UBS, Morgan Stanley, Drill Ban, YouTube in Court News
UBS AG’s (UBSN) U.K. unit was sued for allegedly copying articles from oil and gas publications and reprinting them in the investment research it distributed to clients.
Energy Intelligence Group Inc., based in New York, said its publications, which include International Oil Daily, World Gas Intelligence and Petroleum Intelligence Weekly, were copied by UBS Ltd. at least 10 times during 2006 and 2007, according to the lawsuit. Energy Intelligence articles or portions of them were reprinted in UBS’s own investment research publication, Daily Oil News, according to the suit filed in a London court last month and made public this week.
UBS analyst Jon Rigby had a single-user subscription for the Energy Intelligence publications beginning as long as 10 years ago, according to the suit. Rigby, based in London, is the global coordinator of the bank’s Daily Oil News publication, which is distributed in at least 17 countries including the U.S., U.K., Germany, Russia and China, Energy Intelligence said.
UBS, based in Zurich, has been copying the publications “in a systematic manner over a long period of time for the purposes of enhancing its profile and reputation amongst its customers and potential customers,” according to the lawsuit. “The defendant threatens and intends to repeat the acts of infringement.”
UBS spokesman Dominik von Arx declined to comment.
The case is Energy Intelligence Group v. UBS Ltd., case no. HC10C02381, High Court of Justice, Chancery Division (London).
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Morgan Stanley Sued by Irish Nuns, Investors Over Swaps Deal
Morgan Stanley (MS) was sued in London by nuns, a veterinary fund and 85 other Irish investors who said the bank saddled them with losses, and reaped a profit for itself, by failing to sell notes when it should have.
Morgan Stanley and Saturns Investments Europe Plc, a special-purpose vehicle set up by the New York-based bank, “deliberately or carelessly failed to redeem the notes” when they were downgraded to junk in January 2009, according to a statement by Stewarts Law LLP, the lawyers for the investors.
Morgan Stanley and Saturns waited until June 2009, after the price of underlying bonds had risen significantly, to redeem the notes, “thereby securing Morgan Stanley a profit of at least $11.2 million on the sale of the notes by way of a termination payment,” the lawyers said. The notes were sold to “a related Morgan Stanley entity” at a profit, they said.
The Sisters of Charity of Jesus and Mary, the Holy Faith Sisters, the Irish Veterinary Benevolent Fund and other individual investors bought 5.88 million euros ($7.6 million) of the notes through the stockbroker Bloxham in 2005 and 2006. The investors sued on Aug. 10 in London, according to Stewarts Law. They are seeking damages of more than 15 million euros.
Morgan Stanley spokesman Michael Wang declined to comment.
The case is The Sisters of Charity of Jesus and Mary & ors v. Morgan Stanley & Co, case no. 2010/960, High Court of Justice, Queen’s Bench Division (London).
Atrium Sues Meinl, Bank for 2.1 Billion Euros in U.K.
Atrium European Real Estate Ltd. (ATRS) filed a 2.1 billion-euro ($2.7 billion) lawsuit against Julius Meinl and Meinl Bank AG in the English High Court, a lawyer for Atrium said.
Meinl, the bank and eight other people and companies are being sued for breaching their fiduciary duties in relation to the property developer, Bettina Knoetzl, Atrium’s lawyer from Wolf Theiss in Vienna, said at a briefing yesterday.
Atrium, which is based in the British dependency of Jersey and previously was called Meinl European Land Ltd., slumped 55 percent in the second half of 2007 after the company used 1.8 billion euros to buy back shares without telling investors in advance. Austria’s Financial Markets Authority and the public prosecutor have been investigating the transactions since July 2007. The FMA has said the buyback misled investors.
Julius Meinl’s British citizenship and U.K. courts’ familiarity with Jersey law were reasons to file the suit in London, Knoetzl said.
Meinl Bank acted in accordance with the law, the Vienna-based bank said in an e-mailed statement yesterday. The claims are “absurd,” spokesman Thomas Huemer said in a telephone interview.
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U.S. Seeks Dismissal of Challenge to Drilling Ban
U.S. regulators asked a New Orleans federal judge to throw out a lawsuit seeking to lift a deep-water oil and gas drilling ban, arguing that new government rules make the litigation irrelevant.
U.S. District Judge Martin Feldman heard arguments yesterday and said he wouldn’t make an immediate decision. On June 22, Feldman scrapped a six-month ban on drilling in waters deeper than 500 feet, imposed by the Obama administration following the BP Plc (BP/) spill and sinking of the Deepwater Horizon rig in the Gulf of Mexico. Offshore oil-service firms sued in an effort to lift the ban.
Lawyers for U.S. Secretary of the Interior Kenneth Salazar asked Feldman to dismiss the lawsuit, contending it was rendered moot by new rules suspending drilling announced July 12. Whatever Feldman decides, drilling in the Gulf of Mexico won’t resume immediately, government lawyer Guillermo Montero said at the hearing yesterday.
“No matter what happens to this case, the July directive will remain in place and drilling operations suspended under it will remain suspended,” Montero told the judge.
Feldman asked both sides to file additional briefs by Aug. 18 as he seeks to ensure that the government “did not take the BP oil spill and generalize it to the entire industry.”
“That’s of great concern to me,” Feldman said.
He asked the government for a “specific comparison” of the information it acquired before the moratorium issued in May and the “post-May 28 information that led to the July 12 memorandum.”
The case is Hornbeck Offshore Services LLC v. Salazar, 10-01663, U.S. District Court, Eastern District of Louisiana (New Orleans).
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Credit Suisse Must Face MBIA Fraud Claims Over Mortgage Bonds
Justice Shirley Werner Kornreich of New York state Supreme Court in Manhattan denied a bid by Credit Suisse to dismiss a suit by MBIA, the world’s largest bond insurer, alleging misrepresentations about securities marketed by the Zurich-based bank.
MBIA sued the bank’s Credit Suisse Securities unit, which underwrote the bonds, in December as losses on the transaction soared. Credit Suisse sought to have the case dismissed, arguing that MBIA was a sophisticated party that failed to conduct its own review of the loans backing the securities and was notified that there were deficiencies in the loan pool information.
“Defendants’ contention that a sophisticated entity such as MBIA was required to look beyond Credit Suisse’s contractual representations and conduct extensive due diligence was rejected” in a prior case, Kornreich wrote. The decision was released Aug. 9.
As of Oct. 31, 51 percent of the loans backing the bonds, or $464 million of mortgages, have defaulted, leaving MBIA to pay claims of $296 million, the Armonk, New York-based bond insurer said in a Dec. 14 filing with the court.
“MBIA has been substantially harmed by Credit Suisse and we will continue to aggressively pursue our remedies,” MBIA spokesman Kevin Brown said in an e-mailed statement.
Duncan King, a spokesman for Credit Suisse in New York, declined to comment.
The case is MBIA Insurance Corp. v. Credit Suisse Securities (USA), 603751/09, New York state Supreme Court (Manhattan).
Ex-Credit Suisse Broker Granted Removal of Monitor
Ex-Credit Suisse Group AG broker Eric Butler was granted his request to remove his electronic monitoring as he appeals his securities-fraud conviction.
A lawyer for Butler on Aug. 6 asked U.S. District Judge Jack B. Weinstein in Brooklyn, New York, to ease his bail conditions. In the alternative to removing the device, the lawyer asked for a schedule that would allow Butler to do laundry, shop for groceries and take his two-year-old son to playgrounds.
“Probation shall arrange appropriate restrictions,” Weinstein wrote on the motion in granting the request Aug. 10.
Butler was found guilty last August of fraudulently selling securities that cost investors more than $1.1 billion. He was convicted on three counts: securities fraud, conspiracy to commit securities fraud and conspiracy to commit wire fraud. Weinstein sentenced him in January to five years in prison. On June 25 the judge granted Butler his request to stay out of prison while he appeals
Butler was indicted with Julian Tzolov in 2008. Prosecutors claimed the men falsely told clients their securities were backed by federally guaranteed student loans and were a safe alternative to bank deposits or money-market funds.
Butler and Tzolov can each keep $4.45 million in signing bonuses, according to a July 22 arbitration ruling lost by their former employer, Morgan Stanley, at the Financial Industry Regulatory Authority, or Finra.
Tzolov, who was returned to New York from Spain in July 2009 after fleeing prosecution, pleaded guilty that month to conspiracy, wire fraud and securities fraud. He testified as a prosecution witness against Butler, his former partner.
Robert Nardoza, a spokesman for U.S. Attorney Loretta Lynch in Brooklyn, declined to comment on Weinstein’s order. On Aug. 9, the government opposed the request to modify the conditions.
The case is U.S. v. Tzolov, 08-cr-370, U.S. District Court, Eastern District of New York (Brooklyn).
BP Spill Fund May Be Backed by Drilling Revenue
The $20 billion fund for victims of BP Plc’s oil spill may be backed by the company’s U.S. oil and gas production, an arrangement that an advocacy group called a conflict of interest for the Obama administration.
Provisions of the Deepwater Horizon Oil Spill Trust were released yesterday at the White House. BP agreed to the trust fund, to be administered by Kenneth Feinberg, after a June meeting at the White House with President Barack Obama and BP executives including Chairman Carl-Henric Svanberg.
Using BP’s production as collateral is “wildly inappropriate” because it may give the administration pause in pursuing criminal charges against the London-based oil company and in cracking down on its safety failings, Public Citizen, a Washington-based advocacy group, said yesterday in a statement.
“It’s to their advantage to have an upper hand with an open-ended criminal investigation still pending,” Tyson Slocum, director of the group’s energy program, said in an interview. “The upper hand is an agreement that directly links a continued robust presence by BP in the Gulf of Mexico to financing an Obama administration priority, the victims’ fund.”
Hannah August, a spokeswoman for the U.S. Justice Department, said oil and gas production was one option for securing the fund.
“The negotiations are ongoing for the security arrangements,” August said in an interview.
The agreement specifies that BP’s U.S. production revenue will be used as collateral unless the company and the fund’s trustees agree to substitute other property that isn’t specified.
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Rusal Files for Arbitration on Dispute Over Norilsk
The London Court of International Arbitration hasn’t set a date for a hearing on the OAO GMK Norilsk Nickel row, Moscow-based Rusal, controlled by billionaire Oleg Deripaska, said yesterday in a statement to the Hong Kong stock exchange.
Deripaska and Potanin, both with a quarter of the world’s biggest nickel supplier, offered to buy each other out after disagreeing on dividend payments and investment plans. Rusal is seeking arbitration after winning one less board seat than Interros in a June election it says was manipulated. Norilsk independent directors Gerard Holden and Brad Mills support Rusal’s request for an external investigation into the vote.
“The company seeks the speedy determination of this dispute in order that the parties’ rights and obligations are established,” Rusal said. The filing was made Aug. 10 against Interros International Investments Ltd., the company said.
“We are surprised that Rusal, instead of going through the conciliation committee created by the Norilsk board, decided to go to court,” Interros spokesman Andrei Kirpichnikov said by phone in Moscow. “Still, turning the matter over to judicial courts has to be better than throwing jibes in the media.”
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Novartis Pesticide Decision Overturned on Appeal
Novartis Crop Protection Inc. faces further court review on claims one of its pesticides damaged New Jersey blueberry crops after an appeals court overturned part of a ruling absolving the company of liability.
A group of blueberry growers in 1999 sued Novartis Crop Protection, now a part of Syngenta AG (SYNN), formed in 2000 from the merger of the farm-chemical units of drugmakers Novartis AG (NOVN) and AstraZeneca Plc. (AZN)
The growers claimed the company negligently advertised a new pesticide mixture as safe for the plants. A federal district court in New Jersey ruled in favor of the chemical maker and the farmers appealed.
“The evidence of record raises a genuine issue of material fact as to whether the risk of harm to plaintiffs’ crops was foreseeable” and could have been avoided by “alternative design,” according to an opinion yesterday from the 3rd U.S. Circuit Court of Appeals in Philadelphia.
“While we’re pleased that the appellate court upheld several parts of the district court’s ruling, we’re disappointed with their decision to overturn other parts as we still believe the case has no merit,” said Steven Goldsmith, a Syngenta spokesman in Greensboro, North Carolina. “We intend to defend ourselves vigorously.”
The appeals case is Indian Brand Farms Inc. v. Novartis Crop Protection Inc., 08-4484, 3rd U.S. Circuit Court of Appeals (Philadelphia). The original case is Indian Brand Farms Inc. v. Novartis Crop Protection Inc., 99CV2118, U.S. District Court, District of New Jersey (Camden).
Viacom Appeals YouTube Copyright-Infringement Ruling
Viacom appealed the June decision to the 2nd U.S. Circuit Court of Appeals in New York, according to a filing yesterday in federal court in Manhattan. Viacom sued YouTube in 2007, seeking $1 billion in damages for unauthorized use of videos from programs including “The Daily Show With Jon Stewart” and “South Park.”
U.S. District Judge Louis Stanton ruled that YouTube hadn’t infringed Viacom’s copyrights because it’s protected by the safe-harbor provision of the federal Digital Millennium Copyright Act. The law states a service provider isn’t liable if it removes infringing material when notified by the copyright owner.
“We believe this ruling by the lower court is fundamentally flawed,” New York-based Viacom said in a statement after Stanton granted summary judgment to YouTube. “After years of delay, this decision gives us the opportunity to have the Appellate Court address these issues on an accelerated basis.”
Andrew Pederson, a spokesman for Mountain View, California-based Google, wasn’t available to comment.
The case is Viacom International Inc. v. YouTube Inc., 07-02103, U.S. District Court, Southern District of New York (Manhattan).
Kebble Suicidal, Fought Father, Murder Trial Told
South African mining magnate Brett Kebble became a depressive, suicidal recluse and had a fistfight with his father in the months before he was shot dead, his former butler testified in a Johannesburg court.
Kebble’s eating habits changed and fewer people than usual visited his home in the month before he was killed, Andrew Minnaar told the South Gauteng High Court yesterday during Glenn Agliotti’s trial on charges of murder and conspiracy to murder. The 41-year-old drank three gin and tonics and a bottle of wine on the morning he died, Minnaar said.
Agliotti, a convicted drug dealer, pleaded not guilty to ordering Kebble’s murder on Sept. 27, 2005, describing it as an “assisted suicide.” Kebble, who was forced to resign as chief executive officer of three mining companies, faced a probe after assets worth hundreds of millions of dollars went missing from gold miner Randgold & Exploration Ltd. (RNG), which he led.
The ex-butler said he saw a broken lamp after he had heard Kebble and his father, Roger, have a fistfight in July 2005. Asked by Agliotti’s lawyer, Laurence Hodes, whether Kebble was suicidal, Minnaar said, “Yes, you could say that.”
Four men who admitted being involved in shooting Kebble have testified against Agliotti in exchange for immunity from prosecution. In an 11-year career in South Africa’s gold mining industry, Kebble, who also led JCI Ltd. and Western Areas Ltd., helped set up two of the country’s four biggest gold companies, Harmony Gold Mining Co. (HAR) and DRDGold Ltd. (DRD)
Kebble sold his Johannesburg house and members of his household staff were told they were no longer needed days before his death, Minnaar said.
On the night Kebble died, he abandoned his habit of going to parties in his dinner jacket and with a gift of chocolates and wine, Minnaar said. After finishing a meal of steak and French fries, Kebble left the house with his sleeves rolled up, having uncharacteristically given his driver the night off, Minnaar said.
Three men fired seven rounds into Kebble as he drove through Johannesburg at night, with their efforts almost foiled by a jammed gun that evening and an overheating car during an attempt the night before, witnesses including former nightclub bouncer Nigel McGurk, who was among the killers, told the court previously.
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