A daily look at the legal news and business of law:
The AIG Unit Whose Trades Brought the Company Down Now Adds to Its Woes
According to a new lawsuit, American International Group's (AIG) Financial Products division, then led by the now-infamous Joseph Cassano, discriminated against older women, firing them and paying them less than men and younger women with more "curb-appeal."
Although this suit should not be prejudged, Wall Street is famous for being a "boys club" with a long history of sexual discrimination. So much so, in fact, that a savvy firm interested in hiring some of the female talent laid off in the financial meltdown (indeed, allegedly laid off on the basis of gender) might want to market itself as "one of the few Wall Street firms NOT sued for sex discrimination."
Will CDSs Bring Down Greece Like They Toppled AIG?
A couple of days ago, both Peter Cohan and I wrote about how Goldman Sachs (GS) and others sold lousy securities and then bought Credit Default Swap "insurance" from AIG, betting those loans would go bad. Those CDSs were fundamentally what brought AIG down.
Now word comes that not only did Goldman arrange deals with Greece that helped hide its true financial condition but, along with other banks, it created an index fund that enabled the market to bet, via CDSs, that Greece would go bust. Crucially, the fund was set up after the Goldman deals, but before the Greek meltdown became apparent -- does that mean the banks realized the deals with Greece would enable it to reach a precarious financial condition in the near future, such that the index and related CDSs would be a profitable venture?
How many other situations are we going to uncover in which banks enable a company or a country to continue to race toward the brink of financial ruin through "innovative" financial products, only to discover the banks were pre-positioning themselves to profit when the company or country -- that is, their erstwhile client -- teeters and perhaps plunges over the edge?
DOJ to Target Bribing Foreign Officials Even More Aggressively
The Foreign Corrupt Practices Act has been getting more vigorously enforced of late. Now comes word from the head of the relevant Department of Justice division that his department may grow another 50% in the next year or two.
Florida Judge Cuts Philip Morris's Liability by 90%
Recently Philip Morris (MO) lost a huge case to a Florida smoker, and faces $300 million in mostly punitive damages. Now the cigarette maker can breathe easier; the judge reduced the damages to $38.9 million.
And in the Business of Law:
White & Case partners continue to jump ship; revenues were up at Covington & Burling but significant hiring meant profits per partner (PPP) were down; Jenner & Block had a terrific year, with PPP spiking 33%; and DLA Piper's U.S. operations saw revenue plummet.