Following yesterday’s resignation of PC’s most recent lawyer, Howard Foster, in her case against Steve Cohen, who she claims hid millions from her during their divorce 20+ years ago, the ex-wife that could has hired herself a third attorney. Read more »
Convicted Insider Trader Matthew Kluger “Shocked” To Find Out He Couldn’t Trust The Guys With Whom He Was Committing Federal CrimesBy Bess Levin
Remember Matthew Kluger? To recap, he’s the mergers and acquisitions lawyer who spent two decades feeding inside information to convicted insider trader Garrett Bauer, that he picked up from partners at the six different law firms he worked at over the years. The operation, which included Kenneth Robinson, an old friend of Kluger who acted as the tips mule between MK and GB, went very smoothly for a very long time (17 years), and would have continued going smoothly had Robinson stuck with the plan instead of deciding to start making the same trades as Bauer, raising suspicion with SEC, which was watching the men and used “relationship analysis” to determine they were “part of the same trading scheme and had a common source: Kluger.” In March 2011, federal agents showed up to Robinson’s house and after thinking it over for a couple days, he decided to cooperate by giving prosecutors a step-by-step guide to how the scam operated, telling them Kluger’s name, and recording conversations with Kluger and Bauer in which the two said things like “I went right up to my apartment and I broke the phone in half and went to McDonald’s and put it in two different garbage cans” and “I can’t sleep. I can’t sleep. I’m waiting for the FBI to ride into my apartment” and “We have to get all the fingerprints off that money. Like you wearing gloves or something and wiping every bill down or something” and “There is no way [these cell phone conversations] could ever be recorded.”
Robinson was ultimately sentenced to 27 months in prison, Bauer got nine years (despite his 147 speeches about how insider trading is a bad idea on the college lecture), and Kluger was handed 12 years, beating Raj Rajaratnam for “the longest insider trading U.S. history.”
Recently, Kluger sat down with Bloomberg to offer a few more specifics re: how the scheme went down (“Sometimes it was a deal I was working on, sometimes it was a deal I heard being discussed in the office”; “I would call Ken and say ‘X/Y/Z company is considering a takeover of Q company”) but what he really wants to talk about? What was the biggest surprise and hardest punch to the gut in all of this? Is what it was like finding out that his buddies were stiffing him on cuts of their ill-gotten gains. Read more »
Not sure how many people here know this, but there’s an old saying that when one is running on Ponzi scheme, one needs total focus. It’s a lot of work defrauding investors and while some activities by your staff are tolerable (smoking weed in every corner of the office, as well as the parking garage and the courtyard out back and having sex with prostitutes on the desk), a line must be drawn at those which create unacceptable distractions, like dealing said pot and purveying said prosties. If that doesn’t make any sense or you’re confused at the finely drawn distinction, perhaps convicted Ponzster Scott Rothstein, who was deposed on the matter today, can shed some light. Read more »
Market Apparently Shocked To Find Out Goldman Sachs CEO Takes Investigations Seriously, Hires Best Lawyers Money Can BuyBy Bess Levin
Goldman Sachs Chief Executive Lloyd Blankfein has hired Reid Weingarten, a high-profile Washington defense attorney whose past clients include a former Enron accounting officer, according to a government source familiar with the matter…The move to retain Weingarten comes as investigations of Goldman and its role in the 2007-2009 financial crisis continue. The Securities and Exchange Commission scored a $550 million settlement against the bank in a fraud lawsuit in July 2010, but other investigations continue. “Why do you bring in someone like that?” said the source, who was not authorized to speak publicly. “It says one thing: that they’re taking it seriously.” [Reuters]
In a few short weeks, many financial services employees will begin the soul-crushing, life-sucking process of studying for Level I CFA exam given in December. So you that you don’t look back and realize you wasted 4+ months of your time on earth, most of you are probably hoping to pass. And sure, that’s a good goal. Cute, even. But if you want to really make a name for yourself and not be had by a would-be lawyer, you’re going to have to do better than that. Like going into labor during the exam better. Read more »
Everyone knows that a public company merger is a feeding frenzy for service providers. When you’re writing a multi-billion dollar check for a transformative acquisition, you’re not so worried about a million in fees here and there. So bankers make a lot, lawyers make a bit less, and printers and accountants and proxy solicitors and the SEC all get a piece of the cash cheerfully handed out by acquirers. What is less obvious to people outside the M&A business is that there’s also a tax paid to a group of securities plaintiffs lawyers, who make it their business to sue the board of every company involved in a merger.
The process is pretty straightforward. A merger is announced. A group of law firms sue, on behalf of the target’s shareholders, claiming that the board followed a defective process, had a variety of conflicts of interest, and obtained an inadequate price. The board disagrees, but doesn’t want to run the risk of a court holding up the merger and so agrees to pay off the law firms. It’s not legal just to pay them to go away – they represent shareholders, after all, so they have to get something for those shareholders.
Occasionally what they get is a 5 or 10 cent increase in the merger price, but more often it’s just some added disclosure in the merger proxy. The company amends its proxy to say “we forgot to mention that our lead banker plays a lot of golf with the acquirer’s CEO so he was probably talking smack about us on the side,” the lawyers can say that they got something for the shareholders, and everyone signs a settlement that the judge can approve and that includes a $500k payoff to the law firm. Shareholders get nothing other than additional reading material, but it’s a pretty profitable business for the law firms.
James Woolery, a partner at Cravath, has been named co-head of North American mergers and acquisitions, alongside Chris Ventresca. [Bloomberg]
On Monday night, Stephen Colbert announced that after one of his writer’s had found a lost credit card belonging to Goldman Sachs partner Buckley T. Ratchford, he would be giving out one number per show each day that BTR failed to appear on the Colbert Report to talk Wall Street bonuses. Though Buck presumably had the mental faculties to cancel the card upon losing it, we wagered that he would prefer the information not to be distributed. And, also, that Goldman would not be offering up a body and if need be, Blankfein would head over to the studio to bust some skulls. Luckily for Steph-o, it didn’t come to that. Read more »
Layoffs Watch ’10-’11: Capitalize On The Millions Of People Who’ve Always Wanted To See A Wall Streeter Scrub A ToiletBy Bess Levin
Earlier this week, Meredith Whitney forecast that Wall Street firms will cut 80,000 jobs in the next 18 months. Naturally we hope the Dollar Dominatrix is off in her prognostication but in the event she’s seeing the ball on this one, it’s important to think about what you might do in the event you are unfortunately axed. An equally desirable gig in the financial services industry might not immediately present itself. In the interim, you may need to do something to tide yourself over. Perhaps involving rubber gloves and that French maid outfit you’ve been dying to put to use. Take a page from this enterprising lady’s playabook. Read more »
A few months back Patricia Cohen, ex-wife of Steve, dropped the lawyer who initially helped her file a suit against the SAC founder, claiming he hid marital assets, had engaged in insider trading, and yada yada yada. Then in April, she filed a newer, even bolder suit. Previously, Patricia had requested around $300 million from her former husband. This time, she dreamed bigger. She wanted SAC Capital. A “substantial, if not controlling interest.” The PMs, the P&L analysts, the Silver Fox. They were all gonna be hers. And not just that, she’d take the embalmed pets too. And all the fleece jackets in the back. The vests too! Today, that dream has been stalled. Patricia’s second lawyer, Gaytri D. Kachroo, has informed a court she’s finished with this lady. We’re told GDK is saying she wasn’t paid, or paid as much as she was promised. There are also claims– by others– that Kachroo was actually fired. Whatevs! It’s all relative. Any takers for round three? Read more »