The Subprime Storm is coming

From Reuters:

WASHINGTON, May 28 (Reuters) - The U.S. Securities and Exchange Commission will make public as early as June several enforcement cases involving subprime mortgage-related investigations, two sources familiar with the probes told Reuters on Wednesday.
The SEC last year formed an internal task force to investigate various areas of the subprime mortgage market including sales practices, accounting, the role of credit rating firms and securitization of packaged mortgages.
Many market participants, including credit rating agencies, Wall Street firms and mortgage brokers and lenders, have been criticized for fueling the U.S. housing market, perhaps without disclosing certain risks.
The SEC, which aims to maintain market confidence, is focused on proper disclosure and potential fraudulent activities to investors.
"I think we'll have a few subprime-related cases relatively soon ... within weeks," one source said.

Slightly Off Topic: Winston & Strawn to now just go by the name "Win"

From the Houston Chronicle:

"To Cher, Madonna, Oprah and Prince add Howrey, Skadden, Sutherland and Winstead.
It’s part of a new branding trend for law firms — to go by only one name.

When a law firm brands itself, it’s generally fantastic for the person answering the phone, hard on the tech team and really rough on the legacy of the usually-dead partners whose names go out of use.

As law firms get more comfortable with the idea that lawyers can be professionals and still run their firms like businesses, the idea of creating a marketplace persona for the firm is increasingly popular. This results in modernized Web sites, shiny new often-arty brochures and fewer names on the stationery."

Breaking News: Lawyers to benefit from misdeeds of corporate executives, public officials

Here is a small but rather interesting article concerning white collar crime from Crain's Detroit Business:
"Criminal defense lawyers, even those representing white-collar defendants, once were mostly trial specialists and usually practiced solo or in small firms.

Their reputations earned them major clients and cases, often referred from large firms that wanted to keep the stigma of criminal litigation away from their business clients.
But times have changed.

Stakes are higher as federal investigations increasingly target companies and top corporate officials. And such cases generate major revenue."

Second Request Alert: Is the Microsoft-Yahoo engagement over after Yahoo caught sleeping with Google?

From NYTimes.com:

"How can Google, the Internet search and advertising giant, contend that teaming up with Yahoo in search ads would not invite an antitrust challenge?

Under a proposed partnership, Google would let Yahoo use its more sophisticated ad technology to deliver ads next to some Yahoo search results. By some estimates this could bring Yahoo $1 billion a year in added cash.

If they strike a deal, the No. 2 company in search ads would hand over some of its business to the dominant company in that market. When asked about the issues this would raise in a meeting with reporters this month, Eric E. Schmidt, Google’s chief executive, offered only a cryptic reply: “We would anticipate structuring a deal to address antitrust concerns.”

People involved in shaping Google’s approach say the deal under consideration would be a straightforward supplier arrangement, similar to ones in the markets for computer printers, appliances and cellphone service."

Predatory lenders must prove to be less predatory, more lender

From Sarah Murphy at Bliss PR:

Subprime Lawsuits: How to Defend Yourself
22/05/2008 - 15:02
"The pace of subprime-related litigation continues with no apparent end in sight as more and more lawsuits are filed against mortgage lenders, Wall Street firms that packaged and resold the mortgage loans into bonds and mortgage backed securities (“MBS”), and companies that invested in MBS. Many of the mortgage lender lawsuits are directed at underwriting practices and accounting estimates, including estimates related to allowance for loan losses, valuation of mortgage servicing rights and residual securities, and liabilities for loan repurchases.

What companies can do to defend themselves against these lawsuits depends on how they arrived at their accounting estimates and whether they can demonstrate that good faith efforts were made to determine those estimates based on information available at the time. Anthony Lendez, CPA, CFE, is a partner with BDO Consulting, a division of BDO Seidman, LLP, and can speak to the following best practices for the various defendants of these lawsuits:"

The domain HellerEhrmanWinstonStrawnProskauerRose.com still available

From thelawyer.com:

"Our favourite stateside rumour last week featured the merger of not two, but three US top 100 firms. The first won't surprise anybody: Heller Ehrman. As one of the few firms to show falls in revenue and profit last year, it has been at the centre of merger rumours for months. The continuing drip of exiting partners (last week saw another former New York managing partner, Richard Martin, bail out in favour of Orrick Herrington & Sutcliffe) is doing nothing to stem the feeling in the market that Heller is a firm in need of a deal.

Heller's first marriage partner is rumoured to be Winston & Strawn, another pleasant, but less-than-thrilling, outfit that could use a jolt of electricity.

But it's the third leg of this legal stool that has got people here buzzing: Proskauer Rose. Were Proskauer to join the party, the US legal market would be looking at a new $1.8bn (£905m) mega-firm.

Word is, this deal is too big to digest. But the fact the market gives it credence underlines the extent to which firms are now looking at their options. More consolidation this year is a cert."

FCPA: Time to brush up on the old Arabic

From The Independent:

"BAE Systems admitted yesterday that American authorities investigating corruption claims over an arms deal with Saudi Arabia had issued a series of subpoenas to senior executives, as the investigation continues to gather pace. Two bosses of the defence giant were also detained after they landed at a Houston airport last week.

BAE released a statement which said: 'The Department of Justice last week served a number of additional subpoenas in the US on our employees as part of its ongoing investigation.'"

BAE, formerly British Aerospace, is no stranger to corruption, as evidenced by that cartoon above.

Second Request Alert: It is so back on!

From the AP:
"Microsoft Corp. said Sunday it is talking to Yahoo Inc. about a transaction that doesn't involve a full buyout like the software maker's $47.5 billion offer that fell apart earlier this month.

Redmond, Wash.-based Microsoft (MSFT, Fortune 500) walked away May 3 from its offer to buy the Web pioneer. Since then, billionaire investor Carl Icahn has launched an effort to oust Yahoo's board.

In a statement Sunday, Microsoft says it is considering a different kind of deal with Yahoo (YHOO, Fortune 500) as it pursues ways to improve and expand its online services and advertising business."

Yeah, by better deal, they better mean most ginormus merger ever!

The "Microsoft" of Miners about to acquire the "Yahoo" of mining

From Forbes.com:

LONDON -
"As you might have expected given last week's bid expectations for Canadian steel maker Alcan, other companies in the metals and mining sector have now found themselves the subject of takeover talk. Analysts at Merrill Lynch recently suggested that BHP Billiton, the world's largest mining stock, could be an attractive target for private-equity interests, but now forecasters at Citigroup think the company would be better off just buying Rio Tinto, its nearest rival.

It might seem a little far fetched given the fact that Rio has a market capitalization of $80 billion, while BHP is worth $136 billion. But investors seemed to be hoping there was some truth the speculation, and sent Rio up 204 pence ($4.07), or 6.1%, to £35.08 ($69.93), in Wednesday afternoon trading in London. BHP was up 24 pence (48 cents), or 2.0%, at £12.09 ($24.10). It wouldn't quite be the biggest takeover of all time -- that distinction goes to AOL for buying Time Warner in 2000 for $165 billion -- but it would probably come a close second.

"Rio Tinto's strong cashflow and nominal gearing may bring it into the crosshairs of private equity, but we think BHP Billiton is a much more likely bidder given synergies and nationalistic control issue of Australian assets," Citigroup's Clarke Wilkins wrote in a research note earlier this week.

Considering Rio Tinto's sheer size, a bid at even a modest premium would need to be around $100 billion or more, and that would leave the only other miners that might conceivably buy it -- Anglo American and Xstrata, which have market values of $80 billion and $50 billion, respectively -- saddled with debt. BHP, on the other hand, has reported a hefty cashflow from operating activities of $10.5 billion for the year to June 30, 2006, and even promised shareholders it would add a massive $10 billion to its share buyback program in February.

A bid from BHP Billiton also looks compelling, Wilkins said, because of the synergies that could be achieved between it and Rio through their existing joint ventures. BHP's dual listing on the Australian and London stock exchanges, along with its being partly based in Australia, would also stand it in good stead with the Australian government since a takeover of Rio would see it gain control of the company's huge iron ore operations in Pilbara, Western Australia. Rio derives about 40% of its earnings from its mines there. "

I first received word of this from The Posse List, who had sent out an email to their DC listerv today. If you are a contract attorney anywhere in America you would be foolish not to sign up with The Posse List listservs. Their information on jobs and the market in general is pretty remarkable.

Icahn, Hedgefund Investor prepared to lay the smackdown at Yahoo Inc.

From CNN/Money.com

"Carl Icahn isn’t the only big-name investor taking a big stake in Yahoo (YHOO). Paulson & Co., the hedge fund run that made a killing last year betting against subprime mortgage securities, bought 50 million Yahoo shares in the first quarter, which ended March 31, a Securities and Exchange Commission filing shows. John Paulson, the manager who made $3.7 billion last year on his timely subprime wager, made the big Yahoo purchase during a quarter in which Yahoo fielded an unsolicited bid from Microsoft (MSFT). Microsoft has since walked away from that deal, but Icahn is leading a proxy fight against Yahoo’s board, perhaps in hopes of turning up the heat for renewed deal talks. If he succeeds, Paulson stands to make a few more bucks."

DC News: And 20,000 extra square feet seems pretty smart in their world

Arent Fox inks deal for 1000 Connecticut Ave. NW

Washington Business Journal - by Melissa Castro Staff Reporter

"In the largest private-tenant lease so far this year, law firm Arent Fox LLP announced today it will move its 264 D.C. lawyers one building over from its current office, becoming the lead tenant in the new building planned for Connecticut and K streets NW.

After its current lease expires in 2012, the firm will take 255,000 square feet -- eight floors -- in the Pei Cobb Freed & Partners-designed building slated for 1000 Connecticut Ave. NW. The prominent downtown corner currently hosts a quickly shrinking core of old floor slabs and center columns as demolition of the existing building proceeds.

Arent Fox signed a 17-year lease and will move from Washington Square, 1050 Connecticut Ave. NW, where it now occupies 235,000 square feet. The new lease represents a net gain of 20,000 square feet."

Breaking news: Lawyers to benefit from other people's depression, nightmares

Told you it was going to be a busy summer. From Shannon Duffy:

Antitrust Class Action Certified Against GlaxoSmithKline

"A federal judge has certified a class action antitrust suit that accuses GlaxoSmithKline of using monopolistic tactics to boost its profits from Wellbutrin, a popular antidepressant, by delaying a generic version of the drug from coming to market.

The suit was brought by direct purchasers who claim that GSK concocted a plan to keep Wellbutrin prices high by making fraudulent assertions to the U.S. Patent and Trademark Office and by engaging in "sham" patent litigation against generic drug manufacturers.

According to the suit, the plan worked because the patent litigation delayed the market entry of generic versions of Wellbutrin, and the direct purchasers were forced to pay unnecessarily high prices for the drug, because no generic versions of bupropion were available for nearly two years after GSK's patent monopoly would have expired."

Hat tip to Steve Geisler for bring this to my attention.

The Joe Frazier of all Media (Viacom) to Continue Duking it Out with the Muhammed Ali of the Internet (Google/YouTube)

From ZdNet:
"Google is willing to fight Viacom all the way to the Supreme Court in the companies' legal battle over YouTube and pirated videos, but Viacom is taking a hard line of its own, executives from the companies said Wednesday."

I had accidentally posted the original article for the suit from last year. If you care to read that for some background, it is here.
I think I need some coffee.

FCPA: China to Bankroll Attorney For US, Canada

This is from the Proivincea newspaper in British Columbia, Canada, but I am certain the topic applies to American companies as well. If this article is accurate, and FCPA investigations continue at the pace they are, expect to see many more FCPA cases in the future.

"Corruption has become part of China's "business ethic," and B.C.'s Asian-trade boom puts pressure on companies here to commit white-collar crime, the province's top fraud cop warns.

But B.C. Mounties are ill-equipped even for the battle against existing levels of commercial crime, RCMP Supt. Gordon McRae says.

McRae made the comments at an anti-fraud conference in Vancouver this week.
He cited the Chinese business principle of guanxi, an exchange of favours that can include "tit-for-tat" commercial exchanges illegal in Canada.

He used as an example the hypothetical scenario of a Canadian businessman securing a contract by purchasing a house so "some executive's son" can go to the University of B.C.

"Our business people are going to get these pressures," McRae said. "The temptations are there."

China isn't the only country with unpalatable business practices, McRae said, noting that U.S. agrochemical giant Monsanto was fined for bribing an Indonesian official in 2002."

4.95 Million? A Person has got to eat.

I got this info from resipsablog.com. Looks like an interesting blog. I think I will add it to law links.

Partner Profits
1. Wachtell Lipton Rosen & Katz, $4.95 million
2. Cravath Swaine & Moore, $3.30 million
3. Sullivan & Cromwell, $3.06 million
4. Quinn Emanuel Urquhart Oliver & Hedges, $3.01 million
5. Simpson Thacher & Bartlett, $2.88 million
6. Cadwalader Wickersham & Taft, $2.73 million
7. Cahill Gordon & Reindel, $2.60 million
7. Paul Weiss Rifkind Wharton & Garrison, $2.60 million
9. Milbank Tweed Hadley & McCloy, $2.53 million
10. Kirkland & Ellis, $2.48 million


Overall Revenue
1. Skadden, $2.17 billion
2. Latham & Watkins, $2.01 billion
3. Baker & McKenzie, $1.83 billion
4. Jones Day, $1.44 billion
5. Sidley Austin, $1.39 billion
6. White & Case, $1.37 billion
7. Kirkland & Ellis, $1.31 billion
8. Greenberg Traurig, $1.20 billion
9. Mayer Brown, $1.18 billion
10.Weil Gotshal & Manges, $1.17 billion

FCPA: As if the DOJ and SEC needed an Excuse...

From Sarah Streicker in Mondaq.com. Note: You do have to subscribe for this service. This is related to a earlier post on Monday.

"The investigation and prosecution of violations of the Foreign Corrupt Practices Act (FCPA), a statute targeting bribery of foreign officials, is a top priority of the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). The FCPA provides no private right of action. As a result, commercial litigation based on claims of US companies engaging in corrupt practices abroad have been rare & until now. In the past two months, at least two civil lawsuits have been filed in the United States that contain allegations of foreign bribery against companies doing business in the United States which, if true, would violate the FCPA. These civil lawsuits will almost certainly attract the attention of DOJ and SEC investigators and could lead to criminal investigations."

Breaking News: Lawyers to benefit from others stupidity, pain

From the NY Times DealBook:

"Investment bankers may be worried about layoffs, but it looks like an awful lot of lawyers stand to benefit from the subprime mortgage meltdown. Isn’t that always the way?
A study released Wednesday by , found that nearly as many subprime-related federal lawsuits were filed in the first quarter of 2008 as in the last six months of 2007: 170 in the three months ending March 31, compared with 181 in the six months ending Dec. 31. Those numbers may well understate the total, because they do not include claims filed in state courts. "

You can read the study from Navigant consulting here. Hat tip to The Posse List for finding this before me. If you are an attorney anywhere in America, and not signed up with The Posse List, you are missing out on so much valuble information about jobs and the legal market. Besides its free.