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Wall Street lawyer turns watchdog-for-hire

LiveMint logoLiveMint 25-06-2017 Bloomberg

Ten years ago, lawyer Dan Brockett and his colleagues opted for the equivalent of ditching an office job for a career as a big-game hunter. As Wall Street cratered during the financial crisis, Brockett helped lead his firm’s move away from representing the world’s biggest banks and forgoing $1,000-an-hour defence work. Instead, he would earn his keep by suing the very companies that used to pay his bills. He’d be paid only if he won—as a cut of a client’s recovery.

Brockett has become a kind of securities watchdog-for-hire, a role that could grow even more prominent in the anti-regulatory era of President Trump. He is feared on Wall Street and envied by his peers, who also question some of the aggressive tactics he uses to snag clients. Brockett says he has won 90% of his cases, counting settlements.

He got a $250 million windfall from his triumph in a $2 billion Wall Street antitrust settlement last year from banks such as Citigroup Inc. and Bank of America Corp. Over the last 4 years...(the firm) has won more than $30 billion in financial-fraud settlements.

“They’re making big bets and have a roster of real stars,” says John Coffee, a law professor at Columbia University.

Until recently, Brockett inhabited a marquee building on Central Park West, whose residents included Goldman Sachs Group Inc. chief executive officer Lloyd Blankfein, a frequent target of his litigation. Brockett isn’t best friends with everyone on the plaintiff’s bar, either. He rubbed some the wrong way because he kept much of a $250 million cheque for his firm, stiffing smaller shops that had also been working on the case, according to a person who knows the other attorneys.

No matter the infighting among lawyers, the government is undoubtedly taking cues from Brockett. In 2015, attorneys at the Commodity Futures Trading Commission noticed one of his lawsuits—involving another kind of swaps, which let investors bet on the direction of interest rates. The commodities regulator is now investigating Goldman Sachs and Citigroup for allegedly blocking fund managers from trading the swaps with each other.

Brockett has a network of sources across Wall Street who send disgruntled bankers his way. Some of his whistle-blowers also file claims with regulators. They’re then eligible for a cut of the government’s financial recovery, which can reap pay days of up to $30 million.

Those kinds of rewards may be rarer, since Trump is cutting back on hiring and travel for SEC enforcement officials.

“It’s a sure thing instead of waiting years for the government,” Brockett said. “Most people are looking for money or to do the right thing.”

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