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To: Cactus Jack who wrote (10059)	3/5/2011 11:08:30 AM
From: stockman_scott	4 Recommendations Read Replies (3) \| Respond to of 119361

Armies of Expensive Lawyers, Replaced by Cheaper Software nytimes.com By JOHN MARKOFF The New York Times March 4, 2011 When five television studios became entangled in a Justice Department antitrust lawsuit against CBS, the cost was immense. As part of the obscure task of “discovery” — providing documents relevant to a lawsuit — the studios examined six million documents at a cost of more than $2.2 million, much of it to pay for a platoon of lawyers and paralegals who worked for months at high hourly rates. But that was in 1978. Now, thanks to advances in artificial intelligence, “e-discovery” software can analyze documents in a fraction of the time for a fraction of the cost. In January, for example, Blackstone Discovery of Palo Alto, Calif., helped analyze 1.5 million documents for less than $100,000. Some programs go beyond just finding documents with relevant terms at computer speeds. They can extract relevant concepts — like documents relevant to social protest in the Middle East — even in the absence of specific terms, and deduce patterns of behavior that would have eluded lawyers examining millions of documents. “From a legal staffing viewpoint, it means that a lot of people who used to be allocated to conduct document review are no longer able to be billed out,” said Bill Herr, who as a lawyer at a major chemical company used to muster auditoriums of lawyers to read documents for weeks on end. “People get bored, people get headaches. Computers don’t.” Computers are getting better at mimicking human reasoning — as viewers of “Jeopardy!” found out when they saw Watson beat its human opponents — and they are claiming work once done by people in high-paying professions. The number of computer chip designers, for example, has largely stagnated because powerful software programs replace the work once done by legions of logic designers and draftsmen. Software is also making its way into tasks that were the exclusive province of human decision makers, like loan and mortgage officers and tax accountants. These new forms of automation have renewed the debate over the economic consequences of technological progress. David H. Autor, an economics professor at the Massachusetts Institute of Technology, says the United States economy is being “hollowed out.” New jobs, he says, are coming at the bottom of the economic pyramid, jobs in the middle are being lost to automation and outsourcing, and now job growth at the top is slowing because of automation. “There is no reason to think that technology creates unemployment,” Professor Autor said. “Over the long run we find things for people to do. The harder question is, does changing technology always lead to better jobs? The answer is no.” Automation of higher-level jobs is accelerating because of progress in computer science and linguistics. Only recently have researchers been able to test and refine algorithms on vast data samples, including a huge trove of e-mail from the Enron Corporation. “The economic impact will be huge,” said Tom Mitchell, chairman of the machine learning department at Carnegie Mellon University in Pittsburgh. “We’re at the beginning of a 10-year period where we’re going to transition from computers that can’t understand language to a point where computers can understand quite a bit about language.” Nowhere are these advances clearer than in the legal world. E-discovery technologies generally fall into two broad categories that can be described as “linguistic” and “sociological.” The most basic linguistic approach uses specific search words to find and sort relevant documents. More advanced programs filter documents through a large web of word and phrase definitions. A user who types “dog” will also find documents that mention “man’s best friend” and even the notion of a “walk.” The sociological approach adds an inferential layer of analysis, mimicking the deductive powers of a human Sherlock Holmes. Engineers and linguists at Cataphora, an information-sifting company based in Silicon Valley, have their software mine documents for the activities and interactions of people — who did what when, and who talks to whom. The software seeks to visualize chains of events. It identifies discussions that might have taken place across e-mail, instant messages and telephone calls. Then the computer pounces, so to speak, capturing “digital anomalies” that white-collar criminals often create in trying to hide their activities. For example, it finds “call me” moments — those incidents when an employee decides to hide a particular action by having a private conversation. This usually involves switching media, perhaps from an e-mail conversation to instant messaging, telephone or even a face-to-face encounter. “It doesn’t use keywords at all,” said Elizabeth Charnock, Cataphora’s founder. “But it’s a means of showing who leaked information, who’s influential in the organization or when a sensitive document like an S.E.C. filing is being edited an unusual number of times, or an unusual number of ways, by an unusual type or number of people.” The Cataphora software can also recognize the sentiment in an e-mail message — whether a person is positive or negative, or what the company calls “loud talking” — unusual emphasis that might give hints that a document is about a stressful situation. The software can also detect subtle changes in the style of an e-mail communication. A shift in an author’s e-mail style, from breezy to unusually formal, can raise a red flag about illegal activity. “You tend to split a lot fewer infinitives when you think the F.B.I. might be reading your mail,” said Steve Roberts, Cataphora’s chief technology officer. Another e-discovery company in Silicon Valley, Clearwell, has developed software that analyzes documents to find concepts rather than specific keywords, shortening the time required to locate relevant material in litigation. Last year, Clearwell software was used by the law firm DLA Piper to search through a half-million documents under a court-imposed deadline of one week. Clearwell’s software analyzed and sorted 570,000 documents (each document can be many pages) in two days. The law firm used just one more day to identify 3,070 documents that were relevant to the court-ordered discovery motion. Clearwell’s software uses language analysis and a visual way of representing general concepts found in documents to make it possible for a single lawyer to do work that might have once required hundreds. “The catch here is information overload,” said Aaref A. Hilaly, Clearwell’s chief executive. “How do you zoom in to just the specific set of documents or facts that are relevant to the specific question? It’s not about search; it’s about sifting, and that’s what e-discovery software enables.” For Neil Fraser, a lawyer at Milberg, a law firm based in New York, the Cataphora software provides a way to better understand the internal workings of corporations he sues, particularly when the real decision makers may be hidden from view. He says the software allows him to find the ex-Pfc. Wintergreens in an organization — a reference to a lowly character in the novel “Catch-22” who wielded great power because he distributed mail to generals and was able to withhold it or dispatch it as he saw fit. Such tools owe a debt to an unlikely, though appropriate, source: the electronic mail database known as the Enron Corpus. In October 2003, Andrew McCallum, a computer scientist at the University of Massachusetts, Amherst, read that the federal government had a collection of more than five million messages from the prosecution of Enron. He bought a copy of the database for $10,000 and made it freely available to academic and corporate researchers. Since then, it has become the foundation of a wealth of new science — and its value has endured, since privacy constraints usually keep large collections of e-mail out of reach. “It’s made a massive difference in the research community,” Dr. McCallum said. The Enron Corpus has led to a better understanding of how language is used and how social networks function, and it has improved efforts to uncover social groups based on e-mail communication. Now artificial intelligence software has taken a seat at the negotiating table. Two months ago, Autonomy, an e-discovery company based in Britain, worked with defense lawyers in a lawsuit brought against a large oil and gas company. The plaintiffs showed up during a pretrial negotiation with a list of words intended to be used to help select documents for use in the lawsuit. “The plaintiffs asked for 500 keywords to search on,” said Mike Sullivan, chief executive of Autonomy Protect, the company’s e-discovery division. In response, he said, the defense lawyers used those words to analyze their own documents during the negotiations, and those results helped them bargain more effectively, Mr. Sullivan said. Some specialists acknowledge that the technology has limits. “The documents that the process kicks out still have to be read by someone,” said Herbert L. Roitblat of OrcaTec, a consulting firm in Altanta. Quantifying the employment impact of these new technologies is difficult. Mike Lynch, the founder of Autonomy, is convinced that “legal is a sector that will likely employ fewer, not more, people in the U.S. in the future.” He estimated that the shift from manual document discovery to e-discovery would lead to a manpower reduction in which one lawyer would suffice for work that once required 500 and that the newest generation of software, which can detect duplicates and find clusters of important documents on a particular topic, could cut the head count by another 50 percent. The computers seem to be good at their new jobs. Mr. Herr, the former chemical company lawyer, used e-discovery software to reanalyze work his company’s lawyers did in the 1980s and ’90s. His human colleagues had been only 60 percent accurate, he found. “Think about how much money had been spent to be slightly better than a coin toss,” he said.

To: Cactus Jack who wrote (10059)	3/7/2011 7:22:07 PM
From: stockman_scott	Respond to of 119361

Rajaratnam Trial May Tarnish Goldman, McKinsey, & Spark Suits (1) By David Glovin, Patricia Hurtado and Bob Van Voris March 7 (Bloomberg) -- Goldman Sachs Group Inc., McKinsey & Co. and Intel Corp. are among the companies that may be sued or suffer damage to their reputations after witnesses at the trial of Galleon Group LLC co-founder Raj Rajaratnam describe insider leaks. Rajaratnam, 52, goes on trial tomorrow for trading on tips gleaned from sources inside these and other companies, including Morgan Stanley, International Business Machines Corp. and Moody’s Investors Service Inc. If the billionaire native of Sri Lanka is convicted by a Manhattan jury, U.S. prosecutors may seek to jail him for more than 10 years. The companies from which the leaks emanated may find themselves in court explaining how sensitive data wound up with traders at Galleon. While the actions of a rogue employee who leaked tips won’t justify a lawsuit, evidence that a firm’s executives intentionally gave data to favored traders to manipulate share price may be grounds to sue a company, said Mark Rifkin, a New York lawyer who represents investors. “If a company made a decision for whatever reason that it wanted to make information available to select individuals, that in my opinion would be unlawful,” said Rifkin, of Wolf Haldenstein Adler Freeman & Herz LLP, in an interview. “We’re paying close attention to the entire insider trading case as it unfolds because you never know what’s going to happen.” Largest Crackdown Rajaratnam denies wrongdoing in a case that is the centerpiece of the largest U.S. crackdown on hedge fund insider trading. Prosecutors said he used tips from a network of traders, corporate officials and colleagues to generate $45 million in profits in a scheme that went on for seven years. Rajaratnam said his and his funds’ trades were based on Galleon research and that investment advisers routinely speak to company insiders in the search for news. Prosecutors have cited about three dozen companies in which there were tips, some coming from company employees and some from workers at professional firms representing the companies. Proof about the leaks will come from corporate officials, ex- Galleon traders, and wiretaps of Rajaratnam’s phone calls in which accused accomplices refer to companies such as Intel and Broadcom Corp., prosecutors said. eBay Layoffs Evidence about Intel and McKinsey will take center stage, as prosecutors offer testimony from former Intel employee Rajiv Goel and ex-McKinsey director Anil Kumar about alleged tips to Rajaratnam. Goel, who was an Intel managing director, has said he tipped Rajaratnam about company earnings. Kumar admitted leaking news about clients including eBay Inc.’s 2008 plan for layoffs. Rajaratnam sold short eBay shares and earned about $500,000, prosecutors say. The case “has McKinsey written all over it,” Rajaratnam’s lawyer, John Dowd, wrote in a court filing last month in which he sought documents from the consulting firm. Goel and Kumar pleaded guilty and are aiding prosecutors. There may also be evidence of leaks from a former Goldman Sachs and Procter & Gamble Co. board member, Rajat Gupta, according to court documents. Gupta, who was managing director at McKinsey from 1994 to 2003, was sued last week by the Securities and Exchange Commission for telling Rajaratnam about earnings at those companies and about a Berkshire Hathaway Inc. investment in Goldman Sachs. Prosecutors may call Goldman Sachs Chief Executive Officer Lloyd Blankfein as a witness, according to a person briefed on the matter. Dowd said he may summon Gupta for Rajaratnam’s case. Gupta’s lawyer, Gary Naftalis, calls the SEC claim “baseless.” Morgan Stanley, AMD Other companies will be in the spotlight. Jurors may hear that an ex-IBM senior vice president, Robert Moffat, leaked news to Danielle Chiesi, a trader at New Castle Funds LLC, and that tips to Chiesi made their way to Rajaratnam, according to court papers. Moffat and Chiesi have pleaded guilty. They’re not cooperating with prosecutors. There may be testimony about leaks from ex-Moody’s analyst Deep Shah, whose information traveled to former Intel employee Roomy Khan and then to Rajaratnam, prosecutors say. Shah is a fugitive. Khan has pleaded guilty and may testify for the government. Morgan Stanley and Advanced Micro Devices Inc. might be tarnished too. Prosecutors said in a court filing that a Morgan Stanley banker, whom they didn’t name, disclosed details of an AMD deal to an unnamed person, who told Rajaratnam. Ex-AMD CEO Hector Ruiz allegedly leaked news to Chiesi, according to a person familiar with the probe. The banker has been put on leave. Ruiz hasn’t been charged. Front Page “Our position is that we appear to be a victim of an insider trading scheme,” said Mike Silverman, a spokesman for AMD, of Sunnyvale, California. “We’ve been cooperating with the U.S. Attorney’s Office.” Evidence of unlawful disclosures may be more than “just embarrassing” to companies that are required to guard against such leaks, said Ronn Torossian, Chief Executive Officer of 5W Public Relations LLC in New York. “It’s absolutely distracting from the company’s core mission,” he said in an interview. “A microscopic problem can very quickly become a bigger problem. These are things that can very easily end up on the front page of a newspaper.” Anthony Sabino, a professor at the Tobin School of Business at St. John’s University in New York, said trial disclosures will be just “a tiny bump in the road” for the reputations of the “elite of corporate America.” Black Eye “But it will be a black eye for them, nevertheless,” he said in an interview. “These are corporations who value their reputations tremendously.” Rajaratnam is also alleged to have traded on tips in Clearwire Corp., Polycom Inc., Xilinx Inc., Spansion Inc., Akamai Technologies Inc., PeopleSupport Inc. and others. Ed Canaday, a spokesman for New York-based Goldman; Pen Pendleton, a spokesman for New York-based Morgan Stanley; Yolande Daeninck, a spokeswoman for New York-based McKinsey; and Paul Fox, a spokesman for Cincinnati-based Procter & Gamble, and Andrew Merrill, a spokesman for Ruiz, declined to comment. Carrie Kizer, a spokeswoman for Berkshire Hathaway, didn’t return a call. Chuck Mulloy, a spokesman for Santa Clara-based Intel, and Jeff Young, a spokesman for Cambridge, Massachusetts-based Akamai, said their firms have been cooperating with prosecutors. Intel’s cooperation began a decade ago as part of a probe of leaks by Khan, Mulloy said. Spokespersons for other companies didn’t return calls or declined to comment on whether they feared they’d be sued or see their corporate reputations suffer. Shun Shares Andrew Stoltmann, a securities lawyer in Chicago, said investors may shun companies that can’t keep secrets and that regulators may scrutinize them. “That’s a huge FD issue,” said Stoltmann, referring to Regulation FD, standing for fair disclosure, an SEC rule enacted in 2000 barring corporate officers from intentionally slipping market-moving news to favored investors before general dissemination. “They’re opening themselves up to regulatory issues.” Jim McCarthy, a spokesman for Rajaratnam, declined to comment. Rifkin said it is unlikely “but not impossible” that there will be evidence that a company intentionally leaked information or failed to adequately guard against leaks by employees. ‘Official Duties’ “If a company wasn’t careful, or if executives wanted the information to get out, they could be responsible,” he said. A key question would be whether an executive who disclosed tips was acting “within the scope of his official duties,” he said. Stuart Slotnick, a white-collar defense lawyer at Pittsburgh’s Buchanan Ingersoll & Rooney PC, said investors would have difficulty winning a lawsuit over leaked information. Still, he said, getting sued and having to defend a suit remains a possibility. “It’s unlikely a company would be held liable for the actions of a rogue individual unless its shown the company knew or should have know about the disclosures or the company didn’t take precautions,” he said. “But in this country, if there’s an accusation of wrongdoing, there will be a lawsuit.” The case is U.S. v. Rajaratnam, 1:09-cr-01184, U.S. District Court, Southern District of New York (Manhattan). To contact the reporters on this story: David Glovin in New York at dglovin@bloomberg.net; Patricia Hurtado in New York at pathurtado@bloomberg.net; Bob Van Voris in New York at rvanvoris@bloomberg.net. To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net. Last Updated: March 7, 2011 18:20 EST

To: Cactus Jack who wrote (10059)	3/8/2011 9:28:54 AM
From: stockman_scott	1 Recommendation Respond to of 119361

Trading Technologies wins business by winning patent cases ______________________________________________________________ By Lynne Marek Crain's Chicago Business March 07, 2011 Harris Brumfield started suing his futures industry rivals for patent infringement seven years ago in a bid to make Trading Technologies International Inc. the dominant maker of electronic trading software. His courtroom offensive is paying off. The CEO has chalked up two federal court wins this year in his patent assault on companies that he claims copy Trading Technologies' software or bundle it with their own. One trading firm settled in January, and a futures broker lost its court battle in February. The victories are turning up the flow of licensing fees from some 200 patents that Trading Technologies has long hoped would supplement sales of its popular X Trader software in the expanding electronic futures trading industry. The push to become a monopoly means higher prices for customers. But Mr. Brumfield's winning streak isn't assured: Opponents with deeper pockets, such as TD Ameritrade Holding Corp., are likely to put up a fiercer fight in the 14 remaining cases. “The breaking point is occurring,” says David Donoghue, an intellectual property attorney in Chicago at law firm Holland & Knight LLP who writes an intellectual property law blog and has been following the cases. Privately held Trading Technologies has grown substantially since it was founded in 1994 in Frankfurt, Germany, and now has 600 employees at its Chicago headquarters and in 10 other offices worldwide. Mr. Brumfield, a one-time futures pit trader who grew up working on his family's catfish farm in Mississippi, liked the software so much he bought out the company's founder in 2001, moved the business to Chicago and appointed himself to the top post. The software interfaces with futures exchanges to let traders place and track orders while monitoring the markets and charting trends. Futurepath Trading LLC is among the firms opposing Trading Technologies in court because “data has been displayed this way for years,” says Linda Raschke, managing director of Chicago-based Futurepath. Mr. Brumfield, 46, declines to comment and won't reveal financial results. ON NOTICE Trading Technologies filed its first lawsuit in 2004, the same year it got its first patent. Mr. Brumfield put competitors on notice, via full-page ads in the Wall Street Journal and Financial Times, that he was about to start demanding royalties and would sue to get them. Since then, the company has reached 16 court settlements, a spokeswoman says. In a second round of a dozen lawsuits last year, Trading Technologies named some companies again, alleging infringements on new patents. Its legal carpet-bombing has intimidated even those not sued, say people familiar with those firms. “This has been a particularly aggressive litigation and hard-fought on both sides,” Mr. Donoghue says. To settle with Trading Technologies, Cunningham Trading Systems LLC of Chicago agreed in January to pay $2 million in annual royalty fees and $4 million in damages. Trading Technologies also prevailed over Rosenthal Collins Group LLC last month. A judge fined the Chicago brokerage for misconduct, ordered its attorneys to pay for the litigation—and handed a default judgment to Trading Technologies. Damages are still being calculated. Rosenthal Collins and Cunningham decline to comment. Chicago-based TradeHelm Inc., Stellar Trading Systems Inc. in London and Denver-based CQG Inc. are progressing in settlement talks, according to documents filed in February in U.S. District Court in Chicago. None of those firms returned phone calls seeking comment. Omaha, Neb.-based TD Ameritrade declines to comment. Ms. Raschke laments the costs of litigation and worries some small firms may settle because they can't afford the legal bills, but she notes that Mr. Brumfield may yet meet his match. “The real heavyweights” are still in court, she says. “You need to wait and see how things unfold.” © 2011 by Crain Communications Inc.

To: Cactus Jack who wrote (10059)	3/8/2011 4:52:38 PM
From: stockman_scott	Read Replies (1) \| Respond to of 119361

Rajaratnam Trial Day 1 Brings Early Defense Victory By David Glovin, Bob Van Voris and Patricia Hurtado March 8 (Bloomberg) -- The biggest insider-trading trial in a generation began with a legal victory for the defendant, Galleon Group LLC co-founder Raj Rajaratnam. As U.S. District Judge Richard Holwell took the bench this morning at 9:50 a.m., he told the lawyers that he agreed with the defense on an important legal principle. As potential jurors waited to enter the Manhattan courtroom, Holwell said he would instruct the jury selected to hear the case that they may convict Rajaratnam only if he knew his alleged tipper had breached a legal duty owed to the company from which the news emanated. Holwell said his ruling was only “preliminary,” and prosecutors briefly tried to talk him out of a decision that may make it harder for the government to prove its case. “There’s a more nuanced instruction,” Assistant U.S. Attorney Reed Brodsky told Holwell. The lawyers said they would argue the issue in far greater depth before the judge sends the case to the jury. In the days before the trial, much of the pre-trial legal wrangling focused on whether Rajaratnam, 53, would be harmed by extensive publicity about the case. John Dowd, his lawyer, complained that jurors were likely to be biased against Rajaratnam after the U.S. Securities and Exchange Commission filed a civil action against a potential witness, Rajat Gupta, a former Goldman Sachs Group Inc. director accused by the SEC of tipping Rajaratnam. Dowd may not have needed to worry. Lloyd Who? Of the first 40 potential jurors questioned by Holwell this morning, only eight had heard of Rajaratnam. The judge, after privately questioning those eight, concluded that only one of them should be excused from the case. Holwell read the names of dozens of people who will testify or be mentioned during the trial, and asked the group whether they had heard of any of them. The names mentioned included Goldman Sachs Chief Executive Officer Lloyd Blankfein, who may be a witness for the prosecution. Not a single juror had heard of Blankfein, who testified before Congress last year about his firm’s role in the 2008 financial crisis. And the judge mispronounced Blankfein’s name. Instead of pronouncing the second syllable as “fine,” Holwell rhymed it with “bean.” Nothing on Martha The Rajaratnam trial may be the most far-reaching financial trial on Wall Street in years. Still, he’s got nothing on Martha Stewart when it comes to media star power. Outside the courthouse this morning were three satellite trucks. As jury selection began, just 18 or so journalists sat in the back row of the courtroom. Courthouse officials had set aside a separate room for journalists squeezed out of the courtroom. That space was mostly empty of reporters. Compare that to the 2004 trial of Stewart, who was convicted of obstructing a government investigation into her stock trades. In that trial, dozens of journalists filled three rows of courtroom benches on an almost daily basis. That throng included celebrity reporters such as Dominick Dunne, who was writing for Vanity Fair. Stewart was greeted outside the courthouse on Day 1 of her trial by about 100 photographers. Her supporters held placards high. Dark Suit, Hunched Among the least noticeable characters in the courtroom this morning was the defendant himself. Rajaratnam, wearing a dark double-breasted blazer, walked into the courtroom with seven lawyers. There was no sign of family or friends. While other white-collar defendants including Stewart and former WorldCom Inc. CEO Bernard Ebbers sat at the defense table next to their lawyers during trial, Rajaratnam took a seat today behind Dowd at the second of two mahogany tables. As jury selection got under way, He was quiet, hunched forward in his seat. Unlike his lawyers, he didn’t crane his neck to look at the 100 potential jurors summoned to the courtroom. The case is U.S. v. Rajaratnam, 1:09-cr-01184, U.S. District Court, Southern District of New York (Manhattan). To contact the reporter on this story: David Glovin in New York at dglovin@bloomberg.net; Patricia Hurtado in New York at pathurtado@bloomberg.net; Bob Van Voris in New York at rvanvoris@bloomberg.net. To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net. Last Updated: March 8, 2011 15:30 EST

To: Cactus Jack who wrote (10059)	3/11/2011 11:53:25 AM
From: stockman_scott	Read Replies (1) \| Respond to of 119361

Howrey votes to dissolve firm bizjournals.com By Eli Segall San Jose Business Journal Friday, March 11, 2011 Howrey LLP, stung by partner defections and declining revenue, will dissolve on March 15. Howrey, a corporate litigation firm, has an office in East Palo Alto at the University Circle complex off Highway 101. That office had 19 attorneys as of Thursday, down from 34 lawyers as recently as Feb. 18, according to the firm's website. More than 140 partners left Howrey since April 2010, according to American Lawyer magazine. The Washington, D.C.-based firm was founded in 1956 and reportedly had about 680 lawyers world-wide as of early February. The firm said in a statement Wednesday that its executive committee would dissolve the firm's partnership and "commence an orderly wind down of its affairs." The firm said a "group" of attorneys and staff members, primarily from its Houston office, will join the law firm Winston & Strawn LLP, but many others could not "because of significant client conflicts." Howrey did not elaborate on either point. However, it was reportedly pursuing a merger with Winston & Strawn before it voted to dissolve. Bob Ruyak, chairman and CEO of Howrey, said in the statement that the firm finds "some solace in the fact that our people have been so well received by their new firms." "This is a very difficult time for our firm, for our attorneys and for our staff," he said.

To: Cactus Jack who wrote (10059)	3/16/2011 1:22:09 AM
From: stockman_scott	1 Recommendation Read Replies (1) \| Respond to of 119361

Bernie Madoff Would’ve Made a Fine NFL Owner: Commentary by Scott Soshnick March 16 (Bloomberg) -- Fred Wilpon once offered his pal, Bernie Madoff, an ownership stake in baseball’s New York Mets. The response was no. Maybe Madoff, a convicted con man, would’ve felt more comfortable somewhere in the National Football League, where the practice of obfuscation seems to be thriving. We’ve heard countless stories about Madoff’s unwillingness to show interested parties just how he achieved, year-after- year-after-year, glowing investment returns. Trust me, he said. There’s a similar message emanating from NFL owners in their labor battle with players, whose now-dissolved union demanded to see 10 years of audited team financials as a condition to their pursuing a path of negotiation over litigation. Like Madoff the football owners said no, which sure makes you wonder what they don’t want the rest of us to see. Owners in all sports leagues are fond of describing the management-labor dynamic as a partnership. OK, then, ask yourself this: If you were a partner in a $9 billion a year enterprise, and the other party was clamoring for significant changes to your agreement, saying the status quo stifled their ability to reinvest in the business, wouldn’t you want to see as much information as possible before agreeing to make alterations? That’s what’s happening here. A la Madoff, NFL owners won’t embrace clarity and specificity. If we learned anything from Madoff and the financial crisis it’s this: transparency is good. How to Share “Any smart businessman would want to see full audited financials in the event that someone wanted you to write a check for a billion dollars,” said Kevin Mawae, president of the National Football League Players Association. Owners under terms of the recently expired contract took $1 billion off the top for expenses like, say, stadium construction. Now they want another $1 billion before the sharing even starts, saying expenses are rising faster than revenue. Before discussing givebacks and concessions, however, the players wanted proof that things really are that bad. They wanted to see the numbers. Trust me doesn’t work anymore. Nor should it. Fudging Numbers Should the residents of South Florida trust the leadership of baseball’s Marlins, who trimmed payroll and sought taxpayer assistance for their new stadium while privileged financial statements obtained by the website Deadspin.com showed the team turned an operating profit of about $49 million for the combined 2008 and 2009 seasons? Should players and fans trust George Shinn, who, the Charlotte Observer revealed, was underreporting attendance for the Hornets as it lobbied the National Basketball Association for a move to New Orleans? Here was a case of an owner fudging the numbers to get what he wants. And then there’s Minnesota Timberwolves owner Glen Taylor, who knowingly violated the NBA’s labor agreement when in 1999 he entered into a secret contract with a player. “What was done here was a fraud of major proportions,” NBA Commissioner David Stern said at the time. “The magnitude of this offense was shocking.” It’s worth noting that league owners in 2008 elected Taylor chairman of their Board of Governors. Trust us. NBA Disclosure NFL officials defend their position in part by pointing to the NBA, where they contend the league’s decision to disclose its audited financials hasn’t helped owners and players to reach agreement. Only I asked Billy Hunter, executive director of the basketball players union, if the financial information that he’s received is satisfactory. He said no. Trust us. Perhaps the NFL is weary that full disclosure might prove embarrassing to some of its owners. That’s precisely what happened to the owners of the Los Angeles Dodgers, Frank and Jamie McCourt, whose lavish lifestyle, disclosed in divorce papers, was the stuff of snickers. A Beverly Hills hair stylist, for instance, was paid more than $150,000 a year to primp both in their home. Hard to plead poverty or justify a hike in ticket prices when you’re spending like that. Who knows what audited team financials would show about private jets, clothing allowances and grooming expenses for oh, say, Cowboys owner Jerry Jones. “Maybe you should ask the owners if they trust each other to see each other’s books,” Mawae said. Madoff would’ve loved this bunch. (Scott Soshnick is a Bloomberg News columnist. The opinions expressed are his own.) To contact the writer of this column: Scott Soshnick in New York at ssoshnick@bloomberg.net To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.net Last Updated: March 15, 2011 19:00 EDT