# Petition for Writ of Certiorari — Bache & Co. (Lebanon) S. A. L. v. Tamari

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1984
- **Citation:** 469 U.S. 871

## Text

> 88-1904
No. Oftice-Supreme Court, U.S.

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IN THE MAY 21 i9e¢
Supreme Court of the Hnited BBG. stevas,
CLERK

OCTOBER TERM, 1983

BACHE & CO. (LEBANON) S.A.L.,
a Lebanese corporation,
Petitioner,

—against—
ABDALLAH W. TAMARI, LUDWIG W. TAMARI, FARAH
TAMARI, co-partners d/b/a WAHBE TAMARI & SONS CO.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT

MARVIN SCHWARTZ

FLORENCE A. DAVIS SULLIVAN & CROMWELL
Of Counsel 125 Broad Street
New York, New York 10004
(212) 558-4000
N.A. GIAMBALVO Counsel for Petitioner
JAMES W. COLLINS Bache & Co. (Lebanon) S.A.L.

LAWRENCE M. GAVIN
BOODELL, SEARS, SUGRUE,
GIAMBALVO & CROWLEY

69 West Washington Street
Chicago, Illinois 60602
(312) 269-0300

Of Counsel

May 21, 19384

T

QUESTIONS PRESENTED

1. Are claims under the Commodity Exchange Act which
are brought by citizens and residents of a foreign country
against a foreign affiliate of a Delaware corporation, concern-
ing alleged misconduct that occurred entirely outside the
United States, properly within the subject matter jurisdiction
of the federal courts solely because some of the commodity
futures transactions at issue were executed on a United States
exchange?

2. Did Congress intend to provide a private right of action
under the Commodity Exchange Act to citizens and residents
of foreign countries who complain of misconduct that oc-
curred entirely outside of the United States?

LIST OF PARTIES TO THE APPEAL IN THE
SEVENTH CIRCUIT

The names of all of the parties to the appeal in the Seventh
Circuit are provided in the caption to this petiton. Sup. Ct. R.
21.1(b). A list of the parents, subsidiaries and affiliates of
Bache Lebanon is annexed hereto as Appendix A pursuant to
Rule 28.1.

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TABLE OF CONTENTS

PAGE
UTE WE PRIMED wc ccc ets ccccccccnns i

LIST OF PARTIES TO THE APPEAL IN THE
ee eee eh K CC b CRS Oeseneeee ii
PET PUP PIERO EEE s vc cnc ccccccccccsccccese iv
eae eek ek peek nbeeesececsecs l
BASIS FOR JURISDICTION IN THIS COURT...... 2
ea cc kee sccnseeceens 2
SEATON E OF THE CASE 2... cc ccc cece ccc cnes 2
REASONS FOR GRANTING THE WRIT........... 5
LC. Sin dns ee 6th stn sdsccecisceres 15
EEE ee eee ee A-l
ee eek keh cc eeensendeccecner A-1
B. Court of Appeals Opinion .................... A-3
See IE SE IID wae cncaccccncssncece A-15
D. Commodity Exchange Act Sections ............ A-29
E. 1 N.Y.S.E. Guide (CCH) 671-680 (1984) ........ A-33

iV

TABLE OF AUTHORITIES
Cases: PAGE
Bersch v. Drexel Firestone, Inc., 519 F.2d 974 (2d Cir.),
cert. denied, 423 U.S. 1018 (1975) .......... 6, 8, 9, 10, 14
Blackmer v. United States, 284 U.S. 421 (1932) ....... 7
The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) 12

Cresswell v. Prudential-Bache Securities Inc., 580 F.
, Se Sees Oe CUED wwe ce atans cdeeencataccue 13

Fidenas AG v. Compagnie Internationale Pour
L’Informatique CII Honeywell Bull S.A., 606 F.2d 5

ge Fy rer ee ry ree 6, 7, 8,9
Foley Bros., Inc. v. Filardo, 336 U.S. 281 (1949) ...... 7
IIT v. Vencap, Ltd., 519 F.2d 1001 (2d. Cir. 1975) ..... 6
Leasco Data Processing Equipment Corp. v. Maxwell,

ae ee Be ee A Chan con cacccnccecatiss 5
Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran,

Se es Be EE 46.6:400.0400%645 0% en dae saeennsee 10, 11
Mormels v. Girofinance, S.A., 544 F. shes 3 815

Sn SE 9.5 Kndenccbueskutdcannetuennes cent 6, 8, 9
Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981) ..... 13
Psimenos v. E.F. Hutton & Co., 722 F.2d 1041 (2d Cir.

SE + 0.3.400b eck bandteeeetekscannnne 5, 6, 12, 13, 14

Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974) ....11, 12

Schoenbaum vy. Firstbrook, 405 F.2d 200 (2d Cir.), aff’d
as to jurisdiction and rev’d on other grounds, 405 F.2d
215 (2d Cir. 1968) (en banc), cert. denied, 395 U.S.

Tamari v. Bache & Co. (Lebanon) S.A.L., No. 83-2452,
slip op. (7th Cir. March 30, 1984)................. passim

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PAGE

Tamari v. Bache & Co. (Lebanon) S.A.L., 547 F. Supp.
Ps ne EE Wk 0 45664 06065400.05 166K e KEE Ss 1,4

Tamari v. Bache Halsey Stuart, Inc., No. 77 C 301
(N.D. Ill. 1979), aff'd, 619 F.2d 1196 (7th Cir.), cert.
SE, Gs ee ED hw wha ceceecasuxctesss 3

Tamari v. Bache & Co. (Lebanon) S.A.L., No. 76 C 21
(N.D. Ill. 1976), aff’d, 565 F.2d 1194 (7th Cir. 1977),

cert. denied, 435 U.S. 905 (1978)... ...........008- 3
Tamari v. Conrad, No. 76 C 2071 (N.D. Ill. 1976), aff'd,

— be ef Le 8. er er re 3
Wie v. Swan, $46 U.S. 427 (ISSS) 2... wc seccccccess 12
Statutes:

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Other Authorities:

Proposed Duties of Futures Commission Merchants To-
ward Accounts of Foreign Brokers and Traders,
[1980-1982 Transfer Binder] Comm. Fut. L. Rep.
(CCH) § 21,028 (CFTC May 14, 1980)............. 12

CFTC Statement of Policy Concerning the Exercise of
Commission Jurisdiction Over Reparations Claims
That Involve Extraterritorial Activities of Respond-
ents, 49 Fed, Reg. 14721 (April 13, 1984)........... 13

iia eal

vi

PAGE

CFTC Revision of Registration Regulations; Proposed
Rules, 45 Fed. Reg. 18356 (Marcl. 20, i980) ........ 14
1 N.US.B. Guide (CCH) (1984)... . ccc ccc cccccccccn 6
P.J. Kaufman, Handbook of Futures Markets (1984)... 10

13 C. Wright & A. Miller, Federal Practice and Proce-
ED bib dns koe ee ces baeasoaiee sk 14

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983
.

>

BACHE & Co. (LEBANON) S.A.L.,
a Lebanese corporation,
Petitioner,

—against—
ABDALLAH W. TAMARI, LUDWIG W. TAMARI, FARAH
TAMARI, co-partners d/b/a WAHBE TAMARI & SONS Co.,
Respondents.

=>

PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT

Petitioner Bache & Co. (Lebanon) S.A.L. (“Bache Le-
banon”) respectfully requests that a writ of certiorari issue to
review the interlocutory order of the United States Court of
Appeals for the Seventh Circuit entered on March 30, 1984.

OPINIONS BELOW

The opinion of the Court of Appeals, which has not been
officially reported, is annexed as Appendix B. The opinion of
the United States District Court for the Northern District of
Illinois (Getzendanner, J.), reported as Tamari v. Bache & Co.
(Lebanon) S.A.L., 547 F. Supp. 309 (N.D. Ill. 1982), is
annexed as Appendix C.

BASIS FOR JURISDICTION IN THIS COURT

The jurisdiction of this Court is invoked pursuant to 28
U.S.C. § 1254(1). Jurisdiction in the District Court was pre-
mised on 28 U.S.C. §§ 1331, 1337 and 1350. After the District
Court denied Bache Lebanon’s moiion for summary judgment
or judgment on the pleadings, the Court of Appeals granted
permission for an interlocutory appeal pursuant to 28 U.S.C.
§ 1292(b). The order of the Court of Appeals, which affirmed
the District Court’s ruling, was entered on March 30, 1984.

STATUTE INVOLVED

Sections 4b and 4c of the Commodity Exchange Act, as
amended in 1968 (“CEA”), 7 U.S.C. §§ 6b and 6c, are annexed
as Appendix D. The Commodity Exchange Act of 1974 and the
Futures Trading Act of 1982, which amended the CEA, are not
applicable to this case because the disputes at issue arose
before the passage of the amendments. In any event, the 1974
and 1982 amendments would not affect the questions posed by
this petition.

STATEMENT OF THE CASE

Respondents Abdallah Tamari, Ludwig Tamari and Farah
Tamari (“the Tamaris”) are citizens and residents of Lebanon.
In 1972, the Tamaris opened two commodity futures accounts
with Bache & Co., Inc., a Delaware corporation (“Bache
Delaware”), through Bache Lebanon, a Lebanese corporation
with its sole office in Beirut. Bache Lebanon, a wholly-owned
subsidiary of Bache Delaware, acted as Bache Delaware’s
agent in Lebanon in connection with the Tamaris’ account and,
as the Court of Appeals said, “all communications and meet-
ings between Bache Lebanon and the Tamaris regarding the
commodity futures contracts traded in the United States took
place in Lebanon.” (App. B at A-7)

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A. Prior Litigation Between the Parties

Since 1975 the Tamaris have filed four lawsuits relating to
the disputes at issue in this case. In addition, Bache Delaware
and the Tamaris arbitrated their disputes before an arbitration
panel of the Chicago Board of Trade.

The Tamaris filed this action in 1975 2 ;ainst both Bache
Delaware and Bache Lebanon. The Tamaris alleged common
law fraud, negligence, breach of fiduciary duty and violations
of sections 4b and 4c of the CEA, 7 U.S.C. §§ 6b and 6c,
claiming, inter alia, that Bache Delaware and Bache Lebanon
had churned their accounts, made false representations to them
and deceived them as to the status of their accounts.

In 1976, the District Court dismissed the complaint against
Bache Delaware and ordered the Tamaris to proceed with an
arbitration that had already been commenced before the Chi-
cago Board of Trade and involved the same claims as those
‘ alleged in this action.' After evidentiary hearings, the arbitra-
tors found in Bache Delaware’s favor on its claim against the
Tamaris and dismissed all of the Tamaris’ counterclaims
against Bache Delaware. The arbitration award was confirmed
and a judgment entered on the award.’ Thus, the only entity
that conducted any relevant business in the United States with
respect to the Tamaris’ accounts was found to have acted
properly and lawfully.

l The Tamaris’ counterclaims in the arbitration were virtually
identical to their claims in this action.

2 Tamari v. Bache Halsey Stuart, Inc., No. 77 C 301 (N.D. Til.
1979), aff'd, 619 F.2d 1196 (7th Cir.), cert. denied, 449 U.S. 873
(1980). The Tamaris filed two other lawsuits seeking to stay or
overturn the arbitration proceedings on various grounds. The District
Court dismissed both of these actions, and the Seventh Circuit
affirmed beth judgments. Tamari v. Bache & Co. (Lebanon) S.A.L.,
No. 76 C 21 (N.D. Ill. 1976), aff'd, 565 F.2d 1194 (7th Cir. 1977),
cert. denied, 435 U.S. 905 (1978); Tamari v. Conrad, No. 76 C 2071
(N.D. Ill. 1976), aff’d, 552 F.2d 778 (7th Cir. 1977).

4

B. The Overwhelmingly Foreign Locus of This Case

The only claims remaining in this lawsuit are those asserted
by the Tamaris against Bache Lebanon. Thus, the lawsuit has
become one brought by foreign citizens against a foreign
business, arising out of dealings in a foreign country. It is
undisputed that all of the Tamaris’ dealings with Bache Le-
banon, including all of the alleged misconduct that underlies
the Tamaris’ complaint, took place in Lebanon, where Bache
Lebanon conducted all of its activities. (App. B at A-4, 7; App.
C at A-16-7)

When Bache Lebanon received orders from the Tamaris for
commodity futures transactions, it transmitted them to Bache
Delaware, which relayed the orders to the appropriate ex-
changes for execution in either England or the United States.
(App. C at A-16, 25-6) Bache Delaware gave final acceptance
to and processed the Tamaris’ orders. (App. B at A-6) Bache
Lebanon did not execute any of the Tamaris’ orders; it is not
registered as a futures commission merchant under the CEA’
nor is it a member of any exchange in the United States, (App.
C at A-16 n.2). Thus, any acts in the United States with respect
to the Tamaris’ accounts, including acceptance, processing and
execution of orders, were done by Bache Delaware, a non-
party, and have been found entirely proper by virtue of the
arbitration before the Chicago Board of Trade.

C. The Rulings on Subject Matter Jurisdiction

In July 1981, Bache Lebanon moved for judgment on the
pleadings or alternatively for summary judgment on the
grounds, inter alia, that the District Court lacked subject
matter jurisdiction over the plaintiffs’ claims and that the
Tamaris had no private right of action under the CEA. Bache
Lebanon argued that Congress did not intend to provide for
extraterritorial application of the CEA to a dispute between
foreigners concerning alleged misconduct that occurred in a
foreign country.

3 See section 4d of the CEA, 7 U.S.C. § 6d.

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5

The District Court, relying on the judicially created “ef-
fects” and “conduct” tests of extraterritorial jurisdiction,‘
denied Bache Lebanon’s motion, but certified its order for
appeal with respect to the issue of subject matter jurisdiction.

The Seventh Circuit granted permission for an interlocutory
appeal pursuant to 278 U.S.C. § 1292(b), and affirmed the
District Court’s ruling, expressly sanctioning the District
Court’s application of the “conduct” and “effects” tests and
adopting the District Court’s analysis under those tests. (App.
B at A-12)

REASONS FOR GRANTING THE WRIT

The Seventh Circuit now joins the Second Circuit® in permit-
ting the extraterritorial application of the CEA to disputes in
which the sole nexus to the United States is execution of the
customer’s order on a domestic exchange. The Second and
Seventh Circuits’ interpretation of the CEA is contrary to
analogous decisions of this Court and results in an impermissi-
ble and unwarranted extension of the CEA to disputes that
have, at most, an utterly insignificant and incidental impact on
United States interests.

The extraterritorial application of the CEA sanctioned by
Tamari and Psimenos extends the law governing extraterrito-
rial application of United States statutes far beyond its already

4 The “effects” test, as set forth in Schoenbaum v. Firstbrook,
405 F.2d 200 (2d Cir.), aff’d as to jurisdiction and rev’d on other
grounds, 405 F.2d 215 (2d Cir. 1968) (en banc), cert. denied, 395 U.S.
906 (1969), “focuses on whether conduct occurring outside the
United States causes foreseeable and substantial effects within the
United States.” (App. B at A-7 n.6) The “conduct” test, set forth in
Leasco Data Processing Equipment Corp. v. Maxwell, 468 F.2d 1326
(2d Cir. 1972), “focuses on the significance of conduct within the
United States to the accomplishment of illegal activities.” (App. B at
A-7 n.6)

5 Psimenos v. E.F. Hutton & Co., 722 F.2d 1041 (2d Cir. 1983).

6

generous bounds,° and adversely affects every major American
brokerage firm with foreign offices or affiliates abroad. Mem-
bers of the New York Stock Exchange presently have 266
foreign offices or representatives in 31 foreign countries.
1 N.Y.S.E. Guide (CCH) at 671-680 (1984) (annexed as Appen-
dix E). Tamari and Psimenos bring within the jurisdiction of
the federal courts any dispute involving American securities or
commodities futures occurring in any of those offices and in
any of those countries, even if the dispute is entirely between
foreigners and the subject matter of the dispute is alleged
misconduct that occurred entirely outside the United States.
There is no suggestion in the legislative history of the CEA that
Congress intended that the federal courts should be burdened
by cases of this sort.

ms. (1)

Initially, the Seventh Circuit correctly held that legislative
intent must be considered in determining the scope of jurisdic-
tion under the CEA. (App. B at A-8) The Court relied on
Second Circuit precedent for this position, citing the seminal
Bersch case in which the Second Circuit held that

“When, as here, a court is confronted with transactions
that on any view are predominantly foreign, it must seek
to determine whether Congress would have wished the
precious resources of United States courts and law en-
forcement agencies to be devoted to them rather than
leave the problem to foreign countries.” Bersch v. Drexel
Firestone, Inc., 519 F.2d 974, 985, cert. denied, 423 U.S.
1018 (1975).’ See also Fidenas AG v. Compagnie Interna-
tionale, 606 F.2d at 10.

6 Compare Fidenas AG v. Compagnie Internationale Pour
I’Informatique CII Honeywell Bull S.A., 606 F.2d 5 (2d Cir. 1979);
IIT v. Vencap, Ltd., 519 F.2d 1001 (2d Cir. 1975).

7 Although Bersch is a securities case, courts have applied
principles developed in securities cases relating to subject matter
jurisdiction to cases arising under the CEA. See, e.g., Mormels v.
Girofinance, S.A., 544 F. Supp. 815, 817 n.8 (S.D.N.Y. 1982).

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The Court of Appeals could not find clear legislative intent to
extend the CEA to foreign disputes. (App. B at A-10)

It is well settled that in the absence of clear legislative intent,
it must be presumed that Congress did not intend to provide
for extraterritorial application of a United States statute to
disputes that are predominantly foreign. See, e.g., Foley Bros.,
Inc. v. Filardo, 336 U.S. 281, 284-5 (1949); Blackmer v. United
States, 284 U.S. 421, 437 (1932). But the Court below did not
end its inquiry with a review of the CEA’s legislative history.
Instead, it incorrectly assumed that execution of commodity
futures transactions on United States exchanges had sufficient
impact on United States commerce to justify recourse to the
conduct and effects tests, p. 5 n.4, supra, to determine whether
extraterritorial application would be consistent with the pur-
poses underlying the CEA. (App. B at A-10)

The Seventh Circuit’s error in venturing beyond its inquiry
into legislative intent was compounded by its extension of
extraterritorial application of a United States statute beyond
the already generous bounds established in recent cases. More-
over, the Court based this unwarranted extension solely upon a
highly questionable presumption of generalized impact on the
United States commodities markets. The Court merely stated
its own view that “[t]he transmission of commodity futures
orders to the United States would be an essential step in the
consummation of any scheme to defraud through futures
trading on United States exchanges.” (App. B at A-12) The
Court also speculated that fraudulent activity in connection
with commodity futures transactions would affect prices and
trading volumes on futures exchanges and could undermine
public confidence in the markets. /d.

In recent decisions under the federal securities laws, courts
have been unwilling to extend application of those statutes to
predominantly foreign disputes, even in cases in which there
are far more contacts with the United States than exist here. In
Fidenas AG v. Compagnie Internationale Pour L’ Informatique
CII Honeywell Bull S.A., 606 F.2d 5 (2d Cir. 1979), foreign

8

plaintiffs agreed to raise money for defendant Honeywell Bull
(“HBS”), a Swiss subsidiary of an American company, by the
sale of promissory notes. Pursuant to an underwriting agree-
ment, the plaintiff underwriters sold HBS notes to various
customers, including a New York resident. It subsequently was
learned that the HBS notes sold by plaintiffs had been forged
and HBS refused to honor them.

The plaintiff underwriters sued HBS in federal court for
violations of the antifraud provisions of the federal securities
laws. Plaintiffs alleged that numerous acts related to the fraud
had been committed by the defendants in the United States: the
closing of the underwriting in New York City, the transmission
of note proceeds through several United States banks, repeated
communications between New York and Switzerland and pur-
chases of HBS notes by American customers. The District
Court dismissed the complaint and the Court of Appeals
affirmed.

Relying on Bersch, the Second Circuit concluded that the
core of the allegedly fraudulent activity occurred abroad and
that the contacts between the alleged fraud and the United
States, including the sale here of the HBS notes, were not
sufficient to constitute fraudulent acts in this country. The
Court summarized, “[f]raud there might have been, and plain-
tiffs may very well have been damaged by its perpetra-
tion. . . . {bjut the dispute here presented is rightfully
resolved in the courts of another land.” Fidenas AG v. Com-
pagnie Internationale, 606 F.2d at 10.

In Mormels v. Girofinance S.A., 544 F. Supp. 815 (S.D.N-Y.
1982) (Weinfeld, J.), the court dismissed foreign securities
claims on similar grounds. The plaintiffs in that case were two
German nationals and a former Texan, all residing in Costa
Rica, who sued to recover monies allegedly converted by theim
Costa Rican broker, defendant Girofinance. Also named as a
defendant was E.F. Hutton & Co., Inc., a New York invest-
ment firm. The complaint alleged violations of the federal
securities laws and the CEA.

rs
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9

The crux of the claim against Hutton was that it knew
Girofinance was holding itself out as an agent of Hutton,
thereby inducing plaintiffs to deposit funds with it for invest-
ment. American contacts with the alleged fraud included Giro-
finance’s use of plaintiffs’ funds to open an omnibus account
with Hutton in the United States for trading, one plaintiff’s
placement of orders directly with a Hutton branch in the
United States and the transmission of various telexes from
Girofinance to that Hutton office.

The court found that the American contacts notwithstand-
ing, all false representations were made in Costa Rica. Thus,
under Bersch and Fidenas, no jurisdiction existed because the
activity that occurred in the United States was not fraudulent.
Judge Weinfeld stated that the American contacts with the
transaction, including United States trading, “were ‘relatively
minor’ and of a ‘secondary’ nature and [did] not detract from
the fact that the core of the primary fraud was centered and
committed in Costa Rica and not the United States.” Mormels
v. Girofinance, 544 F. Supp. at 818.

Similarly, in this case, the execution of the Tamaris’ orders
on the trading floor of an American exchange was an inconse-
quential fact in the context of their dispute with Bache Le-
banon. Obviously, but for the mechanical act of execution on a
United States exchange, the transactions that the Tamaris
complain of might not have been consummated. But since the
Tamaris do not claim that the mere execution of their trans-
actions on the floor of the exchange was in any way fraudu-
lent, the mechanical act of execution cannot properly be held
to create a substantial justification for applying the CEA to the
Tamaris’ claims. Their claims of fraud and mishandling of
their accounts, even if true, do not raise questions of domestic
market integrity. They do not allege market or price manipula-
tion. None of their claims, if true, would have any measurable
impact on American investors. (Cf. App. B at A-12)* Thus, the

8 The volume of the Tamaris’ futures trading at Bache was de
minimus. They claim to have traded 2800 futures contracts over a

(footnote continued on following page)

10

Tamaris’ alleged injuries are unrelated to, and provide no
evidence of, the effects presumed by the Seventh Circuit.

An assumption of unparticularized and speculative impact
on the United States economy, or on American investors
generally, is not sufficient to confer subject matter jurisdiction
on the federal courts. See Bersch v. Drexel Firestone, 519 F.2d
at 988. The Seventh Circuit presumed impact even though the
record showed none and the Court’s presumptions were not
sanctioned by anything in the legislative history of the CEA.
The Court’s recourse to the “conduct” and “effects” tests was
erroneous and its analysis of its own speculative assumptions
under those tests, which were designed to measure actual
impact on United States commerce, was incorrect.

(2)

As the Court of Appeals correctly concluded, neither the
words of the CEA nor its legislative history suggest Congres-
sional intent to provide for extraterritorial application of the
Act to predominantly foreign disputes in which the alleged
misconduct occurred outside the United States.

In Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran,
456 U.S. 353 (1982), this Court held that a private party could
maintain an action for damages caused by a violation of the
CEA, although Congress had not expressly provided for such

(footnote continued from preceding page)

thirteen month period in 1972 and 1973. Complaint § 17; Tamaris’
Answer to Arbitration Complaint ¢ 12(1). Many of their trades were
executed on London commodities exchanges. See Tamaris’ Answer to
Arbitration Complaint ¢ 9. According to figures provided by the
Futures Industry Association Inc., the volume of trading in 1972 and
1973 on United States exchanges was 18.3 million and 25.8 million
contracts respectively. P. J. Kaufman, Handbook of Futures Markets
(1984). Even if all of the Tamaris’ 2800 contracts were executed on
American exchanges, they comprised approximately one one-hun-
dredth of one percent of the annual trading volume during the years
relevant to this case.

ithe: stalte ada ih aisit din “4

11

actions.” The Merrill Lynch case involved an alleged massive
conspiracy to manipulate che potato futures market on the
New York Mercantile Exchange. The alleged fraud and manip-
ulation took place in the United States and, assuming the
plaintiffs’ allegations were true, had a demonstrable impact on
domestic investors and the integrity of the domestic potato
market. In Merrill Lynch, the execution of customers’ orders
for transactions in commodity futures and physical commodi-
ties, and the effect of those executions on prices, were not
secondary or minor aspects of the alleged misconduct but went
to the heart of the case. On those facts, the implication of a
private right of action advanced Congress’ purpose in pro-
mulgating the CEA to foster orderly and fair markets.

This case is entirely different. Respondents do not allege a
conspiracy to manipulate prices on American commcdity ex-
changes. Their trades comprised a minuscule percentage of the
total futures contracts traded during the period they main-
tained their accounts at Bache Lebanon. See p. 9 n.8, supra.
Any alleged misrepresentations or misconduct by Bache Le-
banon in Lebanon with respect to the Tamaris’ accounts did
not and could not undermine the fairness of the United States
commodities markets, nor did the mere execution of the
Tamaris’ orders lie anywhere near the heart of Bache Le-
banon’s alleged misconduct. To imply a private right of action
under the CEA in favor of the Tamaris, or to extend the
express right of action in the 1982 Futures Trading Act to
disputes with an overwhelmingly foreign locus, would burden
the federal courts without any attendant benefit to American
investors or the domestic markets.

In an analogous case, Scherk v. Alberto-Culver Co., 417
U.S. 506 (1974), this Court held that an arbitration agreement
involving extranational transactions was enforceable even
though the claims to be asserted in arbitration arose under the

9 A private right of action was expressly provided for in the
1982 amendments to the CEA. Section 22, Futures Trading Act of
1982, 7 U.S.C. § 25.

12

Securities Act of 1933. Arbitration agreements involving do-
mestic transactions are unenforceable with respect to claims
arising under the Act. Wilko v. Swan, 346 U.S. 427 (1953).

But as the Court said in Scherk, in distinguishing domestic
and extranational transactions,

“The invalidation of such an agreement in the case before
us would . . . reflect a ‘parochial concept that all dis-
putes must be resolved under our laws and in our courts

. . . We cannot have trade and commerce in world
markets and international waters exclusively on our
terms, governed by our laws, and resolved in our
courts.’” Jd. at 519, quoting The Breman v. Zapata
Off-Shore Co., 407 U.S. 1, 9 (1972).

If foreign citizens trading commodity futures through for-
eign entities are to be afforded the full protections of the CEA,
it should be accomplished by a program of legislation and
related treaties under which American citizens would receive
similar protections under the laws of foreign nations. The
development and coordination of a comprehensive scheme of
redress for disputes involving the commodities markets are
tasks peculiarly within the legislative province that should
await further guidance from Congress. Judicial expansion of
CEA jurisdiction by any Court of Appeals in circumstances
such as those presented here is plainly improper and should be
halted.

(3)

The decision below, together with the Second Circuit’s
decision in Psimenos and the growing internationalization of
trading markets,'° presage a steady flow into the federal courts
of disappointed foreign speculators in commodity futures,

10 The CFTC itself “recognizes the international character of
the futures markets which it regulates.” Proposed Duties of Futures
Commission Merchants Toward Accounts of Foreign Brokers and
Traders, {1980-1982 Transfer Binder] Comm. Fut. L. Ren. (CCH)
§ 21,028 (CFTC May 14, 1980) at 24,044.

—

13

financial futures, options and securities whose essentially for-
eign claims have as their sole nexus to the United States a
mechanical execution on the floor of a United States ex-
change.'' The judicial burden will be entirely federal, because
the jurisdiction over CEA claims has been exclusively federal
since 1983. Section 22(c), Futures Trading Act of 1982, 7
U.S.C. § 25(c).

This Court observed in a forum non conveniens case that the
American courts have become “extremely attractive to foreign
plaintiffs.” Piper Aircraft Co. v. Reyno, 454 U.S. 235, 252
(1981). In rejecting a court of appeals ruling that restricted the
application of the forum non conveniens doctrine, the Court
recognized that under such a ruling, “[t]he flow of litigation
into the United States would increase and further congest
already crowded courts.” Jd.

The Commodity Futures Trading Commission (“CFTC”),
which is charged with the administration of the CEA and
regulation of the commodities markets, has announced that it
will shed the burden created by the decisions below and in
Psimenos by dismissing reparations complaints, even if there
are sufficient domestic contacts to satisfy the “conduct” or
“effects” tests, if adjudication of a reparations complaint
would cause substantial inconvenience to the respondent or to
the Commission. CFTC Statement of Policy Concerning the
Exercise of Commission Jurisdiction Over Reparations Claims
That Involve Extraterritorial Activities of Respondents, 49
Fed. Reg. 14721 (April 13, 1984).'”

11 One such case, Cresswell v. Prudential-Bache Securities Inc.,
580 F. Supp. 55 (S.D.N.Y. 1984), involving 85 exclusively foreign-
based plaintiffs complaining of alleged misrepresentations made to
them by foreign-based brokerage firm employees, is now winding its
way toward a jury trial of at least three month’s duration. By the
time of trial there will have been more than 100 depositions.

12. The CFTC has likewise shed a comparable burden by ex-
empting from registration under the CEA account executives whose
business is confined to foreign customers:

(footnote continued on following page)

14

in thus applying a forum non conveniens analysis, the CFTC
has exercised an option not available to the federal district
courts. If, as the Court of Appeals below and the Second
Circuit have held, the CEA has extraterritorial application, the
district courts have exclusive jurisdiction over foreign claims
unless the plaintiff elects a reparation proceeding before the
CFTC. Unlike the CFTC in reparations cases, a federal district
court may not dismiss on the ground of forum non conveniens
a federal claim over which it has exclusive jurisdiction. See 13
C. Wright & A. Miller, Federal Practice and Procedure § 3564
(1975) at 429.

This Court should act now to settle the questions posed by
petitioner rather than await the inevitable conflict among the
courts of appeals. The questions posed here have critical
importance. By the time another court of appeals comes to a
different conclusion in another case, the federal courts will
have been needlessly burdened and litigants will have need-
lessly spent millions of dollars in litigation expense because of
the inducement to litigation erroneously offered by the Second
and Seventh Circuits.

So long as Bersch was the seminal decision on the extraterri-
torial application of federal statutes, there was little need for
this Court to speak on the subject. Judge Friendly’s decision in
Bersch was manifestly sound and seemed to be leading the
federal courts to results consistent with Congressional intent.
The decisions in the present case and in Psimenos, however,

(footnote continued from preceding page)

“The Commission believes that, given this agency’s limited
resources, it is appropriate at this time to focus its customer
protection activities upon domestic firms and upon firms
soliciting or accepting orders from domestic users of the
futures markets and that the protection of foreign customers
of firms confining their activities to areas outside this coun-
try, its territories, and possessions may best be for local
authorities in such areas.” CFTC Revision of Registration
Regulations; Proposed Rules, 45 Fed. Reg. 18356 at 18360
(March 20, 1980).

15
represent an unwarranted and dangerous erosion of this sound
federal judicial benchmark and soon will lead to a burden of
litigation in the federal courts involving foreign claims and

claimants never envisioned by Congress. We respectfully sub-
mit that now is the time for this Court to act.

CONCLUSION

For the foregoing reasons, Bache Lebanon respectfully re-
quests that the Court grant a writ of certiorari to review the
decision of the Seventh Circuit.

May 21, 1984

Respectfully submitted,

MARVIN SCHWARTZ

FLORENCE A. DAVIS SULLIVAN & CROMWELL
Of Counsel 125 Broad Street
New York, New York 10004
(212) 558-4000
N.A. GIAMBALVO Counsel for Petitioner
JAMES W. COLLINS Bache & Co. (Lebanon) S.A.L.

LAWRENCE M. GAVIN
BOODELL, SEARS, SUGRUE,
GIAMBALVO & CROWLEY

69 West Washington Street
Chicago, Illinois 60602
(312) 269-0300

Of Counsel

APPENDIX A

Appendix A

STATEMENT PURSUANT TO SUPREME COURT
RULE 28.1

Respondent Bache & Co. (Lebanon) S.A.L. (“Bache Le-
banon”) is a wholly-owned subsidiary of Prudential-Bache
Securities Inc. (formerly Bache & Co., Inc., designated as
“Bache Delaware” in the foregoing petition). The following
are additional parent companies and affiliates of Bache Le-
banon.

The Prudential Insurance Company of America
PRUCO, Inc.

Prudential Capital ana Investment Services Inc.
Bache Group Inc.

Prudential-Bache Leasing Inc.
Prudential-Bache Commodity Management Company, Inc.
Bache Securities Inc.

Bache Commodities Ltd.

Bache Guinness Mahon Futures Limited
Prudential-Bache Metal Co. Inc.

Bache Precious Metals, Inc.

Prudential-Bache Energy Corp.
Prudential-Bache Latin America Inc.
Prudential-Bache Southern Europe Inc.
Prudential-Bache Properties, Inc.

Halsey Stuart Corporate Services Limited
Bache Halsey Stuart Shields Holding Corporation
Prudential-Bache Agriculture Inc.

Bache Insurance Agency of Louisiana, Inc.
Bache Insurance Agency of Nevada, Inc.
Prudential-Bache Energy Production Inc.

P-B Finance Ltd.

Prudential-Bache Venture Capital Inc.

Bache Insurance Agency of Arkansas, Inc.

R & D Funding Corp.

A-2
Appendix A

Bache Securities Asia Pacific Ltd.
Bache Securities Espana S.A.

Bache Securities (France) S.A.

Bache Insurance Agency, Incorporated
Bache Insurance of Arizona, Inc.
Bache Insurance of Kentucky, Inc.
Bache Securities (Hong Kong) Limited
Bache Securities (Greece) S.A.

Bache Securities (Monaco) Inc.
Prudential-Bache (Pan America) Inc.
Prudential-Bache Puerto Rico Inc.
Bache Securities (Japan) Ltd.

Bache Securities (South America) S.A.
Bache Securities (Argentina) S.A.
Bache Securities (Belgium) Inc.

Bache Securities (Germany) Inc.
Bache Securities (Holland) Inc.

Bache Securities (Switzerland) Inc.
Bache Securities (U.K.) Inc.

Bachfurn Corporation

Shields Model Roland Company (London)
Prudential-Bache Real Estate, Inc.

APPENDIX B

Appendix B

IN THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT

i

No. 83-2452

ABDALLAH W. TAMARI, LUDWIG W. TAMARI, FARAH
TAMARI, co-partners d/b/a WAHBE TAMARI & SONS Co.,

Plaintiffs-A ppellees,
v.
BACHE & CO. (LEBANON) S.A.L., a Lebanese corporation,
Defendant-Appellant.

as

Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 75 C 4189—Susan Getzendanner, Judge.

++—

ARGUED JANUARY 18, 1984—DECIDED MARCH 30, 1984

+

Before BAUER and FLAUM, Circuit Judges, and SWYGERT,
Senior Circuit Judge..

SWYGERT, Senior Circuit Judge. The plaintiffs-appellees
(“the Tamaris”), citizens of Lebanon, brought this suit under
the Commodity Exchange Act (“CEA”), 7 U.S.C. §§ 6b and
6c, for damages resulting from alleged fraud and mismanage-

A-4

Appendix B

ment of their commodity futures trading accounts. The defen-
dant-appellant, Bache & Co. (Lebanon) S.A.L. (“Bache
Lebanon”), is a Lebanese corporation wholly owned by Bache
& Co., Inc., a Delaware corporation (“Bache Delaware”). The
issue presented in this interlocutory appeal is whether the
district court has subject matter jurisdiction under the CEA
over a dispute between nonresident aliens when the trading of
commodity futures contracts giving rise to the suit took place
on United States exchanges but the contacts between the
parties occurred in Lebanon.' The district court held that it
had subject matter jurisdiction in ruling on Bache Lebanon’s
motion for judgment on the pleadings, or, in tne alternative,
for summary judgment. The court later denied Bache Le-
banon’s motion to reconsider its ruling, but certified for
appeal those parts of its order dealing with its subject matter
jurisdiction over the case.” This court granted permission to

1 The plaintiffs also stated a claim of common law fraud,
asserting jurisdiction under 28 U.S.C. § 1350 and principles of
pendent jurisdiction. Both parties appear to assume that this claim
would not survive if jurisdiction is lacking under the CEA. We note
that 28 U.S.C. § 1350 has been narrowly construed and would not
supply a basis for federal jurisdiction over the common law claim.
See ITT v. Vencap, Ltd., 519 F.2d 1001, 1015 (2d Cir. 1975). Without
a federal claim that could survive a motion to dismiss, the plaintiffs
also could not rely upon principles of pendent jurisdiction. United
Mine Workers v. Gibbs, 383 U.S. 715 (1966).

2 In its original motion, Bache Lebanon had asserted tiat it
was entitled to judgment for three reasons: (1) the district court
lacked subject matter jurisdiction; (2) the claims against it were
collaterally estopped by an arbitrator’s decision in favor of its parent,
Bache Delaware; and (3) the Tamaris had no implied right of action
under the Commodity Exchange Act. The district court ruled against
Bache Lebanon on all three issues. Tamari v. Bache & Co. (Lebanon)
S.A. L., 547 F. Supp. 309 (N.D. Ill. 1982). Bache Lebanon now seeks
reversal of the district court only on the ground that subject matter
jurisdiction is lacking over the dispute. Although Bache Lebanon also
has discussec the issues of res judicata and collateral estoppel in

A-5
Appendix B

take an interlocutory appeal pursuant to 28 U.S.C. § 1292(b)
on July 20, 1983. For the reasons stated below, we affirm the
district court’s denial of Bache Lebanon’s mction.

A. Background of this Suit

When the Tamaris filed this action in December 1975, both
Bache Lebanon and its parent, Bache Delaware, were named
as defendants. The Tamaris alleged that Bache Lebanon solic-
ited them to open two commodity futures trading accounts,
which they did early in 1972. The Tamaris further alleged that
in soliciting and trading for their accounts, Bache Lebanon,
Bache Delaware, or both, violated the CEA, causing losses to
the Tamaris’ accounts of more than two million dollars.’ The
alleged violations include excessive trading and churning of the
accounts; making false representations, false reports and false
statements to the Tamaris; and deceiving the Tamaris as to the
true condition of the accounts.

The district court dismissed the action against Bache Dela-
ware on May 19, 1976,‘ because an arbitration proceeding

support of its position on subject matter jurisdiction, we find it
unnecessary to consider these issues in reaching our decision on
subject matter jurisdiction. Nor do we rule on whether we have
jurisdiction to decide them given the district court’s limited certifica-
tion order. See Nuclear Engineering Co. v. Scott, 660 F.2d 241 (7th
Cir. 1981), cert. denied, 455 U.S. 993 (1982).

3 The parties disagree on the extent of Bache Lebanon’s in-
volvement in the solicitation and management of the Tamaris’ ac-
counts and on the nature of the agency relationship between Bache
Lebanon and Bache Delaware.

4 This court dismissed the Tamaris’ appeal of the district
court’s order dismissing the action against Bache Delaware without
prejudice to any further appeal from an appealable order in this case.
Tamari v. Bache & Co. (Lebanon) S.A.L., No. 76-1729 (7th Cir.
Sept. 23, 1976) (unreported order).

A-6

Appendix B

between the Tamaris and Bache Delaware was pending at the
time suit was filed. The proceeding was before the Chicago
Board of Trade pursuant to an arbitration agreement between
the parties. Bache Delaware sought an award of $376,366.96
against the Tamaris for the balance owed in the Tamaris’
trading accounts; the Tamaris sought $2,150,000 in damages
based on a counterclaim similar to the claims of this lawsuit.
Bache Delaware ultimately prevailed in the arbitration pro-
ceeding,’ and successfully defended against the Tamaris’ later
suit seeking to vacate the arbitration award. See Temari v.
Bache Halsey Stuart, Inc., 619 F.2d 1196 (7th Cir.), cert.
denied, 449 U.S. 873 (1980). The only action remaining,
therefore, is that against Bache Lebanon.

B. Motion for Judgment on the Pleadings

| In light of the arbitation decision, Bache Lebanon filed its
motion for judgment on the pleadings or summary judgment.
| The undisputed facts relevant to the question of subject matter
jurisdiction raised by the motion can be briefly stated. The
plaintiffs are citizens of Lebanon and reside outside the United
States. Bache Lebanon, a wholly-owned subsidiary and agent
of Bache Delaware, is a Lebanese corporation and has its sole
office in Beirut, Lebanon. In the course of trading for the
Tamaris’ accounts, Bache Lebanon received futures orders
from the Tamaris in Lebanon and transmitted them by wire to
Bache Delaware for execution on the Chicago Board of Trade
and the Chicago Mercantile Exchange. Bache Delaware, a
member of both exchanges, then executed the contracts. Al-
though there were daily conversations between the Tamaris,

5 The Tamaris filed two additional lawsuits seeking to stay the
arbitration on various grounds. The district court dismissed both
suits, and those dismissals were affirmed by this court. Jamari v.
Bache & Co. (Lebanon) S.A.L., No. 76 C 21 (N.D. Ill. May 19,
1976), aff'd, 565 F.2d 1194 (7th Cir. 1977), cert. denied, 435 U.S. 905
(1978); Tamari v. Conrad, No. 76 C 2071 (N.D. Ill. Nov. 15, 1976),
aff'd, 552 F.2d 778 (7th Cir. 1977).

J

A-7
Appendix B

Bache Lebanon, and Bache Delaware, all communications and
meetings between Bache Lebanon and the Tamaris regarding
the commodity futures contracts traded in the United States
took place in Lebanon.

The district court denied Bache Lebanon’s motion, holding
that subject matter jurisdiction exists over a cause of action
arising from trading on United States exchanges even though
the parties are nonresident aliens and the contacts between
them occurred in a foreign country. The court reached its
decision by applying two doctrines used to analyze jurisdic-
tional questions that arise from transnational disputes—the
effects test and the conduct test.° Under both tests, the court
concluded that jurisdiction exists over this case.

Bache Lebanon now challenges this determination. It first
contends that the district court failed to consider whether
Congress intended the CEA to apply to nonresident aliens
when the alleged illegal acts occurred in a foreign country, and
then argues that subject matter jurisdiction is lacking because
Congress did not intend such application. Bache Lebanon also
contends that subject matter jurisdiction does not exist under
either the conduct test or the effects test.

6 The effects test derives from section 18 of the Restatement
(Second) of Foreign Relations Law of the United States (1965), and
focuses on whether conduct occurring outside the United States
causes foreseeable and substantial effects within the United States.
See Schoenbaum vy. Firstbrook, 405 F.2d 200 (2d Cir.), rev’d on other
grounds, 405 F.2d 215 (2d Cir. 1968) (en banc), cert. denied sub nom.
Manley v. Schoenbaum, 395 U.S. 906 (1969). The conduct test
derives from section 17 of the Restatement and focuses on the
significance of conduct within the United States to the accomplish-
ment of illegal activities. See Leasco Data Processing Equipment
Corp. v. Maxwell, 468 F.2d 1326 (2d Cir. 1972); Bersch v. Drexel
Firestone, Inc., 519 F.2d 974 (2d Cir.), cert. denied sub nom. Bersch
v. Arthur Andersen & Co., 423 U.S. 1018 (1975).

A-8
Appendix B

We agree with Bache Lebanon’s contention that legislative
intent must be considered. See, e.g., Psimenos v. E. F: Hutton
& Co., 722 F.2d 1041, 1044-45 (2d Cir. 1983); Bersch v. Drexel
Firestone, Inc., 519 F.2d 974, 985 (2d Cir.), cert. denied sub
nom. Bersch v. Arthur Andersen & Co., 423 U.S. 1018 (1975).
Subject matter jurisdiction exists over this dispute only if the
antifraud provisions of the Commodity Exchange Act were
intended to apply to foreign brokers or agents of commodity
exchange members whenever they facilitate futures trading on
United States exchanges.’ Looking to the language of the
statute and its legislative history, we find no indication, how-
ever, that Congress intended to prohibit fraudulent dealings
connected with futures trading on domestic exchanges only if
the futures transactions originate in the United States.

One of Congress’s fundamental purposes in enacting the
CEA was to ensure fair practice and honest dealings on
commodity exchanges, for the protection of the market itself
as well as those who could be injured by unreasonable fluctua-
tions in commodity prices. S. Rep. No. 93-1131, 93d Cong., 2d
Sess. 14, reprinted in 1974 U.S. Code Cong. & Ad. News 5856.
See also 7 U.S.C. § 5. To effectuate this purpose, the Act
creates a comprehensive regulatory scheme premised on con-
trol over domestic stock exchanges and the trading of futures
contracts on those exchanges.* The specific provisions of the

7 Jurisdiction over civil actions arising under the CEA is
conferred by 28 U.S.C. §§ 1331 and 1337 rather than by any specific
provision in the CEA.

8 Congress has authorized the regulation of commodity futures
exchanges for over seventy years. In 1922, Congress enacted the
Grain Futures Act, 42 Stat. 998, which prohibited any person from
dealing in futures contracts off a designated contract market. It
further provided that the Secretary of Agriculture could designate a
board of trade as a contract market only if the board prevented its
members from disseminating misleading market information and

A-9
Appendix B

CEA upon which this suit is based broadly proscribe fraudu-
lent commodity futures transactions. Under 7 U.S.C. § 6b, any
member of a contract market, or its agents, is prohibited from
defrauding any person in connection with the making of a
futures contract on any contract market.’ Under 7 U.S.C. § 6c,
it is unlawful for any person to enter into or confirm the
execution of a meretricious commodity futures transaction.
We recognize that the Act does not expressly state that the
term “agent” includes, or excludes, agents doing business in
foreign countries, or that “person” includes, or excludes,
nonresident aliens. See 7 U.S.C. § 2. Nor does the legislative
history provide any guidance on whether these provisions
should be applied to all agents of commodity exchange mem-
bers, regardless of their location. in support of their respective
positions, the parties and the Commodity Futures Trading
Commission, as amicus curiae, have referred to congressional
reports on the 1974 and i982 amendments to the CEA, and to
subsequent regulations promulgated by the Commission."

prevented price manipulation. Though the regulatory scheme has
become more expansive and complex, these basic provisions are still
included in the Commodity Exchange Act. See 7 U.S.C. §§ 6 and 7.

9 The Commodity Futures Trading Commission designates a
board of trade as a “contract market” when it complies with and
carries out certain conditions and requirements. 7 U.S.C. § 7.

10 See H.R. No. 93-975, 93d Cong., 2d Sess. 61-64 (1974)
(discussing expansion of the CEA’s coverages to include world com-
modities); 17 C.F.R. §§ 17.00 and 21.02 (1983) (requiring foreign
brokers and foreign traders to comply with Commission reporting
provisions and “special calls” for information on their market
positions); 17 C.F.R. § 30.02 (1983) (proscribing fraud in connection
with futures transactions other than on domestic contract markets);
45 Fed. Reg. 18360 (March 20, 1980) and 17 C.F.R. § 3.12 (1983)
(rescinding registration requirement for foreign associated persons of
domestic firms). See also H.R. Rep. No. 97-565, 97th Cong., 2d Sess.
68, reprinted in 1982 U.S. Code Cong. & Ad. News 3917 (discussion
relating to 17 C.F.R. §§ 17.00 and 21.02).

A-10
Appendix B

Bache Lebanon attaches particular significance to the Commis-
sion’s decision to exclude foreign associated persons of domes-
tic firms from registration requirements. However, we do not
regard this decision as an indication of congressional intent on
the jurisdictional limits of the antifraud provisions, especially
when the Commission has taken the position that the CEA
confers subject matter jurisdiction over this dispute. Likewise,
the other references illustrate specific iegisiative and adminis-
trative responses to increased international trading in commod-
ity futures, but do not address the intended jurisdictional scope
of the antifraud provisions of the Act.

Finding nothing in the Act or its legislative history to
indicate that Congress did not intend the CEA to apply to
foreign agents, but recognizing there also is no direct evidence
that Congress intended such application, we believe it is appro-
priate to rely on the “conduct” and “effects” tests in discerning
whether subject matter jurisdiction exists over this dispute.’

11 As a matter of foreign relations law, the conduct and effects
principles indicate whether the United States has jurisdiction to
prescribe a rule that attaches legal consequences to conduct occurring
in the United States, or to conduct occurring outside the United
States that causes effects within the United States. See Restatement
(Second) of Foreign Relations Law of the United States §§ 17 and 18
(1965). Were Congress to enact a rule beyond the scope of these
principles, the statute could be challenged as violating the due process
clause on the ground that Congress lacked the power to prescribe the
rule. See Blackmer v. United States, 284 U.S. 421, 436 (1931);
Leasco, supra, 468 F.2d at 1334.

When the question instead is whether Congress intended a statute
to have extraterritorial application, the analysis of legislative intent
becomes intertwined with these principles of foreign relations law. If
extraterritorial application would have no impact on domestic condi-
tions, it is presumed that Congress did not intend the statute to apply
outside the territory, unless a contrary intent appears. Foley Bros.,
Inc. v. Filardo, 336 U.S. 281, 285 (1949). Reliance on this presump-
tion is misplaced, however, when the conduct under scrutiny has not
occurred wholly outside the United States, or when conduct outside
the United States could otherwise affect domestic conditions. Leasco,

A-11

Appendix B

Both tests were devcioped in cases brought under the antifraud
provisions of the federal securities laws and have recently been
applied in similar cases arising under the Commodity Exchange
Act. See, e.g., Psimenos, supra, 722 F.2d at 1044-48 (CEA);
Grunenthal GmbH v. Hotz, 712 F.2d 421 (9th Cir. 1983); SEC
v. Kasser, 548 F.2d i109 (3d Cir.), cert. denied sub nom.
Churchill Forest Industries (Manitoba), Ltd. v. SEC, 431 U.S.
938 (1977); Bersch, supra, 519 F.2d 985-93; ITT v. Vencap,
Ltd., 519 F.2d 1001, 1015-19 (2d Cir. 1975); Leasco, supra, 468
F.2d at 1333-39; Schoenbaum, supra, 405 F.2d at 206-08;
Alemano v. ACLI International, Inc., 2 Comm. Fut. L. Rep.
(CCH) 4 21,898 at 27,894 (S.D.N.Y. Nov. 2, 1983) (CEA);
Mormels v. Girofinance, S.A., 544 F. Supp. 815 (S.D.N_Y.
1982) (CEA). The conduct test focuses on the foreigner’s
conduct within the United States as it relates to the alleged
scheme to defraud. See, e.g., Grunenthal, supra, 712 F.2d at
423-26; Kasser, supra, 548 F.2d at 112-16; Travis v. Anthes
Imperial Ltd., 473 F.2d 515, 523-28 (8th Cir. 1973); Bersch,
supra, 519 F.2d at 987. When the conduct occurring in the
United States is material to the successful completion of the
alleged scheme, jurisdiction is asserted based on the theory that
Congress would not have intended the United States to be used
as a base for effectuating the fraudulent conduct of foreign
companies. See Psimenos, supra, 722 F.2d at 1046; Kasser,
supra, 548 F.2d at 116. See also Vencap, supra, 519 F.2d at
1017. Under the effects test, courts have looked to whether
conduct occurring in foreign countries had caused foreseeable

supra, 468 F.2d at 1334; Schoenbaum, supra, 405 F.2d at 206. In
these cases, courts have looked to the nature of the conduct or effects
in the United States to determine whether extraterritorial application
would be consistent with the purposes underlying the statute. See,
e.g., Grunenthal GmbH vy. Hotz, 712 F.2d 421, 424-25 (9th Cir.
1983); SEC v. Kasser, 548 F.2d 109 (3d Cir.), cert. denied sub nom.
Churchill Forest Industries (Manitoba), Ltd. v. SEC, 431 U.S. 938
(1977); Bersch, supra, 519 F.2d at 985-93; Schoenbaum, supra, 405
F.2d at 206-08.

A-12
Appendix B

and substantial harm to interests in the United States. See,
e.g., Continental Grain (Australia) Pty. Ltd. v. Pacific Oil-
seeds, Inc., 592 F.2d 409, 416-17 (8th Cir. 1979); Vencap,
supra, 519 F.2d at 1015-17; Leasco Data Processing Equipment
Corp. v. Maxwell, 468 F.2d 1326, 1334 (2d Cir. 1972); Schoen-
baum v. Firstbrook, 405 F.2d 200, 206-09 (2d Cir.), rev’d on
other grounds, 405 F.2d 125 (2d Cir. 1968) (en banc), cert.
denied sub nom. Manley v. Schoenbaum, 395 U.S. 906 (1969).
The underlying theory is that Congress would have wished
domestic markets and domestic investors to be protected from
improper foreign transactions. See Vencap, supra, 519 F.2d at
1016-17; Schoenbaum, supra, 405 F.2d at 206. See alse Kasser,
supra, 548 F.2d at 116.

The district court’s anaiysis under the conduct and effects
tests was derived from these analogous cases. We find that the
district court correctly applied the tests to the facts of this case
and adopt its analysis under both tests.'? See Tamari v. Bache
& Co. (Lebanon) S.A.L., 547 F. Supp. 309 (N.D. Ill. 1982).
The transmission of commodity futures orders to the United
States would be an essential step in the consummation of any
scheme to defraud through futures trading on United States
exchanges. Further, when transactions initiated by agents
abroad involve trading on United States exchanges, the pricing
and hedging functions of the domestic markets are directly
implicated, just as they would be by an entirely domestic
transaction. If transactions are the result of fraudulent repre-
sentations, unauthorized trading or mismanagement of trading
accounts, prices and trading volumes in the domestic market-
place will be artificially influenced, and public confidence in
the markets could be undermined.

12 We also note that the Second Circuit in Psimenos, supra,
expressly approved the district court’s conclusion that the transmis-
sion of a customer’s orders from abroad to the United States
constitutes sufficient conduct within the United States to support
jurisdiction under the CEA.

A-13

Appendix B

By asserting jurisdiction under the conduct and effects
rationales, the purposes of the Act are advanced. Were we to
construe the CEA as inapplicable to the foreign agents of
commodity exchange members when they facilitate trading on
domestic exchanges, the domestic commodity futures market
would not be protected from the negative effects of fraudulent
transactions originating abroad. Because the fundamental pur-
pose of the Act is to ensure the integrity of the domestic
commodity markets, we expect that Congress intended to
proscribe fraudulent conduct associated with any commodity
future transactions executed on a domestic exchange, regard-
less of the location of the agents that facilitate the trading.

We therefore affirm the district court’s order and opinion
finding subject matter jurisdiction over this case.

APPENDIX C

Appendix C

UNITED STATES DISTRICT COURT
N. D. Illinois, E. D.

No. 75 C 4189
May 25, 1982

7

Abdallah W. TAMARI, et al.,
Plaintiffs,

Vv.

BACHE & Co. (LEBANON) S.A.L.,
Defendant.

os

Robert P. Howington, Jr., Howington, Elworth, Osswald &
Hough, Chicago, Ill., for plaintiffs.

N.A. Giambalvo, James W. Collins, Lawrence M. Gavin,
Boodell, Sears, Sugrue, Giambalvo & Crowley, Chicago, IIl.,
for defendant.

a

MEMORANDUM OPINION AND ORDER

GETZENDANNER, District Judge.

This matter is before the court on the motion of defendant
Bache & Co. (Lebanon) S.A.L. (“Bache Lebanon”) for judg-
ment on the pleadings or, in the alternative, for summary
judgment. Defendant asserts three grounds for its motion: lack

NN NE FIN,

A-16

Appendix C

of subject matter jurisdiction; collateral estoppel; and no right
of action under the Commodity Exchange Act, 7 U.S.C.
§§ 1-24 (the CEA) and associated rules and regulations. For
the reasons that follow, the motion is denied, except as to the
alleged violations of the exchange rules.

Subject Matter Jurisdiction

Plaintiffs Abdallah Tamari, Ludwig Tamari and Farah Ta-
mari (the Tamaris) are Lebanese citizens and residents of that
country. Defendant Bache Lebanon is a wholly-owned subsidi-
ary of Bache & Co., Inc., a “elaware corporation (“Bache
Delaware”)', and it is a Lebanese corporation having its sole
office in Beirut, Lebanon. The Tamaris allege that Bache
Lebanon solicited commodity futures orders (apparently for
silver, coffee and pork bellies, among other commodities) from
them in Lebanon and then transmitted such orders by wire
from its Beirut office to Bache Delaware’s Chicago offices for
execution on the Chicago Board of Trade (the CBOT) and the
Chicago Mercantile Exchange (the CME).” They further allege
that Bache Lebanon made misrepresentations regarding its
expertise, gave false advice on market conditions, mismanaged
their accounts, and breached its fiduciary duty. Their com-
plaint has two counts, the first under the CEA, and the second
for common-law fraud.

The jurisdictional issue is whether this court has subject
matter jurisdiction over a cause of action arising from trading
on American commodities exchanges when the parties to the
suit are nonresident aliens and the contacts between them

1 Bache Delaware was formerly a defendant in this litigation,
but on May 19, 1976, Judge Grady, to whom this case was previously
assigned, dismissed Bache Delaware. The Tamaris then arbitrated
their claims against Bache Delaware and Bache Delaware prevailed in
the arbitration proceedings.

2 Bache Lebanon is not a member of either exchange and thus
could not execute the orders itself.

perros

A-17
Appendix C

occurred outside the United States. The court concludes that it
does have jurisdiction of this dispute.

The CEA has been held to have extraterritorial application
in some circumstances, Commodity Futures Trading Commis-
sion v. Muller, 570 F.2d 1296, 1299 (Sth Cir. 1978). Both
parties, in arguing for and against the applicability of the CEA
to the circumstances in this case, have primarily relied on the
case law in analogous securities law cases. There is a substan-
tial body of such case law defining the transnational scope of
the Securities Act of 1933 and the Securities Exchange Act of
1934. See generally the cases and articles listed in Continental
Grain (Australia) Pty., Ltd. v. Pacific Oilseeds, Inc., 592 F.2d
409, 413 (8th Cir. 1979).?

In these cases, courts have developed two related doctrines
for analyzing transnational problems, the effects test and the
conduct test.* While some courts have indicated that both tests
must be satisfied in order to sustain subject matter jurisdiction,
the weight of authority holds that meeting either test es-
tablishes jurisdiction. Continental Grain, supra, 592 F.2d at
417 (8th Cir. 1979) (jurisdiction may be established by meeting
either test); Straub v. Vaisman & Co., 540 F.2d 591, 595 (3d
Cir. 1976) (conduct alone sufficient from a jurisdictional stand-
point); Leasco Data Processing Equipment Corp. v. Maxwell,
468 F.2d 1326, 1334 (2d Cir. 1972) (same). This court need not
resolve the issue, however, as under each test jurisdiction exists
here.

3 For additional analyses of the important case law in this area,
see Grunenthal GmbH yv. Hotz, 511 F.Supp. 582, 585-87
(C.D.Cal.1981); and Recaman v. Barish, 408 F.Supp. 1189, 1194-
1202 (E.D.Pa.1975).

4 “Of course, the courts may in reality by [sic] using a much
more flexible, and more traditional, approach; that is, the courts
may, in each particular fact situation, be balancing the competing
interests presented. . . . cf. Comment, Jurisdiction in Transnational
Securities Fraud Cases—SEC v. Kasser, supra, note 4, 7 Den.J. Int’l
L. & Pol’y at 286 n.46 (suggesting “test” is too simplistic a term).”
Continental Grain, supra, 592 F.2d at 416 n.11.

A-18

Appendix C
The Effects Test

Under the effects test, courts sustain jurisdiction over con-
duct occurring in foreign countries when that conduct causes
forseeable and substantial harm to interests within the United
States, that is, when there is a substantial impact on domestic
investors or on the domestic market. The doctrinal basis for
this test derives from the Restatement (Second) of Foreign
Relations Law of the United States § 18.° The first court to
formulate and apply the effects test was the Second Circuit in
Schoenbaum v. Firstbrook, 405 F.2d 200 (2d Cir.), aff’d as to
jurisdiction and rev’d on other grounds, 405 F.2d 215 (2d Cir.
1968) (en banc), cert. denied sub nom., Manley v. Schoen-
baum, 395 U.S. 906, 89 S.Ct. 1747, 23 L.Ed.2d 219 (1969).

In Schoenbaum, an American shareholder in a Canadian
corporation brought a derivative suit alleging fraud in viola-
tion of the 1934 Securities Exchange Act. The challenged
transaction occurred in Canada, but it involved Canadian
stock registered on the American Stock Exchange. The court
held that the securities laws applied extraterritorially in that

case “in order to protect domestic investors who have pur-

chased foreign securities on American exchanges and to protect
the domestic securities market from the effects of improper
foreign transactions in American securities.” 405 F.2d at 206.

5 § 18. Jurisdiction to Prescribe With Respect to Effect
Within Territory.

A state has jurisdiction to prescribe a rule of law attaching legal
consequences to conduct that occurs outside its territory and causes
an effect within its territory, if either

(a) the conduct and its effect are generally recognized as constitu-
ent elements of a crime or tort under the law of states that have
reasonably developed legal systems, or

(b)(i) the conduct and its effect are constituent elements of activity
to which the rule applies; (ii) the effect within the territory is
substantial; (iii) it occurs as a direct and foreseeable result of the
conduct outside the territory; and (iv) the rule is not inconsistent with
the principles of justice generally recognized by states that have
reasonably developed legal systems.

A-19

Appendix C

The effects test enunciated in Schoenbaum was later iimited
by two cases from the Second Circuit decided on the same day,
Bersch v. Drexel Firestone, Inc., 519 F.2d 974 (2d Cir.), cert.
denied sub nom., Bersch v. Arthur Andersen & Co., 423 U.S.
1018, 96 S.Ct. 453, 46 L.Ed.2d 389 (1975) and JIT v. Vencap,
Ltd., 519 F.2d 1001 (2d Cir. 1975). In Bersch, a plaintiff class
consisting of thousands of shareholders, most of whom were
foreign, had purchased stock in an international corporation
organized under the laws of Canada. The named plaintiff, an
American, brought an action against various American and
foreign underwriters and an American accounting firm. The
challenged public offering had been deliberately structured to
avoid sales in America, but despite this some sales had been
made to Americans, both within the United States and abroad.

One of the grounds for jurisdiction asserted in Bersch was
the adverse general effect the collapse of the international
corporation had on the American stock market, even though
its securities were not traded on American exchanges. To
support this assertion, plaintiffs submitted an affidavit from
an economics professor. The Bersch court rejected this argu-
ment, stating:

[W]e do not doubt that the collapse of IOS after the
offering had an unfortunate financial effect in the United
States. Nevertheless we conclude that the generalized
effects described by Professor Mendelson would not be
sufficient to confer subject matter jurisdiction over a
damage suit by a foreigner under the anti-fraud provi-
sions of the securities laws.

519 F.2d at 988. See also Recaman v. Barish, 408 F.Supp. 1189,
1199 n.11 (E.D.Pa. 1975) (study showing general adverse
impact on economy in case where securities were not traded on
domestic exchanges held to be insufficient under effects test).

In SEC v. Kasser, 548 F.2d 109, 113 (3d Cir.) cert. denied sub
nom. Churchill Forest Industries (Manitoba) Ltd. v. SC, 431
U.S. 938, 97 S.Ct. 2649, 53 L.Ed.2d 255 (1977), the Third
Circuit found the effects test to be inapplicable in a case where
the securities involved were not traded on American exchanges.
The Court reasoned:

A-20

Appendix C

Frequently, trading on an exchange has helped to under-
grid findings of jurisdiction in other transnational cases.
Where a stock exchange is involved, courts have found
sufficient impact in the United States to sustain jurisdic-
tion.

The Eighth Circuit in Continental Grain (Australia) Pty. Ltd.
v. Pacific Oilseeds, Inc., 592 F.2d 409, 417 n.12 (8th Cir. 1979),
used a similar rationale to find the effects test unavailing where
the plaintiff was a foreign corporation, where the securitie;
involved were those of a foreign corporation and were never
registered or listed on American exchanges, and where the
alleged harm to the plaintiff’s American corporate parent was
indirect. In distinction to Kasser and Continental Grain stands
the case of JJT v. Cornfeld, 619 F.2d 909, 918 (2d Cir. 1980), in
which the court upheld jurisdiction partially on the basis that
the challenged transactions involved American securities.

Bache Lebanon argues that the facts in the present case do
not satisfy the effects test for jurisdiction. It contends that a
“personal dispute between private foreign parties cannot have
any impact whatever upon United States investors or upon the
United States commodities market.” (Def. Memo in Support at
12.) Concededly, both the plaintiffs and the defendant in this
case are Lebanese and the allegedly fraudulent representations
all occurred in Lebanon. The commodities involved, however,
were traded ori American exchanges.

Relying on this fact, the Tamaris counter that fraudulent
transactions on American commodities exchanges have a detri-
mental effect on the trading on such exchanges and they have
submitted an affidavit by an economics professor to that
effect. Bache Lebanon attacks the sufficiency of this affidavit
on the grounds discussed in the Bersch case, that it only
describes a theoretical and generalized harm and that this type
of harm cannot confer subject matter jurisdiction. Bache
Lebanon continues: “Moreover, given the limited volume of
Tamaris’ trades in relation to total volume, it is difficult to
perceive how any impact could have been felt.” (Def. Reply
Memo at 8.)

A-21

Appendix C

The flaw in Bache Lebanon’s arguments is that the trans-
actions at issue here directly involved domestic futures ex-
changes. The cases Bache Lebanon cites, in which courts found
no jurisdiction, all involved foreign securities that were not
traded on American exchanges: //T v. Vencap, Ltd., 519 F.2d
1001, 1016 (2d Cir. 1975); Investment Properties International,
Ltd. v. IOS, Ltd., [1970-71] Fed.Sec.L.Rep. (CCH) 4 93,011
at 90,736 (S.D.N.Y.), @ff’d without opinion (2d Cir. 1971);
Fidenas AG v. Compagnie Internationale Pour L’Informatique
Cll Honeywell Bull S.A., 606 F.2d 5, 7 (2d Cir. 1979); Finch v.
Marathon Securities Corp., 316 F.Supp. 1345, 1347 (S.D.N-Y.
1970) (“It should be noted that [the securities involvedj have
never been registered in this country—nor have they ever been
listed on any of our national securities exchanges or traded on
our over-the-counter market.”).°

Similarly, while Bache Lebanon correctly characterizes the
affidavit of the Tamaris’ expert as theoretical and generalized,
the affidavit was not necessary in the first instance to establish
an impact on the American futures market. In Bersch, the case

6 The one case cited by Bache Lebanon that involved American
securities is Manus v. The Bank of Bermuda, [1971-72]
Fed.Sec.L.Rep. (CCH) ¢ 93,299 (S.D.N.Y. 1971). There Canadian
plaintiffs sued a Bermuda defendant for a transaction that occurred
in London involving the unregistered stock of a New York corpora-
tion. The court stated:

In addition to the foregoing which compels dismissal of this
complaint for failure to state a claim upon which relief can be
granted, subject matter jurisdiction appears to be lacking. The
parties are aliens and the principal transaction of which plain-
tiffs complain took place in London. The plaintiffs do not
claim . . . that the transaction was detrimental to the interests
of domestic investors or of the domestic securities market. . . .
But the question of jurisdiction need not be reached here.

Id. at 91,650. Apart from the factual distinction between the unregis-
tered securities in Manus and the commodities traded on national
exchanges in this case, the court’s view of the present jurisdictional
problem is not swayed by the New York court’s dictum.

A-22

Appendix C

where the court found a similar affidavit insufficient to estab-
lish jurisdiction, the securities involved in the allegedly fraudu-
lent scheme were not registered on American exchanges and
were not intended to be sold within the United States. As the
court reads Bersch and other similar cases, the need fox
plaintiffs to demonstrate a particularized harm to domestic
interests only arises when domestic investors or exchanges are
not directly involved. Conversely, in a case such as this, where
the challenged transactions involve trading on domestic ex-
changes, harm can be presumed, because the fraud alleged
implicates the integrity of the American market.

The court recognizes that no prior case has had to decide
whether to sustain jurisdiction under the effects test solely on
the basis that the securities involved were traded on American
exchanges. The case law, however, does emphasize that “the
absence of certain of the elements which led to finding subject
matter jurisdiction in [prior] cases does not necessarily pre-
clude a similar conclusion on the different facts presented
here.” Bersch, supra, 519 F.2d at 986. See also J/T v. Cornfeld,
619 F.2d 909, 918 (2d Cir. 1980), “the presence or absence of
any single factor which was considered significant in other
cases . . . is not necessarily dispositive,” quoting Continental
Grain, supra, 592 F.2d at 414. Applying this case-by-case
approach here, the court concludes that it has jurisdiction
under the effects test in this dispute involving the allegedly
fraudulent solicitation of orders for American commodities.

The Conduct Test

The conduct test bases jurisdiction on conduct occurring
within the United.States. The residence or citizenship of the
parties and the foreign or domestic nature of the securities
involved, while relevant, is not the focus of inquiry; instead the
courts concentrate on the relative importance of activities
within the United States to the success of the alleged scheme to
defraud. If such conduct is substantial rather than merely
preparatory, incidental or fortuitous, the courts are more likely
to find jurisdiction. This test derives from Restatement (Sec-

rein an towe~

ao omen

A-23

Appendix C

ond) of Foreign Relations Law of the United States § 17’ and
as a policy matter seeks to prevent the United States from
being “used as a base for manufacturing fraudulent security
devices for export, even when these are peddled only to
foreigners.” JT v. Vencap, Ltd., 519 F.2d 1001, 1017 (2d Cir.
1975).

This test was first used in Leasco Data Processing Equip-
ment Corp. v. Maxwell, 468 F.2d 1326 (2d Cir. 1972). In
Leasco, American plaintiffs alleged fraud in the sale of the
securities of an English corporation that were not registered or
traded on American exchanges and were not sold within the
United States. The court upheld jurisdiction because “substan-
tial misrepresentations” were made within this country. 468
F.2d at 1339. Since Leasco, courts have focused on defining the
limits of the conduct test.

In Travis v. Anthes Imperial Ltd., 473 F.2d 515 (8th Cir.
1973), the facts paralleled those in Leasco. American plaintiffs
sued Canadian defendants over a tender offer and merger
involving Canadian securities that were not registered or traded
on American exchanges. The plaintiffs alleged that they were
led to believe that if they retained their stock until after a
tender offer had been made to Canadian shareholders, a
separate tender offer would be made to them and other United
States shareholders. The court reasoned that subject matter
jurisdiction depended on the existence of “significant conduct
with respect to the alleged violations in the United States.” 473
F.2d at 524.

In finding such significant conduct, the court noted that the
plaintiffs alleged that the mails and telephones had been used

7 § 17. Jurisdiction to Prescribe with Respect to Conduct,
Thing, Status or Other Interest within Territory.

A state has jurisdiction to prescribe a ruie of law

(a) attaching legal consequences to conduct that occurs within its
territory, whether or not such consequences are determined by the
effects of the conduct outside the territory, and

(b) relating to a thing located, or a status or other interest local-
ized, in its territory.

A-24
Appendix C

to communicate misrepresentations. The court also considered
as “significant contacts” within the United States the closing of
the ultimate sale of the plaintiffs’ shares (which took place in
St. Louis, Missouri) and communications leading thereto
“even though they were made at a time when the plaintiffs
were aware of the defendants’ true intentions and were thus
not misleading.” 473 F.2d at 527. The court reasoned:

These contacts were the final stage of the defendants’
alleged scheme to defraud the named plaintiffs which
began with the limitation of the tender offer to Anthes
Canadian shareholders and continued on through the
acquisition of plaintiffs’ shares by [one of the defen-
dants.] They were essential to the alleged scheme and may
not be ignored in determining the propriety of subject
matter jurisdiction.

Id. Similarly, in Straub v. Vaisman & Co., 540 F.2d 591, 595
(3rd Cir. 1976), one of the factors that the court relied upon to
establish sufficient conduct within the United States was that
the stock involved had been traded on an American over-the-
counter exchange.

In Bersch v. Drexel Firestone, Inc., 519 F.2d 974, 987 (2d
Cir.), cert. denied sub nom. Bersch v. Arthur Andersen & Co..
423 U.S. 1018, 96 S.Ct. 453, 46 L.Ed.2d 389 (1975), the
Second Circuit cut back on the reach of the conduct test,
stating:

[W]e see no reason to extend it to cases where the United
States activities are merely preparatory ... and are
relatively small in comparison to those abroad.

See also Vencap, supra, 519 F.2d at 1018, where the court
indicated:

[JJurisdiction is limited to the perpetration of fraudulent
acts themselves and does not extend to mere preparatory
activities or the failure to prevent fraudulent acts where
the bulk of the activity was performed in foreign coun-
We Se

Be SA Bed UR nt aS wee

RPP PORE OED ee

A-25
Appendix C

Conduct that occurs within the United States by chance or
merely for convenience is also insufficient for jurisdictional
purposes. Leasco, supra, 468 F.2d at 1338 (2d Cir. 1972)
(dictum; no jurisdiction when a German and a Japanese meet
in New York for convenience and the latter fraudulently
induces the former to purchase Japanese securities on the
Tokyo Stock Exchange); Grunenthal GmbH v. Hotz, 511
F.Supp. 582, 583, 588 (C.D.Cal. 1981). In Grunenthal, all the
parties were foreign nationals or corporations; the securities
involved were foreign and not traded on any American ex-
change; the negotiations involved conduct in four countries,
including the United States; and the conduct in each country
was of relatively equal importance. The challenged transaction,
however, was concluded within the United States because one
of the defendants was here on a temporary non-immigrant visa
for business. The court concluded that the fact that the
transaction was concluded here was insufficient because it
found that this was only a matter of convenience.

Bache Lebanon argues that the conduct of Bache Delaware
and its agents that occurred within the United States was
determined to be lawful in the arbitration proceedings and “it
follows that ail of the activity, if any, constituting the violations
must, of necessity, have occurred outside the United States. We
are thus left with a case of an alleged fraud on foreigners by a
foreign corporation in a foreign country.” (Def. Memo in
Support at 14.) The Tamaris argue that Bache Lebanon wired
the orders it solicited from them to Bache Delaware in Chi-
cago, Illinois, for execution on the Chicago exchanges.*® They

8 In its reply brief, Bache Lebanon asserts that it wired at least
some of the Tamaris’ orders to London and that the orders were then
wired from London to the United States on Bache Delaware’s
“Hassler System.” “In essence,” Bache Lebanon argues, “Bache
Delaware not Bache Lebanon, wired the orders from London to
within the United States.” (Def. Reply Memo at 5 n.3) (emphasis in
original). The Hassler System is a private wire system. Testimony
establishes that, with this system, an order is teletyped on the system
from a branch in Beirut to a central computer in London, where it is

A-26

Appendix C

further contend that these transmission constitute conduct
within the United States and that such conduct is sufficient to
confer jurisdiction.

Several courts have found that making phone calls or send-
ing mail to the United States should be deemed conduct within
the United States for jurisdictional purposes in transnational
cases. E.g., Continental Grain, supra, 592 F.2d at 420 n.18:

Both the place of sending and the place of receipt consti-
tute locations in which conduct takes place when the mails
or instrumentalities of interstate commerce are used to
transmit communications;

Travis, supra, 473 F.2d at 524 n.16; Leasco, supra, 468 F.2d at
1335. Thus, Bache Lebanon’s transmission of the Tamaris’
orders from Beiruit to Chicago constitutes conduct within the
United States.

The court determines, moreover, that such conduct is sub-
stantial or significant when viewed in relation to its importance
to the success of the alleged scheme to defraud. As in Travis,
supra, 473 F.2d at 527, Bache Lebanon’s wiring the Tamaris’
orders to Chicago and the execution of those orders on the
Chicago exchanges were the final steps in the alleged scheme.
And again as in Travis, the “lawfulness” of Bache Delaware’s
execution of the orders, as found by the arbitrators, does not
cure any prior fraud in Bache Lebanon’s solicitations from the
Tamaris, nor does it prevent the execution of the orders from

almost simultaneously relayed to the United States by the computer.
(Dep. of Mr. Fivian, pp.12-13). In light of this testimony, the court
assumes for purposes of this motion (without, however, finding such
to be a fact on the merits, see Grunenthal, supra, 511 F.Supp. at 584
n.2) that Bache Lebanon’s use of this system constituted a communi-
cation from outside to within the United States. Moreover, there is
testimony suggesting that the Hassler System could be bypassed and
an order placed directly by phone. (Dep. of Mr. Fivian, p. 14).
Whether any of the Tamaris orders were directly telephoned from
Beiruit to Chicago is not clear from this record.

SAP AE REE Vinee echt

RAEN 1 ERC ER pa eT AE AES

LRP LE IRM ER UII HEN?

A-27

Appendix C

being a necessary and foreseeable step in a scheme to defraud,
and thus substantial conduct within the United States. On the
basis of these transmissions, therefore, the court finds subject
matter jurisdiction under the conduct test.

Collateral Estoppel

Bache Lebanon argues that the Tamaris, in their complaint,
allege the same violations that were the subject of the arbitra-
tion proceedings between the Tamaris and Bache Delaware,
that “all actions taken by Bache Lebanon in connection with
the Tamaris’ accounts were taken by Bache Lebanon as agent
for Bache Delaware” (Def. Memo in Support at 15-16), and
therefore that the arbitral decision in Bache Delaware’s favor
constitutes an adjudication that Bache Lebanon’s actions were
proper and lawful. Bache Lebanon was not a party to the
arbitration; thus, if it is to rely on the decision there, it must
show that it is entitled to do so under principles of collateral
estoppel.

Once before in this litigation Bache Lebanon raised this
identical argument, that the arbitral decision collaterally estops
the Tamaris from proceeding against it. This was the subject of
a motion to dismiss, treated as a motion for summary judg-
ment, that Bache Lebanon argued to Judge Grady when this
case was assigned to him. In a memorandum opinion dated
March 17, 1978, Judge Grady rejected Bache Lebanon’s argu-
ment and denied its motion. |

In his opinion, Judge Grady made three points: he con-
cluded that it was impossible to tell what the arbitration panel
had decided regarding Bache Lebanon’s conduct due to the
absence of any express findings* that at least one issue—that of
Bache Lebanon’s independent tiability—could not be pre-
cluded by the decision in any case; and that the totality of the
circumstances established that it would be inequitable to apply
the doctrine of collateral estoppel in this case. Bache Lebanon
has not persuaded this court that Judge Grady’s conclusions
were incorrect.

A-28

Appendix C

Right of Action

Bache Lebanon’s final argument, that there is no implied
private right of action under Sections 4b and 4c of the CEA, 7
U.S.C. §§ 6b and 6c, can be quickly answered. Prior to the
1974 amendments to the CEA, federal courts had routinely
recognized a private cause of action under the statute, and in
the recent case of Merrill Lynch, Pierce, Fenner & Smith, Inc.
v. Curran, Us. —. awe See ee Bee, Tee fe
L.Ed.2d 182 (1982), the Supreme Court held that the private
cause of action survived the 1974 amendments.

Bache Lebanon also argues that no private right of action
exists for violations of the rules of the exchanges involved, but
the court need not decide this issue. The Tamaris’ complaint
alleges violations of CBOT Rules Nos. 210, 1822(8), (12), (14)
and (15), 1822-A and 1990, and violations of CME Rules Nos.
928 and 942. All of these rules regulate the conduct of
members of the respective exchanges. Bache Lebanon, how-
ever, is not a member of either the CBOT or the CME. The
Tamaris cannot base a cause of action against Bache Lebanon
on any violation of the exchange rules, and to the extent that
their complaint is based on such violations, Bache Lebanon’s
motion is granted.

Conclusion

Bache Lebanon’s motion for judgment on the pleadings or,
in the alternative, for summary judgment is denied, except that
it is granted as to all claims based on violations of the
commodity exchanges’ rules.

AP? ENDIX D

A-29

Appendix D

SEC. 4b. It shall be unlawful (1) for any member of a
contract market, or for any correspondent, agent, or employee
of any member, in or in connection with any order to make, or
the making of, any contract of sale of any commodity in
interstate commerce, made, or to be made, on or subject to the
rules of any contract market, for or on behalf of any other
person, or (2) for any person, in or in connection with any
order to make, or the making of, any contract of sale of any
commodity for future delivery, made, or to be made, on or
subject to the rules of any contract market, for or on behalf of
any other person if such contract for future delivery is or may
be used for (a) hedging any transaction in interstate commerce
in such commodity or the products or by products thereof, or
(b) determining the price basis of any transaction in interstate
commerce in such commodity, or (c) delivering any such
commodity sold, shipped, or received in interstate commerce
for the fulfillment thereof—

(A) to cheat or defraud or attempt to cheat or defraud
such other person;

(B) willfully to make or cause to be made to such other
person any false report or statement thereof, or willfully
to enter or cause to be entered for such person any false
record thereof;

(C) willfully to deceive or attempt to deceive such other
person by any means whatsoever in regard to any such
order or contract or the disposition or execution of any
such order or contract, or in regard to any act of agency
performed with respect to such order or contract for such
person; or

(D) to bucket such order, or to fill such order by offset
against the order or orders of any other person, or
willfully and knowingly and without the prior consent of
such person to become the buyer in respect to any selling

A-30

Appendix D

order of such person, or become the seller in respect to
any buying order of such person.

Nothing in this section or in any other section of this Act
shall be construed to prevent a futures commission merchant
or floor broker who shall have in hand, simultaneously, buying
and selling orders at the market for different principals for a
like quantity of cotton for future delivery in the same month,
from executing such buying and selling orders at the market
price: Provided, That any such execution shall take place on
the floor of the exchange where such orders are to be executed
at public outcry across the ring and shall be duly reported,
recorded, and cleared in the same manner as other orders
executed on such exchange.

SEc. 4c. It shall be unlawful for any person to offer to
enter into, enter into, or confirm the execution of, any trans-
action involving any commodity, which is or may be used for
(1) hedging any transaction in interstate commerce in such
commodity or the products or by products thereof, or (2)
determining the price basis of any such transaction in interstate
commerce in such commodity, or (3) delivering any such
commodity sold, shipped, or received in interstate commerce
for the fulfillment thereof—

(A) if such transaction is, is of the character of, or is
commonly known to the trade as, a “wash sale,” “cross
trade,” or “accommodation trade,” or is a fictitious sale;

(B) if such transaction is, is of the character of, or is
commonly known to the trade as, a “privilege”, “indem-
nity”, “bid”, “offer”, “put”, “call”, “advance
guaranty”, or “decline guaranty”, or

(C) if such transaction is used to cause any price to be
reported, registered, or recorded which is not a true and
bona fide price.

Nothing in this section shall be construed to prevent the
exchange of futures in connection with cash commodity trans-

A-31
Appendix D

actions or of futures for cash commodities, or of transfer
trades or office trades if made in accordance with board of
trade rules applying to such transactions and such rules shall
not have been disapproved by the Secretary of Agriculture.
Nothing in this section or section 4b shall be construed to
impair any State law applicable to any transaction enumerated
or described in such sections.

APPENDiX ELE

A-33

Appendix E
FOREIGN OFFICES AND FOREIGN REPRESENTATIVES
Arranged Alphabetically as to Countries and Cities

ARAB EMIRATES (UNION OF)

Cairo

Kidder, Peabody & Co. Incorporated
9 Had el Laban Street
Garden City
(Kidder, Peabody & Co., Ltd.)

Dubai

Hutton (E.F.) & Company, Inc.
Chamber of Commerce Bldg.,
P.O. Box 5241

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Union of Arab Emirates
P.O. Box 3911 Al Fuleij Bldg.

ARGENTINA

Buenos Aires

Becker (A.G.) Paribas Incorporated
LaValle 648, 1047

Merrill Lynch, Pierce, Fenner & Smith de Argentina
San Martin 323 Piso 13

Prudential-Bache Securities, Inc.
25 De Mao 537, Piso 14

AUSTRALIA

Melbourne

First Boston Corporaton
535 Bourke St.

A-34
Appendix E

AUSTRIA
Vienna

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Tegetthoffstrasse NBR 1, A-1015

BAHRAIN

Manama

Hutton (E.F.) & Company Inc.
Unitag House, Mezzanine Floor
Government Rd.

P.O. Box 82

BELGIUM

Brussels

Dominick & Dominick Incorporated
Rue de L’Aurore 2

Drexel Burnham Lambert Incorporated
5, Boulevard de l’Empereur
(Burnham Securities, S.A.)

First Manhattan Co.
203 Avenue Louise

Hutton (E.F.) & Company Inc.
10 Place Du Champ De Mars

Laidlaw Adams & Peck, Inc.
15 Rue Blanche

Merrill Lynch, Pierce, Fenner & Smith Incorporated
221 Avenue Louise

(Merrill Lynch, Pierce, Fenner & Smith Belge S.A.)
Prudential-Bache Securities, Inc.

Marubeni Bldg., 7th FI.,

283 Ave. Louise, Box 11

A-35
Appendix E

Shearson/American Express Inc.
368 Ave. Louise

Thomson McKinnon Securities Inc.
43 Rue de Namur

CANADA
ALBERTA

Calgary

Merrill Lynch, Pierce, Fenner & Smith Incorporated
480 7th Ave. S.W.
(Royal Securities Corp. Ltd.)

Merrill Lynch, Pierce, Fenner & Smith Incorporated
480 7th Avenue, S.W. Bentall Bidg.

Prudential-Bache Securities, Inc.
220 Three Calgary Place
Edmonton

Merrill Lynch, Pierce, Fenner & Smith Incorporated
10M-10303 Jasper Ave.
(Royal Securities Corp., Ltd.)

Prudential-Bache Securities, Inc.
820-10025 Jasper Ave.
Montreal
Dean Witter Reynolds Inc.
635 Dorchester Blvd. West
Vancouver

Merrill Lynch, Pierce, Fenner & Smith Incorporated
200 Granville St.

Merrill Lynch, Pierce, Fenner & Smith Incorporated
544 Howe Street
(Royal Securities Corp., Ltd.)

A-36
Appendix E

Paine, Webber, Jackson & Curtis Inc.
595 Howe St., Ste. 1115

Prudential-Bache Securities, Inc.
MacMillan Bloedel Bldg.,
1075 West Georgia St.

Victoria

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Royal Trust Bldg.
(Royal Securities Corp., Ltd.)

MANITOBA
Winnipeg

Merrill Lynch, Pierce, Fenner & Smith Incorporated
1300 One Lombard PI.
(Royal Securities Corp., Ltd.)

NEW BRUNSWICK

St. John

Merrill Lynch, Pierce, Fenner & Smith Incorporated
44 Prince William Street
(Royal Securities Corp., Ltd.)

NEWFOUNDLAND

St. John’s

Merrill Lynch, Pierce, Fenner & Smith Incorporated
139 Water Street
(Royal Securities Corp., Ltd.)

NOVA SCOTIA

Halifax

Merrill Lynch, Pierce, Fenner & Smith Incorporated
300 Barrington Tower
Scotia Square B3J 2A8
(Royal Securities Corp., Ltd.)

A-37

Appendix E

ONTARIO

Hamilton

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Canada Trust Bldg.
(Royal Securities Corp., Ltd.)

Montreal

D-an Witter Reynolds Inc.
635 Dorchester Blvd. West

First Boston Corporation
1155 Dorchester Blvd. West

Ottawa

Merrill Lynch, Pierce, Fenner & Smith Incorporated
151 Sparks St., La Promenade

Toronto

Dean Witter Reynolds Inc.
181 University Avenue

Dominick & Dominick Incorporated
111 Royal Trust Tower,
Toronto Dominion Center,
P.O. Box 272
(Dominick Corp. of Canada)
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Toronto-Dominion Centre
(Royal Securities Corp., Ltd.)
Merrill Lynch, Pierce, Fenner & Smith Incorporated
11 King West
Midland Doherty Inc.
Commercial Union Tower,
P.O. Box 25, Toronto Dominion Centre
Prudential-Bache Securities, Inc.
18 King St., East

Shearson/American Express Inc.
55 University Ave., Ste. 501

A-38

Appendix E

PRINCE EDWARD ISLAND

Charlottetown

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Grafton St.
(Royal Securities Corp. Ltd.)

QUEBEC

Montreal

Dominick & Dominick Incorporated
Place Ville Marie
(Dominick Corp. of Canada)

Merrill Lynch, Pierce, Fenner & Smith Incorporated
800 Dorchester Boulevard, West

Merrill Lynch, Pierce, Fenner & Smith Incorporated
800 Victoria Sq.
(Royal Securities Corp., Ltd.)

Prudential-Bache Securities, Inc.
4 Westmount Sq., Ste. 160

Shearson/American Express Inc.
Capital Centre,
1200 McGill College Ave.

Transatlantic Securities Company*
1155 Sherbrooke West., Ste. 1401
Quebec

Merrill Lynch, Pierce, Fenner & Smith Incorporated
220 Grand Alles
(Royal Securities Corp., Ltd.)

CHILE

Santiago

Shearson/American Express Inc.
Augustinas 1360, 4th FI.

A-39

Appendix E

ENGLAND

Bradford

Prudential-Bache Securities, Inc.
Five Wool Exchange

London

Bear, Stearns & Co.
10-12 Copthall Ave.

Becker (A.G.) Paribas Incorporated
17/19 Lincoln’s Inn Fields

Brown Brothers Harriman & Co.
Prince Rupert House
64 Queen Street

Burns Fry and Timmins, Inc.
9 Bosinghall Street

Dean Witter Reynolds Inc.
One Throgmorton Avenue

Dean Witter Reynolds Inc.
56 Leadenhall Street
(Dean Witter International, Ltd.)

Dillon, Read & Co. Inc.
10 Cheaterfield St.
Dominick & Dominick Incorporated
8 Little Trinity Lane
Donaldson, Lufkin & Jenrette Securities Corporation
22 Austin Friars
Drexel Burnham Lambert Incorporated
Winchester House
77 London Wall
Eberstadt (F.) & Co., Inc.

Brettenham House
Lancaster PI.

A-40
Appendix E

Fahnestock & Co.
62 London Wall

First Boston Corporation
22 Bishopsgate, 3rd FI.

Goldman, Sachs & Co.
40 Basinghall Street,
(Goldman Sachs International Corp.)

Hambrecht & Quist Incorporated
Queens House
8 Queens St., 2nd FI.

Hutton (E.F.) & Company Inc.
58 Mark Lane
Cereal House

Hutton (E.F.) & Company Inc.
17 C. Curzon
(Hutton (E.F.) International)

Kidder, Peabody & Co. Incorporated
99 Bishopsgate
(Kidder, Peabody & Co., Ltd.)

Ladenburg, Thalmann & Co., Inc.
108 Cannen St.

Lehman Brothers Kuhn Loeb Incorporated
16 St. Martins LaGrana

Lehman Brothers Kuhn Loeb Incorporated
Commercial Union Bldg.

Merrill Lynch, Pierce, Fenner & Smith Incorporated
153 New Bond St.
(Merrill Lynch, Pierce, Fenner & Smith Ltd.)

Merrill Lynch, Pierce Fenner & Smith Incorporated
3-5 Newgate St.

Merrill Lynch, Pierce, Fenner & Smith Incorporated
P.O. Box 236
Black Swan Howse
Kennet Wharf Lane

ee

A-4]

Appendix E

Moseley, Hallgarten, Estabrook & Weeden, Inc.
Bilbao House
New Broad St., 4th FI.

Neuberger & Berman
4 and 5 Grosvenor PI.

Oppenheimer & Co., Inc.
Portland House
72-73 Basinghall St.

Ovest Securities, Inc.
Plantation House
Mincing Lane

Paine, Webber, Jackson & Curtis Incorporated
11/12 Finsbury Sq.

Pollock (Wm. E.) & Co. Inc.
114 Old Broad St.

Prudential-Bache Securities, Inc.
5 Burlington Gardens

Prudential-Bache Securities, Inc.
First Floor
Plantation House
Fenchurch St.

Prudential-Bache Securities, Inc.
River House 119-121
Minories

Roulston Research Corp.
55 New Bond Street

Salomon Brothers Inc.
One Angel Court
(Salomon Brothers International Ltd.—Corporate Affiliate)

Seeman (Aubrey N.) & Co., Inc.
Salisbury House
Finsbury Circus

A-42
Appendix E

Seligmann, Harris and Co., Inc.
Friendly House
21-24 Chiswell Street

Shearson/American Express Inc.
16 Moorfields
High Walk

Shearson/American Express Inc.
Saint Alphage House
2 Foure Street

Smith Barney, Harris Upham & Co. Incorporated
Brewers’ Hall
Aldermanbury Sq.

Smith Barney, Harris Upham & Co. Incorporated
18 Finsbury Circus

Thomson McKinnon Securities Inc.
55 London Wall

Wertheim & Co.
54/55 London Wall

FRANCE

Paris

Bear, Stearns & Co.
7 Rue Drouot, 75009

Brown Brothers Harriman & Co.
17 Ave. Matignon
(Brown Harriman Corp.)

Dean Witter Reynolds Inc.
10, Rue de la Paix

Donaldson, Lufkin & Jenrette Securities Corporation
42 Avenue Montaigne

Drexel Burnham Lambert Incorporated
23 Place Vendome
(Burnham and Company, S.A.R.L.)

A-43

Appendix E

Eberstadt (F.) & Co., Inc.
8 Place Vendome

Fahnestock & Co.
5 Rue Gaillon 2 EME

Hutton (E.F.) & Company Inc.
43 Avenue Marceau, 75116

Kidder, Peabody & Co. Incorporated
422, Rue Saint Honore
(Kidder, Peabody S.A.)

Ladenburg, Thalmann & Co., Inc.
28 Rue des Petites-Ecuries

Laidlaw Adams & Peck, Inc.
42 Ave. Friedland

Merrill Lynch, Pierce, Fenner & Smith Incorporated
25 Avenue des Champs-Elysee
(Merrill Lynch, Pierce, Fenner & Smith S.A.F.)

Merrill Lynch, Pierce, Fenner & Smith Incorporated
142 Boulevard Haussman

Merrill Lynch, Pierce, Fenner & Smith Incorporated
4, Rue Saint-Florentin, 75
(Merrill Lynch, Pierce, Fenner & Smith Securities
Underwriter Limited)

Merrill Lynch, Pierce, Fenner & Smith Incorporated
96 Avenue D’ lena

Moore & Schley, Cameron & Co.
120 Ave. des Champs Elysees
(du Pasquier et Cie, S.A.R.L.)

Moseley, Haligarten, Estabrook & Weeden Inc.
125 Champs Elysee

Paine, Webber, Jackson & Curtis Inc.
41 Avenue George V

Paine, Webber, Jackson & Curtis Incorporated
10 Rue Duphot, 75001

A-44
Appendix E

Prudential-Bache Securities, Inc.
6 Rue Royale

Prudential-Bache Securities, Inc.
370 Rue St. Honore

Shearson/American Express Inc.
12114 Rond-Point Champs Elysees

Smith Barney, Harris Upham & Co. Incorporated
7, Place Vendome

Stralem & Company Incezporated
30, Ave. Marceau

Thomson McKinnon Securities Inc.
23 Rue Royale

Wertheim & Co.
4, Place de la Concorde
(Wertheim & Cie., S.A.)

Wertheim & Co., Inc.
23 Boulevard Haussman, 75009

GERMANY

Dusseldorf

Dean Witter Reynolds Inc.
Konigsalle 88

Merrill Lynch, Pierce, Fenner & Smith Incorporated

KOE Center Bldg.
Koenig Sallee 30

Prudential-Bache Securities, Inc.
Benrather/Ecke
Kasernenstrasse, 4000

Frankfurt

Dean Witter Reynolds Inc.
Westendstrasse 8, 6000

A-45

Appendix E

Dominick & Dominick Incorporated
Westendrasse 28

Hutton (E.F.) & Company Inc.
6000 Frankfurt 1
Bockenheimer Landstrasse 51-53
Rhein-Main-Ctr.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Ulmenstrasse 30, 6000
Frankfurt/Main, Germany
(Merrill Lynch, Pierce, Fenner & Smith
International Limited)

Moseley, Hallgarten, Estabrook & Weeden, Inc.
Friedrichsstrasse 34, 6000

Prudential-Bache Securities, Inc.
Wiesenhuettenstrasse 18

Roulston Research Corp.
17 Unterlindau

Shearson/American Express Inc.
Mainzer Landstrasse 27-3!
6000 Frankfurt/Main

Thomson McKinnon Securities Inc.
Hochstrasse 43

Hamburg

Dominick & Dominick Incorporated
Grosse Bleichier 32
2000 Hamburg 36

Hutton (E.F.) & Company Inc.
Hamburgerof
Jungfernstieg 30, 5000

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Paul Strasse 3

Prudential-Bache Securities, Inc.
Neuer Wall 10, 2000

A-46
Appendix E

Shearson/American Express Inc.
Neuer Wall 84

Munich

Prudential-Bache Securities lic.
Ludwigstrasse 8

Dean Witter Reynolds Inc.
Sonnenstrasse 1

Fahnestock & Co.
Frauenplatz 11

Hutton (E.F.) & Company Inc.
Odeonsplatz 18
Stuttgart

Dominick & Dominick Incorporated
Calwerstrasse 19

Prudential-Bache Securities, Inc.
Koenigstrasse 1A, 5-7000

GREECE

Athens

Droulia & Co.
3 Stadiou Street

Hutton (E.F.) & Company Inc.
Vassilissis Sophias 1201

Merrill Lynch, Pierce, Fenner & Smith Incorporated
17 Hellas L.L.C.
Valooriton Street

Paine, Webber, Jackson & Curtis Inc.

(International)
Koumbari #4

Prudential-Bache Securities, Inc.
5 Koumbari St.

A-47

Appendix E

GUAM

Agana

Merrill Lynch, Pierce, Fenne’ & Smith Incorporated
Julale Shopping Center

HOLLAND

Amsterdam

Bear, Stearns & Co.
Singel 540
Drexel Burnham Lambert Incorporated
Signel 540
Herzfeld & Stern
Singel 160
Hutton (E.F.) & Company, Inc.
Dam 21

Merrill Lynch, Pierce, Fenne’ & Smith Incorporated
Weesperstraat 107
(Merrill Lynch, Pierce, Ferner & Smith International
Limited)

Prudential-Bache Securities, nc.
Geboaw Rivierstaete
Amsteldijk 166

Shearson/American Express [nc.
491 Herengracht

Rotterdam

Merrill Lynch, Pierce, Fenne & Smith Incorporated
30 Korte Hoogstraat

HONG KONG (B.C.C.)

Hong Kong

Dean Witter Reynolds Inc.
(Dean Witter Reynolds Inernational Inc.)
1501 Gloucester Tower

A-48
Appendix E

Donaldson, Lufkin & Jenrette Securities Corporation
Bank of America Tower,
12 Harcourt Rd., Ste. 1008

Drexel Burnham Lambert Incorporated
2708 New World Tower
Queen’s Rd. Central

Drexel Burnham Lambert Incorporated
World Wide House
Des Voeux Rd., Rm. 2002

Kidder, Peabody & Co. Incorporated
Rooms 1707-1709
Connaught Center
Connaught Road, Central
(Kidder, Peabody & Co., Ltd.)

Merrill Lynch, Pierce, Fenner & Smith Incorporated
St. George’s Bldg.
2 Ice House Street
(Merrill Lynch, Pierce, Fenner & Smith International
Limited)
Paine, Webber, Jackson & Curtis Incorporated
St. George’s Bldg.
2 Icehouse Street
Prudential-Bache Securities, Inc.
Shell House
Queens Road Central
Salomon Brothers Inc.
2907 Alexandra House
16-20 Charter Rd.
Schwab (Charles) & Co. Inc.
The Bank of America Tower, 7th Floor
12 Harcourt Road

Shearson/American Express Inc.
St. Georgia’s Bldg.
2 Ice House St.
(Shearson Hayden Stone Far East Limited, subsidiary)

A-49

Appendix E
ITALY
Milan
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Via Hoepli 7

(Merrill Lynch, Pierce, Fenner & Smith S.PA)

Rome

Dean Witter Reynolds Inc.
Via Bertoloni 57

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Via Carducci 10
(Merrill Lynch, Pierce, Fenner & Smith S.PA.)

Thomson McKinnon Securities Inc.
8 Via Lacullo

JAPAN

Tokyo

Becker (A.G.) Paribas Incorporated
Yurakucho Denki Bldg.
7-1 Yurakucho-Cham
Chiyoda-Ku

Drexel Burnham Lambert Incorporated
Ste. 430, Fuji Bldg.
2-3 Marunouchi 3 Chome
Chiyoda-Ku

First Boston Corporation
Kokusai, Bldg.

1-1 Marunouchi, 3-Chome
Chiyoda-Ku

Goldman, Sachs & Co.
704 Yurakucho Blidg., 7th FI.
1-10-i Yurakucho
Chiyoda-Ku
(Goldman Sachs International Corp.)

A-50

Appendix E

Kidder, Peabody & Co. Incorporated

AIU Bldg.
1-3 Maranouchi, 1-chome
Chiyoda-Ku
Lehman Brothers Kuhn Loeb Incorporated
P.O. Box 127

Kasumigaseki Bldg.

3-2-5 Kasumigaseki, Ste. 2618
Chiyoda-Ku

(Kuhn, Loeb & Co. Asia)

Merrill Lynch, Pierce, Fenner & Smith Incorpor:ated
Toranomon-Mitsui Bldg. 8-1
Kasumi Gaseki, 3-Chome
Chiyoda-Ku
(Merriil Lynch, Pierce, Fenner & Smith S.A.)

Paine, Webber, Jackson & Curtis Incorporated
AIV Bldg., 5th Floor
1-3 Marunouchi, 1 Chome
Chiyoda-Ku

Salomon Brothers Inc.
Fukoku Seimei Bldg., 22
Uchisaiwai-Cho, 2 Chome
Chiyoda-ku

LEBANON

Beirut

Hutton (E.F.) & Company Inc.
Estral Centre, 8th FI.
Hamra St.

P.O. Box 113-5583

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Starco North Building
P.O. Box 5316

(Merrill Lynch, Pierce, Fenner & Smith International
Limited)

A-51

Appendix E

LUXEMBOURG

Luxembourg

Hutton (E.F.) & Company Inc.
1 Rue Du Fort Elizabeth

MONACO

Monte Carlo

Hutton (E.F.) & Company

Le Montaigne

7/9 Ave., De Grande
Prudential-Bache Securities, Inc.

Sporting d’Hiver
Shearson/American Express Inc.

Park Place
25 Ave., De La Costa

Thomson McKinnon Securities Inc.
Le Schuylkill
19 Blvd. De Suisse

KOREA

Seoul

Merrill Lynch, Pierce, Fenner & Smith Inccrporated
Hankook Ilbo Bldg.
14 Chung Hak-Dong
Chongnoku

NETHERLANDS, ANTILLES

Amsterdam

Merrill Lynch, W.V.
Merrill Lynch House, 51
Frederiksplein

A-52
Appendix E

Prudential-Bache Securities, Inc.
Geboaw Riverstaeter
Amsteldijk 166

PANAMA (REPUBLIC OF)

Panama

Merrill Lynch, Pierce, Fenner & Smith Incorporated
18 Acquilono de la Guardia
Apartado 8065

PHILIPPINES

Manila
Merrill Lynch, Pierce, Fenner & Smith Incorporated
A.1.U. Bldg., Ayala Ave.

Makati Rizal
P.O. Box 7110 Mia Airmail Exchange Ctr. 3120

PUERTO RICO

Hato Rey

Dean Witter Reynolds Inc.
Banco de Ponce Bldg., 268
Munoz Rivera Ave.

First Boston Corporation (The)
Banco Popular Ctr.

Kidder, Peabody & Co. Incorporated
920 Banco Popular Center

Philips, Appel & Walden, Inc.
Banco de Ponce Bldg., Mezzanine FI.

Raymond, James & Associates, Inc.
Banco de Ponce Bidg., 268
Munoz Rivera Ave., Ste. 2201

Shearson/American Express Inc.
Banco de Ponce Bldg., 16th FI.,
P.O. Box SLR

A-53

Appendix E

San Juan

Becker (A.G.) Paribas Incorporated
Banco de Ponce, Ste. 1209
G.P.O. Box 892

Merrill Lynch, Pierce, Fenner & Smith Incorporated
1 Banco Popular Ctr., Munoz Rivera Ave.

Paine, Webber, Jackson & Curtis, Inc.
Chase Manhattan Bank Bldg.

Prudential-Bache Securities, Inc.
255 Ponce de Leon Avenue and Bolivia Street

SINGAPORE (B.C.C.)

Singapore
Dean Witter Reynolds Inc.
4108 O.C.B.C. Centre, Chulia St.

Drexel Burnham Lambert Incorporated
5 Shenton Way, 22-03 UIC Bldg.
Singapore 0106
Merrill Lynch, Pierce, Fenner & Smith Incorporated
18th Fl., Shing Kwanhouse, Shenton Way
Prudential-Bache Securities, Inc.
Ste. 1402, UOB Building, ! Bonham St.

Shearson/American Express Inc.
1201-1205 12th FI.,
Shing Kwan House, 4 Shenton Way

SPAIN

Barcelona
Merrill Lynch, Pierce, Fenner & Smith Incorporated

Avinguda Diagonal 534
(Merrill Lynch, Pierce, Fenner & Smith Espanola, S.A.)

A-54
Appendix E

Madrid

Drexel Burnham Lambert Incorporated
Gorbea 2, Paseo De La Castillana 149

Hutton (E.F.) & Company, Inc.
Calle Fortuny 39

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Edificio Piramide, 7th Floor, Paseo de la Castellana 31
(Merrill Lynch, Pierce, Fenner & Smith Espanola S.A.)

Prudential-Bache Securities, Inc.
Alcala 32

Shearson/American Express Inc.
63 Avenida Del Generalisimo

SWITZERLAND

Basle

Dominick & Dominick Incorporated
Aeschengraben 10

Shearson/American Express Inc.
Asschenvoistadt 55

Chesieres

Donaldson, Lufkin & Jenrette Securities Corporation
Case Postale 55, 1885 Chesieres

Chiasso

Prudential-Bache Securities, Inc.
6830 Via Valdani 2

Geneva

Baird, Patrick & Co., Inc.
9 Rue Calvin

Bear, Stearns & Co.
P.O. Box 40, 30 Rue du Rhone 1211

A-55
Appendix E

Becker (A.G.) Paribas Incorporated
16 Ave. Eugene-Pittard
(Becker Securities Incorporated S.A.)
Dean Witter Reynolds Inc.
7, Rue Versonnex
Drexel Burnham Lambert Incorporated
P.O. Box 290
Eberstadt (F.) & Co., Inc.
24 Avenue de Champel
First Boston Corporation
No. 7 Place du Molard
Herzfeld & Stern
14 Avenue Ernest H 2ntsch
Hutton (E.F.) & Company Inc.
9 Place du Bourg-de-Four
Kidder, Peadudy x Co. Incorporated
11, Cours de Rive, 211 Geneva 3
(Kidder, Peabody, Geneve S.A.)
Merrill Lynch, Pierce, Fenner & Smith Incorporated
65 Rue du Rhone
(Merrill Lynch, Pierce, Fenner & Smith S.A.)

Merrill Lynch, Pierce, Fenner & Smith Incorporated
31 Rue du Rhone

Merrill Lynch, Pierce, Fenner & Smith Incorporated
62 Rue du Rhone

Moseley, Hallgarten, Estabrook & Weeden, Inc.
Cours de Rive 4

Paine, Webber, Jackson & Curtis Inc.
3 Place St. Gervais

Prudential-Bache Securities, Inc.
40 Rue du Rhone

A-56

Appendix E

Rothschild (L.F.), Unterberg, Towbin
21 Rue du Rhone

Shearson/American Express Inc.
P.O. Box 1211, One Place Longemalle

Smith Barney, Harris Upham & Co. Incorporated
6-8 Rue de Candolle

Stralem & Company incorporated
6, Ave. de Frontenex
Lausanne

Dean Witter Reynolds Inc.
10 Ave. de la Gare

Dominick & Dominick Incorporated
Rue St. Martin 7

Droulia & Co.
2 Place St. Francois

Shearson/American Express Inc.
2 Place Pepinet

Lugano

Hutton (E.F.) & Company Inc.
9 Via S. Balestra

Merril! Lynch, Pierce, Fenner & Smith Incorporated
Via Balestra 27, 6900
(Merrill Lynch, Pierce, Fenner & Smith, §.A.)

Prudential-Bache Securities, Inc.
Via Pioda 9

Shearson/American Express Inc.
Viali Ste Fani Franscini 22

Thomson McKinnon Securities Inc.
Via Cantonale-16

Tucker, Anthony & R.L. Day, Inc.
Piazza Monte Ceneri 9

A-57
Appendix E

Zurich

Brown Brothers Harriman & Co.
Stockerstrasse 38
(Brown Brothers Harriman Services AG)

Donaldson, Lufkin & Jenrette Securities Corporation
Beethovenstrasse 5, Ist Floor

Drexel Burnham Lambert Incorporated
Limmat quai 112

Hutton (E.F.) & Company Inc.
Kuttelgasse 4

Lawrence (Cyrus J.) Incorported
Bleicherwig 7, 8002

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Muehlenbachstrasse 25

Prudential-Bache Securities, Inc.
Bahnhofstrasse 106

Smith Barney, Harris Upham & Co. Incorporated
Gartenstrasse 25

URUGUAY

Montevideo

Merrill Lynch, Pierce, Fenner & Smith Incorporated
Rincon 454, Piso 5

Prudential-Bache Securities, Inc.
Calle Buenos Aires 585-BiS

U.S. VIRGIN ISLANDS

St. Croix

Merrill Lynch, Pierce, Fenner & Smith Incorporated
55 Company St., The Mahogany Inn

Prudential-Bache Securities, Inc.
14 Church St.

A-58

LL

Appendix E

St. Thomas

Prudential-Bache Securities, Inc. |
9 Norre Gade, Charlotte Amailie

VENEZUELA

Caracas

Fahnestock & Co.
Edificio Seguras Venezuela, Avenida Francisco
DeMiranda, 2nd Fl., Apartado 3089

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Venezolana S.R.L. Apartado 5136
(Merrill Lynch, Pierce, Fenner & Smith Venezolana S.R.L.)

For Vol,

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385010_2858%3A1. Public record. Not legal advice.