Walter C. Little ()
Walter “Chet” Little, a real estate and banking partner at Bradley Arant Boult Cummings who joined the firm’s Tampa office last summer, has been hit with criminal insider trading charges by federal prosecutors in New York.
Little, 43, and his alleged business associate Andrew Berke, 49, are accused of using nonpublic information to make $1 million in illicit profits through options and stock trading, according to a statement and 26-page complaint released late Thursday by the U.S. attorney’s office in Manhattan. The U.S. Securities and Exchange Commission has also filed a parallel civil case against both defendants.
The government’s case against Little, who did not respond to a request for comment on the charges, highlights the potential perils of a robust market for lateral law firm partner hiring. The accusations stem from Little’s time at Foley & Lardner, which he left in July 2016 to join Bradley Arant. His new firm touted Little’s real estate and finance credentials in a press release at the time.
“We are thrilled that Chet has decided to join Bradley,” said the firm’s board chairman and managing partner, Beau Grenier, in the 2016 announcement. (The Birmingham, Alabama-based regional Am Law 200 firm, formed via a merger in late 2008, opened in Tampa two years ago after acquiring a local firm. Bradley Arant sought to re-brand itself a year ago as Bradley.)
Grenier did not respond to a request for comment. But in a statement provided by a Bradley Arant spokeswoman, he said that his firm had just learned of Little’s Thursday morning arrest in Florida and the subsequent insider trading charges leveled against Little.
“Prior to today, Bradley was unaware of any investigation or other facts regarding this matter,” Grenier said in his statement. “Bradley is deeply committed to upholding and exceeding the highest ethical standards and professional conduct. Mr. Little is no longer with our firm as of today.”
Daniel Farrell, a spokesman for Foley & Lardner, said in a separate statement that upon learning of trading activity involving a firm lawyer in June 2016, it commenced an internal investigation.
“During that review, it was determined that firm policies were violated, which led us to immediately take action,” Farrell said. “As a result, the partner is no longer at the firm. We also reported our findings to the relevant authorities and cooperated fully with them throughout their investigation.”
Farrell said that Foley & Lardner takes the insider trading allegations leveled against Little “very seriously,” and noted that the firm has “zero tolerance” for actions that violate its core values and the trust clients place in the firm. “We will continue to hold all of our people to the highest standards of professional and ethical conduct,” he added.
The Foley & Lardner spokesman did not say whether the firm warned Bradley Arant about the circumstances surrounding Little’s departure. At the time, no criminal or civil charges were pending against Little or Berke. (The SEC, in its 30-page civil complaint, identified Berke as Little’s neighbor.)
Todd Foster and Natalia Silver with the Todd Foster Law Group in Tampa are representing Little. In an email, Foster said that he was evaluating the charges and allegations against his client.
“Mr. Little maintains his innocence,” Foster said.
Caroline Mehta, a Washington, D.C.-based litigation partner at Zuckerman Spaeder, is advising Berke in his criminal case. She did not respond to a request for comment.
The criminal complaint against Berke and Little states that between February 2015 and May 2016, Little used Foley & Lardner’s internal document management systems to obtain nonpublic information on at least seven firm clients: Douglas Dynamics Inc., Hanger Inc., Harley-Davidson Inc., Magnetek Inc., Oshkosh Corp., Pentair plc and Whiting Petroleum Corp. (Several of those companies are based in Wisconsin and longtime clients of Foley & Lardner, which has its roots in Milwaukee.)
While Little did not work for those clients, he made more than $320,000 in illicit profits by trading on inside information that he obtained from Foley & Lardner about future earnings reports and other transactions for those companies, according to the government’s case. Little also allegedly passed such information to Berke, who lived next door to him in the Tampa suburb of Apollo Beach, Florida. Prosecutors claim that Berke earned roughly $660,000 from his stock sales and trades. (The SEC puts Berke and Little’s haul at $640,651 and $363,797, respectively, while federal prosecutors claim it was $668,537 for Berke and $327,252 for Little.)
By Thursday evening, Bradley Arant had taken down from its website Little’s biography page and the press release announcing his hire last year. Following the arrest earlier this year of a now former Akin Gump Strauss Hauer & Feld partner, The American Lawyer reported on how several large firm lateral hires have run afoul of the law.
In March, Arent Fox partner Robert Schulman was convicted on insider trading charges in New York. Schulman, who was on a leave of absence from Arent Fox, quickly had his biography page taken down from the firm’s website. Schulman joined Arent Fox in 2015 from Hunton & Williams.
Steven Metro, an attorney and former M&A clerk at Simpson Thacher & Bartlett in New York, was also once implicated in an insider trading scheme. He pleaded guilty in late 2015 and was sentenced last September to 46 months in federal prison. Metro, 43, is currently incarcerated at a high-security facility in Lewisburg, Pennsylvania. He is due to be released in May 2020.
Copyright The American Lawyer. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.