A former portfolio manager for Steven A. Cohen’s SAC Capital Advisors LP was charged with what U.S. prosecutors called a record-setting insider-trading scheme that netted as much as $276 million for the hedge fund.
Prosecutors in the office of U.S. Attorney Preet Bharara in Manhattan yesterday charged the portfolio manager, Mathew Martoma, with trading on insider tips about clinical trials of bapineuzumab, a drug to treat Alzheimer’s disease.
“Mathew Martoma was an exceptional portfolio manager who succeeded through hard work and the dogged pursuit of information in the public domain,” his lawyer, Charles Stillman, of Stillman & Friedman PC, said in an e-mailed statement. “What happened today is only the beginning of a process that we are confident will lead to Mr. Martoma’s full exoneration.”
Martoma, 38, is accused of advising Cohen to sell shares of Wyeth LLC (PFE:US) and Elan Corp. (ELN) before bad news about the drug’s prospects was announced. Cohen’s firm made $276 million in profits or losses avoided after receiving the advice, prosecutors said in a criminal complaint.
Martoma is charged with conspiracy and securities fraud, a crime that carries a maximum 20-year prison term. The complaint doesn’t state whether Cohen knew Martoma’s advice was based on illegal insider tips. Cohen wasn’t charged or sued over the matter.
“Mathew Martoma and his hedge fund benefited from what might be the most lucrative inside tip of all time,” Bharara said in a statement. “As Martoma allegedly got sneak peeks at drug data, he first recommended that the hedge fund build up a massive position in Elan and Wyeth stock, and then caused the fund to shed those shares after getting a secret look at the unexpectedly bad results of a clinical drug trial.”
The SEC sued Martoma, CR Intrinsic and Dr. Sidney Gilman, the neurologist who allegedly supplied the tips.
Gilman has entered into a non-prosecution agreement with the U.S. government, according to his lawyer, Marc Mukasey, a partner at Bracewell & Giuliani LLP.
“He is cooperating with the SEC and the U.S. Attorney’s Office,” Mukasey said.
“Mr. Cohen and SAC are confident that they have acted appropriately and will continue to cooperate with the government’s inquiry,” Jonathan Gasthalter, a company spokesman, said today in an e-mailed statement.
The criminal case is U.S. v. Martoma, 12-MAG-2985; and the civil case is SEC v. CR Intrinsic Investors LLC, 12-8466, U.S. District Court, Southern District of New York (Manhattan).
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DLA Piper, Kingsley Napley Advise on News Corp. Bribery Probe
Rebekah Brooks, the former chief executive officer of News Corp. (NWSA:US)’s U.K. unit, and Andy Coulson, who edited the company’s now-defunct News of the World tabloid, were charged in a bribery probe, police in London said.
DLA Piper LLP is advising Coulson and Brooks’s law firm is Kingsley Napley in London.
Brooks and Coulson, who quit last year as Prime Minister David Cameron’s press chief as the scandal unfolded, conspired with two News Corp. reporters to pay public officials for stories as early as 2002, the Crown Prosecution Service said yesterday. Brooks paid 100,000 pounds ($159,000) to a defense ministry employee, while Coulson swapped cash for a palace phone directory for the royal family and their staff, the CPS said.
The former executives were charged by police after prosecutors said in a formal decision that Brooks and Coulson should face claims they conspired to commit misconduct in public office. The two reporters and the defense employee involved in the case should also be charged, the CPS said.
The charges stem from a police probe into News Corp.’s best-selling Sun daily tabloid and the News of the World, which Chairman Rupert Murdoch closed last year to help quell public anger over a related phone-hacking scandal. The affairs have cost New York-based News Corp. at least $315 million in civil settlements with victims, legal fees and other costs.
Brooks and Coulson, both 44 years old, will appear at a court hearing scheduled for Nov. 29, police said. They are already due to stand trial in London for parallel phone-hacking offenses in September, along with a dozen other people. Prosecutors haven’t said if hearings on the new bribery claims may overlap or if the cases will be combined for some defendants. More people could be charged in both cases.
“I am extremely disappointed by this latest CPS decision,” Coulson said in a statement e-mailed by DLA Piper. “I deny the allegations made against me and will fight the charges in court.”
Paul Askew, a spokesman for Kingsley Napley, declined to comment in an e-mail.
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Dubai Group, Banks Said Close to $6 Billion Debt Agreement
Emirates NBD PJSC and Noor Islamic Bank are among creditors close to an agreement with Dubai Group LLC on restructuring $6 billion of debt after more than two years of talks, four bankers familiar with the matter said.
Law firm Linklaters LLP, which represents the so-called co- ordinating committee of creditors, is drafting the accord and a final agreement may be reached as soon as mid-December, the people said, asking not to be identified as talks aren’t public. The deal envisages interest of 1 percent to 2.5 percent and was proposed by Dubai Group earlier this year, the people said.
The creditor group, comprising about 35 banks, is seeking to win approval from Royal Bank of Scotland Group Plc, Standard Bank Group Ltd. and Commerzbank AG for the deal, three of the people said. The three banks walked away from the lender group in July because of a lack of progress on the restructuring.
Dubai Group, controlled by Dubai Holding LLC, is one of several companies in the state seeking to restructure loans that were arranged before property prices slumped and credit markets froze with the onset of the 2008 global credit crisis.
Katie Taylor, a spokeswoman for Linklaters, declined to comment. A spokeswoman for RBS in Dubai, who can’t be identified under corporate policy, declined to comment. An Emirates NBD spokesman said the bank won’t comment on client issues. Martin Halusa, a spokesman for Commerzbank, declined to comment. A spokesman for Noor Islamic bank also declined to comment. A Dubai Group spokeswoman also declined to comment.
Dubai Group, whose parent company is owned by Dubai ruler Sheikh Mohammed Bin Rashid Al Maktoum, used cheap loans to invest in financial services companies and property in the U.S. The company, which also owes another $4 billion to shareholders, holds stakes in companies including Dubai-based investment bank Shuaa Capital PSC (SHUAA), Cairo-based investment bank EFG-Hermes Holding SAE (HRHO), and BankMuscat SAOG (BKMB), Oman’s biggest bank by assets.
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Five Firms Advise on News Corp. Acquisition of YES Network Stake
News Corp., the media company led by Rupert Murdoch, agreed to buy 49 percent of the YES Network, the cable channel that carries New York Yankees baseball games, in a deal that values the pay-TV outlet at about $3 billion.
News Corp. is acquiring the stake from the Yankees, Goldman Sachs Group Inc. (GS:US) and other investors, the companies said yesterday in a statement. Murdoch can increase the stake to 80 percent after three years. Other financial terms weren’t announced.
Hogan Lovells LLP and Jenner & Block LLP advised News Corp. Boies, Schiller & Flexner LLP represented YES network. Herrick, Feinstein LLP served as lead counsel to the New York Yankees and Yankee Global Enterprises. Skadden, Arps, Slate, Meagher & Flom LLP is representing Goldman Sachs.
From Hogan, the partners on the deal included Stephen Kay, corporate; Ira Sheinfeld and Philip Altman, tax; Michele Harrington and Logan Breed, antitrust; and Carin Carithers, employment and benefits.
The lead partner for Jenner’s team is Carissa Coze.
Boies Schiller partners included Richard Birns, Mike Huang and Jason Hill, corporate; and Michael Kosnitzky, tax.
The Herrick Feinstein deal team was led by Irwin A. Kishner, chairman of the executive committee and co-chairman of the corporate department, and included partners Richard M. Morris, Edward B. Stevenson, co-chairman of the corporate department, and Daniel A. Etna.
The Skadden team includes the following partners from the New York office: Thomas Greenberg, mergers and acquisitions, and Dean Shulman and Matthew Rosen, tax.
Acquiring YES strengthens News Corp.’s regional sports business (NWSA:US) by adding the Yankees, a marquee Major League Baseball team, and the National Basketball Association’s Brooklyn Nets. YES also negotiated a five-year extension of its agreement to carry Yankees games through 2042, program rights that underpin the valuation, people with knowledge of the situation said.
“This is a tremendous opportunity to enhance News Corp.’s industry-leading portfolio of sports properties, while also strategically re-entering the New York market,” James Murdoch, the company’s deputy chief operating officer, said in the statement.
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HP Says $8.8 Billion Charge From False Autonomy Accounting
Hewlett-Packard Co. (HPQ:US) accused Autonomy Corp., the British software maker it bought last year, of falsifying finances and took a related $8.8 billion writedown, adding to challenges facing Chief Executive Officer Meg Whitman. The shares plunged to a 10-year low.
“Some former members of Autonomy’s management team used accounting improprieties, misrepresentations and disclosure failures to inflate the underlying financial metrics of the company, prior to Autonomy’s acquisition,” Hewlett-Packard said yesterday in a statement. Autonomy denied the allegations.
More than $5 billion of the total charge is due to accounting practices, which were disclosed by a senior executive at Autonomy after founder Mike Lynch, 47, departed in May, Hewlett-Packard said.
Autonomy misrepresented its gross profit margin and also falsely created or miscategorized more than $200 million in revenue over a two-year period starting in 2009, John Schultz, Hewlett-Packard’s general counsel, said in an interview. Autonomy was reselling Dell Inc. (DELL:US) computers and counting those sales as software revenue, he said. Some sales were also fabricated through resellers.
“The board relied on audited financials -- audited by Deloitte -- not Brand X accounting firm but Deloitte,” Whitman said yesterday on a conference call with investors. “The CEO at the time and the head of strategy who led this deal are both gone -- Leo Apotheker and Shane Robison.”
Autonomy’s former top management team said allegations by Hewlett-Packard are “false,” according to Vanessa Colomar, a spokeswoman for Lynch.
Jamie Harley, a spokesman for Deloitte, Judith Burns, a spokeswoman for the U.S. Securities and Exchange Commission, Jina Roe, a spokeswoman for the U.K. Serious Fraud Office, and Chris Hamilton, a spokesman for the U.K. Financial Services Authority, all declined to comment. Robison didn’t return a call seeking comment.
Legal advisers for Hewlett-Packard on the deal included DLA Piper LLP; Freshfields Bruckhaus Deringer LLP; Gibson, Dunn & Crutcher LLP and Skadden, Arps, Slate, Meagher & Flom LLP. Legal advisers for Autonomy were Morgan, Lewis & Bockius LLP and Slaughter and May.
Apotheker said he’s “stunned and disappointed” by the alleged improprieties and that he did thorough due diligence on the acquisition.
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USPTO Hires Google’s Michelle Lee to Head Silicon Valley Office
The U.S. Patent and Trademark Office hired Michelle Lee to head its new California satellite office in Silicon Valley.
Lee is the former deputy general counsel and head of patents and patent strategy at Google Inc. (GOOG:US) She previously was a partner at Mountain View, California’s Fenwick & West LLP.
She served as a judicial clerk for U.S. District Judge Vaughn Walker and Judge Paul Michel of the U.S. Court of Appeals for the Federal Circuit, the Washington-based court that hears appeals of patent cases.
Lee’s hiring is part of the patent office’s push to improve the quality of software patents, David Kappos, the office’s director, said yesterday in a speech at a conference sponsored by the Center for American Progress.
McDermott Adds International Arbitration Partner Duo
McDermott Will & Emery LLP announced the appointments of two international arbitration lawyers, Sabine Konrad and Lisa Richman, as partners in the firm’s Frankfurt and Washington, offices, respectively. They specialize in international investment treaty arbitration and join from K&L Gates LLP, where they worked together as a team.
Konrad has handled high-profile cross-border disputes, particularly in international commercial arbitration and public international law, the firm said. She advises investors and governments in matters of investment protection.
Richman focuses her practice on international commercial and investment arbitration. She also represents corporations, corporate officers and directors and individuals in regulatory, prosecutorial and private matters.
“They bring to McDermott highly sought-after experience in international investment treaty arbitration while helping us build out our German platform,” Lazar P. Raynal, the head of McDermott’s Trial Practice Group, said in a statement.
McDermott has more than 1,000 lawyers in 18 offices in the U.S., Europe and Asia.
King & Wood Hires Melbourne Environmental Partner from DLA
King & Wood Mallesons hired partner Mark Beaufoy in the environment, planning and native title practice in the Melbourne office. He joins from DLA Piper LLP, where he was the lead environment partner in their Australian practice, KWM said in a statement.
Beaufoy has advised on and managed legal risks relating to site contamination and brownfield transactions and redevelopment.
King & Wood has more than 380 partners and 1,800 lawyers in 21 offices in Asia, Australia, the U.K. and the U.S.
Alston & Bird Hires Litigation Partner in Los Angeles
James R. Evans Jr. joined Alston & Bird LLP’s litigation team as a partner in the Los Angeles office. Evans, who has almost 30 years of experience defending complex and high exposure lawsuits, was previously at Fulbright & Jaworski LLP.
Evans has class-action experience, and regularly defends high-stakes matters involving claims of wage and hour law violations, employee misclassification, unfair competition, false advertising, disability discrimination and privacy violations, the firm said. He also provides strategic counsel on employment and intellectual property matters, as well as complicated business disputes.
Alston & Bird has 800 attorneys in 10 offices in the U.S. and Brussels.
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