Skadden, Schlam Stone, Smith Gambrell: Business of Law
Former Chicago U.S. Attorney Patrick J. Fitzgerald, who stepped down in June, will join Skadden, Arps, Slate, Meagher & Flom LLP on Oct. 29 as a partner in the Chicago office, the firm said in a statement.
Under Fitzgerald, the Chicago U.S. Attorney’s office won convictions of I. Lewis “Scooter” Libby, an ex-White House aide; former Illinois governors Rod Blagojevich and George H. Ryan; and Hollinger International Inc. Chairman Conrad Black. Fitzgerald, 51, was appointed by President George W. Bush and took office in September 2001.
Lawyers who have been Chicago’s top federal prosecutor include Dan K. Webb, chairman of the law firm Winston & Strawn LLP; former Illinois Governor James R. Thompson, also a Winston & Strawn partner; and Scott R. Lassar, a partner at Sidley Austin LLP. Both law firms are based in Chicago.
The Wall Street Journal reported Fitzgerald’s move earlier.
In the Courts
Number of Securities Class Actions Filed Is Less than Last Year
The number of federal securities class action filings through the first nine months of 2012 trailed the number of filings in the same period last year, according to a PricewaterhouseCoopers LLP report.
PwC found that 137 cases were filed in the third quarter of 2012 compared with 142 cases filed through Sept. 30, 2011.
“If filings continue at a similar rate, 183 federal securities class actions are expected to be filed by year end compared to a total of 191 filings made in 2011 -- a decrease of approximately 4.2 percent -- just above the annual average (180) of cases filed since” the 1995 Private Securities Litigation Reform Act was enacted, according to PwC’s Securities Litigation Update, which was issued last week.
Foreign entities have been named in 27 cases or 20 percent of the cases filed so far this year. PwC said the figure is “a significant decrease when compared to the percentage of foreign filings in 2011, which represented 32 percent (or 46 cases) of total filings for the first nine months of 2011. The decline in filings against China-based companies appears to be the leading cause for this downward shift.”
Cases involving accounting issues represented 31 percent of the filings; in the same period in 2011, accounting cases comprised 40 percent of filings. According to the survey, inadequate controls and improper revenue recognition were the most common claims in accounting cases. Filings in the high-technology and energy industries were the second-largest in the quarter.
For more on the study, click here.
In the Courts
‘Rebecca’ Musical Producers Sue Backer Accused of Fraud
The Broadway producers of “Rebecca: The Musical” sued a Long Island, New York, man charged with concocting fictional investors and offering the prospect of $4.5 million in financing in order to collect undeserved commissions.
Mark Hotton, a 46-year-old former Oppenheimer & Co. broker, was arrested at his West Islip home on Oct. 15 and charged with wire fraud. Manhattan U.S. Attorney Preet Bharara said Hotton made up the promise of financial backing and a possible $1.1 million loan to get more than $60,000 from producers of the musical. Previews of the show, which is based on the 1938 novel “Rebecca” by Daphne du Maurier, were to have begun at the Broadhurst theater on Oct. 30.
The lawsuit, filed by producers Ben Sprecher and Louise Forlenza in New York State Supreme Court in Manhattan on Oct. 19, seeks more than $100 million in damages from Hotton and his wife Sherri for claims including fraud and breach of contract.
“Defendants’ tortious activities and breach of contract have already caused millions of dollars in damages and gravely wounded the production, which employs dozens of people,” the producers said in the complaint. “Plaintiffs are working tirelessly to salvage the show, but if it cannot be saved, then defendants are responsible for its destruction, along with at least hundreds of millions of dollars in lost profit damages.”
Erik S. Groothuis at Schlam Stone & Dolan LLP in New York is representing the plaintiffs, according to the complaint.
Gerald Shargel, a lawyer representing Mark Hotton, declined to comment on the lawsuit in a telephone interview.
The case is Rebecca Broadway LP v. Hotton, 653659/2012, New York state Supreme Court, New York County (Manhattan).
Moscow Investment Firm Seeks $5.3 Million Frozen in Insider Case
A Moscow-based investment firm is fighting to recover $5.3 million frozen as part of a U.S. investigation into insider trading by a former high-ranking government official in Central Asia, according to court records.
The firm, Ergoport Experts Ltd., is being sued by the U.S. Securities and Exchange Commission. The agency’s complaint cites “highly profitable and suspicious” trades in oil-field construction company Global Industries Ltd.
Federal prosecutors in Brooklyn, New York, are also probing the trades, which involve an individual “who previously held a high-level position in the government of a Central Asian country, which government was overthrown by a coup d’etat in 2010,” they said in court papers.
“We are investigating a conspiracy in which it appears that individuals who exercised control over an account in Ergoport’s name agreed to use inside information in order to execute stock trades,” Assistant U.S. Attorney Rachel Nash told U.S. District Judge Ronnie Abrams at an Oct. 12 hearing in Manhattan federal court, where the SEC lawsuit is pending.
Nash didn’t identify the subjects of the criminal probe. One individual under scrutiny is Maksim Bakiyev, the son of former Kyrgyzstan leader Kurmanbek Bakiyev, the Wall Street Journal reported, citing people involved in the investigation that it didn’t name.
Michael O’Kane, a lawyer for Maksim Bakiyev at Peters & Peters in London, didn’t return a phone call seeking comment on the report.
The U.S. is seeking to extradite the younger Bakiyev, who was arrested in London on Oct. 12 for allegedly conspiring to commit securities fraud and obstructing justice, the U.S. Embassy in Kyrgyzstan said in an Oct. 13 statement. President Bakiyev, a former U.S. ally who was ousted in a 2010 coup, has taken refuge in Belarus.
Ergoport’s New York-based lawyer, Robert Heim, said in an e-mailed statement last week that neither the elder Bakiyev nor his son is an Ergoport shareholder.
Ergoport’s identity surfaced after the SEC filed a lawsuit on Sept. 16, 2011, seeking to freeze proceeds of the trades in Carlyss, Louisiana-based Global Industries.
The civil case is Securities and Exchange Commission v. One or More Unknown Purchasers of Securities of Global Industries, 1:11-cv-06500, U.S. District Court, Southern District of New York (Manhattan). The criminal case is U.S. v. Munir, 1:12-mj-00331, U.S. District Court, Eastern District of New York (Brooklyn).
For more, click here.
Law Firm Moves
Smith Gambrell & Russell Adds New IP Partner in Atlanta Office
Gregory J. Kirsch has joined Smith, Gambrell & Russell, LLP a partner in the firm’s Intellectual Property Practice in Atlanta. Prior to joining SGR, Kirsch was a partner at Ballard Spahr LLP.
Kirsch focuses his practice on patent law with a concentration in electrical and communications technology, software and business methods patents, as well as medical technology. He serves as patent counsel to numerous technology companies ranging from large, multinational corporations to small startups.
Trusts and Estates Lawyer Joins New York’s Barton LLP
Amy Holzman has joined Barton LLP to head the firm’s wills, trusts, estate planning, and estate litigation practice. She works on plans for U.S. and foreign citizens, traditional and non-traditional families, and a range of individuals, including those with complex tax and personal issues. In addition, she represents clients in marital planning by preparing and negotiating prenuptial and post-nuptial agreements.
Before joining Barton, Holzman worked at Debevoise & Plimpton LLP as an associate, advising on and structuring tax plans for high net worth individuals, corporate and individual executors and trustees, and charitable entities.
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