"The former Citigroup broker for convicted WorldCom chief executive Bernard J. Ebbers is suing Paul, Weiss, Rifkind, Wharton & Garrison, claiming the law firm was conflicted when it advised Citigroup on the broker’s severance package.
David H. Trautenberg, the former co-head of the bank’s private wealth management group, was a significant figure in litigation arising from WorldCom’s collapse, having orchestrated massive loans for Ebbers’ personal account. Shareholders and regulators had accused Citigroup of offering such perks as well as favorable research coverage in order to maintain its position as WorldCom’s chief investment bank. The bank ultimately paid close to $3 billion to settle claims relating to WorldCom.
Paul Weiss defended Citigroup against shareholder and government suits, representing Trautenberg in his capacity as a bank employee. In a suit filed last month in Manhattan federal court, Trautenberg claims the firm and partners Brad S. Karp and Daniel J. Toal gained confidences in the course of that representation which it then used against him in subsequent negotiations over his 2004 departure from Citigroup.
"Defendants were blinded to their fiduciary duty to Trautenberg by the legal fees they were receiving from Citigroup and its subsidiaries well in excess of $100,000,000," the complaint claims. Trautenberg, who received a $5 million severance payment, claims he would have received $25 million but for Paul Weiss’ involvement. He is seeking $80 million in damages from the firm. " The story.