JPMorgan, Simpson Sued Over Mistake in GM Loan: Business of Law 

It was only a matter of time.

One of the participants in a $1.5 billion term loan that JPMorgan Chase & Co. made to General Motors Corp. before its bankruptcy is now suing the bank and its lawyers at Simpson Thacher & Bartlett LLP.

The reason: a mistake in the recording of the security interest in the loan, initially made by an associate at Mayer Brown LLP but not caught by those reviewing the documents at both JPMorgan and Simpson Thacher. That mistake eradicated the security interest that would have paid the loan in full despite the carmaker’s bankruptcy in 2009.

The Employees’ Retirement System of the City of Montgomery, Alabama, filed a class action on July 30 in federal court in Manhattan against the bank and Simpson Thacher. The pension fund wants to represent what it says are 400 participants in the term loan.

Because the lawsuit could run up against the statute of limitations, the plaintiffs are saying that the bank hadn’t notified the participants about the error. The pension fund claims it was unaware of the mistake until May, when it was served with a lawsuit to recover payments made on the loan.

The retirement system is asserting claims for breach of contract and gross negligence against the bank as agent on the loan, and is suing Simpson Thacher for malpractice.

The bank didn’t immediately return a call seeking comment on the lawsuit. Simpson Thacher declined to comment. Mayer Brown wasn’t named as a defendant in the suit.

The lawsuit is Employees’ Retirement System of the City of Montgomery v. JPMorgan Chase Bank NA, 15-6002, U.S. District Court, Southern District of New York (Manhattan).

NCAA Athletes Keep Amateur Status Pending O’Bannon Appeal

College athletes will remain amateurs — for now.

An order set to take effect Saturday that would allow athletes to be paid was put on hold by the U.S. Court of Appeals in San Francisco.

The players’ status won’t change while the National Collegiate Athletic Association appeals last year’s ruling that it violated antitrust laws by preventing schools from sharing broadcast and licensing revenue with football and men’s basketball players.

“Without expressing a view as to either party’s likelihood of success on the merits, the court grants a stay of the district court’s injunction in this case,” the appeals court said in its order Friday.

The lawsuit dates back to 2009, when former UCLA basketball player Ed O’Bannon sued the NCAA for licensing his name and likeness in video games and television broadcasts. The NCAA and its five richest leagues — the Atlantic Coast, Big 12, Big Ten, Pac-12 and Southeastern conferences — are guaranteed more than $31 billion in current broadcast contracts.

The NCAA contends athletes are amateurs and that while many receive scholarships to attend their schools, paying them would undermine the purpose and popularity of college sports.

U.S. District Judge Claudia Wilken on Aug. 8 ruled largely in favor of O’Bannon, calling the NCAA a cartel that limits what schools can offer athletes.

Sathya S. Gosselin, an attorney for O’Bannon, didn’t immediately respond to a voice-mail message seeking comment on Friday’s order.

The case is O’Bannon v. National Collegiate Athletic Association, 4:09-cv-03329, U.S. District Court, Northern District of California (Oakland).

Comings and Goings

SEC’s Insider-Trading Head Hawke to Step Down After 16 Years

Daniel Hawke, who has headed the U.S. Securities and Exchange Commission’s insider-trading unit since it was created in 2010, is leaving the agency after 16 years. He plans on joining Arnold & Porter LLP as a partner.

Deputy chiefs Robert Cohen and Joseph Sansone will jointly run the unit, which Hawke has led out of the SEC’s Philadelphia office, the agency said in a statement July 29.

After the 2008 credit crisis, the SEC created specialized units to focus on problem areas. Other units include complex financial instruments and asset management.

Under Hawke’s direction, the SEC brought a case that imposed a record civil penalty against a UBS AG unit’s dark pool in January. His group brought an emergency action against a Bulgarian trader just three weeks after a fake regulatory filing sent shares of Avon Products Inc. soaring in May.

New Hires at Vinson & Elkins, DLA Piper and Sidley Austin

Oil and gas transactional lawyer Bryan Loocke has joined Vinson & Elkins as a partner in its energy transactions practice in Houston, where he will advise both corporate and private-equity clients in the energy sector. He was previously a partner at Bracewell & Giuliani LLP.

Lynn Cadwalader has joined DLA Piper LLP’s real estate practice as a partner in San Francisco. Cadwalader, who was previously a partner at Holland & Knight LLP, focuses on real estate investment, acquisition and development, with an emphasis in the hospitality sector.

Sidley Austin LLP has hired Chad Hummel and Clayton Friedman as partners in Los Angeles. Hummel will be a member of Sidley’s litigation practice and serve as a co-leader of the firm’s new trial practice initiative; Friedman, who works on multistate investigations, will join the firm’s regulatory practice. Both were previously partners at Manatt Phelps & Phillips LLP.

Source: Bloomberg – JPMorgan, Simpson Sued Over Mistake in GM Loan: Business of Law

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