Lookzy: all your daily legal news in 0.1 billable hours. Plain English coverage of deals, litigation and legal trends trusted by lawyers at Cravath, Latham, Skadden, Gunderson and elsewhere.

Welcome to Lookzy. In today's Lookzy:

• Details on Trump's historic criminal indictment

• Gwyneth Paltrow is fully cleared at trial

• Bed Bath & Beyond's hail mary financing move

• More details on who might bid $10B for Subway

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Historic indictment. Former President Donald Trump was reportedly indicted on criminal charges by a Manhattan grand jury yesterday. The official charges remain sealed, but the investigation leading to the indictment is centered on $130,000 in hush money paid to Stormy Daniels by Trump's former lawyer, Michael Cohen, and the accompanying falsifying of business records to hide such payment by Trump and his business. According to rumors, there could be up to 34 counts related to falsifying business records. Trump is expected to be arraigned on Tuesday, which should provide clarity on the indictment. This criminal indictment is first for a former president.

Free Gwyneth. An 8-person Utah jury ruled that Gwyneth Paltrow was not responsible for various injuries sustained by a man during a ski slope collision in 2016. The jury ruled that the man was 100% at fault for the collision and awarded Paltrow the $1 in symbolic damages that she had asked for in a countersuit.

Sanctions bite. The US Federal Reserve and Treasury Department’s Office of Foreign Assets Control fined Wells Fargo & Co. about $97.8 million for inadequate oversight of its sanctions compliance risks from 2010 to 2015, settling charges a subsidiary facilitated more than $532 million worth of prohibited transactions in violation of sanctions against Iran, Syria, and Sudan.

Patent wars. The US Court of Appeals for the Federal Circuit affirmed a decision from the US Patent and Trademark Office that invalidated a $502.8 million patent infringement verdict from 2020 patent licensing company VirnetX Inc. had originally won against Apple. Apple and VirnetX have waged a 13-year fight in the courts.

THE DEAL

Wheelin' and dealin' today's corporate news

Hail Mary. Bed Bath & Beyond has terminated its $1 billion fundraising deal with hedge fund Hudson Bay Capital Management LP and instead launched an effort to sell up to $300 million of common stock in the open market. The distressed retailer said that if the sale of up to $300 million of new shares doesn’t go through, its next move will likely be to file for bankruptcy.

$10B footlong. Roark Capital Group and other private equity firms are reportedly among potential buyers considering bidding for sandwich chain Subway that could be worth $8-$10 billion. Subway is likely to seek closer to a $10 billion valuation.

Unusual consortium. Singapore’s sovereign wealth fund GIC, executives from HR software provider Works Human Intelligence and a new Bain Capital fund agreed to jointly buy Works Human Intelligence for an aggregate of $2.6 billion. GIC will hold ~50% of the shares upon closing.

Bankrupt makeup. Forma Brands, the bankrupt owner of the Morphe makeup brand, reached an agreement with lenders Jefferies Finance LLC and Cerberus Capital Management to be acquired in exchange for $690 million in debt relief. This agreement was reached according to a court filing. No better bids emerged during the company’s Chapter 11 proceedings.

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Lookzy: all your daily legal news in 0.1 billable hours. Plain English coverage of deals, litigation and legal trends trusted by lawyers at Cravath, Latham, Skadden, Gunderson and elsewhere.

Welcome to Lookzy. In today's Lookzy:

• SBF is paying his legal bills using customer money

• Google sanctioned for deleting evidence

• A potential $10 billion satellite company merger to rival SpaceX

• A $3.3 billion IPO delayed amid market and CS worries

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Customers footing bill. FTX founder Sam Bankman-Fried is reportedly paying his extensive legal fees from a greater than $10 million dollar gift he gave his father, Stanford Law professor Joseph Bankman, with money borrowed from FTX’s sister hedge fund, Alameda Research. The gift was made in 2021 while he was CEO of FTX. SBF is expected to be arraigned today in Manhattan.

Lawyering up. Catherine Coley, who helped launch and build Binance.US in 2019 for two years before suddenly leaving the company, has reportedly hired Sullivan & Cromwell partner James McDonald to represent her in any US government investigations of Binance.US. This report comes days after the CFTC's suit against Binance (but not Binance.US), but the posture of that suit and other rumors have suggested more is likely coming for the company.

(Don't) shred everything. A federal judge in California presiding over a consumer class action multi-district litigation involving Google ruled that Google intentionally destroyed employee chats and other messaging evidence. The judge determined that Google must pay sanctions and face a possible penalty at trial.

LIBOR rigging. US prosecutors moved to drop criminal charges against two bankers at Société Générale who were accused of submitting false LIBOR submissions to rig LIBOR - the London Interbank Offered Rate, a world benchmark for short-term interest rates - from 2010-2011. While prosecutors did not explain the change, the dropping of charges follows a number of related losses at the Second Circuit.

THE DEAL

Wheelin' and dealin' today's corporate news

Satellite wars. SES SA is reportedly in talks to combine with rival Intelsat SA to create a European satellite giant that can better compete with billionaire Elon Musk's SpaceX. The potential deal is valued at more than $10 billion, including debt. SES has confirmed that it is in advanced talks and is aiming to reach an agreement with Intelsat as soon as the next few weeks.

Persistence in negotiations. 3D printer maker Nano Dimension Ltd raised its offer to buy the rest of peer Statasys Ltd. that it does not already own, now offering $1.2 billion for the remaining 85.5% of the company. Nano currently owns about 14.5% of Stratasys's outstanding shares and is the largest shareholder. When Nano disclosed its 12.12% stake last summer, Statasys had initially adopted a limited shareholder rights plan ("poison pill").

Delayed IPO. Swedish investment firm EQT is delaying a planned $3.3 billion IPO of skincare group Galderma amid market volatility. Galderma had already once delayed its IPO due to market conditions. Key Galderma shareholders are additionally considering whether to keep Credit Suisse in a lead position in the offering after the bank's recent turmoil.

BOILERPLATE

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Lookzy: all your daily legal news in 0.1 billable hours. Plain English coverage of deals, litigation and legal trends trusted by lawyers at Cravath, Latham, Skadden, Gunderson and elsewhere.

Welcome to Lookzy. In today's Lookzy:

• Adnan Syed's murder conviction is reinstated

• SBF indicted again for $40M in bribes

• White & Case settles SPAC fee lawsuit

• Amazon reportedly eyes AMC theaters

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Birth of murder podcasts. A Maryland appellate court panel reinstated the murder conviction of Adnan Syed, deciding a lower court had violated the right of the victim’s family to attend a critical hearing in the case. Syed was freed last year after he spent 23 years fighting charges that he killed his ex-girlfriend Hae Min Lee in 1999. The panel ruled 2-1 that a lower court had violated the rights of the victim’s family in how it conducted the hearing at which Syed’s conviction was vacated. A new hearing regarding the evidence to vacate Syed’s conviction will be held to allow the family of victim Hae Min Lee to attend.

SBF indicted again. Prosecutors unveiled a new indictment against FTX founder Sam Bankman-Fried, charging him with conspiring to violate anti-bribery provisions of the Foreign Corrupt Practices Act. The indictment accuses SBF of directing $40 million in bribes to one or more Chinese officials to unfreeze assets relating to his cryptocurrency business at hedge fund Alameda Research.

Alphabet antitrust. Alphabet asked a federal judge to dismiss a DOJ lawsuit alleging that Google illegally used its market power to harm competition in online advertising. Alphabet argues that the lawsuit fails to show that Google’s conduct harmed competition and that it is based on a flawed legal theory based on “dubious” interpretations of antitrust law and that it "would do nothing to help consumers".

Law firm settlement. White & Case settled a lawsuit seeking payment of legal fees from Colonnade Acquisition Corp II, a special purpose acquisition company, after its plans for a $480 million merger collapsed. White & Case had sued Colonnade for more than $8.2 million in legal fees, claiming it stiffed the firm after failing to consummate the planned merger and then announcing plans to wind down this month.

THE DEAL

Wheelin' and dealin' today's corporate news

Amazon's degen bet. Amazon is reportedly considering acquiring AMC Entertainment Holdings Inc., with reports of Jeff Bezos instructing advisors to explore acquisition plans. Cutting against a potential acquisition is AMC's extensive debt, at around $5.17 billion. Amazon closed on its $8.5 billion acquisition of MGM studios last year.

Banking crisis. First Republic is reportedly no longer for sale, a change from recent reports that First Republic was looking to sell itself amid attempts to contain contagion kicked off with SVB's failure.

Chinese SPAC. Chinese hydrogen fuel cell vehicle company Bestpath announced it agreed to go public in the United States through a merger with a blank-check vehicle in a deal with an equity value of about $1.2 billion.

Public negotiations. Blackbaud Inc. rejected a buyout offer from its largest shareholder, Clearlake Capital, saying it was undervalued in the approach that pegged the software maker at $3.78 billion. Clearlake, which has a stake of 18.6% in Blackbaud, had offered to take the company private in a deal that valued the software firm at $71 per share. The bid for the company would value it at about four times expected 2024 sales.

BUSINESS OF THE FIRM

Lateral Moves:

• Boies Schiller hired partner Andrei Yakovlev from King & Wood Mallesons.

• Gibson Dunn hired partners Sara Weed and Jason Cabral from Paul Hastings.

BOILERPLATE

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Welcome to Lookzy.  In today's Lookzy:

• What not to write in an email: CFTC v. Binance

• An activist backs off of Salesforce

• Alibaba looks to break itself up

• The admin law judge moonlighting on OnlyFans

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What not to do.  The CFTC sued several non-US Binance entities, Binance founder Changpeng Zhao ("CZ") and the former Binance Chief Compliance Officer, alleging that Binance and CZ operated an unregistered derivatives exchange and strategically targeted US retail customers, ignoring CFTC registration and compliance measures.  The complaint includes a number of damning statements by CZ and his Chief Compliance Officer showing they were highly aware of some of the illegal activity they are alleged to have facilitated - click through today's Boilerplate section for a taste.  

First vaping suit.  E-cigarette company Juul Labs Inc and its former largest investor, Marlboro maker Altria Group Inc, will face their first US trial this week over claims that they created a public nuisance by marketing addictive e-cigarettes to minors. The state of Minnesota seeks to make them pay for remedy measures against teen addiction. This marks the first time any of the thousands of cases against the e-cigarette maker over its alleged marketing to young people is going to play out in a courtroom.

Plea mulligan.  James Velissaris, the founder of Infinity Q Management, a hedge fund, asked to withdraw his guilty plea ahead of his sentencing next week. Velissaris was charged with fraud in 2020 after the SEC found that he had been inflating the value of certain assets in Infinity Q’s portfolio. The SEC also found that Velissaris had been using a complex pricing model that he himself had created to overvalue these assets. Velissaris noted his mental illness and said he had "felt hopeless and overwhelmed by pressure from both prosecutors and his prior counsel to accept a plea deal" at the time.

COVID rent.  Crowell & Moring has sued its Washington, D.C., landlord, The TREA 1001 Pennsylvania Avenue Trust, to recover $30 million that the law firm said it was not required to pay in rent amid office space disruptions brought on by the COVID-19 pandemic. The law firm paid TREA Trust more than $30 million in rent between April 2020 and May 2021 but is entitled to a 98% abatement because office access “was reduced to less than 2% of the normal use and access” under the lease.

THE DEAL

Wheelin' and dealin' today's corporate news

On again, off again.  A federal judge granted the US government’s request to temporarily halt Voyager Digital’s bankruptcy plan, putting the crypto lender’s proposed sale to Binance.US on hold. Voyager Digital filed for bankruptcy in July 2022 and won court approval to sell itself to Binance.US after contentious bankruptcy hearings in which state and federal regulators, including the SEC, joined a handful of investors in opposing the approximately $1 billion deal. 

Activist retreat.  Activist investor Elliott Investment Management won’t be proceeding with plans to nominate its own directors to Salesforce’s board, citing improved performance and a clearer “focus on value creation” from the enterprise software company. With Elliott announcing it is withdrawing its slate of Salesforce board candidates, it seems that some activist pressure has been lifted in a win for Salesforce.

Alibaba breakup.  Alibaba Group Holding Ltd reportedly plans to split its $220 billion business into six main units covering e-commerce, media and the cloud, each of which will explore fundraising or initial public offerings.  The announcement was made one day after Jack Ma returned to China following a year-stay abroad.  

Truck stop wars.  Convenience store operator Arko Corp has offered to buy truck stop operator TravelCenters of America Inc. for $1.4 billion, trumping BP’s $1.3 billion offer in mid-February that was accepted by TravelCenters.  Despite being a higher offer, Arko indicated TravelCenters was not viewing its proposal favorably.  

BUSINESS OF THE FIRM

Lateral Moves: 

• Arnold & Porter hired partner James Bergin, who previously served as the top lawyer at the NY Federal Reserve.

Industry News:

• According to The New York Post, Gregory A. Locke, a 33-year-old New York City administrative law judge, was moonlighting on OnlyFans and has now been fired by City officials for “unprofessional behavior”. He charged fans $12 a month on OnlyFans and produced more than 100 posts since he opened an account in November 2020.

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Welcome to Lookzy.  In today's Lookzy:

• Gwyneth Paltrow's very public trial

• The Internet Archive loses its copyright fight

• Dealmakers think work will pick up

• First Citizens buys much of SVB

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Skiing with Gwyneth.  Gwyneth Paltrow testified that she was not at fault for a 2016 ski slope collision in Utah that left a man with a concussion and broken ribs, who is now suing her for $300,000. She contradicted testimony from the lone witness to the incident, claiming the man suing her smashed into her from behind with his two skis. The hearing will resume today. 

Internet Archive.  The Internet Archive has lost its first fight to scan and lend e-books like a library. A federal judge has ruled against the Internet Archive in Hachette v. Internet Archive, a lawsuit brought against it by four book publishers, deciding that the website does not have the right to scan books and lend them out like a library. The nonprofit, which has a mission to provide “universal access to all knowledge,” says it will appeal the ruling.

Crypto crackdown.  The Securities & Exchange Commission issued a Wells notice to Coinbase, indicating a preliminary intention for enforcement. The notice is linked to Coinbase’s staking, Earn, Prime and wallet efforts. Coinbase said that the warning wouldn’t mean any changes to the exchange’s current products or services and likely intends to fight any enforcement efforts. 

Criminal antitrust.  A DOJ criminal antitrust trial is set to begin in Connecticut federal court alleging that Raytheon Technologies subsidiary Pratt & Whitney and a group of aerospace engineering services executives and managers conspired to restrict employee recruitment and hiring in a long-running criminal conspiracy.  The defendants have pleaded not guilty.  

THE DEAL

Wheelin' and dealin' today's corporate news

Twitter discount.  Elon Musk has reportedly offered Twitter employees new equity grants valuing the company at $20 billion, less than half of the $44 billion Musk paid for the company. The valuation is in line with some approximate third party estimates of Twitter's current valuation.  

Deal work pick-up?  Dealmakers at the Annual Tulane Corporate Law Institute event noted they expect a pick-up in dealmaking activity despite a ‘brick wall’ facing M&A. This served as a note of optimism from some of the most prominent rainmakers in the world of corporate mergers, even as they acknowledged a volatile economic backdrop had significantly impacted M&A activity. 

SVB sells.  First Citizens BancShares Inc. announced it agreed to acquire the deposits and loans of failed Silicon Valley Bank, assuming SVB assets of $110 billion, deposits of $56 billion and loans of $72 billion. The FDIC, which took control of SVB earlier this month, separately announced the FDIC received equity appreciation rights in First Citizens BancShares stock with a potential value of up to $500 million as part of the deal. 

AI goldrush.  Data from Pitchbook indicates that VC investments in AI startups has skyrocketed from $1.5 billion in 2020 to $5.9 billion since the beginning of 2022.  

BUSINESS OF THE FIRM

Lateral Moves: 

• Weil, Gotshal & Manges hired partner Brendan Moylan from Latham.

BOILERPLATE

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Lookzy: all your daily legal news in 0.1 billable hours. Plain English coverage of deals, litigation and legal trends trusted by lawyers at Cravath, Latham, Skadden, Gunderson and elsewhere.

Welcome to Lookzy. In today's Lookzy:

• Banking contagion spreads; will CS collapse?

• EU says company can't trademark the F-word

• Norfolk Southern sued over train derailment

• Ryan Reynolds' billion-dollar company sale

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"F------ Awesome". The EU's General Court rejected US clothing company FA World Entertainment Inc. appeal to trademark the phrase "F------ Awesome" for a number of products ranging from clothing to skateboards. The court's decision upholds a previous ruling by the EU Intellectual Property Office, whose issue was the lack of distinctiveness of the potential mark, rather than its vulgarity.

Right to repair. Tesla faces a slew of antitrust class action lawsuits alleging the company's restrictive "right-to-repair" policies violate federal and state competition laws. Plaintiffs argue that Tesla's policies force owners to rely on the automaker for repairs and part replacements, driving up costs and stifling independent repair shops.

East Palestine. The State of Ohio has filed a lawsuit against Norfolk Southern Corp. following the February 3rd train derailment, which led to significant environmental damage and threatened public health. Ohio's Attorney General accuses the railway company of negligence and violating state environmental laws.

Meta's industry fight. eBay urged a judge to block Meta from deposing an eBay corporate executive as Meta aggressively seeks information from rivals and others in the tech industry, such as VC firm Sequoia, related to Meta and the industry as a whole as Meta builds its defenses to an antitrust suit by the FTC. Quinn Emanuel is representing eBay and Davis Polk is representing Meta.

THE DEAL

Wheelin' and dealin' today's corporate news

Contagion spreads. As potential fallout from SVB and banking contagion, First Republic Bank is reportedly exploring strategic options including a potential sale. Although the bank has not officially commented on the rumors, sources claim that it is working with advisors to consider different options. First Republic Bank has a market capitalization of around $32 billion and could be an attractive acquisition target for larger financial institutions.

CS on the brink. Credit Suisse disclosed it would borrow as much as $53.7 billion from the Swiss National Bank to shore up its liquidity after an extremely volatile day for bank stocks. The Swiss National Bank pledged to backstop CS as credit default swaps on the Swiss bank reached levels not seen since the Great Financial Crisis.

SVB's parent. SVB Financial Group, the parent company of Silicon Valley Bank which was closed by regulators, is reportedly exploring seeking bankruptcy protection as one option for selling assets that include its investment bank and venture capital business. The Company is also exploring other restructuring and recapitalization alternatives.

Deadpool sells. T-Mobile announced it agreed to acquire Ryan Reynolds' prepaid wireless company Mint Mobile for $1.35 billion. Reynolds' reportedly owns 25% of the company. This acquisition will allow T-Mobile to expand its prepaid offerings and gain access to Mint Mobile's customer base. Reynolds' previously sold his gin company Aviation Gin to Diageo for $610 million in 2020.

BUSINESS OF THE FIRM

Lateral Moves:

• Allen & Overy hired partner Todd Beauchamp from Latham.

• Donald Flexner, co-founder of law firm Boies Schiller Flexner, dies.

Industry News:

• PwC partnered with AI startup Harvey and will give 4,000 legal professionals access to its generative legal AI technology. Have you tried Harvey? Let us know your thoughts if so.

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Lookzy: all your daily legal news in 0.1 billable hours. Plain English coverage of deals, litigation and legal trends trusted by lawyers at Cravath, Latham, Skadden, Gunderson and elsewhere.

Welcome to Lookzy. In today's Lookzy:

• SVB now under DOJ and SEC investigation

• Litigation funder sues company whose litigation it's funding

• A driverless tech company plans for IPO

• GPT-4 easily passes the Bar and LSAT

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Banking crisis followup. The Department of Justice and SEC are reportedly investigating SVB's failure, including executive trading activity. Separately, a proposed class action was filed by a Signature Bank shareholder against the bank and certain former executives. The complaint alleges that the defendants violated federal securities laws by making false or misleading statements about Signature Bank’s financial condition, risk management practices and exposure to fraud and money laundering schemes.

Illegal groupchats. The DOJ is reportedly investigating the collapse of TerraUSD (UST), an algorithmic stablecoin that was supposed to be pegged to the US dollar but lost its value in May 2022. The probe follows a civil fraud lawsuit filed by the SEC against Terraform Labs, the company behind UST, and its founder Do Kwon last month. The DOJ is investigating group-chat conversations among trading firms Jane Street, Jump Trading and Alameda Research about a possible bailout of TerraUSD. Prosecutors are looking into whether the firms violated any laws or regulations by discussing or coordinating their actions.

Painful tax bill. Amgen Inc. has been sued in a proposed class action by a pension fund accusing Amgen of waiting too long to tell investors it might owe the Internal Revenue Service $10.7 billion in back taxes and penalties. The lawsuit claims that Amgen misled investors about its financial health by failing to disclose that it received a notice of deficiency from the IRS in 2019 for its tax years 2010 to 2012 and that it faced similar assessments for its tax years 2013 to 2018.

Lit funding + meddling. Burford Capital Limited, the world’s largest litigation funder, has sued food distribution company Sysco Corp. over a $140 million investment it made into Sysco's antitrust litigation. Burford claims that Sysco breached their agreement by trying to settle price-fixing claims against major poultry processors and meatpackers for too low amounts without Burford’s consent. Burford seeks a court order to bar Sysco from settling those claims and to enforce an arbitration ruling that blocks Sysco from doing so. Sysco has countersued Burford, accusing it of meddling in the antitrust settlements and colluding with a law firm to file meritless lawsuits against Sysco.

THE DEAL

Wheelin' and dealin' today's corporate news

Banking on the shelf. Wells Fargo filed a $9.5 billion mixed securities Form S-3 shelf, which allows the bank to sell any combination of debt securities, warrants, units or certain other securities. The optionality for Wells Fargo to offer such securities comes at a time of deep volatility in the banking sector.

Big buy. Apollo Global Management agreed to acquire chemical company Univar Solutions Inc. for $8.1 billion in cash, including debt. Wachtell is representing Univar and Paul Weiss is representing Apollo.

Take (back) private. Blackstone Inc. agreed to buy Cvent Holding Corp., a cloud-based event-software provider, for $4.6 billion. The transaction will take Cvent private again after being taken public by Vista Equity Partners in 2021. Simpson Thacher is representing Blackstone, Goodwin Procter is representing the Special Committee and Kirkland is representing Cvent.

WeRide to IPO. Guangzhou WeRide Technology Co., a Chinese driverless technology startup, filed confidentially for an initial public offering in the US and is looking to raise as much as $500 million. The company is backed by Renault SA, Nissan Motor Co. and Mitsubishi Motors Corp., among other notable backers. WeRide develops autonomous driving software and hardware for passenger vehicles and minibuses. WeRide was valued at approximately $4.4 billion in March 2022.

BUSINESS OF THE FIRM

Lateral Moves:

• Quinn Emanuel hired partner Richard Godfrey from Kirkland & Ellis.

• Orrick hired partner Jamie Evans from Fenwick.

• DLA Piper hired a 30-lawyer patent team from Dentons.

Industry News:

• OpenAI released the next iteration of its AI chat program, GPT-4, which it noted passed both the universal bar exam (90th percentile) and LSAT (88th percentile). This prompted DoNotPay to once again make waves:

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Lookzy: all your daily legal news in 0.1 billable hours. Plain English coverage of deals, litigation and legal trends trusted by lawyers at Cravath, Latham, Skadden, Gunderson and elsewhere.

Welcome to Lookzy. Now that the dust is settling, we interrupt your regularly-scheduled programming with a special edition breaking down this past weekend’s banking crisis. Let’s dive in.

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WHAT HAPPENED?

After depositors withdrew over $42 billion in deposits from Silicon Valley Bank on Thursday, March 9th, regulators stepped in and closed the bank on March 10th.

Specifically, Silicon Valley Bank was put into receivership by regulators when the FDIC created the Deposit Insurance National Bank of Santa Clara which was transferred all insured deposits of SVB.

What contributed to this collapse?

• Duration mismatch: SVB was borrowing money with a short term duration (i.e., taking in deposits from customers) and lending that money out at a long term duration (investing in long term treasuries). This is, in essence, modern fractional reserve banking: take deposits in, lend them out and/or invest them. When the Federal Reserve dramatically increased interest rates over the last year, however, the value of those long term holdings dropped dramatically. If and when depositors become spooked and pull funds (exactly what happened), SVB is left with a potential shortfall. While SVB could have likely managed its portfolio better given its depositor base, unrealized losses at banks following the rapid rise in interest rates are a systemic issue (see below chart).

• Mismanagement: SVB's depositor base was somewhat unusual. Approximately 97% of the bank's deposits were uninsured (i.e., were greater than the $250,000 FDIC limit) as of December 31, 2022, higher than most of its peers. This reflects the business-focused customer base, including many startups and small businesses. Given the depositor base and general market activity, SVB could likely have moved faster in protecting the bank.

What is Silicon Valley Bank?

• Silicon Valley Bank was the 18th largest bank in the country before the collapse. Although named "Silicon Valley Bank" due to its location (and marketing focus), SVB is a normal, FDIC-insured bank.

How does the receivership process typically work?

• Typically, the FDIC receiver bank allows all FDIC-insured deposits (e.g., those accounts with $250,000 or less) to be withdrawn virtually immediately.

• All uninsured deposits receive a "certificate". Prior to the Fed's announcement, it was expected that all certificate holders would receive half of their uninsured amount immediately and receive the remainder over the following six months.

What's different about this process?

• The US Treasury, Federal Reserve and FDIC jointly announced that all assets - both insured and uninsured deposits - would be transferred to a bridge bank, Silicon Valley Bridge Bank, N.A., allowing all normal banking activity and protecting all customers.

• This action was taken pursuant to a "systemic risk exception".

• Shareholders and certain unsecured debtholders will not be protected. Senior management was terminated.

• The government noted that taxpayers would not be paying for the bailout; instead, this is being paid for out of the FDIC's Deposit Insurance Fund, and any costs exceeding that fund would be recovered by a special assessment on banks.

Why didn't another bank just acquire SVB?

• Early in the crisis, SVB announced it was working with Sullivan & Cromwell and Centerview Partners to sell itself.

• Rumors emerged that the government was blocking potential takeovers by "GSIBs", global systemically important banks (e.g., JP Morgan), due to concentration concerns in those banks.

• Following the government's announcements, however, interest in a takeover reportedly cooled.

• SVB's separate UK entity was acquired by HSBC for one single pound.

Was there any contagion?

• Countless startups and small businesses feared they would not be able to make payroll or pay expenses with their funds locked up in SVB, and many sought out separate short term loans as a fix. This problem was resolved following the government's announcements.

• A few large companies had hundreds of millions or even billions of dollars sitting with SVB, including Roku and Circle, the issuer of the USDC stablecoin. Following Circle's announcement that it had $3.3 billion with SVB on Friday night, the stablecoin USDC depegged, though it has now returned to par.

• Almost every other regional bank faced dramatic falls in share price and almost all were halted from trading. Many, like First Republic, took actions with other banks (e.g., JPM) to shore up liquidity.

What about Signature Bank?

• Signature Bank was also closed by regulators pursuant to the systemic risk exception. Former Congressman Barney Frank, who helped create the Dodd-Frank legislation regulating bank activity, was a director of Signature Bank.

• Frank noted that, "By Sunday, we had stabilized the situation ... But I believe the regulators, especially the New York state regulators, wanted to send the message that crypto is toxic." (Signature Bank was used by several prominent crypto companies).

What does this mean going forward?

• The Federal Reserve's announcement with the treatment of uninsured depositors is very noteworthy. In effect, the US government has now pledged to backstop all bank depositors going forward, even those above the FDIC limit. The Fed is now acting as the direct insurer of most bank deposits.

• Additionally, the Fed announced a change in how it treats collateral. The Fed created the Bank Term Funding Program (BTFP), which offers loans of up to one year to lenders that pledge collateral including US Treasuries and other "qualifying assets". Surprising, the Fed will value such other assets at par, rather than marking to market. This in effect juices the value of any collateral.

• The two above points raise important questions. Will the Fed serving as a backstop actually serve to increase moral hazard, as banks learn they can continue to take risks since the government will ultimately serve to make depositors whole? Will the Fed, instead of stopping interest rate increases or even cutting rates (as was done in the GFC), continue to raise rates due to its new treatment of collateral? Time will tell.

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Lookzy: all your daily legal news in 0.1 billable hours. Plain English coverage of deals, litigation and legal trends trusted by lawyers at Cravath, Latham, Skadden, Gunderson and elsewhere.

Welcome to Lookzy. In today's Lookzy:

• Tiger Woods' ex-gf's second suit against him

• One of the largest venture financing rounds ever

• Silvergate Bank 'voluntarily liquidates'

• S&C's $17 million January legal bill

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THE VERDICT

Arguing today's litigation news

Suing Tiger. Erica Herman, the ex-girlfriend of golf legend Tiger Woods, has filed a lawsuit against him in Florida, seeking to nullify a non-disclosure agreement that she signed when they started dating. The suit seeks to nullify the NDA under the federal Speak Out Act, which prevents the enforcement of NDAs in instances of sexual assault and harassment. This suit follows an October 2022 suit in which Herman seeks $30 million in damages related to an "oral tenancy agreement" allowing her to stay at Woods' residence, which Woods breached when he locked her out following their breakup.

Multi-district rules. General counsels and other legal officers at over 30 prominent companies including General Motors and Exxon Mobil signed on to a letter to the civil rulemaking body for the federal judiciary, urging it to have judges overseeing multi-district litigation direct plaintiffs’ attorneys to reveal more about their cases early on.

Epstein connection. JPMorgan Chase & Co. sued its former executive Jes Staley on Tuesday over his relationship with Jeffrey Epstein. The bank claimed that Staley hid the true nature of his ties with Epstein and exposed the bank to potential liability for aiding Epstein’s illegal activities. The lawsuit came after the US Virgin Islands sued JPMorgan last month for allegedly facilitating Epstein’s activities. Staley, who left JPMorgan in 2013 and became the CEO of Barclays until 2020, exchanged suggestive emails with Epstein.

Lawyers get paid. Plaintiffs’ lawyers in a capacitor antitrust litigation were awarded $66 million in fee awards by a California federal judge. This brings total lawyer compensation in the case to more than $187 million, which is 31% of the settlement amount. The case involved a global price-fixing scheme by capacitor manufacturers that resulted in settlements worth $605 million.

THE DEAL

Wheelin' and dealin' today's corporate news

Massive fundraising. Stripe is reportedly raising $6 billion at a $50 billion valuation in a financing round including VC firms Thrive Capital, General Catalyst, Andreessen Horowitz and Founders Fund. The funding round is one of the largest venture rounds in a private technology startup ever, though Stripe's valuation is down massively from the $95 billion at which it was once valued. As previewed in yesterday's Lookzy, proceeds will go toward helping early Stripe employees exercise their restricted stock units before they expire and then toward organizing a tender offer for employees to sell shares; the company reportedly does not intend to use this financing to raise corporate funds for Stripe. The size of this financing round suggests that a Stripe IPO is unlikely this year.

'Voluntary liquidation'. Silvergate Capital Corp., the parent company of Silvergate Bank, announced on Wednesday that it will shut down its bank operations and voluntarily liquidate its assets. The bank, which was one of the few major banks to support the cryptocurrency industry, cited recent industry and regulatory developments as the reason for its decision. Silvergate Bank was founded in 1988 and had more than $6 billion in assets as of December 2022. Silvergate hired Cravath for representation.

Uber spin-off. Uber Technologies Inc. is exploring either selling or spinning off its freight logistics division, Uber Freight, into a separate public company. The move would allow Uber to focus on its core businesses of mobility and delivery, while giving Uber Freight more autonomy and flexibility to grow.

Up for bidding. Several private equity firms, including Advent International Corp. and CVC Capital Partners, are considering bidding for a stake in Lufthansa Technik AG, a subsidiary of Deutsche Lufthansa AG that provides maintenance, repair and overhaul services for aircraft. The deal could value Lufthansa Technik at more than $5.9 billion and help Lufthansa recover from the pandemic-induced slump in air travel. Lufthansa has hired Goldman Sachs Group Inc. to advise on the sale process, which is expected to start in the second quarter of 2023.

BUSINESS OF THE FIRM

Lateral Moves:

• Former SEC commissioner Allison Herren Lee is joining whistleblower law firm Kohn, Kohn & Colapinto as of counsel.

• Jones Day hired partner Lily Zhang from Mintz.

Industry News:

• Sullivan & Cromwell billed FTX $16.9 million for 14,569 hours of work in January on the crypto exchange’s bankruptcy case, according to a report citing court filings.

BOILERPLATE

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Lookzy: all your daily legal news in 0.1 billable hours. Plain English coverage of deals, litigation and legal trends trusted by lawyers at Cravath, Latham, Skadden, Gunderson and elsewhere.

Welcome to Lookzy.  In today's Lookzy:

• FIFA and US Soccer are back in the antitrust seat

• More legal drama for Twitter and Elon Musk

• Stripe raising money just to pay taxes

• An acquisition approved over the SEC's objections

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THE VERDICT

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No goalkeeping.  An antitrust lawsuit against FIFA and the US Soccer Federation was reinstated by the 9th Circuit, when the court found that the plaintiffs sufficiently alleged a violation of the Sherman Act and reversed a lower court’s decision to dismiss the case. The suit claims that FIFA and USSF conspired to create a “closed league” system that bars lower-division soccer clubs and players from competing with Major League Soccer, the only top-tier league in the US. 

Bitcoin ETF.  DC Circuit appellate judges questioned the SEC on its decision to reject a proposed Bitcoin exchange-traded fund when it had earlier approved a similar product based on Bitcoin futures. Grayscale Investments LLC had originally sued the SEC when it originally rejected the plan to convert its $14 billion Bitcoin trust into an EFT.  Donald B. Verrilli Jr. of Munger Tolles argued on behalf of Grayscale.  

FTC v Twitter.  The FTC reportedly demanded that Twitter turn over internal communications related to Elon Musk and provide detailed information about its extensive layoffs.  The FTC is purportedly concerned that the layoffs could compromise Twitter's ability to protect users and comply with a prior consent decree. FTC demands also included providing the names of all journalists with access to company records related to the "Twitter files".  

Suit filed.  As previewed yesterday, the DOJ indeed filed suit yesterday to block JetBlue's acquisition of Spirit Airlines.  Attorney General Merrick Garland said the proposed $3.8 billion merger "will lead to higher fares and fewer seats, harming millions of consumers on hundreds of routes" while the JetBlue CEO countered that the merger "will create a national low-fare, high-quality competitor to the Big Four carriers." Shearman & Sterling is representing JetBlue and Paul Weiss is representing Spirit.  

THE DEAL

Wheelin' and dealin' today's corporate news

Paying the taxman.  Stripe Inc. reportedly informed investors that it plans to use approximately $3.5 billion of the funds it is raising in its latest financing round in order to cover extensive tax withholding charges related to employees' options. $2.3 billion will be used to cover Q1 tax withholdings, $500 million will be used for the remainder of 2023 and $700 million will be used in in 2024.  Stripe has encountered serious issues with its equity program as early employees options begin to expire, prompting Stripe to seek liquidity within the next year.  

Consortium sale.  A consortium of investors led by Blackstone Group Inc. and Thomson Reuters Corp. has reportedly launched the sale of its 10% stake in London Stock Exchange Group Plc, worth about $2 billion. The consortium acquired the stake in 2018 as part of LSEG’s purchase of financial data provider Refinitiv, which was jointly owned by Blackstone and Thomson Reuters. The sale is expected to attract interest from sovereign wealth funds and other long-term investors.

Over SEC objections.  A bankruptcy judge approved a proposal from Binance.US, the U.S. affiliate of the world’s largest cryptocurrency exchange Binance, to acquire Voyager Digital Ltd., a bankrupt Canadian crypto broker, for $1.3 billion.  The judge approved the transaction over the objections of the SEC, which cited concerns over unregistered securities offerings and ongoing investigations into Binance and its affiliates. The judge dismissed the SEC's objections as vague and unsubstantiated.

Expensive coupons.  Quotient Technology Inc., the owner of Coupons.com and other digital marketing platforms, is reportedly exploring a sale that could value it at more than $320 million. The company's collapse of advertising revenue is likely driving the sale.

BUSINESS OF THE FIRM

Lateral Moves: 

• Latham hired partners Ian Nussbaum, Abigail Smith and Gabe Fleet from Cooley, Hogan Lovells and iHeartMedia, respectively.

• Paul Hastings hired partner Garreth Wong from Shearman & Sterling.

Industry News:

• Adam Hakki will replace David Beveridge as leader of Shearman & Sterling following the firm's announcement that it has called off merger talks with Hogan Lovells.

• Quinn Emanuel opened an office in Beijing, its second in China.

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Lookzy: all your daily legal news in 0.1 billable hours. Plain English coverage of deals, litigation and legal trends trusted by lawyers at Cravath, Latham, Skadden, Gunderson and elsewhere.

Welcome to Lookzy. In today's Lookzy:

• The DOJ does not want JetBlue to have Spirit

• Flip phone = cruel and unusual punishment?

• 2023's biggest IPO yet

• Recent trends in private equity lending

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THE VERDICT

Arguing today's litigation news

DOJ loves Spirit. The Department of Justice is expected to file an antitrust lawsuit this week to block JetBlue Airways Corp.’s $3.8 billion merger with Spirit Airlines Inc. Regulators are expected to argue that the deal would harm competition and raise prices for consumers by eliminating Spirit as a low-cost rival. JetBlue said it is working with the DOJ to address its concerns and believes the merger would benefit travelers by creating a stronger network and more choices.

Flip phone only. Former FTX CEO Sam Bankman-Fried, on bail facing extensive fraud charges, may be allowed to use only a flip phone with no internet capability and a basic laptop with limited functions while on bail, following unconfirmed reports that SBF may have been communicating with witnesses via Signal and accessing cryptocurrency accounts. SBF’s lawyers agreed to the proposal but asked for some exceptions, such as allowing him to use email and Zoom for legal purposes.

Church and State. The Supreme Court declined to hear an appeal by the city of Ocala, Florida, which was sued by an atheist group for holding a prayer vigil in 2014 after a shooting that injured three children. The group claimed that the city violated the First Amendment’s separation of church and state by organizing and promoting the event. The city argued that the atheists lacked standing to sue because they did not attend or see the vigil. The lower courts ruled that the atheists had standing and allowed the case to proceed, which the city appealed.

$122M to go away. Media and entertainment company Paramount Global settled a shareholder lawsuit that challenged its merger of Viacom with CBS Corp in 2021. The settlement will provide $122.5 million in cash and stock to the plaintiffs, who claimed that the merger undervalued Paramount’s shares and favored its controlling shareholder National Amusements Inc. The settlement also includes corporate governance reforms and an agreement to end all litigation related to the merger.

THE DEAL

Wheelin' and dealin' today's corporate news

Big buyout. Silver Lake Management LLC and the Canada Pension Plan Investment Board submitted a $12.4 billion buyout bid for software company Qualtrics International Inc. Germany's SAP, currently the majority investor in Qualtrics owning 71% of the company, had announced in January that it was considering offloading its ownership of Qualtrics as part of a restructuring after acquiring its ownership for $8 billion in 2019.

Big IPO. United Arab Emirates-backed oil company Abu Dhabi National Oil Co. raised $2.5 billion in an initial public offering, floating 5% of its gas processing unit ADNOC Gas in what appears to be the year's largest global IPO to date. The IPO values ADNOC Gas at about $50 billion, roughly in line with Occidental Petroleum Corp.

Activist settlement. Bath & Body Works Inc. and activist hedge fund Third Point LLC reached an agreement in which the company agreed to add a third independent director to its board. As part of the deal, Third Point will withdraw its nominations and support Bath & Body Works’ slate at the upcoming annual meeting, ending the proxy fight.

PE lending market. Private equity firms are lending less as interest rates rise and demand cools. According to a study by Reuters, private equity loans now average an interest rate of up to 12%, up from around 7.5% in 2021. This has made conventional bank loans more attractive for borrowers, especially in sectors such as technology and healthcare that have performed well during the pandemic. Some private equity firms such as Apollo Global Management Inc. and Blackstone Group Inc. have shifted their focus to other areas of business such as insurance and real estate.

BUSINESS OF THE FIRM

Lateral Moves:

• DLA Piper hired a team of 10 data scientists from Faegre Drinker Biddle & Reath as it launches a new Artificial Intelligence and Data Analytics practice.

• Orrick hired partner Wes White from IP boutique Reichman Jorgensen Lehman & Feldberg.

• Arnold & Porter hired partner Marina Richter from O'Melveny & Myers.

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Welcome to Lookzy. In today's Lookzy:

• Sue Reddit; ask for legal advice regarding suit on Reddit

• The DOJ will start offering "discounts"

• Multiple massive AI funding rounds

• Baker McKenzie partner steps down amid racism probe

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THE VERDICT

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Discounts for Signal. The US Department of Justice announced that it will take a tougher stance on companies that fail to produce evidence from personal devices and messaging apps in criminal investigations. The DOJ’s Criminal Division will offer discounts on fines to companies that have clear policies and procedures to preserve and collect such data, and impose harsher penalties on those that do not. The new policy aims to address the challenges posed by the widespread use of encrypted and ephemeral communication platforms by employees.

Ripple v. SEC. Ripple Labs Inc., the company behind XRP cryptocurrency, has invoked a recent Supreme Court ruling to bolster its defense against a high-profile lawsuit filed by the SEC. Ripple Labs filed a notice of supplemental authority citing the Supreme Court's recent ruling in Bittner v. United States, which in part hinged on 'fair notice' under the Due Process Clause. One of Ripple Labs' arguments similarly hinges on the fair notice defense. Kellogg Hansen and Debevoise are representing Ripple Labs.

Cyberattack liability. President Biden released a national cybersecurity strategy that seeks legislation to hold software makers liable for data breaches. The plan aims to address the growing threat of cyberattacks by foreign adversaries and criminal groups. Currently, software providers often escape legal liability by pointing to contracts that limit their responsibility for cyber incidents. The plan is supported by some lawmakers and cybersecurity experts, but opposed by some industry groups and software companies that argue it would stifle innovation and increase costs.

WallStreetBets. The founder of WallStreetBets, the Reddit community which exploded in popularity during the retail 'meme stock' trading phase of early COVID, posted on the r/law subreddit on Reddit seeking help in understanding details about IP ownership related to his recent suit against Reddit. In his suit, the WSB founder claims that Reddit wrongfully banned him from moderating the WSB subreddit which prevented him from trademarking the brand, which other subreddit-based brands have successfully done.

THE DEAL

Wheelin' and dealin' today's corporate news

AI funding #1. Stability AI Ltd., an OpenAI rival that created AI model Stable Diffusion, is reportedly seeking to raise funds at a $4 billion valuation. The company claims its models are more efficient and scalable than OpenAI’s GPT-3, Codex and DALL·E. The fundraising round is led by Sequoia Capital and includes Andreessen Horowitz and Founders Fund as investors. It isn't yet clear how much the company is seeking to raise in this round.

AI funding #2. Character.ai, a generative artificial intelligence chatbot company, has raised more than $200 million in a funding round led by Andreessen Horowitz, valuing it at $1 billion. The company uses natural language processing and deep learning to create realistic and engaging conversations with users across various domains.

Italian broadband. Italy’s state-backed lender Cassa Depositi e Prestiti SpA and Macquarie Group Ltd. have made a 20 billion Euro offer for Telecom Italia SpA’s landline network. The offer matches a rival bid by KKR & Co. that values the network at €20 billion ($22 billion), but offers more in cash. The deal would create a single national broadband operator in Italy.

Juul exit. Altria Group, Inc., the maker of Marlboro cigarettes, has exchanged its 35% stake in Juul Labs Inc., the e-cigarette company, for intellectual property rights to some of Juul’s heated tobacco products. The deal marks the end of Altria’s investment in Juul, which has faced regulatory scrutiny and lawsuits over its role in the youth vaping epidemic. Altria had paid $12.8bn for its stake in Juul in 2018, but wrote down most of its value after Juul’s sales plummeted.

BUSINESS OF THE FIRM

Industry News:

• The managing partner of Baker McKenzie's Belgium offices has reportedly stepped down and left the firm a racism probe in the firms Belgium offices initiated due to a departing associate's tell-all email.

BOILERPLATE

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Lookzy: all your daily legal news in 0.1 billable hours. Plain English coverage of deals, litigation and legal trends trusted by lawyers at Cravath, Latham, Skadden, Gunderson and elsewhere.

Welcome to Lookzy. In today's Lookzy:

• A Russian billionaire's $380M art suit

• First of its kind IVF litigation

• Billion dollar bet on Adani Group not being a fraud

• Hogan and Shearman call off their merger talks

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ECON SNAPSHOT

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THE VERDICT

Arguing today's litigation news

Guilty verdict. Alex Murdaugh, a former attorney from South Carolina, was found guilty of murdering his wife Maggie and his son Paul in 2021. The jury reached the verdict after three hours of deliberations and five weeks of testimony from more than 70 witnesses in a highly publicized trial. Murdaugh had hired a hitman to kill him in an insurance fraud scheme, but survived and confessed to his involvement in the killings. He faces potential life in prison without parole at sentencing.

Billionaire's art. A US judge dismissed most of Russian billionaire Dmitry Rybolovlev's claims in his $380 million suit against Sotheby’s for allegedly helping his former art dealer Yves Bouvier overcharge him by hundreds of millions of dollars on 15 pieces of world-class art, including paintings by Picasso, Modigliani, Gauguin and Rothko. The judge allowed Rybolovlev to pursue two counts of fraud and one count of aiding and abetting breach of fiduciary duty. The judge also advised both parties to settle their remaining claims outside of court to avoid a costly and “potentially embarrassing trial”.

Prosecution not deferred. Ericsson AB agreed to pay about $207 million to resolve criminal charges that it violated a 2019 deferred prosecution agreement with the Department of Justice. The DOJ said that Ericsson failed to implement an effective compliance program and continued to engage in bribery and corruption in several countries. The Swedish telecom equipment maker also admitted that it made false statements to the DOJ and the SEC.

IVF litigation. A California couple sued Huntington Reproductive Center for allegedly implanting an embryo that carries a rare gene that causes deadly stomach cancer. The couple say they chose in vitro fertilization to avoid passing on the gene to their child, as Jason has a family history of the disease. The lawsuit claims that the clinic failed to test the embryos for the gene before transferring them to Melissa’s uterus, and then falsified records to hide its error. The couple discovered that their son, who is now 18 months old, has inherited the gene after doing a home DNA test. They are seeking unspecified damages for medical expenses, emotional distress and fraud.

THE DEAL

Wheelin' and dealin' today's corporate news

Exploring options. PE firm Leonard Green & Partners LP is reportedly exploring a sale of Pro Mach Group Inc., a US packaging company, which could value Pro Mach at around $5 billion. Leonard Green is also considering the sale of a minority stake in Pro Mach as an alternative to an outright sale. Leonard Green bought Pro Mach from another buyout firm, AEA Investors LP, for about $2.2 billion, including debt, in 2018.

Regulatory delay. TD Bank disclosed that its planned $13.4 billion acquisition of US-bank First Horizon Corp has been delayed by regulatory reviews. The deal, which was announced in October 2022 and expected to close in the first half of 2023, would make TD the 6th largest US bank by assets. TD said it remains committed to the transaction and expects to receive all necessary approvals in due course.

Adani Group. GQG Partners LLC, a US-based investment firm, has acquired shares worth $1.87 billion in six companies of the Adani Group, the Indian conglomerate which was forced to scrap a $2.5 billion share sale and lost $100 billion in market cap after a short seller reported alleged Adani Group was one of history's biggest frauds. The deal is one of the largest foreign portfolio investments in India and gives GQG Partners a stake of about 5% in each of the Adani companies.

EU antitrust. Microsoft Corp. is expected to secure EU antitrust approval for its $69 billion acquisition of Activision Blizzard with its offer of licensing deals to rivals. The company struck agreements with Nintendo and Nvidia to allow them access to some of Activision’s popular games. The deal still faces regulatory headwinds in Britain, where the UK competition agency has suggested that Microsoft divests Call of Duty to address its concerns, and the US, where the FTC has asked a judge to block the deal.

BUSINESS OF THE FIRM

Lateral Moves:

• Maryland’s US District Judge George Hazel is joining Gibson Dunn.

• SCOTUSblog founder Tom Goldstein announced he is leaving his Supreme Court practice and firm Goldstein & Russell, which has renamed to Goldstein, Russell & Woofter.

• Shearman & Sterling's 20-person Munich office is leaving Shearman to become a new Munich office for Morgan Lewis.

Industry News:

• Hogan Lovells and Shearman & Sterling have called off merger talks that would have created a legal behemoth with more than 3,000 lawyers globally and around $3.6 billion in revenue. The firms noted that after careful consideration, they had mutually agreed that a combination at this time was not in the best interest of either firm.

BOILERPLATE

Alright, back to billing. That's all, folks!

Lookzy: all your daily legal news in 0.1 billable hours. Plain English coverage of deals, litigation and legal trends trusted by lawyers at Cravath, Latham, Skadden, Gunderson and elsewhere.

Welcome to Lookzy. In today's Lookzy:

• Kobe Bryant family's $29M settlement

• The federally-regulated bank down 50% pre-market today

• Activists nominate directors at Salesforce

• Fee roundup: some of this week's blockbuster legal fees

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THE VERDICT

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Kobe. The family of late basketball star Kobe Bryant has been awarded nearly $29 million in a settlement with Los Angeles County over photos taken by sheriff’s deputies at the scene of his fatal helicopter crash in January 2020. The settlement also covers Bryant’s daughter Gianna and seven other victims who died in the crash. The photos were allegedly shared among deputies and shown to others outside the department.

McDonald's. A federal judge has dismissed a lawsuit by McDonald’s Corporation shareholders who accused the board of directors of breaching their fiduciary duties by approving a generous severance package for former CEO Steve Easterbrook. Easterbrook was fired in 2019 for having a consensual relationship with an employee, but later revealed to have had sexual relationships with three other subordinates and lied about it. The judge ruled that the shareholders failed to show that the board acted in bad faith or with gross negligence.

Tipping Congressman. A federal prosecutor alleged that former US Representative Chris Collins abused his position of trust by tipping off his son about confidential information he learned as a board member of an Australian biotechnology company. Collins pleaded guilty in 2019 to securities fraud and lying to the FBI for helping his son and others avoid $800,000 of losses by selling stock in Innate Immunotherapeutics Ltd before news of a failed drug trial became public. He is appealing his 26-month prison sentence.

Pharma v. pharma. Genentech Inc, a subsidiary of Roche Holding AG, filed a suit against Biogen Inc for allegedly breaching a contract over royalties for a blockbuster multiple sclerosis drug called Ocrevus. Genentech claims that Biogen owes it more than $500 million in unpaid royalties and interest for Ocrevus, which was developed by Genentech and licensed to Biogen in 2003. Genentech accuses Biogen of improperly deducting certain expenses from the royalty payments and failing to provide adequate documentation.

THE DEAL

Wheelin' and dealin' today's corporate news

CRM barbarians. Elliott Management Corp., an activist investor group, has reportedly nominated a slate of directors to Salesforce Inc.'s board, just hours before the company announced quarterly earnings. Elliott is one of several activist hedge funds which owns a multi-billion dollar stake in Salesforce and has been pushing for changes in its strategy and governance. Elliott's Jesse Cohn is reportedly likely to be one of the nominated directors.

Solo NYC listing. Arm Ltd., the chip designer owned by SoftBank Group Corp., has ruled out a UK listing for now and is focused on going public in the US. The company said it has made progress in preparing for an IPO by March 2024, after its previous plan to sell to Nvidia Corp. was blocked by regulators. Arm may reportedly pursue a secondary listing in London later, but that path is more unlikely.

Bank run. Silvergate Capital Corp., a crypto-friendly federally-regulated bank and public company, is down over 50% in pre-market trading after delaying filing its annual report due to potentialinquiries from the DOJ, Congress and bank regulators over its dealings with FTX and Alameda Research. The bank disclosed that it received a grand jury subpoena from the DOJ’s fraud unit in January 2023, requesting documents related to its accounts for FTX and Alameda. The bank also said it expects to receive similar requests from other authorities.

Spin-off. German manufacturing company Siemens AG announced that it will spin off its motors and drives business into a new company called Innomotics. The move is part of Siemens’ strategy to focus on its core businesses of digital industries, smart infrastructure, mobility and medical devices. Innomotics will have annual revenues of about $6.8 billion and employ around 24,000 people worldwide.

BUSINESS OF THE FIRM

Lateral Moves:

• Jenner & Block named litigator Lindsay Harrison as head of its Washington DC office.

Fee Roundup:

• A court upheld a $503 million attorneys’ fee award for a $1.5 billion class settlement with Syngenta AG in litigation over genetically modified corn.

• Blackstone Inc. paid $53.4 million to law firm Kirkland & Ellis in 2022, the company disclosed in a securities filing.

• KKR & Co. Inc. gave $18.6 million in total compensation to its new general counsel, Kathryn “Katie” King Sudol, in 2022, according to a securities filing.

BOILERPLATE

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Alright, back to billing. That's all, folks!

Lookzy: all your daily legal news in 0.1 billable hours. Plain English coverage of deals, litigation and legal trends trusted by lawyers at Cravath, Latham, Skadden, Gunderson and elsewhere.

Welcome to Lookzy.  In today's Lookzy:

• Federal prosecutors' investigation into Commanders' Snyder

• Billion-dollar vape purchase

• A trial literally held in the metaverse

• ChatGPT writes an entire legal brief

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THE VERDICT

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Secret loans.  The US Attorney’s Office for the Southern District of New York is reportedly investigating whether Commanders NFL team owner Dan Snyder violated federal law when he allegedly took a secret $55 million loan from Bank of America without informing his former minority partners. The former partners, who sold their stakes to Snyder last year, are suing him for breach of contract and fiduciary duty. Snyder even charged the team $4.5 million to put its logo on his private jet.

Student debt.  The Supreme Court is reviewing the legality of President Biden’s plan to cancel $10,000 in federal student loan debt for most borrowers. The Biden administration argues that the plan is authorized under a 2003 law called the HEROES Act, which allows student loan debt relief during wartime or national emergencies. However, at yesterday's oral arguments, some conservative justices expressed skepticism of this interpretation and questioned whether Congress intended to give such broad authority to the executive branch. 

Cost of bribery.  Mining firm Glencore Plc has been ordered by a US judge to pay $700 million as a criminal punishment for a global bribery scheme. The company pleaded guilty in May 2022 to one count of conspiracy to violate the Foreign Corrupt Practices Act, admitting that it paid millions of dollars in bribes to foreign officials in Nigeria, Chad, Venezuela and other countries to secure access to oil and other commodities. The sentence is part of a global settlement with US, UK and Brazilian authorities that could cost Glencore up to $1.5 billion.

Metaverse trial.  A Colombian court has held a hearing in the metaverse, using Meta’s Horizon Worlds technology and virtual avatars to represent the participants. The magistrate of the court said that this was an innovative way to ensure access to justice and due process during the pandemic. Check out screenshots and a video here.  

THE DEAL

Wheelin' and dealin' today's corporate news

Vaping is expensive.  Altria Group, the parent company of Marlboro, is reportedly in talks to buy e-cigarette startup NJOY Holdings for at least $2.75 billion. The deal would give Altria a second chance in the vaping market after its investment in Juul Labs turned sour. Altria reportedly also plans to sell its stake in Juul as part of a settlement with the US government over allegations that it helped fuel a youth vaping epidemic.

Big buy.  Apollo Global Management Inc. is reportedly in advanced talks to acquire Arconic Corp., a maker of aluminum products for the aerospace and automotive industries. The deal could value Arconic at around $4.5 billion, including debt. Arconic was spun off from Alcoa Corp. in 2020 and has been struggling with weak demand due to the pandemic. 

$10B shelf.  Graphics and computing company Nvidia Corp filed for a Form S-3 mixed shelf offering of up to $10 billion, providing the company flexibility to issue equity, debt and other securities in the face of a strong stock performance this year. Cooley represented Nvidia in the offering.

NBA M&A.  Marc Lasry, co-owner of the Milwaukee Bucks and CEO of Avenue Capital Group, agreed to sell his stake in the NBA team to Dee and Jimmy Haslam, owners of the Cleveland Browns. The deal values the Bucks at $3.5 billion, making them one of the most valuable franchises in sports. Lasry bought a majority stake in the Bucks for $550 million in 2014 and helped them win their first championship in 50 years last year.

BUSINESS OF THE FIRM

Lateral Moves: 

• The CFTC hired Akin Gump partner Ian McGinley, formerly a New York prosecutor with expertise in cryptocurrency and cyber crimes, to lead its enforcement unit.

Industry News: 

• Cravath Swaine & Moore is launching an English law practice in London with a finance team poached from Shearman & Sterling.

• Perkins Coie announced it is laying off 58 business professionals across its US offices, citing market conditions.

Something interesting:  Law professor Joe Regalia and a team used AI tool ChatGPT to write an entire legal brief from start to finish.  Check out the full thread with surprising results here.  

BOILERPLATE

Alright, back to billing.  That's all, folks!

Lookzy: all your daily legal news in 0.1 billable hours. Plain English coverage of deals, litigation and legal trends trusted by lawyers at Cravath, Latham, Skadden, Gunderson and elsewhere.

Welcome to Lookzy. In today's Lookzy:

• Will Taylor Swift fans suing Ticketmaster be sent to arbitration?

• Paying billions to settle Ponzi scheme allegations

• The FCC's effective killing of a $5.4 billion deal

• The big drop in the bar passage rate

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ECON SNAPSHOT

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THE VERDICT

Arguing today's litigation news

Compelled arbitration. Live Nation and Ticketmaster are seeking to dismiss a lawsuit by Taylor Swift fans who were unable to buy tickets for her Eras Tour. Live Nation argues that the fans agreed to arbitrate their claims when they signed up for Ticketmaster’s Verified Fan program. The fans' lawsuit accuses Live Nation of fraud and antitrust violations for allegedly manipulating prices and inventory during the ticket sale in November 2022.

CFPB's future. The Supreme Court agreed to review a federal appellate decision holding that the Consumer Financial Protection Bureau was unconstitutionally funded, taking up a case that could determine the fate of the consumer watchdog and its budgetary independence.

Billon Dollar Ponzi. Three banks, including TD Bank, agreed to pay $1.35 billion to settle a lawsuit accusing them of aiding Allen Stanford’s $7 billion Ponzi scheme. The scheme, which ran for 20 years and involved more than 30,000 accounts, collapsed in 2009 during a federal investigation. Stanford was sentenced to 110 years in prison for defrauding investors from over 100 countries. The settlement is intended to benefit thousands of victims who lost their life savings.

EU antitrust. EU antitrust regulators are set to warn Broadcom about the possible anti-competitive effects of its proposed $61 billion bid for cloud computing company VMware. The deal, which was announced in May 20222, would mark Broadcom’s attempt to diversify into the enterprise software segment. The European Commission is expected to send a statement of objections to Broadcom by mid-March, raising concerns about reduced innovation and higher prices for customers. The deal has also faced scrutiny from UK regulators and has been delayed by three months.

THE DEAL

Wheelin' and dealin' today's corporate news

Killing deals. The Federal Communications Commission put off consideration of hedge fund Standard General LP’s proposed purchase of broadcaster Tegna Inc., a delay that could kill the $5.4 billion transaction. The FCC is concerned that the transaction proposed a year ago might trigger price increases for consumers as TV stations boost charges for cable providers. The deal might also reduce local content on TV stations, the FCC said, and ordered a hearing.

Focused deal. PE firm Clayton, Dubilier & Rice agreed to buy Focus Financial Partners Inc., a partnership of independent wealth management firms, for $7 billion. The deal will allow Focus to continue operating as an independent company with its existing management team and partner firms. Kirkland and Debevoise is representing CD&R and Vinson & Elkins is representing Focus.

Solar sale. Utility company American Electric Power agreed to sell its unregulated, contracted renewables portfolio to IRG Acquisition Holdings, backed by Blackstone Infrastructure. The 11-state wind and solar portfolio is valued at approximately $1.5 billion, including debt. Norton Rose Fulbright is representing IRG and Hunton Andrews Kurth is representing AEP.

Black gold. Baytex Energy Corp., a Canadian oil and gas company, is reportedly close to agreeing to acquire its US peer Ranger Oil Corp for approximately $2.5 billion, including debt. The deal would create a North American energy producer with assets in Alberta, Texas and Oklahoma. The transaction could be announced as soon as this week, but it is not yet final.

BUSINESS OF THE FIRM

Lateral Moves:

• Paul Hastings hired former Goodwin Procter managing director Chris Davis to become its new chief operating officer after abandoning plans to bring on Proskauer Rose's former COO, Jonathan O'Brien, who was accused of stealing trade secrets

Industry News:

• The American Bar Association reported that only 78.1% of U.S. law school graduates who took the bar exam for the first time in 2022 passed it, a 6% drop from 2020. The ABA attributed this decline to lower scores on the Multistate Bar Examination, which accounts for half of most states’ bar exams. The ABA also noted that some states granted diploma privilege to graduates due to the COVID-19 pandemic, which may have skewed the pass rate data.

BOILERPLATE

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Alright, back to billing. That's all, folks!