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Malcolm Wittenberg, the head of Crosby, Heafey, Roach & May’s patent practice, was indicted on felony insider trading charges Monday. The San Francisco attorney, whose client list has included Coca-Cola Co., Levi Strauss & Co., Visa International and Wells Fargo Bank, is accused of illegally profiting $14,000 in a case which has the potential to end his 30-year legal career. The allegations stem from the 1999 merger of Forte Software Inc. and Sun Microsystems Inc. Wittenberg, who was Forte’s patent attorney, bought 2,000 shares in the company, which he sold once the deal was completed. In a separate case, Wittenberg agreed to repay his profits, plus more than $15,000 in penalties and interest, the Securities and Exchange Commission announced Monday. Under terms of the deal, Wittenberg admitted no wrongdoing. He could not be reached for comment. “Malcolm Wittenberg is an outstanding lawyer at the peak of a … successful career,” said his attorney, Douglas Young of Farella Braun & Martel. “He will receive a vigorous defense.” If convicted of either of the two felony counts, Wittenberg could face disbarment. It is the second insider trading case the SEC and U.S. attorney’s office has brought involving local law firms in the last month. In March, an associate at Brobeck, Phleger & Harrison allegedly tipped a friend about an impending merger between Sun and Cobalt Networks Inc. According to the indictment, Wittenberg was contacted by Forte in August 1999 about the pending merger with Sun. That day, he purchased 1,000 shares of Forte — his client. After speaking further with Sun lawyers about Forte’s patents he made another 1,000-share purchase, according to the indictment. Sun acquired Forte to beef up its software development tools sector. The deal was finalized in October 1999, and Wittenberg’s 2,000 shares of Forte were converted into 600 shares of Sun. He sold them Oct. 21, 1999. At the Oakland, Calif., headquarters of Crosby, Heafey, firm leaders were tight-lipped about the allegations. “Mal Wittenberg was with us for quite a while and we are concerned about the charges,” said partner James Wilson, speaking on behalf of the firm, adding that he could not say more because of the pending criminal case. “He’s been a valuable person in Crosby, Heafey. We hope that he will put this behind him,” Wilson said. The firm’s terse statement belies the pivotal role that Wittenberg plays in a strategic part of the firm that Crosby, Heafey has been trying to grow. “He is one of those partners who is synonymous with Crosby, Heafey,” said one industry insider. Wittenberg, who heads the patent prosecution group, has worked at the firm for 10 years since arriving from the now-defunct Limbach, Limbach & Sutton. “I think right now everyone cares about Mal’s well-being,” said Morgan Tovey, a partner at the San Francisco office who oversees recruiting. The indictment news comes at a time when Crosby, Heafey is trying to strengthen its IP and technology-related practices. In January, Oakland managing partner John Smith pledged to boost the size of the San Francisco office. Currently, 20 IP attorneys work in San Francisco and Century City, Calif., offices, said Tovey. The indictment will not cast a shadow on Crosby, Heafey’s IP practice, Tovey said. “Mal is a well-regarded guy who enjoys a good reputation,” he said. “I don’t think that this will affect us in the long run. Nothing has been proven.” Wittenberg hired two heavy hitters for his defense: Young and Robert Friese of Shartsis, Friese & Ginsburg. Friese represented Wittenberg during negotiations with the SEC. The settlement with the regulatory agency — return of profits and a civil penalty in the same amount plus interest — is considered standard. Besides the involvement of a lawyer, staff attorney Robert Mitchell of the SEC said the case was unique in one aspect. “He traded in relatively small amounts. I think some people think you can fall under the radar if you trade in small amounts. This case shows that it’s not true,” Mitchell said. Both the U.S. attorney’s office and Young did not comment on whether a plea agreement was being or has been considered. A Nasdaq watchdog group tipped the SEC about the trades, which then shared the information with the U.S. attorney’s office. Carolyn Samiere, the SEC staff attorney who investigated the case, said Wittenberg was “asked to participate and assist [Sun] in the merger.” The SEC complaint says Wittenberg billed Forte for his time. Crosby, Heafey said it would investigate the matter after reviewing the indictment, which came as a surprise to some partners. “Our view is that once we have seen the indictment, we will investigate and find out what actions are appropriate,” said Crosby, Heafey managing partner Kurt Peterson.

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