I’d love for Mark Cuban to own my basketball team. He’s a self-made billionaire who focuses on the fans and (for all the bluster) leaves the basketball decisions to basketball people. Compare that to current Knicks Owner James Dolan — a man living off of his daddy’s success, who thinks he’s smarter than he really is, who has run the once-proud Knicks franchise into the ground, and who may be in romantic love with Isiah Thomas. You’d take Cuban any day of the week over little Jimmy.
You’d probably take Cuban as a client as well. Stephen Best, the Dewey & LeBoeuf attorney currently representing Cuban in his SEC insider trading case, seems to be happy with his client. And we haven’t even seen his legal fees.
But if you are one of Cuban’s adversaries, it must be brutal. To paraphrase Rory Breaker, if the milk’s sour, Mark Cuban ain’t the kind of pussy to drink it. NBA referees know that. And SEC attorneys are about to learn the same lesson…
We’ve come a long way from the days when federal courts issued orders banning racial discrimination. Now federal judges hand down orders mandating, or at least encouraging, race-based discrimination.
As reported in the American Lawyer, earlier this week Judge Harold Baer (S.D.N.Y.) issued an unusual order. On Monday, Judge Baer directed two firms serving as lead counsel in a securities class action to “make every effort” to staff the case with at least one minority and one woman:
ORDERED that Co-Lead Counsel, Robbins Geller Rudman & Dowd LLP and Labaton Sucharow LLP, shall make every effort to assign to this matter at least one minority lawyer and one woman lawyer with requisite experience….
If federal judges can run school districts and prison systems, law firms should be a piece of cake, right?
Since Judge Denny Chin is moving on up to the Second Circuit, the S.D.N.Y. cases pending before him have to be redistributed. Lawyers for Bank of America, which has 15 civil shareholder lawsuits on Chin’s docket, sent the chief judge a letter requesting that the cases be reassigned using a lottery system. As we mentioned in Morning Docket, Cleary Gottlieb, Davis Polk, and Wachtell Lipton all signed the letter.
Why did they need to send this special letter? Because they were scared of B of A landing again in the lap of Judge Jed Rakoff, says the Wall Street Journal:
Judge Rakoff disappointed bank executives last year when he rejected a $30 million settlement with the Securities and Exchange Commission, which had charged the bank with misleading shareholders about bonuses paid prior to the Merrill merger. The New York judge reluctantly approved a new $150 million agreement in February but called it “half-baked justice at best.”
One of the pending shareholder cases accuses the bank of failing to “disclose billions in Merrill losses before shareholders approved the deal in December 2008.”
Apparently, the lawyers debated whether or not to name Judge Rakoff in their letter, thus making it clear that he was the particular judge they hoped to avoid. They ultimately decided to name names.
They were successful in steering their cases clear of Rakoff, though the chief judge claims the letter wasn’t a factor in her decision to assign the cases to Judge Kevin Castel (aka the John Gotti judge). How did she decide?
The Securities and Exchange Commission filed a civil suit against Goldman Sachs this morning. According to the SEC, Goldman is guilty of taking a “do what I say, not what I do” approach to mortgaged-backed securities.
Well, d’uh. That’s why Goldman isn’t suckling on the federal teat right now.
The SEC claims Goldman sold a financial instrument that they knew was going to fail, while at the same time taking short positions against that instrument.
Goldman denies the charges:
The SEC’s charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation.
Am Law Daily reports that Sullivan & Cromwell partner Richard Klapper will be representing Goldman in this matter.
Let’s unpack the SEC’s complaint (pdf). Whether or not the SEC prevails in this civil litigation, their complaint certainly succeeds in making Goldman look very shady — the company’s stock tanked this morning.
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You can’t go two clicks on the internet today without hearing something about the new term of the Supreme Court (or the NFL playoffs, or porn). I’ve got to agree with the WSJ Law Blog’s Ashby Jones that the most interesting SCOTUS related piece comes via Bloomberg and talks about Solicitor General Elena Kagan’s willingness to defend shareholder rights. The Law Blog summarizes Kagan’s pro-shareholder stances:
Exhibit A: In a case against Merck, Kagan’s office is asking the court to let shareholders wait longer to sue companies for securities fraud. The justices are considering whether to allow a lawsuit by investors who say the drugmaker deceived them about the risks posed by its Vioxx painkiller.
But Exhibit B is the case folks are buzzing about: Kagan and SEC lawyers are urging the court to ease the way for investors to sue mutual fund managers over their fees. The fund industry aims to avert more lawsuits by the 90 million investors who together hold $11 trillion in U.S. mutual funds.
Why worry about potentially messy government regulation of business when you can just sue the bastards?
More details from the Bloomberg article after the jump.
The New York City marathon happens this Sunday. We know many lawyers who will be running it, and we wish them luck.
The marathon did not impose a minimum age until 1981 (16, raised to 18 in 1988). Pegged to the upcoming marathon, the New York Times had a fascinating article earlier this week about child marathoners, focusing on Wesley Paul, Scott Black (pictured), and Howie Breinan:
The adventures of Paul, Black and Breinan offer a glimpse into a forgotten aspect of the running boom of the late 1970s. Preternaturally self-disciplined, they were among about 75 children (ages 8 to 13) who tackled the early years of the New York City Marathon in a time of novelty and naïveté….
With no conclusive study, physicians still debate risks to children who compete in marathons, like muscular-skeletal injuries, stunted growth, burnout, parental pressures and the ability to handle heat stress.
Another risk: going on to become a securities lawyer. Two out of the three child marathoners profiled by the Times now practice in that field.
* Meanwhile, a Pentagon official who inspected Guantanamo at Obama’s request is under fire from human rights activists for filing a report (which declares Gitmo humane) that is little more than good public relations for the administration. [The New York Times]
* What do you do when your boss gets indicted for securities fraud? You get another job. A team of seven bankruptcy lawyers left Dreier LLP for Epstein Becker Green. [EBG]
* A federal judge encouraged the Obama administration to decide whether to keep pursuing a case against 11 Vietnam War Veterans accused of trying to overthrow Laos’s communist government. [The Associated Press]
* Judge says: UBS must respond to the U.S. lawsuit seeking disclosure of 52,000 names of people who allegedly used Swiss accounts for tax evasion. [Bloomberg]
Not that anybody asked them, but Wachtell has decided to weigh in on the financial crisis. According to Am Law Daily, Wachtell wants short-selling to stop:
So say several memorandums penned during the past week by executive committee cochair and banking transactions rainmaker Edward Herlihy, 14-year SEC veteran and firm of counsel Theodore Levine, and associate Carmen Woo.
“In today’s markets, short sales continue to be at record levels, there are false rumors in the marketplace about the demise of financial firms, bear raids and abusive short selling are taking place, and there is significant disruption in the fair and orderly functioning of the securities markets,” said Herlihy and Levine in their first memo on September 16. “The markets are in crisis.”
Generally, we like our political power brokers to be elected or at least appointed by somebody who was elected. However, with everybody else in government waiting for Mr. Paulson to come and save America, maybe it is not a bad thing to have professional lawyers suggesting a strong course of action.
We don’t know if the SEC was listening. But we do know that Wachtell told them to ban short-selling on September 16th, and the SEC banned short-selling on September 19th. Post hoc ergo propter hoc …
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The last time I flapped my wings your way, I tried to make at least enough noise about your mobile phone to make you more than a little bit uncomfortable. I hope I did. If enough of us become anxious enough about the known and unknown unknowns and knowns in our mobile phones, then we can start making wise decisions about how to manage that information and its resultant investigations.
Today, I’d like to put a finer point on the last installment’s topic by asking a question that seemed to catch most attendees off-guard at a conference panel that I moderated last week: is there discoverable personal information in a mobile app? Our panelists’ answer was a uniform “yes” with one stating that, if he had to choose only one type of data that he could discover from a mobile phone, he’d choose app data. Why? Because there’s simply so much of it and because almost all of it is objective – not just user-created like an email – but machine-tracked like GPS, usage duration, log in and log out times, browsed web addresses, browsed actual addresses. Also, most of us seem to have the idea that data doesn’t actually “stick” to our mobile devices the way it “sticks” to our hard drives. Maybe there’s a disconnect based on the fact that our phones are mobile so we assume the data is mobile to?
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