SeaWorld Entertainment’s former associate general counsel, who was fired last October, pleaded guilty Tuesday to a federal charge of insider trading that allowed him to make nearly $65,000 from a stock sale last year, The San Diego Union-Tribune reports.

Paul B. Powers, 60, entered his plea before a U.S. district judge in Florida. Sentencing has not yet been determined, writes the Union-Tribune‘s Lori Weisberg.

The U.S. Securities and Exchange Commission said that it had also charged Powers with insider trading based on confidential information he received that SeaWorld’s revenue would be better than anticipated for the second quarter of 2018.

Read the Union-Tribune article.

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Wells Fargo general counsel C. Allen Parker will take over as interim president and chief executive of the company after the abrupt departure of chief executive Tim Sloan on Thursday.

Sloan had spent more than two years trying without success to convince lawmakers and regulators that the embattled bank is no longer a threat to its customers, according to Renae Merle of The Washington Post.

“Sloan spent more than two years on an countrywide apology tour after Wells Fargo acknowledged a pattern of consumer abuses — from opening millions of fraudulent accounts on behalf of its customers without their consent to mistakenly foreclosing on hundreds of clients and repossessing the cars of thousands of others. Sloan’s pleas often failed to win over frustrated lawmakers,” Merle writes.

Read the Post article.

First NBC Bank’s former top lawyer was charged in federal court Friday with conspiracy to defraud the New Orleans bank, which failed two years ago in the biggest U.S. bank collapse since the 2008 financial crisis, reports The News Orleans Advocate.

Gregory St. Angelo was First NBC’s general counsel for a decade until 2016. During that time, according to the Advocate‘s Anthony McAuley, he took out loans totaling tens of millions of dollars from the bank, many of which went into default.

“St. Angelo was charged in a bill of information rather than a grand jury indictment, generally a sign that a defendant has agreed to plead guilty and cooperate with prosecutors. He is due for a first appearance in federal court March 29,” writes McAuley.

Read the Advocate article.

Cravath, Swaine & Moore is being sued by a former public shareholder of a grocery chain in a class action that alleges the firm breached its fiduciary duty by providing tainted advice that directed the grocer toward a buyer, private equity group Apollo Global Management, reports Bloomberg Law.

In the complaint, the former shareholder claims Cravath crafted a “false and misleading” U.S. Securities and Exchange Commission filing relating to the 2016 $1.36 billion leveraged buyout of The Fresh Market by Apollo.

The complaint alleges Cravath drafted the SEC filing “to procure stockholder approval and cover up prior wrongdoing,” and in doing so, pocketed $5.5 million in fees in what amounted to “a sham sale process.”

Read the Bloomberg article.

Lawyers for Neiman Marcus tried Thursday to convince a district court judge in Dallas to dismiss a lawsuit that alleges the luxury retailer’s owners fraudulently transferred its European subsidiary out of reach of creditors, reports The Dallas Morning News.

Neiman Marcus’ is dealing with an unsustainable debt of $5 billion.

“One of Neiman Marcus’ debtholders, Marble Ridge Capital, sued in December to reverse the transfer of the Munich-based MyTheresa e-commerce division, valued at $1 billion, to private equity owners Ares Management and the Canada Pension Plan Investment Board.” according to the News‘ Maria Halkias.

Read the Dallas News article.

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Reuters is reporting that New York State’s financial regulator has subpoenaed the insurance broker for President Donald Trump’s family business, citing a person familiar with the matter.

The subpoena came after former Trump lawyer Michael Cohen told Congress the president inflated the value of assets to insurers, according to Reuters reporter Suzanne Barlyn.

The source said the New York State Department of Financial Services issued the subpoena late Monday to Aon Plc, a global insurance broker and risk management firm that works for the Trump Organization. The subpoena seeks files about Aon’s dealing with Trump and Trump Organization since 2009, the person said.

Read the Reuters article.

John Olivieri and Patrick Sullivan have joined Barnes & Thornburg as partners in the firm’s Indianapolis office, practicing complex wealth management and corporate finance.

“We are very excited to welcome John and Patrick, two very experienced and successful lawyers, back home to Indiana to practice,” said Brian L. Burdick, managing partner of the firm’s Indianapolis office. “John brings a unique sophistication to wealth management that is unrivaled and Patrick brings a depth and breadth of sophisticated deal experience to this market that traditionally only resides in money center cities. We are proud to have a reputation of excellence that attracts these talented lawyers.”

A Wabash College graduate, Olivieri previously was a partner in the New York office of international law firm White & Case LLP. A Purdue University graduate, Sullivan previously was a partner in the Chicago office of international law firm Kirkland & Ellis LLP.

In a release, the firm said Olivieri advises high net worth individuals and families on complex estate and wealth management planning. Prior to joining the firm, he spent more than 20 years with law firms in New York, helping clients create and manage wealth management vehicles in many other states, such as Delaware and South Dakota.

The firm Olivieri works closely with clients to develop plans for securing and protecting their assets in various jurisdictions throughout the country and around the world. These plans involve the use of appropriate structures, such as limited partnerships, limited liability companies and so-called “asset protection” and “spendthrift” trusts. He regularly counsels foreign individuals making investments in the United States. A frequent commentator on estate and tax planning, Olivieri is active in various professional associations and is a fellow of the American College of Trust and Estate Counsel. He earned his J.D. from Columbia Law School.

The firm said Sullivan brings nearly a decade of corporate and finance-focused experience advising borrowers, financial sponsors, agents and lenders on crafting financing agreements designed to account for the company- and industry-specific needs of clients over the life of the financing facility. He has experience at two major international law firms headquartered in Chicago.

As part of his national practice, he has negotiated and closed transactions and advised clients from a diverse group of industries, including oil and natural gas, restaurant, energy, industrials, pharmaceutical, retail, technology/software, defense and healthcare, including issues related to the corporate practice of medicine.

The firm Sullivan represents financial institutions, private equity sponsors, debt funds and other non-traditional lenders and public and private companies in connection with leveraged financings, syndicated loans, second lien financings, unitranche financings, mezzanine financings, secured and unsecured credit facilities, asset based financing, working capital facilities, acquisition financing, bridge facilities, debt recapitalizations, workouts, debt restructurings, and other financing related matters. He earned his J.D., summa cum laude, from the University of Miami School of Law.

A federal judge has ordered Tesla chief Elon Musk to explain by March 11 why he should not be held in contempt for what the Securities and Exchange Commission described as a violation of a settlement deal last year, reports the San Francisco Chronicle.

“Musk tweeted Feb. 19 that Tesla would make around 500,000 cars in 2019,” writes the Chronicle‘s Melia Russell. “Later that day, he sent a follow-up tweet saying that number represented Tesla’s ‘annualized production rate at end of 2019’ and it would only roll about 400,000 cars off the manufacturing line this year.”

Bloomberg explains that Tesla’s internal system to have an in-house lawyer vet Musk’s tweets didn’t work in this case because his “social-media minder didn’t bless” the Feb. 19 post:

The sitter — whose official title at Tesla is alternately Disclosure Counsel or Designated Securities Counsel — did step in after seeing the offending tweet and arranged to meet Musk to draft a clarifying post.

Read the SF Chronicle article.

Switzerland’s biggest bank hoped to settle a tax evasion case with French authorities for $204 millions. But when enforcers dismissed UBS Group’s offer, the bank’s legal team decided to play hardball, pushing the case to trial in the hope of wringing out a smaller penalty, according to a Bloomberg report. That effort failed spectacularly.

The bank has been ordered to pay more than $5 billion in the tax-evasion case — matching what was sought by prosecutors, reports Bloomberg’s Gaspard Sebag.

The article quotes Stephane Bonifassi, a Paris criminal lawyer not involved in the case: “It’s too early to draw any definitive conclusions given the appeals have just begun, but they took a risk in thinking they had a solid case and it’s clear now the strategy didn’t pay off.”

Read the Bloomberg article.

Above the Law reports that the Biglaw firm of Reed Smith has been named in a $500 million malpractice lawsuit filed by two defunct Bear Stearns investment feeder funds that Reed Smith represented in RMBS-related litigation.

Plaintiffs claim that Reed Smith failed to bring a case against the rating agencies — Standard & Poors, Moody’s, and Fitch Ratings — in a timely manner, resulting in those claims being dismissed, explains Above the Law senior editor Kathryn Rubino.

From the complaint:

“Reed Smith’s negligent failure to understand New York’s statute of limitations cost the Bear Stearns Funds what Reed Smith identified as a billion-dollar claim against various rating agencies.”

Read the Above the Law article.

An associate at Dentons Canada fell victim to a scammer who posed as a mortgage company representative and two bank officials to persuade him to transfer $2.5 million into the fraudster’s account.

A decision in a Toronto court revealed that the associate sent the money from a property sale to a Hong Kong bank account after he received emails requesting the transfer in a business deal, according to a report in the ABA Journal.

The Journal‘s Debra Cassens Weiss reports:

“The fraudster had sent emails to the associate in early January 2017 advising that money from the property sale should be wired to Hong Kong because of an audit of the mortgage company’s account. Dentons called the mortgage company, Timbercreek Mortgage Servicing, to confirm the Hong Kong account information but did not receive a call back, according to [the judge].”

The case came to light over litigation involving the firm’s insurance coverage.

Read the ABA Journal article.

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A team of lawyers with Boyd Powers & Williamson alleging deceptive business practices against BBVA Compass Bank won a $98 million verdict for their client, a real estate developer who was working to build three luxury subdivisions in Tarrant County, Texas.

On its website, the firm explains the case:

“David Bagwell is a real estate developer who was working to build three luxury subdivisions in Tarrant County, Texas. Following the financial crisis of 2008, Mr. Bagwell entered into modification negotiations with his bank, BBVA Compass, to refinance the loans which were funding the new developments. In the course of the negotiations, Compass repeatedly told Mr. Bagwell that his loans would be renewed. However, after secretly negotiating with one of his competitors, those same loans were sold off at a discounted rate. A short time later, the competitor foreclosed and Mr. Bagwell was forced into bankruptcy.”

Read details about the case.

Bloomberg Law is reporting that a former Hunton Andrews Kurth partner is stuck with securities fraud and conspiracy convictions after his drunken brag led to insider trading before a Pfizer merger, the Second Circuit said Jan. 10.

Robert Schulman was a Washington-based partner with Hunton & Williams, now Hunton Andrews Kurth, working on a patent dispute involving King Pharmaceuticals when he learned of the potential merger of King and Pfizer in August 2010.

He made reference to that deal to his investment adviser, Tibor Klein, at a dinner less than two weeks later. Klein “purchased 65,150 King shares for $585,217 in various accounts” and made a profit in less than two months when the merger became public, the opinion said.

Read the Bloomberg Law article.

By Robert Miller, CPA, CFE
Samet & Company, PC

With the effective date for the new revenue standard fast approaching, many private companies have still not taken important steps towards implementation. Time is running out as the private company implementation date draws closer and some entities may be surprised to learn that the effort to implement the new model is more involved than they might have imagined.

In May 2014 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, codified as Accounting Standards Codification (ASC) 606. This sweeping new revenue standard changes the entire model for recognizing revenues from arrangements with customers, introducing a new five-step model. The effective date for non-public entities is any fiscal year beginning after December 15, 2018.

Companies must consider and resolve important questions: What systems are in place to capture the new accounting, reporting and disclosure requirements? Are there customer arrangements that have a variable consideration component? Which of the two acceptable methods for calculating transaction price will be most appropriate? How will assessments be made to determine whether to recognize performance obligations at a point in time versus over time? What adoption method will be most appropriate? These are just some of the questions that must be considered by all entities as they implement the new revenue standard.

Auditors are also paying close attention to the implementation of ASC 606, and will themselves be focused on designing procedures to properly test the elements within the new revenue recognition model, in addition to implementation of the standard by their audit clients.

Companies will find that it is generally beneficial to have a preliminary discussion with their auditor regarding the approach in the first year of implementation and beyond. This will almost certainly eliminate certain potential surprises later on. Items that should be discussed include:

• The approach for documenting implementation of ASC 606, including the new five-step model
• The accuracy of any data used, and the approach for compiling that data to support first year reported amounts and disclosures
• The controls and process for ensuring that revenues are being properly captured and recognized under the new model
• Any assumptions by management and the supporting evidence or reasoning behind those assumptions
• Important management representations that are likely to be required

All entities within the scope of ASC 606 will need to develop a plan for implementation and document how they are applying the new standard, regardless of the level of impact. At a minimum, there are expanded disclosure requirements for all entities. Additionally, many entities that have already adopted ASC 606 found that changes to existing systems were necessary in many cases. An initial assessment of the impact of the new standard is critical to gain an understanding of what might be involved to implement.

So what should private companies who have not yet taken action do? Here are some important steps to follow:
• Designate a Champion – Identify and assign an individual to lead the implementation project
• Develop an Implementation Plan – A solid implementation plan should cover several areas, including technical accounting impact, processes and internal controls, IT and data needs, and training, among other areas
• Document – Document the application of the standard to specific types of customer contracts
• Make Changes to Systems – Implement any necessary system changes to ensure information necessary for proper reporting is captured and tracked
• Capture Information Necessary for Implementation – Complete any analyses and calculations needed to properly support amounts and disclosures on the date of adoption

An important first step is to contact your accounting firm. Your audit partner is often management’s best resource. An initial discussion about how the new ASC 606 model is likely to affect your business can be worth its weight in gold. While the clock continues to tick for many companies that have not yet begun the process of evaluating the impact of ASC 606, there is still time to avoid unwanted surprises. The key is to take that first step and reach out to your accounting firm or other advisor who has a solid understanding of the new standard and start the discussion about implementation.

Robert S. Miller, CPA, CFE, partner, Samet & Company, PC, Robertm@samet-cpa.com, 617-751-5395, www.sametcpa.com

The attorneys general of Maryland and the District of Columbia on Tuesday formally demanded financial records from U.S. President Donald Trump’s businesses as part of their lawsuit alleging his dealings with foreign governments violate anti-corruption clauses of the U.S. Constitution, reports Reuters.

The Trump Organization Inc., the president’s privately owned real estate company, and related corporate entities received the subpoenas, according to Reuters reporter Jan Wolfe.

The report quotes George Brown, a professor at Boston College Law School:

The development “brings us closer to judicially enforced discovery about the Trump empire,” said Brown. “It will probably tell us a lot we don’t know because nobody is going to hide that stuff in the face of a subpoena.”

Read the Reuters article.

The Washington Post reports that the Justice Department charged four people Tuesday with scheming for decades to hide tens of millions of dollars from the Internal Revenue Service — the first U.S. indictment over alleged tax evasion revealed in 2016 through the Panama Papers.

Post reporter Devlin Barrett writes that those charged include a former investment manager, a former U.S. resident, an American accountant and a Panamanian lawyer who once worked for the “firm at the center of the case, Mossack Fonseca.

“The 11-count indictment unsealed in New York marks the first time the U.S. government has charged anyone with tax crimes related to the firm — and authorities suggested others could soon be charged,” according to Barrett.

Read the Washington Post article.

The CEO of Dallas-based AriseBank was arrested by the FBI on Wednesday for allegedly duping hundreds of investors out of more than $4 million in a splashy cryptocurrency scheme that promised federally insured accounts and brand-name credit cards, The Dallas Morning News reports.

Jared Rice Sr.’s arrest followed his indictment on three counts each of securities fraud and wire fraud, said Erin Nealy Cox, U.S. Attorney for the Northern District of Texas, according to Morning News business editor Paul O’Donnell.

Rice was accused of lying to would-be investors by claiming that AriseBank could offer consumers FDIC-insured accounts and traditional banking services, including Visa-brand credit and debit cards, in addition to cryptocurrency services..

Read the Morning News article.

Roetzel & Andress LPA announced that it represented C.S.I. Enterprises, Inc., a leading global corporate payments technology company based in Bonita Springs, Florida, in its agreement with Edenred, a Malakoff, France-based company. Edenred will acquire CSI in the $600 million transaction.

Inn a release, the firm said the transaction allows CSI to accelerate its growth strategies and leverage Edenred’s world leadership in transactional solutions, as well as help Edenred enhance its digital payment technology platform and significantly increase its North American presence. The transaction furthers a partnership between CSI and Edenred formed nearly two years ago, according to the law firm.

The deal is subject to regulatory approval and is expected to close in early 2019.

The Roetzel team representing CSI was led by firm shareholder Christopher P. Reuscher, chair of the Corporate, Tax and Transactional practice group, along with the following Roetzel attorneys:

– Karen D. Adinolfi (shareholder)
– Lindsie Everett (associate)
– Laura (Megan) Faust (shareholder)
– Terrence S. Finn (shareholder)
– James D. Fox (shareholder)
– Paul A. Giordano (shareholder and Business Litigation practice group manager)
– Paul Heuerman (shareholder)
– Paul L. Jackson (shareholder and Roetzel president)
– Suzanne K. Ketler, Ph.D. (shareholder)
– Ronald S. Kopp (shareholder)
– Terrence H. Link III (shareholder)
– Lisa H. Lipman (shareholder)
– Jessica Lopez (associate)
– J. Breton McNab (associate)
– Chad L. Mowery (shareholder)
– Stephanie Y. Olivera (associate)
– Joseph M. Ruscak (shareholder)
– James K. Shaw (counsel)
– John B. Waters (counsel)

Bloomberg is reporting that an experienced securities lawyer has left Tesla Inc. just as the company needs one under its fraud settlement with U.S. regulators.

Phil Rothenberg, a vice president in Tesla’s legal department who joined the company in 2011, became general counsel at Sonder, a hospitality startup, on Nov. 5, writes Bloomberg reporter Dana Hull.

Before joining Tesla, Rothenberg was an attorney-adviser for the U.S. Securities and Exchange Commission and has extensive securities law experience.

Read the Bloomberg article.

A former precious-metals trader said to have worked at JPMorgan Chase & Co. admitted he engaged in a six-year spoofing scheme that defrauded investors in futures contracts with the help of his colleagues and bosses, Bloomberg Law reports.

Prosecutors said John Edmonds placed hundreds of orders he never intended to execute — orders designed to move the market, but were canceled before being matched. Edmonds and other traders sought to manipulate futures markets for gold, silver, platinum and palladium on the Nymex and Comex exchanges for their own benefit.

The Bloomberg article continues: “Edmonds, who lives in Brooklyn, New York, said he learned the spoofing strategy from more senior traders at the bank and said his immediate supervisors approved of it, according to the Justice Department.”

Read the Bloomberg Law article.