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Moritt Hock Hamroff & Horowitz LLP

Terese L. Arenth Chairs Benefit For National Multiple Sclerosis Society- Long Island Chapter
Terese L. Arenth, a partner in the Garden City law firm of Moritt Hock Hamroff & Horowitz LLP, will serve as chair of the 2006 Dinner of Champions "A Touch of Tuscany" to benefit the Long Island Chapter of the National Multiple Sclerosis Society.

The fundraising event is scheduled to take place on September 28, 2006 at Carlyle on the Green in Bethpage State Park. In addition, the event will honor Long Island industry leaders in the fields of accounting, banking, health care, law, media, retail and security services. This year's honorees include PricewaterhouseCoopers LLC (accounting), Community National Bank (banking), Quantum Medical Imaging (health care), Moritt Hock Hamroff & Horowitz LLP (law), News 12 Long Island (media), diSlavo Interiors (retail), Investicorp, Inc. (security services) and Tony Winckowsi.

Ms. Arenth is a partner in the firm's Litigation Practice Group where she concentrates her practice in the area of commercial and corporate litigation. She also has significant involvement in the firm's direct marketing, advertising and new media practice areas as well as the intellectual property and unfair competition practice area. Ms. Arenth has served on several non-profit and professional committees including Helen Keller Services for the Blind, the Trademarks and Unfair Competition Committee with the Intellectual Property Section of the American Bar Association, as well as its Special Committees on Promotions and Marketing Law, Online Trademark Issues and IP Licensing, in addition to the Intellectual Property and Commercial Litigation Committees of the Nassau County Bar Association, among others. She has also served as a member of both the Long Island Center for Business & Professional Women and the Long Island Women's Agenda. As a member of the Equipment Leasing Association, Ms. Arenth is also a contributing author of the Association's online State Law Compendium.

08-09-2006

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White & Case, LLP

A Q&A with White & Case's Joseph P. Armao and Kenneth Raskin
More than 60 companies are currently targets of SEC, IRS and US Department of Justice investigations into whether they backdated or in other ways manipulated stock option awards illegally. More federal and state investigations, and perhaps criminal prosecution and shareholders' lawsuits, may ensue.

In late July, federal prosecutors filed the first criminal charges based on backdating, charging securities fraud against executives at Brocade Communications for possible manipulation of options, and the SEC filed a civil complaint. The scores of companies facing probes range widely across industries and in size, from giants such as Barnes & Noble and UnitedHealth to smaller companies such as Altera.

Joseph P. Armao, a corporate defense partner in White & Case's New York office and Kenneth A. Raskin, global head of White & Case's Executive Compensation, Benefits and Employment Law practice, both key members of the stock options task force, recently discussed some of the top concerns for clients.

Q: What exactly is backdating of options and why has the practice become controversial?

Raskin: Stock options basically allow the holder the option to buy a certain number of company shares at a certain price for a set period of time. The price is usually the price the stock traded at on the date the option was granted. If the stock price rises above the price at the option's grant-date, the option becomes ""in the money"" - in other words, the holder of the option can buy the shares at the grant-date price - less than market price.

Backdating of options occurs when an earlier date is selected as the official grant-date for an executive or employee receiving the options. Generally, companies that are currently being investigated by authorities had chosen grant dates when their options were below market value.

Armao: What's raising the hackles of the SEC is whether the backdating grants have been disclosed properly and if accounting rules have been ""stretched"" to the point of falsifying information. If employees have been granted stocks at a lower price, they are getting bigger payoffs than they are entitled to, and thus diluting the value of shares for the other stockholders.

Q: Can you elaborate on how the backdating was done improperly?

Raskin: While backdating itself is not per se illegal, it can be, if not undertaken properly. That means the backdating must be done with proper authorization, proper disclosure, proper accounting and with the proper tax treatment. But apparently, in the cases under investigation, the backdating may have been done without proper accounting and without proper disclosure, which violates securities laws. In the Brocade case, for example, authorities are basically charging that executives were engaged in securities fraud because they changed stock option dates and concealed the fact. From the tax perspective, a company that doesn't properly report grants of ""in the money"" options might not be paying all the taxes it should.

Q: Why do companies offer stock options?

Raskin: For years, many US companies have provided executives and employees with stock options as an incentive. In the late '90s, technology companies began utilizing the practice in record numbers to attract better job candidates to start ups and high-tech firms, and then backdating the options to maximize the package they could offer. Options are essentially awarded as a way to help motivate executives to boost the company's stock price - if the stock rises in value, their options will become more valuable as well, of course. Options are also offered as a way to attract talented executives to companies while conserving the company's cash, which is why so many technology start ups offered options and why they are now the primary targets for investigation.

Q: What prompted the current furor over backdating?

Armao: The practice of backdating goes back many years, but only came to widespread attention with an academic report written a couple of years ago by a researcher at the University of Iowa, Erik Lie. He studied the movements of thousands of companies' stock prices after the award of stock options between 1992 and 2002, and concluded that there had to have been illegal backdating. This captured the attention of the SEC and the Department of Justice, which, in the wake of the Enron and Worldcom scandals, have become vigilant about accounting irregularities and improper disclosure that may occur with backdating. This subsequently fed the interest of the press. Since then, the issue has exploded.

Q. If a company is targeted for investigation, what should it do?

Armao: Companies should immediately examine their stock option policies and launch a complete and thorough internal investigation. If they do uncover any irregularities, they should immediately consult with experienced regulatory and corporate defense counsel to determine the best way the company should position itself with SEC or DOJ. If companies opt not to disclose irregularities to regulatory agencies, the end result will likely be a much harsher punishment and significantly higher penalties than if they cooperated in the first place.

Q: Are there any insurance issues with investigations into timing of stock option grants?

Armao: Definitely. Companies need to carefully analyze their D+O insurance policies as to the extent of coverage and as to claim reporting requirements set forth in the policies. Individual officers and directors covered by those policies need to know what exclusions may apply, and whether the insurer can rescind their insurance if the company's financial statements, which the insurer considered in deciding whether to underwrite the insurance, will have to be restated.

Q: Where will the current investigations lead?

Raskin: It's likely that the investigations will continue, at least for some time to come. It's also likely that backdating is in fact a practice that has dwindled by now. That's because Sarbanes-Oxley, in 2002, required that option grants be reported within two days, which made concealing information more difficult. Before that, although the SEC had required that option grants be carefully reported, starting way back in 1992, the reporting could be delayed quite awhile, which meant that records could be easily manipulated.

The SEC has since taken action, recently voting for a major change to its disclosure requirements for executive compensation. The new rules are intended to ensure that compensation arrangements are disclosed more clearly and completely to investors.

Armao: Backdating may also become a basis for shareholder and derivatives class action suits, which heightens the need for experienced outside litigation counsel to be involved in a company's internal examination practices.

Joseph P. Armao is a partner in White & Case's Corporate Defense and Special Litigation Group, where he focuses on internal corporate investigations, white-collar criminal and government regulatory defense, related civil litigation and corporate governance and compliance counseling. Mr. Armao has particular experience with accounting and securities fraud, foreign corrupt practices, antitrust, health care fraud and labor racketeering matters. He brings to his clients the benefit of years of experience as a former government prosecutor and investigator, including serving as Deputy Chief of the Rackets Bureau and Chief of the Labor Racketeering Unit for the Manhattan District Attorney's Office.

Kenneth A. Raskin is head of White & Case's Executive Compensation, Benefits and Employment Law Practice Group. He provides counsel on the entire spectrum of employee benefit concerns. Mr. Raskin advises both corporate and individual clients on executive compensation issues. He provides counsel in the design and negotiation of executive employment contracts, incentive compensation arrangements, stock option plans, non-compete agreements, severance arrangements and parachute plans. A Certified Public Accountant as well as an attorney, Mr. Raskin has represented clients before federal, state and city tax agencies. He provides ongoing advice to clients on the implications of new legislation and regulations and specific actions concerning compensation and benefit plans.

08-09-2006

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Hinshaw & Culbertson, L.L.P.

Business Litigator and Trial Attorney Richard Herold Joins Phoenix Office of Hinshaw & Culbertson LLP as Partner
Commercial litigator Richard Herold has joined the Phoenix office of national law firm Hinshaw & Culbertson LLP as a partner.

Mr. Herold has 16 years of experience representing clients in complex commercial litigation. In addition to significant trial experience, he handles appeals, mediations and arbitrations. Cases that Mr. Herold has been involved in include contract litigation, creditors’ rights and remedies, bankruptcy, business torts, real estate litigation, employment litigation, corporate and partnership disputes, and securities litigation.

In addition to other impressive community service efforts, Mr. Herold has been handling jury trials and serving as a settlement judge as a court-appointed Judge Pro Tempore since 2004. Since 2001, he has also been a member of the State Bar of Arizona’s Fee Arbitration Committee, where he presides over lawyer-client fee disputes and issues binding awards to resolve those disputes.

Hinshaw’s Phoenix office opened in 1996 and maintains a broad commercial litigation practice with particular strength in professional liability and insurance coverage matters. The attorneys in this office also handle a broad range of commercial and business litigation for local, regional and national clients including construction, class-action, employment, personal injury and product liability litigation. The office is led by Brian Holohan, a veteran trial lawyer.

“Rick is a terrific addition to our expanding office,” said Holohan. “His 16-plus years of trial experience and his broad knowledge of employment and business law issues are the perfect fit with the strategic growth plans we have for our office. We hope to add more senior partners like him.

08-09-2006

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Fox Rothschild LLP

Fox Rothschild Welcomes New Intellectual Property Attorney
Fox Rothschild LLP welcomes Gerard Bilotto, Esq., as a Partner in its Corporate Department, resident in the New York office. Bilotto is a member of the firm’s Intellectual Property Group, and has over a decade of experience in civil and patent litigation. His practice focuses on biotech and pharmaceutical litigation, products liability and commercial litigation involving chemical polymers, pharmacology, toxicology, pharmacokinetics, and drug efficacy. Bilotto’s practice also involves infringement and invalidity opinions, intellectual property portfolio development, evaluation and management, due diligence, and license agreements.

Admitted to practice in New York and Connecticut, Bilotto is also a Registered Patent Attorney with the U.S. Patent & Trademark Office. Bilotto is a member of the New York State Bar Association, the City Bar of New York, and the New York Intellectual Property Law Association. He received his J.D. from Pace University School of Law in 1996, and his B.S. in aerospace from the New York Institute of Technology in 1970. Among other degrees, he holds a Ph.D. in Physiology and Neurophysiology, received in 1979 from Columbia University’s College of Physicians & Surgeons (Department of Physiology).

08-09-2006

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Prince Lobel Glovsky & Tye LLP

Jessica Foster selected as one of "Up & Coming Lawyers" by Massachusetts Lawyers Weekly
Jessica was one of fifteen selected to receive this honor. There will be a printed feature and networking reception recognizing this honor in September.

08-09-2006

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Dewey & LeBoeuf LLP

"PE Firms Back U.S. Shipping Venture"
Dewey Ballantine represented Blackstone Group LP in connection with its $400 million investment with Cerberus Management LP in a $500 million joint venture deal with U.S. Shipping Partners LP to build deep-water tankers for the domestic energy market.

08-09-2006

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Rider & Bennett, L.L.P.

RIDER BENNETT ATTORNEYS WIN BENEFITS FOR AERIAL FIREFIGHTER'S SURVIVORS
On July 27, 2006, Rider Bennett attorneys Daniel Poretti, Joseph Lawder, Steve Sitek and Amy Taber won a significant victory at the United States Court of Federal Claims in a case involving survivor benefits for families of aerial firefighting pilots killed in the line of duty. The court determined that the Bureau of Justice Assistance of the United States Department of Justice (BJA) improperly denied benefits to the family of Captain Lawrence Groff, an employee of San Joaquin Helicopters who was killed while fighting forest fires for the California Department of Forestry and Fire Protection (CDF).

On August 27, 2001, Captain Groff was involved in a tragic accident near Hopland, California, when his airtanker collided with another aircraft in mid-air. Within a year of his death, his wife applied to the BJA for benefits under the Public Safety Officers' Benefits Act (PSOBA) for herself and her son. In September 2005, after having her claim rejected by the BJA, she filed suit in the United States Court of Federal Claims.

The Court reversed the BJA's rulings and found that the BJA's denial of benefits was inconsistent with the PSOBA's regulations and that, for the purposes of the PSOBA, Captain Groff was ""serving a public agency in an official capacity"" while flying firefighting tankers for the CDF. The Court found it irrelevant that Groff was not employed by the CDF directly, because the history of the PSOBA shows a legislative intent to broadly construe the provisions of the Act. Further, the court found that Groff was indeed functioning as a part of the CDF because he was supervised and directed by the CDF, flew CDF planes, wore a CDF uniform, was evaluated by CDF personnel and was recognized by the CDF itself as an official member. The Court ordered the BJA to pay Mrs. Groff and her son the $250,000 benefit provided by the Act, as well as any applicable educational benefits. Click here to read a copy of the Court's decision.

The decision is a major breakthrough for families of aerial firefighters. In the past, the BJA has denied PSOBA benefits to many family members of contract firefighters who died or were severely injured in the line of duty. The decision may force the BJA to apply the correct standard in determining whether contract firefighters are entitled to PSOBA benefits.

08-09-2006

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