Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_16-cv-01386/USCOURTS-cand-3_16-cv-01386-12/pdf.json

Nature of Suit Code: 850
Nature of Suit: Securities, Commodities, Exchange
Cause of Action: 15:77 Securities Fraud

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44 Montgomery Street, Suite 2800

San Francisco, CA 94104

Telephone: (415) 705-2500Facsimile: (415)705-2501

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,

V.

JOHN V. BIVONA; SADDLE RIVER

ADVISORS, LLC; SRA MANAGEMENT

ASSOCIATES, LLC; FRANK GREGORY

MAZZOLA,

Defendants, and

SRA I LLC; SRA H LLC; SRA HI LLC;

FELIX INVESTMENTS, LLC; MICHELEJ. MAZZOLA; ANNE BFTONA; CLEAR

SAILING GROUP IV LLC; CLEARSAILING GROUP V LLC,

Relief Defendants.

Case No. 3:l6-cv-01386-EMCSTIPULATION FOR PLAINTIFFSECURITIES AND EXCHANGECOMMISSION'S STIPULATEDPROPOSED ORDER FOR APPOINTMENTOF RECEFVTM

Stip. For Order Appointing Receiver Civ.3:16-<:v.01386-EMC
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third party affiliated entities Felix Multi-Opportunity Fund I LLC, Felix Multi-Opportunity Fund II

LLC, Felix Management Associates LLC, NYPA Fund I LLC, NYPA Fund II LLC and INT^PAManagement Associates LLC hereby stipulate to the Court's entry of the attached Plaintiff Securities

and Exchange Commission's Stipulated Proposed Order For Appointment of Receiver.Dated: October 3,2016

SECURITIES AND EXCHANGE COMMISSION

.S.Yuii

Attorneys for PlaintiffsEcuRmes AND EXCHANGE COMMISSION

SHARTSISFRIESELLP

^-s~

Jahan P. Raissi

Attorneys for Defendants JOHN V. BIVONA and SADDLE

RWER ADVISORS, LLC,

Jr^

SRA MANAGEMENT, LLC

SRAILLC

SRA H LLCSRAfflLLC

Managerru

^

By John V. Bivona, Manager

Stip. For Order Appointing Receiver Civ. 3:16-cv-01386-EMC
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FEUX MANAGEMENT ASSOCIATES LLCFEUX MULTI-OPPORTUNITY FUND I LLCFELDC MULTI-OPPORTUNITy FUND H LLC

^lix Management Associates, LLC

/By John V.Bivona, Manager

NYPA MANAGEMENT ASSOCIATES LLC

NYPARJNDILLCNYPAFUNDHLLC

^•NYPA Management Associates LLC

/ By John V. Bivona, Manager

Stip. For Order Appointing Receiver Civ. 3:16-cv-01386-EMC
CASE NO. 3:16-cv-01386-EMC

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JINA L. CHOI (NY Bar No. 2699718)

JOHN S. YUN (CA Bar No. 112260) yunj@sec.gov

MARC D. KATZ (CA Bar No. 189534) katzma@sec.gov

JESSICA W. CHAN (CA Bar No. 247669)

 chanjes@sec.gov

Attorneys for Plaintiff

SECURITIES AND EXCHANGE COMMISSION

44 Montgomery Street, Suite 2800

San Francisco, California 94104

Telephone: (415) 705-2500

Facsimile: (415) 705-2501

SECURITIES AND EXCHANGE COMMISSION,

Plaintiff,

v.

JOHN V. BIVONA; SADDLE RIVER 

ADVISORS LLC; SRA MANAGEMENT 

LLC; FRANK GREGORY MAZZOLA,

Defendants, and

SRA I LLC; SRA II LLC; SRA III LLC; 

FELIX INVESTMENTS, LLC; MICHELE

J. MAZZOLA; ANNE BIVONA; CLEAR 

SAILING GROUP IV LLC; CLEAR 

SAILING GROUP V LLC,

 Relief Defendants.

 

Case No. 3:16-cv-01386-EMC

PLAINTIFF SECURITIES AND 

EXCHANGE COMMISSION’S

STIPULATED PROPOSED ORDER FOR 

APPOINTMENT OF RECEIVER

Date: NA

Time: NA

Judge: Edward M. Chen

Courtroom: 5 (Seventeenth Floor)

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

Case 3:16-cv-01386-EMC Document 141 Filed 10/11/16 Page 4 of 21
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STIPULATED ORDER APPOINTING RECEIVER

Plaintiff Securities and Exchange Commission (“Commission”) and defendants John V. 

Bivona, Saddle River Advisors LLC (“Saddle River”) and SRA Management, LLC (“SRA 

Management”) and relief defendants SRA I LLC (“SRA I”), SRA II LLC (“SRA II”), SRA III LLC 

(“SRA III”) (together, “SRA Funds”) and Clear Sailing Group IV LLC and Clear Sailing Group V 

LLC (together, “Clear Sailing”) have stipulated for entry of an Order appointing the current

Independent Monitor as the Receiver for defendant SRA Management and relief defendants SRA 

Funds and Clear Sailing, which are, collectively, the “Receivership Defendants.” The Court finds 

that it is authorized to appoint a Receiver under Section 20(b) of the Securities Act of 1933 

(“Securities Act”), 15 U.S.C. § 77t(b), Section 21(d) of the Securities Exchange Act of 1934

(“Exchange Act”), 15 U.S.C. § 78u(d), and Section 209(d) Of the Investment Advisers Act of 1940 

(“Advisers Act), 15 U.S.C. § 80b-9(d), which authorize restraining orders and injunctions upon the 

Commission’s proper showing. 

The Receivership Defendants do not currently have any permanent employees, and their 

ability to actively monitor their assets, perform necessary periodic functions such as tax reporting, 

and distribute assets when appropriate, is uncertain. In addition, the shares of private companies 

beneficially owned by the SRA Funds and other investment funds, such as the NYPA Funds and 

Felix Multi-Opportunity Funds described below, are held centrally at Clear Sailing, through 

ownership interests in the Clear Sailing entities. Because these private company shares are not 

discreetly held within the SRA Funds, or other investment funds, claiming an ownership interest over 

the shares, it is appropriate to have one central authority to ensure that all claims from such 

investment funds or others to the centrally held assets are resolved and allocated in a fair and 

equitable manner. Finally, third parties have made claims against entities and individuals affiliated 

with the SRA Funds and other investment funds, and there is a possibility of those claims impacting 

assets that may be available for the benefit of the investors and others. For these reasons, the 

stipulating parties, which include the NYPA Funds and Felix Multi-Opportunity Funds, agree that the 

appointment of a receiver is appropriate. Also for these reasons, and based on the work recently 

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performed and the matters set forth in the Independent Monitor’s Interim Reports, the Independent 

Monitor also believes that the appointment of a Receiver over all of the entities covered by the 

Stipulated Order is now appropriate.

The Court finds that, based on the record in these proceedings, the Independent Monitor’s 

reports to the Court and the parties’ Stipulation, the appointment of a receiver in this action is 

necessary and appropriate for the purposes of marshalling and preserving all assets of the 

Receivership Defendants, as well as of the stipulating affiliated entities Felix Multi-Opportunity Fund 

I LLC (“FMOF I”), Felix Multi-Opportunity Fund II LLC (“FMOF II”), Felix Management 

Associates LLC (“FMOF Management”) (collectively, “FMOF Entities”), NYPA Fund I LLC 

(“NYPA I”), NYPA Fund II LLC (“NYPA II”) and NYPA Management Associates LLC (“NYPA 

Management”) (collectively, “NYPA Entities”) (all combined, the “Receivership Assets”) and of 

persons that: (a) are attributable to funds derived from investors; (b) are held in constructive trust by 

or for the Receivership Defendants; (c) were fraudulently transferred by the Receivership

Defendants; (d) are owned, possessed, affiliated with, or under the direct or indirect control of Saddle 

River and/or the Receivership Defendants and/or (e) may otherwise be includable as assets of the 

estates of the Receivership Defendants (collectively, the “Recoverable Assets”). 

Based upon the pleadings on file, and good cause appearing, it is hereby ordered that the 

current court-appointed Independent Monitor, Sherwood Partners, Inc., 1100 La Avenida Street, 

Building A, Mountain View, CA 94043, telephone: 650-454-8001, is hereby appointed to act, 

without bond, as the Receiver for the estate of the Receivership Defendants and the stipulating FMOF 

Entities and NYPA Entities (all combined, the “Receivership Entities”) as follows:

I. Marshalling of Receivership Assets

Pending further Orders, this Court hereby takes exclusive jurisdiction and possession of the 

assets, of whatever kind and wherever situated, of defendant SRA Management and relief defendants 

SRA Funds and Clear Sailing, as well as of the FMOF Entities and NYPA Entities. Accordingly, all 

persons and entities with direct or indirect control over any Receivership Assets and/or any 

Recoverable Assets, other than the Receiver, are hereby restrained and enjoined from directly or 

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indirectly transferring, setting off, receiving, changing, selling, pledging, assigning, liquidating or 

otherwise disposing of or withdrawing such assets. This judicial possession and restraint shall 

include, but not be limited to, Receivership Assets and/or Recoverable Assets that are on deposit with 

financial institutions such as banks, brokerage firms and mutual funds. This judicial possession and 

restraint shall also include, but not be limited to, all assets, deposits, interests and holdings that are

directly or indirectly managed by Saddle River through a management company such as SRA 

Management, FMOF Management and NYPA Management. 

II. General Powers and Duties of Receiver

The Receiver shall have all powers, authorities, rights and privileges heretofore possessed by 

the officers, directors, managers and members of the entity Receivership Entities under applicable 

state and federal law, by the governing charters, by-laws, articles and/or agreements in addition to all 

powers and authority of a receiver at equity, and all powers conferred upon a receiver by the 

provisions of 28 U.S.C. §§ 754, 959 and 1692, and Fed.R.Civ.P. 66.

The trustees, directors, officers, managers, employees, investment advisors, accountants, 

attorneys and other agents of the Receivership Entities are hereby dismissed and the powers of any 

members, directors and/or managers are hereby suspended. Such persons and entities shall have no 

authority with respect to the Receivership Entities’ operations or assets, except to the extent as may 

hereafter be expressly granted by the Receiver. The Receiver shall assume and control the operation 

of the Receivership Entities and shall pursue and preserve all of their claims.

No person holding or claiming any position of any sort with any of the Receivership Entities

shall possess any authority to act by or on behalf of any of the Receivership Entities.

Subject to the specific provisions in Sections III through XIV, below, the Receiver shall have 

the following general powers and duties:

A. To use reasonable efforts to determine the nature, location and value of all

Receivership Assets, Recoverable Assets and property interests of the 

Receivership Entities, including, but not limited to, monies, funds, securities, credits, effects, goods, chattels, lands, premises, leases, claims, rights, economic interests and other assets, together with all rents, profits, dividends, 

interest or other income attributable thereto, of whatever kind, which the 

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Receivership Entities own, possess, have a beneficial interest in, or control

directly or indirectly (“Receivership Property” or, collectively, the 

“Receivership Estates”);

B. To take custody, control and possession of all Receivership Property and 

records relevant thereto from the Receivership Entities; to sue for and collect, 

recover, receive and take into possession from third parties all Receivership 

Property and records relevant thereto;

C. To manage, control, operate and maintain the Receivership Estates and hold in 

his possession, custody and control all Receivership Property, pending further 

Order of this Court;

D. To use Receivership Property for the benefit of the Receivership Estates,

making payments and disbursements and incurring expenses as may be 

necessary or advisable in the ordinary course of business in discharging his 

duties as Receiver;

E. To take any action which, prior to the entry of this Order, could have been

taken by the officers, directors, members, managers, trustees and agents of the 

Receivership Entities;

F. To engage and employ persons in his discretion to assist him in carrying out 

his duties and responsibilities hereunder, including, but not limited to, 

accountants, attorneys, securities traders, registered representatives, financial 

or business advisers, liquidating agents, real estate agents, forensic experts, 

brokers, traders or auctioneers;

G. To take such action as necessary and appropriate for the preservation of 

Receivership Property or to prevent the dissipation or concealment of 

Receivership Property;

H. The Receiver is authorized to issue subpoenas for documents and testimony 

consistent with the Federal Rules of Civil Procedure; 

I. To bring such legal actions based on law or equity in any state, federal, or 

foreign court as the Receiver deems necessary or appropriate in discharging his 

duties as Receiver;

J. To pursue, resist and defend all suits, actions, claims and demands which may 

now be pending or which may be brought by or asserted against the 

Receivership Estates; and,

K. To take such other action as may be approved by this Court.

III. Access to Information

The past and/or present officers, directors, agents, managers, members, trustees, attorneys, 

accountants and employees of the Receivership Entities, as well as those acting in their place, are 

hereby ordered and directed to preserve and turn over to the Receiver forthwith all paper and 

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electronic information of, and/or relating to, the Receivership Entities and/or all Receivership 

Property; such information shall include but not be limited to books, records, documents, accounts 

and all other instruments and papers.

Within ten court days of the entry of this Order, John Bivona shall provide to the Receiver 

and the Commission a sworn statement listing, to the best of his knowledge, (a) all assets owned by 

the Receivership Entities, (b) identify all bank, securities, or other financial institution account of all 

of the Receivership Entities, (c) all liabilities of the Receivership Entities, and (d) stating that to the 

best of his knowledge all books and records required to be provided to the Receiver by Section IV, 

below, have been provided to the Receiver. Mr. Bivona shall also reasonably make himself available 

to provide the Receiver with information and assist the Receiver in transferring any assets covered by 

this Order to the Receiver’s control.

Within thirty (30) days of the entry of this Order, the Receivership Defendants shall provide 

to the Receiver and the Commission copies of the Receivership Entities’ federal income tax returns 

for 2011, 2012, 2013, 2014 and 2015 with all relevant and necessary underlying documentation.

The Receivership Entities’ past and/or present officers, directors, agents, attorneys, managers, 

shareholders, employees, accountants, debtors, creditors, managers and general and limited partners, 

and other appropriate persons or entities shall answer under oath to the Receiver all questions which 

the Receiver may put to them and produce all documents as required by the Receiver regarding the 

business of the Receivership Entities, or any other matter relevant to the operation or administration 

of the receivership or the collection of funds due to the Receivership Entities. In the event that the 

Receiver deems it necessary to require the appearance of the aforementioned persons or entities, the 

Receiver shall make its discovery requests in accordance with the Federal Rules of Civil Procedure.

To issue subpoenas to compel testimony of persons or production of records, consistent with 

the Federal Rules of Civil Procedure and applicable Local Rules, except for the provisions of 

Fed.R.Civ.P. 26(d)(1), concerning any subject matter within the powers and duties granted by this 

Order.

The Receivership Entities are required to assist the Receiver in fulfilling his duties and 

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obligations. As such, they must respond promptly and truthfully to all requests for information and 

documents from the Receiver.

IV. Access to Books, Records and Accounts

The Receiver is authorized to take immediate possession of all assets, bank accounts or other 

financial accounts, books and records and all other documents or instruments relating to the 

Receivership Entities and/or Recoverable Assets. All persons and entities having control, custody or 

possession of any Receivership Property and/or Recoverable Property are hereby directed to turn 

such property over to the Receiver.

The Receivership Entities as well as their agents, servants, employees, attorneys, any persons 

acting for or on behalf of the Receivership Entities, and any persons receiving notice of this Order by 

personal service, facsimile transmission or otherwise, having possession of the property, business, 

books, records, accounts or assets of the Receivership Entities and/or Recoverable Assets are hereby 

directed to deliver the same to the Receiver, his agents and/or employees.

All banks, brokerage firms, financial institutions, and other persons or entities which have 

possession, custody or control of any Recoverable Assets or any assets or funds held by, in the name 

of, or for the benefit of, directly or indirectly, of the Receivership Entities that receive actual notice of 

this Order by personal service, facsimile transmission or otherwise shall:

A. Not liquidate, transfer, sell, convey or otherwise transfer Recoverable Assets or

any assets, securities, funds, or accounts in the name of or for the benefit of the 

Receivership Entities except upon instructions from the Receiver;

B. Not exercise any form of set-off, alleged set-off, lien, or any form of self-help 

whatsoever, or refuse to transfer any funds or assets to the Receiver’s control 

without the permission of this Court;

C. Within five (5) business days of receipt of that notice, file with the Court and 

serve on the Receiver and counsel for the Commission a certified statement 

setting forth, with respect to each such account or other asset, the balance in 

the account or description of the assets as of the close of business on the date 

of receipt of the notice; and,

D. Cooperate expeditiously in providing information and transferring funds, assets 

and accounts to the Receiver or at the direction of the Receiver.

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V. Access to Real and Personal Property

The Receiver is authorized to take immediate possession of the Recoverable Assets and all 

personal property of the Receivership Entities, wherever located, including but not limited to 

electronically stored information, computers, laptops, hard drives, external storage drives, and any 

other such memory, media or electronic storage devices, books, papers, data processing records, 

evidence of indebtedness, bank records and accounts, savings records and accounts, brokerage 

records and accounts, certificates of deposit, stocks, bonds, debentures, and other securities and 

investments, contracts, mortgages, furniture, office supplies and equipment.

The Receiver is authorized to open all mail directed to or received by or at the offices or post 

office boxes of the Receivership Entities, and to inspect all mail opened prior to the entry of this 

Order, to determine whether items or information therein fall within the mandates of this Order.

Upon the request of the Receiver, the United States Marshal Service, in any judicial district, is 

hereby ordered to assist the Receiver in carrying out his duties to take possession, custody and control 

of, or identify the location of, any assets, records or other materials belonging to the Receivership 

Estate.

VI. Notice to Third Parties

The Receiver shall promptly give notice of his appointment to all known officers, directors, 

agents, employees, shareholders, creditors, debtors, managers and members of the Receivership

Entities, as the Receiver deems necessary or advisable to effectuate the operation of the receivership.

All persons and entities owing any obligation, debt, or distribution with respect to

Recoverable Assets or Receivership Assets shall, until further ordered by this Court, pay all such 

obligations in accordance with the terms thereof to the Receiver and its receipt for such payments 

shall have the same force and effect as if the Receivership Entity had received such payment.

In furtherance of his responsibilities in this matter, the Receiver is authorized to communicate 

with, and/or serve this Order upon, any person, entity or government office that he deems appropriate 

to inform them of the status of this matter and/or the financial condition of the Receivership Estates. 

All government offices which maintain public files of security interests in real and personal property 

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shall, consistent with such office’s applicable procedures, record this Order upon the request of the 

Receiver or the Commission.

The Receiver is authorized to instruct the United States Postmaster to hold and/or reroute mail

which is related, directly or indirectly, to the business, operations or activities of any of the 

Receivership Entities (the “Receiver’s Mail”), including all mail addressed to, or for the benefit of, 

the Receivership Entities. The Postmaster shall not comply with, and shall immediately report to the 

Receiver, any change of address or other instruction given by anyone other than the Receiver 

concerning the Receiver’s Mail. The Receivership Entities shall not open any of the Receiver’s Mail 

and shall immediately turn over such mail, regardless of when received, to the Receiver. All personal 

mail of any individual Receivership Defendants, and/or any mail appearing to contain privileged 

information, and/or any mail not falling within the mandate of the Receiver, shall be released to the 

named addressee by the Receiver. The foregoing instructions shall apply to any proprietor, whether 

individual or entity, of any private mail box, depository, business or service, or mail courier or 

delivery service, hired, rented or used by the Receivership Entities. The Receivership Entities shall 

not open a new mailbox, or take any steps or make any arrangements to receive mail in contravention 

of this Order, whether through the U.S. mail, a private mail depository or courier service.

Subject to payment for services provided, any entity furnishing water, electric, telephone, 

sewage, garbage or trash removal services to the Receivership Entities shall maintain such service 

and transfer any such accounts to the Receiver unless instructed to the contrary by the Receiver.

VII. Injunction Against Interference with Receiver

The Receivership Entities and all persons receiving notice of this Order by personal service, 

facsimile or otherwise, are hereby restrained and enjoined from directly or indirectly taking any 

action or causing any action to be taken, without the express written agreement of the Receiver, 

which would:

A. Interfere with the Receiver’s efforts to take control, possession, or 

management of any Receivership Property; such prohibited actions include but 

are not limited to, using self-help or executing or issuing or causing the 

execution or issuance of any court attachment, subpoena, replevin, execution, 

or other process for the purpose of impounding or taking possession of or 

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interfering with or creating or enforcing a lien upon any Receivership Property;

B. Hinder, obstruct or otherwise interfere with the Receiver in the performance of 

his duties; such prohibited actions include but are not limited to, concealing, 

destroying or altering records or information;

C. Dissipate or otherwise diminish the value of any Receivership Property; such 

prohibited actions include but are not limited to, releasing claims or disposing, 

transferring, exchanging, assigning or in any way conveying any Receivership 

Property, enforcing judgments, assessments or claims against any Receivership 

Property or any Receivership Defendant or any FMOF Entity or NYPA Entity, 

attempting to modify, cancel, terminate, call, extinguish, revoke or accelerate 

(the due date), of any lease, loan, mortgage, indebtedness, security agreement 

or other agreement executed by any Receivership Defendant or which 

otherwise affects any Receivership Property; or,

D. Interfere with or harass the Receiver, or interfere in any manner with the 

exclusive jurisdiction of this Court over the Receivership Estates.

The Receivership Entities shall cooperate with and assist the Receiver in the performance of 

his duties.

The Receiver shall promptly notify the Court and the Commission’s counsel of any failure or 

apparent failure of any person or entity to comply in any way with the terms of this Order.

VIII. Stay of Litigation

As set forth in detail below, the following proceedings, excluding the instant proceeding and 

all police or regulatory actions and actions of the Commission related to the above-captioned 

enforcement action, are stayed until further Order of this Court:

All civil legal proceedings of any nature, including, but not limited to, bankruptcy 

proceedings, arbitration proceedings, foreclosure actions, default proceedings, or other actions 

of any nature involving: (a) the Receiver, in his capacity as Receiver; (b) any Receivership 

Property, wherever located; (c) any of the Receivership Entities including subsidiaries and 

affiliates; or, (d) any of the Receivership Entities’ past or present officers, directors, 

managers, agents, or members sued for, or in connection with, any action taken by them while 

acting in such capacity of any nature, whether as plaintiff, defendant, third-party plaintiff, 

third-party defendant, or otherwise (such proceedings are hereinafter referred to as “Ancillary 

Proceedings”).

The parties to any and all Ancillary Proceedings are enjoined from commencing or continuing 

any such legal proceeding, or from taking any action, in connection with any such proceeding, 

including, but not limited to, the issuance or employment of process.

All Ancillary Proceedings are stayed in their entirety, and all Courts having any jurisdiction 

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thereof are enjoined from taking or permitting any action until further Order of this Court. Further, 

as to a cause of action accrued or accruing in favor of one or more of the Receivership Entities

against a third person or party, any applicable statute of limitation is tolled during the period in which 

this injunction against commencement of legal proceedings is in effect as to that cause of action.

IX. Managing Assets

For each of the Receivership Estates, the Receiver shall establish one or more custodial 

accounts at a federally insured bank to receive and hold all cash equivalent Receivership Property 

(the “Receivership Funds”).

The Receiver’s deposit account shall be entitled “Receiver's Account, Estate of Saddle River 

Management LLC” together with the name of the action.

The Receiver may, without further Order of this Court, transfer, compromise, or otherwise 

dispose of any Receivership Property, other than shares of pre-IPO companies, in the ordinary course 

of business, on terms and in the manner the Receiver deems most beneficial to the Receivership 

Estate, and with due regard to the realization of the true and proper value of such Receivership 

Property. 

If there has been a “liquidity event,” as defined by the operating agreements for the SRA 

Funds, FMOF I and II and NYPA II, for a particular Series of company shares, the Receiver may, 

subject to court approval, carry out a distribution of the proceeds of the liquidity event after making a 

reasonable effort to identify all investors in those shares. The Receiver may also, subject to Court 

approval, negotiate for the sale or transfer of shares of pre-IPO companies. In selling or transferring 

the shares of pre-IPO companies, the Receiver shall not be required to obtain an independent 

appraisal of the value of the shares unless specifically instructed by the Court to obtain an appraisal. 

Upon further Order of this Court, pursuant to such procedures as may be required by this Court, the 

Receiver will be authorized to sell, and transfer clear title to, the shares of the pre-IPO companies.

Upon further Order of this Court, pursuant to such procedures as may be required by 

this Court and additional authority such as 28 U.S.C. §§ 2001 and 2004, the Receiver will be 

authorized to sell, and transfer clear title to, all real property in the Receivership Estates.

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The Receiver is authorized to take all actions to manage, maintain, and/or wind-down 

business operations of the Receivership Estate, including making legally required payments to 

creditors, employees, and agents of the Receivership Estate and communicating with vendors, 

investors, governmental and regulatory authorities, and others, as appropriate.

The Receiver shall take all necessary steps to enable the Receivership Funds to obtain and 

maintain the status of a taxable “Settlement Fund,” within the meaning of Section 468B of the 

Internal Revenue Code and of the regulations, when applicable whether proposed, temporary or final, 

or pronouncements thereunder, including the filing of the elections and statements contemplated by 

those provisions. The Receiver shall be designated the administrator of the Settlement Fund, 

pursuant to Treas. Reg. § 1.468B-2(k)(3)(i), and shall satisfy the administrative requirements 

imposed by Treas. Reg. § 1.468B-2, including but not limited to (a) obtaining a taxpayer 

identification number, (b) timely filing applicable federal, state, and local tax returns and paying 

taxes reported thereon, and (c) satisfying any information, reporting or withholding requirements 

imposed on distributions from the Settlement Fund. The Receiver shall cause the Settlement Fund to 

pay taxes in a manner consistent with treatment of the Settlement Fund as a “Qualified Settlement 

Fund.” The Receivership Defendants shall cooperate with the Receiver in fulfilling the Settlement

Funds’ obligations under Treas. Reg. § 1.468B-2.

X. Investigate and Prosecute Claims

Subject to the requirement, in Section VII above, that leave of this Court is required to resume 

or commence certain litigation, the Receiver is authorized, empowered and directed to investigate, 

prosecute, defend, intervene in or otherwise participate in, compromise, and/or adjust actions in any 

state, federal or foreign court or proceeding of any kind as may in his discretion, and in consultation 

with the Commission’s counsel, be advisable or proper to recover and/or conserve Receivership 

Property.

Subject to his obligation to expend receivership funds in a reasonable and cost-effective 

manner, the Receiver is authorized, empowered and directed to investigate the manner in which the 

financial and business affairs of the Receivership Entities were conducted and (after obtaining leave 

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of this Court) to institute such actions and legal proceedings, for the benefit and on behalf of the 

Receivership Estate, as the Receiver deems necessary and appropriate; the Receiver may seek, among 

other legal and equitable relief, the imposition of constructive trusts, disgorgement of profits, asset 

turnover, avoidance of fraudulent transfers, rescission and restitution, collection of debts, and such 

other relief from this Court as may be necessary to enforce this Order. Where appropriate, the 

Receiver should provide prior notice to Counsel for the Commission before commencing 

investigations and/or actions.

The Receiver has a continuing duty to ensure that there are no conflicts of interest between 

the Receiver, his Retained Personnel (as that term is defined below), and the Receivership Estate.

XI. Bankruptcy Filing

The Receiver may seek authorization of this Court to file voluntary petitions for relief under 

Title 11 of the United States Code (the “Bankruptcy Code”) for the Receivership Entities. If a 

Receivership Entity is placed in bankruptcy proceedings, the Receiver may become, and may be 

empowered to operate each of the Receivership Estates as, a debtor in possession. In such a situation, 

the Receiver shall have all of the powers and duties as provided a debtor in possession under the 

Bankruptcy Code to the exclusion of any other person or entity. Pursuant to Paragraph 4 above, the 

Receiver is vested with management authority for all Receivership Entities and may therefore file and

manage a Chapter 11 petition.

The provisions of Section VIII above bar any person or entity, other than the Receiver, from 

placing any of the Receivership Entities in bankruptcy proceedings.

XII. Liability of Receiver

Until further Order of this Court, the Receiver shall not be required to post bond or give an 

undertaking of any type in connection with his fiduciary obligations in this matter.

The Receiver and his agents, acting within scope of such agency (“Retained Personnel”) are 

entitled to rely on all outstanding rules of law and Orders of this Court and shall not be liable to 

anyone for their own good faith compliance with any order, rule, law, judgment, or decree. In no 

event shall the Receiver or Retained Personnel be liable to anyone for their good faith compliance 

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with their duties and responsibilities as Receiver or Retained Personnel nor shall the Receiver or 

Retained Personnel be liable to anyone for any actions taken or omitted by them except upon a 

finding by this Court that they acted or failed to act as a result of malfeasance, bad faith, gross 

negligence, or in reckless disregard of their duties.

This Court shall retain jurisdiction over any action filed against the Receiver or Retained 

Personnel based upon acts or omissions committed in their representative capacities.

In the event the Receiver decides to resign, the Receiver shall first give written notice to the 

Commission’s counsel of record and the Court of its intention, and the resignation shall not be 

effective until the Court appoints a successor. The Receiver shall then follow such instructions as the 

Court may provide.

XIII. Recommendations and Reports

The Receiver is authorized, empowered and directed to develop a plan for the fair, reasonable, 

and efficient recovery and liquidation of all remaining, recovered, and recoverable Receivership 

Property (the “Liquidation Plan”).

Within ninety (90) days of the entry date of this Order, the Receiver shall file the Liquidation 

Plan in the above-captioned action, with service copies to counsel of record. Nothing in this Order 

shall prevent any interested party from submitting a proof of claim to the Receiver for inclusion in the 

Liquidation Plan, from objecting to any proposed Liquidation Plan, or from objecting to any 

proposed disposition of Receivership Estate assets.

Within thirty (30) days after the end of each calendar quarter, the Receiver shall file and serve 

a full report and accounting of each Receivership Estate (the “Quarterly Status Report”), reflecting

(to the best of the Receiver’s knowledge as of the period covered by the report) the existence, value, 

and location of all Receivership Property, and of the extent of liabilities, both those claimed to exist 

by others and those the Receiver believes to be legal obligations of the Receivership Estates.

The Quarterly Status Report shall contain the following:

A. A summary of the operations of the Receiver;

B. The amount of cash on hand, the amount and nature of accrued administrative 

expenses, and the amount of unencumbered funds in the estate;

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C. A schedule of all the Receiver’s receipts and disbursements (attached as 

Exhibit A to the Quarterly Status Report), with one column for the quarterly 

period covered and a second column for the entire duration of the receivership;

D. A description of all known Receivership Property, including approximate or 

actual valuations, anticipated or proposed dispositions, and reasons for 

retaining assets where no disposition is intended;

E. A description of liquidated and unliquidated claims held by the Receivership 

Estate, including the need for forensic and/or investigatory resources; 

approximate valuations of claims; and anticipated or proposed methods of 

enforcing such claims (including likelihood of success in: (i) reducing the 

claims to judgment; and, (ii) collecting such judgments);

F. A list of all known creditors with their addresses and the amounts of their 

claims;

G. The status of Creditor Claims Proceedings, after such proceedings have been 

commenced; and,

H. The Receiver's recommendations for a continuation or discontinuation of the 

receivership and the reasons for the recommendations.

On the request of the Commission, the Receiver shall provide the Commission with any 

documentation that the Commission deems necessary to meet its reporting requirements, that is 

mandated by statute or Congress, or that is otherwise necessary to further the Commission’s mission.

XIV. Fees, Expenses and Accountings

Subject to the provisions immediately below, the Receiver need not obtain Court approval 

prior to the disbursement of Receivership Funds for expenses in the ordinary course of the

administration and operation of the receivership. Further, prior Court approval is not required for 

payments of applicable federal, state or local taxes.

Subject to the following provision, the Receiver is authorized to solicit persons and entities 

(“Retained Personnel”) to assist him in carrying out the duties and responsibilities described in this 

Order. With the exception of John W. Cotton, of Gartenberg, Gelfand & Hayton LLP, 15260 

Ventura Blvd., Suite 1920, Sherman Oaks, CA 91403, Direct: 213-542-2136, Main: 213-542-2100, 

who currently serves as counsel to the Independent Monitor, the Receiver shall not engage any 

Retained Personnel without first obtaining an Order of the Court authorizing such engagement. The 

Receiver may obtain such Court authorization by filing a motion for administrative relief pursuant to 

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Local Rule 7-11 of the Northern District of California.

The Receiver and Retained Personnel are entitled to reasonable compensation and expense 

reimbursement from the Receivership Estates as described in the “Billing Instructions for Receivers 

in Civil Actions Commenced by the U.S. Securities and Exchange Commission” (the “Billing 

Instructions”) agreed to by the Receiver. Such compensation shall require the prior approval of the 

Court.

The reasonable compensation and expenses of the Receivership shall be paid from a fund (the 

“Set-Aside Fund”) created by the immediate liquidation, upon approval of this Order, by the Receiver 

of up to 4% of the beneficial interests in share holdings, or contractual rights to such share holdings, 

of (i) each of the Series at Clear Sailing; (ii) the beneficial interests of SRA I, SRA II, SRA III, 

NYPA I, NYPA II, FMOF I, FMOF II, SRA Management, NYPA Management Associates, LLC and 

the FMOF Management Associates, LLC currently held by Equity Acquisition Corporation, or 

similar entities; and (iii) any direct holdings of any shares currently held by SRA I, SRA II, SRA III, 

NYPA I, NYPA II, FMOF I, FMOF II, SRA Management, NYPA Management Associates, LLC and 

the FMOF Management Associates, LLC. To the extent, after any final accounting and approval of 

the unpaid compensation and expenses of the Receivership, there is any remaining value in the SetAside Fund, such remaining value shall be available for an equitable distribution as approved by the 

Court.

Notwithstanding the provisions of Section IX above (relating to the sale of pre-IPO shares), 

the Receiver’s sale of beneficial share interest or contractual rights for the Set-Aside Fund shall be 

subject to court authorization on an expedited basis. The Receiver may request, without the need for 

an independent appraisal, the Court’s approval for such sales from the Set-Aside Fund on two-weeks

expedited notice, with any opposition due in writing five court days after the Receiver’s expedited 

motion, and any reply due in writing three court days after the filing of any opposition papers. 

Because the Set-Aside Fund is being created with beneficial share interests or contractual rights that 

belong in whole or part to investors, the Court anticipates that the Receiver will strive to minimize 

costs and expenses charged to the Set-Aside Fund so that remaining value can be distributed as 

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approved by the Court.

Within forty-five (45) days after the end of each calendar quarter, the Receiver and Retained 

Personnel shall apply to the Court for compensation and expense reimbursement from the 

Receivership Estates (the “Quarterly Fee Applications”). At least thirty (30) days prior to filing each 

Quarterly Fee Application with the Court, the Receiver will serve upon counsel for the Commission a 

complete copy of the proposed Application, together with all exhibits and relevant billing information in a 

format to be provided by the Commission.

All Quarterly Fee Applications will be interim and will be subject to cost benefit and final 

reviews at the close of the receivership. At the close of the receivership, the Receiver will file a final 

fee application, describing in detail the costs and benefits associated with all litigation and other 

actions pursued by the Receiver during the course of the receivership.

Quarterly Fee Applications may be subject to a holdback in the amount of 20% of the amount 

of fees and expenses for each application filed with the Court. The total amounts held back during 

the course of the receivership will be paid out at the discretion of the Court as part of the final fee 

application submitted at the close of the receivership.

Each Quarterly Fee Application shall:

A. Comply with the terms of the Billing Instructions agreed to by the Receiver; 

and,

B. Contain representations (in addition to the Certification required by the Billing 

Instructions) that: (i) the fees and expenses included therein were incurred in 

the best interests of the Receivership Estate; and, (ii) with the exception of the 

Billing Instructions, the Receiver has not entered into any agreement, written 

or oral, express or implied, with any person or entity concerning the amount of 

compensation paid or to be paid from the Receivership Estate, or any sharing 

thereof.

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At the close of the Receivership, the Receiver shall submit a Final Accounting, in a format to 

be provided by the Commission’s staff, as well as the Receiver’s final application for compensation 

and expense reimbursement.

SO ORDERED.

DATED: October __, 2016

 

Judge Edward M. Chen

UNITED STATES DISTRICT COURT

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U

NITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

IT IS SO ORDERED

Judge Edward M. Chen

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