Good morning. Hedge fund managers and Robinhood's CEO are preparing for a grilling today in Congress over the GameStop trading frenzy with the help of lawyers at shops including Quinn Emanuel, Debevoise and Kirkland & Ellis. A Reuters examination finds that OSHA has collected little of the fines it hit employers with over pandemic safety issues. And California's top financial regulator is speaking out about his agency's new mandate to police the fintech industry and spur consumer finance innovation. Let's get this show going!
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U.S. House panel to grill hedge fund managers, CEOs over GameStop rally
Hedge fund managers, the CEOs of Robinhood and Reddit and the social media persona "Roaring Kitty" are set to be grilled today by lawmakers over last month's frenzied rally in shares of GameStop. And they've lawyered up in anticipation.
The hearing by the Democratic-led U.S. House Financial Services Committee will focus on the recent market turmoil that resulted after Reddit users trading on low-cost retail platforms banded together to squeeze hedge funds that bet against GameStop and other stocks.
Witnesses include Robinhood CEO Vlad Tenev, who has tapped Andrew Ceresney and Julie Riewe of Debevoise and Reg Brown of Kirkland & Ellis to advise him ahead of expected questions regarding how easy the brokerage makes it for its customers to place risky trades and its decision to ultimately restrict trading in GameStop.
Billionaire Citadel founder Ken Griffin, whose firm is Robinhood's major market maker, is turning to William Burck of Quinn Emanuel and Raphael Prober of Akin Gump for counsel, a person familiar with the matter said. And Melvin Capital CEO Gabriel Plotkin, whose fund lost big in betting against GameStop, has retained Jonathan Streeter of Dechert.
Also slated testify is Keith Gill, known as "Roaring Kitty" on YouTube and "DeepF***ingValue" on Reddit forums, who helped prompt the GameStop rally. He's tapped William Taylor of Zuckerman Spaeder. See what lawmakers are likely to focus on.
U.S. workplace safety regulators collect little of COVID-19 fines
The U.S. Occupational Safety and Health Administration has not only often disregarded workers' warnings about slipshod pandemic safety practices by their employers around the time of outbreaks; it also hasn't been able to collect on many of the fines it issued amid the health crisis.
Those are Chris Kirkham's findings in the second part of a Reuters investigation into how OSHA has policed workplaces in the coronavirus era. The agency has penalized over 300 employers more than $4 million for putting workers at risk during the pandemic. But as of last week, only 108 had paid about $897,000 of the fines.
Those who haven't paid include meatpacking giants Smithfield Foods and JBS USA - which had outbreaks infecting thousands of workers - and packaged foods company Conagra Brands. They are among the more than 50% of cited employers that have appealed, a percentage that far exceeds pre-pandemic appeal rates.
Companies during appeals don’t have to pay fines or fix problems identified by OSHA inspectors. And the fines? They're small, on average $13,000, which current and former OSHA officials say presents little deterrent for large companies. "It's just sending the wrong message," said David Michaels, who led OSHA during the Obama administration. Find out about OSHA's plans to change enforcement.
Industry buzz
- New York-based Debevoise & Plimpton has joined the growing list of law firms to beat pandemic-tinged expectations and post revenue and profit gains in 2020. The firm grossed more than $1.22 billion, up 16.7% from 2019, and enjoyed profits per equity partner of $4.55 million, up 23%. Michael Blair, the firm's presiding partner, called it "the most surprising and fascinating year of my tenure." (The American Lawyer)
- With a Texas online bar exam scheduled for next week, applicants have found themselves scrambling to find electricity and heat, let alone study time, as a winter storm leaves millions in the state without power. (Reuters)
- The ex-wife of a former partner of the firm now known as Hunton Andrews Kurth lost her challenge to the U.S. government's seizure of $788,290 in his retirement account after he was convicted of fraud. The ruling by U.S. District Judge F. Dennis Saylor in Boston related to prosecutors' efforts to compensate victims of Scott Wolas, who spent two decades as a fugitive avoiding charges that he helped run a $100 million pyramid scheme in New York before being arrested over a different fraud in Massachusetts. (Reuters)
- Arnold & Porter and Gibson Dunn have joined a new initiative aimed at increasing Black equity within their offices. They’re the lone law firms, for now, among an expanded roster of major businesses pursuing Management Leadership for Tomorrow's Black Equity at Work certification, which creates a framework for companies to increase the number of Black employees in leadership, bridge the pay equity gap and develop more inclusive workplaces. (Reuters)
- After criticism from members for his role representing former President Donald Trump in his second impeachment trial last week, Philadelphia lawyer Michael van der Veen is resigning as treasurer of the Philadelphia Trial Lawyers Association. (Law.com)
- Two Trump impeachment trials later, Kramer Levin's Barry Berke is headed back to the firm. And even though he wasn't directly arguing the case to convict Trump for inciting a riot at the U.S. Capitol on Jan. 6, Berke said the trial represented everything he loves about his practice. (Reuters)
- President Joe Biden is nominating Jennifer Abruzzo, a lawyer for Communication Workers of America, to serve as general counsel of the National Labor Relations Board, after he ousted Trump appointee Peter Robb on his first day in office. (Reuters)
- Former SEC Chairman Jay Clayman is returning to Sullivan & Cromwell as senior policy adviser and of counsel. Apollo Global Management has also named him lead independent director on its board, and he will also be an adjunct professor at the University of Pennsylvania Carey Law School. (Wall Street Journal)
Video: What would it take to #FreeBritney?
Recent court action and a new documentary have pushed pop star Britney Spears back into the spotlight and raised new questions about her 13-year conservatorship, under her father Jamie Spears. Reuters' Tom Rowe spoke with legal experts about what could be next in her fight. Watch the full video here.
Coming up today
- Robinhood isn't only grappling with a Congressional hearing today. Lawyers for the retail brokerage including C. Brandon Wisoff of Farella Braun + Martel are also going before U.S. District Judge James Donato in San Francisco to seek the dismissal of a proposed class action over system outages that allegedly prevented trading on record market volatility caused by the pandemic in March 2020. Matthew George of Kaplan Fox & Kilsheimer and Anne Murphy of Cotchett, Pitre & McCarthy represent the customers suing Robinhood.
- U.S. District Judge Fernando Olguin in Los Angeles will consider whether to preliminarily approve Bayer AG's revised $550 million settlement of class-action litigation by cities and other claimants over contamination from polychlorinated biphenyls, or PCBs, made by the former Monsanto. The judge in November rejected an earlier version that he called "overly broad" because it could shield Bayer from future claims and require the settling plaintiffs to indemnify Bayer against those claims. Baron & Budd's John Fiske and Scott Summy represent the plaintiffs. Michael Romey of Latham & Watkins is defending the company. Find out more about the hearing.
- Google will ask U.S. District Judge Lucy Koh in San Jose, California, to throw out a proposed privacy class action that alleges the company causes its Chrome browser to record and send personal data to the tech giant even if a user opts not to "sync" their browsers with their Google account. Lawyers at Quinn Emanuel including Andrew Schapiro are defending Google. The plaintiffs are repped by Lesley Weaver of Bleichmar Fonti & Auld, David Straite of Kaplan Fox & Kilsheimer and Mitchell Breit of Simmons Hanly Conroy.
- U.S. District Judge Amit Mehta in D.C. will hear a challenge by a group of visa applicants to former President Donald Trump's ban on many visa holders entering the country. The visa applicants, represented by lawyers at Innovation Law Lab, the American Immigration Lawyers Association and Mayer Brown among others, say the U.S. Department of State unlawfully refused to process their visa applications as a result of the ban. Mehta in September ordered the agency to process applications for "diversity visas," but declined at the time to block enforcement of the ban as judges in California and New Jersey had done.
How California is rethinking consumer protection
Manuel Alvarez, the head of the newly named California Department of Financial Protection and Innovation, spoke with Jody Godoy about how the new focus of the agency will better protect consumers. He also discussed his legal background and the relationship between his office and federal regulators. Check out her Q&A, and watch her video interview.
Reporter's notebook: Law firms report 2020 profit boom despite pandemic
Reuters business of law reporter Caroline Spiezio on what we learned from firms' 2020 profit reports:
Large U.S. law firms had a freakishly good 2020 – profits-wise, at least. Just this week, the international law firm White & Case said its profits per equity partner increased 16% from 2019, a jump comparable to what other top firms have seen, according to legal sector financial advisors and consultants.
It's hard to spend millions on business development, recruitment and retreats when airline travel requires a quarantine and restaurants are closed, so firms slashed expenses without trying. Several also did try, taking active steps – like laying off staff – to save cash. The shift online for law school recruiting and client calls may be here to stay.
Some firms used the 2020 cash bump to lure lateral partners or paid it out to current partners, to keep them from considering a compensation-based move, and gave associates bonuses.
But many spent it in 2020 to pre-pay expenses for 2021, industry sources said, which could make their 2020 profits seem lower than they actually were. That's in part because law firms are in an uncomfortable spot: Their profits thrived in a year that financially devastated many clients and Americans in general. It’s walking a fine line to attract and keep talent without offending clients who are hurting.
"North Korea's operatives, using keyboards rather than guns, stealing digital wallets of cryptocurrency instead of sacks of cash, are the world's leading 21st century nation-state bank robbers."
U.S. Assistant Attorney General John Demers, in announcing an indictment in Los Angeles federal court charging three North Korean computer programmers with a massive hacking spree aimed at stealing more than $1.3 billion in money and cryptocurrency, affecting companies from banks to Hollywood movie studios. Prosecutors said the hackers, who worked for North Korea's military intelligence services, were responsible for a wide range of criminal activity and high-profile intrusions, including a retaliatory 2014 attack on Sony Pictures Entertainment for producing "The Interview," which depicted the assassination of North Korea's leader. (Reuters)
In the courts
- U.S. District Judge Alison Nathan in Manhattan in an order urged the DOJ's Office of Professional Responsibility to investigate any prosecutorial misconduct in the case against banker Ali Sadr Hashemi Nejad. He was convicted of funneling $115 million through the U.S. banking system to Iran in connection with a Venezuelan construction project, but prosecutors dropped the case after revealing they inadequately disclosed evidence to his attorneys. He's repped by Reid Weingarten of Steptoe & Johnson. (Reuters)
- Lawyers for Theranos founder Elizabeth Holmes led by Williams & Connolly's Kevin Downey have asked a federal judge in San Jose to bar prosecutors from introducing at her upcoming fraud trial evidence related to her wealth, spending and lifestyle, saying it could inflame "class prejudice" and unfairly tilt jurors against her. (New York Post)
- U.S. Bankruptcy Judge Laurie Selber Silverstein in Wilmington, Delaware, appeared skeptical of arguments by a group of law firms who have filed sex abuse claims in the Boy Scouts of America's bankruptcy case that she should ignore tweets by one plaintiffs attorney that its insurers say suggest that not all of the claims are valid. "I don't know that I believe the tweet means nothing," she said. (Reuters)
- New York Attorney General Letitia James filed a lawsuit in state court in Manhattan seeking to shut down the cryptocurrency platform Coinseed Inc, alleging it defrauded thousands of investors, including by charging hidden trading fees and selling "worthless" digital tokens. The SEC filed a related federal lawsuit against Coinseed and CEO Delgerdalai Davaasambuu. (Reuters)
- Federal prosecutors in Manhattan in a filing argued that former MiMedx Group CEO Parket Petit and the biotech company's ex-chief operating officer William Taylor should be sentenced next week to six and five years in prison, respectively, after they were convicted of scheming to inflate its revenue. Petit's lawyers, Eric Bruce of Freshfields and Matthew Menchel of Kobre & Kim, in a separate filing urged U.S. District Judge Jed Rakoff to spare him, saying he faced significant risks in prison due to COVID-19. (Reuters)
- U.S. District Judge Paul Engelmayer in Manhattan narrowed a long-running proposed antitrust class action by aluminum purchasers accusing Goldman Sachs, JPMorgan Chase and the mining company Glencore of conspiring to drive up the metal's price by reducing supply. (Reuters)
- The DOJ's bankruptcy watchdog is challenging the National Rifle Association's request to use its long-time law firm Brewer, Attorneys & Counselors during its bankruptcy in Dallas, saying the firm failed to disclose alleged conflicts of interest and prior accusations of improper billing practices. (Reuters)
- Lawyers for two men accused of helping former Nissan Chairman Carlos Ghosn flee Japan while awaiting trial on financial charges have asked U.S. Secretary of State Antony Blinken to halt their impending extradition. The lawyers, Abbe Lowell of Winston & Strawn and Daniel Marino of Marino Finley, did so in a letter after the U.S. Supreme Court on Saturday cleared the way for U.S. Army Special Forces veteran Michael Taylor and his son Peter Taylor to be extradited. (Reuters)
Industry moves
- Hogan Lovells has added health lawyer Cybil Roehrenbeck as a partner in its government relations and public affairs practice in D.C. She was previously the telehealth practice leader at Polsinelli. (Hogan Lovells)
- Patent trial attorney Alan Whitehurst has joined McKool Smith as a principal in its D.C. office from Quinn Emanuel. He focuses on telecom-related disputes. (McKool Smith)
- Jason Levin, who advises on transactions and divestitures of businesses and intellectual property, has joined Reed Smith's global corporate group as a partner in Chicago from DLA Piper. (Reed Smith)
- FisherBroyles has added public finance lawyer David Eric Reid as a partner in Chicago. He moves over from Faegre Drinker Biddle & Reath. (FisherBroyles)
- White-collar defense attorney Jennifer Short has joined Blank Rome's D.C. office as a partner from the litigation boutique KaiserDillon. She was previously as an assistant U.S. attorney in D.C. and spent eight years prosecuting civil False Claims Act cases. (Blank Rome)
- Trust and estates attorney Michael Vito has rejoined Lowenstein Sandler as a partner in D.C. from Baker Hostetler, where he was counsel after joining the firm in 2018. (Lowenstein Sandler)
- Akin Gump has added executive compensation and employee benefits lawyer Rebecca Coccaro as a partner in D.C. She joins from Sullivan & Cromwell, where she was special counsel. (Akin Gump)
Columnist spotlight: Mortgage banker's failed appeal sheds light on opaque SEC bounty process
The president of the mortgage company MNI failed to persuade the D.C. Circuit that the SEC wrongfully denied him a bounty for information he provided. Whistleblower lawyers Jordan Thomas of Labaton Sucharow and Rebecca Katz of Motley Rice say it's quite rare for rebuffed tipsters to go to court to challenge SEC orders denying them a bounty. It’s rarer still for those challenges to succeed. Alison Frankel looks at the D.C. Circuit opinion and what whistleblower lawyers should take away from it. “The decision is also more proof that in the SEC whistleblower process, there’s not a lot of room to second-guess the SEC,” Frankel writes. Read her full column here.
Check out other recent pieces from all our columnists: Alison Frankel, Jenna Greene and Hassan Kanu.
Lawyer speak: Considerations for retail employers before mandating the COVID-19 vaccine
As vaccines slowly become more pervasive, questions are arising about whether retail employers can mandate that employees get the injection. While generally, yes, employers can require vaccination, Hunton Andrews Kurth attorneys Amber Rogers, Susan Wiltsie and Lukas Moffett discuss some of the issues, including EEOC guidelines and labor law provisions, that retail employers face over COVID-19 vaccinations.
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