UNIQA v. PLC BNP SA AG AG HSBC PLC ICAP PIC UBS AG BNP LLC AG HSBC USA ICAP LLC (2021)

SUMMARY ORDER

Fortinbras Asset Management GmbH (“Fortinbras”) appeals from an order of the United States District Court for the Southern District of New York approving the distribution of settlement funds and overruling Fortinbras's objection. This settlement comes at the end of a lengthy litigation that began in September 2014 when the plaintiffs in this action accused defendants of manipulating U.S. dollar ISDAfix, a global benchmark reference rate used primarily for pricing interest rates derivatives. At this stage in the litigation all parties have agreed on the distribution plan approved by the district court and, of the 31,119 claims submitted, only one claimant challenges the decision of the Claims Administrator—Fortinbras. We assume the parties’ familiarity with the underlying facts, the procedural history of the case, and the issues on appeal.

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The gravamen of Fortinbras's objection is that Fortinbras engaged in a high number of trades involving interest rate swaps with defendant Credit Suisse as part of what Fortinbras calls the Three-Factor Model (“TFM”) strategy. In Fortinbras's telling, because the TFM strategy involved holding interest rate swaps at precise tenors (essentially, durations), it required buying and selling swaps daily to ensure the precise balance was maintained. The total value of these purported trades is more than $3.3 trillion. After a year-long audit the Claims Administrator concluded that these claims should be excluded because Fortinbras had not satisfactorily shown these trades actually occurred. After reviewing the evidence, the district court agreed.

Fortinbras erroneously argues that we should review the district court's determination de novo as it purportedly involved an interpretation of the settlement agreement and the plan of distribution. In fact, the district court's decision did not rest on an interpretation of the settlement or the plan of distribution. Had Fortinbras satisfied the district court that it had in fact engaged in TFM-related interest-rate swaps with Credit Suisse, its claims would presumably have been approved. What Fortinbras instead challenges is the district court's conclusion that the purported trades did not occur. This is thus a challenge to the distribution of settlement funds, which this Court reviews for abuse of discretion. In re Holocaust Victim Assets Litig., 424 F.3d 132, 146 (2d Cir. 2005). And, with regard to factual findings, a district court only abuses its discretion when its conclusions are clearly erroneous. Id. (quoting Zervos v. Verizon N.Y., Inc., 252 F.3d 163, 169 (2d Cir. 2001)).

We discern no clear error here. Fortinbras has submitted documents that show that it collaborated with Credit Suisse to create an index that tracked the value of a hypothetical portfolio of interest rate swaps. But for essentially the reasons stated by the district court, we agree that the documents submitted by Fortinbras fail to demonstrate that it actually purchased the products that would make this hypothetical portfolio real. Further, Fortinbras's purported counterparty in these transactions, Credit Suisse, could not identify any such transactions with Fortinbras in its records. Fortinbras has had ample opportunity to demonstrate to the Claims Administrator and the district court that these trades took place. Fortinbras has not done so; nor has it met the high bar for showing the district court's factual findings were clearly erroneous. As a result, there is no abuse of discretion.

We have considered Fortinbras's remaining arguments and find them to be without merit. Accordingly, we AFFIRM the order of the district court.