financial services: matters
Madoff Litigation - Filings Against the SEC
We represent a number of victims of Bernard Madoff's Ponzi scheme. In January of 2009, we filed notices of claim with the Securities & Exchange Commission alleging negligence under the Federal Tort Claims Act. The SEC rejected our claims six months later, and on Wednesday, October 14, 2009, we filed the first known lawsuit against the SEC seeking monetary damages under the FTCA, Molchatsky and Schneider v. United States. We are lead counsel on the Molchatsky case and we have since filed two additional cases against the United States on behalf of other Madoff victims. All of our cases are pending in the Southern District of New York before Judge Swain. To read news items related to Herrick's involvement with this matter, click here.
Witness - SEC Action
Representation of a key witness in an SEC lawsuit charging kickbacks, failures to disclose and overvaluing of assets involving the owners of a registered investment adviser which claimed to have had over $130 million in assets under management.
Brokerage Firm - FINRA Examination
Representation of a brokerage firm in a Financial Industry Regulatory Authority examination of customer trades in foreign bonds and the firm's anti-money laundering procedures.
Brokerage Firm President - SEC Action
Representation of the former president and owner of a brokerage firm in post-trial proceedings following an SEC lawsuit involving the alleged employment of a barred person.
Brokerage Firms - Internal Investigations
Conducted numerous internal investigations for broker-dealers to identify fraud and wrongdoing and defend against criminal and regulatory enforcement actions.
Hedge Funds - General Counsel
Representation of institutional hedge funds, fund of funds and separate account investment managers as outside general counsel, including Stillwater Capital Partners, Wolf Asset Management International, Victoire Finance Capital, Karpus Investment Management, PCE Investors (U.S. matters), Discovery Capital Management, Hildene Capital Management, Wolf Asset Management International, Witter Partners, FIS Group and others. We advise and consult on a wide variety of corporate, regulatory and transactional matters in connection with the ongoing operation of their investment management business.
Doral Bank - Warehouse Lines of Credit
Representation of Doral Bank in warehouse lines of credit to a number of mortgage originators, and financing facilities of up to $250 million to major private equity funds.
Financial Services Firm - Employment Issue
Representation of key employees of financial services firm in a case brought by a competitor alleging misappropriation of confidential information and wrongful solicitation of clients.
Brokerage Firm - Broker Arbitrations
Representation of a leading independent broker-dealer and its officers in several FINRA arbitrations concerning compensation claims brought by former brokers, and claims brought by a broker-dealer for breach of contract, breach of fiduciary duty and unfair competition.
Asset Management Company - Employment Issues
Representation of one of leading independent asset management companies in its defense of a wrongful termination action claiming religious discrimination, and in a separate action claiming discrimination based on disability. We continue to represent the company in all aspects of its employment disputes, and in risk management issues.
Financial Institutions and Borrowers - Real Estate-Related Loans
Representation of financial institutions and borrowers in a variety of real estate-related loans, including loan commitments, first and second fee mortgages, leasehold mortgages, construction loans, and senior and mezzanine loans to real estate operating companies.
Brokerage Firm - Customer Litigation
Representation of a leading independent broker in connection with a customer default on over-the-counter credit derivative swap transactions.
Financial Institution - Syndicated Loan Facility
Representation of a major financial institution as administrative agent and lender in providing a $51 million senior secured credit facility—consisting of a term loan facility and a revolving facility with a sublimit for letters of credit—to IntegraMed America, Inc. (a Delaware corporation that provides services and products to medical practices specializing in infertility and vein disorders). We negotiated limited security agreements with a large number of medical practices to use certain accounts receivable payable to the practices to secure the loan.
Premier Global Financial Service Firm - FINRA
Defense of a premier global financial firm in a FINRA action involving claims brought by an investor for losses to retirement account resulting from alleged flawed asset allocation.
Major Financial Institution - Credit Loan Facility
Representation of a major financial institution in a $7.5 million secured uncommitted line of credit loan facility to a leading manufacturer of baby products produced around the world. The facility was secured by a pledge of all assets of the company, including sizeable inventories located in-transit and in the company's leased warehouses. The transaction also included an intercreditor arrangement with the company's current factor as well as the transfer of existing letters of credit to the new facility.
Distressed Debt Investor - Mezzanine Loan Foreclosure
Representation of a distressed debt investor in foreclosing and conducting UCC secured party sale of portfolio of mezzanine loans securing repo line of credit obligations. One of the mezzanine loan borrowers sought to enjoin the sale; we defeated the TRO application and conducted the sale successfully over the borrower's objection.
Institutional Lender - Stay Relief and Foreclosure
Representation of an institutional lender in obtaining relief from the automatic stay in bankruptcy over the objection of a borrower claiming a right to purchase the property at a discount to the total debt. After stay relief was granted and a foreclosure sale scheduled, the borrower obtained an injunction against the sale, using cash collateral without consent to obtain a bond. We removed the case to bankruptcy court, obtained forfeiture of the bond and dissolution of the injunction, completed the foreclosure sale, quashed the borrower's effort to depose the federal agency that had sold the loan to our client and obtained dismissal of the injunction action with prejudice.
Commercial Bank - Creative Jewelry Financing
Representation of a major U.S. commercial bank as agent in a $30 million syndicated senior secured asset based loan for an international jeweler and its subsidiaries. The loan was to an affiliated group of U.S. companies involved in the wholesaling of diamonds and other precious stones, and was guaranteed by several foreign affiliates. The loan facility also included a $10 million accordion feature.
Commercial Bank - Creative Unsecured Debt Restructuring
Representation of the private bank division of a major U.S. commercial bank in the restructuring of two unsecured loans to a famous Hollywood producer. We are securing a portion of the debt and creating documentation designed to generate cash to reduce the bank's exposure.
Finance Company - Ponzi Scheme Foreclosure
Representation of a finance company in its foreclosure of a commercial property placed in receivership due to the collapse of an alleged Ponzi scheme by the ownership entity.
Public Company - Equity Line of Credit
Representation of a NASDAQ-listed company on a registered $6 million equity line of credit transaction. Pursuant to the equity line, the company has the right to put shares of its common stock to the investor, and the investor is required to purchase those shares, with the number of shares sold at any given time and the purchase price per share to be based upon a formula set forth in the purchase agreement.
Private Bank - $425 Million Credit Facilities
Representation of a private bank as a letter of credit issuer; administrative agent in a $100 million letter of credit facility; and as lender in a $325 million revolving credit facility, each to a trust, the proceeds of which are for working capital purposes. The facilities are cross-collateralized and secured by a combination of public company stock, diversified liquid assets and cash.
Israel Discount Bank - Giants Financing
Representation of Israel Discount Bank as administrative agent and as a lender in amending an existing secured revolving credit facility to New York Football Giants, Inc. to increase the facility's size to $45 million. The loan's proceeds will be used for working capital purposes.
Plainfield Asset Management - Credit Facility
Representation of Plainfield Asset Management in amending an existing credit facility for Wyoming Entertainment, LLC. The deal required us to add a significant delayed draw term loan facility, extend the payment-in-kind feature and add a subsidiary as a guarantor.
New York Yankees - Sponsorship Agreements
Representation of the New York Yankees Partnership in drafting and negotiating sponsorship agreements for the new Yankee Stadium. Two notable sponsors include Standard Parking, the parking garage operator around the new stadium, and Toyota.
Yankees Collectibles - Memorabilia Auction
Representation of the New York Yankees Partnership in the acquisition from the City of New York of the Old Yankee Stadium seats and bleachers and the agreement with DEMCO, providing for the removal and restoration of such items. Integral to these transactions is the Yankees' joint venture with Steiner Sports to market and sell these and other Yankees-owned memorabilia and collectibles from the old Yankee Stadium. The transaction also involved establishing a Yankees Memorabilia Store at the new Yankees Stadium. The store is a venture of Legends Hospitality, NYYP and Steiner Sports.
Emmes Asset Management - Acquisition and Financing
Representation of Emmes Asset Management Company in connection with a joint venture with the investment arm of a major university system and the $100M+ acquisition of a prominent Class A office building in Irvine, CA. The transaction also included a multi-million dollar investment by a Japanese corporation investing in U.S. property for the first time.
Legends Hospitality - Yankees and Cowboys Joint Venture
Representation of the New York Yankees in the ground-breaking "Legends Hospitality Management LLC" joint business venture between the Yankees and the Dallas Cowboys, which will operate the catering, concessions and retail merchandising at both new stadiums.
Commodity Futures Broker - SEC Investigation
Representation of a commodity futures broker in an SEC investigation into allegations that the broker participated in a Ponzi scheme fraud perpetrated by a hedge fund manager. After we made a Wells submission, the SEC determined to close the investigation and not to pursue any enforcement action against our client.
Rogue Employee - CFTC and CME Investigations
Conducted an internal investigation into massive trading losses incurred by a rogue employee of a futures commission merchant, and representing the FCM in connection with investigations into the conduct by the CFTC and CME.
Lehman Brothers - 2nd Lien Receivables Financing
Representation of Lehman Commercial Paper in closing a multi-million dollar, second-lien receivables funding for a special purpose vehicle subsidiary of a leading U.S. educational publishing group. In addition to documenting the loan facility, we negotiated an intercreditor agreement with the first lien lender of an existing $350 million receivables funding agreement.
JP Morgan Chase - Fraud Litigation Victory
Represented JP Morgan Chase in a suit brought by a borrower's principal and guarantors alleging that our client had impermissibly drawn down on a letter of credit provided as a security for a loan on a piece of property in Harlem. Herrick won summary judgment and the borrower appealed. The First Department affirmed the lower court's dismissal of the complaint. The decision clears the way for the ultimate foreclosure of the property.
Nikko Capital Partners - Private Equity Fund
Representation of Nikko Capital Partners K.K. in structuring and setting up a $200 million special situations investment fund for Ant Global Partners Pte., Ltd., a subsidiary of Nikko Capital Partners K.K. as the fund manager, and two private equity funds managed by Elliott Advisors, the sole investors. The fund was structured as a Cayman Islands limited partnership and the fund manager as a Singapore private limited company.
Victoire Finance Capital - Latin America-Focused Hedge Fund
Representation of an international asset manager in establishing an onshore hedge fund to integrate with their existing Cayman Islands-based offshore fund that invests in small cap companies in Brazil and other Latin American markets. Our work also involves converting the entire fund into a master feeder structure.
Commercial Bank - Art Loan
Representation of a major U.S. bank in a multimillion-dollar loan to a high net-worth individual, secured by the borrower's art collection.
Financial Services Company
Defense of a pre-eminent financial services company in an arbitration involving numerous brokers who left a competitor to work for our client. The competitor claimed breach of non-solicitation and confidentiality provisions in the brokers' contracts.
Private Bank - Not-For-Profit
Representation of a major private bank in a $30 million unsecured revolving credit facility to a not-for-profit company that is dedicated to providing services to public schools.
Commodities Broker - Dismissal of Complaint
Representation of a leading futures commission merchant in an action brought by another FCM who accused our client of violating the Commodity Exchange Act, breach of contract and negligence in connection with futures and options trading in an omnibus clearing account. After the Southern District of New York dismissed the complaint, we obtained a dismissal with prejudice of a new complaint filed in state court.
Securities Broker - Summary Judgment
Representation of a broker-dealer and its employees in a "raiding" dispute brought by a rival broker-dealer, including claims of corporate espionage and theft of trade secrets. After a number of the plaintiff's claims were dismissed at the pleading stage, we obtained summary judgment in favor of our clients and dismissal of the remaining causes of action.
German Funds - Restructuring
Restructuring of multi-tiered, affiliated German syndication funds acquiring assets throughout the United States.
Hedge Fund - Investment in Pre-Settlement Financing Companies
Representation of a large hedge fund in the first step of a $175+ million investment in two companies developing an integrated business product platform to increase their market position in the law firm pre-settlement financing market. The capital structure will include a $25 million senior credit facility for the group invested in, a $25 million senior subordinate credit facility to a new company that will develop the integrated business product platform, a $125 million senior facility for that new company, and a $3 million equity investment.
Private Equity Fund - Investment in Technology Company
Representation of a Cayman Islands-based private equity fund in a $1 million Series B investment in a California developer and manufacturer of wireless audio and video home networking multimedia technology products.
Sindicatum Carbon Capital - Green Private Equity Fund
Representation of Sindicatum Carbon Capital, an institutionally backed joint venture management company, in establishing a Cayman Islands-based private equity fund formed to make global investments in greenhouse gas reduction projects intended to generate tradable carbon credits pursuant to international treaty mechanisms.
Silverleaf Capital Group - European Real Estate Fund Formation
Representation of Silverleaf Capital Group in forming a Malta based private equity fund to invest in real estate development projects in Croatia, Montenegro and Serbia. We worked with the fund's management and other service providers to structure the fund and draft offering documents and related agreements, and to customize the fund's structure to meet investor demands.
Futures Commission Merchant - CFTC Investigation
Representation of a futures commission merchant against potential claims by a hedge fund receiver whose manager committed fraud. We defended the FCM in an investigation by the CFTC, which asserted no charges.
International Investigation - Market Manipulation
Representation of a foreign citizen in connection with an indictment by the U.S. Attorney’s Office and an SEC investigation alleging market manipulation of multiple OTC securities in the U.S. markets via the internet.
Mortgage Acquirer - Loan Foreclosure
Representation of a major national mortgage acquirer in its foreclosure on a mortgage loan made to the owner of a luxury hotel in Ohio. The borrower tried to take advantage of recent pro-borrower decisions in state court, arguing that our client had not proved it owned the note and that the borrower had not signed the successor notes into which the original note had been split (pursuant to a modification agreement that the borrower did sign). But waivers of defenses in the forbearance agreements we drafted precluded that argument, and we won the case for our client (including interest and costs) on a motion for summary judgment.
Lender - $2 Billion Facility
Representation of one of the lenders in a $2 billion-plus senior secured revolving and term loan credit facility to a large international exchange company.
Asset Manager - Multifamily Property Foreclosure
Representation of the asset manager for an investment bank in foreclosing on, and taking possession of, a multifamily 208-unit apartment complex encumbered by a deed of trust that our client obtained at a HUD auction sale of distressed debt. We obtained possession in less than 120 days, an extremely fast result in these cases.
Private Equity Fund - Sub-Prime Fund
Representation of a private equity fund in the formation of, and initial investment in, an international opportunity fund that will purchase troubled residential home mortgages, including sub-prime residential home mortgages, and work with each individual borrower to modify the terms so that they are affordable. The fund will then package or securitize the performing mortgages. The operations for this fund may very well be the first large scale private sector cure to the sub-prime debacle and reflects the private sector response advocated by the Chairwoman of the FDIC.
Money Center Bank - $20 Million Facility
Representation of a money center bank in a $20 million senior secured credit facility of a financial advisory firm and international management consultants and its U.S. affiliates.
Futures Broker - CFTC Investigation
Representation of a futures commission merchant in a CFTC investigation arising from a $200 million fraud perpetrated by a hedge fund manager and commodity pool operator who hid trading losses.
Private Equity Fund - Employment Contracts
Representation of a private equity fund in drafting executive employment contracts in connection with the company's acquisition of a holding company engaged in various insurance and reinsurance businesses.
Financial Institution - Fund Management
Representation of a major financial institution in the management of a registered "fund of managers" and in the distribution of the fund shares through a broker wrap program.
Financial Services Firm - FINRA Arbitration
Representation of a major financial services firm and one of its brokers in an arbitration brought by three customers seeking over $20 million in damages. Following 16 days of hearings before a FINRA panel, the customers received an award (less amounts awarded on our client’s counterclaim) of $28,430. The panel granted the broker’s request for an expungement of the matter from his CRD record.
Asset Manager - Senior Living Facility Foreclosure
Representation of an asset manager for an investment bank in foreclosing on, and taking possession of, a senior living facility encumbered by a deed of trust that our client obtained at a HUD auction sale of distressed debt. We obtained possession in less than sixty days, an extremely fast result in these cases.
Institutional Lender - Not-For-Profit School Financing
Representation of an institutional lender in term, construction and revolving credit facilities to a not-for-profit school for the arts. The facilities are secured by prime and collateral mortgages on properties in California and New York.
Commodities Broker - Dismissal of Class Action
Representation of a major commodities broker in a class action brought in a Florida state court. The plaintiffs were investors in a foreign exchange hedge fund whose principal perpetrated a multi-million dollar fraud. The investors alleged that our client, which executed trades on behalf of the fund, violated Florida blue sky laws and aided and abetted the fraud. After twice dismissing the complaint and granting plaintiffs leave to replead, the court finally dismissed all claims with prejudice and awarded our client its costs and attorneys' fees. The appellate court affirmed.
International Lender - Arizona Resort
Representation of an international lender in the senior construction financing of a resort hotel in Tucson, Arizona, that features restaurants, a spa and a luxury residential community with a 27-36 hole PGA golf course, practice facilities and a clubhouse. This project was completed in 2007.
Loan Servicer - Nursing Home Sale
Representation of a servicer for a holder of a defaulted mortgage loan in orchestrating the sale of a nursing home facility in bankruptcy after existing management refused to continue managing the facility. After the sale, the Chapter 11 trustee moved to compel our client to pay all unpaid post-trustee appointment administrative claims. The bankruptcy court in Indianapolis agreed with our argument that the financing stipulation we negotiated for our client with the trustee precluded the trustee's motion, saving substantial out-of-pocket costs.
Foreign Lender - Loan Restructuring
Representation of a foreign lender in the restructuring of a $150 million mezzanine loan to an investment fund, including re-capitalization of certain fund platforms and the sale of certain fund assets.
Garrison Special Opportunities Fund - Mezzanine Loan Purchase
Representation of Garrison Special Opportunities Fund in their purchase of a $31.5 million mezzanine loan from a large investment bank. The loan is cross-collateralized and cross-defaulted by 100% of the membership interests in four mortgage borrowers, each owning a commercial office building in Reston, VA.
Financial Institution - Breach of Fiduciary Duty Defense
Representation of a large financial institution alleged to have breached its duties to a customer in connection with the diversification of a large account. We litigated the matter to a point where it could be settled through mediation on terms very favorable to our client.
Commercial Bank - Credit Facility
Representation of a leading commercial bank as the sole lender in a senior secured term credit facility to an investment manager of three real estate opportunity funds. The transaction required amending a previous facility to coordinate the payments, conditions and covenants of the two facilities.
Impala Partners - RGIS Acquisition
Representation of Impala Partners in its acquisition of a controlling interest in RGIS, a 40,000 employee mid-west inventory management solutions company, the largest in the world.
Retail Brokerage Branch Manager - NASD Charges
Successful defense of the branch manager of a national retail brokerage firm. Following a hearing, the hearing panel dismissed all of the NASD's charges, including allegations of supervisory failures. The dismissal was upheld on appeal by the NASD to the NASD's National Adjudicatory Council.
First Allied Securities - NASD Arbitration
Representation of First Allied Securities in an NASD arbitration in Seattle, Washington involving claims against a competitor for raiding an entire division of the company, including mutliple brokers in multiple offices.
Mezzanine Lender - Term Sheet Breach
Representation of a mezzanine lender in an action in New York State Supreme Court against a borrower for breach of a term sheet. The court granted our motion for summary judgment and awarded damages.
Rockwood Realty Associates - Sale to DTZ Holdings
Representation of Rockwood Realty Associates in the sale of 50% of its equity interests to DTZ Holdings plc, a British public company, in a transaction that formed a global joint venture providing real estate brokerage and capital markets services.
OTC Hedging Service - Market Formation
Representation of a hedging service for over-the-counter commodities in forming a unique credit-enhanced automated trading market in a joint venture with an affiliate of Bechtel Corporation.
Financial Services Company - Internal and Grand Jury Investigations
Conducted an internal investigation for a major international financial services corporation concerning allegations that company employees had provided false customer account information to another financial institution. We also represented the company in a related New York state grand jury investigation.
Title Insurer/Secured Lender - Priority Dispute
Representation of a secured lender in its claim to the proceeds of the sale of a borrower's principal asset. The court granted our motion for summary judgment, ruling that our client's claim had priority over competing claims asserted by produce sellers under the Perishable Agricultural Commodities Act. D.M. Rothman Co., Inc. v. Cohen Marketing Int'l, Inc., 2005 U.S. Dist. Lexis 14449, 2005 WL 1690524 (S.D.N.Y. 2005).
Private Equity Fund - Hedge Fund Loan
Representation of a private equity fund in making a loan to a hedge fund for liquidity purposes, secured by the hedge fund’s securities portfolio.
Hard Money Lender - Loan Default
Representation of a lender in collecting on a defaulted loan made to former Penthouse publisher Robert Guccione and his companies. Over a five-year period, the lender foreclosed on four properties in New York and New Jersey and realized additional funds from the sale of Guccione's world-class art collection. Ultimately, the client collected over $35 million on the loan and was substantially paid in full.
Financial Institution - Junk Bond Dispute Mediation
Representation of a major financial institution in mediating a favorable settlement of a $135 million securities litigation. The plaintiffs alleged that the institution breached its duties as indenture trustee on a large junk bond offering.
Brokerage Firms - Fraud Claims
Representation of domestic and off-shore brokerage firms and FCMs against claims asserted by investors in hedge funds who incurred losses as a result of fraud perpetrated by fund managers.
Lender and Loan Servicer - Liability Action Defense
Representation of a lender and loan servicer in winning dismissal of lender liability actions. John Street Leasehold, LLC v. Capital Management Resources, 142 F.Supp.2d 527 (S.D.N.Y. 2001); John Street Leasehold LLC v. FDIC, 196 F.3d 379 (2d Cir. 1999).
Futures Commission Merchant - Securities Fraud Litigation
Representation of the world's largest non-bank futures commission merchant and its affiliated broker-dealer in securities fraud litigations arising out of losses of more than $100 million incurred by cities and counties in California and a financial institution in Colorado.
Chemical Bank - Usury Claim
Representation of Chemical Bank in a case of first impression in New York holding that the federal Depository Institutions Deregulation and Monetary Control Act of 1980 preempted a corporate borrower's usury defense. We won the case on a motion for summary judgment. Chemical Bank v. 131 West 71st St. Realty Corp., NYLJ, May 24, 1993, p. 1 (Sup. Ct., N.Y. Co.)
Manufacturers Hanover Trust Co. - Note Default Litigation
Representation of Manufacturers Hanover Trust in its suit against a borrower for defaulting on corporate notes. We won the case on a motion for summary judgment. Manufacturers Hanover Trust Co. v. Jayhawk Assoc., 766 F. Supp. 124 (S.D.N.Y. 1991)
Private Equity Restructuring
Representation of a private equity/preferred shareholder in restructuring the debt of its holding company and domestic and foreign operating subsidiaries.
Private Equity Fund - Environmental Fund
Representation of a private equity fund in its formation of National Resources, a $100 million equity fund to acquire, remediate and dispose of environmentally troubled real estate.