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10-04285-brl Doc 127 Filed 08/17/12 Entered 08/17/12 14:29:55 Main Document
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time!” (Pergament Decl. Ex. 5 at 2.) UBS would be
turning over both portfolio management and custodial authority to BLMIS. (Id. at 3.)
7
(Id. at 3.)
(Pergament Decl. Ex. 6.) Oreades was closed and Luxalpha was established,
with UBS AG and UBS SA serving as its co-sponsors. (Pergament Decl. Ex. 3; Am. Compl.
18–19.)
At its inception in February 2004, Luxalpha’s board of directors was composed entirely
of UBS SA principals, including Moving Luxalpha Director Defendants Hondequin and Kranz,
as well as Defendant Pierre Delandmeter, a Luxembourg attorney and Access principal.
(Pergament Decl. Ex. 7 at 21.) The board’s first official resolution directed the opening of a
BLMIS account in Luxalpha’s name, care of UBS SA. (Pergament Decl. Ex. 8 at 3.) UBS SA
employees then completed the BLMIS account opening agreements for Luxalpha. (Pergament
Decl. Ex. 9 at 2–21.) These agreements not only gave wide latitude to BLMIS to make
investment decisions on behalf of UBS SA and Luxalpha’s investors, they actually transferred
custodial and portfolio management responsibility of the fund from UBS SA to BLMIS in New
York. 3 (Id.) UBS SA agreed to this contractual delegation of their responsibilities despite telling
investors that UBS SA “holds all the liquid assets and securities belonging to the Fund’s assets in
safekeeping for the shareholders.” (Pergament Decl. Exs. 10 at 15; 11 at 16.)
Luxalpha never had any of its own employees, but rather was operated, managed and
supported by UBS AG and its subsidiaries, UBS SA, UBSFSL, and UBSTPM, and their
partners, New York-based Access and its overseas subsidiaries, the Moving Access Defendants.
3 Such concentration of power in the hands of Madoff and BLMIS violated the Luxembourg law implementing the
UCITS fund directives that governed Luxalpha. (Am. Compl. 160; see also id. 128.)