IKB, Nomura, Lehman, Federated, Las Vegas Sands, Rajaratnam in Court News

Novartis AG’s U.S. unit agreed to pay as much as $152.5 million to settle a gender-discrimination class action brought by female workers.

As part of the settlement, Novartis will distribute money to eligible class members and spend an additional $22.5 million over three years to improve its personnel policies, the Basel, Switzerland-based drugmaker said yesterday in a statement.

The settlement, which was filed in federal court in Manhattan yesterday, follows a May 19 jury verdict in the case awarding $250 million in punitive damages to a group of 5,600 employees. The settlement must be approved by the judge overseeing the case before it can take effect.

“The terms of this agreement allow for full compensation of both former and current female field force employees, ensuring that every woman who worked at Novartis over the past eight years has been compensated fairly,” David Sanford, lead counsel for the plaintiffs, said in the statement.

The settlement wipes out the May verdict, which was subject to challenge in post-trial motions or on appeal.

“While we believe that there was not systemic discrimination at NPC, the trial revealed that some of our associates had experiences influenced by managerial behavior inconsistent with our values,” Joe Jimenez, Novartis AG’s chief executive officer, said in the statement.

As part of the settlement, Novartis won’t oppose a request by the class attorneys for $40.1 million in fees and expenses, which must be approved by the judge.

The settlement money will go to the class, which is made up of current and former women employees who held sales positions at Novartis from July 15, 2002, until yesterday.

The case is Velez v. Novartis Corp., 04-cv-09194, U.S. District Court, Southern District of New York (Manhattan).

Bayer Loses Fifth Straight Trial Over U.S. Rice Crops

Bayer AG lost its fifth straight trial over contaminated U.S. long-grain rice to a Louisiana farmer who claimed the company’s carelessness with its genetically engineered seed caused exports to plunge.

A jury in St. Louis said yesterday the company should pay damages of $500,248. The company previously lost two trials in state court and two in federal, for a total of more than $52 million in jury awards.

It faces about 500 additional lawsuits in federal and state courts with claims by 6,600 plaintiffs. It hasn’t won any rice trials so far. The Louisiana grower, Danny Deshotels, and his family claimed the company and its Bayer CropScience unit were negligent in testing their genetically modified LibertyLink seed, causing a dive in exports to Europe.

“Five different juries under the laws of four different states in both federal and state courts now have unanimously found that Bayer was negligent and liable to rice farmers for damages,” Don Downing, Deshotels’ lawyer said after the trial. “Not a single juror in any of the five trials found for Bayer.”

Bayer, based in Leverkusen, Germany, denied it was negligent and disputed the damages claims. It said after yesterday’s verdict it “will consider its legal options.”

The case is In Re Genetically Modified Rice Litigation, 06- md-1811, U.S. District Court, Eastern District of Missouri (St. Louis).

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Ex-IKB Chief Ortseifen Convicted Over Subprime Risks

Former IKB Deutsche Industriebank AG Chief Executive Officer Stefan Ortseifen became the first person in Germany to be convicted over the financial crisis and was given a 10-month suspended sentence by a German court yesterday.

The Dusseldorf Regional Court convicted Ortseifen for misstating IKB’s risks regarding asset-backed securities tied to the U.S. mortgage market in a press release, which his trial centered on. The former executive has denied wrongdoing. In addition to the suspended term, Ortseifen must pay 100,000 euros ($127,000) to charities.

“It wasn’t our task to investigate the reasons for the financial crisis, the role of the banks or the rating agencies,” presiding judge Brigitte Koppenhoefer said after the verdict. “We simply had to look into whether Mr. Ortseifen violated criminal statutes by the acts he was charged with.”

Ortseifen was accused of misleading investors by downplaying the effect of the U.S. subprime crisis in the July 20, 2007, press release. IKB received a bailout package 10 days later and subsequently got as much as 12 billion euros in guarantees from Germany’s bank-rescue fund.

Ortseifen’s lawyer, Rainer Hamm, had asked for an acquittal and said his client would appeal yesterday’s decision.

Prosecutor Nils Bussee had sought the 10-month suspended prison term and an “adequate” penalty.

IKB’s shares dropped starting in April 2007 over rumors of its subprime risks and Moody’s Investors Service said in early July 2007 it needed to revise its ratings on some asset-backed securities. Ortseifen wanted to react with a release that also addressed the bank’s quarterly results, Koppenhoefer said.

The case is LG Dusseldorf, 14 KLs 6/09.

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Nomura, Hogarth Davies Settle U.K. Lawsuit Over Hires

Nomura Holdings Inc. settled a U.K. lawsuit brought by an executive-search firm that had claimed the bank owed it millions of pounds for helping to recruit hundreds of bankers from Lehman Brothers Holdings Inc.

The case filed by Hogarth Davies Lloyd, which was in the second week of trial in London, was settled yesterday, Nomura spokeswoman Beth Brophy said in a telephone interview. She declined to give further details.

Nomura acquired Lehman’s operations in Asia and Europe, including about 8,000 former Lehman workers, after the New York investment bank filed for bankruptcy in 2008. While Hogarth Davies asked Justice David Steel to assess damages, the firm sought as much as 35.1 million pounds ($53.6 million) in a court filing earlier this year.

Hogarth Davies didn’t respond to a phone message seeking comment. James Hogarth, one of the firm’s founders, didn’t respond to an e-mail.

In court papers, Tokyo-based Nomura said the fee should be around 2 million pounds and called the sum sought by Hogarth Davies “commercially absurd.”

Hogarth testified last week that the job was “one of the biggest headhunting exercises the market has ever known.”

The case is: Hogarth Davies and Lloyd Ltd. v. Nomura International Plc, 09-519, High Court of Justice, Queen’s Bench Division Commercial Court.

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Federated Agrees to Settle Market-Timing Suit for $1.82 Million

Federated Investors Inc., the third-biggest manager of money-market funds, agreed to settle a 2003 class-action lawsuit alleging improper trading for about $1.82 million.

A legal notice announcing the proposed settlement, which received preliminary approval from the U.S. District Court of Maryland, was published yesterday in the Wall Street Journal. The settlement was agreed to in December.

The suit accused Federated of engaging in so-called market- timing and late-trading practices that allowed large clients to buy and sell mutual funds in ways that diluted the gains of long-term shareholders. Pittsburgh-based Federated agreed in November 2005 to pay $100 million to settle similar allegations from regulators. Federated was among 30 companies to resolve claims of improper trading.

The court scheduled a hearing on Oct. 21 and 22 to consider final approval of the settlement, according to the notice. Federated managed $350 billion for investors as of March 31.

Meghan McAndrew, a spokeswoman for Federated, declined to comment.

The case is Mutual Funds Investment Litigation in re Excelsior, Federated, Scudder and AMCAP, 1:04-MD-15861-CCB, U.S. District Court of Maryland (Baltimore).

DBS to Pay $84 Million in Hong Kong Lehman Settlement

DBS Group Ltd., Southeast Asia’s biggest bank, agreed to repay HK$651 million ($84 million) to Hong Kong clients who bought notes linked to the collapsed Lehman Brothers Holdings Ltd.

DBS (Hong Kong) Ltd. has agreed to make the payments to clients it classified as having a low or medium investment risk profile, the Securities and Futures Commission said yesterday.

“This will serve as a useful guide for other distributors in resolving complaints from customers,” said Martin Wheatley, the commission’s chief executive. Over 60 percent of clients who bought the so-called Constellation Notes from DBS will get back their full investment back with interest, he said.

Hong Kong investors bought a total of HK$6.5 billion worth of the notes, of which HK$1.3 billion were sold by DBS. Yesterday’s agreement follows a settlement arrangement last July in which 16 Hong Kong banks including DBS agreed to pay at least 60 cents on the dollar, for a total of HK$6.3 billion, to buy back a batch of credit-linked notes linked to Lehman, known as mini-bonds.

“Resolution payments are being offered, without admission of liability, in the interests of our relationships with our customers and in the broader interests of the Hong Kong financial system,” DBS said in an e-mailed statement yesterday.

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New Suits

Fannie Mae, Freddie Mac Sued Over California Claims

California Attorney General Jerry Brown sued Fannie Mae and Freddie Mac over claims the companies thwarted a program that allows property owners to pay for energy upgrades over time through special tax assessments.

The suit, filed yesterday in federal court in Oakland, California, is based on the Property Assessed Clean Energy program. Under the initiative, local governments pay to make properties more energy efficient and owners then repay the costs through the special property tax levy, according to the complaint.

Fannie Mae and Freddie Mac have blocked the program by improperly characterizing the assessments as loans, and telling lenders that they won’t fund mortgages on properties that participate in the program, according to the suit.

“Because Fannie Mae and Freddie Mac control the mortgage resale market, lenders will not issue mortgages that do not meet Fannie Mae’s and Freddie Mac’s requirements,” according to the complaint. “As a result, Fannie Mae’s and Freddie Mac’s determination -- which misrepresents California law -- essentially forecloses residential Property Assessed Clean Energy programs.”

Fannie Mae spokeswoman Janis Smith said the company declined to comment.

Freddie Mac spokeswoman Stefanie Mullin declined to immediately comment.

The case is California v. Federal Housing Finance Agency, 10-3084, U.S. District Court, Northern District of California (Oakland).

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Sands Sues Singapore Law Group Again for Unpaid Bills

Las Vegas Sands Corp.’s Singapore casino has filed a second lawsuit against a lawyers’ group that refused to pay its bills for a May conference, even though both sides are discussing a settlement of their dispute.

The latest complaint, following one in May, comes after Sands Chairman Sheldon Adelson said June 23 that he was ready to settle with the lawyers “any day they want” and he would “rather make love than war.”

Marina Bay Sands Pte, a unit of Sands, is now seeking S$641,246 ($466,496) from IPBA 2010 Pte over unpaid bills, more than double the original claim, according to a lawsuit filed with the Singapore High Court on June 28.

The organizer of the Inter-Pacific Bar Association conference said in its own counterclaim, filed June 8, that Sands owed the group compensation for misrepresenting its casino as a world-class venue at a time some rooms were unfinished and some facilities were closed.

Sands, which hasn’t served the latest complaint, and IPBA representatives met for settlement talks late last week, Yap Wai Ming, chairman of IPBA’s organizing committee, said July 13 in an e-mailed response to questions.

The casino resort has six months to formally turn over the papers to IPBA, following which the law group will have eight days to respond, according to court papers.

Lisa Williamson, a spokeswoman for Marina Bay Sands, declined to comment.

IPBA paid S$200,000 of the S$841,245.75 bill, according to court papers. Sands will deduct S$300,000 from its latest claim if it manages to recover the amount from an earlier lawsuit, the resort said in court papers.

The case is Marina Bay Sands Pte Ltd. v. IPBA 2010 Singapore Pte Ltd. S464/2010 in the Singapore High Court.

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Lawsuits/Pretrial

Rajaratnam, Chiesi Get Details of Case, Judge Says

Raj Rajaratnam and Danielle S. Chiesi, co-defendants in the biggest hedge-fund insider-trading prosecution, are entitled to learn more about the government’s case against them, a federal judge ruled.

Rajaratnam, 53, and Chiesi, 44, are among more than 20 people accused since October in overlapping criminal and civil insider-trading cases. U.S. District Judge Richard J. Holwell in Manhattan said prosecutors must give the co-defendants more details about the nature of the inside information they are alleged to have exchanged.

Holwell, who is presiding over the criminal case, said in a ruling dated July 13 and made public yesterday that the government has amassed a substantial amount of evidence. The charges span six years, involve “dozens of stocks, dozens of co-conspirators, and a total of seven conspiracies as charged in the indictment,” he said.

“The merits of such a charge depend heavily on the facts and context,” Holwell said. “A defendant might argue that the information he sought to obtain was not material, or that it was already public at the time he tried to get it. But he can only do that if he knows what the information is and when it was conveyed.”

Prosecutors in the office of Manhattan U.S. Attorney Preet Bharara opposed further disclosures, saying the government had already provided “sufficient information” about the nature of the charges.

Robert Hotz, a lawyer for Rajaratnam, didn’t return a voicemail message left at his office seeking comment. Alan Kaufman, a lawyer for Chiesi, said he was still reviewing the decision and didn’t have an immediate comment.

Rajaratnam, co-founder of New York-based Galleon Group, is accused of using secret tips from corporate officials and hedge- fund executives including Chiesi to earn millions of dollars in illegal stock trades. The allegations involve trading shares in 12 companies, including Intel Corp., International Business Machines Corp., Akamai Technologies Inc., Google Inc. and Advanced Micro Devices Inc.

The criminal case is U.S. v. Rajaratnam, 1:09-cr-1184; the civil case is SEC v. Galleon Management LP, 09-cv-08811, U.S. District Court, Southern District of New York (Manhattan).

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Nigerian Bank Wins U.K. Freezing Order Against Ex-CEO

Intercontinental Bank Plc, a Nigerian lender bailed out by the country’s central bank, won a U.K. court order freezing 83 million pounds ($127 million) in assets held by its former chief executive officer.

The bank won the global-freeze order in January in a lawsuit accusing Erastus Akingbola of using the bank’s money to help buy apartments in London and enrich entities he controlled. The bank yesterday won permission from a judge to add new claims to the case, alleging that Akingbola wrongfully directed the lender to buy its own shares, resulting in a loss.

The money was “misappropriated by the defendant and is due to the claimant,” the bank said in court papers. Akingbola used the money in “breach of fiduciary duty.”

The Central Bank of Nigeria said the country had asked the U.K. to extradite Akingbola so he can face charges, which include mismanagement of Intercontinental. Companies outside Britain frequently use London courts to secure global freezes, including Glitnir Bank hf’s freeze this year on assets of former Baugur Group hf Chairman Jon Asgeir Johannesson.

Akingbola’s lawyer, Ed Crosse of Osborne Clarke in London, declined to comment. Akingbola’s defense papers filed March 19 say the alleged transactions were either valid or were mischaracterized in the lawsuit.

The Nigerian bank’s lawyer, Segun Osuntokun of Berwin Leighton Paisner LLP in London, declined to comment.

The U.K. Home Office didn’t immediately have a comment yesterday on Nigeria’s extradition request. Akingbola has been living in the U.K. since last year.

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Trials

Ex-Morgan Crucible CEO Said Not to Direct Shredding

Ex-Morgan Crucible Co. Chief Executive Officer Ian Norris didn’t order the destruction of documents about price-fixing meetings with competitors, a former executive of the ceramics maker testified in Norris’s criminal trial.

Robin Emerson, who retired from a Morgan Crucible unit that makes carbon-based engine parts, said he was ordered by Norris’s subordinates to destroy files detailing secret talks among European makers of carbon and graphite products about how to fix prices in a cartel lasting more than a decade. U.S. prosecutors extradited Norris from the U.K. on conspiracy and obstruction of justice charges tied to the destruction of company documents about the cartel.

“Mr. Norris never instructed you to destroy documents?” Christopher Curran, a lawyer for the former CEO, asked Emerson yesterday in federal court in Philadelphia. “That’s correct,” the ex-executive replied.

Norris retired from Windsor, England-based Morgan Crucible in 2002 after battling prostate cancer. U.S. prosecutors alleged he colluded with rivals to fix prices on carbon parts and then orchestrated a cover-up of those activities. The cartel, which originally operated in Europe, spread to the U.S. in 1989 and continued until 2000, according to a U.S. indictment.

The case is U.S. v. Ian Norris, 03-CR-632, U.S. District Court for the Eastern District of Pennsylvania (Philadelphia.)

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To contact the reporter on this story: Elizabeth Amon in Brooklyn, New York, at eamon2@bloomberg.net.

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