We continue our lateblogging of the Federalist Society’s 2009 National Lawyers Convention. The conversations at the conference are always interesting. As far as we’re concerned, this has to be one of the most painless ways to rack up CLE credits.

Here’s the next panel discussion that we attended:

Regulation of Financial Institutions

Congratulations to Williams & Connolly and Hughes Hubbard & Reed, the firms that represented Ralph Cioffi, and Brune & Richard, the litigation boutique that represented Matthew Tannin.

Ed. note: This post has been corrected; an earlier version switched the defendants around. Thanks for pointing out the mistake, commenters.

Not Guilty! [Dealbreaker]
Breaking News: Bear Defendants Found Not Guilty on All Charges [WSJ Law Blog]
BREAKING: Bear Stearns Hedge Fund Managers Not Guilty [Am Law Daily]
Bear Stearns Hedge Fund Managers NOT Guilty On All Counts [Business Insider]

Over 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.

Today 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.

The 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]

The general public really doesn’t understand what top-flight counsel does for their corporate clients. If they did, the pitchforks and torches crowd would be as angry at Wall Street lawyers as they are at Wall Street bankers.

Friday’s “revelation” about the advice given to Bank of America by Wachtell Lipton illustrates the point. Am Law Daily reports:

Amid the piles and piles of formerly privileged documents related to the Bank of America-Merrill Lynch merger, there are a few notes and e-mails from mid-December 2008 showing that BofA’s lawyers at Wachtell, Lipton, Rosen & Katz were saying very different things to their client and to federal regulators.

What dastardly double talk did Wachtell Lipton allegedly engage in? Corporate Counsel reports:

The e-mails show that early on the morning of December 19 [Wachtell litigation partner Eric Roth] advised the bank’s chief executive, Ken Lewis, and its interim general counsel, Brian Moynihan, on how difficult and financially risky it would be to try to invoke a so-called MAC — or material adverse change — clause, which would allow the bank to get out of the merger with Merrill.

But another e-mail from associate general counsel Teresa Brenner to Moynihan, sent several hours later and on the same day as Roth’s e-mail, says, “Eric made a very strong case as to why there was a MAC” during a conference call with some officials from the Federal Reserve.

J’accuse!

Pitchforks on parade after the jump.

Have you ever considered the possibility of getting sued for not being able to dance? That’s the reality now facing James Graeber, who allegedly flung a hedge fund employee right off of a dance floor at a New Jersey wedding. The New York Post reports:

An Upper West Side woman is suing a rowdy reveler who drunkenly clobbered her on the dance floor at his sister’s reception last year.

Christine Mancision said she was grooving after dinner at the Hyatt Morristown in New Jersey when, “all of a sudden, I turn and I’m grabbed by this really tall individual.”

“I had no idea who he was. And he grabbed my arm and spun me around to dance with me and then just flung me off to the side of the dance floor, and I went flying to the floor,” the petite 27-year-old recalled.

Turn around, bright eyes
Every now and then I fall apart
Turn around, bright eyes
F***in every now and then I fall apart
And I need you now tonight
I f***in need you more than ever.

In related news, people who can dance do not go to weddings in New Jersey.

Mancision suffered a broken wrist and is suing James Graeber. But she’s also suing the Hyatt, for reasons passing understanding.

Details and updates after the jump.

* Bank of America’s board votes to waive privilege and disclose the legal advice it received on the Merrill Lynch merger, which could spell trouble for B of A’s outside counsel at Wachtell (depending on the advice given). [New York Times]

* Meanwhile, B of A expands its team for the SEC litigation in the S.D.N.Y. by hiring Paul Weiss (which, along with Cleary Gottlieb, urged the bank to waive privilege with respect to the Merrill merger advice). [Dealbook / New York Times]

* Tort reform, in the form of limitations upon medical malpractice suits, could save up to $54 billion over the next 10 years. [CNN]

* Jon and Kate arbitrate… [People]

Is the Public Company Accounting Oversight Board unconstitutional? This admittedly boring-sounding entity has the important task of overseeing accounting firms, who in turn keep an eye on the balance sheets of corporate America, through such mechanisms as Sarbanes-Oxley (SOX) compliance.

The constitutionality of SOX and the PCAOB is at issue in Free Enterprise Fund v. Public Company Accounting Oversight Board, one of the most important cases of the new Supreme Court term. As previously noted, the D.C. Circuit upheld the board’s constitutionality against a separation-of-powers challenge — but over a strong dissent by Article III rock star Brett Kavanaugh, which may have grabbed the justices’ attention.

Read more — and comment (anyone care to predict the result?) — over at Going Concern.

Is the PCAOB Going the Way of the Dodo? [Going Concern]

Earlier: The Sarbanes-Oxley Accounting Board: Not Long For This World?

Yesterday, we covered Andrew Cuomo’s letter to Bank of America. In it, the New York Attorney General ask BofA to essentially waive its attorney client privilege and allow the AG’s office to question BofA outside counsel at Cleary Gottlieb.

Update: The NYAG is looking to talk to the lawyers who consulted on the Bank of America/Merrill Lynch merger. Cuomo wants to talk to attorneys at Wachtell and Shearman & Sterling. He is not asking to talk to Cleary lawyers about their work for the bank.

Today, Cleary commercial litigation partner Lewis Liman, fired back at New York’s chief lawyer. The Charlotte Observer has the details:

“First, the basic premise of the letter is simply wrong,” Bank of America’s attorney, Lewis Liman, wrote in the bank’s response. “Bank of America has not put at issue the subject matter of any advice of counsel. Nor has Bank of America offered reliance on legal advice as a justification for its disclosures. Bank of America’s position has been clear and consistent throughout: the proxy statement and related disclosures complied with all applicable laws, rules and regulations. Because Bank of America did not violate the law, it has not offered reliance on legal advice as a defense.”

Lewis Liman? That sounds more like something Josh Lyman would write.

Apparently, the NYAG isn’t the only one that knows how to litigate in through the press. More from Liman and Bank of America, after the jump.

A couple of weeks ago, I asked if the mainstream media was aware of the existence of Biglaw lawyers. They’re still not, but the New York Attorney General is. Dealbook reports:

Attorney General Andrew M. Cuomo fired another shot at Bank of America on Tuesday, asking the bank to allow its lawyers to be questioned.

In a letter to the bank’s outside counsel, Lewis J. Liman of Cleary, Gottlieb, Steen & Hamilton, Mr. Cuomo wrote that “attorney-client privilege is hindering this office’s ability to make fair and fully informed decisions as to what charges, if any, to bring and whether individual Bank of America officers should be charged.”

What, does Andrew Cuomo want BOA to waive privilege to help him out? I’m not sure that this is how to run a prosecutor’s office, but it seems like a pretty effective way to run for Governor through the headlines.

Cuomo Takes Aim at Bank of America’s Lawyers [Dealbook]

Earlier: The Mainstream Media Is Aware That Law Firms Exist, Right?

Will the mainstream media ever hold law firms accountable for their roles in the global financial crisis? Probably not. Relatively speaking, only a small sector of society understands that Biglaw firms played a significant role making “toxic assets” lucrative and legal. Without attorneys, bankers wouldn’t know their tranches from their enhancements.

Too few people can get their head around what actually happened to cause the market crisis. But the public — the average American citizen — can wrap its mind around the concept of bonuses. I think it goes something like this:

Bonuses, BAD. Wall Street, BAD. Pitchforks and Torches, GOOD.

Can the mainstream media latch onto that?

You know you want to know….

Hazard a guess. Then click on the link below.

Bernie Madoff’s Greatest Scam Of All [Dealbreaker]

Earlier: What Kind Of Package Is A Bernie Madoff Package?

Or maybe good news? It seems they’ll get to enjoy Labor Day weekend before any trouble hits.

Read more and discuss over at Dealbreaker.

Federal Prosecutors May Let Andy And Mark Madoff Enjoy Labor Day Weekend
[Dealbreaker]

It’s legal, so it’s within our jurisdiction. But our sister sites have written it up already, so we’ll simply refer you to their coverage.

UBS is Naming Names (Finally) [Going Concern]
UBS Eagerly Pays Extortion Money [Dealbreaker]

A U.S. House member wants Bank of America to turn over extensive documentation relating to its Merrill Lynch deal (with a focus on lossess and loss projections at Merrill). We wonder which law firm is representing B of A in this matter — there’s nothing like a good old-fashioned congressional investigation to get the billable-hour engines revving.

Read more and discuss over at Dealbreaker.

In A Surprising Twist, Lawmakers Focus On The BAC/ML Merger [Dealbreaker]

If the SEC was a private law firm, it would have dissolved already.

The SEC is taking action against Bank of America over its bonus payments. But it probably won’t matter. Even if the SEC levels BOA with huge fine, we’ll probably just bail them out of again.

Click on the link below to read more about the suit.

BAC May Need Some More TARP Funds…… [Dealbreaker]

If some law firms are not willing to invite members of the class of 2010 to work for them over the summer, why should banks?

We just received word that Citigroup has decided to cancel its 2010 Summer Program for 2L summer associates. A tipster sent us this email that students at Penn Law School received this morning:

Dear Students,

I regret to inform you that Citigroup is not having a summer class for the Summer of 2010 and has cancelled all of it on campus interviews. Your bid will not be lost as we will consolidate it before we process the interview schedules. I apologize for any inconvenience this cancellation may cause you. Please do not hesitate to contact me if you need further assistance.

All the best,

Did you know that Citigroup got legal talent fresh off of the law school tree? Well, they don’t anymore.

Let’s look at what the program used to be after the jump.

Could the credit rating agencies who are now being sued for their alleged role in the financial meltdown have a valid First Amendment defense? Floyd Abrams, god of First Amendment law and longtime partner at Cahill Gordon & Reindel, thinks so.

Abrams is the subject of a lengthy, interesting article in Sunday’s New York Times, focused on his representation of Standard & Poor’s, the biggest of the rating agencies. From the NYT:

Dozens of investors have filed lawsuits seeking redress from the rating agencies, contending that the companies bear responsibility for investors’ losses, under a Whitman’s sampler of theories. The recession, in other words, is about to begin its litigation phase, and Mr. Abrams and a handful of partners at the law firm of Cahill Gordon & Reindel are readying defenses for more than 30 suits filed against S.& P. Up first, an oral argument on a motion to dismiss one case is set for July 31….

Mr. Abrams will contend that S.& P.’s ratings deserve exactly the sort of free-speech protections afforded to journalists, on the theory that a bond rating is like an editorial — an opinion based on an educated guess about the future. And for the same reason you can’t sue editorial writers, Mr. Abrams will argue that you can’t sue a bond rater because the economy went into a free fall that few saw coming.

Is this a valid comparison? Is trying to sue a ratings agency like trying to sue a newspaper editorial board? Or the weatherman?

Read more, and debate the issue, after the jump.

Sir Allen Stanford, financier / accused fraudster, has some issues with the conditions of his pretrial confinement.

Read more and comment over at our sister site, Dealbreaker.

Sir Stanford Takes Issue With Conditions Behind Bars [Dealbreaker]