by Kyle Colona on April 5, 2012
Update: The Republican Primary
The GOP primary has turned the corner with Mitt Romney’s sweep in Wisconsin, Maryland and the District of Columbia on Tuesday, says Politico.
This should spell the end for dark horse Rick Santorum, and Newt Gingrich became irrelevant shortly after his last stand in South Carolina. With the Wisconsin win, a key “battleground” state, the Republican establishment has begun to coalesce around Romney in order to focus their sights on the November election. Moreover, the president’s re-election team is already anticipating Romney’s nomination as a Super PAC has already begun launching advertisement attacks.
From the Federal Trade Commission (FTC)
Ohlhausen Sworn In as New Commissioner
The FTC has a new chief as Maureen Ohlhausen, a former partner at Wilkinson, Barker, Knauer was sworn in on April 4th as the agency’s fifth commissioner.
According to the Legal Times.com, she takes the reins from William Kovacic whose term ended in October 2011. Ms. Ohlhausen has been with the FTC for 11 years, most recently as director of the Office of Policy Planning from 2004 to 2008, leading the FTC’s Internet Access Task Force.
The FTC had customarily had jurisdiction over non depositary financial firms like mortgage banks, consumer finance lenders and pay day lenders. It will be interesting to see how well Ms. Ohlhausen (a Republican) plays with newly installed CFPB head honcho Richard Cordray who was handpicked by Mr. Obama to head the new consumer watchdog. The two agencies will both have regulatory authority in this sector.
More Defections at Dewey & LeBoeuf
Six more legal eagles flew from the “beleaguered” New York law firm Dewey & LeBoeuf, says DealBook.
The latest partner defections include James R. Woods, the co-chairman of the firm’s global insurance practice, and John M. Nonna, a litigator specializing in insurance disputes as well as four other partners. The flight of Woods and Nonna adds to the “virtual decimation of Dewey’s insurance practice” a group that has lost more than 20 partners (insurance has long been regarded as one of the firm’s premier practices).
The ongoing resignations come on the heels of a “disappointing financial performance that led the firm to cut the compensation of many of its partners.”
If You Can’t do the Time Don’t Do the Crime
Why do rich people jeopardize their wealth by engaging in insider trading? DealBook raises the question, but then you may as well ask “why do fools fall in love?”
And was it not Blaise Pascal who said that “the heart has reasons that reason cannot comprehend?”
In any case, the paper reported on April 4th about recent insider trading cases that involved some big wheels like Raj Rajaratnam, a founder of the hedge fund Galleon Group. The billionaire was convicted last year and sentenced to an 11 year haul in the slammer. It is estimated that his illegal plays garnered ill gotten gains of more than $60 million.
Then there’s the curious case of Martha Stewart, who was convicted in 2004 for “lying” to investigators about dumping shares of Genentech before the drug maker released bad news about one of its drugs. Funny, but the move only helped her avoid a loss of about $45,000.
And that brilliant mistake triggered a loss of “millions on paper in her stake in Martha Stewart Living Omnimedia” as the market value of the company she founded plunged after charges were filed. Ultimately she settled with the SEC after getting out of the pokey to the tune of $195,000 in disgorgement and penalties.
The DealBook piece hypothesizes that “people who are used to making decisions quickly may not reflect on whether the information” is insider stuff. The “real victim is the market, a faceless mass of billions of dollars’ worth of transactions daily.”
Volcker Rule May Be ‘Impossible’ to Implement, says Lacker
Federal Reserve Bank of Richmond President Jeffrey Lacker reportedly said that the Volcker Rule provisions of the Dodd Frank Reform measure may be “impossible” to implement.
In an interview with Bloomberg television on Wednesday, Mr. Lacker said the rule is “fairly difficult if not impossible to implement in a way that is at all reasonable.” He also said that the rule would be “high on the list” of things he would change if he could.
“We need to push hard to have firms structure themselves, restructure themselves if necessary, to make sure” their resolution “is an orderly process,” said Lacker.
Given his comments, the delay in getting a final rule out the door, and the strong pushback from the financial sector, it is a pretty safe bet that the final rule will be a watered down version from what was previously contemplated.
Facebook Seeks End to Ceglia Ownership Suit as IPO Nears
The social networking king asked a court to throw out Paul Ceglia’s claim to part of the network without giving him access to evidence including computers that CEO Marl Zuckerberg reportedly used when he built the company while still a lad at Harvard.
Facebook filed its $5 billion IPO with the SEC back in February and this bid is a play to clear the field of any potential obstacles to a successful launch. But Mr. Ceglia’s lawyers contend that the case should proceed and that the computers in question will back his claim.
According to Bloomberg News, Ceglia contends that he had a 2003 contract with Zuckerberg that made him a partner in Facebook and entitles him to half of Mr. Zuckerberg’s holdings in the company. However, the FaceBook lawyers claim Mr. Ceglia “wants to use the litigation to disrupt the IPO and leverage a settlement.”
Kyle Colona is a New York based freelance writer and a Feature Writer for the Compliance Exchange. He has an extensive background in legal and regulatory affairs in the financial services sector and his work has appeared in a variety of print and on-line publications.