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212.756.2733 howard.schiffman@srz.com

March 6, 2009

VIA HAND DELIVERY

Hon. Richard B. Lowe III

Commercial Division
New York County Supreme Court
60 Centre Street
New York, NY 10007

Re: New York University v. Ariel Fund Limited, et al., Index No. 603803-2008

Dear Justice Lowe:

For the past two-and-a-half months, our client, Ariel Fund Limited (“Ariel Fund”
or the “Fund”), has been hamstrung by a temporary restraining order that restricts or prevents its
manager from engaging in any number of transactions to enable the Fund to continue to operate
in the best interests of its investors, including paying counsel to pursue a claim to recover from
the estate of Bernard L. Madoff Investment Securities LLC the very losses that are the subject of
this proceeding. This is despite the fact that Plaintiff makes zero allegations of wrongdoing
against the Fund and has now admitted that it asserts no claims against the Fund. This state of
affairs must come to an end.

As Your Honor may recall, at the conclusion of the February 17, 2009 oral
argument in the above-referenced proceeding, I explained that the current temporary restraining
order (“TRO”) places severe restrictions on Ariel Fund’s ability to operate, and the Court
suggested we negotiate a modification of it with Plaintiff’s counsel. We have urgently attempted
to do so during the nearly three weeks that have now passed since then, but Plaintiff’s counsel
steadfastly insists that the TRO should continue to restrict the Fund’s ability to engage counsel
and meet certain potential contractual obligations despite the absence of any claim against the
Fund and notwithstanding the harm the TRO is causing and threatening to cause the Fund.
Accordingly, we respectfully ask the Court to schedule a conference call (as the Court suggested
at oral argument) so that we can promptly renew our request that the Court lift or modify the
TRO.
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Hon. Richard B. Lowe III
March 6, 2009
Page 2

By way of very brief background, the initial complaint in this proceeding named
the Fund in two counts (one for negligence; the other for an alleged violation of N.Y. Gen. Bus.
Law § 349); the Fund moved to dismiss; Plaintiff filed an amended complaint that abandoned
both those initial claims as to the Fund and instead named the Fund in just one count (for breach
of contract) without setting forth any allegations of wrongdoing by the Fund. Ariel Fund moved
to dismiss again; Plaintiff explained that the Fund was named as a “nominal defendant”; and
Plaintiff did not even attempt to defend the viability of the breach of contract claim. In short, the
Fund is not alleged to have committed any wrongdoing, and Plaintiff does not seek any recovery
from it.

Nevertheless, the Fund’s assets currently remain subject to the TRO’s restrictions
on their use, including:

• paying counsel to file claims in the Securities Investor Protection Act

bankruptcy proceeding to recover for the benefit of the Fund and, by
extension, its investors (including Plaintiff) the money that Bernard
Madoff stole from it -- i.e., the very money as to which Plaintiff seeks
damages through this proceeding;

• paying counsel to represent the Fund’s other interests with respect to the
bankruptcy trustee;

• honoring any contractual or other legal indemnification obligations to the

Fund’s auditors and registrar, each of which have threatened to sue the
Fund to indemnify them for the costs incurred as a result of Plaintiff’s
naming them as defendants in this proceeding;

• retaining and paying counsel to defend any such indemnification actions;

• paying the Fund’s subadvisors who are responsible for trying to liquidate
the Fund’s hundreds of millions of dollars worth of non-Madoff assets for
the benefit of the Fund’s investors;1

• paying counsel to help the Fund cooperate with the various government
investigations into Madoff’s alleged fraud; and

1
It is perhaps the recognition of this fact more than any other that has led investors with
interests totaling nearly $400 million in Ariel Fund and other funds holding such assets to
file affidavits expressing their opposition to the imposition of pre-judgment relief over
the Fund.

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Hon. Richard B. Lowe III
March 6, 2009
Page 3

• paying counsel for its efforts on behalf of the Fund in this proceeding,
including preparing the very motions to dismiss that resulted in Plaintiff’s
swiftly abandoning its claims against the Fund.2

Simply stated, there is no legal or factual basis for this Court or Plaintiff to
interfere with the operations of the Fund -- which, as noted, has not been adjudicated liable for
anything, and, indeed, is not even alleged to be liable.3 Thus, Plaintiff comes nowhere close to
meeting the extremely high factual showing required to justify a TRO that restricts the Fund.
Accordingly, in light of Plaintiff’s refusal to agree voluntarily to modify the TRO despite that
dispositive circumstance, we must urgently and respectfully request that this Court do so.

Thank you very much.

Respectfully submitted,

/s/ Howard Schiffman

Howard Schiffman

cc: Beth Kaswan, Esq.

Scott & Scott, LLP
Attorneys for Plaintiff New York University

Andrew J. Levander, Esq.

Dechert, LLP
Attorneys for Defendants Gabriel Capital Corporation and J. Ezra Merkin

2
Indeed, as currently drafted, the TRO would, at a minimum, require the Fund to submit to
Plaintiff its legal invoices for successfully defending against Plaintiff’s meritless claims.
Such a situation is as inappropriate as it is absurd.
3
Moreover, interfering with the Fund is particularly inappropriate insofar as it is a foreign
entity incorporated and registered under the laws of the Cayman Islands. See Hotel 71
Mezz Lender LLC v. Falor, 869 N.Y.S.2d 61, 64-65 (1st Dep’t 2008).

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