March 29, 2024

Private Manning of WikiLeaks Case Must Face Charges

But the judge, Col. Denise Lind, ruled that brig officials had improperly kept Private Manning on stricter conditions, including procedures designed to prevent potentially suicidal detainees from injuring themselves, for excessive periods. As a remedy, she granted Private Manning 112 days of credit against any eventual prison sentence.

That amounted to little more than a symbolic victory for Private Manning, whose supporters had rallied around claims that he had been tortured at Quantico. Prosecutors are pursuing charges, including aiding the enemy and violating the Espionage Act, that could result in a life sentence if he is convicted. His court-martial is scheduled to begin on March 6.

The ruling by Colonel Lind came after a long pretrial hearing last month that amounted to a miniature trial over whether military officials had subjected Private Manning to unlawfully harsh conditions over the roughly eight months he spent at Quantico in 2010 and 2011. His defense team had asked for the charges to be dismissed or for 10-for-1 credit for time served for the bulk of his time in Quantico, which could have shaved around seven years from any eventual prison term.

But Colonel Lind, who spent nearly two hours reading her opinion in a small courtroom on Tuesday afternoon, found for the government on most of the disputed facts. She recounted in great detail Private Manning’s sometimes erratic behavior and mental problems both before and after his arrest in Iraq in 2010, including suicidal gestures and comments that she said made his captors legitimately fear that he was dwelling on suicide and biding his time until an opportunity arose.

“There was no intent to punish the accused by anyone in the Marine Corps brig staff or chain of command,” she said. “The intent was to make sure the accused was safe, did not hurt himself and was available for the trial.”

Still, Colonel Lind found that some steps brig officials had taken were excessive. The government had already conceded that Private Manning should not have been kept on the strictest status, “suicide risk,” on two occasions totaling seven days, after a brig medical official said that status was no longer necessary. She agreed, awarding one day of credit for each of those days.

She also said that it eventually became excessive and effectively punitive for brig officials to keep him on “prevention of injury” status — a category that did not require a doctor’s assent — for a 75-day period starting in November 2010, when his behavior had been stable for a lengthy period, and ending when he had an anxiety attack.

And she also awarded 20 days’ credit for a period beginning in April 2011 until he was transferred from Quantico later that month, when brig officials kept him on an extra-strict version of “prevention of injury” status. That included removing his underwear nightly after a comment he had laughingly made to a guard in early March that he could kill himself with its elastic band if he wanted.

Finally, she awarded him 10 days’ credit for a period in which brig officials allowed him just 20 minutes of exercise a day instead of the full hour other prisoners were granted.

Colonel Lind’s opinion also at one point discussed events reported in two articles in The New York Times in March 2011, recounting the removal of Private Manning’s clothing at night: a reaction, it is now clear, to his comment about killing himself with his underwear.

The first article said Private Manning had stood naked during inspection one morning in early March and cited his lawyer, David E. Coombs, as saying his client had been “forced” to do so. But Judge Lind portrayed the event as more ambiguous than an order: Private Manning, lacking clothes, had covered himself with a blanket, and a guard asked if that was how he stood at attention. He reacted by dropping the blanket.

The second article, published the next day, cited a Marine brig spokesman as saying that Private Manning would be required to stand outside his cell under similar conditions each morning. But starting the next day, she found, guards began giving Private Manning his clothing back each morning before inspection, and she said there was no evidence he had stood outside his cell rather than inside it.

Also on Tuesday, the judge began hearing arguments on a pair of motions by prosecutors seeking to restrict the ability of Private Manning’s defense team to call witnesses and introduce other testimony related to his motivation and whether the documents were overclassified.

Article source: http://www.nytimes.com/2013/01/09/us/private-manning-of-wikileaks-case-must-face-charges.html?partner=rss&emc=rss

DealBook: A Fund and Its Former Star Clash in Their Legal Battle

Jeffrey Gundlach, chief of DoubleLine.Jessica Rinaldi/ReutersBefore Jeffrey Gundlach fell from grace at TCW, he oversaw much of its assets and was responsible for roughly half of its revenue.

LOS ANGELES — Jeffrey Gundlach, as the manager of highly successful fixed-income funds, first at Trust Company of the West and more recently at his own business, has been called “the king of bonds.”

Now his former employer is trying to disrupt his reign.

In a rare instance of a prominent employee dispute going to trial, Trust Company of the West, better known as TCW, is trying to prove in court here that Mr. Gundlach and three other former employees stole client data and proprietary trading platforms to start Mr. Gundlach’s business, DoubleLine Capital, after he was fired in December 2009.

TCW, a unit of Société Générale, the French bank, is seeking more than $375 million in compensatory and punitive damages in the civil trial, which began in Los Angeles County Superior Court two weeks ago.

In a countersuit, Mr. Gundlach contends that TCW fired him to keep for itself hundreds of millions of dollars in management and performance fees. He is seeking more than $500 million in compensatory damages. His fortunes may turn on how convincing he is to the jury of seven men and five women when he takes the stand, possibly on Thursday.

The trial has captivated the mutual fund world and is being watched closely by pension funds and other large institutional investors. The reputations of TCW and Mr. Gundlach are at stake, and even a small award to either side would be seen as a huge symbolic victory.

Mr. Gundlach, 51, has made a fortune investing in mortgage-backed securities and other fixed-income products, and has gained a reputation as a hard-driving trader whose arrogance is eclipsed only by his market savvy.

In an interview on Tuesday, he attributed TCW’s case against him to “business interference,” and said the company was simply seeking to discredit him.

“They’re jealous of the talent,” he said, referring to himself.

In making their case, lawyers for TCW have sought to sketch a picture of Mr. Gundlach as a brash renegade who was secretly plotting to leave the company and use proprietary information to form a competitor.

Cris Santa Ana, Jeffrey Mayberry and Barbara VanEvery, Mr. Gundlach’s co-defendants, have testified that they downloaded TCW data to external hard drives before being fired.

Eric Arentsen, a TCW managing director, testified on Tuesday and Wednesday that Mr. Gundlach had referred to Marc I. Stern and Robert A. Day, TCW’s chief executive and founder, respectively, as “dumb and dumber” while employed there, and that he had heard Mr. Gundlach and Mr. Santa Ana talk of taking TCW systems to a new company.

“We have established clearly that the defendants were intentionally downloading information that they knew belonged to TCW, that they did it under the direction of Jeffrey Gundlach, and that this process began as early as early 2009,” said Susan Estrich, a lawyer for TCW.

Lawyers for Mr. Gundlach and his co-defendants have said that TCW data was not used at DoubleLine, and that he began preparing to leave only after it became clear he would be fired.

In his opening statement, Brad Brian, a lawyer for Mr. Gundlach, referred to “Project G,” what he described as a scheme by TCW executives to get rid of Mr. Gundlach well before December 2009. The trial has proved unusually exciting for a white-collar civil case, with some testimony resembling that of a bitter divorce proceeding. TCW lawyers have told the jury about a private jet trip Mr. Gundlach arranged for members of his team in 2009 to Marfa, Tex., where they smoked cigars, drank costly wine, viewed art collections and, the lawyers contend, plotted to leave TCW.

TCW tried to introduce even more lurid evidence about items that were found in Mr. Gundlach’s office after he was fired, including pornographic films and marijuana. But Judge Carl J. West did not allow that information to be used in court, saying it was irrelevant. Mr. Gundlach has called the belongings remnants of “a closed chapter in my life.”

Mr. Gundlach has long been a figure of controversy in the fund industry. A former Yale Ph.D. candidate in mathematics who has claimed to be able to do The New York Times Sunday crossword puzzle in 20 minutes, he decided to become a financier after watching “Lifestyles of the Rich and Famous,” the television show with Robin Leach.

He joined TCW in 1985 as an entry-level analyst and eventually made a name for himself by specializing in mortgage-backed securities. In 2006, Morningstar named him fixed-income manager of the year, and he is often mentioned in the same breath as notable bond investors like Bill Gross of Pimco.

By the time he left TCW in 2009, he oversaw $70 billion in assets, roughly 65 percent of the company’s total assets, and was responsible for roughly half of its revenue. About 40 TCW employees followed him to DoubleLine. Today TCW has 550 employees. Howard Marks, chairman of Oaktree Capital Management, said via e-mail that “to the extent TCW’s goal has been to impede DoubleLine’s success, it’s obvious that has failed.”

Mr. Marks, who left TCW in a bitter split in 1995, helped Mr. Gundlach start DoubleLine, and owns a 22 percent stake in it. DoubleLine has become a prominent company with about $14 billion in assets under management. Its flagship Total Return Bond fund grew more than 13 percent in the last 12 months, according to data from Bloomberg.

TCW is still dealing with the effects of Mr. Gundlach’s departure. In 2010, it announced that it had acquired Metropolitan West Asset Management to replace the team that left with Mr. Gundlach, but investors withdrew some $25 billion from TCW. Its assets under management have grown since Mr. Gundlach was fired, and totaled about $120 billion in June, but its flagship bond fund has trailed DoubleLine’s.

In a statement, Mr. Stern, TCW’s chief executive, said, “The integration and performance of the MetWest team has exceeded every one of my expectations, and has helped put TCW on a path of steady growth, with a new cohesive culture of cooperation and teamwork.”

In making their case, lawyers for TCW have sought to show that the trading platform Mr. Gundlach’s team developed at the company, which includes software that quickly analyzes the individual mortgages within a mortgage-backed security, could not have been quickly replicated at DoubleLine without copying. A TCW lawyer compared the value of the trading system to “the recipe for Kentucky Fried Chicken.”

Mr. Gundlach has previously said that the system he used at TCW was easily duplicable, comparing it to “The Sun Also Rises.” Once Hemingway had written the book, Mr. Gundlach said, replacing it would simply be a matter of remembering what he had done and typing it out again.

Article source: http://feeds.nytimes.com/click.phdo?i=34178e244b0ba3b59b11f56ced55be7c

DealBook: Morgan Stanley Posts Loss That Hints at Recovery

James P. Gorman, Morgan Stanley’s chief executive.Tomohiro Ohsumi/Bloomberg NewsJames P. Gorman, Morgan Stanley’s chief executive.

7:59 p.m. | Updated

At Morgan Stanley, even a loss can be a win.

Although the financial firm reported a second-quarter loss of $558 million on Thursday, three crucial divisions posted significant gains, a promising sign that the turnaround plan Morgan Stanley embarked on after the financial crisis was taking hold.

In its institutional securities business, which houses trading and banking, revenue rose almost 15 percent, to $5.19 billion. The division that houses global wealth management posted net revenue of $3.5 billion this quarter, compared with $3.1 billion a year ago, after letting go of poorly performing brokers and cutting costs. The firm’s asset management division’s revenue jumped $235 million, to $645 million.

But the gains failed to put the firm in the black for the quarter, largely because it was still paying for the decisions it made during the financial crisis to keep the firm alive.

In April, Morgan Stanley renegotiated its deal with the Japanese bank Mitsubishi UFJ Financial Group, which had provided it with a $9 billion cash infusion during the darkest hours of the financial crisis. This move, which converted Mitsubishi UFJ’s preferred stock into common stock, was seen as positive, but it came at a price, forcing the firm to take a one-time $1.7 billion charge.

The bank’s loss of 38 cents a share in this most recent quarter was hailed by analysts, who had expected the bank to lose 61 cents a share. The firm’s stock surged on the news, rising 11.4 percent, or $2.48, to close at $24.20. Before Thursday, the shares were down about 20 percent for the year.

Morgan Stanley reported total revenue of $9.3 billion in the second quarter, up 17 percent from a year ago. That gave the bank an important symbolic victory: it was the first time since 2008 that its quarterly revenue exceeded that of its rival Goldman Sachs. Earlier this week, Goldman reported a disappointing $7.3 billion in net revenue, its lowest figure since the financial crisis.

While Morgan Stanley’s results were encouraging, the bank was still “a work in progress,” said Michael Wong, an analyst with the financial research company Morningstar. “It’s too early for James Gorman to declare victory,” he said, referring to Morgan Stanley’s chief executive.

Morgan Stanley’s traders produced some stumbles, such as an interest-rate trade in June that reportedly lost the firm tens of millions of dollars. But gains from other trades offset those losses, and the firm’s overall trading revenue climbed 4 percent over year-ago levels, to $3.5 billion.

Morgan Stanley’s investment banking team, traditionally a strong suit, also improved, and was in on some of the quarter’s biggest deals, including the public offerings of LinkedIn, Groupon and Zynga. These deals helped push investment banking revenue to $1.5 billion, from $885 million a year ago. Underwriting revenue increased 57 percent in the period, to $940 million. Revenue from Morgan Stanley’s advisory division also improved, jumping 85 percent, to $533 million. That unit represented BJ’s Wholesale in its deal to sell itself to a group of private equity firms for $2.8 billion. It also worked with Capital One Financial, which bought ING’s American online banking group for $9 billion in June.

One of Mr. Gorman’s top priorities since becoming chief executive in January 2010 has been stabilizing the bank by beefing up its global wealth management and asset management groups, safer groups that fluctuate less with the ups and downs of the stock market. In January, he appointed Gregory J. Fleming to lead Morgan Stanley Smith Barney, the firm’s wealth management arm.

The bank also took steps this year to improve its asset management division, which is also run by Mr. Fleming, and which has historically been a sore spot for the firm. The division’s growth primarily stemmed from gains in the firm’s real estate investments and improvements to its core asset management business.

“This wasn’t about a bunch of trading gains,” said Ruth Porat, the firm’s chief financial officer, in an interview after Thursday’s earnings release. “We’ve been very focused on building up the client side and delivering content with a point of view.”

In Thursday’s conference call, analysts asked Mr. Gorman about elements of his long-term plan, including the firm’s capital reserves and the continuing integration of its Morgan Stanley Smith Barney brokerage division, which was formed in a joint venture with Citigroup in 2009.

“These are unquestionably challenging markets, but our focus is and must be on methodical and resolute forward progress with an ever-increasing eye on those things which we do control,” Mr. Gorman said.

Article source: http://feeds.nytimes.com/click.phdo?i=d763727b88c28db3fad7bdb7ad618c90