Anwar v. Fairfield Greenwich Ltd.

Fairfield Greenwich Ltd. (defendant) owned and operated four funds (the funds). Citco (defendants) was a financial-services provider contracted by the funds. The services Citco provided to the funds included holding securities purchased for the fund as the primary custodian and ensuring securities were being held by sub-custodians (i.e., the custodians holding securities for Citco), maintaining supervision of sub-custodians, maintaining records of the securities held, calculating the net asset value that investors relied on to make investment decisions, preparing financial statements and records for audits, and communicating with investors and the general public. One of the sub-custodians Citco was responsible for monitoring was Bernard L. Madoff’s investment company, which was notoriously involved in a large Ponzi scheme that defrauded investors out of billions of dollars. [Editor’s Note: For more information on Madoff’s scheme, see United States v. Madoff, 1:09-cr-00213 (S.D.N.Y. 2009), available at https://www.quimbee.com/cases/united-states-v-madoff.] Pasha S. Anwar and other investors in the funds (the investors) (plaintiffs) filed a suit alleging, in part, that Citco owed them a fiduciary duty and that it had breached that duty by failing to safeguard the funds’ assets from Madoff’s scheme. Citco moved for summary judgment, arguing in part that it did not owe the investors a fiduciary duty because a duty was not specified in the service agreements between the funds and Citco.