Wikipedia

Sullivan & Cromwell

Sullivan & Cromwell LLP is an American multinational law firm headquartered in New York City. Founded in 1879 by Algernon Sydney Sullivan and William Nelson Cromwell, the firm advised on the creation of Edison General Electric and the formation of U.S. Steel, pioneered modern reorganization efforts for insolvent companies, and influenced key financial and regulatory practices.

Sullivan & Cromwell LLP
Sullivan & Cromwell
Headquarters125 Broad Street
New York, NY 10004
United States
No. of offices13 total, 9 international
No. of attorneys840 (2024)[1]
Major practice areasGeneral practice
Key people
RevenueIncrease $1.765 billion (2021)[6]
Date founded1879
FounderAlgernon Sydney Sullivan
William Nelson Cromwell
Company typeLimited liability partnership
Websitesullcrom.com

During the 1930s, the firm became one of the world's largest law firm and contributed to the development of shareholder derivatives, antitrust actions, federal income tax law, and securities registration. Sullivan & Cromwell handled landmark deals, including Ford Motor Company's $643 million offering in 1956, and adapted to evolving business trends by establishing dedicated banking and mergers and acquisitions units.

Internationally, the firm has a long history of involvement, from financing America's infrastructure to advising the Panama Canal Authority. It was among the first U.S. firms to open overseas offices, although its history includes controversial actions such as aiding Nazi Germany's arms buildup and involvement in the 1954 Guatemalan coup d'état.

Sullivan & Cromwell's lawyers have been involved in various controversies, including insider trading scandals, work with tobacco companies, and criticism for its role in the FTX cryptocurrency exchange collapse. In 2024, the firm announced the hiring of a background check company to investigate students involved in pro-Palestinian groups. This scrutiny extended to candidates who participated in protests, even if they did not use problematic language themselves.

History

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Founded in 1879 by Algernon Sydney Sullivan and William Nelson Cromwell, Sullivan & Cromwell advised John Pierpont Morgan during the creation of Edison General Electric (1882) and later guided key players in the formation of U.S. Steel (1901).[7] Cromwell developed the concept of a holding company, persuading New Jersey to include it in state law and enabling companies incorporating there to avoid antitrust laws.[8] The firm also worked with less-successful businesses during the volatile decades before the establishment of modern federal bankruptcy laws; it pioneered efforts to reorganize insolvent companies through what became known as the "Cromwell plan."[8] Cromwell was called[by whom?] "the physician of Wall Street" for his ability to rescue failing companies.[9][10]

The post-World War I era saw an expanded need for financing. Sullivan & Cromwell designed many of the equity and debt agreements used during this period, including 94 loan agreements to European borrowers during one seven-year period.[10] The firm's business expanded substantially during the 1930s, when it began to represent companies facing increased regulation and became for a time the world's biggest law firm.[10] During the Great Depression and its aftermath, the firm litigated in the newly emerging fields of shareholder derivatives, antitrust actions, federal income tax law, and registration under the Securities Act of 1933. The firm developed the first major registration statement under the Securities Act of 1933[11] and influenced the development of tax law in the mutual fund industry.[12]

Sullivan & Cromwell performed the legal work for the Ford Motor Company's $643 million offering in 1956, the biggest ever to that date. Evolving business trends continued to be reflected in the firm's organization; a banking practice was formed in 1968, and a mergers and acquisitions unit was established in 1980, as M&A began to accelerate. By the middle of that decade, the M&A unit generated a third of the firm's revenue.[10]

International practice

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The firm's international practice dates back to its early years and the development of America's industrial and transportation infrastructure. Sullivan & Cromwell represented European bankers who were financing the construction of railroads and other elements of the nation's infrastructure. By the turn of the century, the firm Cromwell represented French interests that owned land in Panama and was involved in the financing of the Panama Canal; the firm still represents the Panama Canal Authority to this day.[13]

Sullivan & Cromwell was one of the earliest U.S. firms to open overseas offices,[14] beginning with Paris in 1911. By 1928, offices also were open in Buenos Aires and Berlin. In 1935, Allen Dulles, then a partner in the firm and later Director of Central Intelligence, visited Germany and returned somewhat disturbed by the direction of the regime. Over the sole opposition of Allen's brother and fellow partner, John Foster Dulles, the firm's partners voted in 1935 to close the Berlin office and a subsidiary in Frankfurt. However, later the firm backdated the announcement of the closing of their German offices by one year, to 1934.[15] Under Foster Dulles, the firm had helped the regime's arms buildup effort by including the German company I.G. Farben into an international nickel cartel, which included American, Canadian, and French producers.[16]

Two former chairmen of the firm held senior foreign policy positions during the Eisenhower administration: John Foster Dulles, who served as U.S. Secretary of State; and Arthur Dean, who represented the United States in negotiations resulting in the Korean Armistice Agreement.[17]

It is one of the most profitable law firms in the world, with 2021 profits per partner exceeding $6 million[18] and profits per lawyer exceeding $1.3 million.[19]

Controversies

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I.G. Farben and Nazi Germany

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Under Foster Dulles, the firm assisted Nazi Germany's arms buildup effort by incorporating the German chemical company I.G. Farben into an international nickel cartel alongside American, Canadian, and French companies.[16] By the 1940s, I.G. Farben relied on slave labor from concentration camps, including 30,000 from Auschwitz,[20] and was involved in medical experiments on inmates at both Auschwitz and Mauthausen.[21][22] One of its subsidiaries, BASF, would later supply the poison gas Zyklon B, which was used to killed over one million people in gas chambers during the Holocaust.[a][24]

Once the Allies seized the company at the end of the war in 1945,[b] US authorities put 23 IG Farben directors on trial for war crimes, with 13 ultimately convicted.[25]

1954 Guatemala coup d'état

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Sullivan & Cromwell's involvement in the 1954 coup d'état in Guatemala is documented. At the time, the firm represented the United Fruit Company (UFC), which had major holdings in Guatemala. UFC used its lobbying power, through the firm and through other means, to convince President Eisenhower, as well as Secretary of State John Foster Dulles, and his brother, CIA director Allen Dulles, both former partners of the firm, to depose the democratically elected President of Guatemala, Jacobo Arbenz.[26][27]

Insider trading

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In 2008, police uncovered an insider trading conspiracy involving a former Sullivan & Cromwell attorney; Toronto Dorsey & Whitney partner Gil Cornblum had discovered inside information at both Sullivan & Cromwell and Dorsey and, with his co-conspirator, a former lawyer and Cornblum's law school classmate, was found to have gained over $10 million in illegal profits over a 14-year span.[28] Cornblum committed suicide by jumping from a bridge as he was under investigation and shortly before he was to be arrested but before criminal charges were laid against him, one day before his alleged co-conspirator pleaded guilty.[28][29][30]

Tobacco companies

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Sullivan & Cromwell has worked on behalf of tobacco companies. In 2008, the law firm advised on a merger on the tobacco companies Altria and UST.[31]

FTX

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Sullivan and Cromwell has been criticized for its involvement with FTX, a fraud-ridden cryptocurrency exchange. Sullivan and Cromwell did significant pre-bankruptcy work for FTX.[32] In January 2023, a bipartisan group of four U.S. Senators published a letter arguing that Sullivan and Cromwell had a conflict of interest as FTX bankruptcy counsel due to its significant pre-bankruptcy work.[33][34]

Law Professors Jonathan Lipson and David Skeel argue that as FTX was nearing bankruptcy, Sullivan and Cromwell urged then-CEO Sam Bankman-Fried to transfer control of the company to John J. Ray III by making false promises about Ray's role and failed to suggest that Bankman-Fried and others might face criminal liability. [32] Sullivan and Cromwell also reported concerns about FTX to federal authorities at or near the time it was encouraging Bankman-Fried to transfer control of FTX, possibly in violation of their ethical duties to FTX. [32] Lipson and Skeel have criticized Sullivan and Cromwell as FTX bankruptcy counsel for failing to pursue potentially fruitful claims for malpractice against other law firms who also did pre-bankruptcy work for FTX, or pursue claims against Binance, whose withdrawals started the run on deposits that left FTX in a liquidity crisis. [32]

In its pre-bankruptcy work for FTX, both Sullivan and Cromwell and Fenwick & West used auto-deleting messages in some communications with FTX employees and directors. [35] Although initially cleared by a U.S. Bankruptcy Examiner, Sullivan and Cromwell is being investigated for its advising of Sam Bankman-Fried on his purchase of part of the Robinhood trading platform and whether the firm should have discovered FTX's fraud as part of that representation.[36]

Pro-Palestinian protestors

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In 2024, Sullivan and Cromwell was criticized for scrutinizing students involved with pro-Palestinian student groups, hiring a background check company to scour social media and review news reports and footage from protests. Candidates could face scrutiny even if they weren’t using problematic language but were involved with a protest where others did. Roderick A. Ferguson, a Yale professor of American studies, argued that to "make the leap that it’s all the students", “can mimic racist thinking, sexist thinking, homophobic thinking, that one instance becomes a character of all.” [37]

Notable employees

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See also

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References

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  1. ^ "Sullivan and Cromwell". AMLaw. Retrieved 2 July 2024.
  2. ^ "Sullivan & Cromwell Faces Fight Over Tax Bill for Wall Street HQ". news.bloomberglaw.com. Retrieved 2020-08-13.
  3. ^ January 06, Christine Simmons |; AM, 2020 at 05:30. "Elite Law Firms Are Quietly Outsourcing High-Value Functions. How Far Will They Go?". The American Lawyer. Retrieved 2020-08-13.{{cite web}}: CS1 maint: numeric names: authors list (link)
  4. ^ Rubin, Gabriel T. (2020-02-28). "Democrats Give Cold Shoulder to Big Wall Street Donor". Wall Street Journal. ISSN 0099-9660. Retrieved 2020-08-13.
  5. ^ "(Virtual) Things to Do, June 5-12, 2020". Cornell Chronicle. Retrieved 2020-08-13.
  6. ^ "The 2022 Am Law 100: Ranked by Gross Revenue". Law.com.
  7. ^ "Giant Steel Trust Launched at Last: Will be Known as the United States Steel Corporation," The New York Times, February 26, 1901
  8. ^ a b Harnessing the Growth of Corporate Capitalism: Sullivan & Cromwell and its influence on late Nineteenth-century American business,” by Jason Weixelbaum; paper posted December 25, 2010
  9. ^ Sullivan & Cromwell, page "Columbia Law School"
  10. ^ a b c d “Sullivan & Cromwell History,” at FundingUniverse.com
  11. ^ Filing registration with the Securities & Exchange Commission on behalf of the Southern California Edison Company, Ltd., of Los Angeles, Calif., for an issue of refunding mortgage bonds, April 1, 1935; filing accessed via LexisNexis
  12. ^ Review by Marie Morris of A Lawyer's Life: Deep in the Heart of Taxes, by Edwin S. Cohen. Federal Lawyer, September 1995, page 1
  13. ^ “Development and implementation of a risk model and contingency estimation for the Panama Canal Expansion Program,” prepared by Angie Hanily (ODP), Patricia Alvarado (FMXR) and Ricardo Ungo (FMP), March 2006
  14. ^ Top Law Schools, Sullivan & Cromwell profile
  15. ^ The Secret War: The Office of Strategic Services in World War II, edited by George C. Chalou. Chapter "From Hitler's Doorstep: Allen Dulles and the Penetration of Germany," by Neal H. Petersen; National Archives and Records Administration, 1992
  16. ^ a b Kinzer, Stephen (2013-10-01). The Brothers: John Foster Dulles, Allen Dulles, and Their Secret World War. Macmillan. ISBN 978-1-4299-5352-8.
  17. ^ “Arthur H. Dean, Envoy to Korea Talks, Dies at 89,” by Albin Krebs, The New York Times, December 1, 1987
  18. ^ "The 2022 Am Law 100: Ranked by Profits per Equity Partner". Law.com.
  19. ^ "The 2022 Am Law 100: Ranked by Profits per Lawyer". Law.com.
  20. ^ Hayes 2001, pp. xxi–xxii; Dickerman 2017, p. 440
  21. ^ Lifton & Hackett 1998, p. 310.
  22. ^ "Other doctor-perpetrators". Auschwitz-Birkenau Memorial and Museum. Archived from the original on 15 April 2016.
  23. ^ Hayes 2001, p. 361.
  24. ^ Bartrop 2017, pp. 742–743; Neumann 2012, p. 115.
  25. ^ United Nations War Crimes Commission 1949.
  26. ^ Stephen., Kinzer (2005-01-01). Bitter fruit : the story of the American coup in Guatemala. Harvard University, David Rockefeller Center for Latin American Studies. ISBN 9780674019300. OCLC 948387106.
  27. ^ Immerman, Richard H. (1982). The CIA in Guatemala: The Foreign Policy of Intervention. Austin, Texas: University of Texas Press. ISBN 978-0292710832.
  28. ^ a b "Insider trading and suicide in Canada: a buddy story"
  29. ^ Ex-Dorsey Partner Kills Himself on Eve of Insider Trading Deal
  30. ^ PressReader - National Post (Latest Edition): 2010-01-08 - PRISON FOR INSIDE TRADER
  31. ^ "Five Firms Light Up with $11.7 Billion Tobacco Merger". amlawdaily.typepad.com. Retrieved 2021-04-11.
  32. ^ a b c d Lipson, Jonathan; Skeel, David. "FTX'd: Conflicting Public and Private Interests in Chapter 11". Stan. L. Rev. 77 ((forthcoming 2025)).
  33. ^ "Hickenlooper, Tillis, Warren, Lummis Question FTX's Law Firm's Role in Bankruptcy Investigation". Retrieved 2 July 2024.
  34. ^ Yaffe-Bellany, David; Goldstein, Matthew. "The Lawyers Sam Bankman-Fried Once Trusted Are Drawing Criticism". The New York Times. The New York Times. Retrieved 2 July 2024.
  35. ^ Roe, Dan. "FTX Examiner Clears S&C, Questions Fenwick's Knowledge of Fraud". Law.com. Retrieved 2 July 2024.
  36. ^ Roe, Dan. "FTX Examiner Requests Additional Investigation on Sullivan & Cromwell". Law.com. Retrieved 2 July 2024.
  37. ^ A Wall Street Law Firm Wants to Define Consequences of Israel Protests
  38. ^ "Corporate America isn't welcoming former Trump Cabinet officials with open arms, headhunters say". The Washington Post. 2021.
  39. ^ a b Stephen Kinzer (2013). The Brothers: John Foster Dulles, Allen Dulles, and Their Secret World War. New York: Times Books. ISBN 978-0805094978.

Further reading

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  1. ^ Peter Hayes (2001): "[I]t was Zyklon B, a granular vaporizing pesticide, that asphyxiated the Jews of Auschwitz, and a subsidiary of IG, the Deutsche Gesellschaft für Schädlingsbekämpfung MbH (German Vermin-Combating Corporation), or Degesch, that controlled the manufacture and distribution of the Zyklon. IG's 42.5 percent of the stock in Degesch translated into three seats on its Administrative Committee, occupied by members of Farben's own Vorstand [board of directors], Heinrich Hoerlein, Carl Wurster, and Wilhelm R. Mann, who acted as chairman. But this body ceased to meet after 1940. Though Mann continued to review the monthly sales figures for Degesch, he could not necessarily have inferred from them the uses to which the Auschwitz camp was putting the product ..."[23]
  2. ^ Cite error: The named reference seized was invoked but never defined (see the help page).
  1. ^ White Shoe: How a New Breed of Wall Street Lawyers Changed Big Business and the American Century, by John Oller, Penguin Random House, 2019. ISBN 978-1524743253
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