By Gordon Smith, Christine, Hurt, Vic Fleischer, Fred Tung, Lisa Fairfax, David Zaring
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pTake your pick of object lessons from today's WSJ:/p
p1. Marc Dreier of Dreier LLP, who spent lavishly on homes, cars, and yachts. Warning flags for young associates: paying secretaries $200,00, guaranteeing lawyers salaries of $1 million - $2 million, parties with William Shatner as M.C. or Alicia Keys as entertainment. According to reports, he sold phony promissory notes, impersonated businessmen and hijackiing the conference rooms of companies to further his deceptions. I thought the WSJ was just being sloppy in referring to Dreier as the firm's "owner," but apparently he was the only equity partner of the LLP, perhaps another red flag? Presumably with this ownership structure he was the only one with access to the books. Creepily, you'd never know a thing was wrong from this a href="http://www.dreierllp.com/index.php"website/a. /p
p2. Matthew Devlin obtained and sold inside information from his wife, a partner at PR firm Brunswick Group. Barbara Black has the a href="http://lawprofessors.typepad.com/securities/2008/12/sec-files-insid.html"details/a. It strikes me as somewhat strange that Devin's wife Nina is being depicted as an innocent victim, both by her employer and prosecutors. I'm sure that Brunswick employees as a matter of course sign stiff non-disclosure agreements, and indeed the SEC's complaint states that "Devlin's wife had a duty to keep all nonpublic information concerning her clients confidential." I'm no securities scholar, but the prosecution's la href="http://dealbook.blogs.nytimes.com/2008/12/18/the-complaints-in-the-devlin-case/"anguage/a is right out of Rule 10b5-2: "Whenever the person communicating the material nonpublic information and the person to whom it is communicated have a history, pattern, or practice of sharing confidences, such that the recipient of the information knows or reasonably should know that the person communicating the material nonpublic information expects that the recipient will maintain its confidentiality." This idea of a pattern and practice of sharing confidences is very different from the position Bunswick took in a statement that the confidential information was obtained "without [Nina's] knowleddge." So it's unclear whether there was presumably actionable "pillow talk" disclosure, as suggested by the complaints, or whether Mark was a href="http://www.theeagle.com/business/Lehman-broker-charged-in-insider-trading-case"deducing /ainformation from Nina's travel schedule. I don't teach or work in insider trading--is Nina clearly safe from prosecution? Isn't it likely Brunswick has some kind of claim against her? /p
p3. Madoff, Madoff, Madoff./p
pAlmost makes me wish I was still teaching Corporations this week. Almost.br
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