Jan. 18 (Bloomberg) -- Mary Jo White, the former U.S. attorney in Manhattan, is under consideration to become the next chairman of the Securities and Exchange Commission, three people with knowledge of the matter said.
White, now a partner at Debevoise & Plimpton LLP in New York, would succeed Elisse Walter, who took over as SEC chairman last month, said the people, who asked not to be named because the matter isn’t public.
The choice of White, who was known as a no-nonsense prosecutor, would be a departure for the agency, which has tended to be run by lawyers steeped in financial policy making and the securities industry. Her relative inexperience in those areas, along with her work defending corporate clients including Ken Lewis, the former chief executive officer of Bank of America Corp., is likely to draw fire from some lawmakers and advocates for investors.
As U.S. attorney for the Southern District of New York from 1993 to 2002, White became a leading terrorism prosecutor, winning the conviction of four followers of Osama bin Laden for the 1998 bombings of two U.S. embassies in Africa. Under her direction, prosecutors won convictions for the 1993 World Trade Center bombing and a failed plot to blow up the United Nations headquarters and other New York landmarks. During that time, she supervised Robert Khuzami, the SEC’s outgoing enforcement director, and George Canellos, his deputy.
SEC spokesman John Nester declined to comment on her possible nomination. White didn’t respond to an e-mail seeking comment.
White’s husband, John W. White, was head of the SEC’s division of corporation finance, which is responsible for disclosure policies, under Republican SEC chairman Christopher Cox from 2006 to 2008. He’s now a partner at law firm Cravath Swaine & Moore LLP.
In the Courts
Lawyer Sues San Antonio Spurs After Starters Skipped Miami Game
A fan of the Miami Heat basketball team is suing the San Antonio Spurs because four of their starters didn’t play in the team’s Nov. 29 game in Miami.
In his complaint filed in state court in Miami, Lawrence McGuinness, a partner at McGuinness & Gonzales PA in Miami, accused Spurs coach Gregg Popovich of inflicting economic damages on fans who attended the game. The San Antonio Express-News first reported the suit Jan. 16.
The lawsuit, which seeks class-action status, asks the Spurs to refund the difference between premium tickets charged for more popular games and lower-priced tickets.
The Spurs were fined $250,000 by the National Basketball Association a day after the players missed the game.
The NBA said in an e-mailed release Dec. 1 that the move violated league policy “against resting players in a manner contrary to the best interests of the NBA.”
Among the players pulled from the lineup and sent back to San Antonio were 36-year-old Tim Duncan, 30-year-old Tony Parker and 35-year-old Manu Ginobili.
Tom James, the senior director of communications for the Spurs, declined to comment on the litigation.
McGuinness said in a telephone interview that “people think of lawyers as ambulance chasers, but anything I get from the suit will go to the Hurricane Sandy relief fund in New York. In fact, this case is costing me money rather than making me money.”
Harry Winston Says Ekati Investor Files Suit to Block BHP Sale
Harry Winston Diamond Corp. said a holder of 10 percent of the Ekati diamond mine sued to block the company’s proposed acquisition of BHP Billiton Ltd.’s 80 percent stake in the Canadian operation.
C. Fipke Holdings Ltd. alleged in an action in Ontario Superior Court of Justice that offers made by BHP to Fipke didn’t comply with Fipke’s rights under joint-venture agreements for Ekati, Toronto-based Harry Winston said in a statement. The suit also names Harry Winston, Stewart Blusson, who is another minority owner, and Blusson-controlled Archon Minerals Ltd., according to the statement.
Harry Winston said Nov. 13 it had agreed to pay about $500 million for Melbourne-based BHP’s interests in the diamond mine as well as gem marketing operations. Minority shareholders held pre-emptive rights to purchase BHP’s stake in the mine within 60 days in the event of a sale, BHP said in a separate statement on Nov. 13.
Chuck Fipke and Blusson discovered the Ekati deposit in the Northwest Territories in 1991.
Harry Winston and BHP believe that the claim by C. Fipke, known as Fipco, “is entirely without merit, and intend to vigorously defend the action in order to proceed with the purchase and sale of the Ekati Mine,” Harry Winston said in the statement.
Fipke didn’t immediately return a call for comment outside of regular business hours. The filing couldn’t be immediately confirmed in court records.
“We believe that we have complied with our obligations under the Right of First Refusal provision and will work to resolve the dispute as soon as practical to ensure the sale process can be completed,” Ruban Yogarajah, a BHP spokesman, said by e-mail.
Blusson didn’t immediately return a call for comment to his Vancouver office outside of normal business hours.
Delaware Court Dismisses Waste Claim Over Bonus Payments
A complaint challenging a corporate board’s decision to pay more than $130 million in executive bonuses without adopting a plan that could make the bonuses tax deductible doesn’t state a claim for waste, the Delaware Supreme Court ruled Jan. 14.
“The decision to sacrifice some tax savings in order to retain flexibility in compensation decisions is a classic exercise of business judgment,” Justice Carolyn Berger wrote for the en banc court. “Even if the decision were a poor one” as alleged by the plaintiff, “it was not unconscionable or irrational,” the court said.
The court said Susan Freedman was a stockholder of XTO Energy Inc., a Delaware corporation that, before its acquisition by ExxonMobil Corp., was in the oil and gas production business. In 2008, Freedman filed a derivative action alleging that XTO’s board committed waste by failing to adopt a plan that could have made its bonuses tax deductible.
The court said that from 2004 to 2007, XTO allegedly paid executive bonuses totaling more than $130 million, and those payments weren’t tax deductible. The XTO board was aware that under a qualified Section 162(m) plan, bonuses could be tax deductible, “but it did not think that its compensation decisions should be ‘constrained’ by such a plan,” the court recounted.
Shortly after Freedman filed her complaint, the court said, XTO’s board approved a Section 162(m) plan. The plan was cleared by stockholders at XTO’s 2009 annual meeting. The court said XTO never made use of the plan, because it merged with and into an Exxon subsidiary in June 2010.
Freedman agreed to dismiss her complaint; she then filed a motion for $1 million in attorneys’ fees based on her assertion that the complaint benefited the company by causing XTO to adopt the Section 162(m) plan. The chancery court rejected Freedman’s suit.
Waste claims, the court said, usually involve a transaction in which a corporation allegedly exchanges its assets for “disproportionately low consideration. To state a claim for waste, a stockholder must allege, with particularity, that the board authorized action that no reasonable person would consider fair.”
The case is Freedman v. Adams, No. 230, Delaware Supreme Court.
DuPont Shareholder Sues Managers Over $1 Billion Court Loss
A DuPont Co. shareholder sued company directors and Chief Executive Officer Ellen Kullman, claiming mismanagement of the seed business led to a $1 billion judgment that threatens to wipe out the company’s cash.
In a complaint filed January 15 in U.S. District Court in Wilmington, Delaware, shareholder Robert Zomolosky asked a judge to force Kullman and the board to pay any damages stemming from DuPont’s loss of a patent lawsuit involving Monsanto Co.’s weed killer, Roundup. The jury award, the third-biggest last year, could grow to $3 billion depending on future legal rulings, according to the lawsuit.
“The DuPont board lost sight of its mandate and its responsibilities, and acquiesced in unlawful legal maneuvers and deceptive public statements in conscious disregard of its obligations,” Zomolosky claimed in the complaint.
The Wilmington-based company plans to appeal the jury’s verdict, according to the complaint, and has asked the judge to overturn the award.
DuPont’s General Counsel Thomas L. Sager said in an e-mailed statement that the company handled the Monsanto patent case appropriately.
“We are confident in the appropriateness of all our actions and the points raised in this lawsuit are simply a repetition of those we have repeatedly addressed in the course of the Monsanto litigation,” Sager said.
The case is Zomolosky v. Kullman, 13-cv-00094, U.S. District Court, District of Delaware (Wilmington).
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Law Firm Moves
Clifford Chance in Australia Hires Antitrust Lawyer
Dave Poddar, an antitrust lawyer who advised Emirates on a proposed joint venture with Qantas Airways Ltd., has joined Clifford Chance, the U.K.’s highest-grossing law firm, in its Sydney office.
Clifford Chance is boosting its workforce in the Asia-Pacific region, where its revenue rose 28 percent in the year ended April 30, helped by offices in Sydney and Perth added in 2011 and a new alliance in Singapore last year. Poddar joined Jan. 7, according to a statement from the firm.
“Adding dedicated antitrust expertise has been a priority since our establishment in Australia,” Peter Charlton, Clifford Chance’s Asia Pacific managing partner, said in a statement. “When overseas clients invest in Australia, or local companies acquire or expand domestically, antitrust issues are very likely to arise.”
The value of mergers and acquisitions in Australia slumped 41 percent to $86 billion last year from 2011 and compared with $148.8 billion in 2010, according to data compiled by Bloomberg. The slowdown during the past two years doesn’t mean there’s a lack of work for competition lawyers, with companies planning six to 12 months in advance, Poddar said in a phone interview.
Concentration in Australian industries from news media to retail mean tie-ups and acquisitions face regulatory scrutiny, he said.
“For competition lawyers giving strategic advice, there is plenty of work,” Poddar said.
Poddar worked at Mallesons Stephen Jaques for 22 years, and in 2011 joined Allen & Overy, which he left last year. He declined to discuss his departure from Allen & Overy.
Norton Rose Says Stanley Hartt Joins as Counsel From Macquarie
Stanley Hartt was hired by Norton Rose LLP in Canada from Macquarie Group Ltd.’s Canadian unit, where he was chairman.
Hartt, a former chief of staff to former Canadian Prime Minister Brian Mulroney, will provide “strategic advice to domestic and international clients,” Norton Rose said in an announcement on its website.
Hartt left Macquarie and joined Norton Rose’s Toronto office this month, Peter Zvanitajs, a spokesman for Norton Rose said in a phone interview.
Mulroney, Canada’s Prime Minister from 1984 to 1993, is listed as a senior partner in Montreal on Norton Rose’s website.
Stephen Yan, a Macquarie spokesman, declined to comment on Hartt’s move.
Goodwin Procter Expands Financial Institutions Group
Goodwin Procter LLP said Brynn D. Peltz joined the firm’s financial institutions group in New York as a partner in its transactions and investment management regulation practices, as well as the firm’s private investment funds practice.
Peltz joins from Latham & Watkins LLP, where she was a partner in its financial regulatory and investment funds practices. Previously, she was a partner at Clifford Chance LLP.
Peltz has more than 20 years’ experience advising financial institutions, including private equity, real estate and hedge fund sponsors; alternative asset managers; business development companies; and registered investment companies on strategic matters.
Goodwin Procter has offices in Boston, Hong Kong, London, Los Angeles, New York, San Diego, San Francisco, Silicon Valley and Washington.
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