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Vyas v. Taglich Brothers Inc.

Good Cause to Amend Complaint Lacking in Suit on Cryptocurrency Fraud Scheme

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OPINION AND ORDER ON MOTION TO AMEND This action was commenced by Plaintiff, Sanket Vyas, as liquidating agent for and on behalf of Q3 I, L.P. (“Q3I”), against Defendants Taglich Brothers, Inc. and Taglich Private Equity, LLC (collectively, “Taglich”). Before the Court is Plaintiff’s Motion for Leave to file a Second Amended Complaint. (ECF No. 158.) For the reasons stated below, the motion is DENIED.1 BACKGROUND 1. Facts Alleged in the First Amended Complaint (“FAC”) According to the FAC, which is the operative complaint, Q3I is a limited partnership that was formed in 2018 to facilitate and formalize a cryptocurrency trading club. (ECF No. 48 (“FAC”) 1.) Q3I is managed by its general partner, Q3 Holdings, which was managed by a board composed of Quan Tran, James Seijas, and Michael Ackerman (“Ackerman”). (Id. 9.) In or about September 2018, Q3I retained Denis McEvoy (“McEvoy”), a Chartered Financial Analyst, as its fund administrator. (Id. 5.) Q3I paid McEvoy a “hefty fee” based on the understanding that McEvoy would oversee the administration of the partnership, manage Q3I’s compliance policies and procedures, and protect Q3I from fraud. (Id.

5, 26.) At the time, McEvoy was employed by Taglich. (Id. 5.) Relying on McEvoy’s “advertised association with Taglich on Taglich’s web site and elsewhere, as well as McEvoy’s use of Taglich resources,” Q3I believed that McEvoy was acting on Taglich’s behalf and that he was “fully backed” by Taglich when he was hired. (Id. 22.) The FAC alleges on information and belief that Taglich was “aware that McEvoy was serving as Q3I’s fund administrator,” and that Taglich “was informed of and approved McEvoy’s work for Q3I,” consistent with Financial Industry Regulatory Authority rules that require broker-dealers such as McEvoy to disclose outside business activities to their employer. (Id.

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