Commercial construction projects necessarily involve many moving parts, including multiple parties from the owners to the construction managers to the project financiers to the contractors and to the sub-contractors. Larry P. Schiffer of Squire Patton Boggs writes that these moving parts generally result in a web of interrelated insurance policies covering the project.

“Typically, when there is no controlled insurance program, contractors and sub-contractors are required to obtain liability insurance covering their potential negligence and very often are also required to add others, like the property owner or construction manager, as additional insureds onto those insurance policies,” he explains. “But not all additional insured clauses are the same. In this post, we discuss what a New York appellate court recently called an ‘additional insured by written contract’ clause. The language of an additional insured clause may make all the difference as to whether a party is covered as an additional insured or not.”

He concludes that the case demonstrates that New York courts will interpret insurance policies based on the plain meaning of the words used by the parties and will not alter the contracts for equitable reasons if the language is clear and unambiguous.

Read the article.

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SFGATE reports that a Wells Fargo shareholder sued executives of the reeling San Francisco bank Thursday, accusing them of unethical conduct and seeking to make them cover the costs of setting up nearly 2 million unauthorized customer accounts.

Shareholder William Sarsfield said a federal investigation “exposed a far-reaching, systemic breakdown in corporate governance” at the bank. “Wells Fargo fostered a pervasive, widespread company culture in which employees were pressured to engage in misconduct simply to keep their jobs.”

The plaintiff noted that virtually all of the 5,300 employees fired for the conduct were low-level workers, while top executives were untouched.

“Among them was CEO John Stumpf, who made more than $19 million in salary and stock options last year and has seen the value of his stock rise by $200 million in five years,” writes Bob Egelko. “Carrie Tolstedt, who headed the bank division in which the false accounts were created, is retiring and in line for $124 million in stocks and options.”

Read the article.

Bruce Sewell is Apple’s general counsel and seniorVP of Legal and Global Security.

In the biggest rally in five years, Apple Computers’ stock surged 11 percent in the past week — unfortunately too late for five Apple executives, including the company’s general counsel — who unloaded a massive amount shares in August, according to Bloomberg.

Apple’s stock is up 7 percent for the month, thanks to booming sales of its latest iPhone.

The Bloomberg article reports that General Counsel Bruce Sewell sold 23,305 shares in early August followed by a second sale of 24,000 shares, for a total gain of approximately $5 million, according to SEC filings. He still owns 192,000 shares.

Reporter Gabe Friedman says the GC is doing OK, though:

Sewell has had a big year: He was the number one highest paid GC on Big Law Business’ list, which compared the total compensation received among companies that disclosed their GC’s compensation in their proxy statement. (Not all companies do.)

Read the article.

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New York Attorney General Eric Schneiderman is investigating why Exxon Mobil Corp. hasn’t written down the value of its assets, two years into a pronounced crash in oil prices, reports The Wall Street Journal.

Schneiderman’s office already is looking into Exxon’s past knowledge of the impact of climate change and how it could affect its future business.

“Since 2014, oil producers world-wide have been forced to recognize that wells they plan to drill in the future are worth $200 billion less than they once thought, according to consultancy Rystad Energy,” reports Bradley Olson. “Because the fall in prices means billions of barrels cannot be economically tapped, such revisions have become a staple of oil-patch earnings, helping to push losses to record levels in recent years.”

But Exxon is the only major oil producer not to take any write-downs, leading some analysts to question its accounting practices,” Olson writes.

Read the article.

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Deutsche Bank AB is saying it has no intention of paying the U.S. Justice Department’s demand of $14 billion to settle high-profile probes into its packaging of mortgages in the run-up to the financial crisis, reports MarketWatch.

The Justice Department’s investigations are connected with the bank’s issuance and underwriting of residential mortgage-backed securities between 2005 and 2007, writes reporter Sara Sjolin.

In a statement, the German bank said, “Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited. The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts.”

“The bank expects that they will lead to an outcome similar to those of peer banks, which have settled at materially lower amounts,” it added, saying it has been asked to make a counterproposal.

The Justice Department has settled mortgage-related claims with Goldman Sachs Group Inc.  for $5.1 billion and J.P. Morgan Chase & Co. for $13 billion.

Read the article.

Practical Law and competitive intelligence platform Peer Monitor will present a free webinar titled “Dollars and Sense: A Real-Time Look at the Financial Performance of the Legal Industry in 2016.”

The 60-minute webinar will be Wednesday, Sept. 21, at 1 p.m. Eastern time. A brief question-and answer session will follow.

Peer Monitor will discuss key performance indicators including:

• Demand
• Practice performance
• Rates
• Realization
• Staffing
• Expenses

Presenters will be Cory Branden, Account Executive, Peer Monitor, Thomson Reuters.

Register for the webinar.

CNN Money poses a question that may be on the minds of people in the executive offices of Wells Fargo after more than 5,000 employees have been fired as a result of a scandal involving phony bank accounts: Do the CEO or other senior executives need to be fired, too?

The Los Angeles City Attorney and Consumer Financial Protection Bureau found that Wells Fargo employees had secretly set up new fake bank and credit card accounts in order to meet sales targets. That practice led to a fine of $185 million.

“CEO John Stumpf made $19.3 million in compensation in 2015,” reports Paul R. La Monica. “That makes him one of the top-paid bankers in the United States as he has been for years, along with these others: JPMorgan Chase’s Jamie Dimon, Bank of America’s Brian Moynihan and Lloyd Blankfein of Goldman Sachs. Stumpf, and his predecessor Dick Kovacevich, are well-known in banking circles for leading the bank’s efforts to cross-sell, or get customers to sign up for more and more accounts, with Wells Fargo.”

Read the article.

Managing third-party vendor relationships has recently become a hot topic for state and federal financial bank regulators, writes Jerry Blanchard of  Bryan Cave LLP.

Some examinations have resulted in regulators imposing settlements and impose civil money penalties on vendors, he reports.

He explains that, “The OCC guidance is generally looked at as the ‘gold standard’ for evaluating issues that need to be addressed in a vendor agreement. That does not mean that every contract a bank signs needs to have every one of those issues addressed or that each one needs to be resolved in favor of the bank. Vendor contracts come in many different shapes and sizes and may affect everything from back office processing, internet delivery systems, use of the ‘cloud’ to the people watering the plants at the branch. vendors will vary from small local operations to multi-national companies.”

Read the article.

Wednesday, Sept. 21, 2016
New York

Bloomberg BNA and Bentham IMF will hold an executive briefing and reception that explores how firms are integrating financing into their litigation practices.

The event will be Wednesday, Sept. 21, 2016, at Bloomberg LP, 120 Park Ave., New York, from 4:30 p.m. until 6:30 p.m., with a networking reception to follow.

Law firms face increasing pressure to help clients gain affordable access to the courts as skyrocketing legal costs and other factors make litigation more expensive. Financing provided by litigation funders is helping firms meet this demand while also accomplishing strategic objectives, Bloomberg says on its website.

Erwin Chemerinsky, Dean of University of California Irvine School of Law and author of the forthcoming book,Closing the Courthouse Doors, will deliver a keynote speech on how the upcoming election can change the course of the Supreme Court’s recent decisions and create a new era of wider access to civil justice.

Following Dean Chemerinsky, a panel of top legal and funding professionals will discuss the impact of funding on the U.S. legal system, and how law firms are taking measured risk to increase profits and accomplish growth objectives. Finally, the panel will look at the benefits to corporate clients, as well as plaintiffs.

Register for the event.

Many of those attending the 34th international symposium on economic crime in Cambridge, England, have the view that the record of combating economic crime is so woeful that governments need a new approach, according to a report in The New York Times.

About 1,600 delegates from academia and the legal and compliance profession attended the event.

“If this is a war, we are not winning it,” said Alison Levitt, a partner at the London law firm Mishcon de Reya, speaking on a panel at the University of Cambridge’s Jesus College. She was not opining on drugs or terrorism, rather on the limited progress law enforcement has made in battling economic crimes like money laundering, fraud and insider trading.

Levitt recommended that the same stigma that is associated with crimes like rape be attached to economic crime, reports Anita Raghavan.

“Ironically, one participant suggested that the publication of the Panama Papers, which revealed how wealthy individuals used elaborate corporate structures and offshore tax havens to obscure their ownership of assets, would lead to less transparency,” The Times reports.

Read the article.

For advisers helping clients plan for retirement, drafting a binding contract may now simply be a cost of doing business, reports Kenneth Corbin for FinancialPlanning.

“That contract, through which advisers must pledge to act as fiduciaries and make recommendations in the best interests of their clients, is at the heart of a new fiduciary regulation from the Department of Labor, which is aiming to mitigate the harm to investors from conflicted retirement advice,” he explains.

Advisers should learn how to incorporate the best-interest contract exemption into their practices if they help clients plan for retirement.

In his article, Corbin writes that there’s a streamlined version of the contract requirement in the DoL’s rule, which would ease the compliance burden for so-called level fee advisers, firms that receive fees that don’t vary based on the type of product or investment that they are recommending.

Read the article.

Fugitive ex-CEO Jacob (Kobi) Alexander, who is scheduled to return to the U.S. from Namibia on Wednesday to plead guilty to securities fraud after leaving America more than 10 years ago, will try to convince a Brooklyn judge to release him on $25 million bail, reports the New York Daily News.

The 64-year-old ex-CEO of Comverse Technology Inc. moved to Namibia before he was formally charged in 2006 in a scheme involving the backdating of stock options at Comverse. He faces up to 10 years in prison, writes John Marzulli.

The Wall Street Journal explains how the alleged scheme worked:

Prosecutors allege Mr. Alexander, along with Comverse’s general counsel and its finance chief, for years would look for low-price trading days in the past on which to pretend they and other employees had been awarded stock options at that day’s price. Since an option grants its holder the right to buy shares at a fixed price, the alleged manipulation scored them instant gains. The backdating added millions to Mr. Alexander’s compensation.

Read the article.

Neal, Gerber & Eisenberg LLP has added David P. Milligan as partner. Milligan joins the firm from Kirkland & Ellis LLP.

Milligan’s corporate experience includes mergers & acquisitions, leveraged buyouts, recapitalizations, divestitures, debt financings and equity financings for a client list that includes private equity groups, commercial lending institutions, hedge funds, and a variety of public and privately held companies. He has been recognized as a “leading lawyer” in IFLR1000 for both his banking and private equity work.

“We’re very pleased to expand our group with the addition of an attorney of David’s caliber,” said David S. Stone, chair of the firm’s Corporate & Securities practice. “We are confident that his extensive experience with complex finance transactions will be of great benefit to our clients.”

“I am thrilled to have David join us,” added Managing Partner Scott J. Fisher. “We are committed to delivering cutting-edge counsel with a sound appreciation for our client’s business realities, and David’s skill set – combining his strong business credentials with his excellent legal experience – is a perfect fit.”

Prior to beginning his legal career, Milligan obtained his M.B.A. and worked as a management consultant and in various business roles at Dow Chemical and Compaq Computer Corporation.

Milligan earned his J.D., magna cum laude, from the University of Michigan Law School in 2005, where he was awarded the Order of the Coif. He previously received a B.S. in chemical engineering, with honors, from the Florida Institute of Technology, and an M.B.A. from the University of Houston.

The Wall Street Journal and Bloomberg Law are reporting that eight large U.S. banks are forming a new group to share information in the fight against cyber attacks.

The new cyber sharing group — which comes after thousands of banks formed a group earlier — will include Goldman Sachs, Morgan Stanley, Bank of America, J.P. Morgan Chase, State Street, Bank of New York Mellon, Wells Fargo and Citigroup.

“The financial-services industry ranked third in number of cyberattacks last year, after health care and manufacturing, according to a U.S. cybersecurity report released by IBM Corp. in May. Two years ago, J.P. Morgan, the largest U.S. bank by assets, was targeted by cybercriminals in a breach that exposed names, addresses and other information of 76 million customer households, although no money was taken,” The Journal reported.

Read the article.

Global finance firm Burford Capital announces the appointment of Craig Arnott as a managing director, effective immediately.

Arnott will be based in London and will have as his primary focus Burford’s litigation financing activities in the UK, continental Europe and the Asia − Pacific region.

In a release, the firm says Arnott has multijurisdictional experience in large, complex litigation from his work at some of the world’s leading firms. Currently a barrister in Sydney, Australia, he was formerly partner and Head of the Competition and Antitrust Law Group at Fried Frank Harris Shriver & Jacobson in London.

He previously practiced with Ashurst in London and with Cravath, Swaine & Moore in New York. As a Rhodes Scholar, Arnott attended Balliol College, the University of Oxford, where he earned both his BCL and D.Phil degrees. Before attending Oxford, he graduated from the University of Queensland with First Class Honours in both Law and History, with University Medals in both.

He replaces Nick Rowles-Davies (including as a director of Burford Capital PLC, Burford’s bond — issuing subsidiary), who resigned from Burford to pursue other interests.

Christopher Bogart, Burford’s chief executive officer, said: “We’re very pleased to welcome Craig to Burford. He brings over 20 years of commercial law experience in multiple legal jurisdictions that will assist us in meeting the increasingly global demands of our clients. Moreover, Craig has advised Burford on matters in Australia for some time, and has in the past practiced law with both Aviva Will and me.”

A Denver judge has fined one of the city’s prolific foreclosure attorneys $1.8 million for billing thousands of consumers facing the loss of their homes for title-insurance policies that did not exist, reports The Denver Post.

David Migoya writes that the Colorado Attorney General’s office argued in a seven-day trial in February had alleged in a February trial that Robert Hopp Jr., while working at his now-defunct law firm, billed customers fighting foreclosure for policies that were never issued. And Hopp inflated the cost of the few that were, the AG’s office claimed.

“The 37-page judgement handed down last week by Denver District Judge Shelley Gilman is the latest in a number of cases the state filed in 2013 against lawyers that specialized in foreclosures and allegedly padded their bills for costs that were ultimately borne by consumers losing their homes, the banks foreclosing on them and taxpayers whose federal insurance agencies covered the costs,” according to the report.

“Homeowners facing foreclosure had no choice but to pay the costs in order to stop the foreclosure process, and there was no process in place to challenge any of the fees lawyers said they were owed,” Migoya writes.

Read the article.

A federal judge rejected PricewaterhouseCoopers’ bid to dismiss a $1 billion lawsuit accusing the accounting firm of professional malpractice for helping cause the October 2011 bankruptcy of brokerage MF Global Holdings Ltd., reports Reuters.

U.S. District Judge Victor Marrero in Manhattan said there remained open questions concerning whether PwC’s alleged bad accounting advice was a substantial cause of MF Global’s rapid demise.

“PwC has not satisfied its burden of demonstrating the absence of any genuine issue of material fact,” Marrero wrote.

“PwC stands by its work for MF Global,” James Cusick, a lawyer for the firm, said in a statement. “MF Global’s collapse was caused by its own business decisions and adverse market events, not any accounting determination.”

Jonathan Stempel reports that MF Global sought Chapter 11 protection after investors grew anxious about a $6.3 billion investment in European sovereign debt, a large quarterly loss, credit rating downgrades, margin calls, and the use of customer funds to shore up liquidity.

Read the article.

Reuters is reporting that a federal appeals court rejected a one-time Florida billionaire’s bid to revive his $800 million lawsuit accusing Citigroup Inc. of fraudulently hiding its exposure to subprime and other toxic mortgages, inducing him to hold on to shares he otherwise would have sold.

The 2nd U.S. Circuit Court of Appeals in Manhattan said Citigroup and former officials, including two chief executives Charles Prince and Vikram Pandit, were not liable to trusts and corporate entities overseen by Arthur Williams and his wife, according to the report by Jonathan Stempel.

“Williams, the founder of what became Primerica Financial Services, has said he had planned in May 2007 to sell his 17.6 million Citigroup share stake, but decided to sell just 1 million because the bank assured investors it was in good shape,” the report says. but the assurance proved faulty, as the share price declined, with Williams saying he lost “the financial benefit” of his life’s work.

Read the article.

The scope of the Bankruptcy Code’s safe harbor for certain financial contracts has been tested again, this time in the United States Bankruptcy Court for the Western District of Louisiana, according to an article written by Maurice Horwitz in the Bankruptcy Blog of Weil, Gotshal & Manges.

The question in the case he described was whether an ipso facto provision continues to be safe harbored if enforcement of that provision is conditioned on other factors – in this case, the debtor’s failure to perform under the contract. 

“Consistent with prior case law, the court held that termination is only safe harbored if it is based solely on a condition specified in 365(e)(1), i.e., the financial condition of the debtor, bankruptcy, or the appointment of a trustee,” Horwitz wrote. “Because the ipso facto provision in this case contained an additional condition to enforcement (the debtor’s breach), it no longer fell within the safe harbor.  Thus, even if both conditions were satisfied (bankruptcy and breach), the automatic stay applied and the termination clause could not be exercised absent relief from the automatic stay.”

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When Warren Buffett and Berkshire Hathaway Inc. bought Portland, Oregon-based Precision Castparts Corp. for $37 billion early this year, the investor acquired the services of Precision’s hard-charging CEO, Mark Donegan.

According to a Bloomberg profile by Noah Buhayar, Donegan is “a low-profile CEO with a great track record, relentless about staying ahead of the competition. During the 13 years he led Precision as a publicly traded company, its stock climbed 20-fold, annual revenue quadrupled to $10 billion and he bought dozens of businesses, consolidating a position as a key supplier to Boeing Co., Airbus Group SE and General Electric Co. It helped him attain a cult status among investors.”

“Behind the numbers, though, something more brutal is going on,” the profile continues. “For years, Donegan has traveled the globe, sometimes bullying staff during quarterly reviews at Precision plants.” And sometimes those reviews included profanity and threats.

Read the article.