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Leong v. Goldman Sachs Group, Inc.

United States District Court, S.D. New York

June 25, 2014

OEI HONG LEONG, Plaintiff,
v.
THE GOLDMAN SACHS GROUP, INC., Defendant.

OPINION AND ORDER

JESSE M. FURMAN, District Judge.

Plaintiff Oei Hong Leong, a Singaporean billionaire, sues the Goldman Sachs Group, Inc. ("GS Group"), the New York-based global investment bank conglomerate, alleging fraud and related torts in connection with certain investments he made in the foreign-exchange market. (Docket No. 1). GS Group now moves to compel arbitration in London and for a stay of the present case pending such arbitration. (Docket No. 18). In the alternative, Defendant moves to stay in favor of proceedings in Singapore. ( Id. ). Plaintiff cross-moves to strike two declarations submitted by GS Group in support of its motion. (Docket Nos. 23 and 24). For the reasons discussed below, Defendant's motion is granted and the case is stayed pending arbitration in London, and Plaintiff's motions to strike are denied.

BACKGROUND

The following facts are taken from the pleadings, as well as the declarations submitted in support of, and opposition to, the instant motion. See, e.g., Bensadoun v. Jobe-Riat, 316 F.3d 171, 175 (2d Cir. 2003) ("In the context of motions to compel arbitration..., the court applies a standard similar to that applicable for a motion for summary judgment."). The facts are undisputed except where noted, and all inferences are drawn in Plaintiff's favor. See, e.g., Russell v. Mimeo, Inc., No. 08 Civ. 5354 (RJS), 2008 WL 6559743, at *1 (S.D.N.Y. Oct. 29, 2008).

A. Oei's Relationship With Goldman Sachs

Oei is a Singaporean billionaire who invested his wealth in reliance on the counsel of, among others, GS Group and its subsidiaries (collectively, "Goldman Sachs"). (Decl. Lee Ronald Suk Bae (Docket No. 20) ("Lee Decl.") ¶ 4; see Notice of Removal (Docket No. 1), Ex. A ("Compl.") ¶ 13). In 2001, Oei entered a decade-long relationship with Goldman Sachs, which was formalized most recently through a series of overlapping contracts with several subparts - referred to collectively as the Client Agreement - executed by Oei on March 27, 2012. (Compl. ¶ 13; Lee Decl., Ex. B ("Client Agreement"); accord id., Ex. C). In particular, Oei agreed to be bound by Parts A, B, C, E, and H of the Client Agreement with respect to Goldman Sachs International; because Part E incorporates Part D by reference, that Part also forms part of the contract between Oei and Goldman Sachs International. (Client Agreement, Part A, § A). Additionally, Oei agreed to a contract with Goldman Sachs (Asia) L.L.C. that comprised Parts A, B, C, D, and H of the Client Agreement. ( Id. ).[1]

This byzantine draftsmanship aside, it is undisputed that Oei agreed to arbitrate "[a]ny dispute arising out of or connected with the [Client Agreement], between [himself] and [Goldman Sachs International] and/or [himself] and any Third Party Beneficiary, including a dispute as to... the Transactions contemplated hereby[ or] the Accounts established hereunder." ( Id. 82). The term "Third Party Beneficiary" is defined to include any "Affiliate, " which, in turn, is defined to include any "entity that controls, directly or indirectly, " Goldman Sachs (Asia), L.L.C. ("Goldman Sachs Asia"). ( Id. Part A § B). That category includes GS Group, Defendant here, which is the ultimate parent of Goldman Sachs Asia. (Lee Decl. ¶ 1; Compl. ¶ 3). The Client Agreement provides that such arbitration must take place in England according to the rules of the London Court of International Arbitration, which were incorporated into the Client Agreement by reference. (Client Agreement, Part E, § 12.3). Oei's contracts with both Goldman Sachs International and Goldman Sachs Asia are, by their terms, "to be governed by the laws of England and Wales." ( Id., Part A, § A).

B. The Carry Trades

Oei alleges that in 2011 he "decided to stop virtually all financial dealings with Goldman Sachs and its subsidiaries" because of a losing trade in which he claims Goldman Sachs profited. (Compl. ¶ 16). In April 2012, several Goldman Sachs employees endeavored to win back Oei's business. (Compl. ¶¶ 17-20, 23-24). According to the Complaint, a key part of their campaign was an April 24, 2012 dinner at Oei's home. (Compl. ¶ 18). In attendance at the dinner were, among others, Gary Cohn, president and COO of Goldman Sachs; David Ryan, president of Goldman Sachs Asia; Ronald Lee, head of Goldman Sachs Private Wealth Management Group in Asia (excluding Japan); and Vivien Webb, managing director of Goldman Sachs Private Wealth Management Group in Asia. ( Id. ). During the dinner, Cohn allegedly told Plaintiff that "Goldman Sachs would ensure that its employees and subsidiaries provided [him] with the best possible service, that he would personally make sure that Goldman Sachs and its employees and subsidiaries fulfilled their fiduciary responsibility to [him, ] and that they would treat him fairly and honestly." (Compl. ¶ 19).

Over the following weeks, employees of Goldman Sachs Asia continued to market their services to Oei. (Compl. ¶¶ 20, 27-29). Most notable were the efforts of Goldman Sachs Asia employee Mats Dewitte. (Compl. ¶¶ 28-46). After two meetings with Dewitte, Oei agreed to purchase a series of currency options that together constituted a "carry trade." (Lee Decl. ¶ 10; id. Ex. F). Although Oei had previously entered into trades that were "short" the Japanese Yen and "long" the United States Dollar - that is, bets that would earn Oei money if the Dollar rose in value relative to the Yen - Dewitte and other Goldman Sachs Asia employees persuaded Oei to enter a similar deal with the Brazilian Real, a currency with which Oei was relatively unfamiliar, in lieu of the United States Dollar. (Lee Decl. ¶¶ 10-11; Compl. ¶ 33). The result was that Oei stood to gain if the Brazilian Real appreciated relative to the Japanese Yen, but faced losses if the opposite occurred. (Lee Decl. ¶¶ 10-11; see also id., Ex. F). The transaction was completed on May 15, 2013. (Lee Decl. ¶ 11).

Oei was quickly stricken with buyer's remorse. He sought to unwind the trades only six days after entering into them, but Goldman Sachs told him that it would cost $18, 000, 000 to do so, apparently due to lack of liquidity in the market for the type options Oei held. (Compl. ¶¶ 65-70). Apparently fazed by the steep cost of a quick exit from his positions, Oei did not unwind his trades until June 17, 2013. By that time, Oei had been forced to pay six margin calls, and the transactions collectively cost him $34, 299, 037. (Compl. ¶¶ 98, 113; accord Lee Decl. ¶ 12 ("[T]he cost to Mr. Oei was substantial."); id., Ex. G (accounting for the losses)).

C. The Singapore Lawsuit

On July 5, 2013, Oei wrote a letter to Goldman Sachs Asia, addressed to "Roland S. Lee, " threatening to sue for his losses. (Lee Decl., Ex. H, ¶ 12). On September 20, 2013, Oei made good on his threat and filed suit against another Goldman Sachs affiliate, Goldman Sachs International, in the High Court of the Republic of Singapore. (Lee Decl. ¶ 14; id., Ex. I). (The choice to sue Goldman Sachs International, as opposed to Goldman Sachs Asia, was and is unexplained.) Oei's Singapore lawsuit challenges the same trades as the instant lawsuit, and contains many of the same factual allegations, but omits any reference to Cohn or any other employee of GS Group. ( See generally id., Ex. I). In Singapore, Goldman Sachs International argued that Oei was bound by the arbitration agreement contained in the Client Agreement. (Lee Decl. ¶ 15). On January 20, 2014, a court in Singapore granted Goldman Sachs International's application to stay the suit pending the outcome of arbitration proceedings in London. ( ...


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