Deutsche Bank, SocGen, Credit Suisse, BP, Del Mar, CPC, Akzo in Court News

Deutsche Bank AG salesman Jon-Paul Rorech didn’t illegally disclose information on a bond sale to a hedge-fund manager, a judge ruled in U.S. regulators’ first lawsuit alleging insider trading of credit-default swaps.

U.S. District Judge John G. Koeltl in Manhattan ruled yesterday there was no evidence that Rorech and Renato Negrin, a former Millennium Partners LP portfolio manager, violated laws against insider trading. Information exchanged by the pair in telephone calls, presented by the Securities and Exchange Commission as evidence, wasn’t confidential, Koeltl said.

The SEC accused Rorech, 39, of illegally feeding Negrin, 47, information so he could buy credit-default swaps and profit from the announcement of a debt restructuring by Dutch media company VNU Group BV, according to the complaint filed last year. Negrin reaped $1.2 million profit on the deal.

“While the SEC attempts to attribute nefarious content to those calls through circumstantial evidence, there is, in fact, no evidence to support this inference,” Koeltl said in his 122- page ruling. “The SEC has also failed to present any evidence that Mr. Rorech had any motive to provide ‘inside information’ to Mr. Negrin.”

“The court’s decision is a complete vindication,” Richard Strassberg, Rorech’s attorney, said in a statement. “Trial proved what Mr. Rorech always maintained -- at all times, he acted consistently with Deutsche Bank’s policies and with industry practice.”

In a statement provided June 25 by his lawyer, Lawrence Iason, Negrin said: “As I stated from the outset, I did nothing wrong and I never traded on inside information. Today I’m finally vindicated.”

The case is Securities and Exchange Commission v. Rorech, 1:09-cv-04329, U.S. District Court, Southern District of New York (Manhattan).

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Kerviel Was SocGen ‘Creation,’ Should Be Cleared, Lawyer Says

Jerome Kerviel was a “creation” of Societe Generale SA and should be cleared of charges related to the bank’s 4.9 billion-euro ($6 billion) loss, the former trader’s lawyer told a Paris court June 25.

“Jerome Kerviel is not a fraudster,” said Olivier Metzner, delivering closing arguments for his 33-year-old client. He “was trained, formatted by Societe Generale, reformatted if you will. Jerome Kerviel is nothing but the creation of Societe Generale.”

Kerviel is accused of abuse of trust, faking documents and hacking the bank’s computers. The trading loss occurred as the bank unwound 50 billion euros in positions he’d built up by January 2008 and concealed with faked hedges and forged orders. The court will give its judgment Oct. 5, Judge Dominique Pauthe said at the end of the trial.

“Everything that he did was seen, known and if not encouraged, allowed,” Metzner said, arguing that while Kerviel admitted to the deeds upon which the charges are based, they didn’t qualify as crimes. “That is why I plead for a dismissal.”

Metzner acknowledged that there were grounds for the charge of hacking, defined as wrongfully entering information into a computer system. He turned responsibility for Kerviel’s actions back on the bank. “The bank gave him tacit accord,” he said.

The trial has featured more than 30 witnesses, including Kerviel’s bosses, colleagues and bank controllers. Daniel Bouton, Societe Generale’s chief executive officer at the time of the loss, called the former trader’s conduct a “catastrophe” for the bank.

Kerviel faces as long as five years in prison and a 375,000-euro fine.

The bank asked to be awarded the 4.9 billion euros it lost in damages, with lawyer Jean Veil saying “we could have asked for much more.”

Ex-Credit Suisse Broker Avoids Prison During Appeal

Ex-Credit Suisse Group AG broker Eric Butler can remain free while he appeals his securities-fraud conviction, a judge ruled, overturning another judge’s previous decision.

U.S. District Judge Jack B. Weinstein in Brooklyn, New York, granted Butler his freedom June 25 as the appeals court in Manhattan considers his conviction for fraudulently selling securities that cost investors more than $1.1 billion.

Weinstein reversed an April decision by U.S. Magistrate Judge Ramon Reyes, who revoked Butler’s bail and ordered him to prison, saying he didn’t raise any issues that showed his conviction might be reversed. Weinstein allowed the broker to stay free during a review of that decision.

Butler was found guilty in August of securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud. Weinstein sentenced him to five years imprisonment in January.

Lawyers in U.S. Attorney Loretta Lynch’s office, which prosecuted him, opposed Butler’s request.

The case is U.S. v. Tzolov, 08-cr-370, U.S. District Court, Eastern District of New York (Brooklyn).

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New Suits

SEC Sues Second ICP Manager for Trades That Benefited Client

U.S. regulators sued a second employee at ICP Asset Management LLC, the investment firm accused by the Securities and Exchange Commission of defrauding investors as it bolstered an account held by “an important client.”

That client was Moore Capital LLC, the New York-based hedge fund that manages about $14 billion, an official confirmed June 25, declining to comment further. Moore Capital hasn’t been accused of any wrongdoing.

The SEC sued Aamer Abdullah, 34, a former money manager at New York-based ICP, four days after the agency claimed that ICP founder Thomas Priore made trades at artificially high prices on behalf of collateralized debt obligations he managed.

The SEC’s June 21 suit against ICP claimed it made more than $1 billion of trades at inflated prices for CDOs that were in part insured by American International Group Inc. Some of the trades profited an account at ICP held by Priore, 41, and the unidentified client, the SEC said in its suit.

A phone call to Lawrence Gerschwer, an attorney listed in court documents as representing Abdullah at Morrison & Foerster LLP in New York, wasn’t returned.

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Chef Sues BP Over Damages to Restaurants Selling Gulf Seafood

Chef Susan Spicer, of Bayona restaurant in New Orleans and a judge on “Top Chef,” sued BP Plc for damages to restaurants that can’t access their customary supplies of fresh seafood from the Gulf of Mexico.

Spicer filed a proposed class action on behalf of chefs “whose occupation was destroyed and/or adversely and detrimentally affected” by the worst oil spill in U.S. history, caused by the sinking of the Deepwater Horizon rig off the Louisiana coast in April.

“Much of the plaintiff’s business is based on the unique quality of Louisiana seafood, as well as the chain of delivery of that resource from the initial harvester,” said Serena Pollack, one of Bayona’s lawyers, in papers filed June 25 in New Orleans federal court. “Because this chain of delivery cannot be maintained, plaintiff’s business has been and continues to be materially damaged.”

BP spokesman Mark Salt declined to comment on the suit.

Spicer judged a recent “Top Chef” competition on Bravo TV and is an occasional panelist on the Food Network’s “Iron Chef America” cooking challenge. She received the James Beard Foundation Award as best chef in the southeastern U.S. in 1993, and is a consultant for the HBO series “Treme,” about life in post-Katrina New Orleans.

Bayona, in New Orleans’s French Quarter, has earned four stars in the Mobil travel guide. The Zagat Survey has ranked Bayona among the city’s top five restaurants since 1995.

The lawsuit is Bayona Corp. v. Transocean Ltd., 2:10-cv- 01839, U.S. District Court, Eastern District of Louisiana (New Orleans).

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BP Former Employee Sues Over Loss to Retirement Plan

BP Plc was sued by a former employee over losses to the company’s retirement plan caused by the explosion of a deep- water oil rig and subsequent Gulf of Mexico oil spill.

Ralph Whitley sued London-based BP, its board, the Savings Plan Investment Oversight Committee of BP Corp. North America and the administrator of the plan June 24 in federal court in Manhattan. The suit asks for unspecified damages.

Whitley seeks to represent a class of plan participants and beneficiaries, from Jan. 1 to now, whose accounts held BP American depositary shares. BP stock has lost about half its value since the April 20 blast. According to the complaint, the shares were one of the retirement savings options in the plan.

“The plan suffered millions of dollars in losses in plan benefits because substantial assets of the plan were imprudently invested or allowed to be invested by defendants in BP ADSs during the class period, in breach of defendants’ fiduciary duties,” Whitley said in the complaint.

The case is Whitley v. BP Plc, 10-CV-4935, U.S. District Court, Southern District of New York (Manhattan).

Del Mar Sues Trader, White Bay Over Contract Breach

Del Mar Asset Management LP sued a former trader and his new employer, White Bay Advisor USVI LLC, alleging breach of contract and misappropriation of trading models.

Bret Chesney learned New York-based Del Mar’s trading models and strategies while working as a senior trader on the firm’s index-trading desk, Del Mar said in the suit filed June 25 in New York state Supreme Court. Before he resigned June 16, he e-mailed proprietary materials reflecting Del Mar’s strategies and research to his personal and White Bay accounts, according to the complaint.

White Bay, a U.S. Virgin Islands company, wasn’t involved in index trading before hiring Chesney, who began to actively trade on the firm’s behalf on June 17, the day after he resigned, according to the suit.

“By virtue of these brazen acts, the defendants have effectively usurped Del Mar’s index trading business and, overnight, put White Bay in the index trading business,” Del Mar said in the complaint.

Del Mar sued for breach and interference with Chesney’s contract, breach of the duty of loyalty, aiding and abetting that breach, and misappropriation of trade secrets.

Elli Ausubel, who answered the telephone at a New York-area number for White Bay, said the firm had no immediate comment. A message he took for Chesney wasn’t returned.

The case is Del Mar Asset Management LP v. Bret Chesney, 650729/2010, New York State Supreme Court, New York County (Manhattan).

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Merck Loses $8 Million Verdict in Trial Over Fosamax

Merck & Co. lost the second trial to reach a verdict over claims its osteoporosis drug Fosamax causes so-called jaw death. The jury set damages at $8 million.

A jury in New York ruled against Merck June 25 in the case of Shirley Boles, 72, of Fort Walton Beach, Florida, awarding $3 million more than the $5 million her lawyers had asked for. Boles claimed she developed osteonecrosis of the jaw, or ONJ, from taking Fosamax. The first Fosamax case resulted in a Merck victory in May.

Boles “took on a giant and won,” said Timothy O’Brien, one of her lawyers.

U.S. District Judge John Keenan, who is overseeing federal Fosamax litigation, scheduled three so-called bellwether trials that may point the way to out-of-court settlements and show each side the other’s strategy. The third case is to be tried in November.

“We believe the jury verdict was a result of plaintiff’s counsel’s inflammatory and prejudicial remarks,” Paul F. Strain, a lawyer for Merck, said in a statement.

Strain said in a phone interview that the jury’s findings and the amount awarded aren’t consistent with the evidence introduced in the trial. Merck will ask Keenan to throw out the verdict and, if necessary, will appeal, he said.

Fosamax plaintiffs claim Merck misrepresented the drug’s safety and failed to warn doctors and patients that it might hamper blood flow to the jaw, causing jawbone-tissue death.

The case is Boles v. Merck & Co., 06-cv-09455, and the lawsuits are combined in In Re Fosamax Products Liability Litigation, MDL 1789, U.S. District Court, Southern District of New York (Manhattan).

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Candy’s CPC Group Wins Trial Against Qatari Diar

The real-estate investment arm of Qatar’s sovereign-wealth fund wrongfully backed out of a deal to redevelop London’s landmark Chelsea Barracks site after the plan was opposed by Prince Charles, a judge ruled.

Qatari Diar Real Estate Investment Co. breached its contract with U.K. developer CPC Group Ltd., controlled by real- estate entrepreneur Christian Candy, and must pay damages in an amount to be determined later, Judge Geoffrey Vos ruled June 25. CPC is seeking as much as 81 million pounds ($121.1 million).

Vos backed CPC’s claim that the site plan application was withdrawn in June 2009 because the emir of Qatar, Sheikh Hamad Bin Khalifa Al-Thani, wanted to avoid upsetting the Prince of Wales, who had complained about the site’s modern design. The judge disagreed with claims that Qatari Diar acted in bad faith.

Christian Candy declined to comment after the ruling.

A joint venture of CPC and Qatari Diar paid 959 million pounds for Chelsea Barracks in January 2008. In November of that year, Qatari Diar bought out CPC’s stake for an initial payment of about 38 million pounds and agreed to make 81 million pounds in deferred payments, CPC said.

The contract allowed Qatari Diar to withdraw the planning application if London Mayor Boris Johnson indicated he would ask the city council to refuse it. Vos disagreed with Qatari Diar’s claim that Johnson intended to do so.

CPC lawyer Neil Kitchener said the company would consider Vos’s suggestion that the developer and Qatari Diar find a way to work together on the project.

The case is CPC Group Ltd. v. Qatari Diar Real Estate Investment Company, case no. 4260/09, High Court of Justice, Chancery Division (London).

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Akzo Unit Wins 20% Cut in Antitrust Fine at EU Court

Akzo Nobel NV’s Imperial Chemical Industries unit won a 2 million-euro ($2.5 million) reduction in a 10 million-euro European Union antitrust fine.

The European Union General Court, the EU’s second-highest court, cut the fine for Imperial Chemical by 20 percent to 8 million euros in Luxembourg June 25, saying the EU’s antitrust regulator “was wrong to find that an aggravating circumstance existed in the applicant’s case” that justified a higher fine.

The European Commission in 2000 re-imposed a 10 million- euro fine on London-based Imperial Chemical, a few months after an EU court threw out the original penalty. The EU antitrust agency also reinstated a 23 million-euro fine on Solvay SA, accusing both companies of abusing their dominant positions in the market for soda ash, used to make glass for cars and buildings.

Solvay and Imperial Chemical in 2008 both challenged the re-adopted fines, saying they came too late after the alleged breaches were committed. Akzo, the world’s biggest maker of paints, bought Imperial Chemical in the same year.

Lawyers for Amsterdam-based Akzo “will have to study the ruling first before making a decision on a possible appeal,” said spokesman Oskar Bosson by telephone.

Amelia Torres, a spokeswoman for the commission’s antitrust unit, didn’t respond to calls and an e-mail seeking comment.

The case is T-66/01 Imperial Chemical Industries v Commission.

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Litigation Departments

Ex-Prosecutor Daddario to Head New York Police Terrorism Units

Richard C. Daddario, a federal prosecutor in New York for 13 years, was named head of the New York Police Department’s anti-terrorism units.

Daddario, 59, was appointed deputy commissioner of counterterrorism, the NYPD said June 24 in a statement. He succeeds Richard Falkenrath, who left in April to join the Chertoff Group, a security advisory firm led by former U.S. Homeland Security Secretary Michael Chertoff.

Daddario, as an assistant U.S. attorney in the Southern District of New York since 1996, led the general crime, narcotics and organized-crime divisions and served as deputy chief of the unit that oversaw organized crime and terrorism, the police department said. He has been the U.S. Justice Department’s attaché in Moscow since September 2009 and will assume his new duties in August, said Paul Browne, a police spokesman.

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To contact the reporter on this story: Elizabeth Amon in Brooklyn, New York, at

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