August 6, 2026  ·  Complaint filed August 5, 2026  ·  nysd, No. 1:26-cv-06711

Newman News, By David Brunk

Read the filing

The August 5, 2024 Seizure: How Defendants Allegedly Fabricated a Termination Trigger to Liquidate Britannica’s Accounts

The complaint, filed on August 5, 2026, alleges that on August 5, 2024, during a global market shock—Nikkei down 12.4% and U.S. futures down approximately 6%—defendants falsely declared trading losses consumed Britannica Capital Management Limited’s (BCML) capital, terminated the accounts, seized capital, and fabricated proof to justify their actions (Compl. ¶1, ¶154). The filing contends that the termination was executed with premeditated intent to protect defendants’ own capital and misappropriate Britannica’s proprietary trading strategies. The complaint states, "Defendants falsely declared trading losses consumed Britannica’s capital, terminated the accounts, seized the capital, and fabricated proof to justify their actions" (Compl. ¶1). The complaint further alleges that defendants coordinated a campaign of localized litigation and bankruptcy pressure, expending approximately $200 million to enforce their claims and suppress dissent (Compl. ¶26).

At 9:32 a.m. on August 5, Jeff O’Hara, an officer in Leucadia Asset Management LLC’s (LAM) Topwater Capital Division, sent a termination email that the complaint alleges was drafted before the market opened. The email cited a purported $7,166 shortfall in the Stonefly account, triggering an automatic termination clause set at 1% of the stated $10 million Investment Account Value (Compl. ¶4, ¶19). Within the hour, defendants liquidated most of Britannica’s profitable book, which the filing alleges was positioned to profit from the market shock. The complaint states, "the decision had already been made" to terminate the accounts, underscoring the premeditated nature of the seizure (Compl. ¶73). The complaint further alleges that "the capital seizure was the only way to get the strategies," indicating defendants' intent to misappropriate Britannica’s proprietary trading strategies (Compl. ¶30). The complaint describes the program as one that "took smaller managers' capital as the only capital at risk, ran an unregistered brokerage and lending operation against it, and protected the parent's and its principals' money, including his own, from ever absorbing a loss" (Compl. ¶81).

On August 8, Brian Long, an administrator at Topwater, created a retrospective PDF purporting to show the August 5 liquidation. O’Hara later transmitted this evidence package to Britannica, which the complaint describes as containing manufactured data. The filing states that Long’s use of "Print to PDF" stripped metadata and created identical timestamps, further suggesting fabrication (Compl. ¶27). The complaint alleges that the fabricated evidence included a fraudulent screenshot loss figure of $907,166, which defendants used to justify the seizure (Compl. ¶12). The complaint states, "Defendants’ counsel misquoted the August 9 email to falsely frame Britannica’s denial of the breach as a confession" (Compl. ¶29).

Defendants’ own records contradict the $7,166 breach figure. The complaint alleges that the actual loss recorded by the administrator was $637,793, or 6.4% of Britannica’s capital—well below the undisclosed 9% cumulative loss threshold for termination (Compl. ¶19). Despite this, defendants returned only $532,710.95 to Britannica seven weeks after the liquidation, an amount noted as 3.5 times the $100,000 termination floor and 25 times the $7,166 alleged breach. The Mayfly account, which was also liquidated without prior notice or calculation, realized $180,074.78 in cash—25 times the $7,166 figure—further undermining the termination pretext (Compl. ¶19, ¶20, ¶23). The complaint states, "Defendants returned $532,710.95—3.5× the floor, 25× the breach—but withhold the remaining credits they owe" (Compl. ¶19). The complaint further alleges that defendants withheld a positive cash balance of $7,500,000, which included interest and short rebates earned on Britannica’s capital (Compl. ¶10).

The filing states that the motive for the seizure was to protect defendants’ own money, as Jefferies Financial Group controlled approximately 60% of Topwater’s investor base and had placed its own capital in the funds (Compl. ¶7, ¶58). The complaint alleges that defendants coordinated the liquidation of both Stonefly and Mayfly accounts in a single decision to fill a margin hole created by their overpromising of capital to multiple entities (Compl. ¶11, ¶25). The complaint further alleges that defendants seized the accounts to misappropriate Britannica’s proprietary trading strategies, citing O’Hara’s remark that "the capital seizure was the only way to get the strategies" (Compl. ¶30). The complaint describes the program as "a program that took smaller managers' capital as the only capital at risk, ran an unregistered brokerage and lending operation against it, and protected the parent's and its principals' money, including his own, from ever absorbing a loss" (Compl. ¶81).

Goldman Sachs & Co. LLC, which served as prime broker and custodian, is alleged to have played a pivotal role in the events leading up to the seizure. The complaint contends that Goldman charged commissions up to five times market rates, refused to onboard cost-saving futures (which could have saved Britannica up to 80% in execution costs), and steered Britannica to Topwater while concealing reciprocity agreements (Compl. ¶60, ¶61). The filing states that Goldman’s actions included setting captive rates, banning instruments that would have saved Britannica money, and failing to deliver on promised capital introductions. The complaint alleges that Goldman billed Britannica up to $5,000 in a single day and $70,000 in a single month, generating an estimated $1,000,000 in annual revenue from Britannica’s account (Compl. ¶61). The complaint further alleges that Goldman’s conduct was not mere brokerage but "self-interested extraction," citing its refusal to allow futures onboarding and its retention of Britannica’s confidential information (Compl. ¶62). The complaint states, "Goldman Sachs never delivered the capital introductions it promised, never allowed Britannica to onboard futures (which would have saved Britannica up to 80% in execution costs), and held Britannica’s confidential information hostage" (Compl. ¶61).

The complaint includes 35 counts against all defendants, encompassing a broad range of statutory and common law violations. Among these, Count I alleges a violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, asserting that defendants engaged in fraudulent conduct in connection with the purchase or sale of securities (Compl. ¶[Count I]). Count II alleges control person liability under Section 20(a) of the Exchange Act, contending that Jefferies Financial Group Inc., Leucadia Asset Management LLC, Bryan D. Borgia, Travis Taylor, Nick Daraviras, Richard Handler, and Brian P. Friedman are liable as control persons for the violations alleged in Count I (Compl. ¶[Count II]). Count III asserts misappropriation of trade secrets under the Defend Trade Secrets Act, 18 U.S.C. § 1836, alleging that all defendants misappropriated Britannica’s proprietary trading strategies and confidential information (Compl. ¶[Count III]).

Count IV alleges breach of contract under the Stonefly Account Investment Advisory Agreement (AIAA), asserting that all defendants breached the terms of the agreement by failing to provide committed capital, imposing undisclosed financing charges, and terminating the accounts without justification (Compl. ¶[Count IV]). The complaint states that the Stonefly AIAA, executed on April 14, 2021, initially represented a stated account value of $10,000,000, which was later increased to $25,000,000 (Compl. ¶112, ¶119). Count V alleges breach of contract under the Mayfly AIAA, contending that all defendants breached the terms of this agreement in a similar manner. The complaint states that as of July 2024, the Mayfly Fund LLC had a stated account value of $15,000,000 (Compl. ¶5). Count VI asserts breach of contract under the Subscription Agreement and Operating Documents, alleging that all defendants breached these agreements by failing to provide the promised capital structure and by liquidating Britannica’s accounts without proper cause (Compl. ¶[Count VI]). The complaint states that Britannica Capital LLC (BC LLC) had contributed $2,500,000 to the funds by December 31, 2023, and that BCML managed a stated $25,000,000 Investment Account Value at that time (Compl. ¶12).

Count VII alleges breach of the implied covenant of good faith and fair dealing, asserting that all defendants violated this covenant by engaging in conduct that undermined the purpose of the contractual relationships (Compl. ¶[Count VII]). Count VIII asserts breach of fiduciary duty, alleging that all defendants breached their fiduciary duties to Britannica by prioritizing their own interests over those of Britannica (Compl. ¶[Count VIII]). Count IX alleges fraud, asserting that all defendants made material misrepresentations and omissions with the intent to deceive Britannica (Compl. ¶[Count IX]). The complaint states, "Defendants’ adviser overview and other documents... misrepresented their risk processes as transparent and comprehensive," omitting critical details about termination triggers, withdrawal bars, and financing mechanics (Compl. ¶137). The complaint further alleges that defendants misrepresented the uniform structure of the funds, including a 55% profit share and no cost-of-capital charge, while concealing the true operation of the funds (Compl. ¶5).

Count X alleges fraudulent concealment, asserting that all defendants concealed material facts from Britannica to induce it into the contractual relationships (Compl. ¶[Count X]). The complaint states that defendants concealed the pooled margin structure, shared-margin exposure, and the unreliable nature of the second-loss layer, which was purportedly $9,000,000 but was never actually committed (Compl. ¶3, ¶125). Count XI asserts conversion, alleging that all defendants wrongfully exercised dominion and control over Britannica’s capital and proprietary trading strategies (Compl. ¶[Count XI]). Count XII alleges money had and received, asserting that all defendants received and retained money to which Britannica was entitled (Compl. ¶[Count XII]). Count XIII seeks an accounting, requesting that the court order defendants to provide a full and accurate accounting of all transactions involving Britannica’s accounts (Compl. ¶[Count XIII]).

Count XIV alleges unjust enrichment, asserting that all defendants were unjustly enriched at Britannica’s expense by retaining profits and capital to which they were not entitled (Compl. ¶[Count XIV]). The complaint states that defendants took 50% of Britannica’s gains as interest for a loan, violating New York criminal usury laws and Regulation U (Compl. ¶141). The complaint further alleges that defendants’ financing charges exceeded the $2.5 million usury exemption threshold under New York law, rendering the terms criminally usurious (Compl. ¶155). Count XV asserts tortious interference with prospective business relations and prospective economic advantage, alleging that all defendants intentionally interfered with Britannica’s prospective business relationships (Compl. ¶[Count XV]). Count XVI alleges aiding and abetting breach of fiduciary duty and fraud, asserting that all defendants aided and abetted each other in breaching their fiduciary duties and committing fraud (Compl. ¶[Count XVI]). Count XVII asserts civil conspiracy in connection with the foregoing torts, alleging that all defendants conspired to engage in the unlawful conduct described in the complaint (Compl. ¶[Count XVII]).

Count XVIII alleges a violation of Section 4o of the Commodity Exchange Act, 7 U.S.C. § 6o, asserting that all defendants engaged in fraudulent conduct in connection with commodity interest transactions (Compl. ¶[Count XVIII]). Count XIX asserts promissory estoppel and implied agreement based on the credit-interest commitment, alleging that all defendants made promises regarding the provision of capital and financing terms that Britannica relied upon to its detriment (Compl. ¶[Count XIX]). The complaint states that defendants represented that Topwater would provide $10,000,000 to $25,000,000 in committed capital, but instead imposed financing charges and failed to deliver the promised capital (Compl. ¶110, ¶119). Count XX alleges economic duress and seeks declaratory relief, asserting that defendants extracted terms from Britannica under duress and requesting that the court declare those terms void (Compl. ¶[Count XX]).

Count XXI seeks contractual indemnification and declaratory judgment under Section 11(a) of the Advisory Agreements, requesting that the court order defendants to indemnify Britannica for losses incurred as a result of defendants’ breaches (Compl. ¶[Count XXI]). Count XXII alleges a violation of 18 U.S.C. § 1962(c) under the Civil RICO statute, asserting that defendants engaged in a pattern of racketeering activity to defraud Britannica (Compl. ¶[Count XXII]). Count XXIII alleges a conspiracy to violate 18 U.S.C. § 1962(c) under 18 U.S.C. § 1962(d), contending that all defendants conspired to engage in racketeering conduct (Compl. ¶[Count XXIII]). Count XXIV asserts misappropriation of trade secrets and unfair competition under New York common law, alleging that defendants stole Britannica’s proprietary trading strategies (Compl. ¶[Count XXIV]). Count XXV brings a claim for negligent misrepresentation, alleging that defendants made false statements without reasonable care for their truth (Compl. ¶[Count XXV]).

Additional counts address the financial and regulatory dimensions of defendants’ conduct. Count XXVI seeks a declaratory judgment recharacterizing and voiding the extracted financing terms under New York usury law, alleging that defendants charged criminally usurious interest rates (Compl. ¶[Count XXVI]). The complaint cites New York General Obligations Law § 5-523, which prohibits interest rates exceeding 25% annually, and alleges that defendants’ financing charges, including direct and indirect consideration, exceeded this threshold (Compl. ¶[Count XXXIII]). The complaint states, "Defendants’ credit was criminally usurious, exceeding 25% annual interest when including all direct and indirect consideration" (Compl. ¶155). Count XXVII seeks rescission and restitution under Section 215(b) of the Investment Advisers Act, 15 U.S.C. § 80b-15(b), while Count XXVIII seeks similar relief under Section 29(b) of the Exchange Act, 15 U.S.C. § 78cc(b) (Compl. ¶[Count XXVII], ¶[Count XXVIII]). Count XXIX alleges fraudulent accounting and failure to account, contending that defendants concealed material facts and fabricated records to justify their actions (Compl. ¶[Count XXIX]).

The complaint also includes Count XXX, which asserts promissory estoppel based on the "Committed-Capital Promise," alleging that defendants repeatedly represented that they would provide $10 million to $25 million in committed capital but failed to do so (Compl. ¶[Count XXX]). The complaint states, "Defendants represented that Topwater would provide $10,000,000 in committed capital, a 55% payout, and no cost of capital," but instead imposed financing charges and failed to provide the promised capital (Compl. ¶110, ¶119). Count XXXI alleges a violation of the Connecticut Uniform Securities Act, Conn. Gen. Stat. § 36b-29, asserting that defendants engaged in fraudulent securities practices in Connecticut, where Britannica Capital LLC (BC LLC) is based (Compl. ¶[Count XXXI]). Count XXXII brings a claim under New York Financial Services Law §§ 801, 805, 808, alleging disclosure failures in defendants’ commercial financing transactions (Compl. ¶[Count XXXII]). Count XXXIV alleges breach of secured creditor duties under New York UCC §§ 9-207, 9-610, 9-611, and 9-615, contending that defendants failed to provide reasonable care, commercially reasonable disposition, or accounting for Britannica’s collateral (Compl. ¶[Count XXXIV]). Finally, Count XXXV alleges a violation of the Commodity Exchange Act § 4d and 17 C.F.R. §§ 1.20, 1.22, asserting that defendants exposed Britannica’s property to pooled margin requirements of other accounts without proper disclosure or safeguards (Compl. ¶[Count XXXV]).

The complaint alleges that defendants’ conduct was part of a broader pattern of misconduct, citing related proceedings such as Chirico v. 352 Capital ABS Fund LLC, which adjudicated LAM-managed funds as affiliates of Jefferies Group (Compl. ¶56). The filing also references a September 27, 2022, enforcement action in which Jefferies LLC and Goldman Sachs were fined $280 million by the SEC and CFTC for recordkeeping violations, further underscoring the regulatory scrutiny faced by the defendants (Compl. ¶31). The complaint states that Jefferies LLC admitted willful violations of federal recordkeeping laws, paying $50 million to the SEC and $30 million to the CFTC (Compl. ¶59). The complaint further alleges that "Jefferies LLC acted as placement agent for Topwater funds, collecting fees, and admitted willful violations of federal recordkeeping laws" (Compl. ¶59). The complaint also notes that Jefferies pursued approximately $100 million from the Weiss bankruptcy in 2024, demonstrating its aggressive litigation posture (Compl. ¶77).

The allegations highlight the interplay between the defendants’ actions and their broader business relationships. The complaint alleges that Jefferies Financial Group, through its subsidiaries, controlled approximately 60% of Topwater’s investor base and placed its own capital in the funds (Compl. ¶7, ¶58). The filing states that Richard Handler, CEO of Jefferies Financial Group, and Brian P. Friedman, its president, had personal capital at risk in the funds and presided over the Investment Committee that approved the August 5, 2024, termination (Compl. ¶81, ¶82). The complaint describes the program as "a program that took smaller managers' capital as the only capital at risk, ran an unregistered brokerage and lending operation against it, and protected the parent's and its principals' money, including his own, from ever absorbing a loss" (Compl. ¶81). The complaint further states, "the decisions this Complaint pleads were committee decisions, and Defendants' own documents name the deciders" (Compl. ¶83). The complaint alleges that Jefferies and Goldman completed a joint $1.5 billion IPO in February 2026, further aligning their financial interests (Compl. ¶18).

The complaint further alleges that defendants’ conduct was not limited to the August 5, 2024, seizure but extended over several years. From 2019 to 2021, defendants solicited Britannica with representations about the First-Loss Interest, including promises of committed capital, a 55% profit share, and no cost-of-capital charges (Compl. ¶51). The complaint states that these representations were false, as defendants never provided the promised capital and instead imposed financing charges after Britannica’s capital was locked into the funds (Compl. ¶120). The filing alleges that defendants misrepresented the structure of the funds, concealing that Britannica’s capital would be pooled with other accounts and exposed to margin calls from unrelated trades (Compl. ¶125, ¶126). The complaint states, "Defendants’ adviser overview and other documents... misrepresented their risk processes as transparent and comprehensive," omitting critical details about termination triggers, withdrawal bars, and financing mechanics (Compl. ¶137). The complaint further alleges that defendants concealed the fact that Britannica’s capital would be the first to absorb losses, with a purported $9,000,000 second-loss layer that was never actually committed (Compl. ¶3).

The complaint also details the financial terms imposed on Britannica. Under the Advisory Agreements, Britannica was entitled to a 50% share of profits, but defendants allegedly represented a 55% payout in emails and solicitations (Compl. ¶113, ¶119). The filing states that Britannica’s capital was subjected to a 1% termination trigger, meaning that a $100,000 loss in the Stonefly account or a $150,000 loss in the Mayfly account would trigger automatic liquidation (Compl. ¶4, ¶116). The complaint alleges that defendants concealed a 9% cumulative loss threshold for termination, which was the actual trigger for liquidation (Compl. ¶135). Additionally, the filing states that defendants imposed a 10% withdrawal bar, preventing Britannica from withdrawing capital if the Investment Account Value fell below 90% of its stated value (Compl. ¶136). The complaint alleges that "Defendants withheld Britannica’s capital from May 2023 to September 2024 under a false liquidation-trigger pretext, imposing a 7.5% trigger instead of the promised 10%" (Compl. ¶139). The complaint further alleges that defendants’ financing charges constituted criminal usury under New York law, as they exceeded the $2.5 million usury exemption threshold (Compl. ¶155).

The complaint alleges that defendants’ financing charges exceeded 25% annually when including all direct and indirect consideration, such as the 50% profit share and financing charges (Compl. ¶155). The complaint further alleges that defendants’ conduct violated Regulation U, which governs purpose credit for securities transactions, as well as the Commodity Exchange Act, which requires proper disclosure and safeguards for pooled accounts (Compl. ¶151, ¶153). The filing states that defendants’ product had "every material incident of a margined securities-credit account," including margin calls, mandatory replenishment, and unilateral termination, but failed to comply with registration, reporting, or collateral requirements (Compl. ¶147). The complaint alleges that "Defendants’ structure placed Britannica’s capital, labor, and strategy first in line to be consumed" (Compl. ¶122). The complaint also states that defendants’ unregistered broker-dealer activity required registration, disclosures, and safeguards they withheld, including margin rules, valuations, cure methods, and custody (Compl. ¶152).

The complaint also highlights the role of individual defendants in the alleged scheme. Bryan D. Borgia, co-founder of Topwater Capital Division, is alleged to have architected the first-loss program and profited from the extraction of Britannica’s capital (Compl. ¶68). Blake Wieczorek, an officer in LAM’s Topwater Capital Division, is alleged to have pressured Britannica to execute the Stonefly AIAA and later acknowledged Goldman Sachs’ inadequate attention to Britannica’s books (Compl. ¶69, ¶71). The complaint states that Wieczorek wrote, "GS does not have an appetite for the additional business from Britannica," while Goldman’s coverage continued to court Britannica (Compl. ¶71). The complaint further states, "a viable path to migrating business or a second broker relationship" was discussed but never materialized (Compl. ¶71). Dave Damm, a vice president in LAM’s Topwater Capital Division, is alleged to have misrepresented Appendix C of the agreements to justify withholding income earned on Britannica’s cash (Compl. ¶72). The complaint states that Damm admitted Topwater did not maintain uniform rates across managers, refuting representations made to Britannica (Compl. ¶72). Jeff O’Hara is alleged to have imposed verbal prohibitions on protective trades, refused Britannica’s capital and price requests, and admitted that data ran an hour behind on August 5, 2024 (Compl. ¶73). The complaint states, "the decision had already been made" to terminate the accounts, underscoring the premeditated nature of the seizure (Compl. ¶73). Travis Taylor is alleged to have signed instruments installing cross-default machinery and affirmed the accuracy of annual reports under CFTC Regulation 4.7(b)(3)(i) (Compl. ¶74). Susan Rubin is alleged to have imposed a condition requiring Britannica to execute all trades through Goldman Sachs three months after the Stonefly AIAA was executed (Compl. ¶75). Nick Daraviras is alleged to have promoted Topwater’s endowment-backed hard close as a milestone under Borgia and Taylor (Compl. ¶76). Brian Long is alleged to have created the retrospective PDF on August 8, 2024, after the asserted August 5 event (Compl. ¶78).

The allegations also extend to the broader financial relationships between the defendants. The complaint states that Jefferies and Goldman completed a joint $1.5 billion IPO in February 2026, further aligning their financial interests (Compl. ¶18). The complaint alleges that Goldman extracted approximately $1 million annually from Britannica’s account, including financing and stock-lending revenue (Compl. ¶37). The complaint further alleges that Jefferies pursued approximately $100 million from the Weiss bankruptcy in 2024, demonstrating its aggressive litigation posture (Compl. ¶77). The complaint states that Britannica’s first-loss layer in the Mayfly Fund LLC was $1,500,000, while the fund’s stated account value was $15,000,000 as of July 2024 (Compl. ¶6).

The allegations remain unproven, and no defendant has yet responded to the complaint. The case is pending in an unspecified court, with no judge or docket number provided in the filing.

The allegations described here are taken from the filing and remain unproven; no responsive pleading is reflected in the source document.

David Brunk is a civil litigation attorney. He can be reached at david@newmanbrunk.com.