Grayson Consulting, Inc v. Wachovia Securities, LLC (In Re Derivium Capital LLC), 716 F.3d 355

Debtor Derivium Capital, LLC filed for bankruptcy after its stock-loan program collapsed.
Grayson Consulting, as assignee of the bankruptcy trustee, sought avoidance of transfers under 11 U.S.C. §§ 544, 548 and asserted tort claims against Wachovia.
Bankruptcy court dismissed tort claims under in pari delicto and granted summary judgment for Wachovia on fraudulent conveyance claims, applying stockbroker defense under § 546.
Derivium’s customers deposited stock into Wachovia accounts (At-Issue Accounts) and Derivium used sale proceeds to fund loans and owners’ ventures.
In 2007–2008 Campbell (trustee) filed complaints against Wachovia for Customer Transfers, Cash Transfers, and commissions/fees/margin payments; Grayson inherited these claims and appealed after district court affirmed.
This appeal challenges the district court’s and bankruptcy court’s rulings on four substantive issues and the in pari delicto defense.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Customer Transfers were debtor property	Grayson: transfers implicate Derivium’s interest via simultaneous Wachovia interests	Wachovia: transfers were not debtor property; no avoidance under §§544/548	Customer Transfers not debtor property; affirmed
Whether Wachovia was the initial transferee of Cash Transfers	Grayson: Wachovia had dominion/control over At-Issue Accounts	Wachovia lacked dominion/control; not initial transferee	Wachovia not initial transferee; affirmed
Whether commissions/fees are protected as settlement payments under §546(e)	Grayson: commissions not within stockbroker defense	Wachovia: commissions are settlement payments and protected if reasonable/customary	Commissions found within stockbroker defense; protected when reasonable/customary
Whether Grayson can pursue §548(a)(1) fraud claims notwithstanding stockbroker defense	Grayson: possible actual fraud exceptions apply	Defense reserved; no ruling on §548(a)(1) in record	Issue not ripe; no extra-statutory fraud exception recognized here
Whether in pari delicto bars Grayson’s tort claims	Grayson: assignee not barred; independent estate claims	Derivium insiders governed; sole-actor rule imputes to Derivium	In pari delicto bars as Grayson stands in debtor’s shoes; alternative adverse-interest rejected

In re Nieves, 648 F.3d 232 (4th Cir. 2011) (standard of review for bankruptcy appeals; clear error deference on facts; de novo on law)
In re Manhattan Investment Fund Limited, 397 B.R. 1 (S.D.N.Y. 2007) (distinguishing customer margin transfers from debtor property; Ponzi aspects not dispositive)
In re Manhattan Investment Fund Limited, 328 F. App’x 709 (2d Cir. 2009) (affirming on appeal; relevance to initial transferee/avoidance)
In re Bogdan, 414 F.3d 507 (4th Cir. 2005) (in pari delicto scope and application in bankruptcy)
R.F. Lafferty & Co., 267 F.3d 340 (3d Cir. 2001) (estate standing; trustee stands in debtor’s shoes)