In The United States District Court 

For The Northern District Of Illinois 

Eastern Division 

Commodity Futures Trading Commission, 

 Plaintiff, 

vs. 

Lake Shore Asset Management Limited 

 Defendant. 

Civil Action No: 07 C 3598 

Honorable Judge Manning 

Magistrate Judge Mason 

MOTION FOR RULE TO SHOW CAUSE WHY LAKE SHORE ASSET 

MANAGEMENT LIMITED SHOULD NOT BE HELD IN CONTEMPT OF COURT 

FOR VIOLATING THE STATUTORY EX PARTE RESTRAINING ORDER

On June 27, 2007, this Court entered a Statutory Ex Parte Restraining Order (“SRO”) that 

provided, among other things, that Defendant Lake Shore Asset Management Limited (“LAM” 

or “Defendant”) allow representatives of the plaintiff Commission to immediately inspect 

Defendant’s books and records and to copy said documents, data, and records either on or off the 

premises where they are located. To date, Defendant has neither allowed representatives of the 

Commission to immediately inspect its books and records nor has it allowed CFTC 

representatives to copy said documents or records either on or off the premises where they are 

situated. Therefore, the plaintiff is filing this Rule to Show cause why Defendant LAM should 

not be held in contempt for violating the SRO. In support of this Petition, plaintiff states as 

follows: 

1. The SRO entered by this Court on June 27, 2007 ordered the Defendant to allow 

representatives of the plaintiff “to immediately inspect the books, records and other 

electronically stored data, tape recordings, and other documents of the defendant and its agents, 

including all such records of defendant’s business operations, wherever they are situated and 

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whether they are in the possession of the defendant or others and to copy said documents, data, 

and records either on or off the premises where they may be situated.” 

2. Defendant has provided Commission staff with some documents, including a fact 

sheet dated May 31, 2007 for Lake Shore Alternative Financial Asset Fund IV Limited, a generic 

chart listing the total amount of assets under management as $1 billion, a listing of telephone 

numbers for LAM’s staff, copies of some selected net asset values (“NAV”) and performance 

information for LAM, Bermuda corporate records, and account documents for one New York 

investor, who Defendant claims is LAM’s sole U.S. investor. 

3. Defendant, however, has not provided all of the documents enumerated in the 

Commission’s document request made pursuant to Section 4n of the Act, nor has Defendant 

allowed Commission staff to inspect its books and records. In particular, Defendant has not 

provided the Commission with a list of all accounts under management, account opening 

documents for those accounts, monthly and daily statements for each account, and copies of all 

correspondence between Defendant and each account holder. Additionally, Defendant has not 

provided the Commission with Disclosure Documents and Offering Memoranda for funds under 

its management. 

 4. As described in plaintiff’s complaint and supporting Memorandum of Law 

previously filed with this Court, LAM and its principals and directors, have made numerous 

inconsistent statements to National Futures Association (“NFA”) and Commission staff 

concerning assets in Defendant’s pools and managed accounts, LAM’s ownership, U.S. investors 

in the pools, and the location of its books and records. 

 5. On June 21, 2007, Mr. Laurence Rosenberg (“Rosenberg”), a LAM director, told 

Commission staff that there were no books and records in the Chicago office and that all books 

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and records were located in Toronto and were not available for inspection. Commission staff 

later learned that the address for the Toronto office provided by LAM in registration materials 

was a UPS store or “mail drop.” Commission staff also learned that Mr. Nicholas Eveleigh 

(“Eveleigh”), whose name appeared on registration materials as LAM’s compliance officer, 

claimed to be an “IT” consultant under contract with LAM. 

 6. LAM, a registered commodity pool operator (“CPO”), appears to operate one 

pool, Lake Shore Alternative Financial Asset Fund IV (“Fund IV”), which purportedly consists 

of two sub-funds – Class E (“Fund-E”) for European investors and Fund US for U.S. investors. 

These funds have trading accounts with Man Financial London, Lehman Brothers London and 

Fimat London and Sentinel in Chicago, Illinois. 

 7. LAM is also a registered commodity trading advisor (“CTA”). Documents 

produced by Eveleigh state that LAM is the registered CTA advising Lake Shore Alternative 

Financial Asset Funds III, IV and IV E. Specifically, the Confidential Explanatory 

Memorandum produced by Eveleigh for the foregoing Funds state that LAM is the Investment 

Manager and Advisor for each of the respective Funds and is “a registered CTA.” 

 8. This Court’s asset freeze appears to have frozen approximately $238 million on 

deposits with futures commission merchants (“FCMs”). Because the Commission does not have 

access to the customer records, it cannot determine whether or not all customer funds are 

accounted for. 

 9. On June 19, 2007, Rosenberg revoked NFA’s access to LAM’s protected website 

and told the NFA that upon the advice of counsel, located in Geneva, Switzerland, LAM would 

not provide any additional information because of concerns related to unspecified “bank secrecy” 

laws. The NFA reminded Rosenberg that LAM had agreed to make its books and records 

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available to the NFA within 72 hours and had certified in its registration application that it was 

not subject to any blocking privacy or secrecy laws that created an obstacle to full record 

production. 

 10. Since the issuance of the SRO, plaintiff has continued to request that the 

Defendant allow CFTC representatives to inspect its books and records. Instead of allowing 

plaintiff immediate inspection, as required by the SRO, Defendant has continued to hide behind 

unspecified Swiss “bank secrecy” laws and has told CFTC staff that investor contracts prohibit 

Defendant’s revealing personal information about investors. Moreover, Defendant has informed 

CFTC staff that the firm will produce only account documents for the one U.S. investor because 

its other investors are all foreign investors, their investments are located off-shore, and thus, the 

Commission is not entitled to inspect those books and records. 

 11. CFTC staff has obtained a Confidential Explanatory Memorandum for Lake 

Shore Alternative Financial Asset Fund IV Limited (“Confidential Memo”) from a FCM that 

carries an account under that name. The Confidential Memo expressly states: 

Lake Shore Alternative Financial Asset Fund IV Limited, a British Virgin Islands 

limited company (the “Fund”), seeks to maximize returns whilst preserving 

capital by investing in three assets, Lake Shore Alternative Financial Asset Fund 

Ltd., (LSAFA I), Lake Shore Alternative Financial Asset Fund II Ltd., (LSAFA 

II), Lake Shore Alternative Financial Asset Fund III Ltd., (LSAFA III). 

The Memo further states that LSAFA I, II and III each invest in a portfolio of exchange traded 

financial derivatives traded on a stock or futures exchange and that the Fund utilizes the 

proprietary trading program developed and operated by LAM. 

 12. The Confidential Memo also states that the “Investment Manager of the Fund 

[Fund IV] is Lake Shore Asset Management Limited, and the Investment Advisor is Lake Shore 

Asset Management Limited, a corporation incorporated in Hamilton, Bermuda and a registered 

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CTA (the “Investment Manager”).” According to the Confidential Memo, the Investment 

Manager is responsible for identifying suitable investments and has been authorized to make 

investments for and on behalf of the Fund. 

 13. Moreover, CFTC staff has obtained a chart from Eveleigh, LAM’s purported 

compliance officer, entitled “Lake Shore Group of Companies Product Range.” The chart shows 

specific entities under LAM’s management. According to the chart, Lake Shore Alternative 

Financial Asset Funds I, II, III, IV and Yen Funds are all under the Management of LAM. 

 14. Based on the representations contained in the chart described in Paragraph 13 and 

the Confidential Memo, particularly the representations that LAM is the Investment Manager 

and Investment Advisor for Fund IV, which invests in the three other LAM Funds, and that LAM 

is a registered CTA and that LAM advises the trading in Funds I, II III, and IV, the Commission 

is entitled to inspect all of LAM’s books and records, not simply the account statement of the 

purportedly sole U.S. investor. 

 15. By failing to allow representatives of the plaintiff Commission to inspect 

Defendant’s books and records and to copy said documents, data, and records either on or off the 

premises, where they may be situated, the Defendant has violated the SRO. In addition, 

Defendant has delayed compliance with the Court’s Order by retaining and firing attorneys. In 

particular, Defendant retained California counsel, who indicated that the firm would be 

producing certain documents to CFTC staff, only to fire that firm and thereafter retain a Chicago 

firm. While the Chicago firm has indicated it would be producing documents to CFTC staff, the 

firm has only produced account documents for the purported sole U.S. investor. 

 16. In support of this Petition, the plaintiff has separately filed a brief, including 

Exhibits attached thereto. 

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Wherefore, the Commission requests that Defendant be ordered to comply with the SRO 

forthwith and that this Court enter plaintiff’s Proposed Order to Show Cause against Defendant 

LAM. 

Date: July 3, 2007 Respectfully submitted, 

 s/ Diane M. Romaniuk

 Diane M. Romaniuk 

 Senior Trial Attorney 

 A.R.D.C. No. 0341649 

 s/ Ava M. Gould

 Ava M. Gould 

 Senior Trial Attorney 

 A.R.D.C. No. 06194202 

 Commodity Futures Trading Commission 

 525 West Monroe Street, Suite 1100 

 Chicago, Illinois 60661 

 (312) 596-0541 (Romaniuk) 

 (312) 596-0535 (Gould) 

 (312) 596-0520 (Hollinger) 

 (312) 596-0700 (office number) 

 Fax (312) 596-0714 

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CERTIFICATE OF SERVICE

 The undersigned, an attorney with the Commodity Futures Trading Commission, certify 

that on July 3, 2007, I caused the foregoing, 

• MOTION FOR RULE TO SHOW CAUSE WHY LAKE SHORE ASSET 

MANAGEMENT LIMITED SHOULD NOT BE HELD IN CONTEMPT OF COURT 

FOR VIOLATING THE STATUTORY EX PARTE RESTRAINING ORDER 

• MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFF’S MOTION FOR RULE 

TO SHOW CAUSE AGAINST LAKE SHORE ASSET MANAGEMENT LIMITED 

• [PROPOSED] ORDER TO SHOW CAUSE 

to be electronically filed with the Clerk of the Court using CM/ECF. I also certify that the 

foregoing document is being served this day on Lake Shore Asset Management Limited, c/o 

Laurence Rosenberg, 875 North Michigan Avenue, Suite 1562, Chicago, Illinois 60611 a nonparticipant in CM/ECF, via Federal Express mail. 

 No appearances have been filed by or on behalf of non-participants in CM/ECF. A 

courtesy copy of the foregoing document will be sent to the following individuals via Federal 

Express mail. 

Mr. William Nissen, Esq. 

Sidley Austin LP 

One South Dearborn Street 

Chicago, Illinois 60603 

e-mail: wnissen@sidley.com 

Mr. Robert L. Byman, Esq. 

Jenner & Block LLC 

One IBM Plaza 

Chicago, Illinois 60611-7603 

e-mail: RByman@jenner.com 

s/ Diane Romaniuk

Diane M. Romaniuk 

 Senior Trial Attorney (dromaniuk@cftc.gov) 

Illinois ARDC No. 0341649 

Commodity Futures Trading Commission 

525 West Monroe Street, Suite 1100 

Chicago, Illinois 60661 

(312) 596-0541 (Romaniuk) 

(312) 596-0714 (facsimile) 

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