Discovery Schedule Conference

(Seen on my way to the courthouse)

Question: What has one Judge and fifteen lawyers?
Answer: An Optionable Conference.

The Judge's Agenda:  Set discovery schedules for the following cases: SEC, CME/NYMEX (NYMEX) and Bank of Montreal (The Bank) 
Case excluded: CFTC (per Lawrence Gelber's statement to Judge Cott)  

My personal agenda: Sniff out if The Bank has any other mediation sessions going on given that they just had a 2 day mediation earlier this week with Joe Saab of MF Global *1

Here's what I learned: Joe Saab's lawyer (Owen Pell) described the 2 day mediation session between his client and The Bank as "unsuccessful". At the very tail end of the 3 hour conference, The Bank's lawyer (Tim Haggerty) made a general statement that The Bank was interested in entering mediation with any of the other defendants.  I got the impression that no other defendant is currently in mediation with The Bank.

As for the official agenda, here's how that went:

Ed O'Connor (Optionable) is now the lone defendant who has not settled with the SEC, so a discovery schedule was needed for the SEC case. Judge Cott hammered O'Connor's lawyer Scott Smith 8-ways-till-Sunday over Smith's assertion of O'Connor's right to depose David Lee before going to trial with the SEC. The sticking point is that Lee is entitled to only be deposed once and several of the other defense lawyers don't want to depose Lee until The Bank has delivered more 'privileged' information. Owen Pell 'stuck his head into the lion's mouth' more than once on Smith's behalf, although to his credit, Smith stood his ground and got what he was asking for - the ability to depose Lee. (by July 1).  The other defense lawyers will still be able to depose Lee later by using the definition of "once" to mean "several times" as long as Lee isn't asked the same questions over and over.  Smith also mentioned wanting to depose both Bob Moore (Lee's former boss) and Murray McIntosh (one of The Bank's Risk Managers who was key in painting a picture of fraud in the minds of The Bank's upper management - in my opinion)  My personal reaction to hearing that Lee, Moore and McIntosh would all be deposed = Hell Yeah!!!!)
Schedule:  Settlement conference: May 15th - letters to the Judge due by May 8
Expert Disclosure by May 31 - Rebuttal by June 18
Depositions conclude by July 1.

Judge Cott used a variety of strategies to motivate the legal teams to consider settling.  Ed McDermott (for NYMEX) wasn't interested in waiting around for The Bank to reveal their 'priviledged' information that defense lawyers claim will show that Optionable's reports were accurate.  McDermott's agrument is his only burden is to show that there was an agreement between Lee and Cassidy to hide Lee's losses, and that it is irrelevant if Cassidy's reports were accurate.  Judge Cott told him that he would have to wait.  Solomon Klein (for Mark Nordlicht) and Owen Pell both wanted more time to examine The Bank's 'privileged' data. Pell went as far as to drop the "E-bomb" (Enron) and let the Judge know that in his work representing 2 banks in a class action against Enron, discovery took up to 7 years, and that what he was seeing in The Banks transactions were even more complicated. That appeared to get the Judge's attention, but he still told Pell that he needed to hurry up.
Schedule:  Fact finding and expert testimony needs to wrap up in a year - 4/1/14.  Earlier in the session, the Judge had been suggesting the end of this year, but pushed it to 4/1/14 with the warning that he was pre-baking in the requests for an extension.  (Personal note: I try this approach with my son sometimes, and am still disappointed when crunch time comes and he doesn't get the concept)


Bottom Line:

Mark Nordlicht just pumped enough cash into Optionable yesterday (4/10/13) to keep the cash-strapped company afloat for about a year.  (Nordlicht was repaid with newly minted OPBL shares) I think that speaks to his readiness to take this to trial rather than settling.  If BMO's or NYMEX's strategy was to stall until Optionable ran out of cash, that plan was just thwarted.

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footnote:

* 1: I think of Joe Saab at MFG as being a peer or counterpart to Kevin Cassidy at Optionable. However, even though both men performed similar tasks per The Bank's instructions, I think it's only fair to Saab that I acknowledge that The Bank's 'Blame Optionable' campaign portrayed Cassidy as being 'much more guilty' than Saab given Cassidy's unrelated previous criminal record which made him such an opportune and indelibly delicious scapegoat.