John Mack, the former head of Morgan Stanley, is going into business with a 77-year-old tax lawyer who oversees more than $15 billion in investment assets for clients such as ex-basketball star Magic Johnson and the founding family of Estee Lauder Cos., Bloomberg News’s Miles Weiss reports.
Joel Ehrenkranz, who co-founded a tax and estate legal practice with his brother Sanford in 1966, joined forces with Mack to start fund-of-funds manager E&M Advisors LLC, according to a registration filing last month with the U.S. Securities and Exchange Commission. E&M expects to raise $500 million this quarter to invest in outside hedge funds and private-equity deals, the firm said in the filing.
Mack, a onetime bond salesman and trader, could help E&M Advisors attract assets from corporate executives and private-banking contacts cultivated during the course of his 35-year career at Morgan Stanley, said Brad Hintz, a bank and brokerage analyst at Sanford C. Bernstein & Co. Since leaving as Morgan Stanley’s chairman at the end of last year, Mack has become an adviser to companies including buyout firm KKR & Co., where he signed on in March.
“John’s Rolodex would be mammoth,” said Hintz, who worked for Morgan Stanley from 1986 to 1996 as a managing director and treasurer. “The classic model of Goldman Sachs and Morgan Stanley was you had the relationship with the company and the executive.”
Daniel Schloendorn, a partner at the law firm Willkie Farr & Gallagher LLP who represents Ehrenkranz, said his client declined to comment. Mack said in a brief interview that he had simply lent his name to the venture.
“We have no plans,” Mack said. “I’ve just known Joel for a long time.”
After exiting Morgan Stanley last December, the Wall Street veteran set up John Mack Advisors LLC, according to Delaware state records. E&M Advisors was incorporated two months later, with John Mack Advisors and Ehrenkranz’s E&E Capital Advisors LLC both holding 50 percent stakes, according to the September filing.
Joel and his brother Sanford, 73, started a tax and estate planning legal practice 46 years ago that catered to high-net-worth individuals, such as the Lauder family, SEC filings show. According to court documents, Joel was an executor for the estate of Alan Tishman, the real estate developer who “helped transform New York’s skyline,” according to the New York Times.
The law firm began managing money for its clients, initially by having them invest in commercial real estate partnerships and then in hedge funds, said a person familiar with the firm who requested anonymity because of confidentiality agreements. In a 2004 civil trial tied to his former role as the president of Walt Disney Co., Michael Ovitz testified that Joel Ehrenkranz was one of his two principal money managers and had also been one of his main tax advisers from 1990 to 1995, according to court transcripts.
For more, click here.
Dewey’s Insurance Can Pay Up to $6.75 Million for Defense
Dewey & LeBoeuf LLP, the liquidating law firm, agreed that as much as $6.75 million from a $25 million insurance policy can be used to pay defense costs for firm managers defending lawsuits.
XL Specialty Insurance Co. filed papers in August for authority to pay defense costs incurred by those covered by the policy. Dewey initially opposed and later negotiated a so-called soft cap where $6.75 million can be paid.
The agreement, approved yesterday by the bankruptcy court in New York, allows XL to ask for increases in the cap. Payments for defense costs reduced the $25 million policy limit.
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 of New York (Manhattan).
Two Patton Boggs Partners Return to Firm in the U.S.
Two former Patton Boggs LLP partners, Todd R. Harrison, former chief counsel for oversight and investigations for the Energy and Commerce Committee in the U.S. House of Representatives, and Susan B. Bastress, former managing partner of the firm’s office in Doha, Qatar, rejoined the firm as partners.
Harrison joins the firm’s litigation and dispute resolution practice group in Washington and New York. Bastress rejoins the real estate practice in Washington. Later this year, she will return to the Doha office.
As chief counsel to the Energy and Commerce Committee, Harrison led investigations, including one on the failure of solar-panel maker Solyndra LLC and the related loss of taxpayer funds. Harrison has held lead or first-chair responsibility in more than 40 jury trials in both federal and state courts, and has argued before the U.S. Court of Appeals for the Second Circuit, the firm said.
Bastress joined Patton Boggs in 1996 and established the firm’s Doha office in 2003. She served as its managing partner until 2006. She was chair of the firm’s real estate practice at the time of her departure in 2008.
Bastress was a partner in the real estate practice at Orrick Herrington & Sutcliffe LLP from 2008 to 2010. After that, she established Bastress & Associates.
Patton Boggs has more than 600 lawyers and specialists in nine offices in the U.S. and the Middle East.
Winston & Strawn Practice Heads Join Squire Sanders
Squire Sanders LLP announced that Eric W. Cowan and Glynna K. Christian joined the firm as partners in the corporate transactions, finance and governance practice group. The new partners will work in both the London and New York offices.
Before joining Squire Sanders, Cowan was the global chair of communications, media and technology and Christian was the global chair of sourcing at Winston & Strawn LLP, the firm said.
Cowan and Christian will focus their practices on advising public and private companies on international corporate and commercial transactions, including cross-border mergers and acquisitions, joint ventures, financial arrangements and complex outsourcing transactions.
Squire Sanders has more than 1,300 lawyers in 37 offices in 18 countries.
Locke Lord Hires Washington Litigator Marlon Paz
Marlon Q. Paz, a litigator experienced in complex securities issues, internal investigations and compliance, has joined Locke Lord LLP as a partner in Washington.
He joins Locke Lord from the Inter-American Development Bank, where he was principal integrity officer and managed a team of lawyers and investigators in the development, investigation and prosecution of fraud and corruption cases in 26 Latin American countries, the firm said.
Paz also worked at the U.S. Securities and Exchange Commission as senior special counsel to the director of the trading and markets division from 2004 to 2010.
Paz has represented in private practice financial institutions and corporations in large-scale securities and other litigation matters. He is an adjunct professor of law at Georgetown University Law Center, where he teaches courses on securities law and international business litigation.
Locke Lord has more than 650 lawyers in 13 offices in the U.S., London and Hong Kong.
Ally to Sell Mexico’s ABA Seguros to Ace for $865 Million
Mayer Brown LLP advised Ally Financial Inc. in its agreement to sell its Mexican insurance business to Ace Ltd. for $865 million in cash as the bailed-out company narrows its focus on auto lending and U.S. banking. Sullivan & Cromwell LLP represents Ally.
The price for ABA Seguros is more than twice the unit’s $390 million book value -- what it would be worth if liquidated -- at the end of June, Ally spokeswoman Gina Proia said in an e-mail. The purchase of Mexico’s sixth-largest property-casualty insurer will add coverage of autos, homes and small businesses, according to a statement yesterday from Zurich-based Ace.
The Mayer Brown team included corporate and securities partners Eddie Best, Bill Kucera and Linda Rhodes. Tax transactions and consulting partners Jim Barry and Lee Morlock also worked on the deal, as did employment and benefits counsel Karen Grotberg and IP partner Rich Assmus.
The S&C New York-based team is led by financial institutions M&A partner Andrew Gerlach and M&A partner Sergio Galvis, who is head of the firm’s Latin America Group. Other partners include senior chairman H. Rodgin Cohen; Jay Clayton; Theodore Edelman; Andrew Solomon, tax; Marc Trevino, executive compensation and benefits; and Palo Alto special counsel Spencer Simon, intellectual property.
Ace Chief Executive Officer Evan Greenberg has been using acquisitions to expand in emerging markets in Latin America and Asia. He announced a deal last month to buy Fianzas Monterrey in Mexico from New York Life Insurance Co. for $285 million. Detroit-based Ally, led by Chief Executive Officer Michael Carpenter, previously divested a U.S. auto insurer.
“Taking these actions with respect to the international operations will enable Ally to further invest in and grow its leading U.S.-based automotive services and direct banking franchises and be best-positioned to return additional capital to the U.S. taxpayer,” Carpenter said in a separate statement.
Returning capital to the U.S. Treasury Department, which owns 74 percent of Ally after bailouts of $17.2 billion, remains a priority and must be approved by the Federal Reserve, Proia said in an e-mail. She declined to comment on whether any of the sale proceeds will go to the Treasury.
For more, click here.
Clifford Chance Lawyers Elect New Managing Partner in Moscow
Clifford Chance LLP’s Moscow partners elected Logan Wright as managing partner of the office. Wright will succeed finance lawyer Jan ter Haar on Jan. 1 for a four-year term.
Wright is also a finance partner, representing both banks and borrowers on cross-border financings into Russia and the CIS, including debt restructurings and work-outs. He has been based in Russia since 2000, and was made partner at Clifford Chance in 2006. He will continue to counsel clients while handling his leadership responsibilities.
“Logan has deep knowledge of the Russian market and the right leadership skills to develop further our existing strong position in the Moscow and the wider Russian market,” Ter Haar said in a statement. He has held the post since 2009.
Clifford Chance has been in Russia since 1991. The firm has 34 offices in 24 countries with about 3,400 legal advisers.
Loeb & Loeb Names New Chief Financial and Information Officers
Loeb & Loeb LLP said Scott Cotie was named chief financial officer and Patricia Anne O’Hara was named chief information officer of the firm. They will be based in the Los Angeles and New York offices, respectively.
Cotie, a certified public accountant, joins the firm from the Minneapolis office of law firm Faegre & Benson LLP, where he served as the executive director since 2008. O’Hara joins the firm from Adaptive Solutions Inc., a provider of systems integration and consulting services, where she served as CIO, the firm said.
Cotie and O’Hara will work closely with Loeb & Loeb’s Chief Operating Officer Alan B. Cutler. Cotie will direct Loeb & Loeb’s financial functions in keeping with the firm’s strategic objectives. O’Hara’s responsibilities will include managing information and software development for the firm, particularly addressing the implementation of new and emerging technologies and applications, the firm said.
Loeb & Loeb LLP has more than 300 attorneys in seven U.S. and Asian offices.
Level Global Fund Manager Seeks to Show Partner Traded
Level Global Investors LP co-founder Anthony Chiasson, who faces trial Oct. 29 for insider trading of two technology companies, asked to present jurors with an analysis he said shows the hedge fund’s other co-founder, David Ganek, made trades in the same stocks at the same time, Bloomberg News’ Patricia Hurtado and Katherine Burton report.
While Ganek hasn’t been accused of wrongdoing, Chiasson’s lawyers told a judge in an Oct. 3 letter that they want to introduce evidence showing the fund manager’s trading in Dell Inc. and Nvidia Corp. occurred in the same period their client was accused of insider trading. The two men were co-heads of Level Global’s largest fund before the firm closed.
The government, opposing the request, said such testimony wasn’t relevant to the case. Prosecutors, however, acknowledged in a court filing that Chiasson had two uncharged co-conspirators at Level Global, though their names were blacked out. If the defense can show others may have been responsible for the Dell and Nvidia trades, it could create reasonable doubt for the jury.
“Chiasson shared discretion over the (only) two funds at Level Global with two other individuals, who have been named as co-conspirators by the government,” Assistant U.S. Attorneys Antonia Apps, Richard Tarlowe and John Zach wrote. Chiasson faces as long as 20 years in prison if convicted.
Manhattan U.S. Attorney Preet Bharara, whose office has pursued a wide-ranging probe of hedge funds that has yielded 70 convictions, alleged Chiasson and former Diamondback Capital Management LLC portfolio manager Todd Newman were part of a tight-knit group of fund managers and analysts who engaged in insider trading of 13 stocks. Chiasson and Newman earned more than $67 million in illicit profits, the U.S. said. Both men, who were first charged in January, have pleaded not guilty.
Ganek and Chiasson were running Level Global when it closed in February 2011 because of the federal investigation. Chiasson and Newman were charged along with five other fund managers, analysts and technology company employees who allegedly swapped illegal tips about Nvidia and Dell.
Greg Morvillo, a partner at the Morvillo law firm and Steptoe & Johnson LLP partner Reid Weingarten, Chiasson’s defense lawyers, wrote U.S. District Judge Richard Sullivan in Manhattan federal court seeking to have expert testimony by a finance professor presented at trial. They contend that much of the trading at the hedge fund in Nvidia and Dell stock was directed “not by Mr. Chiasson but by others at Level Global.”
Professor Mukesh Bajaj, of the University of California at Berkeley, “may identify which of the trades at issue with regard to Dell Inc. and Nvdia Corp. were directed by Mr. Ganek,” they told Sullivan, who presides over the case.
Prosecutors said Bajaj should be barred from testifying because the defense hasn’t revealed what trades were reviewed in his analysis. He would have to determine which trades were executed by Chiasson in order for his testimony to provide “any meaningful comparisons in trading analysis of trades executed,” the government said in its Oct. 12 filing, which included the defense letter to the judge. Morvillo declined to comment.
Ganek’s lawyer, John Carroll said if prosecutors don’t specify at trial the trades Chiasson made that are the subject of his prosecution, the defense must make clear to jurors “what trades he made and what trades were done by others.”
“What Chiasson is doing is identifying people who may have traded in this stock,” Carroll said in an interview. “He’s not pointing the finger at anybody else, including my client. ‘‘If the government accuses us of that, then we’ll defend it.”
In a revised indictment filed Aug. 28, prosecutors claimed Chiasson helped illegally boost Level Global’s profits by $67 million, including $53 million from alleged insider trading in Dell stock during trades in August 2008.
“The government’s alleged illegal profit amounts are profoundly inflated,” Morvillo and Weingarten said in court papers. “Much of Level Global’s trading in these stocks was directed not by Mr. Chiasson but by others at Level Global.”
The defense lawyers, arguing prosecutors are trying to hold their client responsible for trading he didn’t do, pointed to the unidentified Level Global employees noted in the government’s court filings.
“Although the government contends those individuals are unindicted co-conspirators, for whose conduct Mr. Chiasson may be held liable,” Morvillo and Weingarten wrote, “it would be misleading and unfair for the government to suggest inaccurately to the jury without explication, that all of Level Global’s profits in Dell and Nvidia are ill-gotten and attributable solely to Mr. Chiasson’s actions.”
Carroll said the government hasn’t told him the identities of the unindicted co-conspirators.
“There were other people at the fund who were authorized and could trade at Level Global,” Carroll said. “There were absolutely more than two people.”
Carroll, previously the chief of the securities and commodities fraud unit at the Manhattan U.S. Attorney’s office, is a partner at Skadden Arps Slate Meagher & Flom LLP who specializes in white-collar crime and regulatory enforcement.
The case is U.S. v. Newman, 12-00124, U.S. District Court, Southern District of New York (Manhattan).
For more, click here.
Hartford Settles Lawyer’s Suit Involving Treasury Deputy Wolin
Hartford Financial Services Group Inc. settled a lawsuit by a Texas attorney who accused the insurer of causing him to be prosecuted on bribery charges that were later dropped after a mistrial, a lawyer for the man said.
The lawyer’s negligence allegations against Hartford included claims that the company’s former general counsel, Neal S. Wolin, now U.S. deputy treasury secretary, took part in a cover-up linked to alleged extortion by two employees, attorneys for the lawyer told jurors in opening statements last week.
“We settled today, and I can’t discuss the terms,” John Flood, who represents Texas lawyer Todd Hoeffner, said Oct. 17 in a phone interview when the trial in state court in Houston was halted before Hoeffner was to take the stand.
Wolin, who isn’t named as a defendant in the lawsuit, testified against Hoeffner in a 2009 criminal trial that ended with a deadlocked jury. Wolin’s testimony was to be part of the jury trial that began last week.
Hoeffner was charged with making illegal payments to two claims processors to get inflated insurance settlements for clients suffering from silicosis. The charges followed an internal company investigation ordered by Wolin and given to federal prosecutors, according to court records.
Jurors at the 2009 trial couldn’t reach a verdict. Hoeffner, later faced with new charges that didn’t include bribery, agreed to pay prosecution costs and the criminal case was dropped.
Hoeffner sued Hartford in October 2011 on claims the insurer lied to the government about him. The motive, he said, was to hide the claims processors’ extortion of $3 million from the portion of the settlements paid to him as legal fees. He accused Hartford of negligence, economic duress, interference with his attorney-client relationships and intentional infliction of emotional distress.
Thomas Hambrick, a spokesman for the Hartford, Connecticut-based insurer, didn’t immediately respond to an e-mail seeking comment yesterday on the settlement. He said in a phone interview before the trial that there was “no evidence to support Hoeffner’s allegations.”
Wolin, through his attorney, denied Hoeffner’s allegations and said that when he learned of what appeared to be a bribery scheme involving rogue workers, he ordered company investigators to dig into the matter.
“He directed them to investigate the facts no matter where those facts led them, and if they deemed it appropriate, to refer the matter to law enforcement authorities for a full and complete investigation,” James E. Rocap, Wolin’s lawyer, said in an e-mail before the trial. “Any assertion to the contrary is ridiculous.”
The case is Sanchez v. Hoeffner, 2010-15489, 133rd Judicial District Court of Texas (Houston).
For more, click here.