Court & The Citi
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BP, Barclays, Pfizer, Terra, Citigroup, AstraZeneca, Satyam in Court News
<CITE class=byline>By Elizabeth Amon - Aug 19, 2010 </CITE>
BP Plc’s former head of commodities trading Quek Chin Thean and three other ex-employees countersued the oil company after being accused of misusing confidential information and helping BP’s rival set up a competing business.
Quek, former regional operating unit manager Clarence Chang and ex-trading manager John Foo claim in papers filed in Singapore High Court yesterday that they were wrongly fired and are owed an unspecified amount of money by BP. Former executive assistant Laura Kuan claims she is owed S$379,000 ($280,000) that BP wrongfully withheld after she left.
BP, based in London, sued Quek, Chang, Foo, Kuan and two other former employees, accusing them of breaching their obligations by misusing confidential information including oil trading “cheat sheets” to help Shenzhen Brightoil Group set up a competing business in Singapore. BP sued as it seeks to stem employee defections, which the former workers partly blamed on a change in bonus payments in 2007.
The Gulf of Mexico oil spill, which led to a record loss in the second quarter, may also have prompted some BP workers to leave, Quek said in court papers. At least 40 employees have left BP’s Asian trading operations this year, Quek said. The unit had employed 200 workers, he said.
Quek, 41, was fired July 9 after BP said it found evidence of wrongdoing, according to the court papers. Quek submitted his resignation in May and his last day was supposed to be July 16, he said.
BP also sued the former head of operations Paul John Bradshaw and legal manager Simon Cheong.
Lau Lu Ching, a Singapore-based BP spokeswoman, declined to comment.
Foo and Chang said the firings caused them “great distress” and damaged their reputations. All six of the former employees had accepted a signing bonus from Brightoil. They denied misusing any of BP’s trade secrets.
The case is BP Singapore Pte v. Quek Chin Thean & Ors S482/2010 in the Singapore High Court.
For more, click here.
Verdicts/Settlements
Barclays Plc won court approval for its $298 million settlement with the U.S. over dealings with nations including Sudan, Libya and Iran, a day after the judge on the case delayed the accord.
U.S. District Judge Emmet Sullivan in Washington on Aug. 17 requested more information about the settlement, which he called a “sweetheart deal.” London-based Barclays will pay $149 million each to the U.S. and New York state, according to a deferred-prosecution agreement filed this week.
During an hour-long hearing yesterday, Sullivan criticized the accord for not going after individuals who perpetrated the crime and punishing shareholders instead.
“Why do the shareholders have to pay for this venture?” Sullivan asked. “If I own stock, why do I have to pay?”
Barclays was accused of violating U.S. financial sanctions against Cuba, Iran, Libya, Sudan and Burma from about March 1995 through September 2006. Barclays followed the directions of banks in those countries to omit their names in payment messages sent to the New York branch and to other financial institutions, according to court papers.
“It’s a fair and appropriate resolution for this case,” said Kevin Gerrity, a U.S. prosecutor.
The company admitted wrongdoing and reported it to regulators, Gerrity said. Barclays spent $250 million investigating the crime, though no individuals are likely to be prosecuted, he said.
“They spent $250 million and they couldn’t find anyone?” Sullivan asked yesterday, calling it “shocking.”
“When corporations self-disclose their criminal wrongdoing to us, as Barclays did, they will not get a pass, but we will take their disclosure, cooperation and remedial efforts into consideration,” Lanny Breuer, head of the Justice Department’s criminal division, said in a statement.
The case is U.S. v. Barclays Bank Plc, 10-cr-218, U.S. District Court, District of Columbia (Washington).
For more, click here.
New Jersey Settles SEC Fraud Claims Over $26 Billion in Bonds
The state of New Jersey settled claims that it fraudulently misled municipal-bond investors while underfunding the state’s two biggest pension plans in the first Securities and Exchange Commission case to target a state.
New Jersey consented to a cease-and-desist order, the SEC said in a statement yesterday. Documents for more than $26 billion in bond offerings from 2001 to 2007 “created the false impression” that the Teachers’ Pension and Annuity Fund and the Public Employees’ Retirement System were adequately funded, masking the fact that the state couldn’t make contributions without raising taxes or cutting services, according to the SEC’s statement.
“All issuers of municipal securities, including states, are obligated to provide investors with the information necessary to evaluate material risks,” SEC Enforcement Director Robert Khuzami said in the statement. “The State of New Jersey didn’t give its municipal investors a fair shake, withholding and misrepresenting pertinent information about its financial situation.”
New Jersey didn’t admit or deny wrongdoing in the settlement, the SEC said. The regulator said it considered the state’s cooperation and “certain remedial acts” in reaching the accord.
For more, click here.
Pfizer Menopause Drug Didn’t Cause Cancers, Jury Says
Pfizer Inc.’s menopause drug Prempro didn’t cause two women’s cancers, and the drugmaker doesn’t have to pay damages over those illnesses, a jury decided.
Jurors in state court in Philadelphia deliberated about four hours before concluding yesterday that Prempro wasn’t a “factual cause” of Sharon Buxton’s and Joy Henry’s breast cancers. The women sought at least $100,000 in damages.
“While we have great sympathy for Mrs. Buxton, Mrs. Henry and their families, we believe the verdicts in this case confirm our position,” Pfizer said in a statement. “The vast majority of women who take hormone therapy do not get breast cancer.”
Until 1995, many menopausal women combined Premarin, Wyeth’s estrogen-based drug, with Upjohn Co.’s progestin-laden Provera, to relieve their symptoms. Wyeth later combined the two hormones in Prempro.
The case is Buxton v. Wyeth, 00202, Court of Common Pleas (Philadelphia).
For more, click here.
Swiss Man’s Jail Term for Vandalizing Singapore Train Extended
Swiss executive Oliver Fricker must spend an additional two months in jail for breaking into a Singapore depot and spray- painting a commuter train, an appeals judge ruled, extending the sentence to seven months.
Appeals Judge V.K. Rajah dismissed Fricker’s appeal of the original five-month sentence for trespassing and vandalism yesterday, agreeing to a request by prosecutors for a longer prison term.
Fricker, 32, along with a British accomplice, broke into SMRT Corp.’s depot and spray-painted a train with the words “McKoy Banos” on May 17. The executive, in an orange jumpsuit with a beige windbreaker and a crew cut, hung his head as the judge read the sentence.
Fricker’s act was “audacious” and the two months he received for trespassing was “manifestly inadequate,” Rajah said prior to handing down the sentence that extended the term to four months. Fricker’s three-month sentence for vandalism and three strokes of the cane remain unchanged.
Fricker had been in Singapore since October, 2008, and had worked as a software consultant at Zurich-based financial software maker Comit AG. Comit hasn’t been in touch with Fricker since he pleaded guilty, Fricker’s lawyer Derek Kang said.
Fricker is “obviously disappointed,” Kang told reporters. “It was never meant to be a big publicity stunt. He’s paying a very heavy price for a single, foolish, act.”
The case is Fricker Oliver v Public Prosecutor MA232/2010 in the Singapore High Court.
For more, click here.
For the latest verdict and settlement news, click here.
New Suits
Bank of America Sues to Prevent Stuytown Foreclosure
Bank of America Corp. and U.S. Bancorp sued to block an entity seeking to foreclose on the equity interests of the owner of Manhattan’s Stuyvesant Town and Peter Cooper Village apartment complex.
The entity, PSW NYC LLC, has scheduled an Aug. 25 foreclosure auction. The group is a joint venture between Bill Ackman’s Pershing Square Capital Management LP and Winthrop Realty Trust, who together bought $300 million in defaulted mezzanine loans on the 80-acre property.
The joint venture wants to foreclose on the equity interests of the company that owns the apartment complex and is responsible for paying the $3 billion first mortgage. If successful, the venture will place the entity into bankruptcy, and avoid paying the mortgage, according to the lawsuit.
“The future of this iconic enclave in the Borough of Manhattan is in imminent jeopardy,” lawyers for Bank of America N.A. and U.S. Bank said in the complaint filed yesterday in New York State Supreme Court in Manhattan. The Pershing and Winthrop plan violates terms of the intercreditor agreement for the property, according to the suit. The agreement, which governs how the loan is to be repaid among competing creditors, says junior lenders get second priority after the senior mortgage holders.
Charlotte, North Carolina-based Bank of America and U.S. Bank, a subsidiary of Minneapolis-based U.S. Bancorp, acting “by and through” special servicer CW Capital Asset Management LLC, have already sought foreclosure on behalf of creditors of the senior mortgage. That was packaged with other commercial- property loans and sold as securities. The biggest holders include government-owned mortgage finance companies Fannie Mae and Freddie Mac.
Ackman didn’t respond to an e-mail seeking comment. Michael Ashner, chairman and chief executive officer of Boston-based Winthrop Realty, declined to immediately comment.
The case is Bank of America Corp. v. PSW NYC LLC, 10- 651293, New York State Supreme Court in Manhattan (New York County).
For the latest new suits news, click here. For copies of recent civil complaints, click here.
Lawsuits/Pretrial
Fairfield Must Face Investor Suit, U.S. Judge Rules
Fairfield Greenwich Group, an operator of “feeder funds” channeling money into Bernard Madoff’s fraudulent investment scheme, must face claims in a lawsuit filed in New York, a U.S. judge ruled.
U.S. District Judge Victor Marrero in Manhattan yesterday declined to dismiss most of the claims in the case while narrowing the investor lawsuit against Fairfield and several firms that provided it with administrative and accounting services.
Fairfield, a hedge fund co-founded by Walter Noel, earned an estimated $919 million from placing investors’ money with Madoff. The suit, which seeks class-action status, contends the defendants shut their eyes to Madoff’s fraud, and seeks recovery of the investors’ losses.
“According to plaintiffs, FGG fulfilled a critical role for Madoff, who knew that secrecy and obfuscation were key to prolonging how long he could keep his big lie afloat and his sand castles grounded,” Marrero said in a 198-page opinion yesterday.
Also sued in the case are Citco Group Ltd., GlobeOp Financial Services LLC and the accounting firm PricewaterhouseCoopers LLP.
A call to Amsterdam-based Citco Group after business hours wasn’t answered. A voice-mail message left with the New York office of London-based GlobeOp wasn’t returned. Steven Silber, a spokesman for PricewaterhouseCoopers, based in New York, had no immediate comment on the ruling.
GlobeOp provided administrative services to Fairfield’s Fairfield Sentry fund, Marrero said in his opinion. Citco served as an administrator, custodian, bank and depository for Fairfield funds.
“We’re pleased that Judge Marrero dismissed many of the claims against many of the individual and corporate defendants,” said Mark Cunha, a lawyer representing Fairfield in the case.
Cunha said that important claims in the suit, which Marrero was required to assume as fact for purposes of deciding whether to dismiss them, aren’t true. Fairfield will have a chance to disprove the plaintiffs’ remaining claims later, he said.
The case is Anwar v. Fairfield Greenwich, 09-cv-118, U.S. District Court, Southern District of New York (Manhattan).
For more, click here.
Terra, Citigroup Said to Plan Settlement Talks Before Trial
Guy Hands’s Terra Firma Capital Partners Ltd. and Citigroup Inc. plan settlement talks in September before a trial on the 2007 sale of music label EMI Group Ltd., two people with knowledge of the matter said.
Hands is seeking to reach an accord with Citigroup, EMI’s lender, over the music label’s debt before the trial starts in October in New York, said the people, who declined to be identified because the talks are confidential. Officials at Citigroup and Terra Firma in London declined to comment yesterday.
The move comes after the British financier raised 105 million pounds ($135 million) from investors in June to meet its debt requirements. In March, Citigroup, EMI’s lender, was denied a request to move Terra’s lawsuit, which accuses the bank of misrepresenting facts and tricking Hands into buying EMI, to England from Manhattan. Citigroup has denied wrongdoing.
For more, click here.
AstraZeneca Gets Verus’s Asthma-Drug Suit Dropped
AstraZeneca Plc won dismissal of a lawsuit in which it was accused of backing out of a deal with Verus Pharmaceuticals Inc. to develop a children’s asthma drug and instead aligning with competitor Map Pharmaceuticals Inc.
Verus, based in San Diego, sued in New York state court in May 2009, seeking at least $280 million in compensatory damages and $1 billion in punitive damages from AstraZeneca, the U.K.’s second-biggest drugmaker. Verus claimed that once AstraZeneca entered a deal with Map, it sought to kill any competition by destroying Verus’s ability to develop the drug on its own.
The case, which doesn’t name Map as a defendant, was later moved to federal court in New York.
“Verus’s causes of action fail to state claims for which relief can be granted,” U.S. District Judge Barbara S. Jones said in an Aug. 16 order dismissing the case. She didn’t rule on the merits of Verus’s accusations.
“We are disappointed with the decision,” Blair Fensterstock, a lawyer for Verus at Fensterstock & Partners LLP in New York, said in an e-mailed statement. “AZ’s actions are examples of a wrongful pattern of activity to monopolize a sector of the pharmaceutical space to the detriment of the public at large.” Fensterstock said he will appeal.
“When preclinical studies failed to show the safety of the pediatric asthma product in development, AstraZeneca exercised its legal rights to terminate its collaboration with Verus Pharmaceuticals and to discontinue development of the product,” Tony Jewell, a spokesman for AstraZeneca, said in an e-mailed statement.
The case is Verus Pharmaceuticals Inc. v. AstraZeneca AB, 09-cv-5660, U.S. District Court, Southern District of New York (Manhattan).
For more, click here.
Satyam Founder Raju Granted Bail by Indian Court
Ramalinga Raju, who resigned as chairman of Satyam Computer Services Ltd. after saying he overstated the Indian company’s assets by $1 billion, won bail from a court in Hyderabad, his lawyer said.
Raju, whose bail petition on health grounds was rejected by the country’s Supreme Court in March, was granted bail by Judge Raja Elango, his lawyer S. Bharat Kumar said by telephone. Kumar said he couldn’t immediately provide any further details as he was yet to receive a copy of the judgment.
The Satyam founder has been in custody in India since January last year when he wrote a letter to the board explaining the financial irregularities. The letter touched off India’s biggest corporate-fraud inquiry. The admission triggered a stock slump and a government takeover that led to sale of the Hyderabad-based software-services exporter to Tech Mahindra Ltd.
“It appears that the bail has been granted on health grounds, and if that is the case then it does not dilute charges against Raju,” said Barunesh Chandra, a New Delhi-based independent legal consultant. “It is surprising that the investigation is on even after one-and-a-half years. Ideally the investigating agencies should have completed that process and the trial should have started.”
Raju was allowed to be freed on bail on condition he stays in Hyderabad, Press Trust of India reported. He will have to provide two bonds of 2 million rupees ($43,000) each, according to the report.
For more, click here.
For the latest lawsuits news, click here. For the latest trial and appeals news, click here.
Litigation Departments
Hughes Hubbard Litigation Chief Ted Mayer to Run New York Firm
Hughes Hubbard & Reed LLP partner Ted Mayer, one of Merck & Co.’s chief lawyers in its $4.85 billion Vioxx painkiller settlement, will replace Charles Scherer as the law firm’s managing partner.
Mayer, co-head of the litigation group, and Gerard Cruse, who joined the firm as chief operating officer last month from Apollo Global Management LLC, will take over Scherer’s duties Jan. 1, Hughes Hubbard Chairwoman Candace Beinecke said yesterday in a statement.
Scherer, who served as managing partner for more than two decades, has “guided us through more than 15 straight years of record profits,” Beinecke said in the statement. He is retiring from Hughes Hubbard, according to the firm.
Beinecke also appointed Mayer and Kenneth Lefkowitz, co- head of Hughes Hubbard’s corporate and mergers-and-acquisitions groups, as deputy chairs to advise on strategic and practice- management issues, according to the statement.
Cruse will handle day-to-day management duties of the firm, the law firm said. He was global director at New York-based Apollo, the buyout firm headed by Leon Black.
Mayer will maintain his product-liability practice at the law firm, Hughes Hubbard said.
For more, click here.
U.K. Antitrust Regulator Pays Most in Legal Fees Since 2006
Britain’s antitrust regulator has seen its legal costs soar after setbacks in court battles in the past year, including cases against BAA Airports Ltd., Barclays Plc and Tesco Plc, according to Competition Commission data.
Legal fees reached a four-year high of 1.91 million pounds ($3 million) between April 1, 2009, and March 31, 2010, more than double the amount a year earlier and over 10 times the 140,586 pounds paid in 2006-07, according to data obtained by Bloomberg News under a Freedom of Information Act request. The commission paid 644,515 pounds in external legal costs in the period from April 1 to June 7.
“The costs have increased because we’ve been through an exceptional period where we’ve faced a significant number of important legal challenges,” commission spokesman Rory Taylor said in an e-mailed response to questions. “Not everything has gone our way in these cases but that is inevitable, nobody can guarantee unblemished success in these situations.”
Lawyers from Farrer & Co were paid 640,854 pounds for legal advice between 2007 and 2010, the most among the 16 legal firms named in the disclosed data.
One Essex Court charged a total 300,169 pounds for work involving BAA, owned by Madrid-based Ferrovial SA, and competition in the mobile-phone industry in the same period. Monckton Chambers were paid 191,764 pounds for work on market and merger regulation involving Barclays, BAA, British Sky Broadcasting Group Plc, Sports Direct International Plc, Tesco and Virgin Media Inc.
For more, click here.
For the latest litigation department news, click here.
To contact the reporter on this story: Elizabeth Amon in Brooklyn, New York at [email protected].
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BP, Barclays, Pfizer, Terra, Citigroup, AstraZeneca, Satyam in Court News
<CITE class=byline>By Elizabeth Amon - Aug 19, 2010 </CITE>
BP Plc’s former head of commodities trading Quek Chin Thean and three other ex-employees countersued the oil company after being accused of misusing confidential information and helping BP’s rival set up a competing business.
Quek, former regional operating unit manager Clarence Chang and ex-trading manager John Foo claim in papers filed in Singapore High Court yesterday that they were wrongly fired and are owed an unspecified amount of money by BP. Former executive assistant Laura Kuan claims she is owed S$379,000 ($280,000) that BP wrongfully withheld after she left.
BP, based in London, sued Quek, Chang, Foo, Kuan and two other former employees, accusing them of breaching their obligations by misusing confidential information including oil trading “cheat sheets” to help Shenzhen Brightoil Group set up a competing business in Singapore. BP sued as it seeks to stem employee defections, which the former workers partly blamed on a change in bonus payments in 2007.
The Gulf of Mexico oil spill, which led to a record loss in the second quarter, may also have prompted some BP workers to leave, Quek said in court papers. At least 40 employees have left BP’s Asian trading operations this year, Quek said. The unit had employed 200 workers, he said.
Quek, 41, was fired July 9 after BP said it found evidence of wrongdoing, according to the court papers. Quek submitted his resignation in May and his last day was supposed to be July 16, he said.
BP also sued the former head of operations Paul John Bradshaw and legal manager Simon Cheong.
Lau Lu Ching, a Singapore-based BP spokeswoman, declined to comment.
Foo and Chang said the firings caused them “great distress” and damaged their reputations. All six of the former employees had accepted a signing bonus from Brightoil. They denied misusing any of BP’s trade secrets.
The case is BP Singapore Pte v. Quek Chin Thean & Ors S482/2010 in the Singapore High Court.
For more, click here.
Verdicts/Settlements
Barclays Plc won court approval for its $298 million settlement with the U.S. over dealings with nations including Sudan, Libya and Iran, a day after the judge on the case delayed the accord.
U.S. District Judge Emmet Sullivan in Washington on Aug. 17 requested more information about the settlement, which he called a “sweetheart deal.” London-based Barclays will pay $149 million each to the U.S. and New York state, according to a deferred-prosecution agreement filed this week.
During an hour-long hearing yesterday, Sullivan criticized the accord for not going after individuals who perpetrated the crime and punishing shareholders instead.
“Why do the shareholders have to pay for this venture?” Sullivan asked. “If I own stock, why do I have to pay?”
Barclays was accused of violating U.S. financial sanctions against Cuba, Iran, Libya, Sudan and Burma from about March 1995 through September 2006. Barclays followed the directions of banks in those countries to omit their names in payment messages sent to the New York branch and to other financial institutions, according to court papers.
“It’s a fair and appropriate resolution for this case,” said Kevin Gerrity, a U.S. prosecutor.
The company admitted wrongdoing and reported it to regulators, Gerrity said. Barclays spent $250 million investigating the crime, though no individuals are likely to be prosecuted, he said.
“They spent $250 million and they couldn’t find anyone?” Sullivan asked yesterday, calling it “shocking.”
“When corporations self-disclose their criminal wrongdoing to us, as Barclays did, they will not get a pass, but we will take their disclosure, cooperation and remedial efforts into consideration,” Lanny Breuer, head of the Justice Department’s criminal division, said in a statement.
The case is U.S. v. Barclays Bank Plc, 10-cr-218, U.S. District Court, District of Columbia (Washington).
For more, click here.
New Jersey Settles SEC Fraud Claims Over $26 Billion in Bonds
The state of New Jersey settled claims that it fraudulently misled municipal-bond investors while underfunding the state’s two biggest pension plans in the first Securities and Exchange Commission case to target a state.
New Jersey consented to a cease-and-desist order, the SEC said in a statement yesterday. Documents for more than $26 billion in bond offerings from 2001 to 2007 “created the false impression” that the Teachers’ Pension and Annuity Fund and the Public Employees’ Retirement System were adequately funded, masking the fact that the state couldn’t make contributions without raising taxes or cutting services, according to the SEC’s statement.
“All issuers of municipal securities, including states, are obligated to provide investors with the information necessary to evaluate material risks,” SEC Enforcement Director Robert Khuzami said in the statement. “The State of New Jersey didn’t give its municipal investors a fair shake, withholding and misrepresenting pertinent information about its financial situation.”
New Jersey didn’t admit or deny wrongdoing in the settlement, the SEC said. The regulator said it considered the state’s cooperation and “certain remedial acts” in reaching the accord.
For more, click here.
Pfizer Menopause Drug Didn’t Cause Cancers, Jury Says
Pfizer Inc.’s menopause drug Prempro didn’t cause two women’s cancers, and the drugmaker doesn’t have to pay damages over those illnesses, a jury decided.
Jurors in state court in Philadelphia deliberated about four hours before concluding yesterday that Prempro wasn’t a “factual cause” of Sharon Buxton’s and Joy Henry’s breast cancers. The women sought at least $100,000 in damages.
“While we have great sympathy for Mrs. Buxton, Mrs. Henry and their families, we believe the verdicts in this case confirm our position,” Pfizer said in a statement. “The vast majority of women who take hormone therapy do not get breast cancer.”
Until 1995, many menopausal women combined Premarin, Wyeth’s estrogen-based drug, with Upjohn Co.’s progestin-laden Provera, to relieve their symptoms. Wyeth later combined the two hormones in Prempro.
The case is Buxton v. Wyeth, 00202, Court of Common Pleas (Philadelphia).
For more, click here.
Swiss Man’s Jail Term for Vandalizing Singapore Train Extended
Swiss executive Oliver Fricker must spend an additional two months in jail for breaking into a Singapore depot and spray- painting a commuter train, an appeals judge ruled, extending the sentence to seven months.
Appeals Judge V.K. Rajah dismissed Fricker’s appeal of the original five-month sentence for trespassing and vandalism yesterday, agreeing to a request by prosecutors for a longer prison term.
Fricker, 32, along with a British accomplice, broke into SMRT Corp.’s depot and spray-painted a train with the words “McKoy Banos” on May 17. The executive, in an orange jumpsuit with a beige windbreaker and a crew cut, hung his head as the judge read the sentence.
Fricker’s act was “audacious” and the two months he received for trespassing was “manifestly inadequate,” Rajah said prior to handing down the sentence that extended the term to four months. Fricker’s three-month sentence for vandalism and three strokes of the cane remain unchanged.
Fricker had been in Singapore since October, 2008, and had worked as a software consultant at Zurich-based financial software maker Comit AG. Comit hasn’t been in touch with Fricker since he pleaded guilty, Fricker’s lawyer Derek Kang said.
Fricker is “obviously disappointed,” Kang told reporters. “It was never meant to be a big publicity stunt. He’s paying a very heavy price for a single, foolish, act.”
The case is Fricker Oliver v Public Prosecutor MA232/2010 in the Singapore High Court.
For more, click here.
For the latest verdict and settlement news, click here.
New Suits
Bank of America Sues to Prevent Stuytown Foreclosure
Bank of America Corp. and U.S. Bancorp sued to block an entity seeking to foreclose on the equity interests of the owner of Manhattan’s Stuyvesant Town and Peter Cooper Village apartment complex.
The entity, PSW NYC LLC, has scheduled an Aug. 25 foreclosure auction. The group is a joint venture between Bill Ackman’s Pershing Square Capital Management LP and Winthrop Realty Trust, who together bought $300 million in defaulted mezzanine loans on the 80-acre property.
The joint venture wants to foreclose on the equity interests of the company that owns the apartment complex and is responsible for paying the $3 billion first mortgage. If successful, the venture will place the entity into bankruptcy, and avoid paying the mortgage, according to the lawsuit.
“The future of this iconic enclave in the Borough of Manhattan is in imminent jeopardy,” lawyers for Bank of America N.A. and U.S. Bank said in the complaint filed yesterday in New York State Supreme Court in Manhattan. The Pershing and Winthrop plan violates terms of the intercreditor agreement for the property, according to the suit. The agreement, which governs how the loan is to be repaid among competing creditors, says junior lenders get second priority after the senior mortgage holders.
Charlotte, North Carolina-based Bank of America and U.S. Bank, a subsidiary of Minneapolis-based U.S. Bancorp, acting “by and through” special servicer CW Capital Asset Management LLC, have already sought foreclosure on behalf of creditors of the senior mortgage. That was packaged with other commercial- property loans and sold as securities. The biggest holders include government-owned mortgage finance companies Fannie Mae and Freddie Mac.
Ackman didn’t respond to an e-mail seeking comment. Michael Ashner, chairman and chief executive officer of Boston-based Winthrop Realty, declined to immediately comment.
The case is Bank of America Corp. v. PSW NYC LLC, 10- 651293, New York State Supreme Court in Manhattan (New York County).
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Lawsuits/Pretrial
Fairfield Must Face Investor Suit, U.S. Judge Rules
Fairfield Greenwich Group, an operator of “feeder funds” channeling money into Bernard Madoff’s fraudulent investment scheme, must face claims in a lawsuit filed in New York, a U.S. judge ruled.
U.S. District Judge Victor Marrero in Manhattan yesterday declined to dismiss most of the claims in the case while narrowing the investor lawsuit against Fairfield and several firms that provided it with administrative and accounting services.
Fairfield, a hedge fund co-founded by Walter Noel, earned an estimated $919 million from placing investors’ money with Madoff. The suit, which seeks class-action status, contends the defendants shut their eyes to Madoff’s fraud, and seeks recovery of the investors’ losses.
“According to plaintiffs, FGG fulfilled a critical role for Madoff, who knew that secrecy and obfuscation were key to prolonging how long he could keep his big lie afloat and his sand castles grounded,” Marrero said in a 198-page opinion yesterday.
Also sued in the case are Citco Group Ltd., GlobeOp Financial Services LLC and the accounting firm PricewaterhouseCoopers LLP.
A call to Amsterdam-based Citco Group after business hours wasn’t answered. A voice-mail message left with the New York office of London-based GlobeOp wasn’t returned. Steven Silber, a spokesman for PricewaterhouseCoopers, based in New York, had no immediate comment on the ruling.
GlobeOp provided administrative services to Fairfield’s Fairfield Sentry fund, Marrero said in his opinion. Citco served as an administrator, custodian, bank and depository for Fairfield funds.
“We’re pleased that Judge Marrero dismissed many of the claims against many of the individual and corporate defendants,” said Mark Cunha, a lawyer representing Fairfield in the case.
Cunha said that important claims in the suit, which Marrero was required to assume as fact for purposes of deciding whether to dismiss them, aren’t true. Fairfield will have a chance to disprove the plaintiffs’ remaining claims later, he said.
The case is Anwar v. Fairfield Greenwich, 09-cv-118, U.S. District Court, Southern District of New York (Manhattan).
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Terra, Citigroup Said to Plan Settlement Talks Before Trial
Guy Hands’s Terra Firma Capital Partners Ltd. and Citigroup Inc. plan settlement talks in September before a trial on the 2007 sale of music label EMI Group Ltd., two people with knowledge of the matter said.
Hands is seeking to reach an accord with Citigroup, EMI’s lender, over the music label’s debt before the trial starts in October in New York, said the people, who declined to be identified because the talks are confidential. Officials at Citigroup and Terra Firma in London declined to comment yesterday.
The move comes after the British financier raised 105 million pounds ($135 million) from investors in June to meet its debt requirements. In March, Citigroup, EMI’s lender, was denied a request to move Terra’s lawsuit, which accuses the bank of misrepresenting facts and tricking Hands into buying EMI, to England from Manhattan. Citigroup has denied wrongdoing.
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AstraZeneca Gets Verus’s Asthma-Drug Suit Dropped
AstraZeneca Plc won dismissal of a lawsuit in which it was accused of backing out of a deal with Verus Pharmaceuticals Inc. to develop a children’s asthma drug and instead aligning with competitor Map Pharmaceuticals Inc.
Verus, based in San Diego, sued in New York state court in May 2009, seeking at least $280 million in compensatory damages and $1 billion in punitive damages from AstraZeneca, the U.K.’s second-biggest drugmaker. Verus claimed that once AstraZeneca entered a deal with Map, it sought to kill any competition by destroying Verus’s ability to develop the drug on its own.
The case, which doesn’t name Map as a defendant, was later moved to federal court in New York.
“Verus’s causes of action fail to state claims for which relief can be granted,” U.S. District Judge Barbara S. Jones said in an Aug. 16 order dismissing the case. She didn’t rule on the merits of Verus’s accusations.
“We are disappointed with the decision,” Blair Fensterstock, a lawyer for Verus at Fensterstock & Partners LLP in New York, said in an e-mailed statement. “AZ’s actions are examples of a wrongful pattern of activity to monopolize a sector of the pharmaceutical space to the detriment of the public at large.” Fensterstock said he will appeal.
“When preclinical studies failed to show the safety of the pediatric asthma product in development, AstraZeneca exercised its legal rights to terminate its collaboration with Verus Pharmaceuticals and to discontinue development of the product,” Tony Jewell, a spokesman for AstraZeneca, said in an e-mailed statement.
The case is Verus Pharmaceuticals Inc. v. AstraZeneca AB, 09-cv-5660, U.S. District Court, Southern District of New York (Manhattan).
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Satyam Founder Raju Granted Bail by Indian Court
Ramalinga Raju, who resigned as chairman of Satyam Computer Services Ltd. after saying he overstated the Indian company’s assets by $1 billion, won bail from a court in Hyderabad, his lawyer said.
Raju, whose bail petition on health grounds was rejected by the country’s Supreme Court in March, was granted bail by Judge Raja Elango, his lawyer S. Bharat Kumar said by telephone. Kumar said he couldn’t immediately provide any further details as he was yet to receive a copy of the judgment.
The Satyam founder has been in custody in India since January last year when he wrote a letter to the board explaining the financial irregularities. The letter touched off India’s biggest corporate-fraud inquiry. The admission triggered a stock slump and a government takeover that led to sale of the Hyderabad-based software-services exporter to Tech Mahindra Ltd.
“It appears that the bail has been granted on health grounds, and if that is the case then it does not dilute charges against Raju,” said Barunesh Chandra, a New Delhi-based independent legal consultant. “It is surprising that the investigation is on even after one-and-a-half years. Ideally the investigating agencies should have completed that process and the trial should have started.”
Raju was allowed to be freed on bail on condition he stays in Hyderabad, Press Trust of India reported. He will have to provide two bonds of 2 million rupees ($43,000) each, according to the report.
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Litigation Departments
Hughes Hubbard Litigation Chief Ted Mayer to Run New York Firm
Hughes Hubbard & Reed LLP partner Ted Mayer, one of Merck & Co.’s chief lawyers in its $4.85 billion Vioxx painkiller settlement, will replace Charles Scherer as the law firm’s managing partner.
Mayer, co-head of the litigation group, and Gerard Cruse, who joined the firm as chief operating officer last month from Apollo Global Management LLC, will take over Scherer’s duties Jan. 1, Hughes Hubbard Chairwoman Candace Beinecke said yesterday in a statement.
Scherer, who served as managing partner for more than two decades, has “guided us through more than 15 straight years of record profits,” Beinecke said in the statement. He is retiring from Hughes Hubbard, according to the firm.
Beinecke also appointed Mayer and Kenneth Lefkowitz, co- head of Hughes Hubbard’s corporate and mergers-and-acquisitions groups, as deputy chairs to advise on strategic and practice- management issues, according to the statement.
Cruse will handle day-to-day management duties of the firm, the law firm said. He was global director at New York-based Apollo, the buyout firm headed by Leon Black.
Mayer will maintain his product-liability practice at the law firm, Hughes Hubbard said.
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U.K. Antitrust Regulator Pays Most in Legal Fees Since 2006
Britain’s antitrust regulator has seen its legal costs soar after setbacks in court battles in the past year, including cases against BAA Airports Ltd., Barclays Plc and Tesco Plc, according to Competition Commission data.
Legal fees reached a four-year high of 1.91 million pounds ($3 million) between April 1, 2009, and March 31, 2010, more than double the amount a year earlier and over 10 times the 140,586 pounds paid in 2006-07, according to data obtained by Bloomberg News under a Freedom of Information Act request. The commission paid 644,515 pounds in external legal costs in the period from April 1 to June 7.
“The costs have increased because we’ve been through an exceptional period where we’ve faced a significant number of important legal challenges,” commission spokesman Rory Taylor said in an e-mailed response to questions. “Not everything has gone our way in these cases but that is inevitable, nobody can guarantee unblemished success in these situations.”
Lawyers from Farrer & Co were paid 640,854 pounds for legal advice between 2007 and 2010, the most among the 16 legal firms named in the disclosed data.
One Essex Court charged a total 300,169 pounds for work involving BAA, owned by Madrid-based Ferrovial SA, and competition in the mobile-phone industry in the same period. Monckton Chambers were paid 191,764 pounds for work on market and merger regulation involving Barclays, BAA, British Sky Broadcasting Group Plc, Sports Direct International Plc, Tesco and Virgin Media Inc.
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To contact the reporter on this story: Elizabeth Amon in Brooklyn, New York at [email protected].
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