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Editors Choice

National Law Firm LeClairRyan To Shutter Following Bitter Lawsuits, Mass Attorney Departures and a Sharp Decline in Revenues

LeClairRyan has been facing lawsuits, including a $150 million lawsuit brought by Tonya Mallory, the founder and former chief executive officer of the now-defunct Richmond-based clinical laboratory company Health Diagnostic Laboratory. Mallory sued LeClairRyan for alleged malpractice in Richmond Circuit Court in December 2017, claiming that the law firm gave bad legal advice that contributed to the blood-testing company’s eventual bankruptcy after it settled alleged violations of federal anti-kickback laws.

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RICHMOND — The Richmond-based legal giant LeClairRyan is shutting down, a casualty of a dramatic collapse in revenue and an exodus of lawyers in recent years.

The demise of the national law firm, which has an office in Charlottesville, also is attributed in part to the uncertainty surrounding a multimillion-dollar lawsuit filed by a former client.

LeClairRyan announced late Wednesday afternoon that its partners had voted to start an orderly wind down of its business, saying it “was in the best interest of our clients, colleagues and creditors.”

It is one of the larger law firms to close in recent years in Virginia and nationally.

LeClairRyan, with 21 offices across the country, including six in Virginia, was ranked No. 179 among the nation’s law firms based on revenue in 2018.

The decision to cease operations came as departures continued at LeClairRyan this year, including Gary LeClair, the firm’s co-founder and former longtime CEO who joined crosstown rival Williams Mullen earlier this week.

Besides losing lawyers, LeClairRyan has closed offices and the firm’s gross revenue continued to decline.

C. Erik Gustafson, who was listed in a news release as the former CEO of LeClairRyan, said in the statement that he and his colleagues were “deeply saddened” to make the decision to wind down operations.

“Through our transition we will continue to focus first and foremost on the success of our clients, as we have always done,” said Gustafson, who had been chief executive officer since early 2016.

“I am thankful to all of the clients who have chosen to work with our team over the last 30 years, and I am grateful for the exceptional lawyers and professionals who continue to work with dedication and determination towards winding down the firm in an orderly fashion.”

Gustafson, who could not be reached for comment, works in the firm’s Alexandria office. He joined LeClairRyan in 2001.

LeClairRyan acknowledged in its statement that some partners already had moved to new firms and that the company anticipates that the remaining attorneys will do the same over the coming weeks.

Two attorneys were listed on the firm’s Charlottesville office website as of Wednesday.

Steven W. Blaine, a founding member of the Charlottesville office who focused on real estate finance and land use law, will join the local office of Woods Rogers, a Roanoke-based law firm.

Gretchen Jackson, listed on the now-defunct firm’s website as the Charlottesville office leader, could not be reached for comment. She focused on transportation litigation, tort defense, business litigation and construction law.

A spokesman hired by LeClairRyan declined to comment beyond the release, including on whether the firm would file for bankruptcy or when the last day will be for the firm’s employees.

LeClairRyan is based at the SunTrust Center at 919 E. Main St. in downtown Richmond, which is the firm’s largest office.

LeClair and Dennis Ryan created a venture capital legal boutique operation in 1988 to help entrepreneurs, startup businesses and venture capitalists.

LeClair, who served as chairman of LeClairRyan from 1988 to 2015 and CEO from 1988 to 2010, declined comment Wednesday about the shutdown of the firm he co-founded.

“I am incredibly grateful for all of the colleagues and clients who made it a great 30-plus years for me there,” LeClair said. “I am incredibly excited to be at Williams Mullen and continuing to do some good in the Richmond venture capital community.”

Ryan left LeClairRyan in 2012 to join Health Diagnostic Laboratory Inc.

LeClairRyan grew from those two attorneys into a full-service national firm with nearly 400 lawyers working at 25 offices in 13 states and Washington, D.C., representing some of the largest corporations in the world. It had offices from Los Angeles to Boston.

The firm’s website said it had 225 attorneys in 21 offices as of February.

But dozens of lawyers have been leaving LeClairRyan in recent months, including LeClair and five other lawyers who recently joined Williams Mullen; a group of 15 attorneys with a specialty in aviation law leaving for a Philadelphia-based firm; and a four-lawyer group in LeClairRyan’s labor and employment practice in the Los Angeles office joining the Clark Hill firm there on Wednesday.

The firm’s gross revenue also fell from $163 million in 2015 to $122.4 million in 2018, according to the latest Am Law 200 figures.

The firm said its dissolution committee is working in cooperation with its lender to ensure the continuity of client service until LeClairRyan firm “ceases to actively practice law and turns its attention to post-practice activities.”

LeClairRyan has been facing lawsuits, including a $150 million lawsuit brought by Tonya Mallory, the founder and former chief executive officer of the now-defunct Richmond-based clinical laboratory company Health Diagnostic Laboratory. Mallory sued LeClairRyan for alleged malpractice in Richmond Circuit Court in December 2017, claiming that the law firm gave bad legal advice that contributed to the blood-testing company’s eventual bankruptcy after it settled alleged violations of federal anti-kickback laws.

LeClairRyan in June sought a dismissal of Mallory’s lawsuit.

In 2016, LeClairRyan agreed to pay a $20.37 million settlement to the bankruptcy estate of Health Diagnostic Laboratory.

The downfall of HDL might have been a contributing factor in LeClairRyan’s dissolution, said Carl Tobias, a law professor at the University of Richmond.

Tobias said the dissolution of a major firm such as LeClairRyan “is unusual, but it does happen, for all kinds of reasons, which could range from economics to disputes over anything such as the way the firm is run.”

Tobias said he thinks the legal industry also has become more “fluid” since the economic recession, with more firms seeking mergers and lawyers switching firms more often than before the downturn.

“There is a lot of movement these days,” he said. “People do not always stay at the same firm like they often did traditionally.”

With the breakup of LeClairRyan, “the lawyers will scatter and join other firms,” he said. “In the short term, it may be not great for some of the lawyers, but most of them I expect will land on their feet. And I expect a number of them had already seen this contingency and were making plans.”

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Editors Choice

Virginia Judge Behavin’ Like an Outlaw On the Bench, Pulls a Pistol On Counsel During Trial

Judge Hummel then pulled out a black handgun from an over-the-belt leather holster beneath his robe, and started waving it around the room.

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A Judge Pulled a Gun in the Courtroom—and Then It Got Weird

“The whole trial was insane,” said one lawyer, who later reported the weapon-wielding jurist to the FBI.

JUL 16, 2022 | REPUBLISHED BY LIT: JUL 17, 2022

During a trial in West Virginia earlier this year, witnesses tell The Daily Beast, a state court judge whipped out his handgun, waved it in the air, and left it on the bench with the barrel pointing directly at the corporate lawyers who had irritated him.

Circuit Judge David W. Hummel Jr., who oversees cases in the tiny city of New Martinsville, repeatedly told The Daily Beast it never happened.

When reached by phone in March, he initially professed shock at the allegations.

On subsequent phone calls, however, his story kept changing as he claimed to recall more details about the incident.

“I did not have my 1911 at any point during that trial,”

he said then, referring to a common type of semi-automatic pistol.

“It was secreted in a drawer on the bench. I never showed my 1911 at the trial whatsoever—at any point during that trial.”

That judge is now under investigation by the state’s judiciary for violating the profession’s code of conduct, according to three witnesses now sharing information with law enforcement and official communications about the investigation reviewed by The Daily Beast.

The judge’s own staff has since told an investigator that the judge did, in fact, display his gun openly during an attorneys-only hearing and boasted about having it in his possession, according to two of those witnesses.

Hummel insisted to The Daily Beast that there was no recording of the incident that would back up these accusations, but two witnesses say the state investigator has acquired a videotape of the interaction.

“You don’t understand what a terrible victimization it is,”

said Lauren Varnado, the attorney who was standing at the podium when the judge pulled out his gun.

“It was pretty traumatic for multiple people. The whole trial was insane.”

“We have no power in this situation,”

she said.

“It was way scarier than even just a normal person on the sidewalk.

You need more power over us than you already have right now?

That’s frightening, because he could order us to do whatever.

Why would you ever need to pull out a gun?”

The judge’s show of force was the culmination of months of building tension between him and Varnado’s team of corporate lawyers.

The Daily Beast has reviewed hundreds of pages of court transcripts and spoken to several people involved.

As with many legal battles in West Virginia, it all started with fossil fuels.

“It was too stunning to even process it. My brain didn’t even process it until after the hearing concluded. I was on edge. I don’t know if it was loaded.”
— Lauren Varnado

Until the case settled recently, Hummel oversaw a dispute involving West Virginia landowners who sued over the royalty payments they get from the natural gas giant EQT for fossil fuels extracted from the earth hundreds of feet below their property.

But the gas company’s lawyers accused the judge of never disclosing that his parents get gas company royalties that may someday pass on to him—sparking questions about a glaring conflict of interest.

When the gas company’s lawyers sought to disqualify him, court transcripts show he grew increasingly aggravated at Varnado and her team.

At an April 2021 court hearing in which he was asked about his family’s gas interests, the transcript shows how the judge patronized EQT’s lawyers as he detailed his family tree and dismissed their concerns, ranting about how his cousin “Christy” got mad at him for not recognizing her at a wedding.

When the attempt to have higher state courts disqualify him failed, Hummel started the next court hearing in similar fashion.

“Okay. Excellent. And I’m Judge Hummel, and I have no conflicts, Supreme Court said, so here we are. And this time I don’t have to talk about my Aunt Rose’s numerals or which shoe I put on first or anything,”

he said on July 19, 2021, according to another transcript.

The eventual trial was always going to be fiercely contentious.

EQT cut its royalty payments nearly a decade ago, shortly before the energy value of the state’s natural gas production began to overtake coal.

While the state has relied heavily on the exports of coal and oil since the 1800s, natural gas from the fracking of the massive Marcellus Shale underground has the promise to enrich the state.

By the time the two-week trial started in February in New Martinsville, the locals were so angry at how the gas company had cut their royalties in recent years that EQT lawyers felt the need to be escorted by ex-CIA private security contractors, according to three members of that team.

But when lawyers on both sides were called into the century-old sandstone courthouse for a special hearing on Saturday, March 12, bailiffs at the entrance surprised the legal teams with a new rule for the day.

“Trial counsel only today,” they said, according to three witnesses who spoke to The Daily Beast on condition of anonymity, fearing potential reprisal.

Varnado’s private security guard and a paralegal were turned away.

The lawyers made their way into the courtroom on the second floor.

Once there, according to a transcript, the judge castigated the gas company’s lawyers for having private guards, noting that if there were any concerns about safety,

“I promise you, I’ll take care of them.”

“We were never told these folks were security until most recently,”

the judge said, according to a court transcript.

“I got this man here carrying a man purse, which I make fun of him every damn day for wearing such a sissy-ass contraption. And I hear he has blood coagulant. I have blood coagulant up here too, and I’ve got lots of guns. Like, bigger ones too.”

Hummel then pulled out a black handgun from an over-the-belt leather holster beneath his robe, and started waving it around the room, according to Varnado and another person in the room.

Hummel then put it down on his wooden desk, known as a judge’s bench, and left the barrel pointing at Varnado, her New York law partner David R. Dehoney, and their local West Virginia attorney Jennifer Hicks.

The gun stayed there for the rest of the hearing. When the attorneys were directed to negotiate in a private room, they found the handgun still waiting for them when they returned. When lawyers had to approach the judge, the resting gun remained pointed at their faces.

“It’s just a violation of basic gun safety, having it out like that pointing at people,” Varnado said. “It was too stunning to even process it. My brain didn’t even process it until after the hearing concluded. I was on edge. I don’t know if it was loaded.”

Indeed, pointing a firearm at anything but a target violates the National Rifle Association’s primary rule on gun safety, which is to keep a barrel pointed away from people at all times. And the judge seems to have broken a second rule of safe gun handling, which is to check whether a firearm’s chamber is empty and clear of ammunition—then say so out loud.

In the days after the hearing, Varnado reached out to the FBI to report what happened. But she decided to seek help from the feds 100 miles away in Pittsburgh, concerned that local law enforcement might be untrustworthy given the judge’s position of power and influence.

Varnado still feels confident that was the right move. When The Daily Beast reached out to Wetzel County Sheriff Michael L. Koontz, whose deputies provide security outside the courthouse, the sheriff remembered that a special hearing happened that Saturday morning—but denied any knowledge about the judge pulling out the gun.

However, two sources with direct knowledge say a sheriff’s deputy who was in the courtroom that day has since confirmed to the state investigator that the judge brandished his pistol.

When reached by phone a few weeks after the episode, Hummel first denied anything remarkable ever occurred.

“There is no incident… I absolutely, categorically deny I had a gun that day in the courtroom,” he said. “It was just me and the attorneys. I had no reason to have a firearm that day… I’ve never shown a gun in my courtroom to anybody. I don’t want them to know that I have it. I do not display my firearm at any time during trial.”

“My job is not to protect anyone with firearms,” he said. “That’s what my bailiffs and deputy sheriffs are for.”

Minutes later, the judge called back and said he now recalled having a holstered gun on him beneath his robe during the trial the previous week.

But it wasn’t the 1911 pistol, he said.

It was a long, classic-looking revolver that hails from the days of the Wild West.

“I wore the Colt Peacemaker,”

he said.

“The Peacemaker never ever came out of the holster during that trial.”

When the judge called back a third time, he acknowledged showing something to the attorneys in the courtroom that day.

But he said it wasn’t a gun.

“I did pull out a small, red first aid kit. But it was casual. I did show her a foiled packet, and said this is blood coagulant. We have preparations for active shooter situations,” he said.

In April, a spokeswoman with the Supreme Court of Appeals of West Virginia told The Daily Beast that she was not aware of the gun incident.

And records showed that Hummel had not been the subject of an admonishment or formal statement of charges.

But in the weeks since, Judicial Investigation Commission of West Virginia investigator David Hudson has been gathering evidence about the incident, asking witnesses to describe the firearm and how they felt about it being displayed by the judge, according to communications reviewed by The Daily Beast.

In a signed affidavit submitted to the investigator, Varnado, who hails from Texas, described the judge’s gun as a “Colt 45,” a widely recognized pistol otherwise known as a 1911.

The judge, his court clerk, a secretary, and a court reporter have all submitted sworn affidavits describing the events that day to the investigator, court reporter Holly A. Kocher told The Daily Beast on Wednesday.

Since March, the FBI’s Pittsburgh field office has repeatedly declined to confirm that a special agent there has been assigned to look into the incident. The judge did not respond to requests for comment on Wednesday.

The state judiciary, citing policy, declined to provide details about the ongoing ethics investigation.

But its staff pointed to its website, which indicates that judges who violate the rules face a one-year suspension.

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corruption

Akerman’s Lawyer Travers Clark On A Saturday Foreclosure Filin’ Bonus

Morrison, a homeowner represented by the local legal aid society, loses his case when dismissed WITH PREJUDICE.

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Morrison v. Carrington Mortgage Services LLC

(3:22-cv-00013)

District Court, E.D. Virginia

xxx

FEB 5, 2022 | REPUBLISHED BY LIT: FEB 6, 2022

LIV COMMENTARY (APRIL 6, 2022)

CENTRAL VIRGINIA LEGAL AID SOCIETY, INC. have achieved little for Morrison, if anything. The case is over before it has started. A dismissal WITH PREJUDICE is effectively a loss to the homeowner, who cannot bring these claims again to federal court.

STIPULATION OF VOLUNTARY DISMISSAL PURSUANT TO FED. R. CIV. P. 41(a)(1)(A)(ii)

Pursuant to Fed. R. Civ. P. 41(a)(1)(A)(ii), Plaintiff James Morrison, Jr. stipulates that this action shall be dismissed with prejudice as to Defendants Carrington Mortgage Services LLC, Wilmington Savings Fund Society, FSB as Trustee of ACM Stanwich Alamosa 2020 Trust and Professional Foreclosure Corporation of Virginia and that each party to this Stipulation shall bear their own costs and attorney fees incurred in this action. Pursuant to Kokkonen v. Guardian LifeInsurance Co. of America, 511 U.S. 375 (1994), this Stipulation of Dismissal explicitly reserves in this Court jurisdiction to enforce the terms of the Parties’ Settlement Agreement.
As evidenced by the endorsements herein, Defendants consent to the dismissal provided for herein.
DATED this 13th day of March, 2022.

Respectfully submitted,

/s/ Jessica W. Thompson

Jessica W. Thompson (VSB # 75514)

CENTRAL VIRGINIA LEGAL AID SOCIETY, INC.
101 W. Broad Street, Suite 101
Richmond, VA 23220
Telephone: (804) 200-6037
Facsimile: (804) 864-8794 Email: jessica@cvlas.org Counsel for Plaintiff

SEEN AND AGREED:

/s/ J. Travers Clark
James Travers Clark (VSB # 94706)
AKERMAN LLP
750 Ninth Street, N.W., Suite 750
Washington, D.C. 20001
Telephone: (202) 393-6222
Facsimile: (202) 393-5959 Email: trav.clark@akerman.com
Counsel for Carrington Mortgage Services LLC and Wilmington Savings Fund Society, FSB
as Trustee of ACM Stanwich Alamosa 2020 Trust
/s/ Malcolm B. Savage, III
Malcolm Savage, Esq. (VSB # 91050)
LOGS Legal Group, LLP
10021 Balls Ford Road, Suite 200
Manassas, VA 20109
Telephone: 703-449-20109 Email: msavage@logs.com
Counsel for Professional Foreclosure Corporation of Virginia

 

Defense Counsel for James Morrison, Jr.

LIV would have transcribed this removal notice, but for it being modified to an image PDF version by the Virginia Federal Court.

Just Call Me Trav

The internal memo from @uscourts has gone viral

U.S. District Court
Eastern District of Virginia – (Richmond)
CIVIL DOCKET FOR CASE #: 3:22-cv-00013-DJN

Morrison v. Carrington Mortgage Services LLC et al
Assigned to: District Judge David J. Novak
Cause: 28:1441 Notice of Removal -Violation of Real Estate Settlement Procedure Act
Date Filed: 01/05/2022
Date Terminated: 03/16/2022
Jury Demand: None
Nature of Suit: 220 Real Property: Foreclosure
Jurisdiction: Federal Question
Plaintiff
James Morrison, Jr. represented by Jessica Wagner Thompson
Central Virginia Legal Aid Society
Southside Office
229 N Sycamore Street
Petersburg, VA 23803
804-518-2124
Fax: 804-861-4311
Email: jessica@cvlas.org
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
Defendant
Carrington Mortgage Services LLC represented by James Clark
750 Ninth Street, NW
Ste 750
Washington, DC 20001
202-393-6222
Email: trav.clark@akerman.com
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
Defendant
Wilmington Savings Fund Society, FSB as Trustee of ACM Stanwich Alamosa 2020 Trust represented by James Clark
(See above for address)
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
Defendant
Professional Foreclosure Corporation of Virginia represented by Malcolm Brooks Savage , III
Shapiro & Brown, LLP
501 Independence Parkway
Suite 203
Chesapeake, VA 23320
(703) 449-5800
Fax: (703) 449-5850
Email: msavage@logs.com
LEAD ATTORNEY
ATTORNEY TO BE NOTICED

 

Date Filed # Docket Text
01/06/2022 2 Civil Cover Sheet re 1 Notice of Removal, by Carrington Mortgage Services LLC. (Clark, James) (Entered: 01/06/2022)
01/18/2022 3 ANSWER to Complaint by Carrington Mortgage Services LLC, Wilmington Savings Fund Society, FSB as Trustee of ACM Stanwich Alamosa 2020 Trust.(Clark, James) (Entered: 01/18/2022)
01/24/2022 4 ORDER Setting Pretrial Conference – Initial Pretrial Conference set for 2/17/2022 at 02:00 PM in Richmond Telephonically before District Judge David J. Novak. Signed by Patrick F. Dillard with permission of District Judge David J. Novak on 1/24/2022. (cgar) (Entered: 01/24/2022)
03/09/2022 5 NOTICE of Appearance by Malcolm Brooks Savage, III on behalf of Professional Foreclosure Corporation of Virginia (Savage, Malcolm) (Entered: 03/09/2022)
03/13/2022 6 STIPULATION of Dismissal by James Morrison, Jr. (Thompson, Jessica) (Entered: 03/13/2022)
03/16/2022 7 ORDER pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii), the Court hereby DISMISSES WITH PREJUDICE all claims by Plaintiff against Defendants.

Each party shall bear their own costs and attorney fees incurred in this action.

The Court retains jurisdiction to enforce the terms of the Parties’ Settlement Agreement pursuant to Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375 (1994).

This case is now CLOSED.

Signed by District Judge David J. Novak on 3/16/22. (adun, )

(Entered: 03/16/2022)

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Dark Money

Who Needs Reddit for Share Trading Tips and Tricks? Not this Broker

It’s possibly a big mistake, as Virginia Federal Judge Claude Hilton signed an order and dated it Dec 13, 2011. Its 2021 last time we looked.

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SEC Handed Rare Midtrial Defeat In Insider Trading Case

On Monday, Dec 13, 2021, The U.S. Securities and Exchange Commission suffered a rare midtrial loss after a Virginia federal judge dismissed the agency’s insider trading case against a mortgage broker without hearing any evidence from the defendant.

“As the date of the announcement approached, Clark allegedly took aggressive steps to fund purchases of additional out-of-the-money CEB options, including liquidating his wife’s IRA, nearly maxing out a line of credit and taking out a loan on his car.”

Rule 50(a) provides for a motion for judgment as a matter of law (JMOL) which may be made at any time before submission of the case to the jury. This was previously known as a motion for a directed verdict.

SEC Obtains Judgment Against Former Corporate Controller for Tipping Brother-In-Law Ahead of Merger Announcement

Litigation Release No. 25264 / November 15, 2021

Securities and Exchange Commission v. Christopher Clark and William Wright,

No. 1:20-cv-01529 (E.D. Va. filed December 11, 2020)

DEC 13, 2021 | REPUBLISHED BY LIT: DEC 14, 2021

On October 18, 2021, the U.S. District Court for the Eastern District of Virginia entered a final consent judgment against William D. Wright of Arlington, VA, the former Corporate Controller of CEB Inc., whom the SEC had charged with insider trading.

The SEC’s complaint, filed on December 11, 2020, alleged that Wright learned about an impending acquisition of his company. As alleged, Wright tipped non-public information concerning the acquisition to his brother-in-law, Christopher J. Clark of Arlington, VA. Based on the information tipped by Wright, Clark allegedly purchased highly speculative, out-of-the-money call options. The complaint further alleged that, after the public announcement of the acquisition of CEB for $2.6 billion, Clark liquidated his CEB options and made profits of over $240,000.

Without admitting or denying the allegations in the complaint, Wright consented to a final judgment ordering a permanent injunction against future violations of the anti-fraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; ordering a civil monetary penalty of $240,934; and barring Wright from serving as an officer or director of a public company for two years.

In a related administrative proceeding based on the entry of the final consent judgment, on November 12, 2021, the SEC issued an order barring Wright from appearing or practicing before the SEC as an accountant pursuant to Commission Rule of Practice 102(e)(3)(i), with the right to reapply after two years.

The SEC’s ongoing litigation against Clark is being handled by Daniel Maher, Olivia Choe, John Lucas, and Sarah Hall, under the supervision of David Gottesman.

The 10 Sins

SEC Obtains Judgment Against Former Corporate Controller for Tipping Brother-In-Law Ahead of Merger Announcement

SEC Charges Corporate Controller and His Brother-In-Law with Insider Trading Ahead of Merger Announcement

Litigation Release No. 24982 / December 11, 2020

No. 1:20-cv-01529 (E.D. Va. filed December 11, 2020)

DEC 11, 2020 | REPUBLISHED BY LIT: DEC 14, 2021

The Securities and Exchange Commission today charged the former Corporate Controller of CEB Inc. and his brother-in-law with insider trading in advance of a public announcement about CEB’s acquisition for $2.6 billion. The alleged insider trading scheme generated profits of $296,000.

According to the SEC’s complaint, William D. Wright learned non-public information about the acquisition of CEB while serving as a senior accounting officer of the company. In the months leading up to the merger announcement, the complaint alleges, Wright repeatedly tipped his brother-in-law, Christopher J. Clark, about the impending acquisition.

The complaint alleges that based on the information tipped by Wright, Clark purchased highly speculative, out-of-the-money call options and directed his son to purchase the same options in the son’s account.

As the date of the announcement approached, Clark allegedly took aggressive steps to fund purchases of additional out-of-the-money CEB options, including liquidating his wife’s IRA, nearly maxing out a line of credit and taking out a loan on his car.

The options Clark allegedly purchased were so speculative that Clark – alone or with his son – were the only people to buy those options on all but one of the days they traded.

As alleged, Clark and his son made profits of more than $243,000 and $53,000, respectively.

The SEC’s complaint charges Wright and Clark with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks permanent injunctions, civil penalties, and as to Wright, a bar from serving as an officer or director of a public company.

The SEC’s investigation was conducted by Paul Kim, John Lucas, and Deborah Tarasevich with assistance from John Rymas of the SEC Market Abuse Unit’s Analysis and Detection Center, who uncovered the suspicious trading.

The investigation was supervised by Joseph G. Sansone, Chief of the Market Abuse Unit. Daniel Maher and Olivia Choe are leading the SEC’s litigation. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.

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