Robert Schulman, an Arent Fox patent prosecution and intellectual property litigation partner in Washington, D.C., has been convicted of insider trading in New York for passing on a tip related to a billion-dollar pharmaceutical merger announced in 2010.
Prosecutors in the Eastern District of New York announced late Wednesday that after a week-and-a-half trial in Brooklyn, a federal jury had returned a guilty verdict against Schulman on securities fraud and conspiracy charges leveled against the Big Law partner in August 2016.
Arent Fox hired Schulman in late 2015 as part of a four-lawyer IP litigation team from Hunton & Williams. It was at Hunton & Williams that Schulman’s name appeared in an insider trading suit filed in 2013 by the U.S. Securities and Exchange Commission related to Pfizer Inc.’s $3.6 billion acquisition in 2010 of King Pharmaceuticals Inc. (Covington & Burling advised King Pharmacueticals on that deal and Cadwalader, Wickersham & Taft took the lead for Pfizer.)
The SEC suit against investment adviser Tibor Klein and his friend, former Ameriprise Financial Inc. broker Michael Shechtman, claimed that Schulman “drank several glasses of wine and became intoxicated” at a dinner with Klein in August 2010. Klein, a friend of Schulman’s who helped manage the lawyer’s money, learned from Schulman at the dinner about Pfizer’s pending acquisition of King Pharmaceuticals. At the time, Schulman was representing King Pharmaceuticals in an IP case that was subsequently dismissed.
Schulman was not charged by the SEC, but Shechtman pleaded guilty to criminal insider trading charges in November 2014. Last year federal prosecutors filed insider trading charges against Klein and Schulman, claiming that securities bought by Klein related to Pfizer’s purchase of King Pharmaceuticals had resulted in $400,000 in illicit profits. The criminal case also alleged that Schulman, 58, had not unwittingly mentioned the merger to Klein, but had done so deliberately. In an email to The American Lawyer last year, Schulman vowed to fight the government’s case and clear his name.
“I will fight this and I will win,” said Schulman. “I did not divulge the information alleged by the indictment nor did I have any knowledge of the [$15,000] trade made by my broker in my retirement account.”
Schulman reiterated at trial that he didn’t intentionally inform Klein about a deal involving a client in order to reap a $15,000 profit, as noted by legal newswire Law360, and he reportedly broke down in tears after U.S. District Judge Joan Azrack refused to dismiss the government’s case. Assistant U.S. attorneys David Pitluck and Julia Nestor, who led the U.S. Department of Justice’s team prosecuting Schulman, called Shechtman as a cooperating witness. He described to the jury efforts to cover-up Schulman’s alleged loose lips.
Schulman, who was on a leave of absence from Arent Fox, has had his biography page on the firm’s website taken down. Schulman’s firm email and voicemail were disabled Wednesday, and he was unable to be reached for comment. His lawyers—Morvillo Abramowitz Grand Iason & Anello partner Jonathan Sacks and counsel Curtis Leitner in New York, and Christopher Mead of Washington, D.C.’s London & Mead—did not return requests for comment. Arent Fox confirmed that Schulman, a resident of McLean, Virginia, is no longer affiliated with the firm.
“Robert Schulman is no longer a member of this firm,” an Arent Fox spokesman said in a statement. “He was previously on a leave of absence to focus on personal matters. As one of the country’s top general practice firms, Arent Fox is committed to exceeding the industry standards for ethical and professional conduct. We have no further comment at this time.”
A spokeswoman for Hunton & Williams did not immediately return a request for comment about Schulman’s conviction, although in the past the Richmond, Virginia-based firm has said that it cooperated with the government’s investigation.
Schulman, who has written contributed articles for sibling publication The National Law Journal, could face up to 20 years in prison at his sentencing. Bridget Rohde, a former white-collar defense and litigation partner at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo who left the firm’s New York office last summer to become chief U.S. attorney in Brooklyn, announced the verdict against Schulman and thanked various law enforcement bodies for their work. (Rohde is serving as acting U.S. attorney given the recent firing of U.S. Attorney Robert Capers.)
Klein, charged with Schulman last year, is scheduled to go to trial in September. Federal public defender Randi Chavis and Christopher Bruno of Bruno & Degenhardt are representing Klein. The SEC proceedings against Klein have been stayed pending a resolution of his criminal case.