Barclays, Credit Suisse, AT&T, Standard Bank in Court News

A U.S. bankruptcy judge’s order that Barclays Plc return $2 billion in margin assets to the liquidator of Lehman Brothers Holdings Inc.’s brokerage was “commercially absurd” and should be reversed, the U.K. bank said in a court filing challenging the decision.

“Courts should avoid interpretations that are commercially absurd and make no economic sense,” Barclays argued in the appeal Oct. 28 in Manhattan federal court, saying that the ruling violated established law.

The Lehman brokerage’s trustee disputed Oct. 28 a separate ruling by the same judge, claiming he erred in awarding $1.1 billion in assets to Barclays. The judge mistakenly focused on a description of the assets, held in boxes to clear trades, rather than concentrating on which party they were owed to, the trustee argued in his own appeal.

The dueling filings between London-based Barclays and trustee James Giddens follow a bankruptcy court trial held in 2010 before U.S. Bankruptcy Judge James Peck in Manhattan. Both sides have challenged Peck’s June order on the fight over assets.

Lehman Brothers filed the biggest bankruptcy in U.S. history in 2008. The brokerage is being liquidated separately from its parent, and has been gathering money to pay hedge funds and other remaining customers.

In his decision, the judge told Barclays to return $2 billion in margin assets to Giddens while ordering the trustee to give the bank at least $1.1 billion, and possibly another $769 million.

Michael O’Looney, a Barclays spokesman, declined to comment on Giddens’s so-called cross appeal.

Giddens said in a statement that the judge’s margin award to Lehman’s brokerage was a “milestone” for brokerage customers and that he would contest Barclays’s appeal.

The district court case is Giddens v. Barclays Capital Inc., 11-cv-06052, U.S. District Court, Southern District of New York (Manhattan).

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New Suits

SocGen Sues Mail on Sunday for ‘Irresponsible’ Bailout Story

Societe Generale SA sued Associated Newspapers Ltd., publisher of the Daily Mail and Mail on Sunday, for defamation over an article saying the bank might need a bailout.

Societe Generale, France’s second biggest bank, filed a claim at London’s High Court on Oct. 26. The article, which appeared in the Mail on Sunday on Aug. 7, said the Paris-based bank was in a “perilous” state and possibly on the “brink of disaster.”

The lender called the article “false and irresponsible,” in a statement the day after it was published. The newspaper took the story down from its website and published an apology two days later.

Societe Generale shares fell about 30 percent in August as investors, concerned over European banks’ holdings of sovereign debt, sold shares. French newspaper Le Figaro reported on Sept. 12 that the Paris-based lender called on Associated Newspapers to pay one million pounds ($1.6 million) to be donated to charity.

“The Mail on Sunday has already apologized for publishing this article,” the newspaper said in a statement Oct. 27. “Any claim for damages will be resisted.”

Murray Parker, a London-based spokesman for Societe Generale declined to comment because the legal proceeding are ongoing. Court papers stating the bank’s claim weren’t immediately available.

The case is: Societe Generale SA v. Associated Newspapers Limited, HQ11X04025, High Court of Justice, Queen’s Bench Division.

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JDA Software Sues Credit Suisse Over I2 Acquisition Loan

JDA Software Group Inc. sued Credit Suisse Group AG in New York, accusing the bank of failing to honor a commitment to provide financing for its acquisition of I2 Technologies.

Credit Suisse and Wachovia Bank in August 2008 agreed to provide $450 million in financing to fund the proposed acquisition of I2, Scottsdale, Arizona-based JDA said in a complaint filed Oct. 27 in New York State Supreme Court. Wachovia isn’t named as a defendant.

JDA was scheduled to complete the acquisition on Nov. 6, 2008, until Credit Suisse said it wouldn’t honor its commitment to provide funding for the purchase unless JDA “agreed to several radical changes in the loan terms,” the company said in the lawsuit.

“Credit Suisse retained the fees paid by JDA but did not fund the loan,” forcing the company to terminate the acquisition, pay I2 a $20 million breakup fee and suffer more than $100 million in damages, JDA said.

JDA resumed talks to acquire I2 in August 2009, it said in the complaint. In November 2009, JDA announced it planned to buy the company for an enterprise value of about $396 million, about $50 million more than the purchase price under the original agreement, the company said. JDA completed the acquisition in January 2010.

Steven Vames, a spokesman for Credit Suisse in Boston, declined to comment immediately on the lawsuit in a telephone interview.

The case is JDA Software Group Inc. v. Credit Suisse Securities (USA) LLC, 652997/2011, New York State Supreme Court, New York County (Manhattan).

Healthspring Sued by Investor Over $3.8 Billion Cigna Buyout

Health-maintenance organization Healthspring Inc. was sued over its planned $3.8 billion purchase by Cigna Corp. by an investor claiming the price was inadequate.

Healthspring shareholder Hilary Coyne contends that company directors, duty-bound to get the best possible price for the stock, didn’t take the necessary steps to maximize its value.

“Healthspring is poised for significant financial gains” and “the $55 per share price fails to adequately account for the company’s anticipated growth,” Coyne’s lawyers said in court papers in Delaware Chancery Court in Wilmington.

Cigna, based in Bloomfield, Connecticut, said Oct. 24 it would pay cash for Healthspring, based in Franklin, Tennessee, to triple the number of Medicare customers it serves. Such managed-care plans are among the fastest-growing products for insurers as baby boomers age.

Karey Witty, Healthspring’s chief financial officer, didn’t return voice and e-mail messages seeking comment on the lawsuit.

The case is Coyne v. Healthspring Inc., CA6989, Delaware Chancery Court (Wilmington).

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Madoff Investor Asks Appeals Court to Toss Picower Accord

An investor in Bernard Madoff’s Ponzi scheme asked a federal appeals court to throw out a lower-court decision barring her from suing over a $7.2 billion settlement by the U.S. with the estate of Jeffry Picower.

Giving Madoff trustee Irving Picard priority in dealing with the Picower estate, the district judge denied the investor, Adele Fox, the right to sue the estate herself, she said in a filing Oct. 28 in the U.S. Court of Appeals in New York.

Fox said she is among the Ponzi scheme’s so-called net winners who took out more money than they put in. The trustee and the government have determined that “not a penny of the forfeiture” by the Picower estate will go to her and other net-winner investors, she said.

The appeal of the settlement struck in December means that the majority of the $8.7 billion gathered by the trustee for distribution to investors who lost money with the con man remains tied up in court.

Picower, one of the largest of Madoff’s investors, may have suspected the con man was running a Ponzi scheme, according to Picard. Picower drowned in 2009, and his estate forfeited the money to the U.S. and Picard.

The settlement also is being challenged in district court by lawyer Helen Chaitman on behalf of investors.

Picard, who has filed more than 1,000 suits seeking money for Madoff investors, has estimated allowed claims on the estate at more than $17 billion. He and his law firm, Baker & Hostetler LLP, have collected about $224 million in fees since Madoff’s 2008 arrest.

The case is U.S. v. $7.2 billion, 11-2898, U.S. Court of Appeals for the Second Circuit (New York)

Sprint Seeks to Block AT&T Document Demands in T-Mobile Case

Sprint Nextel Corp. asked a judge to block subpoenas by AT&T Inc. in the government’s antitrust case against AT&T’s purchase of T-Mobile USA Inc., saying the rival company’s requests are “overlapping” and “burdensome.”

Efforts to resolve the dispute over AT&T’s document demands have failed, Sprint said in court documents filed Oct. 28 in federal court in Washington. Sprint said AT&T’s insistence on material beyond the 2.2 million pages Sprint gave the U.S. Justice Department for its probe of the proposed $39 billion merger constituted an “impermissible burden.”

“AT&T was unable to state with any specificity what additional information it needs,” Sprint said in the filing. “AT&T nonetheless continues to insist that it is Sprint’s burden to identify responsive materials that may exist at the company that have not already been produced.”

The fight between the two companies over documents stems from AT&T’s right as a defendant to seek evidence from rivals to show that the proposed acquisition isn’t anticompetitive. The battle intensified after Sprint brought its own lawsuit seeking to block the T-Mobile takeover, and sought access to AT&T documents collected by government antitrust investigators. U.S. District Judge Ellen Segal Huvelle rejected that request last week.

Michael Balmoris, an AT&T spokesman, and John Taylor, a spokesman for Sprint, declined to comment on the Oct. 28 motion.

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Merkel’s Policy Unchanged by Court EFSF Ruling

Chancellor Angela Merkel’s government said a temporary court ban on decisions by a special parliamentary body affecting the euro rescue fund won’t have any impact on Germany’s ability to react to the debt crisis.

Until the final court ruling is made, the “full operational capacity” of the government in relation to the rescue fund remains unhindered, Peter Altmaier, the deputy parliamentary leader of Merkel’s Christian Democratic Union, said Oct. 28 in an e-mailed statement. “In an emergency situation, we will react speedily and effectively.”

Germany’s Federal Constitutional Court placed a temporary ban Oct. 28 on any decisions being taken by a parliamentary select subcommittee that was set up to clear emergency or classified issues regarding the European Financial Stability Facility. The members of the EFSF panel were only voted in two days ago by the lower house, the Bundestag.

The top judges granted a request to halt committee activities while a suit by two opposition lawmakers over the issue is pending, the court said in a statement. According to the court’s ruling, Merkel needs approval from parliament for any emergency actions tied to the rescue fund.

The decision doesn’t hamper “the government’s power to act,” the court said. “The government can always ask parliament for the required approval, which then has to decide as a whole.”

The German government “doesn’t want to comment on a court case that is still ongoing” and will await the court’s final ruling, Steffen Seibert, Merkel’s chief spokesman, told reporters in Berlin. Until then, it will continue to fully involve the lower house in all matters relating to the rescue fund, he said.

The case is BVerfG, 2 BvE 8/11.

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Singapore to Toughen Money Laundering, Terror Financing Laws

Singapore, where assets under management have risen fivefold to $1.2 trillion since 2001, will consider a “tougher penalty regime” and boost enforcement against money laundering and terrorist financing.

The city-state will also make laundering of proceeds from tax offenses a crime and tighten laws on tax evasion, said Ravi Menon, managing director of the Monetary Authority of Singapore, the country’s central bank.

“We will ensure that financial crime does not pay in Singapore and those who jeopardize Singapore’s hard-earned reputation as a financial center of integrity face severe consequence,” Menon said in a speech Oct. 27. “Singapore is sending a clear message that it neither wants nor will tolerate these illicit inflows.”

The Asian nation, which has the highest proportion of millionaires in the world, was criticized in a March U.S. State Department report as being vulnerable to money launderers. Singapore’s economy expanded 14.5 percent last year, boosted by two new casino resorts.

“The speech sends a clear signal that the authorities do not want to see tax evaders from other countries using Singapore as a safe haven for their undeclared funds,” said Edmund Leow, a tax lawyer at Baker & McKenzie.Wong & Leow in Singapore. “This will put Singapore in a similar position to Hong Kong, where tax evasion is already a money-laundering offense.”

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Saudi Billionaire Blames Hotel Loss on Standard Bank Dispute

Sheikh Mohamed bin Issa al Jaber, Saudi Arabia’s third richest man, told a London court Standard Bank Plc’s effort to freeze his assets throughout the world cost him more than 1 billion pounds ($1.6 billion) and caused his U.K. hotels to be seized.

Al Jaber’s assets were frozen last year because of a dispute with Standard Bank’s U.K. unit over loans to companies in his MBI International & Partners Inc. group that the bank said weren’t repaid.

When questioned at a London court hearing Oct. 28 about the assets covered by the freezing order, al Jaber said it had caused lenders to put parts of his JJW Hotels & Resorts Ltd. into administration. On Oct. 26, Lloyds TSB Bank Plc applied to put the Scotsman Group, which runs hotels in Edinburgh and Paris, into administration, the Saudi billionaire said. Boutique hotel operator Eton Group went into administration last year.

The unit of Johannesburg-based Standard Bank Group Ltd. is separately suing al Jaber in London to recoup the loans, worth a total of $150 million, to JJW Hotels & Resorts Ltd. and Ajwa for Food Industries Co.

Al Jaber is the chairman, chief executive officer and founder of MBI, which has interests in hotels, real estate, oil and gas, and agribusiness, according to his website.

“I am proud about my business,” al Jaber told Standard Bank’s lawyer Ian Mill. “I would not let things go like this if I was not in the position your bank put me in. Now, my losses exceed 1 billion pounds.”

Al Jaber, Saudi Arabia’s third-richest man according to Arabian Business, has a counter-claim against the bank because it allowed unauthorized foreign-exchange trades from a personal account, his lawyers said at a pretrial hearing last week.

“Sheikh Mohamed is determined to fight these claims from Standard Bank, and to advance a significant counter claim in excess of $1 billion,” al Jaber’s spokesman Neil McLeod of PHA Media Ltd. said Oct. 28 in an e-mailed statement.

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Two Convicted in Singapore’s Biggest Public Fraud Since 1995

Koh Seah Wee and Lim Chai Meng were convicted for their roles in cheating Singapore government agencies of S$12.5 million ($10 million) in the city’s biggest public-sector fraud since 1995.

Koh, 41, formerly a deputy director at the Singapore Land Authority, pleaded guilty to 55 charges including cheating and conversion of property from criminal proceeds at a hearing in Singapore Oct. 28. Lim, 38, who was his subordinate, pleaded guilty to 49 counts including money laundering.

Justice Tay Yong Kwang said the men, who face a maximum of 10 years in jail for each cheating charge, will be sentenced Nov. 4. Koh is accused of defrauding the land authority of S$12.2 million and the Intellectual Property Office of Singapore of S$286,000, and was charged with 372 counts of cheating and corruption at the agencies. Lim was charged on 309 counts of defrauding the land authority.

Koh’s actions were a “wanton abuse of trust,” Prosecutor Aedit Abdullah said in seeking a jail term of 20 to 24 years. The fraud, committed to support the men’s “hedonistic lifestyles,” has undermined and severely shaken public confidence in the internal controls at government agencies, Abdullah said.

The two men submitted false invoices through various shell companies set up by five accomplices for fictitious information technology services and goods at the land agency, according to court papers, and Koh’s crimes lasted more than a decade.

Ravinderpal Singh, Koh’s lawyer, urged the court to consider his voluntary surrender and cooperation as mitigating factors. About S$8.2 million in assets have been seized from Koh, who graduated from Australia’s Queensland University of Technology with a first class honors in electrical engineering, Singh said.

Prosecutors are seeking imprisonment of 16 to 20 years for Lim, while his lawyers, Subhas Anandan and Sunil Sudheesan, asked Justice Tay to consider a jail term of 10 to 12 years.

Lim is “extremely remorseful” over his role in “what started as an initial plan to cheat a bit of money and spiraled out of control,” Anandan said.

Ho Yen Teck, an accomplice in defrauding the land authority, was sentenced on Jan. 14 to 10 years in jail.

The case is Public Prosecutor v Koh Seah Wee and Lim Chai Meng CC36/2011 in the Singapore High Court.

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Litigation Departments

SEC’s Khuzami Faults Defense Lawyers for Conflicts of Interest

Some defense lawyers need to pay closer attention to possible conflicts of interest when they represent both companies and their employees in front of the U.S. Securities and Exchange Commission, the agency’s top enforcement official said.

The SEC has seen “situations where counsel represents 20, 30 or 40 witnesses and the company in a case,” SEC Enforcement Director Robert Khuzami said at a securities law conference Oct. 28 in Los Angeles. “It’s conceivable that there are no conflicts, but when you see those kinds of numbers you start to get concerned.”

Khuzami said that lawyers representing multiple defendants pose problems for people who may wish to cooperate with investigators in exchange for lighter sanctions. In some cases, attorneys have represented both a manager under investigation for supervisory failures as well as the subordinate who engaged in the questionable conduct.

Khuzami also faulted some defense attorneys for coaching their clients aggressively, resulting in witnesses who recall facts that exonerate them while claiming to forget other basic information, including their own job description, that could incriminate them.

Referring to internal investigations at companies, Khuzami said that “the firm conducting the investigation obviously should be representing the best interests of the company and the shareholders, but the concern is sometimes much more about representing management and those who made decisions.”

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