“Tesla threatened to fire law firm in bid to block Musk pay critic – court document” —

• “A Delaware law professor accused Tesla on Monday of threatening to fire one of its longtime law firms if he proceeded with plans to file a friend-of-the-court brief criticizing the company’s bid to restore CEO Elon Musk’s $56 billion pay package.”
• “Retired professor Charles Elson of the University of Delaware alleged in a legal filing, that Holland & Knight, for which Elson has worked for nearly three decades as a consultant, told him that Tesla said it would end its relationship with the law firm unless Elson abandoned plans to submit his brief.”
• “Tesla’s tactic was ‘extraordinary and appalling,’ Elson said in the filing, which seeks permission from the court to submit the brief.”
• “After he learned of the electric carmaker’s alleged threat to Holland & Knight, Elson said in the filing, he resigned from his consulting arrangement ‘to protect that firm from retaliation while upholding the important principle of academic freedom.'”
• “Tesla did not respond to a query about Elson’s allegations.”
• “Holland & Knight denied in an email statement that it was pressured by Tesla. ‘Holland & Knight determined that Charles Elson’s proposed course of action was inconsistent with the firm’s obligations to its client, Tesla,’ the statement said. ‘This determination was not based on any coercion or threats by anyone, including Tesla.'”
• “Holland & Knight represents Tesla in unrelated employment matters, including a race discrimination suit by a California civil rights agency and a separate race discrimination case by the U.S. Equal Employment Opportunity Commission, according to news reports.”
• “Elson, a corporate governance expert, submitted a previous friend-of-the-court brief that was cited several times in the Delaware Chancery Court opinion that voided Musk’s pay package. The judge called the compensation granted by Tesla’s board “an unfathomable sum” that was unfair to shareholders.”
• “Elson sought to file his second brief after Tesla announced last month that it intends to hold a new shareholder vote to reinstitute Musk’s compensation. Elson’s proposed brief argues that Delaware law does not permit the ‘unprecedented’ maneuver of undoing a Chancery Court judgment through a shareholder vote.”
• “Elson’s lawyer, Joel Fleming from the Equity Litigation Group, sent the proposed new brief to Tesla on Friday morning, according to Elson’s filing. A Tesla lawyer from DLA Piper called Fleming later that day to assert that Elson had a conflict of interest, and that Fleming should wait before filing the proposed brief, Elson’s filing said.”
• “Elson said in his filing that there is no conflict of interest because he is not a lawyer at Holland & Knight but only consults with the firm on corporate governance matters. Elson also said he is acting as a friend of the court, not an advocate, in the Musk case.”
• “‘I am very disappointed with these events,’ said Elson in an interview. He declined to say how much Holland & Knight paid him, but said the monthly payment ‘helped cover my mortgage.'”

“Sullivan Hits Back Against FTX Investors’ ‘Dubious’ Fraud Claims” —

• “FTX law firm Sullivan & Cromwell is slamming the ‘claim by some of the failed crypto exchange’s investors that its lawyers were complicit in a billion-dollar fraud.”
• “A federal lawsuit against the firm by FTX investors is based on ‘innuendo masquerading as facts,’ Sullivan Cromwell said Monday in a court filing. Defrauded FTX customers are set to get all of their money back from the failed exchange in bankruptcy proceedings, according to the firm.”
• “‘Plaintiffs in this action, a handful of alleged FTX customers, purport to bring claims against Sullivan & Cromwell to recover the same damages for which they are already being compensated through the bankruptcy process,”’ the firm said, asking a federal judge in Florida to dismiss the lawsuit.”
• “A proposed class of investors represented by The Moskowitz Law Firm in February sued the firm for allegedly aiding and abetting the fraudulent activity that happened at the exchange. The firm is also facing a court-mandated review into whether it has any conflicts of interest that should have been addressed as it leads FTX through bankruptcy proceedings.”
• “Controversy over the powerful Wall Street firm’s work for FTX ultimately caused it to lose out on a high-profile outside monitor assignment overseeing crypto exchange Binance Holdings Ltd, Bloomberg News reported.”
• “In Monday’s filing in the US District Court for the Southern District of Florida, the firm said FTX investors have still made no accusation that Sullivan & Cromwell had knowledge of any fraud while performing certain legal services. Courts have held that ‘lawful legal services to a fraudster does not impute knowledge of the fraud,’ said the firm’s counsel, lawyers from Hunton Andrews Kurth.”

“High Court: Sanctioned Russians “probably owned” litigation funder” —

• “There is ‘reasonable cause to suspect’ that the funder of the claimant in a $1.3bn action was controlled by sanctioned Russians, the High Court has ruled.”
• “Mrs Justice Cockerill said the sale of A1 LLC for a mere £714 as its founders were sanctioned was of particular concern.”
• “‘The figure given for the sale price is surprising on its face. The financial documentation adduced (in a lengthy and full exchange of evidence) fails to provide a coherent or robust justification for that figure.'”
• “Her ruling was the latest in long-running litigation brought by Vneshprombank LLC (VPB) over an alleged massive fraud carried out by Georgy Bedzhamov.”
• “In the hearing before Cockerill J, Mr Bedzhamov sought a declaration that there was reasonable cause to suspect that A1 – which had to that point funded VPB and the trustee – was owned or controlled by designated persons under the Russia sanctions regulations.”
• “The judge said the application ‘has to some extent been prompted by judicial concerns’ – Mrs Justice Falk said in a ruling last year that it was ‘impossible at this stage to dispel the concern that the March 2022 transaction was not genuine, but instead arranged to give the appearance that A1 is no longer under the control of sanctioned individuals.'”
• “Falk J said A1’s role was ‘an unusual one that appears to go well beyond that of a conventional litigation funder,’ as it was managing the proceedings on the liquidator’s behalf.”
• “A1 is no longer funding the case, having been replaced by Cezar Legal Consulting Agency in March, after the latest hearing.”
• “A1 is part of the Alfa Group, which describes itself as ‘one of the largest privately owned financial-investment conglomerates in Russia.'”
• “Up until March 2022, A1 was owned by a Luxembourg company whose major shareholders were Mikhail Fridman, German Khan and Alexey Kuzmichev. All three were all designated under the sanctions regime on 15 March 2022.”
• “VFB said that, around the date but before Mr Khan and Mr Kuzmichev – who between them held 52% of A1 Investment – were designated, they sold their shares to an Alfa director who was not. A week later, all the shares were sold to another undesignated director of A1, a Mr Fayn, for £714.”