ICAP Plc’s former Asia head Kim Rosenkilde and his deputy Don McClumpha created an “unbearable” work culture, brokers who were sued by the company to stop them from quitting said in court papers.
The two executives favored Caucasians over Asians, the 10 brokers said in Oct. 8 filings to the Singapore High Court. The court last month ordered Lausanne, Switzerland-based Compagnie Financiere Tradition SA to stop recruiting ICAP brokers until the dispute is resolved.
While local brokers took a voluntary pay cut of as much as 20 percent in late 2008 on the basis there would be no firings, the senior ranks were being staffed with “high-cost friends and previous colleagues from overseas,” said Steven Ng, a deputy manager, and Gary Sim, a vice president.
London-based ICAP, the world’s largest broker of trades between banks, has almost 5,000 employees in 32 countries and values and respects “everyone who contributes to our business,” Mike Sheard, a company spokesman, said in an e-mail yesterday.
Rosenkilde is needed in a new role reporting to Chief Executive Officer Michael Spencer and was succeeded by Sydney- based Hugh Gallagher as head of ICAP’s Asia operations at the end of September, Sheard said.
McClumpha will return to London in a few months to work on ICAP’s e-swaps platform, Sheard said, adding that the changes aren’t related to the lawsuit.
Christopher Daniel from Advocatus Law LLP and Suresh Nair from Straits Law Practice LLC are representing the brokers. Andy Leck from Baker & McKenzie.Wong & Leow is acting for ICAP.
The case is ICAP AP (Singapore) Pte. v. M. Divakaran & Ors S703/2010 in the Singapore High Court.
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Petters Trustee Sues JPMorgan Chase, Ritchie Capital
JPMorgan Chase & Co. and Ritchie Capital Management LLC were sued by the U.S. bankruptcy trustee for companies run by convicted Ponzi schemer Thomas Petters in an effort to recover more than $261 million.
The trustee, Douglas Kelley, filed the complaints Oct. 10 in U.S. Bankruptcy Court in Minneapolis, where he has brought more than 200 lawsuits seeking to recover billions of dollars for creditors.
Petters last year was sentenced to 50 years in prison after being found guilty of running a $3.5 billion fraud. Petters conned investors into giving him money to finance phony consumer-goods purchase contracts. His Minnetonka, Minnesota- based businesses also owned Sun Country Airlines Inc. and Polaroid Corp.
Kelley alleged that New York-based JPMorgan, a shareholder in Polaroid before Petters acquired it, received more than $241 million of Petters’s ill-gotten gains. Kelley also seeks to recover more than $12 million from former Polaroid Holding Co. Chairman Jacques Nasser.
Thomas Kelly, a spokesman for JPMorgan, said the bank was unaware of the case and he couldn’t comment on it. A spokesman for Nasser, the chairman of mining company BHP Billiton Ltd., couldn’t be reached for comment.
Justin Meise, a spokesman for Ritchie Capital, said he couldn’t immediately comment on the complaint.
The cases are In re Petters Co., 08-45257; Kelley v. JPMorgan Chase & Co., 10-04443; and Kelley v. Ritchie Capital Management LLC, 10-04440, U.S. Bankruptcy Court, District of Minnesota (Minneapolis).
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WestLB Seeks $22.3 Million From Nomura in Trial Over Notes
WestLB AG, the German lender bailed out during the financial crisis, told a London court yesterday that a Nomura Holdings Inc. unit should pay $22.3 million for securities it wrongly said were worthless.
The Nomura unit last year used an inappropriate bidding procedure to determine the price of 195,000 shares in an investment fund after missing a deadline to physically deliver the notes instead of paying their cash value, WestLB argued on the first day of a trial at the High Court in London.
Nomura had a right to choose the valuation method and the notes were worthless because several banks expressed no interest in them, said Nomura’s lawyer, Richard Handyside. “The valuation should be held to be final and binding,” he said in an Oct. 7 court filing.
WestLB claims Nomura should have used the $22.3 million cash value of the notes established by the fund’s manager, Mauritian International Trust Co., or Mitco. Tokyo-based Nomura claims Mitco didn’t provide enough information about the fund’s underlying assets, or its methodology for determining the value.
The trial comes as state-owned WestLB is shedding risky businesses and preparing to sell itself by the end of 2011 under conditions imposed by the European Commission after the bank was bailed out. Germany’s Soffin bank-rescue fund agreed last year to provide WestLB, based in Dusseldorf, with 3 billion euros ($4.2 billion) to help with moving its bad assets.
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Societe Generale Calls Claim Bank Lied to Court ‘Defamatory’
Societe Generale SA provided “full transparency” about a 1.7 billion-euro deferred tax credit it received because of the 4.9 billion-euro 2008 trading loss from Jerome Kerviel, the bank’s lawyer said.
“It is defamatory to claim that Societe Generale had lied to the court about its loss,” Jean Veil, a lawyer for the bank, told Europe1 radio yesterday.
Societe Generale confirmed his statement and released details on the tax credit, reported as early as August 2008, to refute comments by Kerviel’s lawyer Olivier Metzner to France Info radio on Oct. 9. Metzner said the bank “voluntarily, fraudulently tricked the court” by not figuring the credit into its calculation of the loss.
The dispute over the size of Societe Generale’s loss comes less than a week after a Paris criminal court ordered Kerviel, 33, to repay the full 4.9 billion euros. A Societe Generale spokeswoman said the next day the bank was willing to negotiate a reduction in the award, which is being appealed together with Kerviel’s three-year jail sentence.
“They should have asked for an amount that took into account” the tax credit, Metzner said in a phone interview yesterday. “Therefore they misled the court.”
Any revision to the damages award will be up to the appeal court, Metzner said. He hasn’t been contacted by the bank or its lawyers about the proposed negotiation, he said.
Kerviel amassed 50 billion euros in unauthorized positions, concealed with faked hedges. The Paris-based bank discovered the trades in January 2008 and decided to unwind the bets over three days, resulting in the loss. The court rejected his defense that the bank knew about and encouraged what he was doing, holding Kerviel solely responsible. He was convicted of breach of trust, forgery and computer hacking.
Airgas to Appeal Court Ruling on Meeting Date in Takeover Case
Airgas Inc., fighting a $5.5 billion takeover bid by Air Products & Chemicals Inc., plans to appeal a court ruling that would allow the industrial-gas supplier’s next annual meeting to be held in January.
Delaware Chancery Court Judge William B. Chandler III ruled Oct. 8 that a bylaw approved by Airgas shareholders last month doesn’t improperly shorten the terms of directors on the company’s staggered board. Air Products may use the ruling to take control of Airgas at the January meeting. Airgas rose 3.2 percent in New York trading.
“Airgas continues to believe that the proposed amendment to its bylaws,” which moves up the meeting date from as early as April, “is invalid under both Delaware law and Airgas’s Certificate of Incorporation,” the Radnor, Pennsylvania-based company said yesterday in a statement.
The cases are Air Products & Chemicals Inc. v. Airgas Inc., 5249, Delaware Chancery Court (Wilmington); and Airgas Inc. v. Air Products & Chemicals Inc., 5817, Delaware Chancery Court (Wilmington).
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Lehman U.K. Unit Seeks Ruling on $1 Billion in Securities
Lehman Brothers Holdings Inc.’s U.K. unit asked a London judge to determine the ownership of more than $1 billion worth of securities left in the bank’s accounts when it collapsed two years ago.
Lehman Brothers International Europe lawyer Iain Milligan told Justice Michael Briggs that former Lehman units are contesting the ownership of the securities that they had bought and sold to each other in a series of internal transactions.
Lehman filed for the U.S.’s biggest bankruptcy in September 2008, disrupting financial markets and contributing to the worst economic crisis since the Great Depression. The U.K. unit has been involved in suits with the parent company in the U.S. and affiliates throughout Europe over billions in accounts frozen when the bank collapsed. Last week, it lost a German ruling over $1.1 billion held by Lehman Brothers Bankhaus AG.
“Ultimately you are being asked to make sense of what is in some regards, a mess,” Milligan told the judge.
Milligan said that the case is complicated because the bank’s internal transactions hadn’t been as well documented as transactions with “the outside world.”
Lehman Brothers International Europe was buying and selling securities both on its own and on behalf of other affiliates, Milligan said, leaving a constantly changing balance in its accounts.
AIG in Talks to Settle Duke Stripper-Lacrosse Lawsuit
American International Group Inc. is in talks with Duke University to settle a lawsuit over expenses tied to the school’s court dispute with lacrosse team members falsely accused of sexually assaulting a stripper.
Duke and a unit of New York-based AIG set a mediation date in the almost 2-year-old case, according to a motion filed last week. The school was seeking reimbursement of costs from confidential settlements with three members of the team who were exonerated after they were accused of rape by a stripper invited to a 2006 party.
“The parties are hopeful that they will be able to resolve this dispute at the November 4 mediation and have agreed that it is preferable to avoid incurring significant expenses,” according to the motion from AIG and Duke in federal court in Durham, North Carolina.
A settlement may reduce distractions as AIG seeks to repay taxpayer loans within its $182.3 billion government bailout. Chief Executive Officer Robert Benmosche has settled disputes with investors and former CEO Maurice “Hank” Greenberg.
Duke and AIG have held settlement talks and agreed to reconvene, according to the Oct. 8 filing. Mark Herr, a spokesman for AIG, and Michael Schoenfeld of Durham-based Duke declined to comment.
Duke had demanded reimbursement for costs tied to lawsuits by players and another by the team’s former coach over the school’s role in investigating the accusation, according to the November 2008 complaint. The athletes said Duke remained silent during the probe even though the university had evidence they were innocent.
The case is Duke University and Duke University Health System Inc. v. National Union Fire Insurance Co. of Pittsburgh Pa., 08-cv-0854, U.S. District Court, Middle District of North Carolina (Durham).
SKS Microfinance CEO Needs Board Approval for Major Decisions
SKS Microfinance Ltd., the Indian lender backed by George Soros, said a court ruled that newly appointed Chief Executive Officer M.R. Rao can’t make major decisions without the approval of the board.
SKS Microfinance shares have declined 3.6 percent since Oct. 4, when the lender replaced Suresh Gurumani with Rao, four years before the end of Gurumani’s term. The stock rose 0.4 percent at the 3:30 p.m. close on the Bombay Stock Exchange yesterday, bringing gains since its Aug. 10 initial public offering to 25 percent.
The Andhra Pradesh High Court’s ruling, which came in response to an application from S. Lekha to stop SKS’s board from terminating Gurumani’s term as CEO, will be effective pending further orders, the company said in a statement to the Bombay Stock Exchange yesterday.
Gurumani continues to serve on the board of SKS, India’s largest microfinance lender, the Hyderabad-based company said in a response to the court. He “can take every possible action to protect the interests of every person concerned as a member of the board,” the court said in its ruling dated Oct. 8.
The company has withdrawn “all powers and authorities granted” to Gurumani, it said in a statement to the Bombay Stock Exchange on Oct. 4. The company’s management, including founder Vikram Akula, hasn’t said why Gurumani was fired.
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Singapore Whistleblower Ang Seng Thor Fined Rather Than Jailed
Ang Seng Thor, the former head of AEM-Evertech Holdings Ltd., was fined rather than jailed for corruption by a Singapore judge after disclosing bribes to companies including Seagate Technology Plc.
His whistle-blowing led to the full discovery of wrongdoings that were difficult to find and prosecute, Singapore District Judge John Ng said in his ruling yesterday. Ang, who pleaded guilty, “played a passive role” in the bribery, Ng said.
Ang told the board of Singapore-based AEM in 2005 that its executives including himself and former Chairman Tok Kian You bribed employees at Seagate and Infineon Technologies AG, according to court papers. The former CEO also informed the board of STMicroelectronics NV that bribes were given to its executives.
Ang was fined a total of S$200,000 ($153,000) for two corruption charges and barred five years from being a company director, Ng said. He could have been jailed for as long as five years for each charge.
Wendell Wong, Ang’s lawyer, had asked for a fine instead of a jail term, saying the prospect of imprisonment would deter whistleblowers.
Singapore’s courts must accord a significant recognition to whistleblowers, who deserve a discount on their sentence, Ng said. “At the same time, we need not elevate whistle-blowing to an exalted level,” he said.
AEM-Evertech was renamed AEM Holdings Ltd. in May 2007.
The case is Public Prosecutor v Ang Seng Thor DACs 20430- 5/2010 in the Singapore Subordinate Court.
Settles Brand Dispute With Founder Stelios
EasyJet Plc resolved a brand-license dispute with founder Stelios Haji-Ioannou, giving Europe’s second-largest discount airline greater freedom to boost revenue through marketing deals with other travel companies.
The airline will retain the right to the EasyJet name for as long as 50 years, with a minimum commitment of 10 years, by paying an annual royalty of 0.25 percent of total revenue, fixed at 3.9 million pounds ($6.2 million) and 4.95 million pounds in the first and second years, EasyJet said yesterday in a statement. The Luton, England-based company reported sales of 2.67 billion pounds in the last fiscal year.
Stelios, who prefers to be known by his first name, alleged that EasyJet had infringed on an agreement it signed with his EasyGroup holding company in November 2000, shortly before the airline’s initial offering of shares to investors. The dispute centered on whether the carrier was violating terms of the contract specifying that at least 75 percent of sales must come from airline operations.
“We see this as a new chapter in working with EasyGroup going forward,” EasyJet Chief Executive Officer Carolyn McCall said yesterday on a conference call with reporters. “It gives us more freedom to use the brand.”
EasyJet’s other investors, who must approve the agreement, are “very supportive,” McCall said. The executive, who became CEO in July, said the dispute with Stelios, the carrier’s biggest shareholder, had cost the company about 4 million pounds in legal fees.
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