Second Department Judge Quits Over Lack of a Raise
Appellate Division, Second Department Justice Robert A. Spolzino (See Profile), citing the fact that state judges have not received a raise in more than a decade, will rejoin the law firm he left when he became a Supreme Court justice in 2001. At the end of September, Justice Spolzino, who has been on the Second Department since 2004, again will become a partner at Wilson, Elser, Moskowitz, Edelman & Dicker, a 750-lawyer firm, where he will litigate and expand the firm's commercial and appellate practices. In a statement issued yesterday, Justice Spolzino said he would never have left a "job I love so much if it were not for the judicial salary situation in New York." Eight years ago, Justice Spolzino recalled, he and his family realized that joining the bench would entail a financial sacrifice, but with no raise since then "I can no longer ask them to do that." At the Appellate Division, Justice Spolzino earns $144,000. At Wilson Elser, where he will work in the White Plains office, he said, "I will be paid an amount appropriate for someone with 25 years of legal experience." — Daniel Wise
Bank to Pay $33 Million In Merrill Bonuses Case
Bank of America yesterday agreed to pay $33 million for charges allegedly misleading investors about billions in bonuses it agreed to pay Merrill Lynch & Co. executives when it was on the verge of acquiring Merrill for $50 billion in a 2008 merger. The payment settles a civil suit filed in the Southern District by the Securities & Exchange Commission. The SEC charged that proxy materials sent to Bank of America shareholders on the proposed acquisition stated that Merrill Lynch had agreed not to pay performance bonuses and other compensation to executives prior to the closing of the merger when, in fact, Bank of America had already contractually authorized Merrill Lynch to pay up to $5.8 billion. Robert Khuzami, director of the SEC's Division of Enforcement, released a statement saying, "Companies must give shareholders all material information about corporate transactions they are asked to approve. Failing to disclose that a struggling company will pay out billions of dollars of performance bonuses obviously violates that duty and warrants the significant financial penalty imposed by today's settlement." Bank of America agreed to the settlement without admitting or denying the allegations. "Bank of America believes that the settlement…represents a constructive conclusion to this issue," company spokesman Scott Silvestri said in an e-mailed statement. New York Attorney General Andrew Cuomo, who referred the case to the SEC in April, said his investigation is continuing. The SEC said its probe also is ongoing. Lewis J. Liman of Cleary Gottlieb Steen & Hamilton represented Bank of America. David Rosenfeld, associate regional director for the New York regional office, was lead counsel for the SEC. — Mark Hamblett, Associated Press
Law Establishes Protocols For Relocating Courts
Governor David A. Paterson has signed into law a bill prompted by the Sept. 11, 2001, terrorist attacks, establishing protocols for the relocation of courts when they cannot operate safely due to war, natural disasters, outbreaks of disease or other emergencies.
The bill, A6921/S2849, was proposed by the Office of Court Administration based on an appraisal of the judiciary's response to the destruction of the World Trade Center towers (NYLJ, May 6, 2008). Virtually all Manhattan trial courts were located in a "frozen zone" created after the attacks and were idled for six days until restrictions were eased.
The measure, which takes effect immediately, replaces state Judiciary Law §§8-12 and authorizes the governor, in consultation with the state's chief judge, temporarily to relocate courts outside of their jurisdictional districts if that is necessary to maintain their continued operation. Previously, courts were not allowed to convene outside of their own district, a restriction that has been in state law since 1909.
The new law allows the governor to designate the "most proximate" location for the safe operation of courts "without limitation based on the judicial department, judicial district, county, city, town, village or other geographical district for which such court was established." It removes reassignment authority from local mayors and other chief executives for some courts formerly contained in the Judiciary Act, but specifies that the governor and chief judge must consult with those local officials before moving court locations.
The measure was sponsored by state Senator John L. Sampson, D-Brooklyn, and Assemblywoman Helene Weinstein, D-Brooklyn, the chairs of their chamber's Judiciary committees. — Joel Stashenko
Madoff Investors Oppose Fees Sought by Trustee
Citing what they called the "pathetic track record" of the court-appointed trustee in charge of liquidating Bernard L. Madoff's investment securities firm, three Pennsylvania residents who invested with Mr. Madoff urged a bankruptcy court to reject the request of Irving H. Picard and his counsel for more than $15 million in interim fees.
In papers filed yesterday with the U.S. Southern District Bankruptcy Court, Diane and Roger Peskin and Maureen Ebel, who claim the support of more than 100 customers of Bernard L. Madoff Investment Securities LLC, accused Mr. Picard and his legal team at Baker & Hostetler, of causing "needless devastation" to Mr. Madoff's customers by "ignoring" the mandate of the Securities Investor Protection Corporation (SIPC) to pay claims promptly based upon their "statutory balances."
"Of the more than 15,400 Customer Claims in this case, the Trustee has allowed a mere 747 claims in eight months," the objection to the fee applications states. The papers also accuse Mr. Picard of disregarding the law by failing to pay "SIPC insurance to anyone who does not have a net investment over the life of his investment with Madoff."
Mr. Picard has come under fire in recent months for evaluating claims by subtracting the amount withdrawn from investors' total deposits with Mr. Madoff rather than using the value of their most recent account statements (NYLJ, June 11). In a mid-May briefing for reporters, Mr. Picard and Stephen Harbeck, president of SIPC, insisted that the maximum $500,000 the agency advances to customers of failed brokerage funds is not an insurance policy.
A hearing on the fee applications is scheduled for Thursday. — Noeleen G. Walder
Personal Notes on Lawyers
• Joel Telpner, 52, has joined the New York office of Jones Day as a partner in its banking and finance practice. Mr. Telpner was at Mayer Brown, where he was a specialty capital markets attorney.
• Keith Krasney has joined Nixon Peabody as a partner in the firm's global finance practice. He was at McKee Nelson.
