Gibbs & Bruns LLP, the law firm that won an $8.5 billion settlement from Bank of America Corp. tied to faulty mortgage bonds said Wells Fargo & Co. and Morgan Stanley failed to service $73 billion of similar securities, creating a default.
Gibbs & Bruns cited at least $15 billion of Wells Fargo’s residential mortgage-backed securities and $5 billion from Morgan Stanley where holders have 25 percent or 50 percent or more of the voting rights, according to a statement yesterday from the Houston law firm. The dispute also covers $23 billion of Morgan Stanley-issued RMBS and $30 billion of Wells Fargo’s RMBS where holders “have significant voting rights, but less than 25 percent or 50 percent,” the firm said.
Faulty mortgages and foreclosures have cost the largest U.S. home lenders at least $84 billion since the start of 2007, according to data compiled by Bloomberg, and have been blamed by regulators for discouraging banks from making new loans. Kathy Patrick, a partner at Gibbs & Bruns, led a bondholder group that reached a settlement in June 2011 with Bank of America covering mortgage trusts with an original loan balance of $424 billion.
“We will review any communication we receive and respond appropriately,” said Mary Eshet, a spokeswoman for San Francisco-based Wells Fargo. Mary Claire Delaney, a spokeswoman for New York-based Morgan Stanley, declined to comment.
Patrick’s firm said in January it was seeking information on pools securing more than $19 billion of residential mortgage-backed securities issued by affiliates of Wells Fargo, which says it’s the biggest U.S. home mortgage lender and servicer.
Morgan Stanley also received a letter in October from the law firm, which said it was representing holders of at least 25 percent of voting rights in 17 trusts with more than $6 billion in outstanding balances, according to a filing.
Bank of America’s settlement with 22 bondholders, including BlackRock Inc. and Pacific Investment Management Co., seeks to allow it to pay 2 percent of the faulty bonds’ face value to avoid repurchasing the underlying loans.
While Bank of America’s deal is awaiting court approval, attorneys general from New York and Delaware have intervened to seek more information. New York has said there are “serious questions about the fairness and adequacy” of the accord, which covers just “a small fraction” of losses.
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Failures by U.S. Officials Plagued Gun Program, Report Says
Management failures and errors by a U.S. law enforcement agency and the Justice Department were pervasive in a federal operation designed to track guns illegally shipped to Mexico, according to a report by the department’s internal watchdog.
The 471-page report, released yesterday, described failures by the Bureau of Alcohol, Tobacco, Firearms and Explosives, which ran Operation Fast and Furious, and by the U.S. attorney’s office in Arizona. After the report’s release, the Justice Department announced the retirement of one official and resignation of a second.
Republicans have faulted Attorney General Eric Holder’s oversight of Fast and Furious and his responses to lawmakers queries on the operation. The U.S. House in June cited Holder for contempt of Congress for failing to turn over documents related to the operation. ATF is part of the Justice Department.
Fast and Furious permitted illegal gun purchases in the U.S. in an effort to link the weapons to Mexican drug cartels. It took place between 2009 and January 2011 and allowed more than 2,000 guns to be carried away.
Two of the weapons were found at the scene of the December 2010 murder of U.S. Border Patrol agent Brian Terry in Arizona, according to a congressional report. Other guns were found at crime scenes Mexico.
In a statement after the report was released, Holder announced that Kenneth Melson, the former acting director of ATF, is retiring from the Justice Department. Deputy Assistant Attorney General Jason Weinstein, who led violent and organized crime enforcement efforts, has resigned, Holder said in a statement.
The inspector general referred 14 officials to the Justice Department for possible disciplinary or administrative action for failures in Fast and Furious.
In his statement, Holder said Justice Department leaders “did not know or authorize the use of the flawed strategy and tactics.” He also said department leaders didn’t “attempt to cover up information or mislead Congress about it.”
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Blackstone Group Agrees to Buy Vivint for About $2 Billion
Simpson Thacher & Bartlett LLP corporate partner Peter Martelli led the team advising Blackstone Group LP, the world’s biggest private-equity firm, in its agreement to buy Vivint Inc. for about $2 billion to gain home-security, energy-management and solar-power customers in more than 670,000 homes in North America. Jones Day New York mergers and acquisitions partners Bob Profusek and Andy Levine led the team advising Vivint. Buchanan Ingersoll & Rooney PC’s Hugh Van der Veer and Robert Jones as well as Durham Jones & Pinegar’s Todd Leishman also provided representation for Vivint and Vivint Solar and 2GIG respectively, Jones Day said.
Additional Simpson Thacher partners included: Alden Millard, credit; Igor Fert, capital Markets; Gary Mandel,tax; Gregory Grogan, executive compensation; and Joseph Tringali, litigation.
Blackstone is buying a majority stake in the Provo, Utah-based home-security and solar-leasing company from initial investors Goldman Sachs Group Inc., Jupiter Partners LLC and Peterson Partners LP in a deal that should be completed by year-end, founder and Chief Executive Officer Todd Pedersen said in an interview yesterday. He plans to keep his minority equity stake.
“We were a small company when they first invested in us in 2006,” Pedersen said. “They’ve done very well since then and with Blackstone we’ll have the strong backing in the capital markets that will help us scale up.”
Vivint started as a home-security and management business in 1999 and last year expanded into offering solar-power leases. These home-management services, excluding solar, reached more than $30 million in recurring monthly revenue this year and should climb to almost $35 million in the next three months, Pedersen said.
Lenovo Makes First Software Buy to Expand in Cloud Computing
Weil Gotshal & Manges LLP advised Lenovo Group Ltd., the world’s second-largest maker of personal computers, which agreed to buy Stoneware Inc. of the U.S. to gain cloud-computing products in its first acquisition of a software vendor. Taft Stettinius & Hollister LLP was counsel to Stoneware.
Weil’s team was led by Keith Flaum, mergers and acquisitions, and included partners Helyn Goldstein and Michael Kam, tax, benefits and executive compensation, and John Brockland, technology and IP transactions.
Taft Stettinius’s Neal Roach, Bradley W. Schwer and Todd C. Lady were the partners on the deal for Stoneware.
Stoneware produces software used mainly by governments and schools to synchronize data across multiple mobile devices, Mark Cohen, a Lenovo vice president, said in a telephone interview. The closely held, Indianapolis-based company has 60 employees, he said, without disclosing terms.
The purchase is Lenovo’s second in less than three weeks as Chief Executive Officer Yang Yuanqing expands the company to take on rivals including Apple Inc. and Samsung Electronics Co. in smartphones, tablets and Internet-ready televisions. Lenovo will use Stoneware to build a “public cloud” for consumers, Cohen said. The service would compete with Apple’s iCloud, which lets users store music, movies and applications and access them by the Internet and wirelessly.
The acquisition “helps us access and interface with users in a way that we haven’t been able to do,” Cohen said. “We are not trying to remake ourselves into a software company. What we’re trying to do is selectively enter the software market where we can make a difference for our customers, and to support our overall strategy.”
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Morrison & Foerster Names Three New Firm Co-Chairs
San Francisco litigation partners Craig Martin and Anna Erickson White and Tokyo real estate partner Eric Piesner, were appointed Morrison & Foerster LLP’s new co-managing partners. The trio succeeds Pamela Reed, who was managing partner of the firm for 13 years.
Martin and White, who are both members of the securities litigation, enforcement and white-collar defense group, share responsibilities for the firm’s nine U.S. and two European offices. Piesner, a real estate partner, will oversee MoFo’s four Asian offices.
They will report to bankruptcy partner Larren Nashelsky, who was elected chairman of the firm in July.
Nashelsky said in a statement that he was confident the three leaders “will be a formidable team, with a very broad and real understanding of the firm’s practices, clients, culture, and economics, aptly poised to face the competitive challenges of today’s legal market.”
White acted as firmwide managing partner from 2006 to 2009. She also heads the Business Review Committee, which advises the firm on conflicts and strategy issues. In her practice she represents public companies and their officers and directors in securities class actions, derivative suits, internal investigations, SEC investigations, and general commercial disputes.
Martin represents clients in SEC enforcement and DOJ matters, corporate investigations, and private securities litigation.
“By all measures our firm is thriving. Financially we are having one of our best years ever, and our lawyers are busy with market-shaping matters across the globe,” Martin said in a statement.
Piesner is head of the firm’s Asia real estate practice, and is the global co-chairman of the firm’s 550-lawyer business department. His practice focuses on the representation of funds, banks, REITs and other institutional clients in real estate-related transactions in Japan, China, India, Australia and other markets in the Asia-Pacific region.
During Reed’s term as managing partner, which ends next month, the firm has seen expansion of its global platform, particularly in Asia.
“As MoFo approaches its 25th anniversary in Tokyo, we’re incredibly proud of the growth and success we’ve had in Japan, as well as China,” Piesner said. “The firm’s strategic objective is to continue to represent the top companies in these markets in their most significant matters, whether corporate or litigation, and I’m looking forward to growing our practices to support client needs.”
Morrison & Foerster has more than 1,000 lawyers in 15 offices in the U.S., Europe and Asia.
Crowell & Moring Hires High Profile Partners in Washington
Crowell & Moring LLP announced two high profile partner hires this week. Former Goldman Sachs Group, Inc. vice president in the Office of Government Affairs Eric Edwards and Cheryl A. Falvey, general counsel of the U.S. Consumer Product Safety Commission join the firm’s Washington office.
Edwards joins the public policy group as a partner. He will provide strategic counseling to firm clients on government affairs matters in the areas of banking, securities, financial institutions, and general business, with a particular focus on the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act and other financial regulatory matters, the firm said.
At Goldman, Edwards managed a legislative and regulatory portfolio that included the application of the “Volcker Rule” to bank-sponsored private equity and hedge funds, and the broader impact of Dodd-Frank on banks and asset managers, the firm said.
His legislative experience includes senior staff positions in the U.S. House of Representatives and the U.S. Senate, where he was staff director and counsel for the Subcommittee on Financial Institutions and Consumer Credit of the U.S. House Committee on Financial Services.
Falvey will join the firm as a partner in the torts group and product risk management practice on Oct. 1. As general counsel of the CPSC, Falvey advised the Commission during the implementation and passage of the Consumer Product Safety Improvement Act of 2008, the congressionally mandated creation of the consumer complaint database, as well as enforcement efforts at the ports, the firm said.
Falvey was general counsel of the CPSC since March 2008. During that time, the Commission’s regulatory and enforcement activities focused on toxic substances in children’s products, performance standards for durable infant products, testing and certification requirements for regulated products, and emissions from Chinese drywall.
Prior to joining the CPSC, Falvey headed Akin Gump Strauss Hauer & Feld LLP Washington litigation practice.
Crowell & Moring LLP has about 500 lawyers representing clients in litigation and arbitration, regulatory, and transactional matters. The firm has 11 offices in the U.S., Europe and the Middle East.
Gibson, Dunn & Crutcher LLP’s Hires DOJ Partner in Washington
Gibson, Dunn & Crutcher LLP hired a U.S. Justice Department lawyer from the Antitrust Division, Joshua Soven. He joins the firm’s Washington office as a partner.
Soven was Chief of the Litigation I Section, where for five years he was responsible for investigating and prosecuting merger and non-merger antitrust violations in industries such as health care and consumer products, the firm said.
Before he worked at the Justice Department, he was an attorney adviser to the chairman of the Federal Trade Commission and a trial attorney for the Antitrust Division’s Networks and Technology Enforcement Section.
At the Justice Department, he oversaw 25 lawyers and 10 professionals who investigated and prosecuted merger and non-merger antitrust violations in the insurance, health-care, consumer products, paper and dairy sectors.
Gibson Dunn has more than 1,000 lawyers in 17 offices the Americas, Europe, the Middle East, and Asia.
Sedgwick Hires Six Lawyers with focus on Land Use, Litigation
Sedgwick LLP hired six attorneys in its Austin office. Three partners, Alan Glen, Michael Klein and Lisa Michaux Magids, and three associates, join the firm from Smith, Robertson, Elliott, Glen, Klein & Douglas LLP. Two outside counsel, law school professors with environmental regulatory expertise, are also working with the firm, Sedwick said in a statement.
The members of this group bring experience in environmental, natural resource and land use issues, including the Endangered Species Act, National Environmental Policy Act, Clean Water Act and other federal regulatory programs. They also have health-care and insurance regulatory litigation and general commercial litigation experience, the firm said.
“The growth of our Austin office reflects our goal of expanding in the Texas marketplace, and we now have the real estate, construction and land use bandwidth in the state to meet our clients’ needs in those areas,” Sedgwick’s Commercial Division Chairman Michael Davisson said in a statement.
Alan Glen represents both public and private entities across the country and has handled dozens of permits and consultations under the ESA. Michael Klein is a litigator, with more than 40 matters tried to final award or judgment in state and federal courts and arbitration. Lisa Michaux Magids focuses on litigation matters, including general commercial litigation, business disputes, premises liability, general tort, insurance coverage issues, contract disputes, securities class actions, governmental regulation matters and trade secret litigation.
Sedgwick LLP provides trial, appellate, litigation management, counseling, risk management and transactional legal services with more than 370 attorneys in 14 offices in the U.S. and Europe as well as an affiliated office in Bermuda.
K&L Gates Lawyer Moves to Barnes & Thornburg in Chicago
Barnes & Thornburg LLP hired Bonita Hatchett as a partner in the Corporate Department of the Chicago office. She was previously a partner in the Chicago office of K&L Gates LLP.
Hatchett has more than 15 years of experience counseling publicly traded, closely held, collectively bargained, government and tax-exempt employers on employee benefit matters.
Her experience includes all aspects of compliance with the Employee Retirement Income Security Act of 1974, as well as the tax qualification and requirements of the Internal Revenue Code of 1986, applicable to qualified plans, nonqualified plans, health and welfare agreements, executive compensation and other compensatory arrangements, the firm said.
Barnes & Thornburg expects Hatchett to help employers understand the many implementation requirements for complying with the Patient Protection and Affordable Care Act in the short-term and long-term.
Barnes & Thornburg’s has more than 200 lawyers in the Corporate Department The firm has more than 550 attorneys in 12 U.S. offices.
Sheppard Mullin Adds Labor Lawyer in Orange County
Jason A. Weiss has joined Sheppard, Mullin, Richter & Hampton LLP as a partner in the firm’s labor and employment practice group, based in the firm’s Orange County office. Weiss was previously at Allen Matkins Leck Gamble & Mallory LLP in Orange County.
Weiss specializes in representing employers, from multinational corporations to startups, on a variety of employment and labor relations matters, including wrongful termination and unfair competition lawsuits as well as preventive counseling and advice. He has handled cases at the trial and appellate levels in both state and federal courts as well as in arbitration.
Sheppard Mullin’s labor and employment practice group includes 90 attorneys firm wide. The firm has 60 attorneys based in its Orange County office. The firm has close to 600 attorneys in 16 offices in the U.S., Europe and Asia.
Eversheds Hires Banking and Finance Partner in London
Eversheds LLP has appointed CMS Cameron McKenna LLP banking and finance partner Alex Doughty as a partner in its London banking team, the firm said.
Doughty has a focus on emerging markets. As well as providing general advice on a wide range of banking, infrastructure and project finance matters, he has been involved in the structuring of over $50 billion of debt finance-related deals across several industry sectors, the firm said. His most recent work was on energy transactions, including the oil and gas sector.
Eversheds has lawyers in 45 offices in 28 countries around the world.
AMR, Committee Lawyers Costing About $5.5 Million a Month
AMR Corp., the parent company of American Airlines Inc., is being charged an average of about $4 million a month by its primary bankruptcy lawyers since filing to reorganize in late November, Bloomberg News’s Bill Rochelle reports.
Weil Gotshal & Manges LLP, the airline’s chief lawyers, this week filed a request for court approval of $17.5 million in fees covering April 1 through July 31. From the start of the case through March 31, the cost excluding expenses was $14.8 million.
Primary lawyers for the official creditors’ committee from Skadden Arps Slate Meagher & Flom LLP are costing an average of $1.4 million a month. In the new fee request filed this week, Skadden seeks $5.6 million. In the prior request, the total was $5.7 million.
The airline is being forced to reduce the flight schedule 2 percent this month and next because of a shortage of pilots. The pilots’ union said its members aren’t engaging in a job action.
Last week, the bankruptcy court authorized AMR to impose contract concessions on the pilots. AMR’s other eight unions negotiated and ratified contracts with fewer concessions.
AMR will be putting about 4,000 mechanics and ground workers on furlough as the result of their unions’ contract concessions.
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AMR, based at the airport midway between Dallas and Fort Worth, Texas, listed assets of $24.7 billion and debt totaling $29.6 billion in the Chapter 11 reorganization begun in November. American Airlines entered bankruptcy with 600 aircraft in the mainline fleet and another 300 with American Eagle, the feeder airline.
The case is In re AMR Corp., 11-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).