Qu v. Deutsche Bank Securities, Inc. et al

Filing 21

ORDER, signed 8/31/12, by Judge Joseph C. Spero granting 13 Motion for Issuance of Letters Rogatory (klhS, COURT STAFF) (Filed on 8/31/2012)

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1 2 IN THE UNITED STATES DISTRICT COURT 3 FOR THE NORTHERN DISTRICT OF CALIFORNIA 4 5 6 7 8 9 10 11 12 : : : Claimant, : : v. : : DEUTSCHE BANK SECURITIES, INC., a : Delaware Corporation; and WILLIAM : SVOBODA, an individual : : Respondents. : : : : CASE No. 3:11-MC-80112 JSW (JCS) XIAOHUA QU, an individual LETTER OF REQUEST TO THE ONTARIO SUPERIOR COURT OF JUSTICE 13 The United States District Court for the Northern District of California presents its 14 compliments to the Ontario Superior Court of Justice and requests international judicial 15 assistance to obtain oral examination, under oath, and the production of documents from the 16 Custodian of Records of Canadian Solar, Inc. (“CSIQ”). 17 This Court, the United States District Court for the Northern District of California, is a 18 competent court of law which properly has jurisdiction over this proceeding for purposes of this 19 letter of request, and has the power to compel the attendance of witnesses and the 20 production of documents. In the proper exercise of its authority, this Court has determined that, 21 in the interests of justice and to assure a complete record, the custodian of records of CSIQ, a 22 corporation with its principal place of business in your jurisdiction, must be examined as a 23 witness under oath and produce certain documents. 24 I. 25 This matter arises out of a FINRA arbitration initiated by Dr. Xiaohua Qu (“Dr. Qu”) in 26 June 2009 against Deutsche Bank Securities, Inc. and William Svoboda. Dr. Qu is a resident of 27 China, and is the founder, Chairman of the Board of Directors, President and Chief Executive 28 Officer of CSIQ, the subject of this Letter of Request. CSIQ is incorporated in Canada with its NATURE OF PROCEEDINGS 1 LETTER OF REQUEST 1 principle place of business in Kitchener, Ontario. Dr. Qu alleges that DBSI failed to execute a 2 sales order pursuant to the terms of a 10b5-1 trading plan that he established in May 2008. 3 DBSI contends, inter alia, that Dr. Qu, through his wife and authorized agent, provided DBSI 4 instructions not to sell the stock until it reached $52 a share, an event that did not occur. The 5 arbitration hearing on the merits was scheduled to commence on May 16, 2011 in San 6 Francisco, California, but has been adjourned temporarily specifically to allow DBSI the 7 opportunity to seek the testimony and documents addressed in this Letter of Request. 8 9 DBSI successfully moved the FINRA arbitration panel to issue a subpoena for the production of documents and information from CSIQ. The requested subpoena to CSIQ 10 sought, among other things, communications concerning Dr. Qu’s 10b5-1 plan, documents 11 pertaining to the revenue and earnings forecasts of the company, and Dr. Qu’s knowledge 12 regarding those forecasts. 13 contracts and agreements, board meeting minutes, and memoranda relating to Dr. Qu and/or the 14 performance of CSIQ. DBSI sought these documents to show what Dr. Qu knew about the 15 company’s performance and prospects, which it contends was relevant to the dispute about his 16 instructions to DBSI, his decision to establish and then modify trading instructions for the 17 10b5-1 plan, and whether he was in possession of material non-public information during the 18 relevant timeframe. On April 30, 2011, the FINRA panel Chair executed and issued the 19 subpoena to CSIQ. The subpoena required the production of documents at a hearing to be held 20 at FINRA’s offices in Los Angeles on May 9, 2011. Specifically, it sought production of internal communications, 21 On May 4, 2011, DBSI caused a copy of the subpoena to be served upon the offices of 22 the registered agent for Canadian Solar (USA), Inc. (“CSIQ (USA)” in San Ramon, California. 23 CSIQ (USA) is wholly-owned subsidiary of CSIQ. CSIQ through counsel informed DBSI that 24 it would not voluntarily comply with the arbitrators’ subpoena. 25 On May 17, 2011, DBSI filed a Petition to Compel Compliance with Subpoena with 26 this Court, pursuant to United States law authorizing United States District Courts to enforce in 27 appropriate instances subpoenas issued by arbitrators to compel witnesses to appear at a 28 hearing to provide testimony and documents. 2 LETTER OF REQUEST 1 On November 4, 2011, the Court held a hearing on DBSI’s Petition to Compel. At the 2 hearing, this Court determined that it could not enter the requested Order to compel CSIQ to 3 compel with the arbitrator’s subpoena. This Court concluded that DBSI had not made a 4 sufficient showing that CSIQ and CSIQ (USA) were sufficiently indistinguishable that service 5 on one could constitute service on the other. Id. This Court further concluded that enforcement 6 of the subpoena on CSIQ would need to take place in Canada, where CSIQ is incorporated and 7 maintains its corporate headquarters. 8 Based on this Court’s determination that enforcement of the arbitrator’s subpoena must 9 take place in Canada, DBSI sought from the arbitration panel and obtained from the arbitrators 10 a revised subpoena to CSIQ, a copy of which is attached hereto as Exhibit A. The subpoena 11 seeks testimony and production of documents at a hearing in Kitchener, Canada, at a time place 12 to be agreed upon by the parties. 13 II. CANADIAN EVIDENCE SOUGHT 14 CSIQ resides in and is subject to the jurisdiction of the Ontario Superior Court of 15 Justice. CSIQ maintains records relating to its corporate performance and communications 16 with Dr. Qu, its founder, President and Chief Executive Officer, who initiated the underlying 17 FINRA arbitration. CSIQ also maintains documents relating to an investigation by the United 18 States Securities and Exchange Commission of accounting irregularities. 19 arbitration panel has determined that those documents are relevant to the arbitration panel’s 20 ability to determine the issues presented in the arbitration. The FINRA arbitration panel issued 21 a subpoena to obtain the appearance of a CSIQ representative with those documents. This 22 Court is authorized under United States law to issue this letter of request to aid in the 23 enforcement of the FINRA arbitration panel’s subpoena. The FINRA 24 III. REQUEST FOR JUDICIAL ASSISTANCE 25 The evidence sought cannot be obtained other than from a representative of CSIQ 26 through oral examination and document production, and such evidence has already been 27 determined by the FINRA arbitration panel to be relevant to the FINRA arbitration proceedings 28 in determining the validity of the claims and defenses in this case. 3 LETTER OF REQUEST 1 Therefore, this Court requests: 2 (1) You cause an authorized representative of CSIQ, by your proper and usual 3 process, to be summoned to appear before a court reporting service, on a date 4 mutually agreed upon by CSIQ, the parties, and the FINRA arbitration panel, to 5 produce the documents requested in the Subpoena attached hereto as Exhibit A 6 and give testimony under oath to the court’s authorized officer as to the 7 authenticity of the documents. 8 (2) video-conference to be arranged by counsel for DBSI. 9 10 You order that the arbitration panel be allowed to witness the testimony by (3) You order that the oral and documentary evidence produced pursuant to your 11 enforcement of this Letter of Request shall not be used by anyone in any manner 12 other than this matter pending before the United States District Court for the 13 Northern District of California, and the FINRA arbitration panel. 14 IV. 15 This Court expresses its sincere willingness to provide similar assistance to the Ontario 16 RECIPROCITY Superior Court of Justice if future circumstances should require. 17 V. CONCLUSION 18 In the spirit of comity and reciprocity, this Court hereby requests international judicial 19 assistance in the form of this Letter of Request to obtain the production of documents and oral 20 examination, under oath, from the Custodian of Records of Canadian Solar, Inc. Jud 26 27 28 4 LETTER OF REQUEST A H ER FO RT 25 R NIA By: _______________________________ o Judge, UnitedhStates District Court C. Sper ge Josep NO 24 August 31 Dated: ______________________, 2012 LI 23 UNIT ED 22 S DISTRICT TE C TA RT U O S 21 N F D IS T IC T O R C 1 2 3 [Seal] 4 5 _____________________________ Karen L. Hom Clerk of Court Dated: August 31, 2012 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 LETTER OF REQUEST EXHIBIT A BEFORE FINRADISPIYTE RESOLUTION In the Matter of theArbhratien between : FINRA CASE NO. 09-03*71 XIAOIHJA QU, FiI1 Claimant, iI) V. DEUTSCHE BANK SECIJRJTIES INC., WILLIAM SVORODA. and DOES 1 through 20, Respendrnla. TO; Canadian SOIU4 Inc. 545 Spoedvale Avenue West Oceiph, Ontario NIX 1E6 Canada YOU ARE EEREDY DIRECTED, pursuent to Rule 12512 of tIE Code of Arbitration Ptedue of the Financial Industry Regulatory Authority and the Federal Arbiira&m Act, 9 IIS.C. §§ 1, ci seq., to appear through representative witness avid produce for inspection, copying and verifying testimony at a Hearing in this matte to be held In Kichcn Canad, at an ,caminatioa oce and on a date to be agreed upon by the parties, aU doc=ents identified In this Subena. Failure to comply with this Subpoena will subject you to such sanctions as are legafly applicable. Dated; 1Ll_, 2012 By Michelle Judy Bt, Cljthperso Arbitration Panes FINRA Dispute eso1ulon wtst F-40=11 300 S. Grand A’venue, Suite 900 Los Angeles, c4 90071-3135 Dated. .cjJ7 2012 RiebsuiB. Bullock, Member Arbitration Panel FINRA Dispitc Reaolutlou West Regional Office, 300 S. Grand Avenue, Suite 900 L*3knge1es, CA%071.3 135 By, Datcd 112012 Amy Scr Ph.D., )inber ~T (.7 9M3A Dispute Resolution Aiitrion Panel We Regional Oft1ce 300 S. Grand Avenue, Suite 900 Los Angeles, CA 90011-3135 2 DEFINITIONS 1. The term "Claimant Qu" as used herein shall mean Xiaohua Qu, individually, and anyone else acting or purporting to act on his behalf. 2. The term "document" as used herein means and shall encompass every writing or record of every type and description, including original and any copy thereof, and every tangible thing that is or has been in your possession, custody or control, or of which you have knowledge, including but not limited to, correspondence, electronic mail, contracts, print-outs of Internet web pages, memoranda, stenographic notes, handwritten notes, applications, forms, notebooks diaries, models, devices, sketches, pictures, photographs, films, tapes, computer records, voice recordings, minutes, bulletins, invoices, data compilations, extracts or summaries of other documents and statistical compilations regardless of the form of storage (such as on paper, microfiche, magnetic tape, magnetic disk (hard or floppy)), CD-ROM, optical disk, or electronic storage device. 3. The term "CSIQ" as used herein shall mean Canadian Solar, Inc. 4. In the event that multiple copies of a document exist, produce every copy on which appear any notations or markings of any sort not appearing on any other copy. 5. The term "applicable time period" shall mean April 2007 through June 25, 2009. DOCUMENTS REQUESTED 1. All agreements and/or contracts between CSIQ and Claimant Qu during the applicable time period. 2. All communications concerning Claimant Qu’s 10b5-1 plans. 3. Documents sufficient to demonstrate all grants of CSIQ stock and/or stock options to Claimant Qu during the applicable time period. 4. All meeting minutes or transcripts of meetings of the Board of Directors of CSIQ ("the Board") during the applicable time period, including committees and sub-comnuttees of the Board pertaining to CSIQ’s revenues, revenue projections, earnings, earning projections financial reporting, business development plans, performance reports as well as any governmental or regulatory investigations of accounting irregularities at CSIQ. 5. All internal communications regarding any governmental or regulatory investigation of accounting irregularities at CSIQ during the applicable time period. 6. All documents produced by CSIQ to the United States Securities and Exchange Commission in response to requests/subpoenas regarding any accounting irregularities at CSIQ. 3 7. All documents, including communications and attachments thereto, provided to or ’received from Claimant Qu relating to CSIQ’s revenues, revenue projections, earnings, earning projections, financial reporting, business development plans, and performance reports as well as any governmental or regulatory investigations of accounting irregularities at CSIQ during the applicable time period. 8. All documents provided to and received from Claimant Qu relating to any secondary offerings of CSIQ during the applicable time period. 9. All documents related to Claimant Qu’s purchases/acquisitions and sales of CSIQ shares for the time period of April 2007 through present. 10. Documents sufficient to evidence CSIQ’s "trading windows" and/or "blackout dates" for corporate insiders, including Claimant Qu during the applicable time period. 11. All documents prepared by Claimant Qu, for Claimant Qu, or on Claimant Qu’s behalf, related to CSIQ’s earnings, performance, business development and business plans during the applicable time period. 4

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