UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK
xSECURITIES AND EXCHANGECOMMISSION,Plaintiff,v.GOLDMAN, SACHS & CO. andFABRICE TOURRE,Defendants.::::::::::::xCivil Action No.: 10-cv-3229 (BSJ) (MHD)ELECTRONICALLY FILED
REPLY MEMORANDUM OF LAW OF FABRICE TOURRE IN FURTHER SUPPORTOF HIS MOTION FOR THE ISSUANCE OF A LETTER OF REQUEST AND ANORDER REQUIRING THE SEC TO SEEK DOCUMENTS PURSUANT TO ITSINTERNATIONAL AGREEMENTS
Pamela Rogers ChepigaDavid C. EsseksAndrew Rhys DaviesBrandon D. O’NeilALLEN & OVERY LLP1221 Avenue of the Americas New York, New York 10020(212) 610-6300
Attorneys for Fabrice Tourre
Dated: December 2, 2010 New York, New York
Case 1:10-cv-03229-BSJ-MHD Document 50 Filed 12/02/10 Page 1 of 6
Mr. Tourre respectfully submits this reply memorandum of law in further supportof his motion for (1) the issuance of a Hague Convention letter of request to obtain documentsfrom IKB Deutsche Industriebank AG (“IKB”), and (2) an order requiring the SEC to seek documents relating to IKB from its counterpart in Germany, the German Federal FinancialSupervisory Authority (“BaFin”).
ARGUMENTA.As The SEC Does Not Oppose Issuance Of Mr. Tourre’s Proposed Letter Of Request, The Court Should Now Issue That Letter
As Mr. Tourre’s proposed letter of request complies with the Hague Convention’srequirements, and as the SEC does not oppose its issuance, Mr. Tourre respectfully requests thatthe Court now issue that letter of request.Since the SEC does not oppose issuance of the letter of request, its gratuitous andunfounded remarks that the letter of request is “facially overbroad,” and that it “appears designedto provoke an objection from German authorities on that basis alone,”
see
SEC Resp. at 6, perhaps require no response. In any event, the SEC is quite wrong.As a litigant is “entitled to conduct discovery that may uncover relevantevidence,”
Netherby Ltd. v. Jones Apparel Group, Inc
., No. 04 Civ. 7028 (GEL), 2005 WL1214345, at *1 (S.D.N.Y. May 18, 2005), when asked to issue a letter of request, the U.S. courtneed only satisfy itself that the movant has made “a reasonable showing that the evidence soughtmay be material or may lead to the discovery of material evidence.”
Id.
(citing
Elliot Assoc. v. Peru,
No. 96 Civ. 7917 (RWS), 1997 WL 436493, at *2 (S.D.N.Y. Aug. 1, 1997)). The materialssought by the letter of request are directly relevant to demonstrate that IKB, the principal alleged“victim” of the fraud alleged against Mr. Tourre, was a sophisticated and regular participant inthe structured finance markets, that it had previously engaged in numerous similar transactions,that it understood very well the economics and interests of participants in such transactions, andthat nothing said to IKB in connection with the ABACUS 2007-AC1 transaction was a material
Case 1:10-cv-03229-BSJ-MHD Document 50 Filed 12/02/10 Page 2 of 6
2misrepresentation or omission. Nothing could be more central to Mr. Tourre’s defense of thesemost serious of charges.Due to the “somewhat cumbersome nature of the letters rogatory process,” whenissuing letters of request, the U.S. courts do not rule on overbreadth objections, leaving suchobjections to the foreign judicial authorities.
See Netherby,
2005 WL 1214345, at *1 (granting amotion to issue letters rogatory to depose five witnesses, “leaving it to the good offices of theCanadian authorities and the good faith of the parties to determine the actual course of events.”);
see also Tulip Computers Int’l B.V. v. Dell Computer Corp.
, 254 F. Supp. 2d 469, 474-75 (D.Del. 2003) (granting motions to issue letters of request under the Hague Convention, noting thatthe document requests would “presumably be narrowed” by those authorities if they were overly broad under Dutch law).Mr. Tourre requests that the Court now issue his proposed letter of request, so thatthe process of transmitting it to the relevant German central authority can begin promptly.
B.The Court Should Order The SEC To Seek The Assistance Of BaFin In ObtainingDocuments From IKB
The SEC is also quite wrong that there is “no proper legal basis” for Mr. Tourre’srequest for an order requiring the SEC to seek documents from BaFin.
See
SEC Resp. at 3. Asshown in Mr. Tourre’s moving papers, the SEC has the legal and practical ability to obtain thedocuments under its MOUs, both of which expressly state that they may be used to obtainevidence for use in civil enforcement proceedings.
See
Memorandum of UnderstandingConcerning Consultation and Cooperation in the Administration and Enforcement of SecuritiesLaws, October 17, 1997, Section 5(1)(b) (Chepiga Decl., Ex. H); Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information,International Organization of Securities Commissions, May 2002, Section 10(a)(ii) (ChepigaDecl., Ex. I) (together, the “MOUs”).
1
Nothing more is required under Rule 34.
See
,
e.g.
,
1
Although the SEC represents that it has not so far used its MOUs to obtain evidence from IKB,
see
Tourre Mem. at 6, it has been able to obtain documents from IKB, albeit very limited, heavily-redacteddocuments, and to interview IKB witnesses, albeit without having those interviews transcribed in a form
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