Republican presidential candidate Mitt Romney, as a board member of Staples Inc., voted to set a low price on the stock and create a new class of shares as a “favor” to its co-founder who was involved in a divorce.
Romney, in testimony in 1991 in the divorce case of Staples co-founder Tom Stemberg, said the special class of Staple shares was created because Stemberg “needed a settlement with his wife.”
The testimony, made public yesterday, deals with the investment in Staples by Bain Capital LLC, the private-equity firm Romney co-founded. He addressed the valuation of the company, the value of the stock Stemberg’s wife received in the divorce settlement, and the business relationship between the two men.
The testimony was released by Massachusetts Probate Judge Jennifer Ulwick after a hearing in which Stemberg’s ex-wife urged its disclosure, initially requested by the Boston Globe. At a hearing in Canton, the judge said that while Romney’s testimony would be released, a confidentiality agreement between the ex-spouses remains in effect.
Gloria Allred, a women’s rights lawyer, appeared in court with Stemberg’s ex-wife, Maureen Sullivan Stemberg, and said she was backing a request by the Globe to unseal the documents.
Asked for comment, Andrea Saul, a spokeswoman for the Romney campaign, referred to a statement from Romney’s lawyer, Robert Jones, lawyer with Ropes & Gray LLP in Boston.
“These tabloid charges being shopped by Gloria Allred, one of President Obama’s most prominent supporters, are absolutely false,” Jones said yesterday in the statement. “Every time a court has reviewed the allegations of her client over the past 24 years, they have been rejected. There is no new information here.”
At the Republican national convention, Tom Stemberg, 63, spoke on behalf of Romney, the former governor of Massachusetts, who was given his party’s nomination for president in the Nov. 6 election against President Barack Obama.
Tom Stemberg’s lawyer, Brian Leary, told the judge yesterday that Romney’s statements were a “primer” on Staples’ early development. Lisa Arrowood, a lawyer for Staples, said the company didn’t oppose the release of Romney’s testimony.
Allred opposed a confidentiality order that was left in place, telling the judge she wants her client to be able to talk about Romney’s testimony.
“She needs to be able to speak,” Allred said. “She apparently is the only person in the U.S., maybe in the world, who cannot speak about Governor Romney.”
The judge said Margaret Sullivan Stemberg could file a new motion to modify the gag order in the case. Allred said it was “the most comprehensive gag order I have ever seen in my 36 years of practicing law.”
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Simpson Thacher Advises McKesson on PSS World Medical Deal
Simpson Thacher & Bartlett LLP advised McKesson Corp. (MCK), the largest U.S. drug distributor, on its agreement to buy PSS World Medical Inc. (PSSI) for about $2.1 billion to expand in providing medical supplies and services. Alston & Bird LLP represented PSS World.
Mergers and acquisitions partners Rob Spatt and Eric Swedenburg are leading the Simpson Thacher team. Additional partners include Joseph Kaufman and Joyce Xu, capital markets; David Rubinsky, executive compensation and employee benefits; Nancy Mehlman, tax; and Peter Thomas, regulatory.
The Alston & Bird team was led by corporate head David E. Brown Jr. and former Health Care head Steven L. Pottle, and included health care mergers and acquisitions partner Sarah E. Ernst, health care and FDA regulatory partners Dawnmarie R. Matlock and Marc J. Scheineson, benefits partners John B. Shannon and Blake C. MacKay, and antitrust counsel Valarie C. Williams. PSS World’s general counsel is Joshua DeRienzis.
Cleary Gottlieb Steen & Hamilton LLP is advising Goldman Sachs Group Inc. (GS), financial adviser to PSS World. The Cleary Gottlieb corporate team includes New York partner Ethan Klingsberg and associate Ritu Narula.
The $29-a-share agreement to purchase the Jacksonville, Florida-based company also includes the assumption of PSS World’s debt, San Francisco-based McKesson said in a statement.
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Reed Smith Starts Emergency Relief and Injunction Team
Reed Smith LLP started a firm-wide emergency relief and injunction team comprising nine members of the commercial litigation and disputes practice. Wayne C. Stansfield, a Philadelphia-based Reed Smith commercial litigation partner, will head the team.
The member lawyers all have experience prosecuting and defending litigation in emergency situations. The initial roster includes Doug Albritton in Chicago, Jesse Miller in San Francisco, Michael Garabed in Los Angeles, John McIntyre and Jayme Butcher in Pittsburgh, Brian Rostocki in Wilmington, Delaware, Travis Sabalewski in Richmond, Virginia, and David Kochman in New York.
“Clients who require or face emergency action, such as injunctions, need a specialized resource because of the unique nature of these types of matters and the speed at which they move,” Stansfield said in a statement. “That is why Reed Smith created this specialized team.”
Lawyers on the team have experience in securing emergency relief, including situations requiring competitors or former employees to be enjoined from misappropriating trade secret information or competing unfairly, preventing tenants from holding over on leases, or obtaining injunctions to prevent damage to property.
The team will advise clients across the U.S. on emergency actions, from initial investigation to resolution. They will aggressively seek and defend emergency relief, whether in the form of a temporary restraining orders, preliminary injunctions or expedited discovery orders.
Clifford Chance’s Shipman to Head Asia Corporate Practice
Clifford Chance LLP said Mark Shipman was elected to head Clifford Chance’s corporate practice in Asia Pacific beginning in January. He will continue to lead the global funds and investment management sector.
Roger Denny, who was previously head of the Asia Pacific corporate practice, steps down after 10 years. He will continue to be head of mergers and acquisitions for Asia Pacific.
“Our highly talented Asia Pacific Corporate team is playing key roles in many of today’s most high-profile deals and I believe the practice will only go from strength to strength under Mark’s leadership,” Peter Charlton, the regional managing partner for Asia Pacific, said in a statement.
Shipman joined Clifford Chance in 1991 and has been a partner since 2001. He has been in Asia since 1997.
Shipman has experience advising managers, sponsors and investors on funds and advises financial institutions on regulatory matters.
Clifford Chance’s corporate practice has 750 legal advisers worldwide. The firm has 34 offices in 24 countries with about 3,400 legal advisers.
Baker & McKenzie Private-Equity Head Jumps to King & Wood
King & Wood Mallesons will hire Mark McNamara next month as head of private equity. He was previously Baker & McKenzie LLP’s global head of the private equity practice and the head of its Australian corporate markets practice, the firm said.
McNamara will lead a team of about 60 partners and lawyers. His practice includes mergers and acquisitions transactions for private-equity clients.
“The private equity market in Asia is set to grow,” Tony O’Malley, King & Wood’s managing partner for Australia, said in a statement. “With our talent, and our relationships, we are in a unique position to provide clients with world-class private- equity expertise and second-to-none access to the go-to lawyers in this field.”
King & Wood is a Beijing-based firm with 21 offices in China, the U.S. and Tokyo.
Troutman Sanders Hires Winston & Strawn Partner and Counsel
Troutman Sanders LLP announced the addition of partner Jeffrey P. Rosenstein and a lawyer as of counsel, both formerly with Winston & Strawn LLP. They are joining the construction practice group in New York.
Rosenstein advises construction-industry clients on all phases of construction projects, including contract negotiation and drafting and resolution of project disputes.
Troutman Sanders has more than 600 lawyers in 15 offices throughout the U.S. and China.
Rajaratnam Judges Voice Concern Over U.S. Wiretap Request
Judges hearing the appeal of Galleon Group LLC co-founder Raj Rajaratnam, who is serving 11 years in prison for insider trading, voiced concern over whether prosecutors improperly won authority to wiretap his phone calls.
A three-judge panel in Manhattan heard arguments yesterday over whether to reverse Rajaratnam’s conviction for insider trading. The central issue is if prosecutors misled the lower court judge who authorized the wiretaps in 2008 by omitting key facts from their request for the secret recordings, and if Rajaratnam’s conviction should be overturned as a result.
“What happens if we agree with you?” U.S. Circuit Judge Robert Sack asked Rajaratnam’s lawyer, Patricia Ann Millett, a partner at Akin Gump Strauss Hauer & Feld LLP, at the start of the argument. “Does this mean a new trial?” Millett responded yes.
A second judge, Jose Cabranes, suggested in his questions that prosecutors had acted properly. The third judge, Susan Carney, asked Millett what the “remedy” would be if the judges agreed that prosecutors had misled the district court.
The appeals court didn’t rule. A reversal would lead to a new trial for Rajaratnam where wiretaps wouldn’t be played, while a decision for the government will keep Rajaratnam behind bars. He is serving his time at the Federal Medical Center Devens in Ayers, Massachusetts.
Rajaratnam was convicted of directing the biggest hedge fund insider-trading scheme in U.S. history. At the trial, the government introduced 45 wiretap recordings, along with documents and testimony derived from the wiretaps.
During yesterday’s argument, Millett argued that prosecutors violated federal law by deceiving the judge who authorized the wiretaps through numerous “misstatements.” Prosecutors omitted important details about the scope, duration and methods of the U.S. Securities and Exchange Commission’s insider-trading investigation, she said.
“In paragraph after paragraph” of the government’s wiretap request, “there were statements that had no reality,” she said. “You cannot ask for a wiretap without showing what you’ve done.”
Assistant U.S. Attorney Andrew Fish defended the U.S. wiretap request, saying prosecutors didn’t intend to mislead the lower court judge. If prosecutors had included details of the SEC investigation and the difficulties then confronting the agency in gathering evidence against Rajaratnam, the lower court judge would have been even more likely to authorize the wiretaps, he said.
“No suppression is warranted,” Fish argued.
Kevin O’Brien, a partner at Harris, O’Brien, St. Laurent & Houghteling LLP in New York and a former federal prosecutor, said prosecutors must follow strict disclosure rules before obtaining approval for a wiretap because wiretaps are so invasive.
The Rajaratnam appeal is U.S. v. Rajaratnam, 11-04416, U.S. Court of Appeals for the Second Circuit (New York); the Gupta case is U.S. v. Gupta, 11-00907, U.S. District Court, Southern District of New York (Manhattan).
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