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Good morning. Indicted FTX founder Sam Bankman-Fried faces long odds in getting fraud charges dismissed, despite a recent U.S. Supreme Court ruling that he contends helps him. Luc Cohen connected with experts for their insight. Plus, the FTC will face hurdles in its lawsuit to block Amgen’s $27.8 billion acquisition of Horizon Therapeutics, and Quinn Emanuel is fighting hard to keep its $185 million in fees.
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FTX founder Sam Bankman-Fried is hoping that a recent U.S. Supreme Court ruling paring back the scope of fraud prosecutions will help his defense, but legal experts told Luc Cohen it’s unlikely the onetime billionaire will get the charges dismissed.
Bankman-Fried has pleaded not guilty to charges he stole millions in customer funds from the crypto exchange to prop up his hedge fund, violated campaign finance laws and bribed Chinese authorities. In a bid to get his charges dismissed, Bankman-Fried has argued that some of those charges rely on a theory of fraud that centers on depriving a victim of economically-valuable information rather than tangible property. The U.S. Supreme Court invalidated that theory, known as “right to control,” last week when it overturned the conviction of a Buffalo construction executive accused of bid-rigging.
But legal experts said that in Bankman-Fried’s case, prosecutors can point to tangible property that victims lost.
“If the customers turned over their money to FTX based on allegedly fraudulent statements that Bankman-Fried made, the government would argue that is a deprivation of property,” said Mark Kasten, counsel at Buchanan Ingersoll & Rooney in Philadelphia.
One expert said that among the charges against SBF, the one that might fail based on the right to control theory is the bank fraud count.
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- Two more partners departed Stroock, as the firm struggles with retention and eyes a potential merger. Miami-based litigation partners Laura Besvinick and Julie Nevins left for London-founded Clyde & Co. Stroock lost a 43-lawyer restructuring group to Paul Hastings last year. New York-founded Stroock has been in talks to merge with Nixon Peabody. (Reuters)
- An anonymous in-house lawyer is suing the FDA to block the agency from disclosing the attorney’s name or identifying information in an inspection report that questioned a company’s regulatory compliance. The lawyer hired a team from Cooley to file the case in D.C. federal court. The FDA declined to comment. (Reuters)
- Quinn Emanuel attorneys are pressing back against a bid from class action objectors UnitedHealthcare and Kaiser for an accounting of how the law firm handled a $185 million legal-fee award that was subsequently struck down. The 900-lawyer firm denied any improper actions in distributing the fees because the compensation order was final. (Reuters)
- Irma Carrillo Ramirez, a longtime federal magistrate judge in the Northern District of Texas, received bipartisan support for her nomination to serve on the 5th Circuit. Texas’ two Republican senators recommended her for the post. Ramirez would join an appeals court that has been staunchly opposed to Biden administration policies and a bench where a majority of the court’s active judges were appointed by Republicans. (Reuters)
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Suing a celebrity is a double-edged sword. Your allegations get extra attention – but so does your conduct. That’s the context, writes Alison Frankel, for new assertions by Mark Cuban — the billionaire “Shark Tank” star and owner of the NBA’s Dallas Mavericks — about the way that plaintiffs lawyers have pursued their claims that Cuban breached securities laws by inducing investors to open interest-bearing accounts at now-bankrupt crypto lending firm Voyager Digital. In two motions filed this week in federal court in Miami, Cuban’s lawyers argued that plaintiffs counsel allowed some of their clients to put forth false statements and themselves signed off on a proposed amended pleading that asserts “fabricated” allegations already proven to be false. Plaintiffs lawyer Adam Moskowitz, who is co-counsel in the case with Boies Schiller, told Frankel that Cuban’s personal attacks are provably false — and a sign, he said, that Cuban is running scared.
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“We are allowed to look at the FDA, just as we are allowed to look at any agency. That’s the role of the courts.“
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- The U.S. Senate Judiciary Committee is scheduled to meet to vote on judicial nominees and legislation. First Circuit nominee Michael Delaney was listed on the agenda for today’s meeting. Some Democrats have raised concerns about Delaney over a legal brief he signed in defense of a since-repealed New Hampshire law that required parents be notified before their minor child obtains an abortion. Delaney has said he had “extremely limited involvement” in the case.
- The FTC will meet in an open session to discuss topics including whether companies collecting biometric information are complying with a legal provision that prohibits unfair or deceptive trade practices. The commission expects to vote on issuing a policy statement that will detail some practices it said it will examine in weighing compliance.
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Court calendars are subject to last-minute docket changes.
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- A group of Republican-led U.S. states asked a Texas federal judge to strike down a Biden administration rule allowing socially conscious investing by retirement plans, saying it will imperil Americans’ retirement savings. Lawyers for the 25 states led by Utah and Texas argued the U.S. Labor Department failed to justify its departure from a Trump-era rule that limited investing based on environmental, social and corporate governance factors. (Reuters)
- The U.S. Supreme Court declined to block a Democratic-backed ban on assault-style rifles and large capacity magazines enacted in Illinois after a deadly mass shooting in Chicago’s Highland Park suburb in 2022, handing a setback to gun rights advocates. The court denied a request by the National Association for Gun Rights and a firearms retailer for an injunction pausing enforcement of the state law pending an appeal. (Reuters)
- BP agreed to pay a record $40 million to settle U.S. air pollution civil charges that its Indiana-based oil refinery violated federal laws aimed at curbing emissions of cancer-causing benzene in wastewater and other harmful pollutants. Sidley’s Justin Savage, co-leader of the firm’s environmental practice, represented BP in Indiana federal court. (Reuters)
- Celsius Network lawyer Ross Kwasteniet told U.S. Bankruptcy Judge Martin Glenn in Manhattan that the crypto lender hopes to conclude an auction for its assets within days, and said that the current lead bidder is Fahrenheit LLC, a consortium that includes blockchain-based venture capital firm Arrington Capital. Celsius filed for Chapter 11 protection in July, one of several crypto lenders to go bankrupt following the rapid growth of the industry during the COVID pandemic. (Reuters)
- Walgreens Boots Alliance reached a $230 million settlement with San Francisco over its role in that city’s opioid epidemic, the city announced. The settlement came nine months after U.S. District Judge Charles Breyer in San Francisco said Walgreens could be held liable for creating a public nuisance, faulting the drugstore chain for its “15-year failure” to properly scrutinize opioid prescriptions and flag possible misuse of the drugs. (Reuters)
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- Crowell hired Christine Lane in D.C. as the firm’s new co-chair for its tax practice group. Lane was previously at Hogan Lovells. (Reuters)
- Quinn Emanuel added white-collar partner Samuel Nitze in New York. He was an assistant U.S. attorney for the Eastern District of New York. (Reuters)
- McDermott added Ryan Tisch as a D.C.-based regulatory partner focused on antitrust matters. Tisch was previously at Crowell. (McDermott)
- Duane Morris added Jessica Kenney Bonteque in New York as a partner focused on business reorganization and financial restructuring. Bonteque was previously at Moses & Singer. (Duane Morris)
- DLA Piper added Chicago-based real estate partner Michael Rechtin from Seyfarth. (DLA Piper)
- Hinshaw & Culbertson hired Rebecca Moore as a Houston-based partner focused on global insurance services. She was previously at Sheehy, Ware, Pappas & Grubbs. (Hinshaw)
- Perkins Coie added M&A partner Jonathan Forgang in the firm’s Los Angeles office from Alston & Bird. (Perkins Coie)
- Sullivan & Worcester hired former Womble partner Greg Sampson as a Boston-based partner in its permitting and land use practice. (Sullivan & Worcester)
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Business risk disclosures, which are required by the SEC, are often the source of shareholder claims in securities class actions. Many of those claims accuse companies of misleading investors by characterizing a risk as hypothetical. Most courts have said those types of hypothetical risk disclosures are only misleading if the risk has already materialized or is extremely likely, write Virginia Milstead, Mark Foster and Michelle Portillo of Skadden. But a recent 9th Circuit decision may have muddied the waters, they say.
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