Alfadda v. Fenn

The Saudi European Investment Corporation (SEIC), incorporated in the Netherlands Antilles, held the French-licensed Saudi European Bank (SEB) as its principal asset. The SEIC and SEB were run by Jawal Radwan (defendant). In 1984, SEIC decided to sell its outstanding authorized but not issued voting shares, with a subscription agreement and private placement memorandum (offerings documents) that described the offer to include 600,000 shares not sold in the United States. After the 600,000 authorized voting shares were sold, Radwan converted SEIC capital notes, which he owned, into 600,000 shares of SEIC voting stock. Radwan then sold the shares to a US entity, doubling the number of SEIC voting shares. The French government, concerned with SEB’s lack of liquidity, coordinated the sale of SEB to new owners who renamed the bank Societe de Banque Privee, S.A. (SBP). After SBP was named in US lawsuits concerning Radwan’s actions, the French banking authority reorganized SBP’s US holdings into a separate entity. Saudi investors in SEB began filing lawsuits against SEIC and Radwan in France. In 1989, the same Saudi investors, including Abdulaziz Alfadda (plaintiff), filed suit against Radwan, SEIC, SEB and its successors, and other affiliates (collectively the SEIC affiliates) in the United States for violating the Securities Exchange Act, the Racketeer Influenced and Corrupt Organizations Act, and New York common law. The United States District Court for the Southern District of New York dismissed the case for lack of subject-matter jurisdiction; however, the dismissal was reversed on appeal. Another suit was filed in 1990 against Radwan, Fenn (Vice-Chairman of SEIC), and the SEIC affiliates, and the two cases were consolidated. In 1992, Radwan and the SEIC affiliates moved to dismiss the consolidated cases based on forum non conveniens grounds. The district court denied the motion. After years of discovery, the SEIC affiliates again moved to dismiss the case on forum non conveniens grounds. The district court granted the motion. Alfadda appealed, arguing that the dismissal was inappropriate because of the massive discovery effort.