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A tendency in financial journalism, and journalism in general, really, is to write about the big names. The Lloyd Blankfeins. The Ben Bernankes. The Dick Fulds. The Steve Cohens. For readers, that means never learning about the true heroes. The men and women toiling behind the scenes. The ones doing the real and, quite often, extraordinary work. SAC Capital outside counsel Martin B. Klotz is one of those unsung heroes.
Although we previously flagged Klotz as one to watch based on his tremendous performance during a deposition of Cohen, in which the opposing counsel addressed the hedge fund manager as “Stevie,” and Klotz proceeded to go absolutely ape shit on the guy, today he cemented himself to us and the world as a god damn genius and a man worth every one of the many pennies he’s being paid.
As those of you who read Matt’s and the Journal‘s stories today know, earlier this week SAC distributed a “white paper” prepared by Klotz & Co to its employees, which “responded point by point to the Securities and Exchange Commission’s civil-enforcement action Friday against Mr. Cohen.” The main argument is that Cohen, they claim, “never even read” a key email about Dell that the SEC says proves he failed to provide adult supervision at his firm, and allowed insider trading to happen on his watch. Klotz et al write they can confidently say Cohen never read said email because everyone’s every move at SAC is recorded to the second, and reviewing Cohen’s activity on the day in question reveals that he would not have had time in between all the other stuff he was doing.
Now, your regular old high-priced attorney would have left it at that. But Martin B. Klotz is no ordinary high-priced attorney. He’s Martin B. Klotz, legal genius and, we believe, Seinfeld aficionado. Which would explain why in vigorously defending his client, he reached deep into the annals of television history to make his most profound point. Naturally, we are referring to his obvious reference to the Keith Hernandez/Magic Loogie episode AKA “The Boyfriend,” in which Kramer and Newman attempt to sully Mr. Hernandez’s good name with lurid allegations that the former baseball player spit on them. Recall, if you will:
KRAMER: Our day was ruined. There was a lot of people, you know, they were waiting by the player’s parking lot. Now we’re coming down the ramp, Newman was in front of me. Keith was coming toward us, as he passes Newman turns and says, “Nice game pretty boy.” Keith continued past us up the ramp.
NEWMAN: A second later, something happened that changed us in a deep and profound way front that day forward.
ELAINE: What was it?
KRAMER: He spit on us…and I screamed out, “I’m hit!”
NEWMAN: Then I turned and the spit ricochet of him and it hit me.
ELAINE: Wow! What a story.
JERRY: Unfortunately the immutable laws of physics contradict the whole premise of your account. Allow me to reconstruct this if I may for Miss Benes as I’ve heard this story a number of times.
JERRY: Newman, Kramer, if you’ll indulge me. According to your story Keith passes you and starts walking up the ramp then you say you were struck on the right temple. The spit then proceeds to ricochet off the temple striking Newman between the third and forth rib. The spit then cam off the rib turned and hit Newman in the right wrist causing him to drop his baseball cap. The spit then splashed off the wrist, Pauses In mid air mind you- makes a left turn and lands on Newman’s left thigh. That is one magic loogie.
NEWMAN: Well that’s the way it happened.
JERRY: What happened to your head when you got hit?
KRAMER: Well. Uh, well my head went back and to the left
KRAMER: Back and to the left
JERRY: Back…and to the left. Back…and to the left.
ELAINE: So, what are you saying?
JERRY: I am saying that the spit could not have come from behind … that there had to have been a second spitter behind the bushes on the gravelly road. If the spitter was behind you as you claimed that would have caused your head to pitch forward.
ELAINE: So the spit could have only come from the front and to the right.
JERRY: But that is not what they would have you believe.
It’s a scene that clearly embedded itself in Klotz’s mind, and was playing on a subconscious level when he came up with the crucial section of the white paper, which was introduced like this:
“The sequence of Cohen’s decision to sell shares of Dell, as set forth in the accompanying chart, demonstrates starkly the implausibility of the SEC’s theory.”
…and argued like this:
Although Cohen might feel differently, let’s all hope this thing goes to trial, so one under-appreciated legal eagle may have his day in the sun (and the opportunity to pull out his best Jackie Chiles for the jury). Martin- we salute you. Keep up the good GREAT work.
Earlier: Steve Cohen Was Serious About Stopping Insider Trading Unless It Occurred In The 89% Of Emails He Didn’t Read
Related: SAC Capital Lawyer Martin Klotz Showed Enormous Restraint In Not Dealing With This Guy By Driving Him Out To The Pine Barrens; You Won’t Be Questioning Anyone After Your Voicebox Is Removed