2016 by CM/ECF.[1880714] [16-3327] [Entered: 10/11/2016 11:10 AM]
15
10/11/2016
NOTICE OF APPEARANCE AS SUBSTITUTE COUNSEL, on behalf of Appellee Morgan Stanley, Morgan Stanley & Co. LLC and Morgan Stanley Capital Services LLC, FILED. Service date 10/11/2016 by CM/ECF. [1880781] [16-3327] [Entered: 10/11/2016 11:31 AM]
16
10/11/2016
ATTORNEY, Eric Foster Leon for Deutsche Bank AG, in case 16-3327, [13], ADDED.[1881061] [16-3327] [Entered: 10/11/2016 02:21 PM]
17
10/11/2016
ATTORNEY, Jonathan M. Moses, [15], in place of attorney David G. Januszewski, SUBSTITUTED.[1881077] [16-3327] [Entered: 10/11/2016 02:32 PM]
18
10/11/2016
ACKNOWLEDGMENT AND NOTICE OF APPEARANCE, on behalf of Appellee Credit Suisse Securities (USA) LLC, FILED. Service date 10/11/2016 by CM/ECF.[1881310] [16-3327] [Entered: 10/11/2016 03:55 PM]
19
10/11/2016
ACKNOWLEDGMENT AND NOTICE OF APPEARANCE, on behalf of Appellee Morgan Stanley, Morgan Stanley Capital Services LLC and Morgan Stanley & Co. LLC, FILED. Service date 10/11/2016 by CM/ECF.[1881430] [16-3327] [Entered: 10/11/2016 04:33 PM]
21
10/12/2016
ATTORNEY, Eric Foster Leon for Appellee Deutsche Bank AG, in case 16-3327, [13], ADDED.[1882144] [16-3327] [Entered: 10/12/2016 12:47 PM]
22
10/12/2016
CAPTION, Credit Suisse AG has been changed from Defendant to Defendant-Appellee, AMENDED.[1882152] [16-3327] [Entered: 10/12/2016 12:54 PM]
23
10/12/2016
LOCAL RULE 31.2 NOTICE, placing this appeal on the Court's Expedited Calendar, setting appellant' brief due date as 11/16/2016, appellee's brief due date as 12/21/2016,TRANSMITTED.[1882164] [16-3327] [Entered: 10/12/2016 01:00 PM]
26
10/12/2016
NEW CASE MANAGER, Amit Singh, ASSIGNED.[1882279] [16-3327] [Entered: 10/12/2016 02:12 PM]
28
11/03/2016
MOTION, to consolidate appeals, to extend time, on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren Pepicelli, FILED. Service date 11/03/2016 by CM/ECF. [1900041] [16-3327] [Entered: 11/03/2016 05:30 PM]
33
11/09/2016
MOTION ORDER, granting motion to consolidate appeals, and to extend the briefing schedule, [28] filed by Appellant Doris Sue Allen, Donna S. Lucas, Jonathan G. Axelrod, Dana Kellen, Hedy L. Anselman, Timothy R. Garrett, Warren Pepicelli and John A. Boardman in 16-3327, granting motion to consolidate appeals, and to extend the briefing schedule [1900042-2] filed by Appellant Doris Sue Allen, Donna S. Lucas, Jonathan G. Axelrod, Dana Kellen, Hedy L. Anselman, Timothy R. Garrett, John A. Boardman and Warren J. Pepicelli in 16-3571, by RKW, FILED. [1903990][33] [16-3327, 16-3571] [Entered: 11/09/2016 04:02 PM]
34
11/10/2016
CAPTION, in re: 16-3571 consolidation, AMENDED.[1904853] [16-3327, 16-3571] [Entered: 11/10/2016 02:39 PM]
35
11/10/2016
DEFECTIVE DOCUMENT, Notice of Appearance as Additional Counsel, [1904648-2], on behalf of Appellee HSBC Bank PLC, HSBC Bank USA, N.A., HSBC Holdings PLC and HSBC North America Holdings Inc. in 16-3571, FILED.[1904890] [16-3571, 16-3327] [Entered: 11/10/2016 02:51 PM]
36
11/14/2016
NOTICE OF APPEARANCE AS ADDITIONAL COUNSEL, on behalf of Appellee HSBC Bank PLC, HSBC Bank USA, N.A., HSBC Holdings PLC and HSBC North America Holdings Inc. in 16-3327, 16-3571, FILED. Service date 11/14/2016 by CM/ECF. [1906367] [16-3327, 16-3571] [Entered: 11/14/2016 05:27 PM]
37
11/15/2016
ATTORNEY, Julia C. Webb for HSBC Bank USA, N.A. HSBC Holdings PLC HSBC North America Holdings Inc. HSBC Bank PLC, in case 16-3327, [36], ADDED.[1906895] [16-3327, 16-3571] [Entered: 11/15/2016 12:02 PM]
38
11/15/2016
CURED DEFECTIVE NOTICE OF APPEARANCE AS ADDITIONAL COUNSEL, [36], on behalf of Appellee HSBC Bank PLC, HSBC Bank USA, N.A., HSBC Holdings PLC and HSBC North America Holdings Inc. in 16-3327, FILED.[1906897] [16-3327, 16-3571] [Entered: 11/15/2016 12:03 PM]
39
11/16/2016
NOTICE OF APPEARANCE AS ADDITIONAL COUNSEL, on behalf of Appellee HSBC Bank PLC, HSBC Bank USA, N.A., HSBC Holdings PLC and HSBC North America Holdings Inc. in 16-3327, 16-3571, FILED. Service date 11/16/2016 by CM/ECF. [1908037] [16-3327, 16-3571] [Entered: 11/16/2016 11:40 AM]
40
11/16/2016
DEFECTIVE DOCUMENT, notice of appearance as additional counsel, [39], on behalf of Appellee HSBC Bank PLC, HSBC Bank USA, N.A., HSBC Holdings PLC and HSBC North America Holdings Inc. in 16-3327, FILED.[1908650] [16-3327, 16-3571] [Entered: 11/16/2016 04:35 PM]
41
11/16/2016
NOTICE OF APPEARANCE AS ADDITIONAL COUNSEL, on behalf of Appellee HSBC Bank PLC, HSBC Bank USA, N.A., HSBC Holdings PLC and HSBC North America Holdings Inc. in 16-3327, 16-3571, FILED. Service date 11/16/2016 by CM/ECF. [1908718] [16-3327, 16-3571] [Entered: 11/16/2016 05:00 PM]
42
11/17/2016
DEFECTIVE DOCUMENT, Notice of Appearance as Additional Counsel, [41], on behalf of Appellee HSBC Bank PLC, HSBC Bank USA, N.A., HSBC Holdings PLC and HSBC North America Holdings Inc. in 16-3327, FILED.[1908788] [16-3327, 16-3571] [Entered: 11/17/2016 08:36 AM]
44
11/28/2016
NOTICE OF APPEARANCE AS ADDITIONAL COUNSEL, on behalf of Appellee HSBC Bank PLC, HSBC Bank USA, N.A., HSBC Holdings PLC and HSBC North America Holdings Inc. in 16-3327, 16-3571, FILED. Service date 11/28/2016 by CM/ECF. [1914752] [16-3327, 16-3571] [Entered: 11/28/2016 03:33 PM]
45
11/28/2016
ATTORNEY, Roger B. Cowie for HSBC Bank USA, N.A. HSBC Holdings PLC HSBC North America Holdings Inc. HSBC Bank PLC, in case 16-3327 Roger B. Cowie for HSBC Bank USA, N.A. HSBC Holdings PLC HSBC North America Holdings Inc. HSBC Bank PLC, in case 16-3571, [44], ADDED.[1914873] [16-3327, 16-3571] [Entered: 11/28/2016 04:12 PM]
46
11/28/2016
CURED DEFECTIVE NOTICE OF APPEARANCE AS ADDITIONAL COUNSEL, [44], on behalf of Appellee HSBC Bank PLC, HSBC Bank USA, N.A., HSBC Holdings PLC and HSBC North America Holdings Inc. in 16-3327, FILED.[1914877] [16-3327, 16-3571] [Entered: 11/28/2016 04:13 PM]
47
12/15/2016
CAPTION, Appellee name changed from Credite Suisse AG to it's correct name Credit Suisse AG, AMENDED.[1929239] [16-3327] [Entered: 12/15/2016 04:04 PM]
48
01/04/2017
NOTICE OF APPEARANCE AS ADDITIONAL COUNSEL, on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren Pepicelli, FILED. Service date 01/04/2016 by CM/ECF. [1939335] [16-3327] [Entered: 01/04/2017 11:10 AM]
49
01/04/2017
ATTORNEY, Regina Markey for Jonathan G. Axelrod Dana Kellen Warren Pepicelli Donna S. Lucas John A. Boardman Hedy L. Anselman Doris Sue Allen Timothy R. Garrett, in case 16-3327, [48], ADDED.[1939678] [16-3327, 16-3571] [Entered: 01/04/2017 02:19 PM]
50
01/09/2017
BRIEF, on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren Pepicelli in 16-3327, Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren J. Pepicelli in 16-3571, FILED. Service date 01/09/2017 by CM/ECF.[1943368] [16-3327, 16-3571] [Entered: 01/09/2017 04:39 PM]
51
01/09/2017
JOINT APPENDIX, volume 1 of 3, (pp. 1-265), on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren Pepicelli in 16-3327, Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren J. Pepicelli in 16-3571, FILED. Service date 01/09/2017 by CM/ECF.[1943395] [16-3327, 16-3571] [Entered: 01/09/2017 04:48 PM]
52
01/09/2017
JOINT APPENDIX, volume 2 of 3, (pp. 266-444), on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren Pepicelli in 16-3327, Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren J. Pepicelli in 16-3571, FILED. Service date 01/09/2017 by CM/ECF.[1943400] [16-3327, 16-3571] [Entered: 01/09/2017 04:52 PM]
53
01/09/2017
SPECIAL APPENDIX, on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren Pepicelli in 16-3327, Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren J. Pepicelli in 16-3571, FILED. Service date 01/09/2017 by CM/ECF.[1943405] [16-3327, 16-3571] [Entered: 01/09/2017 04:55 PM]
54
01/09/2017
LETTER, dated 01/09/2017, in re: sealed appendix, on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren Pepicelli, RECEIVED. Service date 01/09/2017 by CM/ECF.[1943419] [16-3327]--[Edited 01/10/2017 by AS] [Entered: 01/09/2017 05:03 PM]
55
01/09/2017
SEALED JOINT APPENDIX, volume 3 of 3, on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren Pepicelli in 16-3327, FILED. Service date 01/09/2017 by CM/ECF.[1945443] [16-3327, 16-3571] [Entered: 01/11/2017 02:51 PM]
64
03/10/2017
BRIEF, on behalf of Appellee Credit Suisse AG and Credit Suisse Securities (USA) LLC in 16-3327, FILED. Service date 03/10/2017 by CM/ECF. [1986889] [16-3327, 16-3571] [Entered: 03/10/2017 01:01 PM]
65
03/10/2017
LETTER, dated 03/10/2017, in re: joint brief, on behalf of Appellee Citibank, N.A. and Citigroup Inc., RECEIVED. Service date 03/10/2017 by CM/ECF.[1987060] [16-3327]--[Edited 03/15/2017 by AS] [Entered: 03/10/2017 02:51 PM]
66
03/10/2017
LETTER, dated 03/10/2017, in re: joint brief, on behalf of Appellee BNP Paribas Group and BNP Paribas North America, Inc., RECEIVED. Service date 03/10/2017 by CM/ECF.[1987123] [16-3327]--[Edited 03/15/2017 by AS] [Entered: 03/10/2017 03:41 PM]
67
03/10/2017
LETTER, dated 03/10/2017, in re: joint brief, on behalf of Appellee HSBC Bank PLC, HSBC Bank USA, N.A., HSBC Holdings PLC and HSBC North America Holdings Inc., RECEIVED. Service date 03/10/2017 by CM/ECF.[1987131] [16-3327]--[Edited 03/15/2017 by AS] [Entered: 03/10/2017 03:43 PM]
68
03/10/2017
LETTER, dated 03/10/2017, in re: joint brief, on behalf of Appellee Goldman, Sachs & Co. and The Goldman Sachs Group, Inc., RECEIVED. Service date 03/10/2017 by CM/ECF.[1987134] [16-3327]--[Edited 03/15/2017 by AS] [Entered: 03/10/2017 03:44 PM]
69
03/10/2017
LETTER, dated 03/10/2017, in re: joint brief, on behalf of Appellee JPMorgan Chase & Co. and JPMorgan Chase Bank, N.A., RECEIVED. Service date 03/10/2017 by CM/ECF.[1987142] [16-3327]--[Edited 03/15/2017 by AS] [Entered: 03/10/2017 03:46 PM]
70
03/10/2017
LETTER, dated 03/10/2017, in re: joint brief, on behalf of Appellee Barclays Bank PLC, Barclays Capital Inc., Barclays Group US Inc. and Barclays PLC, RECEIVED. Service date 03/10/2017 by CM/ECF.[1987158] [16-3327]--[Edited 03/15/2017 by AS] [Entered: 03/10/2017 03:55 PM]
71
03/10/2017
LETTER, dated 03/10/2017, in re: joint brief, on behalf of Appellee UBS AG, UBS Group AG and UBS Securities LLC, RECEIVED. Service date 03/10/2017 by CM/ECF.[1987338] [16-3327]--[Edited 03/15/2017 by AS] [Entered: 03/10/2017 05:04 PM]
72
03/10/2017
LETTER, dated 03/10/2017, in re: joint brief, on behalf of Appellee RBS Securities Inc., The Royal Bank of Scotland Group PLC and The Royal Bank of Scotland PLC, RECEIVED. Service date 03/10/2017 by CM/ECF.[1987341] [16-3327]--[Edited 03/15/2017 by AS] [Entered: 03/10/2017 05:08 PM]
73
03/10/2017
LETTER, dated 03/10/2017, in re: joint brief, on behalf of Appellee Morgan Stanley, Morgan Stanley & Co. LLC and Morgan Stanley Capital Services LLC, RECEIVED. Service date 03/10/2017 by CM/ECF.[1987364] [16-3327]--[Edited 03/15/2017 by AS] [Entered: 03/10/2017 05:55 PM]
74
03/10/2017
LETTER, dated 03/10/2017, in re: joint brief, on behalf of Appellee Deutsche Bank AG, RECEIVED. Service date 03/10/2017 by CM/ECF.[1987367] [16-3327]--[Edited 03/15/2017 by AS] [Entered: 03/10/2017 06:08 PM]
75
03/10/2017
LETTER, dated 03/10/2017, in re: joint brief, on behalf of Appellee Bank of America Corporation, Bank of America, N.A., Merrill Lynch Capital Services, Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, RECEIVED. Service date 03/10/2017 by CM/ECF.[1987374] [16-3327]--[Edited 03/15/2017 by AS] [Entered: 03/10/2017 07:00 PM]
78
03/23/2017
ORAL ARGUMENT STATEMENT LR 34.1 (a), on behalf of filer Attorney David G. Januszewski, Esq. for Appellee Credit Suisse AG and Credit Suisse Securities (USA) LLC in 16-3327, FILED. Service date 03/23/2017 by CM/ECF. [1996410] [16-3327, 16-3571] [Entered: 03/23/2017 03:51 PM]
79
03/23/2017
ORAL ARGUMENT STATEMENT LR 34.1 (a), on behalf of filer Attorney Mr. Matthew Alexander Schwartz, Esq. for Appellee Barclays Bank PLC, Barclays Capital Inc., Barclays Group US Inc. and Barclays PLC in 16-3327, Attorney Mr. Matthew Alexander Schwartz, Esq. for Appellee Barclays PLC, Barclays Banks PLC, Barclays Capital Inc. and Barclays Group US Inc. in 16-3571, FILED. Service date 03/23/2017 by CM/ECF. [1996450] [16-3327, 16-3571] [Entered: 03/23/2017 04:05 PM]
81
03/24/2017
ORAL ARGUMENT STATEMENT LR 34.1 (a), on behalf of filer Attorney Regina Markey, Esq. for Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren J. Pepicelli in 16-3327, Attorney Regina Markey, Esq. for Appellant Doris Sue Allen, Donna S. Lucas, Jonathan G. Axelrod, Dana Kellen, Hedy L. Anselman, Timothy R. Garrett, Warren J. Pepicelli and John A. Boardman in 16-3571, FILED. Service date 03/24/2017 by CM/ECF. [1996902] [16-3327, 16-3571] [Entered: 03/24/2017 10:46 AM]
83
04/05/2017
CASE CALENDARING, for the week of 06/19/2017, PROPOSED.[2004710] [16-3327, 16-3571] [Entered: 04/05/2017 12:05 PM]
84
04/11/2017
LETTER, dated 04/11/2017, in re: oral argument, on behalf of Appellee Credit Suisse Securities (USA) LLC and Credit Suisse AG, RECEIVED. Service date 04/11/2017 by CM/ECF.[2008811] [16-3327]--[Edited 04/12/2017 by AS] [Entered: 04/11/2017 12:09 PM]
85
04/11/2017
REPLY BRIEF, on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren J. Pepicelli in 16-3327, 16-3571, FILED. Service date 04/11/2017 by CM/ECF. [2009362] [16-3327, 16-3571] [Entered: 04/11/2017 06:01 PM]
90
04/20/2017
CASE CALENDARING, for argument on 06/22/2017, SET.[2015805] [16-3327, 16-3571] [Entered: 04/20/2017 02:32 PM]
91
04/26/2017
ARGUMENT NOTICE, to attorneys/parties, TRANSMITTED.[2020702] [16-3327, 16-3571] [Entered: 04/26/2017 04:35 PM]
92
04/26/2017
NOTICE OF HEARING DATE ACKNOWLEDGMENT, on behalf of Appellee Credit Suisse AG and Credit Suisse Securities (USA) LLC, FILED. Service date 04/26/2017 by CM/ECF. [2020806] [16-3327] [Entered: 04/26/2017 06:08 PM]
93
04/27/2017
LETTER, dated 04/27/2017, in re: oral argument, on behalf of Appellee Barclays Bank PLC, Barclays Capital Inc., Barclays Group US Inc. and Barclays PLC, RECEIVED. Service date 04/27/2017 by CM/ECF.[2021171] [16-3327]--[Edited 04/27/2017 by AS] [Entered: 04/27/2017 12:06 PM]
94
04/27/2017
NOTICE OF HEARING DATE ACKNOWLEDGMENT, on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren J. Pepicelli, FILED. Service date 04/27/2017 by CM/ECF. [2021373] [16-3327] [Entered: 04/27/2017 02:41 PM]
96
04/27/2017
NOTICE OF HEARING DATE ACKNOWLEDGMENT, on behalf of Appellee Barclays Bank PLC, Barclays Capital Inc., Barclays Group US Inc. and Barclays PLC, FILED. Service date 04/27/2017 by CM/ECF. [2021487] [16-3327] [Entered: 04/27/2017 03:34 PM]
98
06/22/2017
CASE, before DJ, PNL, RR, C.JJ., HEARD.[2064057] [16-3327, 16-3571] [Entered: 06/22/2017 11:13 AM]
100
08/29/2017
NEW CASE MANAGER, Troy White, ASSIGNED.[2112249] [16-3327, 16-3571] [Entered: 08/29/2017 10:13 AM]
103
05/09/2018
FRAP 28(j) LETTER, dated 05/09/2018, on behalf of Appellee Credit Suisse AG, Credit Suisse Securities (USA) LLC, Deutsche Bank AG, Morgan Stanley, Morgan Stanley & Co. LLC and Morgan Stanley Capital Services LLC, RECEIVED. Service date 05/09/2018 by CM/ECF.[2298752] [16-3327] [Entered: 05/09/2018 11:18 AM]
105
05/18/2018
FRAP 28(j) LETTER, dated 05/18/2018, on behalf of Appellant Doris Sue Allen, Hedy L. Anselman, Jonathan G. Axelrod, John A. Boardman, Timothy R. Garrett, Dana Kellen, Donna S. Lucas and Warren J. Pepicelli, RECEIVED. Service date 05/18/2018 by CM/ECF.[2306801] [16-3327] [Entered: 05/18/2018 05:37 PM]
108
07/10/2018
OPINION, affirming the judgment of the district court, by DJ, PNL, RR, FILED.[2341215] [16-3327, 16-3571] [Entered: 07/10/2018 09:27 AM]
109
07/10/2018
NEW CASE MANAGER, Yenni Liu, ASSIGNED.[2341225] [16-3327, 16-3571] [Entered: 07/10/2018 09:31 AM]
113
07/10/2018
JUDGMENT, FILED.[2341437] [16-3327, 16-3571] [Entered: 07/10/2018 10:55 AM]
114
07/23/2018
NOTICE OF APPEARANCE AS ADDITIONAL COUNSEL, on behalf of Appellee Credit Suisse AG and Credit Suisse Securities (USA) LLC, FILED. Service date 07/23/2018 by CM/ECF. [2350841] [16-3327] [Entered: 07/23/2018 03:58 PM]
115
07/23/2018
ATTORNEY, Sheila Ramesh for Credit Suisse AG, Credit Suisse Securities (USA) LLC, in case 16-3327, [114], ADDED.[2350851] [16-3327, 16-3571] [Entered: 07/23/2018 04:03 PM]
116
07/23/2018
ITEMIZED BILL OF COSTS, on behalf of Appellee Credit Suisse AG and Credit Suisse Securities (USA) LLC, FILED. Service date 07/23/2018 by CM/ECF.[2350864] [16-3327] [Entered: 07/23/2018 04:08 PM]
118
07/31/2018
JUDGMENT MANDATE, ISSUED.[2356161] [16-3327, 16-3571] [Entered: 07/31/2018 12:47 PM]
120
08/23/2018
STATEMENT OF COSTS, on behalf of Appellees Credit Suisse AG and Credit Suisse Securities (USA) LLC, FILED.[2374110] [16-3327, 16-3571] [Entered: 08/23/2018 10:39 AM]
121
08/23/2018
CERTIFIED ORDER, dated 08/23/2018, to SDNY, ISSUED.[2374112] [16-3327, 16-3571] [Entered: 08/23/2018 10:40 AM]
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