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Lehman 4/1
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Judge Rejects Ex-Lehman Employees’ Bid to Collect on Stock Awards
Mar 31, 2016 | The Wall Street Journal
By Patrick Fitzgerald
A federal judge has rejected a bid by a group of former Lehman Brothers Holdings Inc.’s senior employees to collect on some $300 million in restricted stock awards that were rendered worthless when the investment bank collapsed into bankruptcy. -
Ex-Lehman Employees Can't Revive $200M In Stock Claims
Mar 31, 2016 | Law360
By Max Stendahl
A New York federal judge has refused to reinstate approximately $200 million in claims by more than 100 former senior employees of Lehman Brothers who were partly compensated in stock before the megabank went under in 2008, according to a decision made public Thursday. -
U.S. judge rejects Lehman workers' claims on stock awards
Mar 31, 2016 | Reuters
By Jonathan Stempel
Former senior employees of Lehman Brothers Holdings Inc [LEHLO.UL] who once commanded seven-figure pay packages failed to persuade a federal judge to restore hundreds of millions of dollars of stock awards that become worthless after the Wall Street bank's collapse. -
Erin Callan on CNBC
Mar 30, 2016 | The Wall Street Journal
By John Carney
Erin Callan appeared on CNBC at a quarter past 4 p.m. It was her first public appearance since she vanished from the public eye in 2008 after she resigned as the chief financial officer of Lehman Brothers.
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Former Employee Stock Claims
Erin Callan Memoir
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Judge Rejects Ex-Lehman Employees’ Bid to Collect on Stock Awards
Mar 31, 2016 | The Wall Street Journal
By Patrick Fitzgerald
A federal judge has rejected a bid by a group of former Lehman Brothers Holdings Inc.’s senior employees to collect on some $300 million in restricted stock awards that were rendered worthless when the investment bank collapsed into bankruptcy.
Judge Richard J. Sullivan of the U.S. District Court in New York in a decision Wednesday upheld a 2014 bankruptcy court ruling that said the restricted stock awards for more than 200 ex-Lehman employees should be classified not as cash but as equity.
The former employees received either restricted stock units or contingent stock awards as part of their seven-figure compensation packages, said Judge Sullivan. These awards, which functioned as holdbacks on compensation, gave Lehman employees a contingent right to own Lehman common stock, which would be issued five years after it was granted.
Richard J. Schager, Jr., a lawyer for some of the former Lehman employees who had filed claims of $120 million for deferred compensation tied to the stock awards, said he “respectfully disagreed” with the ruling. He said Lehman itself, in court filings, initially listed the restricted stock units as claims.
“When Lehman filed for bankruptcy it listed each of these employee claims individually as contract claims,” Mr. Schager said. “It was only after the major creditors took over the Lehman shell that they developed the argument that the withheld compensation was really equity.”
Mr. Schager said he is consulting with his clients on whether they will appeal...
Full story at: http://www.wsj.com/articles/judge-rejects-ex-lehman-employees-bid-to-collect-on-stock-awards-1459455444
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Ex-Lehman Employees Can't Revive $200M In Stock Claims
Mar 31, 2016 | Law360
By Max Stendahl
A New York federal judge has refused to reinstate approximately $200 million in claims by more than 100 former senior employees of Lehman Brothers who were partly compensated in stock before the megabank went under in 2008, according to a decision made public Thursday.
In a ruling dated Wednesday, U.S. District Judge Richard Sullivan upheld a bankruptcy court’s 2014 finding that claims by about 110 former Lehman workers seeking cash for their restricted stock units should be classified as equity and may be wiped out.
Judge Sullivan said the dispute was similar to one involving former employees of Enron Corp., the Texas-based energy giant that collapsed amid allegations of widespread accounting fraud. The judge said the cases could not be distinguished on the grounds that the former Lehman employees had allegedly been forced to accept the terms of the bank’s compensation plan.
“For purposes of this case, the court adopts the reasoning of the Enron court and rejects appellants' argument that they accepted their compensation terms under economic duress,” Judge Sullivan wrote.
According to court documents, the former employees received seven-figure compensation deals that included both cash and equity in the form of the RSUs. Under the compensation plan, the RSUs gave workers the right to Lehman stock if they stayed at the company for five years and hit certain performance targets.
The claimants at issue had not yet vested their RSUs when Lehman went bankrupt and argued that the unpaid claims should stand on equal footing with the bank’s other unsecured debts.
The November 2014 ruling by U.S. Bankruptcy Judge Shelley Chapman followed a three-day evidentiary hearing. Several workers claimed in court that the RSUs were an essential part of their compensation and that they had no realistic option to walk away from Lehman before the five-year waiting period elapsed.
In the decision, Judge Chapman said that such personal accounts were “compelling” but also described the claimants as “highly sophisticated individuals who were working at a prestigious investment banking firm.”
Richard Schager, a lawyer who represents many of the former employees, said on Thursday that Lehman had initially listed the claims as contract claims for withheld compensation. The bank changed course and began arguing that the compensation was equity “only after the major creditors took over the Lehman shell,” he said.
“The major creditors won here, but it was not the victory that Lehman wanted at the beginning,” Schager said. “We respectfully disagree with the court’s conclusion that these were securities as defined in the statutes, and we are consulting with our clients regarding an appeal.”...For full text: http://www.law360.com/articles/778800/ex-lehman-employees-can-t-revive-200m-in-stock-claims
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U.S. judge rejects Lehman workers' claims on stock awards
Mar 31, 2016 | Reuters
By Jonathan Stempel
Former senior employees of Lehman Brothers Holdings Inc [LEHLO.UL] who once commanded seven-figure pay packages failed to persuade a federal judge to restore hundreds of millions of dollars of stock awards that become worthless after the Wall Street bank's collapse.
In a decision made public on Thursday, U.S. District Judge Richard Sullivan said the awards should be classified as equity, subject to being wiped out, rather than as contract claims entitling the workers to cash payouts from Lehman's estate.
The decision covers an estimated $200 million or more of restricted stock units (RSUs) that Lehman awarded as an incentive to perform well over the long-term, before its Sept. 15, 2008 bankruptcy helped trigger that year's global financial crisis.
Sullivan ruled less than two weeks after the federal appeals court in Manhattan rejected a bid by former Lehman workers to hold onetime Chief Executive Richard Fuld and others liable for losses in an employee stock ownership plan.
The RSUs entitled workers to Lehman common stock if they stuck around for five years and met performance targets.
Most workers holding unconverted RSUs saw them wiped out, but more than 100 told Sullivan in seven lawsuits that they should be treated like Lehman creditors who got at least some of their money back.
But the judge called the RSUs "materially indistinguishable" from "securities-based compensation" previously deemed low in the capital structure of other companies that went bankrupt, including Enron Corp, MF Global Holdings Ltd and WorldCom Inc.
He said the RSUs counted as equity because they were "issued and treated as ownership shares in Lehman - shares that, while inferior to Lehman common stock, nevertheless carried similar benefits and risks."
The decision upheld a November 2014 ruling by U.S. Bankruptcy Judge Shelley Chapman in Manhattan, who oversees Lehman's Chapter 11 case.
Richard Schager, a Stamell & Schager partner representing many Lehman workers with RSUs, in an interview called Sullivan's decision "disappointing," and said an appeal is possible.
For full story: http://www.reuters.com/article/us-lehmanbrothers-decision-idUSKCN0WX2BF
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Mar 30, 2016 | The Wall Street Journal
By John Carney
Erin Callan appeared on CNBC at a quarter past 4 p.m. It was her first public appearance since she vanished from the public eye in 2008 after she resigned as the chief financial officer of Lehman Brothers.
Last week, she published “Full Circle: A Memoir of Leaning In Too Far and the Journey Back.” The book tells the tale of her ill-fated Wall Street career. Unlike many earlier financial crisis books, “Full Circle” is a surprisingly introspective book. Its central message is one of lament. Ms. Montella, as she’s now called, regrets giving herself so completely over to her work in finance.
We covered Ms. Montella’s interview live below.
OLDESTNEWEST11:43 pm
One thing that still is unclear: how is Erin Montella supporting herself?
That’s not addressed in her book and she didn’t quite answer this question when Ms. Evans asked about it.
11:39 pm
How does Ms. Montella support herself financially?
“I don’t know. I still consider myself relatively young, so I don’t know what I’m going to do,” she says.
11:38 pm
“It happens for a reason if you make it happen for a reason.”11:37 pm
If Dick Fuld called, would Ms. Montella agree to work with him again?
“Absolutely not. That’s not about Dick. It’s not something I’m interesting in,” she said.11:34 pm
Ms. Montella explains how she “lost her way.”
“When you are put into the spotlight, when you get media coverage…you believe it,” she says.
In her book, she describes how she came to regret allowing herself to be featured in a story in the Wall Street Journal that included glamorizing photos.11:32 pm
Has there been a cultural change on Wall Street? Do people have a better work-life balance?
“I read the stories like everyone else…but in the end, it’s each individual’s decision,” Ms. Montella says.
She explains that there were “badges of honor” for people who overworked. Back when she was on Wall Street, she admired a woman who took a 2-week maternity leave.
“Now I think, ‘Oh my goodness,’” she says.11:30 pm
Kelly Evans asks about the infamous Repo 105 transactions.
“I’m really not going to talk about that now, Kelly,” Ms. Montella says.
11:29 pm
“I understand the anger and what happened. And how many people lost so much,” Ms. Montella says.11:28 pm
Ms. Montella says that while she didn’t set out to write a self-help book but she did want to tell the story about her own life.
“I think I’ve had a unique position where I can speak with authority about what did it look like to have a career at the absolute center of your life,” she says. “When things didn’t work out, I had no foundation.”11:25 pm
Ms. Montella on her life these days: “My day to day looks pretty much like a lot of people’s. I spend time with my husband. I’m raising my daughter.”
11:21 pm
Ms. Montella argues that that she wasn’t “set up to fail” at Lehman.
This is a point she makes in her book. The wealth of people like Joe Gregory and Dick Fuld were tied up in the equity of Lehman. Far from wanting to see her fail, they desperately want her to succeed, Ms. Montella says. 11:21 pm
Ms. Montella argues that that she wasn’t “set up to fail” at Lehman.
This is a point she makes in her book. The wealth of people like Joe Gregory and Dick Fuld were tied up in the equity of Lehman. Far from wanting to see her fail, they desperately want her to succeed, Ms. Montella says.
For full story: http://blogs.wsj.com/moneybeat/2016/03/30/erin-callan-on-cnbc/
Client Attorney Privileged/Attorney Work Product/At Request of Counsel
Former Employee Stock Claims
Erin Callan Memoir
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