Price for a Career as Counsel at Skadden: $9 Million?

The Skadden, Arps, Slate, Meagher & Flom lawyer whose husband is accused of attacking her earlier this year stands to lose $9 million in income if she cannot return to work in the aftermath of the alleged attack, according to expert testimony recounted in this story from the Stamford (Conn.) Advocate.

The testimony came Thursday in a preliminary hearing in the civil case that Mary Margaret Farren, 44, counsel in Skadden’s Washington, D.C., office, filed against her ex-husband, a former attorney in both Bush administrations, the Advocate reports.

In addition to his ex-wife’s $15 million civil suit, John Michael Farren faces attempted murder charges in connection with the alleged January attack. He has pleaded not guilty to criminal charges and is being held on bond. The trial court in Stamford is wrapping up a preliminary hearing to decide whether the court may freeze John Michael Farren’s assets as part of the civil suit, the Advocate says.

Mary Farren has said the alleged attack has impaired her ability to process large amounts of information quickly. Mary Farren has testified she fears she may no longer be able to do her job as a litigator on behalf of energy companies. A finance professor at the New York Institute of Technology testified Thursday that Mary Farren’s income over the remainder of her Skadden career would be about $9 million. The professor, Steven Shapiro, based that calculation on median lawyer salaries, life expectancy, and other variables, the Advocate reports.

Farren’s Skadden salary was $300,000 per year, according to prior reports.

Social Networking Pitfalls for Judges, Attorneys

Populous and widespread, social networking sites draw participants from an increasingly broad spectrum. They comprise an open forum that has torn down walls established by many institutions, including the legal system.

Social networking online is a remote sensory experience engaging our minds at many levels, and it will take time for us to adapt to this unprecedented way of communicating with one another. Moreover, it imposes a unique burden on the judicial component of our system. Several recent cases illustrate the pitfalls for judges and lawyers who use social networking.

Early in 2009, the Advisory Committee on Judicial Ethics issued opinion No. 08-176 prompted by an inquiry from a judge who received an invitation to join a social networking site. This site was aimed at professional networking that would allow sharing business-related information, contacts and, most notably, the ability to “interact with lawyers and litigants.”

The committee recognized a host of potential benefits from membership, such as staying in touch with distant family members, former schoolmates and associates. There was nothing “inherently” wrong with joining, since it was comparable to the type of socializing judges already do in person. They keenly divorced the mode of communication from how it was used.

The Rules of Judicial Conduct cautioned against the appearance of impropriety and emphasize the need for promoting public confidence in the integrity of the judiciary and maintaining its dignity.

The first tocsin for a judge’s online profile is that it is “public” in nature, and the items posted there can raise issues depending on their content and affiliation.

Secondly, the profile can serve as a public Rolodex, listing as “friends” attorneys, litigants, experts, or anyone who might participate in the legal system. And it could invite inquiries from the public or litigants about some matter before the court. Overall, it could potentially convey the wrong impression about the extent of the relationships of those “friends.”

The committee’s well-thought-out opinion was not intended to be exhaustive. New issues crop up constantly, which is why they encouraged judges to stay on top of developments in social networking features, such as privacy settings.

The unforeseen perils of online communication and participation by judges and lawyers have been revealed in several scenarios that will highlight what happens when social networking sites and ethical boundaries intersect.

Attorneys with profiles that can be seen by judges run risks ranging from professional embarrassment to potentially unethical behavior.

At last year’s American Bar Association program called Courts and Media in the 21st Century, a Texas judge related the story of a lawyer who requested a continuance in court due to the death of a family member, but whose status updates on Facebook revealed she had been drinking and partying all week.

The South Carolina Advisory Committee on Standards of Judicial Conduct in opinion No. 17-2009 concluded that a magistrate judge could have law enforcement personnel and court employees as “friends” on the magistrate judge’s Facebook page. The proviso was that the magistrate judge did not “discuss anything related to the judge’s position as magistrate.” They even went so far as to underscore on the value of public education that was possible through a social networking profile.

The Florida Supreme Court scrutinized the entanglements arising from the use of contact lists that appear on a judge’s profile. In Judicial Ethics Advisory Committee opinion No. 2009-20, they responded to questions raised by four types of social networking communications: (1) judge’s posting of comments or other materials on judge’s profile within limits of Judicial Code (yes); (2) friending lawyers who appear before the court (no); (3) judge’s election campaign committee posting information on their separate profile (yes); and (4) option to allow lawyers appearing in the judge’s court to list themselves as fans on the campaign profile (yes).

The answers to these questions depended in part on the ability of the judge or the re-election committee to filter or approve friends and fans and adjust the privacy level settings on those sites.

Citing Canon 2B of the Florida Code of Judicial Conduct, the court emphasized the need to avoid giving the impression that certain lawyers were in a “special position to influence the judge.” The “friending” process was selective and the judge would have needed the power to accept or reject requests from lawyers to be added or vice versa for the judge to appear on a lawyer’s profile as a friend.

The court concluded that identifying a lawyer who may appear in that court as a “friend” on the judge’s public profile gave the wrong impression. However, they found no problem with lawyers who did not appear before the judge or other persons being added as “friends.”[FOOTNOTE 4]

Notably, a minority view of the court’s opinion believed that the term “friend” as applied to a social networking site did not carry the same import as the common definition of friend. In this special context, a lawyer’s name appearing on a judge’s contact list did not give visitors the impression of a special bond or position of influence.

‘FANS’ OF JUDGES

Finally, the listing of fans on a judge’s campaign site was viewed differently, so long as the election committee could not accept or reject anyone seeking to be added. The absence of discretion in controlling admission or exclusion of names appearing on the profile was the distinguishing characteristic.

In North Carolina, a judge was publicly reprimanded for establishing contact with an attorney in an active case through a social networking site. The Judicial Standards Commission Inquiry No. 08-234 described how a district court judge presiding over a custody matter had an in chambers discussion with the attorney representing the defendant/father about using Facebook. The plaintiffs attorney was present but did not get involved in their talk.

The judge and the defendant’s attorney friended each other on their respective profiles. They each posted comments about the case and reviewed each other’s sites. The judge informed plaintiffs attorney about the online exchanges.

The judge had also done a Google search on the plaintiff/mother’s photography business and read poetry she had posted there as well. He did not reveal this research to either side until after the custody hearing was concluded and the order entered. The plaintiffs attorney filed a motion asking for the order to be vacated, a new trial held and recusal of the judge — all of which was granted.

The commission found that the judge had improper ex parte communications with an attorney representing a party in a case before him as well as allowing himself to be influenced by information about the plaintiff he found through independent internet research. As a result, his actions were prejudicial to the administration of justice under the North Carolina Code of Judicial Conduct.

Interestingly, the Indiana Supreme Court in A.B. v. State, 885 N.E.2d 1223, 1224 (Ind. 2008), tacitly approved firsthand inspection of a social networking site in order to grasp its mechanics, which was an issue in the case.

In this harassment prosecution, the record had not been fully developed on the use of social networking sites:

As a preliminary matter, we note that the evidence presented at the fact-finding hearing was extremely sparse, uncertain, and equivocal regarding the operation and use of My Space.com … which is central to this case … The Commentary to Canon 3B of the Indiana Code of Judicial Conduct advises: ‘A judge must not independently investigate facts in a case and must consider only the evidence presented.’ Notwithstanding this directive, in order to facilitate understanding of the facts and application of relevant legal principles, this opinion includes information regarding the operation and use of MySpace from identified sources outside the trial record of this case.

The upshot of these opinions is that social networking sites require new line drawing. Although the rules do not expressly cover this mode of communication,[FOOTNOTE 5] the fundamental query is about content and behavior. Judges and lawyers inevitably will be using blogs, Twitter, Facebook, or some yet to be imagined forms of communicating and connecting online. And based on the experiences so far some guideposts have emerged.

An article published by the National Judicial College makes several salient observations applicable to these new forms of media.[FOOTNOTE 6] It points out that information on judge-authored sites could form the basis for recusal, convey misimpressions, or contain improper public comments about matters that might come before the court. Also they may be too revealing such as showing status, schedules, or other personal details.[FOOTNOTE 7] Basically, it admonished that adherence to the ethical guidelines in any medium was the best standard.

CONCLUSION

Transitions from one form of communication to another never occur neatly. They frequently wend their way through society by fits and starts, embraced by a few at first, then by masses of people until they are commonplace.

But as technology cuts a swath through established practices and institutions in this piecemeal fashion, we have to be cognizant of the perils to our professional lives and the judicial process. A social networking site cannot sanitize conduct that transgresses ethical boundaries when done in person or in print.

Ken Strutin is director of legal information services at the New York State Defenders Association.

::::FOOTNOTES::::

FN1 http://www.courts.state.ny.us/ip/acje/.

FN2 See, e.g., “The 3 Facebook Settings Every User Should Check Now,” The New York Times, Jan. 20, 2010.

FN3 “Facebooking Judge Catches Lawyer in Lie, Sees Ethical Breaches,” ABA Journal Law News Now, July 31, 2009.

FN4 See also State of Nev. Comm’n on Jud. Discipline Op. JE08-010 (Aug. 22, 2008)(“On an official court website which provides information to self-represented individuals in family law matters, judges may list the names of, and provide a link to, the websites of attorneys who have volunteered in a program which offers a free consultation with a lawyer regarding those matters.”).

FN5 But see, e.g., Amendment to the Code of Ethics, The Judiciary of Malta News, Feb. 15, 2010 (“membership of ‘social networking internet sites’ is incompatible with judicial office.”).

FN6 “Bench Blogging: Where Should Judges, Lawyers and Court Personnel Draw the Line?” Case In Point, Spring/Summer 2007, at 3. See generally Social Media and the Courts Resource Guide (National Center for State Courts, mod. Feb. 15, 2010).

FN7 See, e.g., “Staten Island Criminal Court Judge to Be Transferred to Manhattan After Facebook Postings, Sources Say,” Staten Island Advance, Oct. 15, 2009.

Former Partner Accuses DLA Piper (US) of Sexual Discrimination

A former real estate partner with DLA Piper is accusing the firm of sexual discrimination, alleging that she was dismissed from her job because she was pregnant, reports Legal Week.

Sarah Sweeney, 36, testifying before a Liverpool employment tribunal on Monday, described her former firm as an “old boys’ club,” according to the Liverpool Daily Post. In proceedings brought against DLA last year, Sweeney alleges she was terminated in November 2008 when DLA management learned that she was pregnant, the Liverpool Daily Post reports.

Sweeney, who had worked at the firm for more than a decade, according to Legal Week’s report, is being advised by Mace & Jones employment and human resources partner Martin Edwards. Timothy Pitt-Payne of 11KBW has been instructed as counsel, Legal Week reports. Edwards did not respond to messages seeking comment.

DLA Piper is represented by Morgan Lewis employment partner Matthew Howse. According to Legal Week, Littleton Chambers‘ Gavin Mansfield has been instructed as counsel.

DLA Piper has released a statement about the allegations: “We strongly contest the allegations that have been made by Sarah in this case and will be calling evidence to rebut all aspects of her claim. Like any other business, we regret when people leave us because of a change in market conditions but, sadly, in 2008 it was something that we had to face up to as a business, along with many other employers in the legal and professional services sector.”

Howse told The Am Law Daily that no additional comment would be provided by him or the firm.

Flood and Fire Displace Labaton and Schnader Law Firm

We assumed that working from home had become so easy that some flooding, an electrical fire, and a few small explosions that result in an office closure wouldn’t disrupt a company’s work too much. But when your company is a law firm, and you’re in the middle of a massive document review, things can be a little more complicated.

Labaton Sucharow and Schnader Harrison Segal & Lewis are tenants of 140 Broadway in downtown New York City, where flooding related to this weekend’s megastorm caused an electrical fire that melted a transformer and set off some minor explosions late Saturday night. The building was evacuated, and it has since been closed. (Two floors of the evacuated building, undergoing hazmat cleanup, are pictured above.) It will reopen–the tenants expect–early next week. A few Labaton associates were actually working Saturday after 9 p.m. when the problems began, says Joel Bernstein, a partner in the office. And some called their supervisors asking if they could remain in the building just a little bit longer after the evacuation call so they could finish up some work, Bernstein says. “I told them to get out of there,” he says.

If those lawyers were thinking they might get to work from their couch for a few days this week, they were wrong. Labaton, which is in the middle of a document review, rented two temporary office spaces for about 60 New York-based lawyers and staff on Varick Street and 11th Street, according to Bernstein and a firm spokeswoman. The firm also removed its computer servers from 140 Broadway and relocated them to a building the firm’s chief operating officer found in Stamford, Conn., Bernstein says. “I’ve never been through anything quite like this,” Bernstein says with a laugh. “I never knew how important a law firm’s administrative staff could be until now.” The firm went almost 48 hours without access to key documents before the servers finally were running again in Stamford, Bernstein says.

Schnader Harrison talked about renting temporary space but opted not to, says Eric Boden, an associate in the 140 Broadway office, where Schnader has about 30 lawyers and 25 staffers. A decent chunk of those employees live in New Jersey, and some are using the firm’s offices in Philadelphia and Cherry Hill, N.J., while the New York office is closed, Boden says. The firm also has diverted all New York snail mail to the apartment of M. Christine Carty, the managing partner of the New York office. Staffers are heading there to sort mail and send any urgent items to the right attorneys, Boden says.

Rothstein’s World: An FBI Informant, A Lawyer’s Free Rent, and a Free-Spending Wife

The scandal stemming from Florida lawyer Scott Rothstein’s $1.2 billion Ponzi scheme continues to unravel in increasingly unpredictable ways.

In recent days reports have surfaced about Rothstein’s allegedly brief stint as an FBI informant and his wife’s spending habits. A deposition on Tuesday of Rothstein’s lawyer, Marc Nurik, also revealed details about Nurik’s living arrangements and how much Rothstein paid the lawyer when the two were partners at Rothstein’s firm, Rothstein Rosenfeldt Adler (RRA).

According to the Daily Business Review, a sibling publication, Nurik lived rent-free for 15 months in a waterfront Fort Lauderdale home owned by Rothstein while Nurik worked for now-defunct RRA. Rothstein bought the property for $1.9 million several years ago.

“Scott as a friend allowed me to live in his house, with the understanding [that I would eventually pay rent],” Nurik said in a deposition conducted by Charles Lichtman, a partner at Miami’s Berger Singerman. (The firm is bankruptcy counsel to the court-appointed trustee for the RRA estate.)

In his deposition, Nurik said the rent was not part of his income. He testified that he has been paying rent of $2,500 per month for the 3,000 square foot, three-bedroom property since last October. It was then that Rothstein’s scheme unraveled and Nurik signed on to represent his former partner in the subsequent investigation by federal prosecutors.

Former RRA attorney David Boden lived next door to Nurik in another home owned by Rothstein, but Nurik testified that he did not know whether or not Boden paid rent, the DBR reports. Federal prosecutors have seized both homes as part of their probe into Rothstein’s fraud.

Lichtman spent some time in the deposition reviewing Nurik’s work history, the DBR reports. Nurik worked at Florida firm Ruden McClosky for eight years between 1998 and 2006 and was on the firm’s management committee for two of those years. He left Ruden in May 2006 with six other lawyers for South Florida’s Genovese Joblove & Battista–the firm is cocounsel to Berger Singerman in the RRA bankruptcy, the DBR notes–before signing on with Rothstein’s firm in October 2007.

Lichtman then focused on Nurik’s salary while he was a partner at RRA. Nurik said he earned $350,000 per year, and although he held “an honorary title of shareholder,” he did not get a cut of the firm’s profits.

The Florida Sun-Sentinel reports that Nurik also testified that he was unable to repay $190,000 in loans received from the firm. Nurik claimed that RRA policy provided for the money to be forgiven depending on the amount of business he brought to the firm, which he put at $1.9 million. (The bankruptcy trustee is trying to recover money for creditors, some of which is listed on RRA’s books as loans to former attorneys, as the DBR has also reported.)

Asked about the loans and his testimony during the deposition, Nurik says, “At the end of the day, everyone has come forth on the government side and clearly asserted that I was not involved in anything improper or illegal. I made it clear that a portion of the money booked as loans was forgiven pursuant to my performance at the firm.”

Nurik said that a $50,000 retainer paid to him by the family of Rothstein’s wife, Kimberly, to represent her husband, has been turned over to her attorney Scott Saidel, the DBR reports. Nurik, who told us he didn’t have his own attorney at the deposition because he didn’t need one, also says that he’s representing other clients for free with claims against the RRA estate. (Nurik is not currently being paid for representing Rothstein.)

“Whatever exists between the trustee and I in terms of financial issues, I’m sure we’ll work out,” he adds. “They have much bigger fish to fry.”

Meanwhile, Kim Rothstein has been getting some attention of her own lately. The Miami Herald recently reported that Rothstein’s wife didn’t cut back on her lavish lifestyle as her husband’s firm imploded. In a civil suit filed last week, Paul Singerman of Berger Singerman has accused Kim Rothstein of spending nearly $900,000 between 2006 and 2009 on everything from shoes and clothes to gym expenses and spa charges. Singerman is seeking to recover $1.13 million for creditors.

Commenting on the suit against his client, Saidel, reached by phone late Wednesday, says, “I understand that the bankruptcy attorneys need to do their job, but it’s unfortunate that they feel the need to attempt to squeeze blood from a stone. Certainly Mrs. Rothstein was not complicit in her husband’s wrongdoing, and to personally go after her seems a bit overzealous.”

As for Scott Rothstein, he awaits sentencing at a hearing scheduled for May 6 after entering a guilty plea in January. It remains to be seen how U.S. district court judge James Cohn will react to reports that Rothstein briefly served as an FBI informant by agreeing to wear a wire to help the feds nab a reputed Miami mafioso. (Nurik declined to comment on the reports that Rothstein was a government informant.)

Chalk it up as another crazy chapter in the Scott Rothstein saga.

Law Firms Protest Lehman Fee Committee’s Cuts in Legal Bills

Fifteen law firms have billed the Lehman Brothers estate more than $300 million in total fees and expenses since Lehman filed for bankruptcy in September 2008. By almost any standard, that’s a lot of money. But the cash pouring in hasn’t stopped the key firms involved from protesting aggressively when the fee committee monitoring the case moves to slash their bills, even if the proposed cuts amount to a fraction of a percent of the firms’ total requested fees.

The fees dispute gained momentum earlier this week, when three firms — Milbank, Tweed, Hadley & McCloy, Jones Day and Curtis, Mallet-Prevost, Colt & Mosle — filed papers protesting the Lehman fee committee’s reductions of their bills for the period of June 1, 2009, through the end of September 2009. The cuts are small in the context of the total billings to date in the Lehman matter. In the case of Curtis Mallet, for instance, the committee, headed by Kenneth Feinberg, the Obama administration’s bailout pay czar, slashed the firm’s $4.8 million bill for that four-month period by about $178,000. The firm protested, saying the cuts were too large, and Feinberg agreed to put about $29,000 back onto the firm’s bill, court records show.

Other firms made similar protests. Jones Day, which billed the Lehman estate $9 million over the same four-month period, objected to Feinberg’s move to cut that $9 million bill by roughly $412,000. Among Feinberg’s findings: the firm spent nearly $8,000 on business-class or first-class flights when its lawyers were supposed to fly coach, and the firm exceeded the $20 per person limit on overtime meals by nearly $2,500 over those four months. But Jones Day wasn’t going to give up that money without a fight. The firm sent Feinberg detailed papers arguing the initial $9 million bill should be slashed only by about $174,000 instead of the proposed $412,000, court records show. Feinberg again compromised, settling last week on a reduction of $293,000.

Jones Day did not relent. The firm filed papers on Tuesday in which it labeled Feinberg’s reasoning “opaque.” It joined a Milbank motion, also filed Tuesday, in which the firms reserve their right to argue later on for the higher fee amounts.

Lawyers at Jones Day, Milbank and Curtis-Mallet did not immediately respond to requests for comment.

The biggest head-scratcher in all of this? The main dispute — in terms of controversy and dollars — centers on how much it costs firms to prepare their bills in the case. Jones Day’s recent application for fees and expenses, for instance, ran nearly 700 pages. It takes an enormous amount of work to put something like that together and include all the detail Feinberg and his committee demand. That time costs money, and the firms bill that cost to Lehman’s estate.

And the cost is huge. Recall that Feinberg initially cut about $412,000 from the Jones Day bill. Of the $412,000 of (alleged) fat Feinberg found, about $122,000 covered the firm’s work in preparing the 700-page fee application, court records show. Likewise, nearly $83,000 of the $295,000 or so Feinberg wanted to slash from Jenner & Block‘s bill for the same four-month period came out of the costs Jenner claimed for preparing that very bill.

To summarize: The argument about law firm bills centers on how much the firms are billing to prepare their bills. Get your head around that.

But it’s a serious issue, and the firms that filed papers this week are arguing that Feinberg’s committee is ignoring precedent by imposing a strict cap on how much firms can charge for the preparation of their bills. Early on in the case, the committee ruled that the costs firms claim for the preparation of their bills could amount to no more than 1 percent of their total bill, court records show. The firms claim that is draconian, since judges typically set the cap at somewhere between 2.5 and 5 percent of a firm’s total bill, court records show.

Feinberg has yet to respond to the papers filed this week, and the timetable for any resolution is unclear. We’ll keep you posted.

nytimes.com: The Difficulty of Being Ukraine

Ukraine holds presidential elections this month, and the outcome is likely to spell the epitaph of the Orange Revolution. The euphoria of 2003-04, when a grand display of “people power” reversed a rigged election, has long faded.

The country of 46 million has been one of the hardest hit by the global financial meltdown, suffering a sharp currency devaluation and a projected 14 percent drop in G.D.P. this year.

President Viktor Yushchenko, once the Orange hero, is now polling in low single digits. Much like Lech Walesa in Poland a generation ago, the out-of-touch Mr. Yushchenko has unceremoniously morphed from national icon of change into political footnote.

The January ballot is likely to lead to a run-off between Prime Minister Yulia Tymoshenko, a feisty populist, and Viktor Yanukovich, a drab but steady former prime minister and Yushchenko rival, whose Party of Regions boasts the strongest organization.

Both are pragmatic leaders. But whichever wins will face enormous challenges, foremost restarting the anti-crisis program with the I.M.F., which suspended its $16 billion lending facility last month due to the bitter political impasse between Mr. Yushchenko and Ms. Tymoshenko.

The winner will also need to remember that to lead Ukraine is to balance East and West. This imperative reflects the pressures of both external geopolitics and internal demographics.

Russia and the United States tend to view Ukraine as a key battleground in a cosmic proxy war between East and West. Both have a bad habit of trying to pick winners in Ukrainian politics. These interventions, naïve in their own ways, tend to backfire, often at Ukraine’s expense.

Russian meddling fueled the Orange backlash against the mediocre Leonid Kuchma and his cronies and ended in a series of crippling winter gas cut-offs and sabre-rattling over Crimea.

Meantime, the U.S. expected far more from Mr. Yushchenko than he could deliver, deepening his isolation at home. The curse of U.S. foreign policy idealism, whether neoconservative or liberal, is to make the best the enemy of the good.

By putting more emphasis on the symbolism of a failed NATO membership bid than the unglamorous work of energy reform, the U.S. did no favor for Ukraine’s security. It should be clear that an independent Ukraine must not consume Russian-sourced energy as though it were still part of the Soviet Union.

By contrast, Russia’s designs on Ukraine are hardly idealistic. At the NATO summit last year, Vladimir Putin reportedly remarked to former president George W. Bush, “You understand, George, that Ukraine isn’t even a country. What is Ukraine? Part of its territory is Eastern Europe, and part of it, a significant part, was given by us.”

Political bullies can be clever at implanting a grain of truth in their predatory barbs. Like other European nations, Ukraine’s ethnicity is mixed and its borders were not God-given. These things emerged through collisions of tribes, ethnic intermingling and considerable bloodshed over centuries.

Western Ukraine — Galicia and Bukovina — were Hapsburg lands and never part of the czarist empire. The Crimean peninsula was transferred from the Russian Republic to Soviet Ukraine by Nikita Khrushchev in 1954, when both were part of the Soviet Union.

Ukraine faces deep identity issues. Ethnic Russians are roughly 20 percent of the population, and many more Ukrainians speak Russian. The languages are close, like High German and Bavarian or Danish and Swedish.

Europe prides itself on what Freud called “the narcissism of small differences.” However, Ukrainian nationalists would be wise not to overplay their hand, as Mr. Yushchenko often has done on sensitive language and historical issues.

In the 21st century, Ukraine needs to pursue its own path as a pluralist democracy and emerging market, balancing Western integration with a respect for its older cultural roots and affinities. Despite the present economic crisis and wide dissatisfaction with the political elite, Ukraine has a bright future. It has fertile land, solid industry and well-endowed human capital.

It also has a libertarian Cossack streak that explains how Ukraine came into being — precisely because of the proud self-reliance of its diverse people. The streets of Kiev, Lvov, Kharkov, Dniepropetrovsk and Simferopol (forgive the Russian transliterations) today have a distinct whiff of freedom, and they should keep it.

What should the West do to help? The U.S. needs to continue balancing its important “reset” policy with Russia by reassuring its neighbors, foremost Ukraine, of its active commitment.

It is the fate of the post-Soviet countries to be part of what Moscow calls the “near abroad.” While these states will always be near, it must be the policy of the U.S. and European Union to make sure they remain “abroad,” and free and prosperous.

Earlier this year, a senior Ukrainian official, anxious about the reset, asked me whether the Obama administration would “trade us for something like cooperation on Iran.” I told her that the U.S. was rooting for Ukraine even when Leonid Kravchuk and Leonid Kuchma, less than stellar figures, were its elected leaders. This will not change.

Yet Ukrainians remember lost dreams of statehood during the two great European wars in the 20th century. And they remember the “Chicken Kiev” speech of President George H.W. Bush to the Ukrainian Supreme Soviet on Aug. 1, 1991, just months before the unraveling of the U.S.S.R.

“Freedom is not the same as independence,” Bush said. “Americans will not support those who seek independence in order to replace a far-off tyranny with a local despotism.” Bush had uncannily bad timing, but his underlying point about the need for political maturity remains important.

Ukrainians and their Western partners alike should stick to a balanced path of reform and long-term sustainability, not quick fixes and grand gestures. The end of the Orange era will not be the end of Ukraine’s independence — nor of its Euro-Atlantic identity.

NYtimes.com: Hedge Fund Executive Is Charged With Insider Trading

The founder of the Galleon Group, a big New York hedge fund, was charged on Friday with insider trading in the stocks of several companies, including Advanced Micro Devices, Clearwireand Akamai, earning about $20 million in the process.

Federal prosecutors for the Southern District of New York accused Raj Rajaratnam, 51, with illegally obtaining and trading on information on these companies, which also included Polycom, Hilton Hotels, Google and People Support. He was charged with four counts of conspiracy and nine counts of securities fraud. (Read the complaints after the jump.)

The prosecutors’ case is built on both statements from an unnamed cooperating witness, who has agreed to plead guilty, and from the recording of four conversations between the witness and Mr. Rajaratnam. The unnamed witness began conversations with the Federal Bureau of Investigation in 2007, which led to the phone taps.

At a press conference Friday afternoon, law enforcement officials described the case as a sign that the Justice Department, the Federal Bureau of Investigation and the Securities and Exchange Commission were stepping up their efforts against white-collar crime. Preet Bahara, the United States attorney for the Southern District of New York, compared the investigation to those used against the Mafia and drug cartels.

“This case should serve as a wake-up call to Wall Street and to every hedge fund manager,” Mr. Bahara said. “These people were privy to inside information, but they didn’t know one secret, that we were listening.”

Others charged by prosecutors include Mark Kurland, the president of New Castle Partners, another large money manager; Danielle Chiesi, a former Bear Stearnsexecutive who now works at New Castle; Rajiv Goel, an executive at Intel’s treasury department who supported the company’s venture capital arm; Anil Kumar, an executive at McKinsey & Company; and Robert Moffatt, an executive at I.B.M.

All six were arrested Friday morning. Five of the six are set to be arraigned in federal court in Manhattan Friday afternoon. Mr. Goel is set to be arraigned in California.

According to the complaint, the witness first approached Mr. Rajaratnam in mid-2005 about divulging nonpublic information. That led to a scheme that ran from January 2006 through July 2007 involving insider information about three companies — Polycom, Hilton and Google — in which the hedge fund executive garnered about $12.7 million in profit. Mr. Rajaratnam reciprocated by supplying inside information about other technology companies.

Mr. Rajaratnam partnered with the likes of Mr. Goel and Mr. Kumar, who supplied information about their portfolio companies or clients, and in turn made profitable trades for these associates. The unnamed cooperating witness is alleged by prosecutors to have also obtained insider information, including from an analyst at Moody’s Investors Service covering Hilton (and who was paid $10,000) and an unnamed employee atMarket Street Partners, an investor relations firm working for Google.

Mr. Rajaratnam, a native of Sri Lanka, is listed as No. 551 on Forbes’s 2009 list of the world’s richest people, with an estimated net worth of $1.3 billion.

Law-enforcement officials on Friday said that Mr. Rajaratnam’s success appeared built not on “genius trading strategies,” but on his insider-trading connections.

“He is not a master of the universe,” said Robert Khuzami, the S.E.C.’s director of enforcement. “He is a master of the Rolodex.”

A spokesman for Galleon said in a statement: “Galleon was shocked to learn today that Raj Rajaratnam was arrested this morning at his apartment. We had no knowledge of the investigation before it was made public and we intend to cooperate fully with the relevant authorities. Galleon continues to operate and is highly liquid.”

A spokesman for Moody’s said in a statement: “Moody’s has strict policies against divulging confidential information, and the alleged wrongdoing by an individual at Moody’s would be an egregious violation of Moody’s policies and values. Moody’s fully supports the government’s prosecution of insider trading and will provide every assistance in its investigation of this matter.”

A spokesman for Intel said that Mr. Goel was placed on administrative leave Friday morning, and that the chipmaker had not been aware of the investigation until then. He added that Intel has not been contacted by authorities so far, but is ready to cooperate.

A spokeswoman for McKinsey said in a statement: “The firm was distressed to learn that Mr. Kumar was arrested and is looking into the matter urgently.” She declined to comment on Mr. Kumar’s job status, but a person briefed on the matter said that Mr. Kumar was placed on paid leave.

Representatives for I.B.M. and Market Street Partners declined to comment.

Representatives for Akamai and lawyers for the defendants were not immediately available for comment.

FT.com: Emerging economies shine in dark times

For many people the future of investing can be summed up in two words: emerging markets.

This view has been strengthened by the experience of the past two years, when most of the financial problems surrounding subprime, toxic assets, stricken banks and overleverage were features of developed markets, rather than emerging ones.

Moreover, it has been an emerging market – China – that has led the world back from recession, rather than the US, the world’s biggest economy, which continues to struggle.

In other words, this is a crisis that may prove the making of the emerging markets, because during previous bouts of global financial turbulence they have often been harder hit than their developed market counterparts. This time, emerging markets rebounded more quickly, and emerging market assets, particularly equities, have staged far stronger recoveries.

The improvement has been so great that some commentators even believe that the term “emerging markets” is obsolete.

Marko Dimitrijevic, chief investment officer at Everest Capital, a Miami-based hedge fund manager, is one of them. “You’re basically buying something with similar risk, yet has better growth characteristics.”

Jerome Booth, head of research at Ashmore Investment Management, says: “I think people have got to fundamentally rethink their view of the world, the way they do their asset allocation and risk. Brazil has a lower default risk than Italy, given the risk of a messy euro exit.

“There is not much doubt Brazil’s macro-economic fundamentals and policy credibility are stronger than Italy’s, yet Brazil is an emerging market and Italy is an industrialised country and part of the Group of Seven [leading industrialised nations].”

Indeed, Brazil’s status was enhanced last week when it was selected ahead of Madrid, Tokyo and Chicago to host the 2016 Olympics. And the shift to emerging markets was further underlined two weeks ago when the G20 was confirmed as one of the world’s primary international forums, displacing the G7.

The question now is how quickly, emerging markets can progress from exotic to mainstream in the minds of international investors.

In spite of their recent resilience, the average pension fund allocates an estimated 5 per cent of its portfolio to emerging markets, yet they make up 30 per cent of the world’s gross domestic product, according to the International Monetary Fund.

Mike Gomez, co-head of emerging markets portfolio management at Pimco, says: “Without question this is an asset class that continues to expand and is structurally underinvested by the majority of longer-term investors. This is an asset class that has gone from exotic to more mainstream over the past 10 years.”

The past 10 years has certainly seen emerging markets burst dramatically on to the global investment stage.

Emerging market funds under management globally have increased to a current $563bn from $64bn at the start of 1999, according to EPFR Global, the data provider. Yet, they are still just a small part of the investable universe compared with the $4,400bn under management in the developed world.

Emerging market stocks now make up 11 per cent of the FTSE All World index compared with 3 per cent in 2000. By contrast, developed stocks have seen their share of capitalisation on the FTSE All World index fall to 89 per cent from 97 per cent.

The reversal in fortunes reflects their commitment to prudent economic policies and careful fiscal management.

Chris Cheetham, chief executive of Halbis, the active manager within HSBC Global Asset Management, says: “The emerging markets have had a good crisis. Their position has been strengthened and there is no doubt that more money will flow into the emerging world over the next few years.

“These markets and economies are certain to grow more quickly than those in the developed world over the next five, 10 or 15 years. ”

Simon Hallett, chief investment officer at Harding Loevner, a $5bn fund manager based in the US, adds: “Emerging market economies are better managed than they used to be. There’s much less debt than there used to be. And individual companies are much, much better managed than they used to be.”

The surge in commodity prices since 2002 has also encouraged investors to switch money into these markets as many are rich in oil and resources, with big agricultural sectors.

However, fund managers warn investors against becoming too complacent and simply putting faith in the emerging markets because they are likely to grow at a much faster pace than the developed world.

For a start, investors have to be selective. The emerging markets cover a vast number of countries with very different economic outlooks and investment profiles.

In central and eastern Europe, Poland and the Czech Republic have proved resilient, while Hungary and Ukraine have been forced to turn to the IMF for financial support. In Latin America, Brazil’s size and relative stability makes it attractive, but Mexico is more dependent on oil revenues and growth in the neighbouring US. Argentina, Venezuela and Ecuador remain highly volatile and risky.

Mr Cheetham says: “It may be a given that the emerging markets will grow more quickly than the developed markets, but that does not necessarily mean they will offer higher total returns. You may have bigger equity markets and more shares in issue, but that can lead to lower dividends and lower returns. It means investors still have to buy at the right price.”

Nigel Rendell, senior emerging markets strategist at RBC Capital Markets, agrees: “Valuations will remain important. Buying shares on expensive valuations could lead to losses, although countries with superior economic performances should in general offer superior market returns. The future is definitely the emerging markets.”

FT.com: Bernanke says US recession likely over

The US recession “is very likely over”, Ben Bernanke, Federal Reserve chairman, said on Tuesday as Barack Obama, US President, heralded the end of the economic “freefall.”

Their comments came after data showed retail sales rose 2.7 per cent last month, their fastest rate in more than three years. The expected boost from the popular “cash for clunkers” car rebate programme was accompanied by a surprise pick-up in other spending.

This raised hopes that US consumers might be re-emerging from the rubble of the housing market collapse, the rollercoaster ride in equities markets and rising unemployment.

“This is a consumer that is in a lasting full recovery mode,” said Chris Rupkey of the Bank of Tokyo/Mitsubishi UFJ. “The Fed is going to need to stop talking about its exit strategy and start implementing it if today’s data keeps up.”

Others were more cautious, pointing out that August was the back-to-school month. “I’d like to see if this is just a one-month bounce or an actual trend,” said Adam York, at Wells Fargo.

Many economists believe that consumer spending will be constrained for months by households’ limited access to credit and their desire to reduce their debts.

However, after a long period of near-stagnant spending, there may be pent-up demand for some goods.

Mr Bernanke, who did not comment directly on the sales report, remained cautious about the shape of the recovery.

He said he expected a “moderate” recovery in 2010 with growth “not much faster than the underlying potential growth rate of the economy” – which means around 3 per cent.

Car and car parts sales jumped 10.6 per cent in August thanks to the now-defunct clunker scheme, while petrol stations’ sales also jumped 5.1 per cent as the price of oil rose during the month.

But even excluding all auto-related purchases and petrol, retail sales were up a healthy 0.6 per cent with increased spending on clothing, sporting goods, books, electronics and food.

Separately, Mr Obama offered his own optimistic comments and championed the role that workers would play in rebuilding the American economy.

“While I know times are still tough for working people, while I know too many folks are still looking for work or worried they’ll be the next ones let go, the Recovery Act is making a difference,” Mr Obama told an AFL-CIO convention in Pittsburgh on Tuesday.

“We have stopped our economic freefall. That is something everyone can agree on,” he said. “We cannot afford to go back – we must move forward. That’s why we need to build a new foundation for lasting prosperity… and ensure that we never experience another crisis like this again.”

Mr Obama cited creating new economy jobs, reforming healthcare, protecting consumers from abuse and letting markets function fairly and freely as ways to avoid another crisis.

“That’s how we’ll build an economy that works for working Americans. That’s how we’ll help our children climb higher than we did. And that’s how we’ll grow our great American middle class,” the president said.

Meanwhile, wholesale prices rose 1.7 per cent in August after falling 0.9 per cent in July. The rise was greater than analysts expected, given a lot of spare capacity in the economy, and was led by an 8 per cent rise in energy prices and a 23 per cent jump in the cost of petrol.

“With gold at $1,000 an ounce, we are concerned about the outlook for inflation later in 2010 and this report suggests that inflation pressures may be beginning to stir in manufacturing,” said John Ryding and Conrad DeQuadros, economists at RDQ Economics.

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