Warnings on helmets? Adequate? Effective?

by Ken Belson
Even by the alarmist standards of many product warnings, the labels on the backs of the football helmets are bracingly blunt: “No helmet system can protect you from serious brain and/or neck injuries including paralysis or death. To avoid these risks, do not engage in the sport of football....”

SAC Capital Advisors - a criminal enterprise?

When tort remedies are inadequate the case for criminal prosecution grows stronger. Such appears to be the case for SAC Capital Advisors - the hedge fund owned by founder Steven A. Cohen. The Securities and Exchange Commission took the unusual step of obtaining an indictment of the company itself, while filing an administrative complaint under the Investment Advisers Act charging Cohen as manager with civil liability for overseeing the enterprise and failing to stop specified insider trades.

The wire fraud act 18 USC 1343 was called "our stradivarius" by Jed Rakoff, reflecting on his years as a federal prosecutor. It reaches "[w]hoever, having devised or intending to devise any scheme or artifice to defraud..." obtains money by false pretenses, etc. A corporation is a "whoever". Innocent investors and stockholders may suffer greatly from an ill conceived prosecution under such a broad criminal statute.

The indictment describes an enterprise with a corrupt culture, led by a principal shareholder who sought and obtained portfolio managers and research analysts with "an edge" over competitors, instructed to find "high conviction" investment opportunities.

A jury will have to decide whether these structures and incidents so characterize the enterprise - SAC Capital Advisors, etc. that the entity is guilty beyond reasonable doubt. The fact that a criminal enterprise is a large one is an aggravating not a mitigating factor. In this case, reportedly, little remains of stockholders beyond Steven A. Cohen himself. If the allegations are true those defrauded by SAC are legion.

Former Goldman Trader Is Found Liable in Mortgage Deal - NYTimes.com

Fabrice Fabre - who lamentably described himself as the Fabulous Fab in a now notorious email - has been found liable by a jury in an enforcement action by the S.E.C.  The case arises from the famed %500 million deal in which John Paulson bet against derivative securities while ACA management bet they bonds would perform.  Tourre was the Goldman Sachs broker who knew but did not disclose that Paulson was taking the short side, misleading investors with cagey formulations, while marveling at his own cleverness. Background information including the complaint can be found on this blog HERE (I have not however updated that page for since 2012) - GWC
Former Goldman Trader Is Found Liable in Mortgage Deal - NYTimes.com:

In finding Mr. Tourre liable for civil fraud, the jury concluded that he made a material — or important — misstatement to investors and failed to correct it. The S.E.C. had to prove its case by a preponderance of the evidence, a lower standard than criminal cases.

In deliberating the S.E.C.’s most serious claims, the jury was instructed to weigh whether Mr. Tourre intended to defraud investors, or at least acted recklessly. The lesser charges required only that Mr. Tourre acted negligently.

In 2010, the S.E.C. had also charged Goldman with fraud. Not long after the case was announced, the bank settled for $550 million, a record fine at the time.

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OTHERWISE: Legal Ethics Forum: Sixth Circuit: it was unreasonable for Cooley applicants to believe Cooley's "objectively untrue" statements

OTHERWISE: Legal Ethics Forum: Sixth Circuit: it was unreasonable for Cooley applicants to believe Cooley's "objectively untrue" statements:

Caveat emptor for law students?


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Approaching Georges Harbor, Muscongus Bay, Maine
VIDEO by Milton Mejia

Mourning Victims and Assigning Blame After Fatal Boat Crash on the Hudson - NYTimes.com

Mourning Victims and Assigning Blame After Fatal Boat Crash on the Hudson - NYTimes.com: by Cara Buckley

PIERMONT, N.Y. — It was a gorgeous midsummer night on the banks of the Hudson, the first Friday since the recent heat wave broke, and business at Pier 701, this riverfront village’s newest restaurant, was brisk. Diners and revelers chatted happily on the new sprawling wooden deck, and across the darkened river the lights of Tarrytown twinkled.

Boat Crash on Hudson Kills Bride-to-Be - NYTimes.com

Boat Crash on Hudson Kills Bride-to-Be - NYTimes.com: "A young woman who was set to be married in two weeks was killed and her fiancé’s best man remained missing on Saturday after a boating accident on the Hudson River on Friday night, the authorities said."



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BP Wants To Stop Paying Damages For Gulf Spill While Lawyer Is Investigated For Misconduct

This investigation involves a single staff attorney who apparently was a plaintiff's lawyer who had a stake in some cases.  BP is having success with the business press, roping in people like the intermittently reasonable Joe Nocera, and is now moving to create more extravagant headlines to influenc the conservative Fifth Circuit, I suppose.  - GWC
BP Wants To Stop Paying Damages For Gulf Spill While Lawyer Is Investigated For Misconduct:

NEW ORLEANS (AP) — BP asked a federal judge on Tuesday to temporarily halt all settlement payments to Gulf Coast businesses and residents who claim they lost money after the company’s 2010 oil spill while former FBI Director Louis Freeh investigates alleged misconduct by a lawyer who helped administer the multibillion-dollar settlement program.

BP PLC argues in a court filing that it shouldn’t be required to take the risk that hundreds of millions of dollars in claims payments could be “tainted by fraud, corruption and malfeasance.”

“A temporary suspension in … payments will eliminate the serious risk of any further irreparable harm to BP while having little negative impact upon the claimants,” attorneys for the London-based oil giant wrote.

U.S. District Judge Carl Barbier didn’t immediately rule on BP’s most recent request to temporarily halt settlement payouts.

In April, Barbier refused to block what could be billions of dollars of payments to businesses after BP argued that he and court-supervised claims administrator Patrick Juneau have misinterpreted the settlement and forced the company to pay for inflated and fictitious losses.

Barbier, who appointed Juneau, upheld his interpretation of settlement terms governing payments to businesses. BP appealed that decision.

A three-judge panel from the 5th U.S. Circuit Court of Appeals heard the case last Monday. The panel didn’t indicate how soon it would rule.

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Madoff Case Puts Focus on Duties of Custodial Banks - NYTimes.com

Madoff Case Puts Focus on Duties of Custodial Banks - NYTimes.com:
by Susan Antilla

Among the far-flung feeder funds, brokerage houses and institutions interconnected in the vast Ponzi scheme perpetuated by Bernard L. Madoff, one little-known local bank is now in the spotlight.

Westport National Bank and its parent company, Connecticut Community Bank, is the type of Main Street bank found in Anytown U.S.A., rather than near Wall Street. It has one main office and nine affiliated branches, all within a small radius stretching from Fairfield to Greenwich.

But to more than 200 individual investors, it was the bank that should have stood sentry over their money. A lawsuit brought by investors who lost a combined $60 million in the Madoff Ponzi scheme seeks to show that the bank failed at its job as the custodial bank in charge of their money.

Though it was one of many institutions entangled with Mr. Madoff and his firm, Bernard L. Madoff Investment Securities, the trial serves as a cautionary tale for any investor on the role and duties of custodial banks. The central question at the heart of the civil case is what obligation, if any, such banks have in determining whether the assets of investors exist at all.

A jury in Hartford finished hearing eight days of evidence last month in the case before Judge Vanessa L. Bryant of the United States District Court for the District of Connecticut. Closing arguments are expected to be heard on Thursday.
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Judge Orders N.F.L. Concussion Case to Mediation - NYTimes.com

Judge Orders N.F.L. Concussion Case to Mediation - NYTimes.com: 
"The federal judge overseeing the case brought by thousands of former N.F.L. players who have accused the league of hiding the dangers of concussions ordered both sides to mediation Monday.
United States District Court Judge Anita Brody, from the Eastern District of Pennsylvania, ordered Layn Phillips, a retired judge, to serve as mediator in the case.
Judge Brody said she would not rule on the N.F.L.'s motion to dismiss the case until Sept. 3 to give the mediator time to bring the sides closer. She had expected to rule on that motion July 22. The judge said she had an “informal exploratory telephone conference with lead counsel” Monday before referring the case to a mediator.
The league and the lawyers representing more than 4,000 players and their wives will now meet in a conference room instead of a courtroom to try to iron out their differences, which will not be easy given the complexity of the case."

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