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10-04285-brl Doc 127 Filed 08/17/12 Entered 08/17/12 14:29:55 Main Document
Pg 65 of 133
The fourth requirement of the mere department test, interference with operations, is
satisfied because Luxalpha could not have been established and sustained—and UBS SA,
UBSFSL, and UBSTPM could not have been permitted to service Luxalpha and Groupement and
reap the fees that form the basis of this action—without UBS AG’s approval.
UBS AG was anything but a rigidly separated parent company with respect to the
Moving UBS Defendants. Rather, UBS AG’s approval was required before Luxalpha was
opened and it then exercised significant and ongoing control over its Luxembourg subsidiaries’
ongoing operation of Luxalpha. See Kargo, Inc. v. Pegaso PCS, S.A. de C.V., No. 05 Civ. 10528
(CSH) (DFE), 2008 WL 2930546, at *9 (S.D.N.Y. July 29, 2008) (finding a mere department
relationship where the “facts suggest that [the parent’s employee] exercised a significant degree
of managerial control over [the subsidiary]’s business dealings with [the plaintiff]”); Dorfman,
2002 WL 14363, at *6 (finding a mere department relationship where control by parent
“substantially exceeds the level of control inherent in the parent-subsidiary relationship”).
Shortly after Littaye first proposed that UBS take over sponsorship of Luxalpha’s
predecessor Oreades,
(Pergament Decl. Ex. 4.) UBS AG admitted that “normally, we have
to give a ‘NO’ answer in cases like Madoff,” because “the broker may under no circumstances
also be a depository at the same time.” (Pergament Decl. Ex. 5 at 2.) Nevertheless, UBS AG
permitted the delegation of custodial authority from UBS SA to BLMIS,
Ex. 66.)
45
(Id. at 3; see also Pergament Decl.
Then, in March 2004, before UBS SA signed the Luxalpha account opening documents
with BLMIS, UBS SA principal DeAngelis assured UBS AG director Dieter Kiefer, “I still don’t