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Options Backdating

Non-Sequiturs: 12.07.07

* John Carney on backdating: "Although it was billed as the latest financial crime of the century, backdating is turning out to have some very minor results. Few prosecutions, stalled or failed lawsuits..." [DealBreaker]

* Glenn Reynolds on the Omaha mall shooting: "[W]e've reached the point at which a facility that bans firearms, making its patrons unable to defend themselves, should be subject to lawsuit for its failure to protect them." [Instapundit]

* Ann Althouse on Hillary Clinton: "The resistance I feel toward Hillary has to do do with her advancement under the aegis of a powerful man — a powerful man who seems to have diminished quite a number of women." [Althouse]

Valerie Plame Wilson Fair Game nude Playboy Above the Law blog.jpg* Dan Solove, author of The Future of Reputation, on breaking up with someone via Facebook. [Concurring Opinions]

* Michael Dimino on SOC: "Justice O'Connor's status as the first woman on the Court makes it easy to praise her. I cannot imagine that she would be receiving the praise that she gets from the country if she were male." [PrawfsBlawg]

* Valerie Plame, whose exposure as a CIA agent launched lengthy legal proceedings, on the prospect of posing in Playboy: "I'm a mother of twins, are you kidding me?" [Washington Examiner / Yeas and Nays via Gawker]

The Brocade Verdict: A Report from the Trenches

We run ATL on a shoestring budget, so we can't exactly afford to send reporters across the country. Taking the train up to New York, to cover a hearing in L'Affaire Charney, is already a big deal for us.

So we're delighted when tipsters give us eyewitness reports on breaking news. Today we had a correspondent in the courtroom when the jury returned with its verdict in the stock options backdating prosecution of Gregory Reyes, the former CEO of Brocade Communications.

Our source filed this report:

Gregory Reyes Greg Reyes Brocade Communications Abovethelaw Above the Law blog.jpgJury verdict: Guilty on all counts. Not really a scoop, since it's all over the media. But we were there and wanted to share.

Courtroom was two rows of press, armed with laptops and blackberries, and three rows of N.D. Cal. externs, armed with nothing else to do during the last week of their externships. And miscellaneous district court clerks, hangers-on, and family.

Reyes's family was sobbing when the deputy read off the verdict. It was pretty rough. Then a couple of jurors broke out in tears too. Can't say I envy them.

Or, for that matter, Gregory Reyes. The former member of the Forbes 400 -- which he first appeared on at age 37, with a net worth of $1 billion -- is presumably headed for federal prison.

Update: ATL's San Francisco correspondent had this to add:

Judge Breyer [Charles R. Breyer, li'l brother of Justice Breyer] gave the defense one week to file a motion for new trial, partly because he wants to be able to rule on it while the case is fresh in his mind, but also because he's confident that both sides will be able to staff it on that schedule, or something to that effect. I love it when judges basically tell big firms, "You've got enough manpower to throw at this."

Sentencing is set for November 21. Reyes gets to remain free until then.

Jury Finds Brocade Ex-CEO Guilty on Backdating Charges [WSJ Law Blog]
Ex-Brocade Chief Convicted in Backdating Case [Associated Press]

Lawyer of the Day: M. Todd Scott

M Todd Scott Orrick Herrington Sutcliffe Above the Law.JPGTruth be told, we find the stock options backdating story a little boring. But every now and then, it results in mildly interesting news.

From the Recorder:

A fourth-year associate at Orrick, Herrington & Sutcliffe inadvertently disclosed a sensitive document about stock option backdating that the firm has spent the last five months fighting to keep under seal.

The document -- a complaint in a shareholder derivative action against former executives of Mercury Interactive Corp. -- contains explosive allegations against the executives and quotes extensively from e-mails in which the executives allegedly discuss backdating their own stock options....

The complaint, Morillo v. Abrams, 1:05-cv-50710, had been filed under seal on Sept. 22 as part of a confidentiality agreement with the executives' lawyers -- but without judicial approval. The Recorder and two other news organizations have been trying since then to unseal the complaint and its supporting exhibits.

But a Dow Jones News Service reporter discovered Friday that Orrick associate M. Todd Scott had inadvertently filed the complaint publicly with a motion to stay the derivative action in October. The Wall Street Journal posted the complaint on its Web site over the weekend and wrote a story about it on page A-4 of Tuesday's print edition.

Whoops! There goes five months' worth of legal battles.

Our personal view is that filing under seal is greatly overused, even abused. But if you're going to file under seal, then file under seal.

(We do feel bad, however, for Mr. Scott. We're guessing he was operating under inadequate sleep. And when associates are exhausted and overworked, mistakes will get made.)

Oops! Orrick Associate Lets Slip Mercury Backdating Document [The Recorder via Law.com]

Morning Docket: 12.01.06

* "[P]rosecutors will be investigating the backdating of stock options by companies for 'years to come.'" [WSJ Law Blog]

* "A state appeals court on Thursday rejected a lawsuit by a boy who wanted to compete on his high school's girls' gymnastics team." [Sports Illustrated]

* Anna Nicole gets booted from another ex-boyfriend's mansion. [CNN]

* DHS wants to know what you eat on the airplane... [CNN]

* ... and your boss wants to know what your IMs say (e-discovery). [MSNBC]

Musical Chairs: 11.27.06

musical chairs 2 Above the Law legal blog above the law legal tabloid above the law legal gossip site.GIFWe've fallen a bit behind in telling you who is going where, and why. So here's a short recap of notable recent moves within the legal profession:

From Law to Finance:
* It's rare for partners to leave Wachtell Lipton, but it does happen. Earlier this month, former WLRK corporate partner Mitchell Presser left the firm, to join Fox Paine. Presser, renowned at Wachtell for his impeccable taste in sushi, focuses on deal structuring and new investment opportunities at Fox Paine.

New Partners:
* Simpson Thacher & Bartlett: Eight new partners in New York. Corporate: Barrie Covit, John Ericson, Ellen Reilly Patterson, Kathryn King Sudol. Executive compensation and employee benefits: Gregory Grogan. Real estate: Sasan Mehrar. Litigation: Michael Garvey and George Wang (whom we know, and who are both very fine lawyers -- congrats, guys).

* Willkie Farr & Gallagher: Eleven new partners in New York. Corporate and financial services: Leah Campbell, Mark Cognetti, Morgan Elwyn, Rita Molesworth (luv the name), Adam Turteltaub. Litigation: Mary Eaton, Scott Rose, and former AUSA Michael Schachter. Tax: Christopher Peters. Business reorganization and restructuring: Rachel Strickland.

You may recall Michael Schachter as the superstar federal prosecutor in the Southern District of New York, who helped send Martha Stewart to prison (where she learned to make delicious dishes using vending machine fare and the inmates' communal microwave).

* Weil Gotshal & Manges: Twenty new partners around the country. That's too many for us to reprint here, so check out the list in the press release.

A majority of these twenty partners are women, and two are "flex-time partners." Details here.

Out the Door:

* Myron Olesnyckyj, former general counsel of Monster Worldwide Inc. (which owns Monster.com). Stock options backdating. Yawn.

* And a bunch of execs at ACS and Quest Software, also because of backdating. Some lawyers, some not. Double yawn.

NY Biglaw Associates Making Partner [NYLawyer.com]
Another GC Axed Over Stock-Options [NYLawyer.com]
Backdating: More Resignations, More Legal Business [WSJ Law Blog]
Weil Gotshal Elects Twenty to Partnership and Appoints Five as Counsel [Weil Gotshal & Manges]
Weil’s Partnership Class Has More Women Than Men: News? [WSJ Law Blog]

Musical Chairs: 11.13.06

musical chairs above the law legal blog above the law legal tabloid above the law legal gossip site.GIFLaw Firm Mergers:

Actually, they're really acquisitions:

* Washington-based Crowell & Moring is building up its New York office by acquiring King Pagano Harrison, the health care/labor-and-employment boutique, and by picking up partners from IP boutique Morgan & Finnegan.

* Philadelphia-based Drinker Biddle & Reath is "merging" with Chicago-based Gardner Carton & Douglas. The new entity will keep the Drinker Biddle name and will be chaired by Drinker Biddle's current chairman, Alfred W. Putnam Jr.

(Translation: Gardner Carton = Drinker Biddle's beeatch.)

Out the Door:

* Casualties of the options backdating scandal: Bruce Karatz, CEO of KB Home (and a lawyer by training), and Richard Hirst, KB Home's chief legal officer.

Crowell & Moring Acquires 20 Lawyers From Litigation Boutique [Legal Times via Law.com]
Firm Boosts NY Office With Boutique Acquisition, Raid [NYLawyer.com]
Firms Merge [NYLawyer.com]
Backdating Scandal Fells Top Homebuilding CEO [WSJ Law Blog]

Morning Docket: 11.10.06

* German citizen files state action to block sale of Picasso painting after federal action was dismissed earlier this week. [CNN]

* Talk about court tv: Cablevision is involved in a little bit of litigation. [WSJ Law Blog]

* Prosecutors file 12 murder counts in Reno Halloween hotel fire. [Reno Gazette-Journal]

* Must not have been a very good fence. [MSNBC]

* Barot (almost like Borat, except not funny and a terrorist) gets life for bomb plots.[MSNBC]

Musical Chairs: 10.17.06

musical chairs above the law legal blog above the law legal tabloid above the law legal gossip site.GIFA number of big-ticket moves to report today. The most notable involve government lawyers:

Government to Private Sector:

* Debra Wong Yang, the U.S. Attorney for the Central District of California (Los Angeles), has resigned from the USAO. She's headed to Gibson, Dunn & Crutcher, as a partner (duh). Ka-ching!

Yang will work out of the firm's L.A. office. She will co-chair its Crisis-Management Group, along with former Solictor General Theodore Olson and another former federal prosecutor, Randy Mastro.

At Main Justice:

* Jonathan Cohn (OT 2000/Thomas) is now the Deputy Assistant Attorney General for Civil Appellate. He was previously the DAAG overseeing the Office of Immigration Litigation (and will continue to discharge that duty until a successor is found).

rachel brand jonathan cohn.JPGAt right: Jonathan Cohn and his wife, Rachel Brand (OT 2002/Kennedy), the Assistant Attorney General for the Office of Legal Policy. Although his portfolio has changed (and we'd say for the better), he doesn't have to get new business cards, since he's still a DAAG.

Out the Door:

* Casualties of the stock options backdating scandal: Stuart Nichols, former general counsel of KLA-Tencor, and David Lubben, former general counsel of UnitedHealth.

Lateral Moves:

* Corporate lawyer Arthur Hull Hayes III, to Sonnenschein Nath & Rosenthal, from Dewey Ballantine.

* Technology, media, and telecom lawyer Carole Aciman, to Greenberg Traurig, from Hughes Hubbard & Reed.

* King & Spalding: The intellectual property practice acquires five new lawyers: Kenneth Sonnenfeld (NY) and John Harbin, Tony Askew, Steve Schaetzel, and Jim Johnson (in Atlanta). They came from Morgan & Finnegan (Sonnenfeld), Powell Goldstein (Harbin), and Kilpatrick Stockton (Askew, Schaetzel and Johnson).

And Another One Gone, And Another One Gone... [WSJ Law Blog]
L.A. U.S. Attorney Debra Yang Resigns; Will Join Gibson Dunn [WSJ Law Blog]
NY Partners Switching Firms [NYLawyer.com]
More NY Partners Switching Firms [NYLawyer.com]

Musical Chairs: 10.11.06

musical chairs above the law legal blog above the law legal tabloid above the law legal gossip site.GIFOut the Door:

* CNET's former general counsel, Sharon Le Duy -- resigns -- another casualty of the stock options backdating scandals.

Lateral Moves:

* ERISA lawyer Dana Scott Fried, to Loeb & Loeb, from Brown Raysman Millstein Felder & Steiner.

Is Dana Fried an ERISA hottie? Perhaps. You be the judge; here's his bio (with photo).

* Corporate and securities lawyer Mark Thierfelder, to Dechert, from O'Melveny & Myers.

* Tax specialist James Tander, corporate lawyer Patrick de Carbuccia, and real estate lawyer Michael Pollack, all to Reed Smith (NY); they come from, respectively, Skadden Arps (as counsel), Willkie Farr (as an associate), and British trusts and estates boutique Withers Bergman (as head of the real estate practice).

CNET Joins the Backdating Parade; Its General Counsel Resigns [WSJ Law Blog]
Firm Boosts NY Office With Three Lateral Partners [NYLawyer.com]
NY Partners Switching Firms, NY Associates Making Partner [NYLawyer.com]

Morning Docket: 10.05.06

mark foley.JPG* "If Mark Foley had sex with a page in the District of Columbia, it wouldn't be a crime. In the capital, the age of consent is 16, as it is in many states. That, coincidentally, is the minimum age to be a page." [Los Angeles Times]

* The Sixth Circuit has placed Judge Anna Diggs Taylor's warrantless wiretapping handiwork on hold. [Detroit Free Press via How Appealing]

* Some benchslapping of the government, courtesy of Second Circuit Judge Jon O. Newman: "Beatings? Exposure to air-conditioning after standing in the rain? Needless strip-searches? Never approached a due process violation? If I thought your client really believed that, I’ve got to tell you, I’d be really troubled.” [New York Times]

* The other shoe has dropped in the HP leak investigation scandal: criminal charges have been filed against former chairwoman Patricia Dunn and four others. [New York Times]

* Apple joins the options backdating scandal club. [New York Times; WSJ Law Blog]

Morning Docket: 10.04.06

burka burqa burkha burqha.jpg* An investigation by the Justice Department Inspector General reveals that the Bureau of Prisons doesn't have enough staff to monitor communications of imprisoned terrorists with the outside world, including mail and phone calls. [Washington Post]

(And what about Instant Messenger? "What ya wearing?" "A burka." "Love to slip it off you...")

* The Supreme Court kicks off October Term 2005 -- and J. Lo is in the house. José Antonio López's appeal raises the question of what constitutes a “felony punishable under the Controlled Substances Act” (which the Court has grappled with before, and surely will again). [New York Times; Los Angeles Times; Washington Post]

* That wacky Ninth Circuit ruling from earlier this year, holding that arresting the homeless for sleeping on streets and sidewalks constitutes "cruel and unusual punishment," may be coming home back to the shelter to roost. It could jeopardize Los Angeles's attempted crackdown on homeless encampments. [Los Angeles Times]

* Larry Sonsini's reputation has been tarnished by his involvement in the HP and options backdating scandals. But he's got all his life to live, he's got all his love to give; he will survive... [WSJ Law Blog]

* Ex-Comverse Technology CEO Kobi Alexander, wanted back in the United States on options backdating charges, is granted bail by a Namibian court, over U.S. objections. Those starstruck Namibians! Ever since Brangelina, they're suckers for the rich and (in)famous. [Associated Press]

Morning Docket: 09.28.06

brangelina branjelina.jpgHey, it's not yet noon -- so we can still call this "Morning Docket."

(Sorry for the delay. But if you care about actual legal news, as opposed to our crude musings on them, you really should go here or here instead.)

* BREAKING: Ann Baskins just resigned as general counsel of HP. And her lawyer, K. Lee Blalack 2nd of O’Melveny & Myers, said that she will not answer questions at today's congressional hearings into the HP leak investigation scandal. [New York Times]

* Apparently Namibia is good for things other than harboring baby-bearing celebrities. Kobi Alexander -- who is not an NBA player, but the ex-CEO of Comverse Technology -- has been found in the African nation. As you may recall, after he was indicted on federal criminal charges arising out of alleged options backdating, Alexander became a fugitive. [Wall Street Journal via WSJ Law Blog]

* Not all internet sickos are creepy white men like John Mark Karr. There are a few ladies out there, too. [Pittsburgh Post-Gazette via How Appealing]

* Federal prosecutors are looking into whether Jeanine Pirro, anti-porn prosecutrix and the Republican candidate for New York attorney general, illegally taped conversations of her husband, to figure out if he was having (another) affair. Her partner in (possible) crime: Bernard Kerik, the former New York City police commissioner and ill-fated pick for DHS Secretary. [New York Times]

(Anyone have a link to the tapes? We heard them on the news this morning, and Pirro repeatedly drops the F-bomb. It's pretty awesome.)

* The long and tortuous path to legislation governing the treatment of terror detainees may be reaching an end -- and not a moment too soon, since this story is kinda hard to follow. And a bit boring. And torture generally doesn't lend itself to humor opportunities. But see here. [New York Times; How Appealing (linkwrap)]

* We described the HP leak investigation scandal as a "made-for-television movie" well before Rep. Dianna Degette (D. Colo.) did. [WSJ Law Blog]

Morning Docket: 09.22.06

anna nicole smith and j howard marshall.jpg* Judge Manuel Real (C.D. Cal.) defends himself against impeachment charges before the Senate. The accusation that he made rulings "to benefit an attractive female" is one that the 82-year-old jurist "find[s] repugnant, particularly at my age." [Los Angeles Times]

(But who says old guys can't be horndogs? See, e.g., J. Howard Marshall, the late husband of victorious SCOTUS litigant Anna Nicole Smith.)

* Senatrix Dianne Feinstein -- who has a really nice house, by the way -- storms out of a Senate Judiciary Committee meeting, vowing to filibuster the Ninth Circuit nomination of Idaho judge Randy Smith. DiFi wants the seat to go to a Californian. We love a little SJC drama!!! [Associated Press via How Appealing]

* Two San Francisco Chronicle reporters were sentenced to up to 18 months in jail, for refusing to disclose their confidential sources with knowledge of steroid use by star baseball players. ATL tipsters, listen up: We'll go to jail to protect your anonymity too. It would be great publicity for us! [Los Angeles Times]

* Fifth Circuit Judge Harold R. DeMoss, Jr., will assume senior status next year, creating a Fifth Circuit vacancy. [Confirm Them via How Appealing]

* Apparently Cablevision awarded stocks options to a dead guy. Oops. Columbia Law prof John Coffee: “Trying to incentivize a corpse suggests they were not complying with the spirit of shareholder-approved stock-option plans.” [WSJ Law Blog]

Morning Docket: 8.31.06

conrad black.jpg* In the legal and regulatory crackdown on business corruption and white-collar crime, "lawyers serving fraud-ridden companies have emerged relatively unscathed," reports the Washington Post. Chalk it up to professional courtesy. [Washington Post]

* Lord Conrad Black (at right), former media mogul, has had his worldwide assets frozen by a Canadian court. But don't feel too sorry for him -- he still gets an allowance of $20,000 a month. (Is that U.S. dollars, or Canadian?) [BBC News; Wall Street Journal via WSJ Law Blog]

* Judge Eldon E. Fallon (E.D. La.) upheld the jury verdict finding Merck liable in a recent Vioxx case, but ruled that a new trial must be held on damages because the $50 million compensatory damage award -- not a punitive damages award -- was "grossly excessive." Seems like the right decision to us. After all, the guy survived (and isn't a pro basketball player). [Associated Press via DealBreaker]

* Two former Brocade Communications executives, charged in the options backdating scandal, have pleaded not guilty. [Bloomberg News]

* A federal bankruptcy judge ruled that Dorsey & Whitney breached fiduciary duties of client loyalty -- and ordered the firm to cough up almost $900,000 in fees.
[Minneapolis-St. Paul Star-Tribune]

Milberg Weiss Death Watch: The Last Throes

Sometimes a dying person twitches and convulses violently before finally biting the big one. Such is the case with Milberg Weiss, which is showing a few final signs of life. The New York Law Journal passes along this good news for our favorite class-action complaint assembly line:

A New York judge has given a boost to Milberg Weiss Bershad & Schulman by appointing the embattled law firm co-lead counsel in a consolidated suit over stock-option backdating....

Manhattan Supreme Court Justice Richard Lowe said in a decision dated July 13 that the firm's indictment had no bearing on its ability to handle a batch of derivative suits on behalf of individual investors in voicemail software company Comverse Technology, Inc., whose top executives allegedly enriched themselves by almost $400 million by repricing stock option grants.

In addition, in a catty footnote, the judge took a swipe at Bernstein Litowitz, one of the firms that tried to replace Milberg Weiss as lead counsel:

Justice Lowe also said in his footnote it was "disingenuous" for Bernstein Litowitz to raise the issue of Milberg Weiss' indictment and its impact on the Comverse matter "since the attorney representing LSERS [Bernstein's client] was himself a partner at Milberg Weiss, a member of its Management Committee, and was at Milberg Weiss when this action was commenced."

The judge was referring to Salvatore Graziano, who announced plans to leave Milberg Weiss in March.

There are few things more fun to watch than scrappy plaintiffs' lawyers going at each other's throats. Milberg Weiss and Bernstein Litowitz deserve each other.

NY Judge Backs Indicted Firm for Spot in Backdating Case [New York Law Journal]