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Martin Lipton’s ties to the New York Stock Exchange have been cut. Arguably the most powerful corporate adviser in America, Lipton had been the exchange’s chief outside corporate counsel, privy to the institution’s most important decisions. He also headed the exchange’s Legal Advisory Committee. Now Lipton and his firm, Wachtell, Lipton, Rosen & Katz, are no longer getting work from the landmark financial institution, according to an exchange spokesman. In Lipton’s place, Silicon Valley lawyer Larry Sonsini has taken over as chairman of the legal advisory committee. Lipton, 73, had come under fire for his role advising the exchange and its former chairman and chief executive officer, Richard Grasso, about Grasso’s nearly $200 million pay package. New York State attorney general Eliot Spitzer had critically portrayed Lipton’s actions in his May 24 suit against the exchange and Grasso. Although not naming Lipton or his firm as defendants, Spitzer faulted the lawyer and his firm for drafting documents that allegedly failed to disclose the full terms of Grasso’s pay to the Securities and Exchange Commission and to the public. He also implied that Lipton might have had a conflict — by advising Grasso about his compensation at the same time that he represented the exchange. The exchange referred questions to Michael York, an attorney with Reston, Va.’s Wehner & York. York stated that Wachtell might be wrapping up projects, but “they won’t be doing any new work” for the exchange. Lipton did not respond to a phone call or an e-mail. Wilson Sonsini Goodrich & Rosati chairman Sonsini says that the exchange’s board of directors selected him in June to replace Lipton as head of the Legal Advisory Committee. Sonsini, who was an exchange director before the board was reconfigured last fall, also serves as chairman of the exchange’s important Regulatory Enforcement & Listing Standards Committee. Sonsini’s ascension was apparently kept under wraps for a while. None of the five members of the Legal Advisory Committee contacted in August were aware that Lipton was no longer in charge. “I didn’t know that,” said former federal judge Stanley Sporkin, a partner in the Washington, D.C., office of Weil, Gotshal & Manges. “Did he retire or resign? I didn’t receive a notice.” Likewise, Skadden, Arps, Slate, Meager & Flom partner Kenneth Bialkin expressed surprise that Lipton was gone. “Who’s the chairman now?” he asked. This 25-person committee — which includes partners from major Wall Street law firms and in-house lawyers — has been dormant since the Grasso pay scandal surfaced last fall. The committee, founded more than 20 years ago, had previously convened three to four times a year. “It’s not functioning anymore,” said Sporkin. “It’s hard to say what’s going to happen to it.” A few days after The American Lawyer contacted Sporkin and his fellow committee members, they received an e-mail informing them that a meeting would be held in October. Sporkin, a former director of the SEC’s division of enforcement, sounded disappointed that the exchange hadn’t sought the advice recently of the committee members, who serve for free. Other members include Jack Nusbaum, chairman of Willkie, Farr & Gallagher; Thomas Cole, chairman of Sidley, Austin, Brown & Wood; and William Williams Jr., of Sullivan & Cromwell. “It was such a no-brainer to have such a group,” Sporkin said. “It brought together some of the finest legal minds in the financial services area.” But others downplayed the committee’s role. “It’s mostly an exchange of views,” said Skadden’s Bialkin about the committee’s activities. “The committee doesn’t have any power.” Member Herbert Wander, a partner at Katten Muchin Zavis Rosenman, said he understood that this committee is not currently the exchange’s highest priority. “They have more important things to do than have a bunch of lawyers come down and give advice.”

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