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Robert Byman, the Jenner & Block LLP partner who represented Lehman Brothers Holdings Inc.’s bankruptcy examiner Anton Valukas, is conducting the National Futures Association’s internal review of its auditing procedures and its oversight of bankrupt Peregrine Financial Group Inc.
“I’ll be heading up our team but it’s an internal matter and I can’t comment further,” Byman said in a telephone interview yesterday.
The NFA on July 9 announced at least $200 million in client funds were unaccounted for at Cedar Falls, Iowa-based Peregrine.
Russell Wasendorf Sr., the firm’s chairman and chief executive officer, attempted suicide that day and was later arrested. Wasendorf had written a signed statement that he committed fraud for two decades, according to a criminal complaint filed in federal court in Cedar Rapids, Iowa.
The U.S. Commodity Futures Trading Commission sued Peregrine in federal court in Chicago on July 10, accusing Wasendorf and his firm of misappropriating client funds.
Peregrine filed for Chapter 7 court protection in U.S. Bankruptcy Court in Chicago on July 10.
Larry Dyekman, a spokesman for the NFA, declined to comment on the review of Peregrine. In a statement yesterday, the association said it would implement any necessary changes that would improve fraud detection.
The regulatory case is U.S. Commodity Futures Trading Commission v. Peregrine Financial Group Inc., 12-cv-05383, U.S. District Court, Northern District of Illinois (Chicago).
The criminal case is U.S. v. Wasendorf, 12-mj-131, U.S. District Court, Northern District of Iowa (Cedar Rapids). The bankruptcy case is In re Peregrine Financial Group Inc., 12-27488, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).
Ropes & Gray LLP advised State Street Corp. (STT), the third- largest custody bank, which agreed to buy the hedge-fund administration unit of Goldman Sachs (GS) Group Inc. to boost growth as second-quarter revenue fell amid declining global markets and record-low interest rates. Sullivan & Cromwell LLP advised Goldman Sachs.
State Street agreed to pay $550 million in cash for the Goldman Sachs unit to become the world’s largest servicer of alternative assets such as hedge funds, the Boston-based company said yesterday. State Street fell as much as 5.9 percent in New York, the most in seven months, as declining assets and fees spurred a 1.9 percent drop in revenue to $2.43 billion.
The attorneys from Ropes & Gray were: Christopher Henry, Brian McCabe, Eric Elfman, William Jewett, Mark Bellomy and Michael McFalls.
The S&C New York-based team includes financial institutions M&A partner Mitchell Eitel, mergers and acquisitions partner Brian Hamilton, executive compensation and benefits partner Matthew Friestedt and tax partner Andrew Mason.
Custody banks have struggled to increase profits as the Federal Reserve has held interest rates near zero since December 2008 and falling stock markets worldwide have cut the assets that the firms oversee for clients. State Street Chief Executive Officer Joseph Hooley has cut more than 2,200 jobs in the past two years to contain expenses, raised the company’s dividend in April to boost shareholder returns and searched for acquisitions such as the Goldman Sachs unit to increase assets.
“We’re all grinding through this difficult environment,” Hooley said yesterday in a telephone interview. “We’ve positioned ourselves in this cycle so that a combination of a less risky business model and higher capacity give us the opportunity to pounce on acquisitions when they make sense.”
The acquisition of the Goldman Sachs hedge-fund servicing unit adds $200 billion in assets under custody, and gives State Street $877 billion in alternative funds under administration.
The company added $133 billion in custody assets through new client deals in the quarter. That’s down from an average of $327 billion in the previous five quarters.
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Shearman & Sterling LLP acted as legal counsel to Ardagh Group SA, the packaging company, which agreed to buy U.S.-based peer Anchor Glass Container Corp. from Wayzata Investment Partners LLC funds for $880 million in cash. Akin Gump Strauss Hauer & Feld LLP acted as legal counsel for Anchor.
Shearman lawyers included New York mergers and acquisitions partner Christa D’Alimonte; London capital markets partner Apostolos Gkoutzinis; London finance partner Peter Hayes; New York executive compensation and employee benefits partner Doreen Lilienfeld; Washington tax partner Michael Shulman; and New York real estate partner Malcolm Montgomery.
The Akin Gump deal team was led by Kerry Berchem, a partner and co-head of the firm’s corporate practice. Additional partners include Joseph Ginsberg, real estate; Ron Grabov- Nardini, tax; Alice Hsu, securities; David Quigley environmental; Anthony Swisher, antitrust; Mark Volow, finance; Richard Rabin, labor; and Rolf Zaiss, executive compensation.
Ardagh plans to raise $920 million equivalent to fund the purchase and refinance almost all of Anchor’s existing debt, the Luxembourg-based company said in an e-mail statement. Ardagh is “committed to raising equity as soon as is practicable” after the transaction is completed and intends to seek a public listing.
The acquisition, which is subject to U.S. regulatory approval, will give Ardagh a 23 percent market share in the U.S., it said. Anchor is the third-largest glass container maker in the U.S.
Citigroup Inc. acted as financial adviser to Ardagh and provided “committed financing” for the acquisition, Ardagh said. Jefferies & Co. is financial adviser to Anchor.
Thermo Fisher Scientific Inc., the world’s second-largest maker of health-care equipment, agreed to acquire closely held One Lambda Inc. for about $925 million to expand in specialty diagnostics.
Wilmer Cutler Pickering Hale & Dorr LLP is serving as legal counsel to Thermo Fisher. Sheppard, Mullin, Richter & Hampton LLP is serving as legal counsel to One Lambda.
JP Morgan Securities LLC is acting as financial adviser to Thermo Fisher. Perella Weinberg Partners is acting as financial adviser to One Lambda.
Partner Hal Leibowitz, vice chairman of WilmerHale’s corporate and transactional department, led the team advising Thermo Fisher on the acquisition. Other members of the WilmerHale team included partners Keith Barnett, real estate; Robert Burke, tax; Nan Giner, private client; Jeffrey Hermanson, corporate; Belinda Juran, IP and licensing; and Amy Null, benefits.
The partners on the Sheppard Mullin deal team included Jon Newby, corporate; John Bonn, tax; and Robert L. Magielnicki Sr., antitrust.
Latham & Watkins LLP represents Perella Weinberg Partners with a corporate team led from the firm’s Orange County, California, office by partners Charles Ruck and Scott Shean.
Thermo Fisher will acquire Canoga Park, California-based One Lambda’s technology for determining what human leukocyte antigens are present in tissues, a process needed for successful transplants and determining paternity. Thermo Fisher, based in Waltham, Massachusetts, beat out other bidders, said people familiar with the transaction who asked not to be identified as the process is private.
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Justice Department Lawyer Joins Baker & McKenzie in Washington
Former U.S. Justice Department attorney Jonathan C. Poling joined Baker & McKenzie LLP’s Washington office as a partner in the trade-compliance practice.
A trial attorney with the Justice Department’s National Security Division, Counterespionage Section, Poling has prosecuted dozens of export control, counter proliferation and trade-related cases involving violations of the Arms Export Control Act, International Emergency Economic Powers Act, and fraud and money laundering statutes, the firm said. He also worked with the Justice Department’s National Export Coordinator and interacted with licensing agencies and civil enforcement authorities on numerous trade matters.
“At a time of increasing focus on trade compliance, Jonathan offers unique insight into government enforcement proceedings,” Miguel Noyola, chairman of the firm’s North American international commercial practice, said in a statement.
Baker & McKenzie has more than 3,800 lawyers and more than 5,800 professional staff in 70 offices in 43 countries.
Crowell & Moring LLP added two tax controversy and litigation partners to the firm’s tax group in Washington. David B. Blair, who joins from Miller & Chevalier, and David J. Fischer, from Cooley LLP, advise domestic and international clients in the areas of federal tax litigation and controversy, with a specific focus on transfer pricing and international tax issues, the firm said.
“Their work involving the application of the economic substance doctrine, partnership-level litigation, and alternative dispute resolution with the IRS, as well as managing the overall tax needs of multi-national corporations, makes them an excellent fit for our group and clients,” Harold J. Heltzer, chairman of Crowell & Moring’s tax group, said in a statement.
A former trial attorney for the Tax Division of the U.S. Justice Department, Blair’s experience includes representing companies in the petroleum, retail, timber, pharmaceutical, cosmetics, government contracting and chemical industries, the firm said.
Fischer represents companies and individuals in tax matters. His clients include companies in the semiconductor, software, petroleum, mining, automotive, and banking and finance industries.
Crowell & Moring has about 500 lawyers representing clients in litigation and arbitration, regulatory and transactional matters. The firm has six U.S. offices, as well as offices in London and Brussels.
Dechert LLP said Archil Giorgadze joined the firm’s corporate and securities practice as a national partner in its Tbilisi office. Giorgadze previously was chief executive officer at JSC Nenskra, a unit of the state-owned JSC Partnership Fund established to develop a hydropower plant project in Georgia, the firm said.
Before that, he held several positions within the Ministry of Justice of Georgia, according to the firm. Giorgadze has expertise in advising energy-sector clients on project financing, mergers and acquisitions and regulatory matters.
“Since opening our office in Tbilisi, we have been determined to continue expanding our practice in Georgia, a growing and increasingly important emerging market, especially in the energy, project finance and inward investment sectors where Archil has special know-how,” Louise Roman Bernstein, managing partner of the Tbilisi office, said in a statement.
Dechert has lawyers at 26 offices in the U.S., Europe and Asia.
Galleon Group LLC co-founder Raj Rajaratnam declined to answer any questions during a deposition at the federal prison where he’s serving an 11-year sentence for securities fraud and conspiracy, said Howard Kleinhendler, an attorney representing plaintiffs in a lawsuit.
Rajaratnam, convicted last year of directing the largest hedge fund insider-trading scheme in U.S. history, was interviewed June 16 for about an hour and 45 minutes at the Federal Medical Center Devens in Ayers, Massachusetts. The deposition stems from a case involving a tax shelter Rajaratnam had invested in. He isn’t a defendant in the lawsuit.
He refused to answer any of the more than 100 questions he was asked, invoking his right against self-incrimination under the U.S. Constitution’s Fifth Amendment, according to Kleinhendler, of Wachtel Masyr & Missry LLP in New York.
“He looked good,” Kleinhendler said yesterday in a phone interview, adding that Rajaratnam appeared to have lost weight since the last time he saw him, in 2007. Rajaratnam, 55, has said in court papers that he has health problems including diabetes and will probably need dialysis and a kidney transplant.
New York state Supreme Court Justice Eileen Bransten in March ordered Rajaratnam to answer questions from Diversified Group, a tax-shelter promoter, as part of the 2010 lawsuit. Samidh Guha, a lawyer representing Rajaratnam, had opposed the request, saying his client would invoke his right against self- incrimination.
Guha, of Akin Gump Strauss Hauer & Feld LLP in New York, declined to comment on the deposition.
Rajaratnam and his wife, Asha, along with Galleon Group co- founder Gary Rosenbach and his wife, Susan, sued Diversified in 2005, saying they were tricked into investing in an illegal tax shelter. They sought to recover at least $15 million in interest, penalties and fees that Rajaratnam and Rosenbach paid to the U.S. Internal Revenue Service. They didn’t seek to recover the taxes.
Rajaratnam and Rosenbach won a 2009 arbitrator’s decision against Diversified and its president for $5.8 million, according to court records. Diversified and its founder were found to have committed fraud in the marketing, promotion and implementation of the tax shelter.
In 2010, Diversified sued a tax attorney and three consulting firms over the structuring of the shelter, the case for which Rajaratnam was deposed.
Bransten also granted an unopposed request from Diversified’s lawyers to question Rosenbach, who lives in Vail, Colorado. Rosenbach will be deposed next month in New York, Kleinhendler said.
The case is Diversified Group Inc. v. Marcum & Kleigman LLP, 450286/2010, New York State Supreme Court (Manhattan).
JPMorgan Chase & Co. (JPM) can’t show that 25 e-mails sought in an investigation of possible energy-market manipulation contain advice from lawyers and should remain out of reach of regulators, the U.S. Federal Energy Regulatory Commission told a federal magistrate.
The agency, in a filing yesterday in U.S. District Court in Washington, said that JPMorgan made identical attorney-client privilege claims for 28 other e-mails that were later turned over to regulators. Some of the earlier e-mails that JPMorgan claimed contained legal advice were messages that said “Great job compliance,” “Are you being sarcastic?” and “Plse call ASAP,” according to the filing.
“JPMorgan’s current privilege claims are the same as those it improperly made about unprivileged documents,” Thomas Olson and Vivian Chum, lawyers for the agency, wrote in the filing.
FERC sued JPMorgan on July 2 to release the e-mails in an investigation of possible manipulation of power markets in California and the Midwest by J.P. Morgan Ventures Energy Corp. U.S. District Judge Colleen Kollar-Kotelly directed JPMorgan to explain why the e-mails shouldn’t be turned over to investigators.
JPMorgan, based in New York, submitted copies of the e- mails to the court on July 13 so they can be examined by U.S. Magistrate Deborah Robinson, who is handling the dispute.
“Each of the e-mails relates to the advice of counsel with respect to the investigation -- not the adoption of the bidding practices under investigation,” Skadden Arps Slate Meagher & Flom LLP partner Michele Roberts, a lawyer for JPMorgan, wrote in the bank’s filing. “The only possible use the commission could make of the e-mails would be to peer into the details of respondent’s legal strategy.”
FERC opened the probe in August after complaints from California and Midwest grid operators that JPMorgan’s bidding practices were abusive, according to the agency’s initial court filing.
Jennifer Zuccarelli, a JPMorgan spokeswoman, didn’t immediately comment on yesterday’s filing because she hadn’t seen it yet. Mary O’Driscoll, a FERC spokeswoman, didn’t immediately respond to an e-mail message seeking comment on the filing.
The case is Federal Energy Regulatory Commission v. J.P. Morgan Ventures Energy Corp., 12-mc-352, U.S. District Court, District of Columbia (Washington).
Spencer Dreier, whose father, Marc Dreier, is serving a 20- year sentence for cheating hedge funds out of $400 million, agreed with an ex-roommate to drop mutual claims of assault and defamation tied to a dorm-room fight.
Dreier sued Ben Clorite, his former roommate, in May 2009 for defamation, battery and emotional distress. After a fight in their room, Clorite posted a libelous online allegation that Dreier was obstructing the investigation into his father’s crimes and trying to destroy evidence, Spencer Dreier claimed.
After jury selection and a week of a trial in federal court in Manhattan that included testimony by both men, they agreed to drop the case July 16, Clorite’s lawyer, Jerome Coleman, said yesterday in a phone interview.
“The parties have amicably reached a confidential settlement agreement that they find has resolved the claims underlying this lawsuit favorably,” Coleman read from a joint statement by the two men. He declined to comment further. Dreier, who represented himself, declined to comment.
The elder Dreier pleaded guilty in May 2009 in Manhattan federal court to money laundering, conspiracy, securities fraud and wire fraud. He defrauded hedge funds in an effort to prop up his now-defunct 250-lawyer New York firm, Dreier LLP.
The case is Dreier v. Clorite, 09-07553, U.S. District Court for the Southern District of New York (Manhattan).
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