Richard Revesz, who has been Dean of New York University School of Law for the last 10 years, is stepping down at the end of this academic year.
Citing the school’s entrepreneurial spirit, inclusiveness of women and underrepresented groups, as well as its commitment to scholarship, he said in a letter addressed to the law school community yesterday, “I am deeply proud of all that we have accomplished together.”
Revesz said he plans to oversee a university initiative to create a new interdisciplinary institute on cities and the urban environment. He will also continue to teach at the law school.
During his tenure, the law school increased the size of the full time faculty from 83 to 110, added 19 new clinics and 12 new centers, including a new programs abroad for global law students and created elective courses to allow greater specialization, according to the letter. The school has also developed its programs for students interested in government-related careers and public interest jobs.
Revesz also said that over the past 10 years, the school has raised $520 million, and more than doubled the size of the NYU Law Fund in order to secure the Law School’s financial future.
Rajat Gupta Gets Two-Year Sentence for Insider Trading
Former Goldman Sachs Group Inc. director Rajat Gupta was sentenced to two years in prison for insider trading, marking the downfall of a man who rose to the top of corporate America after being orphaned as an 18-year-old in Kolkata.
Gupta, who ran McKinsey & Co. from 1994 to 2003, was sentenced yesterday by U.S. District Judge Jed Rakoff in Manhattan for leaking stock tips to Galleon Group LLC co-founder Raj Rajaratnam. Gupta, 63, was convicted in June of securities fraud and conspiracy. He is set to report to prison on Jan. 8. He was also fined $5 million.
Gupta’s lawyer, Gary Naftalis, a partner at Kramer Levin Naftalis & Frankel LLP, wrote in a legal brief to the judge last week, “Rajat Gupta has lived an exemplary life of uncommon accomplishment, compassion and generosity.”
His defense lawyers had requested probation and proposed that he work with needy children in New York or with the rural poor fighting AIDS, malaria and extreme poverty in Rwanda. Gupta previously served as chairman of the Global Fund, a public-health advocacy group for the developing world.
Prosecutors had sought a prison term of as long as 10 years.
Gupta served on the boards of Procter & Gamble Co. and AMR Corp., won praise for his charity from Microsoft Corp. Chairman Bill Gates and former United Nations Secretary-General Kofi Annan and, as McKinsey’s youngest managing director, almost tripled firm revenue.
Gupta “was at the pinnacle of a profession built on protecting client confidences,” prosecutors said in court papers. “Yet, time and time again, over the span of nearly two years, Gupta flouted the law and abused his position of trust.”
The case is U.S. v. Gupta, 11-cr-907, U.S. District Court, Southern District of New York (Manhattan).
Kerviel Loses Appeal on 4.9 Billion-Euro SocGen Trading Loss
Jerome Kerviel lost his bid to reverse a 2010 guilty verdict holding him solely responsible for Societe Generale SA’s 4.9 billion-euro ($6.35 billion) trading loss.
Judge Mireille Filippini yesterday upheld the verdict finding Kerviel guilty of abusing the bank’s trust, faking documents and entering false data into computers. Kerviel argued the bank knew he was exceeding his mandate and used him as a scapegoat for losses on subprime mortgages.
The 2008 trading loss was one of the biggest ever, wiping out almost two years of pretax profit at Societe Generale’s investment-banking unit. Kerviel, 35, was called a “terrorist” by then-Chief Executive Officer Daniel Bouton, a comment he refused to apologize for during Kerviel’s June appeal trial.
“It is clear that Societe Generale was a victim of these crimes, of which Jerome Kerviel was the sole conceiver,” Filippini said, upholding a three-year prison sentence and an order for him to repay the bank. “Societe Generale is entitled to recover the full amount of the financial harm from unwinding this position.”
Kerviel said in an interview on RTL radio that he was “distraught” over the decision and will appeal it to France’s highest court, the Cour de Cassation.
His lawyer, David Koubbi, who appeared on the radio program with him, said that he expects the appeal may take as long as a year-and-a-half. By going to the Cour de Cassation, Kerviel will remain free at least until that court rules.
“He would be crazy not to,” said Christopher Mesnooh, an American lawyer practicing in Paris. “He doesn’t lose anything in doing so and it’ll keep him out of jail.”
In France, the initial appeal is almost always a retrial, with the judges hearing the case essentially from scratch. The Cour de Cassation considers legal issues involved in the decision. The bid for a hearing at the top appellate court is automatically accepted, unlike in the U.S. or U.K., said Stephane Bonifassi, a French criminal lawyer.
“Appeals in cassation have very, very little chance in criminal matters,” Bonifassi said.
Jean Veil, a lawyer for the Paris-based bank, said Societe Generale is realistic about the chance of Kerviel repaying 4.9 billion euros.
Kerviel’s story -- a native of Brittany, who rose through the ranks to Societe Generale’s trading floor without having attended any of France’s elite schools -- made him a cult hero in the aftermath of the 2008 loss. There was a comic book, fan clubs and t-shirts supporting his cause. A poll taken after news of the loss broke showed 77 percent of French respondents saw him as a “victim.”
Kerviel changed defense teams and pursued an aggressive strategy on appeal, filing criminal complaints against the bank in the weeks before the trial began. Societe Generale retaliated with defamation claims and Filippini openly clashed with Koubbi during the hearings, threatening at one point to refer him to the bar association over his treatment of witnesses.
Prosecutors asked Filippini to increase Kerviel’s sentence to the maximum five years, from the three years.
“Given how the hearings went, one wasn’t expecting much of an improvement for Mr. Kerviel,” said Bonifassi. “If there was any suspense, it was whether the punishment would be harsher.”
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Debt Collectors Face Consumer Bureau Supervision in January
Large debt collectors, including law firms, will for the first time face supervision to assure they follow federal consumer-protection laws beginning on Jan. 2, the U.S. Consumer Financial Protection Bureau announced yesterday.
“Millions of consumers are affected by debt collection, and we want to make sure they are treated fairly,” Richard Cordray, the agency’s director, said in an e-mailed statement. “We want all companies to realize that the better business choice is to follow the law -- not break it.”
The regulation will cover any company that has more than $10 million in annual receipts from consumer debt collection. That definition will capture about 175 collectors, representing 60 percent of the industry’s annual revenues, according to the CFPB.
The new rule could erode profits at major debt collectors including Norfolk, Virginia-based Portfolio Recovery Associates Inc., the largest publicly held firm in the business, San Diego-based Encore Capital Group Inc. and Asta Funding Inc., based in Englewood Cliffs, New Jersey. It could also affect the largest player by revenue, NCO Group, a unit of New York-based JPMorgan Chase & Co.’s private equity arm, One Equity Partners.
The accounts-receivable industry had revenues of $17 billion in 2011, according to Kaulkin Ginsberg, a Rockville, Maryland-based consulting firm. In addition to debt collectors, the industry includes debt buyers, who purchase written-off debt from creditors such as credit-card issuers. Debt collectors can be independent agents, employees of buyers or members of law firms.
The regulation closely tracks a Feb. 17 CFPB proposal that was opposed by the debt-collection industry because of the $10 million revenue threshold. ACA International, an association of debt collectors, in an April 10 letter called the figure “arbitrary and capricious, an abuse of discretion and not otherwise in accordance with law.”
The regulation also includes partial coverage of collection lawyers. Earlier this year, groups including the National Association of Retail Collection Attorneys and the American Bar Association criticized the agency’s initial proposal.
They said that Dodd-Frank exempts attorneys from Title X, the section of the law creating the CFPB, on the grounds that they are lawyers, not consumer financial services providers.
“As is clear from the legislative history of the act, Congress took pains to exclude attorneys engaged in the practice of law,” the bar association wrote in an April 11 letter.
The final rule covers law firms meeting the agency’s definition of debt collectors, namely those “whose principal business activity is debt collection” or who regularly engage in debt collection, according to the regulation.
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Staples Co-Founder Ex-Wife Won’t Block Romney File Unsealing
The ex-wife of Staples Inc. co-founder and Highland Capital Partners Chairman Tom Stemberg said she won’t block a bid to unseal documents in her divorce, in which Republican presidential candidate Mitt Romney gave information.
Gloria Allred, a women’s rights lawyer, appeared yesterday in Norfolk Probate court in Canton, Massachusetts, with Maureen Sullivan Stemberg and said she’s backing a Boston Globe request to unseal the documents. Jonathan Albano, an attorney for the Globe, described the information the newspaper sought as “expert testimony on a financial matter.”
Stemberg, 63, spoke at the Republican national convention, where Romney, the former governor of Massachusetts, was given the party’s nomination for the Nov. 6 presidential election. Framingham, Massachusetts-based Staples, an office-supply retailer, grew with the help of an investment from Bain Capital LLC, the private-equity firm Romney co-founded.
“The sooner we get out from this, the better,” Robert Jones, an attorney for Romney with Ropes & Gray LLP, told the court.
Stemberg is a co-founder and managing general partner of Highland Consumer Fund, a venture capital fund based in Cambridge, Massachusetts, that focuses on retail and consumer service companies. It is affiliated with Highland Capital Partners LP.
“Over the past several years, the judge in this case has made it very clear that the gag order imposed should not be violated,” George Regan, Stemberg’s spokesman, said in an e-mail. “We have never violated this order and will continue to adhere to the court’s ruling in this case.”
Stemberg’s attorney, Brian Leary, lost a bid yesterday to have the courtroom closed during arguments over the unsealing.
The judge set a hearing for today on whether to unseal the documents. A Staples attorney, Lisa Arrowood, asked for time to review two volumes of Romney’s testimony dating back to the 1980s.
Allred and her client declined to answer questions after the hearing.
Allred is a partner in Allred, Maroko & Goldberg. On its website, the Los Angeles-based firm describes its practice areas as employment law, discrimination, sexual harassment and civil rights law.
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Women Lawyers at Big Firms Struggle for Pay and Power
Despite the efforts of law firms to promote gender parity, women at the 200 biggest firms in the U.S. still lag men in power and pay, according to the seventh annual survey by the National Association of Women Lawyers.
Women account for 15 percent of equity partners, about the same percentage as in the first survey. Their compensation trails behind men’s at all levels, most notably at the equity-partner level, where women earn 89 percent of what men do, the organization said in a statement. Women hold 20 percent of the positions on a firm’s highest governance committee, and women are firm-wide managing partner at 4 percent of firms. They make up 70 percent of the nonpartner track, lower paid, staff attorney positions, according to NAWL. That’s the only category in which they are a majority.
Efforts to explain the pay differences were foiled by compensation systems that lack transparency and could incorporate unintended bias, according the text distributed with the survey.
“The gap between male and female compensation at the equity partner level does not correlate with male/female differences in billable hours, total hours or books of business, begging the question of how firms actually set compensation for their partners,” NAWL Foundation President Stephanie Scharf, a partner at Scharf Banks Marmor LLC in Chicago, said in a statement.
Moreover, the survey found the pay discrepancies begin at the associate level, where new women lawyer earn 99 percent of what men earn and make less in bonuses. Women constitute nearly 45 percent of the associate pool, yet they receive only 40 percent of the bonuses, the report says.
If trends continue, the future looks dim, particularly given that for the second year in a row, the proportion of women entering big-firm practice has decreased, the report said.
Toronto-Dominion to Buy $5.9 Billion Target Card Portfolio
Simpson Thacher & Bartlett LLP advised Toronto-Dominion Bank, Canada’s second-largest bank, which agreed to buy the $5.9 billion U.S. credit card portfolio of Target Corp. Skadden Arps Slate Meagher & Flom LLP partner Andrew Faulkner represented Target Corp. Sidley Austin represented Target in connection with the Program Agreement addressing the operation of the program going forward.
Simpson Thacher partners included Maripat Alpuche, Lee Meyerson, mergers and acquisitions; Stacie McGinn, financial institutions regulatory; Laura Palmer, structured finance; Michael Naughton, antitrust; Steve Todrys, tax; Lori Lesser, intellectual property.
Sidley lawyers included financial institution regulation partners William S. Eckland and David E. Teitelbaum.
The portfolio will be sold for an amount equal to the gross value of the outstanding receivables at the time of closing, Minneapolis-based Target said in a statement. TD also agreed to a seven-year deal to underwrite, fund and own the retailer’s future credit card and Visa receivables in the U.S., the companies said.
Toronto-Dominion said the transaction will help it meet a forecast for $1.6 billion in U.S. consumer-banking profit by next year. The Toronto-based lender has more branches in the U.S. than it does in Canada.
Target will record pretax gains of about $150 million in the third quarter, and additional pretax gains of $350 million to $450 million when the deal is completed, the company said. The second-largest U.S. discount retailer suspended the sale of the credit-card portfolio in January after it had been unable to find a buyer for a year.
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Rio Tinto Unit Lawyer Barred From Leaving Mongolia on Inquiry
An Australian lawyer working for a company controlled by Rio Tinto Group has been barred from leaving Mongolia to assist with a corruption probe by the government.
Sarah Armstrong, chief legal counsel for Vancouver-based SouthGobi Resources Ltd., is assisting authorities with a corruption case involving the company she works for, the resources authority of Mongolia and the Mongolian anti-corruption authority, according to Australia’s foreign minister, Bob Carr.
“She hasn’t been detained, she hasn’t been arrested, her passport hasn’t been taken from her but the authorities in Ulan Bator are seeking to interview her further,” Carr told the Australian Broadcasting Corporation’s 774 radio program.
SouthGobi, controlled by Rio Tinto’s 51 percent-owned unit Turquoise Hill Resources Ltd., said in a statement yesterday it’s cooperating with Mongolian authorities and that none of its employees have been charged with any crimes. The company said on May 8 that Mongolia’s anti-corruption agency had asked one of its units for information for an investigation into a third party.
Rio Tinto, the world’s third-biggest mining group, in January gained control of Turquoise Hill, whose name was changed from Ivanhoe Mines Ltd. in August. The acquisition handed Rio the stake in SouthGobi as well as control of Oyu Tolgoi, where Rio plans to start production next year.
Wal-Mart Reorganizes Compliance Office Amid Bribery Probe
Wal-Mart Stores Inc., the world’s largest retailer, hired Jay Jorgensen, an attorney with Sidley Austin LLP in Washington, as global chief compliance officer.
Wal-Mart also combined its compliance office with ethics, investigations and legal functions to form one organization amid a bribery probe at the company’s Mexico operations.
The new unit will report to the company’s general counsel, Wal-Mart said in a memo. The moves come after Wal-Mart named Daniel Trujillo to the new position of senior vice president and chief compliance officer of its international operations earlier this month.
The U.S. Justice Department and the U.S. Securities and Exchange Commission are investigating allegations that Wal-Mart systematically bribed Mexican officials so it could more quickly open stores, possibly violating the Foreign Corrupt Practices Act.
Jorgensen previously served as a law clerk for U.S. Supreme Court Justice William Rehnquist and for Justice Samuel Alito while he was at the 3rd U.S. Court of Appeals, according to the memo.
HSBC Says Preeta Bansal Joins Bank as Global Litigation Counsel
HSBC Holdings Plc said Preeta Bansal, who served as a senior policy adviser to the U.S. Office of Management and Budget, is joining the bank as global general counsel for litigation and regulatory affairs.
Bansal will be based in London and report to Stuart Levey, the company said yesterday in an e-mailed statement.
Mintz Levin Hires Chadbourne Hedge Fund Head in New York
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC announced that Adam Gale, the former head of Chadbourne & Parke LLP’s hedge fund practice group, has joined the firm as a member in the corporate and securities section in New York.
Gale has experience in the structuring, formation and fundraising efforts of hedge funds and private equity funds as well as providing regulatory and compliance advice to the funds, their sponsors and broker-dealers, banks, and registered investment companies. Also, he represents numerous institutional investors in their investments into all fund types.
“As we continue to see hedge funds and other private funds become an increasingly important element of capital markets and financial services, we’re thrilled to welcome Adam and his wealth of expertise in both the structuring and regulatory compliance of these entities,” Peter Demuth, chairman of the corporate and securities section said in a statement.
Mintz Levin has 500 lawyers in eight offices in the U.S. and London.
Katten Muchin Hires Financial Services Partner
Katten Muchin Rosenman LLP announced that David Y. Dickstein has joined the firm as a partner in its financial services practice in New York. Prior to joining Katten, he was a partner in the New York office of K&L Gates LLP, the firm said.
Dickstein focuses his work on providing counsel to hedge funds, investment companies, investment advisers and broker-dealers on regulatory, compliance and operational issues. He has experience in advising businesses responding to investigations by the U.S. Securities and Exchange Commission.
Katten has more than 600 attorneys in 11 offices in the U.S. and in London and Shanghai.
Albert Pinzon Joins Edwards Wildman as a Business Law Partner
Edwards Wildman Palmer LLP hired Albert J. Pinzon, a capital markets lawyer, as a partner in the business law department in New York. Pinzon joins the firm from Cozen O’Connor, where he practiced in the corporate and capital markets group, the firm said.
Pinzon represents buyers and sellers in mergers and acquisitions, including Latin American asset-based lending transactions, and alternative risk transfer capital markets transactions. He also advises clients on legal and regulatory issues concerning life, property/casualty, and financial guaranty insurance transactions.
Edwards Wildman has 625 lawyers in 14 offices in the U.S., London and Asia.