Swiss banks are turning over thousands of employee names to U.S. authorities as they seek leniency for their alleged role in helping American clients evade taxes, according to lawyers representing banking staff.
At least five banks supplied e-mails and telephone records containing as many as 10,000 names to the U.S. Justice Department, according to estimates by Douglas Hornung, a Geneva-based lawyer representing 40 current and former employees of HSBC Holdings Plc’s Swiss unit, Credit Suisse Group AG and Julius Baer Group Ltd. The data handover is illegal, said Alec Reymond, a former president of the Geneva Bar Association, who is representing two Credit Suisse staff.
“The banks are burning their own people to try and cut deals with the DoJ,” said Hornung. “This violation of personal privacy is unprecedented in the Swiss banking industry.”
Swiss banks want to settle a U.S. tax-evasion probe after U.S. prosecutors indicted Wegelin & Co. on Feb. 2 for allegedly helping customers hide money from the Internal Revenue Service. Credit Suisse, HSBC and Julius Baer, which have said they expect to pay fines to resolve the tax matter, are handing over data to mollify the U.S., according to Hornung.
Credit Suisse said the Swiss government authorized the delivery of staff names and that the “large majority” of employees have nothing to fear. Julius Baer and Zuercher Kantonalbank also said they received authorization. HSBC said it has delivered documents and is cooperating with the U.S.
Swiss banks, the biggest managers of offshore wealth, have seen secrecy erode since UBS AG admitted in 2009 to fostering tax evasion and paid a fine of $780 million to avoid prosecution. Switzerland’s largest wealth manager later turned over data on about 4,700 accounts to the IRS.
While Swiss companies are usually prohibited from sending evidence to assist foreign legal proceedings, the country’s governing Federal Council authorized an exemption in April at the request of an undisclosed number of banks.
“The Federal Council had no right to grant permission for banks to send any information to a foreign authority,” said Marcel Niggli, a professor of law at the University of Fribourg. “The companies know the risk of penalties in Switzerland is insignificant compared with the business risk in the U.S. It’s a cold-blooded action by the banks.”
Switzerland is in talks to end a Justice Department investigation of 11 Swiss financial firms, including Credit Suisse, Julius Baer and HSBC’s Geneva-based wealth business, as part of a U.S. probe of offshore tax evasion.
For more, click here.
Miami Options Exchange Moves Closer to Becoming 11th U.S. Venue
The Miami International Securities Exchange’s planned U.S. options venue will compete for orders by giving priority to market makers that meet certain quoting requirements, according to its application to regulators.
MIAX, as the proposed exchange is called, may become the 11th U.S. venue to trade equity options if the Securities and Exchange Commission approves its application published Aug. 15. The exchange has been planned for several years and its filing, submitted to the SEC in April, provides the first detailed look into its trading plans and rules. The SEC is seeking comment on the exchange as it considers approval.
The exchange doesn’t yet have a president and chief executive officer, according to its parent company, Princeton, New Jersey-based Miami International Holdings Inc. Shelly Brown, senior vice president for strategic planning and operations, declined to comment on the exchange’s application.
The company’s executive chairman is Thomas P. Gallagher, a founding partner at Princeton-based law firm Gallagher, Briody & Butler, which helps companies raise money. Douglas M. Schafer is the chief information officer, Barbara Comly is general counsel and Paul Warner is the chief financial officer. The chief regulatory officer is Edward Deitzel.
The surge in electronic trading since 2000 has spurred more competition among older exchanges and startups seeking to draw trades through different pricing and rules for matching orders. MIAX will compete for volume in the growing options market with 10 exchanges, including three run by Nasdaq OMX Group Inc. and two each from NYSE Euronext and CBOE Holdings Inc. in Chicago.
The parent company will contribute at least $2 million to the exchange before it begins operating and provide enough capital for it to meet its regulatory and operational requirements, MIAX’s application said. Information about the company’s financing wasn’t immediately available.
For more, click here.
Dewey to Have Net Recoveries of $2 Million a Week
Dewey & LeBoeuf LLP, the defunct law firm, was given an extension until Sept. 30 of the right to use cash representing collateral for secured lenders’ claims.
The renewed right to use so-called cash collateral, granted Aug. 15 by the U.S. Bankruptcy Court in New York, contains a projection showing that Dewey expects to bring in $21.7 million between Aug. 16 and Sept. 30.
Over the same period, expenses are projected to total $10.6 million, allowing the lenders to be paid about $11 million, because cash-use procedures allow the lenders to draw down the excess when cash rises above $10 million.
Dewey has two official committees, one for unsecured creditors and the other for former partners. The firm once had 1,300 lawyers before liquidation began under Chapter 11 in May. There was secured debt of about $225 million and accounts receivable of $217.4 million at the outset of bankruptcy, the firm said. The petition listed assets of $193 million and liabilities of $245.4 million as of April 30.
The case is In re Dewey & LeBoeuf LLP, 12-12321, U.S. Bankruptcy Court, Southern District New York (Manhattan).
Jackson Lewis Names Managing Partner of Seattle Office
Jackson Lewis LLP’s Bryan P. O’Connor has assumed the role of Seattle office managing partner, succeeding Wayne W. Hansen. Hansen, who has served in the role since the Seattle office opened in 1998, will stay on as partner and continue to represent employers in all phases of traditional labor law negotiations.
O’Connor has experience advising and representing employers in traditional labor law matters across numerous industries, including construction, manufacturing, retail, health care, utility, food distribution, and government-related services. His practice also includes employment law advice and litigation, including both state and federal claims and individual and class action suits, the firm said.
Jackson Lewis has over 700 attorneys practicing in 49 locations nationwide.
Perkins Coie Hires Chicago Corporate Partner from K&L Gates
Perkins Coie LLP hired Randy A. Bridgeman in the Chicago office as a partner in the corporate governance and transactions practice. He was most recently a partner at K&L Gates LLP, where he was head of the corporate group for the Chicago office, the firm said.
Bridgeman serves as a legal advisor to businesses across a range of industries, coordinating all the client’s legal matters, including strategic transactions, corporate governance, commercial contracts, litigation, finance, employee benefits, intellectual property, government regulation, estate planning and real estate.
Bridgeman is the 11th partner to join Perkins Coie’s Chicago office this year. Perkins Coie’s business practice has 224 attorneys. The firm has more than 850 lawyers in 19 offices across the U.S. and Asia.
Jones Day Hires Litigation Partner in Pittsburgh
Litigator Kimberly Brown joined Jones Day as a partner in the Pittsburgh office. Formerly a partner with Thorp Reed & Armstrong LLP, she is a member of the business and tort litigation practice focusing on commercial and insurance litigation and the defense of product liability and toxic tort actions, the firm said.
Brown also teaches litigation strategy and planning at the University of Pittsburgh School of Law, where she is an adjunct professor.
Jones Day has more than 2,400 lawyers in 35 offices world-wide.
Brown Rudnick Hires Chief Government Lawyer in Boston
Brown Rudnick LLP hired Jed M. Nosal, formerly chief of the business and labor bureau in the office of Massachusetts Attorney General Martha Coakley, in the firm’s Boston office as counsel in the government law and strategies and energy utilities and environmental groups.
At the Attorney General’s office, Nosal was responsible for overseeing a number of divisions, including the business, technology and economic development; energy and telecommunications; fair labor; medicaid fraud; and non-profit organizations/public charities. He advised Coakley on carrying out her statutory duties and oversight of these divisions, and oversaw related civil and criminal investigations and litigation on behalf of the state.
He previously served as head of the energy and telecommunications division, serving as Coakley’s chief advisor on energy and telecommunications matters. His previous positions have also included general counsel to the Massachusetts Department of Telecommunications and Energy, and deputy director/chief of staff for the Massachusetts Office of Consumer Affairs and Business Regulation.
Brown Rudnick has more than 200 lawyers with 7 offices in the U.S., U.K. and Ireland.
Apple May Owe Samsung $422 Million in Damages, Witnesses Say
Apple Inc. would owe as much as $421.8 million in royalties if found to infringe five Samsung Electronics Co. patents for mobile devices, two witnesses for the South Korean company testified.
One damages expert, Vincent O’Brien of OSKR LLC, told the jury yesterday in the intellectual property trial between Apple and Samsung in federal court in San Jose, California, that he calculated royalties of $22.8 million based on claims that the iPhone maker infringed three of Samsung’s feature patents.
A second expert, University of California, Berkeley business school professor David Teece, testified that damages for Apple’s infringement of two other Samsung patents should be in the range of $290 million to $399 million, based on royalty rates of 2 percent to 2.75 percent.
Joe Mueller, a partner at Wilmer Cutler Pickering Hale and Dorr LLP who is representing Apple, showed Teece a July 25, 2011, letter from Samsung to Apple proposing Apple pay a 2.4 percent royalty rate to license any of 86 patents.
Mueller got Teece to agree he had “no idea” how Samsung arrived at the rate. Samsung had never published the rate, and you have “no evidence that Samsung has ever asked any other company for such a rate,” Mueller said.
Apple said in a pretrial filing that the 2.4 percent rate is “unfair, unreasonable, and discriminatory.”
Apple sued Samsung in April 2011, accusing it of copying patented designs for mobile devices, and Suwon, South Korea-based Samsung countersued. The case is the first to go before a federal jury in a battle being waged on four continents for dominance in a smartphone market valued by Bloomberg Industries at $219.1 billion.
Samsung told the judge yesterday it’s resting its case. The trial is now in its third week and the jury hasn’t yet decided the merits of either company’s infringement claims.
Samsung said in its filing that long before Apple announced the release of any of its products using Samsung’s technology, Samsung offered a “fair and reasonable” royalty rate on its patents to “virtually every major player in the mobile phone industry,” including Apple.
Apple, based in Cupertino, California, claims it is owed at least $2.5 billion in damages and is also seeking to make permanent a preliminary ban it won on U.S. sales of a Samsung tablet, and extend the ban to Samsung smartphones.
The case is Apple Inc. v. Samsung Electronics Co. Ltd., 11-cv-01846, U.S. District Court, Northern District of California (San Jose).