Two other Cravath associates identified by the firm in its press release as working on IBM's acquisition of SPSS, Daniel Birnhak and Mark Dundon, have joined Weil, Gotshal & Manges within the past year. Neither responded to requests for comment about the deal or the insider trading allegations tied to the transaction. Kelly Halpern-Skoglund, another Cravath associate who worked on the matter, joined Reed Smith in February 2010. She declined to comment.
Other Cravath associates that worked on the deal who remain with the firm include Jisoo Kim—the onetime summer associate—M.C. Tania Balthazaar, and Sophia Tawil. Barshay, the corporate partner who took the lead for Cravath on the transaction, did not respond to a request for comment, nor did tax specialist J. Leonard Teti II, the sole remaining associate to have also worked on the SPSS acquisition for IBM, and whom the firm announced in November was being promoted to partner.
Three Cravath spokeswomen also did not respond to requests for comment about the insider trading case, nor did presiding partner Evan Chesler, who was in Milwaukee on business Friday. The Justice Department does note that the unnamed New York law firm advising IBM "took various precautions" to keep the potential deal between both companies secret in order to prevent insider trading. (Mayer Brown advised SPSS on its sale to IBM.)
“Among other things, the New York Law Firm used code names for IBM and SPSS in the documents that it prepared in connection with the IBM/SPSS Transaction,” according to the criminal complaint. “At all relevant times, the New York Law Firm maintained a strict written policy prohibiting any person connected with the firm from, among other things, ‘[r]evealing ‘inside’ information to anyone else except on a strict ‘need to know’ basis.’ ”
These precautions are standard practice among Am Law 100 firms, and on September 29, 2008, the associate identified by prosecutors as Attorney-1 certified to his firm in writing that he had read and understood the firm's policy on insider trading, according to the criminal complaint.
The insider trading charges against Conradt and Weishaus do not appear to have hurt Cravath's relationship with IBM. The firm advised the company in August on its $1.3 billion bid to buy human resources software maker Kenexa, according to our previous reports. Robert Weber serves as general counsel and senior vice president for legal and regulatory affairs at IBM.
Ellen Davis, a spokeswoman for the U.S. attorney's office in Manhattan, declined to comment on the identity of the unnamed associate in question. Assistant U.S. attorneys John Zach and David Massey, who are leading the government's team prosecuting the insider trading charges from the Justice Department's securities and commodities fraud task force, either declined or did not respond to requests for comment on the matter.
Mary Hansen, A. Kristina Littman, and accountant John Rymas are conducting the SEC's ongoing insider trading investigation out of the regulator's Philadelphia office. G. Jeffrey Boujoukos and Catherine Pappas are handling the agency's civil litigation against Conradt and Weishaus.
The case isn't the first insider trading investigation to touch Cravath. Last year Matthew Kluger, a former Cravath associate who also once worked at Fried, Frank, Harris, Shriver & Jacobson, Skadden, Arps, Slate, Meagher & Flom, and Wilson Sonsini Goodrich & Rosati, was charged in connection with an insider trading probe that netted defendants roughly $37 million in illicit proceeds over more than a decade.
Kluger, who worked out of Cravath's New York office from 1994 to 1997, pleaded guilty to the insider trading charges in December 2011 and was sentenced to 12 years in prison this past June, according to our previous reports. The sentence is the longest-ever handed down in an insider trading case.
