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AT&T Sees NY Network Upgrades Wrapped Up By 3Q, SF By 4Q – WSJ.com

May 20, 2010 By Leave a Comment
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AT&T Inc. (T) is expected to wrap up its network improvements for New York by the third quarter, with San Francisco to follow three months later, according to the company’s operations chief.

The Dallas telecommunications giant is working to upgrade its network in the two key media markets, which were hit by intense traffic primarily caused by the Apple Inc. (AAPL) iPhone. But the company has been delayed by component shortages and zoning issues, which have been particularly cumbersome in San Francisco.

The improvements are critical to AT&T repairing the reputation of the network, which suffers from the perception that its coverage lags behind rival Verizon Wireless. It also will enable the company to offer additional features, such as tethering for the iPhone, which allows a handset’s cellular signal to be used like a modem.

Other AT&T smartphones allow tethering.

“It’s taking longer than we’d like,” said John Stankey, chief executive of AT&T Operations, in an interview with Dow Jones. “The dynamics of San Francisco are different.”

The New York improvements are proceeding on schedule, he said, adding that the work in San Francisco is roughly 90 days behind as a result of the logistical complications.

Last month, the company said the number of dropped calls on its third-generation, or 3G, network fell 6% in Manhattan and 9% in the New York metropolitan area, but acknowledged that San Francisco was behind. Earlier Wednesday, Ralph de la Vega, who runs AT&T’s wireless and consumer businesses, told investors that the New York metrics have “improved significantly.”

via CORRECT: AT&T Sees NY Network Upgrades Wrapped Up By 3Q, SF By 4Q – WSJ.com.

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Novartis Must Pay Punitive Damages in Sex-Bias Case, Jury Rules – Bloomberg.com

May 18, 2010 By Leave a Comment

A Novartis AG pharmaceuticals unit discriminated against female sales representatives in the U.S. and must pay $3.4 million to a dozen women plus punitive damages to be decided, a federal jury found.

The jury in Manhattan federal court reached its decision yesterday after a monthlong trial of a class-action lawsuit on claims of discrimination against women at Novartis Pharmaceuticals, a U.S. unit of Europe’s second-largest drugmaker. The nine jurors’ award to the women for lost pay and other damages came in the first stage of deliberations. The panel will decide on the amount of punitive damages.

The women are part of the Basel, Switzerland-based company’s 14,000-member workforce in the U.S. They’ve said they’re seeking about $200 million in punitive damages. Jurors found that Novartis discriminated against women over pay and promotion and because they got pregnant.

“Novartis has been involved in systemic discrimination since 2002,” David Sanford, a lawyer for the women, said in an interview after the verdict. “The verdict supports the claims of 5,600 women.”

Novartis said in a statement that it is disappointed in the verdict and plans to appeal.

“We believe the plaintiffs’ claims were unfounded,” the company said, adding that it has been “recognized for its commitment to an inclusive environment.”

via Novartis Must Pay Punitive Damages in Sex-Bias Case, Jury Rules – Bloomberg.com.

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SEC’s CDO Cross-hairs: Now Morgan Stanley…Who’s Next? | Westlaw Business

May 14, 2010 By Leave a Comment
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With Morgan Stanley now joining Goldman in its cross-hairs, the SEC is taking aim at synthetic collateralized debt obligation (CDO) activity across Wall Street. It was the Street’s version of fantasy football, played by banks from Merrill to Morgan, with much money and little disclosure (according to the Commission). Other parties and enforcement agencies are now playing pile-up as well, with Federal prosecutors in Manhattan and even AIG jumping into the fray – yet the question is on what grounds…

The hunt for inadequate disclosure is spreading wide on Wall Street. Morgan Stanley, Citigroup, JPMorgan, UBS, and Deutsche Bank are all reportedly under investigation for their roles in synthetic CDO transactions. On the surface the allegations seem substantially similar to the SEC charges filed against Goldman Sachs last month.

The Goldman charges focus on allegedly inadequate disclosure of conflicts of interest related to the structuring of ABACUS 2007-AC1, another synthetic CDO. Like fantasy football teams, these securities were built from whatever “referenced assets” the bank desired — giving them more power, and understanding, than usual, and arguably mandating more disclosure as a result.

via SEC’s CDO Cross-hairs: Now Morgan Stanley…Who’s Next?.

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Goldman Talks Settlement With SEC – WSJ.com

May 7, 2010 By Leave a Comment
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Goldman Sachs Group Inc. lawyers met this week with representatives of the Securities and Exchange Commission in a first step toward a potential settlement of the agency’s fraud lawsuit against the securities firm.

The two sides remain far apart. The preliminary settlement talks, held Tuesday, between Goldman co-general counsel Gregory Palm and other lawyers representing the New York company and SEC officials didn’t include any specific settlement terms, such as the amount of a fine or agreements Goldman could make with the agency, people familiar with the situation said.

Goldman’s willingness to even meet with the SEC is a sign that executives are scaling back their combative stance since the lawsuit was filed April 16. While the company hasn’t retreated from its public statements that the suit’s accusations are groundless, some Goldman executives are taking a softer line with restive shareholders.

The SEC and Goldman declined to comment.

The talks come ahead of Goldman’s scheduled shareholder meeting Friday morning in lower Manhattan. Protesters are expected outside the building. The meeting is expected to be a big departure from the almost perfunctory events of the past, when investors applauded Goldman’s ability to make money at a blistering pace. Also on Friday, Goldman directors are expected to discuss a revision of some company practices in dealing with customers, people familiar with the situation said.

via Goldman Talks Settlement With SEC – WSJ.com.

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N.Y. bomb plot highlights limitations of data mining – Computerworld

May 5, 2010 By Leave a Comment

Saturday’s botched bombing attempt in New York City provides an example of why the use of data mining approaches to uncover potential terrorism plots is a little like weather forecasting.

“You definitely need to do it, because it gives you warning of major storms,” said John Pescatore, an analyst with Gartner Inc. and a former analyst with the National Security Agency. “But it’s not going to tell you about individual raindrops.”

Faisal Shahzad, a naturalized U.S. citizen of Pakistani descent was arrested Monday at New York’s John F. Kennedy International airport in connection with an attempt to detonate a car bomb in Times Square. Shahzad, who is scheduled to be indicted on terrorism-related charges in Manhattan today, was pulled off a plane bound for Dubai, minutes before the jetliner was scheduled to take off.

Shahzad is alleged to have parked an explosives-laden vehicle in Times Square, apparently with the intention of blowing it up. Media reports quoting the FBI and other authorities said the bomb could have caused a substantial number of deaths and injuries had it detonated.

The anti-terrorism task force was quickly able to identify Shahzad as the prime suspect in the case thanks to a series of mistakes the would-be bomber made. But for the moment, there is little to show that authorities had any inkling of either Shahzad or of his plot beforehand.

via N.Y. bomb plot highlights limitations of data mining – Computerworld.

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Goldman Sachs Reveals Slew of Shareholder Suits | Corporate Counsel

May 5, 2010 By Leave a Comment

General counsel Gregory Palm of Goldman Sachs Group Inc. late Monday made a rare filing with the government, revealing at least six shareholder suits against the company over its dealings in the subprime mortgage market, and one highly critical letter from an institutional shareholder.

The filing made no direct reference to a rumored Justice Department criminal investigation. But it did say the company anticipates that additional shareholder actions “and other litigation may be filed, and regulatory and other investigations and actions commenced, with respect to offerings of collateralized debt obligations.”

Palm made the disclosures in an 8-K report (pdf) to the Securities and Exchange Commission. The filing came after shareholders had questioned Palm in a recent quarterly conference call about why the company hadn't revealed a civil investigation by the SEC over Goldman's role in the CDOs.

Monday's filing said that since the SEC filed suit (pdf) against Goldman on April 15, several putative shareholder derivative actions have been filed in New York Supreme Court and U.S. District Court in Manhattan against the company, its board of directors, and certain officers and employees.

Palm and Goldman have previously denied any wrongdoing. A Goldman spokesman Tuesday said the company would not comment on the filing or the suits.

The shareholder suits generally allege “claims for breach of fiduciary duty, corporate waste, abuse of control, mismanagement and unjust enrichment in connection with collateralized debt obligation offerings made between 2004 and 2007,” the filing said.

The complaints also challenge “the accuracy and completeness of GS Inc.'s disclosure,” it said, which may be why the company decided to disclose them. Copies of the suits were included with the filing.

The complaints seek, among other things, declaratory relief, unspecified money damages, restitution, and corporate governance reforms. The filing also included a shareholder suit in the Delaware Court of Chancery relating to compensation levels for 2009, which was amended to include allegations similar to the five actions in New York.

In another unusual move, the company disclosed a critical shareholder demand letter in its filing. The letter, from counsel for the Louisiana Municipal Police Employees Retirement System, accused Goldman's top officers and directors — including Palm and his co-general counsel Esta Stecher — “with breaching their fiduciary duties and other misconduct.”

The retirement fund relies on its holdings of shares of Goldman Sachs and other companies to provide benefits to thousands of police personnel throughout Louisiana, wrote lawyer Albert Myers, a partner in the New York office of Kahn Swick & Foti. The letter was a follow-up to a Sept. 2, 2009, demand that the company take action to remedy the breaches and misconduct.

via Law.com – Goldman Sachs Reveals Slew of Shareholder Suits.

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Criminal Probe Looks Into Goldman Trading – WSJ.com

April 30, 2010 By Leave a Comment
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Federal prosecutors are conducting a criminal investigation into whether Goldman Sachs Group Inc. or its employees committed securities fraud in connection with its mortgage trading, people familiar with the probe say.

The investigation from the Manhattan U.S. Attorney’s Office, which is at a preliminary stage, stemmed from a referral from the Securities and Exchange Commission, these people say. The SEC recently filed civil securities-fraud charges against the big Wall Street firm and a trader in its mortgage group. Goldman and the trader say they have done nothing wrong and are fighting the civil charges.

Lloyd Blankfein, CEO of Goldman Sachs, during testimony before the Senate Homeland Security and Governmental Affairs Investigations Subcommittee hearing on Tuesday.

Prosecutors haven't determined whether they will bring charges in the case, say the people familiar with the matter. Many criminal investigations are launched that never result in any charges.

The criminal probe raises the stakes for Goldman, Wall Street’s most powerful firm. The investigation is centered on different evidence than the SEC’s civil case, the people say. It couldn’t be determined which Goldman deals are being scrutinized in the criminal investigation.

via Criminal Probe Looks Into Goldman Trading – WSJ.com.

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Blavatnik Creation LyondellBasell May Face Kazakh Payment Probe – BusinessWeek

April 7, 2010 By

LyondellBasell, the bankrupt chemical company created by billionaire Len Blavatnik, may face a U.S. bribery probe after telling prosecutors about a potentially improper payment linked to a project in Kazakhstan, according to four people with knowledge of the matter.

LyondellBasell, which sought protection from creditors last year, told the Justice Department it uncovered conduct that raised “compliance issues” under the U.S. Foreign Corrupt Practices Act, according to a March 30 court filing in Manhattan. The FCPA makes it a crime for companies with U.S. operations to bribe foreign officials. A review of international holdings by a management team installed after the bankruptcy triggered the disclosure, said David Harpole, the company’s Houston-based spokesman.

“This is an active investigation,” Harpole said in an interview. “It’s not appropriate for me to comment on any details of that particular investigation. We are cooperating fully with the Department of Justice, and we are conducting our own internal investigation.”

Subsidiaries of LyondellBasell, based in Rotterdam, won court approval on March 11 for a disclosure statement, or rough outline of a reorganization plan. The company has said it plans to exit bankruptcy around April 30. While the probe would be unlikely to affect LyondellBasell’s emergence from bankruptcy, any FCPA investigation could result in fines and indictments, according to Evan Flaschen, chairman of the restructuring group at the Bracewell & Giuliani LLP law firm in New York. Flaschen isn’t involved in the case.

via Blavatnik Creation LyondellBasell May Face Kazakh Payment Probe – BusinessWeek.

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When It Comes to E-Discovery Sanctions, Be Afraid. Be Very, Very Afraid

January 19, 2010 By Leave a Comment

You don’t often hear plaintiffs lawyers kvetching about the burdens associated with e-discovery, and for good reason. Their cases typically depend on what corporate defendants produce in the way of e-mails and computer data, so they’re usually the ones complaining to judges about defense failures to preserve electronic records.

But a recent decision by the federal judiciary’s doyenne of e-discovery—Manhattan federal district court judge Shira Scheindlin–is a reminder that plaintiffs shouldn’t get too cocky about their own e-discovery obligations. As first reported by the New York Law Journal, Judge Scheindlin sanctioned 13 plaintiffs in a case involving the collapse of two hedge funds, finding that “most plaintiffs conducted discovery in an ignorant and indifferent fashion.”

The underlying case was brought in 2004 by investors who lost $550 million in the liquidation of two British Virgin Islands hedge funds, Lancer Offshore and OmniFund. Some defendants settled, but Citgo Fund Services, which was hired by the funds to perform certain administrative tasks, decided to fight on. After the close of discovery in 2008, Citgo’s lawyers at Gilbride, Heller & Brown and Curtis, Mallet-Prevost, Colt & Mosle moved for sanctions against the plaintiffs for failing to preserve and produce documents.

Judge Scheindlin, who previously authored an influential opinion on e-discovery in Zubulake v. UBS Warburg, subtitled her 87-page opinion (yep, 87 pages) in the hedge fund case, “Zubulake Revisited: Six Years Later.”

“While litigants are not required to execute document productions with absolute precision, at a minimum they must act diligently and search thoroughly at the time they reasonably anticipate litigation,” wrote Judge Scheindlin. “All of the plaintiffs in this motion failed to do so and have been sanctioned accordingly.”

The judge also ruled that she would issue an adverse inference against the plaintiffs if the case against Citgo goes to a jury. Nonetheless, lead plaintiffs lawyer Scott Berman of Friedman Kaplan Seiler & Adelman told the New York Law Journal that the investors would move forward with the case. “We respect the court’s decision but believe that clients and counsel did what was required by existing law, custom, and practice,” Berman said. “In prior decisions the court has denied Citgo’s motions to dismiss and for summary judgment. Other defendants have settled with plaintiffs, and we look forward to trying the merits of the case against Citgo.”

via When It Comes to E-Discovery Sanctions, Be Afraid. Be Very, Very Afraid.

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New SEC Suit Alleges BofA Hid ‘Extraordinary Losses’ at Merrill

January 13, 2010 By Leave a Comment

The Securities and Exchange Commission filed a new lawsuit Tuesday against Bank of America Corp., claiming the bank failed to disclose billions of dollars in rising losses at Merrill Lynch & Co. Inc. before shareholders voted on a merger in December of 2008.

The new suit will be heard by U.S. District Court Judge Jed Rakoff in Manhattan, who is also handling an earlier SEC suit accusing the bank of misleading shareholders about billions of dollars in Merrill bonuses.

On Monday, Rakoff denied a motion by the Securities and Exchange Commission to add a new charge to its earlier complaint against Bank of America. But Rakoff told the SEC it could bring the charge as a separate case, if it wants.

Rakoff said he wanted to move ahead with the March 1 trial date on the earlier complaint, and there was a danger of confusing the jury by introducing a different charge involving a different set of facts. Rakoff said, in fairness to the bank, it would need more time to pursue its defense and expert testimony against the new allegation.

The new charge accuses the bank of failing to disclose the “extraordinary losses” at Merrill Lynch, before the shareholders voted on Dec. 5, 2008, to approve the merger between the two financial giants.

The SEC wrote a Dec. 31 letter (pdf) to Rakoff asking to add the charge to its earlier complaint, which alleged that the bank failed to disclose Merrill's $5.8 billion bonus pool to the shareholders. The Dec. 31 letter, along with the bank's response (pdf), were made public Monday.

In the letter, the SEC alleges that by the time of the shareholder vote, the bank knew of $4.5 billion in net losses at Merrill in October of 2009, and estimated an additional multibillion-dollar loss for November. “These losses alone constituted more than one-third of the merger value as of December 5, and approximately 60 percent of Merrill's entire losses in the preceding three quarters of the year,” the letter stated. Merrill would eventually lose $15.3 billion in the fourth quarter alone.

Responding for the bank, attorney Daniel Kramer said that the new claim has no legal basis, that the SEC didn't act diligently in waiting so close to the March 1 trial date to file the new charge, and that the bank would be prejudiced because the discovery and other pre-trial processes are closed. Kramer is a partner at Paul, Weiss, Rifkind, Wharton & Garrison in New York.

via Law.com – New SEC Suit Alleges BofA Hid ‘Extraordinary Losses’ at Merrill.

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