Wide legal spectrum for Madoff claims

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Messy legal battles involving investor claims is likely to break new legal ground involving jurisdiction disputes, insurance, bankruptcy and international finance."  Unraveling the complex scheme will produce legal actions or many varieties and impacting many areas of law.

A primary issue will be attempts by the bankruptcy court to reclaim improper payouts to early investors, a process known as "clawback."  [See "Madoff investors may be on the hook for 'clawback' suits."]   But the issues do not stop there.   An interesting nuance is the fate of funds sent out of the United States.  Many Madoff investors were funds and investors based in Europe.

"'Will that result in a tug of war between aggrieved European investors and aggrieved U.S. investors?,' asked Howard Kleinhandler, a partner at Wachtel & Masyr in New York."

Other potential areas of controversy include suits and allegations involving:

• Funds sent out of the United States
• Difference in state laws regarding how far back the clawwbacks may go
• Defining a "fraudulent conveyance" of payments by Madoff to early investors
• Potential liquidations of offshore feeder funds if they can't repay investor claims
• Recovery from a federal program designed to repay victims of failed brokerages
• Negligence of feeder funds worldwide for failure to uncover Madoff's alleged fraud

See full article:  A new legal industry: Madoff

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The View From 3L

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From The National Law Journal - "Third-year students at law schools across the country are about to graduate and enter a brave new legal world of layoffs, pay freezes, and reduced bonuses. So how do these soon-to-be-lawyers feel? Says one: 'Frankly, if you're not nervous, you haven't been paying attention.'"

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FT.com / Companies / By region - BofA set for further jobs cuts

Image by Getty Images via DaylifeFT.com / Companies / By region - BofA set for further jobs cuts: "BofA set for further jobs cuts

By Greg Farrell in New York
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Published: January 19 2009 23:44 | Last updated: January 19 2009 23:44

Bank of America is expected to make several thousand employees in its capital markets businesses redundant, starting this week, according to executives familiar with the matter.

The cuts, most of which are expected to be in New York, come three weeks after BofA acquired Merrill Lynch. They reflect the consolidation of the bank’s sales and trading businesses under the control of Tom Montag, who joined Merrill last year from Goldman Sachs."

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Madoff: How to Get Away With It

Image via WikipediaAre you wondering how how Madoff's scheme got past the SEC?  Allan Sloan's of Fortune.com. says that regulators routinely miss gargantuan frauds because they're not looking for them.

"You're likely to get caught if you run a few inches outside the baseline, because regulators are set up to catch that," wrote Sloan. "But run so far that you're playing on a whole different ball field? You can get away with that if you're enough of a financiopath, and your luck holds."

Thanks to AmLaw Litigation Daily for pointing out the article.

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Is high leverage model of firms set to change?

Image via WikipediaOver the last couple decades, high leverage--the practice of having each equity partner supported by three or more associates or income partners--was accepted as a basic tenet of profitability. But is the pyramid an unstable structure? Our report includes a chart ranking the Am Law 100 by leverage.

See full article at: From the January Issue of The American Lawyer: Past the Tipping Point

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