Opinion ID: 814830
Heading Depth: 3
Heading Rank: 2

Heading: Miguel Ferrer

Text: Plaintiffs allege that Miguel Ferrer serves as both Chairman and President of the Board of Directors of each of the four Funds. At the time of the ERS bond offering, Ferrer was also the Chief Executive Officer of both UBS Trust and UBS Financial. Before the complaint was filed, Ferrer concluded his employment with both UBS Financial and UBS Trust, but he did not leave the UBS AG family. Instead, at the time the complaint was filed, Ferrer was the Chairman of yet another UBS-affiliated entity known as UBS International & Puerto Rico (UBS International). Though the district court was correct in its ultimate conclusion that plaintiffs had created a reasonable doubt about Ferrer's ability to objectively evaluate demand, it improperly considered Ferrer's circumstances at the time of the ERS bonds transaction. By contrast, Rales requires the court to consider the facts pleaded concerning each director's circumstances at the time the complaint was filed. See Rales, 634 A.2d at 933-34 ([A] court must determine whether or not the particularized factual allegations of a derivative stockholder complaint create a reasonable doubt that, as of the time the complaint is filed, the board of directors could have properly exercised its independent and disinterested business judgment in responding to a demand. (emphasis supplied)). -20- Considering only the facts alleged concerning Ferrer's circumstances at the time the complaint was filed, we conclude that plaintiffs have established a reasonable doubt that Ferrer could have exercised his independent and disinterested business judgment in responding to a demand. Rales, 634 A.2d at 934. Even though Ferrer was no longer a full-time employee at UBS Trust and UBS Financial, his extensive past ties to both UBS Trust and UBS Financial are important factors in our analysis. See Krantz v. Fidelity Mgmt. & Research Co., 98 F. Supp. 2d 150, 156 (D. Mass. 2000) (citing with approval ten factors set out by the SEC relevant to determination of control over directors which included former business associations between the director and the controlling person); In re Trump Hotels S'Holder Deriv. Litig., Nos. 96 Civ. 7820, 8527, 2000 WL 1371317, at  (S.D.N.Y. Sept. 21, 2000) ([Director's] history of personally beneficial affiliation with Trump-controlled entities . . . diminishes the possibility that [he] had only the corporation's interests in mind when evaluating the transaction.). In particular, Ferrer's ability to leave his former UBS positions and assume a new role at a different UBS affiliate suggests that Ferrer has been able to leverage the relationships and goodwill he has built in the UBS family of companies into advancing his career. Given this history, we agree with the district court that plaintiffs have established a reasonable doubt that Ferrer could objectively evaluate the demand. -21-