Wall Street

Miss the Goldman Sachs Hearing? We’ve Got You Covered.

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If you missed the Goldman Sachs Congressional hearing today, you missed the height of unintentional comedy. There are too many highlights to mention. Senator Carl Levin using a dirty word, the ongoing train wreck that is Senator Tom Coburn, it was the kind of hearing that makes you laugh out loud at Congress (and secretly weep for our country). I’ll let Bess Levin of our sister site, Dealbreaker, describe a particularly lively twenty minute exchange:

* 10:09: Carl [Levin]: “Goldman Sachs treats clients like objects (of profit).” Jackie Treehorn, a former prop trader, was the first to pioneer this model at the firm.

* 10:16: Goldman made money off its shorts. Dun Dun Dun.

* 10:26: Apparently Goldman didn’t just hurt its clients, it hurt everyone in the world. Take a moment right now to show us on the doll where Goldman touched you.

If you missed the hearings, you should check out Dealbreaker’s live blog. Just wait until Coburn starts talking.

Live-Blogging The Goldman Flogging: There’s Gonna Be A Showdown [Dealbreaker]

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SEC Accuses Goldman Sachs of Hypocrisy in Civil Suit

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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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Quote of the Day: Is Rodge Cohen Comparing His Clients to Coke Addicts?

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The cocaine analogy is quite a good one. Because this stuff was addictive. A lot of people couldn’t resist.


– H. Rodgin Cohen — former chairman of Sullivan & Cromwell, and counsel to many of the nation’s biggest banks — discussing subprime mortgage debt.

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Goldman Envy Comes to the Legal Profession

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goldman sachs.gifOver the weekend, the New York Times had an interesting article about compensation for Wall Street bankers. The article explained how, due to criticism from the public and from Congress, banks shifted employee comp away from cash and towards stocks and options. This shift was supposed to align pay with performance, averting an AIG situation of rewarding failure.

Now, thanks to the recovery in bank shares — fueled in part by generous government bailouts, and not necessarily the brilliant performance of bank employees — these stock and option grants are turning out to be super-lucrative. Here’s an interesting excerpt:

Goldman Sachs, for instance, sharply cut nearly all bonuses it paid last year but gave some executives more options than usual.

The company gave its general counsel, for example, 104,868 stock options and 14,117 shares in December, when the bank’s stock was around $78.

Now the bank’s shares have more than doubled in value, making that stock and option award worth nearly $12 million, according to Equilar, an executive compensation research firm in Redwood Shores, Calif.

Sullivan & Cromwell partners, eat your hearts out. Not only does Goldman GC Gregory Palm get to boss you around, he also makes more money than you do.

Way more. Get a hint of how much, after the jump.

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Lawyers of the Day: Arthur Cutillo, Michael Kimelman, and Jason Goldfarb

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Michael Kimelman Mike Kimelman Michael Kimmelman Arthur J Cutillo Arthur Cutillo Ropes Gray headshot.JPGToday the winners of Lawyer of the Day honors are obvious. Congratulations to Arthur Cutillo, Michael Kimelman, and Jason Goldbfarb, three attorneys who stand accused of involvement in the infamous Galleon Group insider trading scheme.

Both Cutillo and Kimelman have distinguished pedigrees, with ties to two top firms. Cutillo (left), a holder of an M.S. in chemical engineering as well as a J.D. (both from Villanova), was an associate at the white-shoe firm of Ropes & Gray. Kimelman (right), a partner at Incremental Capital LLC, once worked as an associate at super-prestigious Sullivan & Cromwell.

Check out Cutillo’s firm bio and Kimelman’s LinkedIn profile over here.

The third charged lawyer, Jason Goldfarb, apparently worked as a personal injury lawyer in Brooklyn. He allegedly served as a conduit of information between Cutillo and Zvi Goffer — the former Galleon employee apparently referred to as “Octopussy” at the SEC, because “he had his arms in so many insider” trading schemes.

More on our three honorees, after the jump.

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Breaking: Arrest at Ropes & Gray in Galleon Insider Trading Case

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Arthur J Cutillo Arthur Cutillo Ropes Gray headshot.JPGThe news was first reported by CNBC. See Dealbreaker for more details.
We have phone calls and emails in to Ropes & Gray and are waiting to hear back. We will keep you posted on further developments.

If you have more info, please email us. Thanks.

UPDATE (10:00 AM): According to Bloomberg, the FBI has arrested Arthur Cutillo (pictured). He is no longer on the Ropes & Gray website, but you can find his bio via Google Cache. Interestingly enough, he was an IP litigator, not a corporate attorney.

CNBC is now reporting that a Ropes & Gray employee allegedly provided inside information about various “going private” transactions the firm was involved in. Some of these transactions apparently involved companies heavily dependent upon intellectual property, such as technology companies.

UPDATE (10:10 AM): In case the Google Cache entry is removed, we have posted Arthur Cutillo’s bio after the jump. He graduated from Rutgers (undergrad) and Villanova (law), and he worked at Merck before joining Ropes.

UPDATE (10:15 AM): Here is a statement from Ropes & Gray:

We are deeply disappointed to learn about this situation, which suggests an extreme breach of this person’s duty of trust to our clients and to the firm. We cannot comment in detail on an ongoing investigation but we are moving quickly to protect our clients and are cooperating fully with authorities.

UPDATE (12:15 PM): U.S. Attorney Preet Bharara (S.D.N.Y.) is giving a press conference discussing the charges. One of the other individuals charged, Michael Kimelman, once worked as an associate at Sullivan & Cromwell.

UPDATE (4:30 PM): We’ve honored Artie Cutillo, Michael Kimelman, and a third lawyer, Jason Goldfarb, as our Lawyers of the Day.
Art Cutillo’s Ropes bio and Mike Kimelman’s LinkedIn profile, after the jump.

Seven Arrested In Insider Trading Case [Dealbreaker]

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Хороший день, Comrade Pay Czar. Не снимите нас

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Russia.jpgFriday was the last day for companies on the government dole to submit their pay plans to Kenneth Feinberg, our nation’s new Pay Czar. The new compensation commissar is as powerful as a mid-winter blizzard on the Eurasian Steppe. According to Law.com:

The Obama administration’s “pay czar” is embarking on a review of proposed compensation packages for the top employees at seven companies that are on government life support, marking the first time a federal official will have veto power over how much private-sector executives are compensated.

Kenneth Feinberg, who ran the government’s fund for families of the victims of the Sept. 11, 2001, terrorist attacks, has 60 days to approve or reject the compensation plans submitted this week from bailout recipients. They include American International Group Inc. and General Motors.

Can’t you just see a detail of Feinberg’s men assigned to follow Fritz Henderson (the new CEO of GM) during his training routine? One day maybe Fritz will outrun Feinberg’s men and climb to the top of a high peak and scream “Fein-BERG,” as he prepares for an epic final battle with Feinberg himself?

In the meantime, here are more reasons why being a lawyer right now is better than being a banker.

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Breaking: Madoff Sentenced to 150 Years

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Bernie Madoff has been sentenced to 150 years.

Judge Denny Chin said that the sentence was necessary to deter other people from entering into these kinds of schemes.

The Judge apparently said that he was struck that there was no letter written in support of Bernie Madoff. On the other hand, the judge received 141 pages of letters from Madoff victims.

Madoff allegedly said:

They have accused me and my wife of not being sympathetic. She cries every night, I am also tormented.

Umm … crying doesn’t make you sympathetic. I think instead of turning on the waterworks, Madoff should try not stealing billions of dollars.

But Madoff did apparently say: “I am sorry.”

But the pitchfork rally doesn’t have to end here. Next up: what prison will Madoff be heading to? A “club-fed” facility, or someplace where Madoff might expect “more bareback.”

For extensive and ongoing coverage of L’Affaire Madoff, surf over to our sister site, Dealbreaker.

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Maximilia Cordero: Maybe Not a Man?

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Maximilia Cordero small Jeffrey Epstein Dealbreaker Above the Law blog.JPGWe’re confused. And we’re guessing we’re not alone.

We have provided extensive coverage of Cordero v. Epstein, in which model Maximilia Cordero alleges that high-profile financier Jeffrey Epstein took advantage of her when she was underage. To add to the suit’s salaciousness, the New York Post previously claimed that Maximilia Cordero was born a man — to wit, Maximillian Cordero (b. 1983).

Now Cordero has turned around and sued the Post. She has filed an exhibit with the court casting doubt on the Post’s claim that she was born a man — but oddly enough, she’s not raising the gender issue in her lawsuit. From DealBreaker:

Cordero and her lawyer (and alleged sometime boyfriend) William Unroch have filed a lawsuit against the Post, claiming it engaged in a smear campaign coordinated with Epstein’s flack Howard Rubenstein (who is also the publicist for the Post).

Radar has all the dirt, but here’s the dirtiest bit:

“Conspicuously absent from the accusations is the Post’s revelation that Cordero was born a man. A source tells Radar that the initial filing of the suit by Unroch includes as an exhibit a birth certificate, which showed Cordero being born Maximilia Cordero, a woman. Reached by phone this weekend, Unroch (with Cordero commenting loudly in the background but declining to come to the phone), called the Post’s behavior ‘outrageous’ but refused to address Cordero’s birth gender or the authenticity of the birth certificate originally filed. ‘She’s a woman,’ Unroch tells Radar. So, why not go after the Post’s gender claims?

‘It’s a slam dunk case whether she was born a cat, a dog, or a space alien,’ Unroch says.”

You can see why we’re confused. And our confusion has only grown since someone sent us a copy of the exhibit mentioned by Radar — namely, a birth certificate showing that Maximillia Josephine Cordero, born on November 15, 1982, was born a “Female.”

You can check out the birth certificate for yourself — please note, we take no position on its authenticity — after the jump.

Epstein’s Accuser Accuses Page Six Of ‘Raping’ ‘Her’ All Over Again [DealBreaker]
Epstein’s Accuser Sics Law Dog On Page Six [Radar / Fresh Intelligence]

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Lawsuit of the Day: Cordero v. Epstein

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Our colleagues over at DealBreaker have been extensively covering one heck of a lawsuit. It’s our Lawsuit of the Day, but it really ought to be our Lawsuit of the Week — it’s that good.

The defendant is wealthy New York financier Jeffrey Epstein, who already stands accused, in Florida state court, of sex crimes involving underage girls. This latest case is a civil action filed in New York. Here’s a teaser:

[W]e’re knee-deep into the latest sex suit against Jeffrey Epstein, brought by a girl who, at the time, was whatever the opposite of over eighteen is. This one’s from Maximilia Cordero [at right], an aspiring model, who claims that in 2000, Epstein lured her to his Upper East Side apartment on the promise that “he and his wealthy friends would help…with her modeling career.”….

Epstein, in order to quell the girl’s fears as to what people would think of her blowing a man old enough to be her father, swore that he “wouldn’t tell anyone.” Bet he’s wishing he’d gotten her to do the same! Ah, well, hindsight.

Then he came in her mouth and requested that she return with her “14, 15, and 16 year old girlfriends next time.”

More — ’cause you know you want it — after the jump.

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