looks like i'll say what judge fletcher said yesterday after similar incident and looks like the people here who are here to see your case i cast that sound we are very interested in hearing hear arguments you may proceed honor i'd tell people that the worst thing a doctor or a lawyer can tell you is you have a very interesting case and i guess i'll add to that if the court starts off your guess the courts look like the interesting case one perhaps when you unusual aspect of this case is that the ball first first question is whether or not the federal securities law applies not not in my mind the first question but that was raised on appeal for the first time by the by the plaintiff in citing the morrison case this case is fundamentally different from orson morrison involved a foreign plaintiff suing foreign in american defendants for conduct that occurred in a foreign country this case involves a california plaintiff suing under a contract that's governed by california law in its suing to recovery com recover compensation for services that were performed in california and throughout the united states and it's those are let me interrupt respect fully the judge seaboard found that the  to go to your point that the interests in the sugarcane properties that your client was contracting with a d m brazil over securities and therefore if those were not securities and we in deference to his legal judgment find them to be correct since all the facts are not in dispute at sea and of the case right first of all this is a do novo review and the court affords the district court no deference ok so secondly i don't believe judge seaboard found that these were not securities i think the court's opinion is  very carefully worded so that it does not make that finding it simply says this is not the type of transaction that is subject to the securities laws but even if the court had made that finding this court looks at the issue don't know  i believe that sugar cane just as a person i believe that sugar cane properties in this context are not securities and we should from the district judge your honor the what what what why why wouldn't i come to their conclusion because it wasn't sure who came properties it was common stock and they were they were interests and limited liability companies common stock is the quintessential security it's been described is that what was sold was common stock there was that was undisputed in the district court it's undisputed here but we look at the overall transaction tell that is correct your honor and here it's those at one point start off it's not but ultimately it was the property and then we look at who is going to manage the property aren't we guided by the law to look at who's going to manage the property isn't that a important factor i don't think when the when the case is focusing on the regulated acquired by a da brazil we're not secure he's correct so i don't know if that helps you it may or may not help me but it's the truth so it's just what i mean the fact the fact is that no no no i'm just saying i mean as we look at the overall transaction just so that i'm not sure how we get to where you want to so the trick the transaction starts with what  undisputedly securities common stock and limited liability interests met on a minute the supreme court in united housing foundation said that simply because  shares of sales of quote stock does not necessarily mean that this is a security transaction i think what judge moore good points out is that going behind the language what to did was to put your client and a t m brazil in a position through these transactions to do business for which they expect compensation now whether it was deemed or labeled stock is one thing but the facts of the transactions in their agreements appear to be otherwise well it's it was more than just the labels your honor it was the actual nature of the interests and that was we presented in the district court undisputed evidence about what the nature of the interests were we didn't simply rely on the label of common stock we had professor salaam as declaration which explained what what what rights were available and those are the rights that match up with the definition of a security company owning the fields that we america and purchase of the company owning the fields at constituted securities right i think what you want to look at is whether or not to was brokering securities and that's what it's seeking its compensation for i don't think you look at what the securities the company for which the securities were issued own and you're honor is focusing on what were the assets that these companies owned not not the ownership interests in those assets and it's the ownership interests that constitute securities i don't there's i don't i'm not aware of any securities case where the court  assets rather than the interests and it's the interests and the rights afforded by those interests that make these securities and as i said professor salaam a we went through and explained what rights were available and making clear that for example mr cabrera had no no right to manage the just tie limited partnership and under california law under california law if there's not a right to manage if all parties don't have a right to manage and don't actively participate as matter fact not just a right they have to actively participate and manage then it is a security by definition well that all sounds very persuasive i know where to look at the district court's characterization of the transactions to know but judge seaboard did look at the facts and and said that the economic reality and all the evidence surrounding what was going on was that there was no license scen that there there was no evidence that any transactions were structured to avoid securities laws here the economic reality was simply not such that it would implicate any of the types of the factors that would implicate securities law judge seaboard never explained why so that's that's the that's what was missing from his analysis he simply stated his conclusion and he didn't link it back ok to to the statutes that congress passed he simply s my reading of it is he simply said these are too sophisticated entities and i don't think the securities law needs to apply so we looked in novo at the record and determine if he was  correct why if he was incorrect it's it's based on what you told us regarding the relationship of the parties and the nature of the transactions that occurred in brazil right correct it's  a it's based on the evidence that we've presented which wasn't disputed that that was that a t m paid cash for securities and what it paid bennies for was common stock and what it paid alexander cabrera for was interest in a limited liability company who did not pay for property they paid for stock and limited liability company interests looking at how or how weak i guess is that the decision and important question there is whether the investor will derive profit slowly from the efforts of others how does that apply to your sentence so what it means is the interest acquired by a d m were not securities in the interests that were sold were securities because the parties who owned the interest beforehand were in fact depending on the efforts of others so i mean it's it's it's kind of is it all changes on the date of the final transaction but but there are a don't think there's been any what's your authority for that what case are you relying on to say that if the changed on the final then the transaction i'm not relying on authority that's just the fact i mean it was only if i don't think that the plaintiff's counsel can point to anything in the record that contests the fact that these were securities before this transaction occurred in the transaction all occurred was a multi step transaction that all occurred on one day i mean but i still i don't know that you've addressed that you know the law's tells us that we look at the economic reality and the overall transaction time that the brokering activity occurred and it's the brokering activity that we contend was illegal and it was a continental legal contract because she entered into a contract to broker securities and in fact that's what she did but by happenstance the transaction was consummated to create a sweater effectively joint venture interests but the illegal activity had already occurred the illegal purpose of the contract had already been affected and it's that activity for which he was sue is you can compensation it's not but your and so you're looking at one step i'm looking at the step one i'm looking at the step during which the regulated activity occurred that's what our position is is that you should when you're going to look at this you should look at the economic reality of the transaction the economic reality is a d m paid by neef for common stock it made a direct cash payment to benn paid alexander cabrera for limited liability company interests those were securities cash went straight to them we think that's the reality of the transaction in they were not registered with those those shares of stocks as securities were not registered with the s c c and therefore the transaction between the last two and your client was illegal and he doesn't have to pay him the four hundred eighty thousand  right registration in the context he was using which is a cult you need to be registered as a broker dealer right so it's a sometimes we refer to licensing and registration but that's different from registering of securities whether or not the securities are registered well if they're registered they are by definition they wouldn't be registered unless they were securities but you don't limit the analysis of securities to things that have been registered with the i c c you want to i would like  e mail addresses correct either so in my my colleague in my former partner at counsel table constance you have sidemen and bancroft to try the case with me some years back i believe the court tract did with one and only one party namely mr cabrera the contract is a two party contract mr cabrera's brother his wife his lender are not parties to the contract and they were not concerned in fact across you didn't find out about them until later the goss who was asked by mr cabrera to see if they could find an investor to create a biofuel plant on his property they did they found a  and it was a t m s brazilian subsidiary which did all of the the work the only aspect of a t m s u s headquarters in decatur was that they had to write give the final approval for the transaction which happened about a year later the the agreement was entered into in november twenty two thousand and seven the final documents in the closing didn't happen until almost a year later in october two thousand and eight and of course during that whole year a d m brazil through its c p a s through its attorneys through its other experts totally expertise this transaction before deciding to do it and therefore the real issue here is do the u s securities laws really have any place in a transaction occurring in brazil between a brazilian subsidiary and a bunch of brazilian citizens the only involvement of which is related to the us is that that somebody in in san francisco made a couple of phone calls and sent a couple of e mails can i ask your question yes or that's all squares with my understanding of the facts as well but what mr  sanctions are just was that and i guess this is where the where the issue would be joined as well the transactions between the brazilian subsidiaries and the brazilian  citizens involved what by all of us can see would agree were shares shares of stock and if those two companies or excuse me those two parties are dealing in shares of stock regardless as mr sangster says of the interests that the stock represents an american company eager wassa to broker that transaction well the fact that there were there were two entities as as you know one was the cea or quote and he was a stock company before it was acquired the other was a only with mr cabrera we didn't want to bunch of people as our partners we wanted him it was his land and he was the former minister of agriculture he was a large landholder in brazil and he was the one who wanted to get into this business a d m brought capital  brought expertise to the contra to the deal he brought a piece of land and yes there was there was it was owned one of the pieces of land was owned and previously in a stock company but a d m did not pay for st anything mr cabrera did with the money which a d m understood he would do with it was to pass it on and buy out his former co investors so it was not a t m buying out the investors but those are the stock transactions cabrera had to buy limited liability corporation there were shares of interests to compare as brother had to give doesn't come broke those are quote unquote stock or securities transactions which were facilitated by that's how i understand mr cabrera's argument well and that is the are quite agree with you the question is that a d m did not deal directly with mr cabrera's brother or with his bank or with his wife might partial interest it dealt only with and its contracts were only with mr cabrera it knew and he and he said i'm going to buy out so that i want to own one hundred percent of these these entities these new l l c entities we're forming discuss but which is the closest case in point that we have both found to the situation in that case the the court the ninth circuit looks through a two part transaction and said we're going to collapse this because leading case on the question of what do you do how do you look at a transaction that involves component parts that help you don't you look through those parts and collapse them when the when the intent is thereby to avoid securities laws applying to subsidiaries were formed for that purpose but they were controlled by the umbrella qualify as securities here especially when we look at the supreme court's decision in lamberth timber well because m in this case buys in and is not putting its money at risk through the management efforts of others but is actually intending to and does help run those businesses and that's what there's no dispute in the record that that's what a d m intended to do and did was willing to use the comparer property but wanted to clear only involving mr cabrera you think the general nature of the transaction right it wanted a partner he was the partner it wanted because it was his property and so it was a two person venture as as that was always their intent and he could have had one hundred partners he could have had one partner he could have had his wife with a point zero zero one percent interest as she did have in the america so these were the requirements of the company we used to call archer daniels midland that these were their requirements in order to enter into the transaction brazil by brazilian lawyers and accountants over a period as i said from the vendor of zero seven until finally closing in the i think october of zero eight so there was a huge amount of due diligence and documentation in the court of purchase agreements are part of the record here they are quite voluminous and complex and our client the most she did away at all was to help mr cabrera understand them a little better because he was had not done this kind of  your point of view this is no different than a real estate broker in san francisco finds a willing buyer of the property but there are some details to be worked out to make sure that the ti and all your client was looking to do was to put the two parties together believe the tales of the transaction were up to a d m and cabrera absolutely and even less than a broker which normally the broker is the is the sophisticated party in a transaction between an unsophisticated buyer and seller who have never done this before maybe they've done a once in their lives in this case a t m had a whole pleather of people and they were to be involved in the management of the institute right they wanted management control they did not want it this was not a passive investment where they were handing somebody some money to do with what he wanted they helped him build the bio fuel plant on his property they each there were four directors of the l l c or four managers of the l l c parts of the transaction the jury decided that the only thing we should compensated for was the amount of cash that was paid by a t m to mr cabrera for his interests not for anything he bought from his wife his brother or his bank can you leave a copy with the clerk serving your honor and the point of that is that the f c c has decided the transaction such as this and even transactions in which the the alleged broker agent absolutely has been dissipated  event they would not hold it was and to have required registration they've made an exemption for broker dealers dealing with the purchase of control of private companies not involving a public offering attention to excerpt the record pages one zero five four through five five in which mr fernandez describes literally hundreds of communications with ms satoru who is the president in which she recommended language she advised and made recommendations about the value of the transaction she advised the parties of the manner and means of consummating the transaction so it's the record is completely contrary to landreth case and i would point out that you don't just simply look at landreth because that's federal law you also have to look at california law which defines interest in a limited liability company as curity s unless the person who is asserting an exemption can prove that all parties actively participated in management and it was undisputed that mr cabrera could not and did not participate in management so by definition under the california security statute matters of inter and there is nothing in this no action letter that interprets congress the statute it's simply the enforcement division saying or saying under the circumstances here we're not going to take enforcement activity and in fact the commentary that's that's followed this no action letter has pointed out that it has no impact on parties raising the lack of registration as a defense in an action to collect commissions so it's simply the enforcement division saying we're not going to spend our time and money prosecuting these in this particular case in the under the facts that were presented in that in that in that no action letter and that does it goes along that gives a long list of conditions that have to apply most frankly do apply to this case some do not because ms sitaram played a role in i think getting the parties together in order to consummate the transaction and these are not restricted share some of the conditions in the no action letter simply don't apply here but regardless our defense is based on what congress the statute says not on what the enforcement division says is worth its time and money to prosecute