Friday, January 25, 2013

Communications on judicial front

The following are communications with judge and judiciary oriented organizations relative to the Citigroup and Bank of America litigations:


From: RDShatt@aol.com
To: fja@federaljudgesassoc.org
Sent: 1/20/2013 11:54:17 A.M. Central Standard Time
Subj: Judicial independence; public opinion
Dear Sir or Madam,
I have previously tried to communicate with the FJA (see below email).
I can understand and appreciate the FJA mission to protect the independence of the judiciary.
At the same time, the judiciary can appear to the public to be in a cocoon, detached from reality, and indifferent to legitimate concerns of the public.
I am sure others have expressed complaints to the FJA, about which I cannot speak.
I wish onlt to voice the particular complaint I have, the current embodiment of which can be found in this objection I am attempting to file in the Citigroup and Bank of America securities class action litigations that are pending in the Southern District of New York.
I am not a member of the plaintiff class in either case, which is part of my point, to wit, I feel there are larger public interests involved in these and other class action litigations that the judiciary gives no regard to in the exercise of its powers and discretions.
Read the objection, and tell me I am wrong. Tell me that Judges Stein and Castel are fully cognizant of the issues I raise, and either that these issues can have no legal bearing on how the judges exercise their discretions in the cases or that the issues I raise are not meritorious of thoughtful consideration by the judges and possible effect on their exercise of their discretion.
Thank you for your attention to this letter.
Sincerely,
Rob Shattuck

2. ABA Justice Center

From: RDShatt@aol.com
To: peter.koelling@americanbar.org
Sent: 1/24/2013 8:28:03 A.M. Central Standard Time
Subj: Continued request for engagement with Justice Center; Citigroup, Bank of America
Dear Mr. Koelling,
I have previously tried to communicate with the Justice Center (see, e.,g., below email).
I can appreciate that the Justice Center has many judiciary related subjects it wishes to give attention to, and the subject I have endeavored to raise is not of a priority for the Justice Center. Also, I am only a member of the public, in competition with judges, bar leaders, law professors and deans, for engaging the Center.
I nonetheless will continue to press for the Justice Center's attention.
I think the judiciary can appear to the public to be in a cocoon, detached from reality, and indifferent to legitimate concerns of the public. I am a "tort reformer" and feel the judiciary has manifested significant failure on behalf of the public's interest.
The current embodiment of my complaint against the judiciary can be found in this objection I am attempting to file in the Citigroup and Bank of America securities class action litigations that are pending in the Southern District of New York.
I am not a member of the plaintiff class in either case, which is part of my point, to wit, I feel there are larger public interests involved in these and other class action litigations that the judiciary gives no regard to in the exercise of its powers and discretions.
Read the objection, and tell me I am wrong. Tell me that Judges Stein and Castel are fully cognizant of the issues I raise, and either that these issues can have no legal bearing on how the judges exercise their discretions in the cases or that the issues I raise are not meritorious of thoughtful consideration by the judges and possible effect on their exercise of their discretion.
Thank you for your attention to this letter.
Sincerely,
Rob Shattuck

From: Peter.Koelling@americanbar.org
To: RDShatt@aol.com
Sent: 1/24/2013 9:39:08 A.M. Central Standard Time
Subj: RE: Continued request for engagement with Justice Center; Citigroup, Bank of America
Dear Mr. Shattuck,
The Justice Center is not interested in becoming involved in your project at this time. We are not able to engage in matters that are in litigation or might result in litigation. As a membership organization the ABA must first respond to the interest of its members.
Best,
Peter M. Koelling
Director Chief Counsel, ABA Justice Center

Thursday, January 17, 2013

CCAF objection in Citigroup

The Center for Class Action Fairness also has filed an objection in the Citigroup securities class action litigation.  See this link and this link.

The latter link says:

"There are a lot of important issues in this case that the Center for Class Action Fairness hasn't previously addressed.

  • The question of compensation for first-tier document review has been poorly handled by the courts, in part because no one has ever submitted the right evidence to challenge it. No paying client would agree to $550/hour attorneys doing first-pass document review; the law firm here claimed that the style consultants moonlighting as temp attorneys working for a third party and getting paid less than a tenth of that were firm attorneys. (That's before the question of whether the document review is intentionally conducted in an inefficient manner to inflate the hours, which won't be challenged since the scanty billing records are going to be inscrutable in the week that class members have to look at the Rule 23(h) fee petition.) This issue has been covered by Lester Brickman and, sadly, no one else.

  • The PSLRA freezes discovery until the motion to dismiss is resolved; if the plaintiffs survive the motion to dismiss, 82% of securities cases settle. Given that nearly all the investment is after it becomes very likely that the attorney is going to be paid, why is a 1.8 multiplier necessary to attract competent legal counsel?

  • Lester Brickman has also written about the "bless these fees" experts who rubber-stamp every fee request. The experts here were no different: they cherry-picked empirical evidence; one used boilerplate to assert that the "risk" meriting a multiplier and accounting for the small size of the settlement included the threat that Citigroup would go bankrupt because of the litigation; they bald-facedly called a $0.09/dollar nuisance settlement a "success." A really shameful performance. I hope to be able to depose them.

  • The PSLRA requires the fees and expenses to be a reasonable percentage of the amount the class actually receives. Few fee petitions follow the law; neither this one, nor either of the expert reports even mentioned it. Of course, the amount the class will actually receive is not disclosed in the notice or in any of the papers.

  • Brokers regularly take two months to provide lists of names to settlement administrators. It's happened in every securities case I've been involved in. Settlement administrators know this, dawdle in requesting the names, and then point fingers when the notice is late. How is it possibly acceptable to send reasonably foreseeable late notice instead of establishing a schedule that accounts for the inevitable two-month delays? Again, no one has ever made the right argument challenging this problem."






Sunday, January 13, 2013

The corporate detective business


From National Public Radio http://www.npr.org/2013/01/10/169029734/companies-invest-in-new-employees-corporate-watchdogs 

To Catch Worker Misconduct, Companies Hire Corporate Detectives

by Ailsa Chang

As businesses face more complex regulations and heightened scrutiny by prosecutors, companies are turning to investigative firms to help keep watch over their employees.
The idea behind the "corporate monitoring" business is to nip misconduct in the bud before law enforcement catches a whiff of it. These corporate detectives-for-hire are seeing good business these days, and finding new ways to snoop.
We all know our employers have access to tons of data about us. They can see every person we email from our company email account, every phone number we dial from our desk.
But what if you found out that every bit of that vast ocean of data was being analyzed so that your company could build a portrait of you?
That's what Matt Unger is hired to do. Unger is like the computer-geek-in-chief for K2 Intelligence, an investigative firm in Midtown Manhattan that specializes in corporate monitoring.
Unger is no ordinary gumshoe. He's helping K2 repurpose counterterrorism software developed by the government to catch insider traders.

What Do These Corporate Monitors Do?
Sliding behind a desk and scrolling through screen after screen on his monitor, Unger demonstrated how the software takes snapshots of a person's behavior at a company at any given time.
"We see that this guy Kevin all of a sudden started calling the 410 area code where he never did that before, and he stopped answering emails — he's being less responsive to his peers," Unger said, pointing at a group of statistics clustered under the individual's name. "What has he got cooking on the outside that he's spending so much time on the phone and he's not able to answer his peers?"
Is My Behavior Around The Workplace Suspicious?
There isn't a specific list of behaviors that corporate monitors can say are slam-dunk signs someone is committing misconduct. They won't accuse you just because you took four sick days in a row, or if you phoned your co-worker 10 times in a day. It's more complex than that.
In the case of trying to find insider traders, these monitors aggregate an ocean of data about you — the people you usually message through your company email account, the phone numbers you dial from your desk, the colleagues you instant message at work. And then they look for sudden changes in that behavior.
For example, two people who usually communicate by email suddenly talk only by phone for a few days. And during that time, one of them sells off a bunch of stock from a pharmaceutical company right before the company announces unfavorable information about a drug they're marketing. Monitors might see that as something worth checking out.
What Unger is looking for are sudden changes in behavior. Some changes don't mean anything at all, he said, but when people are up to no good, they usually start acting a bit differently. His software can instantly see when two people who usually only email each other suddenly switch to phone communication for a few days. And if one of them does a big trade during that time, that's something to check out.
A Booming Business
Unger's boss, Jeremy Kroll, said more clients are asking for this monitoring, especially with the uptick in insider trading convictions the past couple of years
"Two years ago, when we started to talk to clients about a preventative solution vis-a-vis insider trading, we got a lot of nodding heads and saying, 'That's really interesting.' But no one was biting," Kroll said.
What's emerged is a multibillion-dollar corporate detective industry aimed at ferreting out not only insider trading, but also money laundering, bribery, embezzlement and fraud.
Kroll's firm is where former CIA agents find second careers — same with ex-prosecutors, cops and investigative reporters. And they're landing big-name clients like JPMorgan Chase and Brookfield Properties.
The corporate monitoring business is looking so promising, K2 wants to expand. So this month, it acquired Thacher Associates, a company that has spent years monitoring construction projects for fraud.
"There's no question today that corporate America is much more concerned about turning a lens on itself," said Toby Thacher, CEO of Thacher Associates. "This is not just out of a heightened level of concern about ethics. It's self-preservation."

Call It Preventative Care
Fines for breaking the law can run into billions of dollars. Take HSBC, for example. The bank agreed last month to pay a $2 billion fine to settle allegations that it was helping Mexican drug cartels launder money.
The average price tag for any of these corporate monitoring jobs can run from five to seven figures. But Jeremy Kroll said those fees will help you save on the back end.
"I think the smart CEOs and boards are saying, 'It's not a question of whether something naughty is going on in our company; it's a question of where and how often," he said.
Kroll's dad is often called the father of the corporate monitoring industry. Jules Kroll was a former prosecutor when he started the investigative firm Kroll Inc. back in 1972.

Does Monitoring Break Any Rules?
These firms say most of their monitoring happens out in the open — employees are informed about their presence. These monitors help companies design codes of ethics and financial controls to prevent waste and abuse.
But some employment law experts say they're concerned that these firms could be hired to do other things — like spy on communications among union organizers, or hunt down whistle-blowers.
K2 officials say they've never been hired to do that. In fact, Thacher says his business requires standing up to companies.
"There've been situations where we have found that principals of companies have engaged in kickbacks, embezzlements, fraud, steering of contracts, where the company felt that the principals involved were too important to the company to risk exposing this to law enforcement or regulatory entities," he said.
So Thacher said he resigned in at least two of those cases.
Credibility is everything in the industry because so much of the business comes from the government.
Sometimes companies are forced to hire outside monitors as a result of settlements with regulators. That happened to HSBC and to Standard Chartered, a London bank that was also accused of money laundering. Now, the federal government is considering whether to require hedge funds to report suspicious transactions.
And that will only mean more business for all the private corporate watchdogs out there.