U.S. Attorney Patrick J. Fitzgerald in Chicago, the chief federal prosecutor in the Northern District of Illinois since Sept. 1, 2001, said he will step down, effective June 30.
During his decade-long tenure, the appointee of Republican President George W. Bush won convictions of two Illinois governors, Republican George Ryan and Democrat Rod Blagojevich, newspaper publisher Conrad Black, and Bush White House aide I. Lewis “Scooter” Libby.
“His aggressive prosecution of wrongdoing -- including politicians in both parties -- has given fair warning that no one is above the law,” Richard Durbin, the U.S. senator from Illinois, said in a statement on the prosecutor’s announcement.
Fitzgerald, 51, who scheduled a press conference for today, has no immediate employment plans and “will take time off this summer before considering career options,” according to a Justice Department statement.
JPMorgan Hires Ex-SEC Enforcer McLucas in Loss Investigation
JPMorgan Chase & Co., the biggest U.S. bank, hired former U.S. Securities and Exchange Commission enforcement chief William McLucas to help respond to regulatory probes of the firm’s $2 billion trading loss.
The lender retained Wilmer Cutler Pickering Hale & Dorr LLP, where McLucas is a partner, shortly after the bank disclosed the loss on May 10, said Kristin Lemkau, a spokeswoman for New York-based JPMorgan.
The probes began after JPMorgan traders in London built up positions in illiquid credit derivatives that were so large they distorted market prices and eventually led to what Chief Executive Officer Jamie Dimon called “self-inflicted” losses that may grow. That spurred reviews by the SEC, Commodity Futures Trading Commission, Office of the Comptroller of the Currency and Federal Bureau of Investigation.
“Our focus right now is on whether the company’s public disclosure and financial reporting is accurate,” SEC Chairman Mary Schapiro said May 22 in congressional testimony. “The agencies collectively, including the criminal authorities, are working very hard to untangle what happened at the firm.”
The SEC is reviewing the accuracy and timing of JPMorgan’s disclosure of changes in how it calculates value-at-risk, or VaR, which shows how much it could lose from trading most days, Schapiro said. The bank changed its VaR model for the chief investment office during the first quarter without telling investors. The new model, which has since been scrapped, had cut the risk estimation almost in half, Dimon told investors May 10.
McLucas, 61, led the SEC’s enforcement division from 1989 to 1998 and represented board committees in the collapses of Enron Corp. and WorldCom Inc. He didn’t reply to a phone call and e-mail seeking comment.
The losses occurred in a portfolio of credit investments overseen in London by JPMorgan’s chief investment office, which manages risks. The company used a trading strategy that was “flawed, complex, poorly conceived, poorly vetted and poorly executed,” Dimon, 56, has said.
JPMorgan’s general counsel and most senior lawyer, Stephen Cutler, also previously served as the head of enforcement at the SEC. Cutler, 50, worked with McLucas at WilmerHale from 2005 to 2007, before JPMorgan hired him.
Jones Day, Gunderson Dettmer Work on SAP-Ariba Deal
SAP AG, the largest maker of enterprise-applications software, agreed to buy Ariba Inc. for $4.3 billion in the German company’s second multibillion purchase in cloud computing to take on Oracle Corp.
Jones Day represented SAP. Leading the Jones Day team are partners Daniel Mitz in the Silicon Valley office and Jonn Beeson in the Irvine, California, office. Also on the deal were antitrust partners Phil Proger in Washington, Craig Waldman in San Francisco and Thomas Jestaedt in Frankfurt; intellectual property partner Warren Nachlis in New York, tax partner Les Droller in Washington, labor partner Rick Bergstrom in Irvine, government regulation partner Giovanna Cinelli in Washington and benefits partner Brian Holmen in Irvine.
Partners David W. Van Horne, Brooks Stough and Sharon Hendricks in the Redwood City, California, office and Gari Cheever in the San Diego office of Gunderson Dettmer Stough Villeneuve Franklin & Hachigan LLP represented Ariba. Hogan Lovells LLP partners Logan Breed in Washington, Michele Harrington in Northern Virginia and Catriona Hatton in Brussels provided antitrust advice to Ariba.
SAP will pay $45 a share, or 20 percent more than Ariba’s May 21 closing price, Walldorf, Germany-based SAP said May 22. The transaction, subject to approval by Ariba shareholders and regulators, will probably be completed by the end of August, SAP Chief Financial Officer Werner Brandt said on a conference call.
Ariba is the leader in cloud-based collaborative commerce applications, counting BHP Billiton Ltd. and Deutsche Bank AG among customers it connects to more than 730,000 suppliers. As competition in on-demand software intensifies, SAP has increased its pace of acquisitions, last buying SuccessFactors Inc. in December. With businesses increasingly choosing to store and process data on the Web, SAP is shifting many of its staple applications to the Internet.
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Morgan Stanley, Goldman Sachs Sued Over Facebook Stock Sale
The first lawsuits against Facebook Inc. and its bankers, lead underwriter Morgan Stanley, as well as Goldman Sachs Group Inc. and JP Morgan Chase & Co. have been filed.
Robbins Geller Rudman & Dowd LLP was among the first law firms to file a proposed class action, or group lawsuit, on behalf of investors who have lost more than $2.5 billion since the initial public offering last week.
The complaint was filed yesterday in Manhattan federal court. It claims Facebook and the banks didn’t disclose lower revenue estimates.
Also sued were units of Bank of America Corp. and Barclays Plc and Facebook’s top executives and directors, according to the filing. Facebook went public at $38 a share. While the stock rose 1.5 percent and raised $16 billion in the IPO, it plunged 19 percent over two days.
“The true facts at the time of the IPO were that Facebook was then experiencing a severe and pronounced reduction in revenue growth,” the plaintiffs said in the complaint.
Andrew Noyes, a spokesman for Menlo Park, California-based Facebook, said in an e-mail: “We believe the lawsuit is without merit and will defend ourselves vigorously.” Pen Pendleton, Michael Duvally and Mark Lane, spokesmen for Morgan Stanley, Goldman Sachs and Barclays, respectively, declined to comment. Representatives of JP Morgan and Bank of America didn’t immediately return calls for comment.
Facebook’s revenue growth is declining because its greatest growth is coming from users of mobile devices rather than personal computers, according to the complaint. The company hasn’t shown advertisements to people who gain access to the website through mobile applications, according to the complaint. Facebook booked 85 percent of its revenue from advertising in 2011, according to the suit.
The banks named in the suit reduced their estimates for Facebook for the second quarter and full year of 2012 and didn’t inform potential investors in presentations before the IPO, the plaintiffs claimed.
“The underwriters took down their earnings estimates dramatically during the road show and only told a select group of investors,” Samuel Rudman, a lawyer for the plaintiffs from Robbins Geller, said yesterday in a telephone interview.
In a separate action, a Facebook investor sued Nasdaq OMX Group Inc. May 22 in the same court, saying the exchange “badly mishandled” trades in Facebook stock, which resulted in delays and a failure to complete customer orders.
The U.S. Securities and Exchange Commission has said it will review the first day of trading in Facebook shares.
Also named as defendants in yesterday’s suit are Facebook’s co-founder and chief executive officer, Mark Zuckerberg, and its chief financial officer, David Ebersman.
The underwriter case is Brian Roffe Profit Sharing Plan v. Facebook, 12-04081, and the Nasdaq case is Goldberg v. Nasdaq OMX Group Inc., 12-cv-04054, U.S. District Court, Southern District of New York (Manhattan).
Law Firm Moves
Dechert Opens Office in Chicago with Three Litigators
Dechert LLP has opened an office in Chicago with three securities litigation partners: David H. Kistenbroker, Joni S. Jacobsen and Carl E. Volz. All three had worked at Katten Muchin Rosenman LLP.
Kistenbroker, who was managing partner of Katten’s Chicago office and chairman of the firm’s Litigation and Dispute Resolution practice, focuses on representing public companies, as well as their directors and officers, in securities class actions, SEC investigations and corporate governance matters.
Jacobsen and Volz also represent public companies, as well as their directors and officers in securities actions, directors’ and officers’ liability actions, SEC investigations, corporate governance disputes and other complex commercial litigation.
Dechert has 25 offices throughout the U.S., Europe, Asia and the Middle East.
Akin Gump Adds Hedge Fund Lawyer in Its New York Office
Kelli L. Moll has joined the New York office of Akin Gump Strauss Hauer & Feld LLP as a partner. The firm announced that Moll, who previously was a partner in the New York office of Schulte Roth & Zabel LLP, will head Akin Gump’s hedge fund practice in New York.
Moll represents investment managers in all aspects of their business, focusing primarily on hedge fund and private equity fund formation, regulatory advice, seed capital arrangements and partnership arrangements among principals, according to a statement from Akin Gump.
Akin Gump has more than 850 attorneys in offices throughout the U.S., Europe, Asia and the Middle East.
McCarter & English Adds Patent Litigator in Delaware Office
Thomas A. Stevens, assistant general counsel for global IP litigation at AstraZeneca Pharmaceuticals and formerly a senior deputy attorney general in Delaware’s Department of Justice, has joined McCarter & English LLP as a partner in the firm’s intellectual property and information technology practice.
Stevens will specialize in Hatch-Waxman patent-infringement actions relating to pharmaceutical and biotechnology products and other litigation matters. He will be based in the firm’s Wilmington, Delaware, office.
At AstraZeneca, Stevens served as senior legal manager in patent litigation cases involving the company’s best-selling drugs in the U.S., Canada and other global markets.
McCarter & English, based in Newark, New Jersey, has 400 attorneys in Boston, Connecticut, New York, Newark, Wilmington and Philadelphia.