first in dismissing the funds for trading claim under came in law the district court and holding that the sham loan agreement was not necessarily fraudulent simply because there was some theoretical prospect of repayment second in applying that offensive i d looked at to the funds aiding and abetting claims to the district court in holding the new york had a superior interest to that of the cayman islands and determine whether the funds are responsible for the breaches of fiduciary duty of one of their directors so at the first turn to the  which is not subject to any input a look at the fence dismissing that claim the disinterred district court misinterpreted the law the district court believed that the funds had to show that there was no prospect of repayment to plead the claim but the law enforcement training does not set such a stringent test for liability rather set forth in the case law and a summarized by the funds for a law expert it is fraud if there is proven that there's a dishonest taking of a risk that there was no right to take their cars home or prejudice to a company's creditors that is exactly what is  here there was at the very least a substantial risk of the funds creditors the redeeming investors not being paid because i c p m priore the manager and the director decided to literally gamble away the funds cash with no right to repayment the deal a for its part unquestionably had knowledge of these fraudulent purposes the best evidence of dealers knowing participant patient in the fraud was its role in documenting fake margin calls so that trial can make interest payments to its no holders and other expenses in fact dealer even went so far as to document a completely fake margin call so that it could take money from the master phone and get paid its own outstanding legal bills to try explaining a separate entity that's a do so delay directive that cash first urgent calls and for lack of a better term to launder the cash taken from the master fund to get paid its own outstanding legal bills to a different entity shows delays knowledge of the the frogger nature of the entire series of transfers here and the fact that dealing created stiction of a loan to barclays shows that the he that do i knew that the transfers had frozen purposes as the u k court held the bank of india it quote must have been obvious to the defendant that trent that the transaction was not an ordinary loan transaction of any kind these transfers were far from ordinary barclays even recognize the nature of the transfers and reserved its rights in case they got sued in a foreign transfer case moreover it's not ordinary for a law firm to draft documents for non client with no regard for the whether or not that client should make the representations whether or not the contribution enter into the transaction if the transfers were legitimate dealer contends there just would have been no reason to misrepresent their actual nature much less for deal way and its deposition before the misled mislead the f c c about how the repayment to the alleged repay mechanism act was actually going to work and some on this issue that came a court albeit an ex parte a basis sanction the pursuit of the foliage and trading claims here finding that the liquidators do have a cause of analysis is confirmed by the first departments opinion in f a i leveraged on a critically that is the only new york case to consider the argument that the imputation issue must in accordance of babcock and its progeny be subject to a separate conflict laws analysis the cases relied upon by the district court and deal way including to greenwich or simply an opposite because those courts were never even asked to consider an issue by issue application of all the potential conflicting laws here now i'd know which of the if a court did hold the new york had a paramount interest in that case and deciding the imputation issue but that case did not involve and aiding abetting crime and more importantly the agent there was neither a director nor officer of the company there is an important distinction between a third party investment manager and a corporate director when considering the agency relationship just as the court appeals as advised and the relevant facts are those that relate to the purposes of the particular long conflict so are the relevant facts and determining what jurisdiction has the greatest interests in governing the agency relationship between a corporation and the directors of the corporation the most relevant fact is where the companies incorporated this is because as the first apartment held at the corporation and its shareholders rightfully expect that the laws under which they have chosen to build business will be applied and it's for this exact same reason when we look at the underlying breach produce a duty claim that courts you believe that transactions around the world believe that the law that they trip put shoes is going to govern the relationship between them and their directors so if they have a board of directors just as we look to dollar does we just have courts of continually recognize the delaware has unique as we contend here if you're going to look at it to conform those to inform those first two questions you should also look at it to inform the question of whether or not the delaware incorporated entity is responsible for the conduct of one of its directors here we just so happen to have a cayman islands so when you look at the most significant relationship which is what leverage cells do how can it not be your the most significant relationship to this agency question is the state of incorporation because just because one of the directors was in new york the other directors were in the cayman islands because what would be the at the imputation question is whether or not the company is responsible for the conduct of its agent should be the state of a corporation because it also governs the underlying breach the underlying for history relationship thank you the comments that were made in the reply brief as well as during all argument and then i'll briefly touch on the cayman islands claim and the on the sufficiency of allegations regarding actual knowledge of richard fiduciary duty for the head for hedge funds here obviously and why do i say that because if you look carefully at their briefing and you listen carefully to the argument their argument putting aside the fact that there were there was with respect imputation i'll come back to that but their entire organ about  actions were in new york and four other off senior officers of i c p specifically identified in paragraphs thirty five to thirty eight of the complaint who are alleged in the complaint to have been fully involved in the fraud that forms the foundation of the allegations in the complaint so putting aside for a priori for a second and whether his conduct is imputed ball to the hedge funds here you have undisputed imputation by i c p itself and remember that i c p identified in the very first paragraph of the complaint paragraph one as the investment manager moreover the complaint over and over again if you look at the complaint every action every alleged instance of misconduct you see the phrase i c p priori so the complaint makes clear that the the allegations of misconduct are attributable to i c p i c p is not a director so this entire line of argument with respect to misconduct imputed to the hedge funds about pr nothing to do with the other four or five relevant actors here and in that sense it's academic but even with respect to mr pure himself and the argument about the internal affairs doctrine the fact of the matter division disagreed in that motion to dismiss context the court specifically rejected the application of the incurred to look to the interim affairs doctrine to imputation were guarding conduct by investment managers the same type of investment managers we have here that the court also held that new york law required imputation after after conducting an interest in interest analysis which is what judge broderick did in the alternative in his order and that is consistent of course with the new york court of appeal jurisdiction with the greatest interest in the litigation in the underlying claims also has a nick in the underlying claim here is aiding and abetting fraud under new york law has an acute interest in the availability of defenses to that claim and how those defenses are interpreted and of course we have here what  have with respect to new york we have a new york cause of action brought in a new york court alleging conduct that in occurred exclusively in new york by new york lawyers and new york investment managers the only connection whatsoever in this case is the fact that the hedge funds happen to have incorporated in new  york in the cayman islands excuse me the other important case aside from the f i a case that you mentioned your honor is the new granite case and the new greenwich case i think is interesting to look at in the purpose for purposes of this analysis aside from the fact of course that it rejected the application of the internal affairs doctrine there as well which the funds conceded footnote ninety seven of their brief and the fact that it also imputed reiterate as your honor said that imputation is an issue of agency and not subject to the internal affairs doctrine but new greenwich offers a formulation that i think is helpful in sort of getting your arms around this whole issue in a very simple way the formulation offered by that court is that the internal affairs doctrine does not apply to the rights of third parties external to the corporation outside administrators and auditors in that case p w c contractual agents or third parties external to the fines and significantly in that case the court noted even though the auditor who is the defendant in that case you see that their role as an auditor relates to the internal affairs of the corporation that's the language that the new greenwich court order governs exactly exactly this is not a claim by the investors that he's talking about against their f that's a different lawsuit in a different place involving different issues and different policies and not involving the issue of illegal taishan it's a direct claim so the key takeaways of course is that new york has a very strong interest in how encourage alect is interpreted how the adverse exception is applied and thus in a choice of law analysis new york very clearly does not want the internal affairs doctrine to supplement new york agency law it's simply not applicable to so having settled that issue with respect imputation we now move on to does the does the with respect to choice of law i think if all you have to do is look at kirsner to dispose of the argument that the adverse interest exception does not apply why kirshner tells us everything i think we need to know even though there's other cases that we cite in our brief that that stand for the same proposition why kirschner says you only need some benefit  extent benefit to the entity it's again and this is all in the words of the new york court of appeals it's immaterial that it's turned out that it would have been better for the asian to have acted differently as the hedge funds of argued here significant even short term illusory benefits with long term harm don't qualify all corporate acts including in they give a specific example moving aspen assets between corporate entities are subject to the presumption of imputation the adverse interest exception represents in their words a strong public policy that should not be weakened by exception the adverse interest exception is one of the in their words most narrow of exception exceptions even in difficult cases and it applies irrespective of motive in their words even if motivated by the agent's desire for personal gain and from the standpoint of benefit under of that standard with those policies from new york's highest court we know as broderick and judge gerber found that there was a perfectly reasonable and certainly beneficial aspect to this situation where the funds were going to cover the margin call why because as they acknowledge the complaint itself paragraphs three seven hundred forty eight the funds had a fifty percent stake in two hundred forty five million dollars worth of c d s as the complaint acknowledges tri x had no other option in order to meet the margin call and barclays would have foreclosed we know that from paragraph forty forty three thirty one and thirty three of the complaint and we specifically know from paragraph forty two of the complaint the triax had no other means to raise capital we also have in addition to protecting their fifty percent interest in those two hundred forty five million dollars judge broderick in his opinion identified two other benefits that i won't repeat here so that's that's my point with respect to encourage electoral regarding the aiding and abetting claim with respect to the cayman islands fraudulent trading claim i'll state very simply the statute itself requires knowledge knowledge means knowledge that business that the business is carried on carried on means something specific with an intent to defraud or fraudulent purpose now if you read the book the briefing from the appellant here fundamentally what they're trying to do is they're  trying to pick and choose little bits of statements from different cases to try to suggest that fraud means something than fraud knowledge means something that the knowledge and carried on is so broad that it's a meaningless provision within the statute we know even from the hedge funds x expert for example that they say that they the two page declaration that they submitted on the section on the question of fraud fraud is is is very similar to what we understand as frau these are you know the description from that expert talks about no prospect of repayment payment that will never be settled and no good reason to believe that the payment will happen repayment will happen and i w submit your honour's in this case frankly we're asking the wrong question if we focus exclusively on repayment because it's not in on a reasonable judgment to make that certainly with respect to the initial investments and then and then further in terms of meeting the margin calls so you don't lose roughly one hundred twenty three million dollars worth of your investments that you might be willing to do that even if the prospects for repayment is limited perhaps nonexistent and you would and it is not in a reasonable business judgment remember we're talking about lawyers here not business advisors not accountants with respect to that issue on the issue of knowledge aside from the the the pleading standard  be the case law bank of india that was was was quoted talks about a deliberate decision to avoid obtaining confirmation and an actual appreciation that the answer is likely to disclose that the existence of fraud that is significant language that's just not anything and everything and carrying on means some it has to have some sort of direct relationship to have any meaning  respect to the actual knowledge because i think it it ties into some of what has been said in the characterization of my client that's been made very very briefly i'd like to point out just the following good lawyers are often asked to solve tough problems that's why they get called and we know this was a tough problem the client the investment manager not the hedge funds the investment manager was based with one hundred twenty two and a half guaranteed because the margin call couldn't as we know from the complaint could not be met guaranteed loss of one hundred twenty two and a half million dollars and indenture agreement the triax had that limited the options in terms of direct loans to to try x with tracks having no other to start by addressing the what i think are the absurd results that it can occur if you do not apply a single state's law to the entertainer in question and one of the best cases that illustrates that is the cobol case which we do cite in our brief which the you had three defendants there you really distinguish yours with respect to kirschner the the court there incursion held that there was a distinction between fraud that's committed against the company and fraud that's assumption that new york applied to the nonaligned aid agency question but with respect to kirschner almost every case that has been up that has applied kirshner has been or circumstance in which the fault was first felt by separate party so the fraud was committed by the hedge fund on investors to bring money into the hedge fund and then the money was looted here we do not have that circumstance there was no other party that was to fought it the only party that was defrauded was the master fund and they make a lot of of the fact that the master fund was a creditor in another entity that received part of the benefits of the transfer but just because it was a mezzanine note holder with different tranches of notes is not a sufficient basis on the pleading standard to presume if you taishan because that requires a complex analysis of ok i'm not going to get my thirty six million back what's the value of my current investment tracks funding what's the hope of it ever coming back what's the likelihood of the of the market crash again that's that's a complex and complex analysis that just can't be assumed that because i'm a creditor and in an entity that receive the money that i receive the benefit under the current standard and just quickly back to the defaulter trading claim what is still continuing to be missed by the defendants here is the fact that in addition to the margin payments there was over a million dollars around a million dollars that was taken from one to hold or the master from here to basically make sure that other no holders got paid out of the trucks money out  only continues to kind of ignore that allegation and also ignore the allegation that it took the master funds on cash to get paid its outstanding legal bills to another entity and in doing so concealed how that those transfers occurred and then a lot about them call those transfers to barclays bank