16 As noted above, to the extent any portion of the Collateral did come from an initial transfer after December 11, 2006, its return would be barred by section 546(g). 17 See Plaintiff Lakeview Investments, LP’s Notice of Intention to Appear at the Fairness Hearing and Objections to Plaintiffs’ Motion for Final Approval of Proposed Partial Settlement, Plans of Allocation, and Requested Attorneys’ Fees; Joinder in

However, where Congress has intended to ―safe harbor‖ certain, specific types of transfers from avoidance, it has done so expressly. See, e.g., 11 U.S.C § 546(e) (―Notwithstanding sections 544, . . . 547, 548(a)(1)(B), and 548(b) of this title, the trustee may not avoid a transfer that is a margin payment . . . .‖); 11 U.S.C § 546(f) (―the trustee may not avoid‖); 11 U.S.C. § 546(g) (same); 11 U.S.C § 546(i) (same); 11 U.S.C § 546(j) (same); (emphases added). Notably sub-sections 546(e), (f), and (g) of the Bankruptcy Code pre-date enactment of Section 1828 in 1999, while sub-sections 546(i) and (j) of the Bankruptcy Code were enacted in 2005, following the enactment of Section 1828.

However, where Congress has intended to ―safe harbor‖ certain, specific types of transfers from avoidance, it has done so expressly. See, e.g., 11 U.S.C § 546(e) (―Notwithstanding sections 544, . . . 547, 548(a)(1)(B), and 548(b) of this title, the trustee may not avoid a transfer that is a margin payment . . . .‖); 11 U.S.C § 546(f) (―the trustee may not avoid‖); 11 U.S.C. § 546(g) (same); 11 U.S.C § 546(i) (same); 11 U.S.C § 546(j) (same); (emphases added). Notably sub-sections 546(e), (f), and (g) of the Bankruptcy Code pre-date enactment of Section 1828 in 1999, while sub-sections 546(i) and (j) of the Bankruptcy Code were enacted in 2005, following the enactment of Section 1828.

The inescapable conclusion is that the Trustee need not avoid the initial transfer in any proceeding against anyone before recovering under section 550(a). For example, although the Trustee failed to commence a proceeding against Standard Chartered before the deadline for asserting claims to avoid transfers under 11 U.S.C. § 546(a), the Court denied Standard Chartered’s motion to dismiss because the Trustee had commenced a timely proceeding against the initial transferee, Fairfield Sentry. But the Trustee settled his claims against Fairfield Sentry without avoiding the initial transfers, and the settlement precludes him from ever avoiding those transfers in the proceeding against Fairfield Sentry.

See Kenney v. Bear Stearns & Co., Inc. (In re Daisy Sys. Corp.), 92 Civ. 1845 (DLJ), 1993 WL 491309, at *14 (N.D. Cal. Feb. 3, 7 11 U.S.C. § 546(e) provides that “the trustee may not avoid a transfer that is a . . . settlement payment . . . made by or to (or for the benefit of) a . . . stockbroker . . . or that is a transfer made by or to (or for the benefit of) a . . . stockbroker . . . in connection with a securities contract . . . .” RBS/ABN raised the applicability of section 546(e) to the Trustee’s claims in its motion to withdraw the reference, among other issues. The Court consolidated the resolution of this issue with other defendants, and RBS/ABN defers to the defendants’ joint briefing on this point.

See Kenney v. Bear Stearns & Co., Inc. (In re Daisy Systems Corp.), 92 Civ. 1845 (DLJ), 1993 WL 491309, at *14 (N.D. Cal. Feb. 3, 1993) (holding that subsequent transferee defendant was protected by section 546(e) safe harbor). The purpose of section 546(g), according to the safe harbor’s legislative history, is to “ensure that the swap and forward contract financial markets are not destabilized by uncertainties regarding the treatment of their financial instruments under the Bankruptcy Code,” providing the same protections from avoidance as those afforded to securities contracts and similar financial 8 11 U.S.C. § 546(e) provides that “the trustee may not avoid a transfer that is a . . . settlement payment . . . made by or to (or for the benefit of) a . . . stockbroker . . . or that is a transfer made by or to (or for the benefit of) a . . . stockbroker . . . in connection with a securities contract . . . .” RBS/ABN raised the applicability of section 546(e) to the Trustee’s claims in its motion to withdraw the reference, among other issues. The Court consolidated the resolution of this issue with other defendants, and RBS/ABN defers to the defendants’ joint briefing on this point.

and the documents he references in his Complaint make clear that Bank of New York served as an intermediary through which the PlusFunds Tender Offer was consummated. Yet, Plaintiff asks the Court to ignore the plain language of Section 546(e) and disregard two decisions directly on point issued this year by federal courts of appeals holding that the sale and purchase of privately held securities through a financial institution acting as an intermediary meets the requirements of Section 546(e). As the Sixth and Eighth Circuits have concluded, the plain language of Section 546(e) protects such transactions, including the PlusFunds Tender Offer at issue here. Fourth, Plaintiff fails to plead with particularity his actual fraudulent transfer claims, as he is required to do under Rule 9(b) of the Federal Rules of Civil Procedure. He has not, and cannot, allege that Suffolk acted with the intent to defraud a creditor – an indispensable element of a fraudulent transfer claim – because, by his own admission, the Suffolk insiders colluded - 3 - with principals of the very “creditors” he now identifies – Refco and SPhinX – to engage in the fraudulent scheme underlying the Suffolk loans and the PlusFunds Tender Offer. Fifth, Plaintiff effectively concedes that his unjust enrichment claim should be dismissed. He offers no response to the argument that his claim is preempted by the Bankruptcy Code or to the Bank Defendants’ alternate bases for why the claim should be dismissed. ARGUMENT I. PLAINTIFF LACKS STANDING TO ASSERT ANY OF HIS CLAIMS A. Pl

Critically, however, Section 546(a)(1) gives the trustee only two years from the petition date to assert such claims. 11 U.S.C. § 546(a)(1). During this two-year period, the ability of individual creditors to pursue state law avoidance claims against a debtor’s transferees is stayed, on the ground that such claims exist only because of “a claim against the debtor,” and thus fall within the Code’s automatic stay provisions.

In addition, because the Trustee has not alleged facts to support that BLMIS transferred within two years of the Petition Date most of the funds that Defendants ultimately received as collateral, most of Count Two (actual fraudulent transfer under the bankruptcy code) must be dismissed as well. A. SECTION 546(G) BARS ALL CLAIMS HERE OTHER THAN SUBSEQUENT TRANSFERS OF INITIAL TRANSFERS AFTER DECEMBER 11, 2006 MADE WITH ACTUAL FRAUDULENT INTENT First, the Swaps are indisputably “swap agreements” under 11 U.S.C. § 546(g), defined as a “total return, credit spread or credit swap, option, future, or forward agreement,” 11 U.S.C. § 101 (53B)(VI), as the Court has noted. See SIPA v. Bernard L. Madoff Inv.

His argument that treating the settlement as triggering the one-year period prescribed by section 550(f) was necessary because otherwise "the Trustee would be permitted to bring suit against a subsequent transferee for an indefinite amount of time" is incorrect because the Trustee is required to assert a preference or fraudulent transfer claim against the subsequent transferee within the time prescribed by section 546(a). Finally, there is no basis for Judge Lifland’s apparent view that the conceded requirement that the Trustee must demonstrate that the transfer is avoidable in the proceeding against the subsequent transferee does not require the Trustee to commence “an action or proceeding under” an avoidance provision, see 11 U.S.C. § 546(a), governed by the statute of limitations applicable to such proceedings. The authorities relied on by Judge Lifland in BLI do not support either his decision or the Trustee and SIPC’s position in this litigation.