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U.S. judge gives mutual fund industry good news The mutual fund industry, which has been under intense scrutiny, has received some good news from a federal judge who dismissed a class action filed against Salomon Smith Barney. After hearing more than three hours of oral arguments, Judge Paul A. Crotty of the Southern District of New York held that the plaintiffs could not proceed in their assertion of wrongdoing. Investors accused the investment firm of offering undisclosed incentives to brokers and financial advisers, extracting improper fees from investors in its proprietary funds and encouraging its propriety funds to invest in poorly performing companies because of their status as Smith Barney investment banking clients. In re Salomon Smith Barney Mutual Fund Fees Litigation, No. 04-civ-4055. Shearman finance group head joins Paul Weiss The head of Shearman & Sterling’s structured finance group is leaving to join Paul, Weiss, Rifkind, Wharton & Garrison. T. Robert Zochowski specializes in securitization transactions involving unusual assets like films, patent royalties and hydrocarbon reserves. He recently led Shearman’s representation of the Ambac Assurance Corp. as guarantor of a $500 million securitization of future film revenue by the Weinstein Co., the film company launched by Miramax founders Harvey and Bob Weinstein. As options probe goes on ex-Apple GC lawyers up For the last few months, the San Francisco U.S. attorney’s office has been investigating whether Apple Computer Inc. changed the dates on stock option grants to employees to maximize executive payouts, according to lawyers familiar with the case. Apple-and some of its current and former executives-are now seeking counsel. Nancy Heinen, Apple’s ex-general counsel who left the company earlier this year, has hired defense lawyers Cristina Arguedas and Miles Ehrlich to represent her in connection with the government probe. Arguedas of Arguedas, Cassman & Headley has represented an Enron defendant and athletes tied up in the Balco steroids case. Ehrlich is the former head of the San Francisco U.S. attorney’s office’s white-collar section, a job he left last year to start the firm Ramsey & Ehrlich. Vinson & Elkins sued by San Diego over pension The city of San Diego has sued Vinson & Elkins, alleging the firm failed to fully investigate problems with the city’s troubled pension system and provide a “warts and all” report into a $1.4 billion to $2 billion pension funding shortfall. The city brought breach of contract, breach of fiduciary duty and professional negligence causes of action against Houston-based Vinson & Elkins and seeks at least $10 million in damages. City of San Diego v. Vinson & Elkins was filed on July 27 in San Diego superior court. No individual attorneys are named in the suit. Ex-Comverse execs face back-dating charges Three former executives at voicemail software maker Comverse Technology Inc., among them the company’s former top lawyer, have been charged with fraudulently manipulating dates on stock options. In a complaint unsealed last week, the U.S. Attorney’s Office for the Eastern District of New York alleges that Jacob “Kobi” Alexander, the former CEO of the company; David Kreinberg, its former finance chief; and William Sorin, its former senior general counsel, violated federal law and Securities and Exchange Commission rules by conspiring to hide the backdating from shareholders and the investing public. “The defendants reaped substantial personal gain from their fraudulent conduct,” the complaint asserted. “Alexander exercised options and sold stocks worth approximately $150 million, of which approximately $138 million was profit.” Prosecutors attribute almost $6.4 million of that profit to backdating.

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