Overview Experience Events News Intelligence Patrick D. Daugherty Partner pdaugherty foley.com Download vCard Connect Patrick Daugherty Patrick Daugherty is a partner of Foley & Lardner LLP, with a corporate, M&A, finance and regulatory practice devoted to capital formation, productive innovation and return of and on investment. As a business lawyer, he has helped clients monetize billions of dollars in sweat equity. As a confidential adviser, he also helps clients resolve sensitive legal matters out of court, quickly and quietly. Corporate, M&A and Finance Practice In his deal-making practice, Mr. Daugherty directs multi-disciplinary teams of lawyers in the planning and execution of tender offers, exchange offers, restructurings, recapitalizations, mergers, stock purchases, asset purchases, divestitures, LBOs, MBOs and "going private" transactions. He also plans and executes public and private offerings of equity, debt and hybrid securities occupying every rung of a company’s capital structure, throughout its entire life cycle: from “angel” or “seed” investment and “Series A” preferred stock to the IPO, PIPE and secondary offerings, as well as mezzanine, convertible, exchangeable, high-yield and high-grade debt issues. With help from other experts, Mr. Daugherty organizes hedge funds and private equity funds. Mr. Daugherty is a frequent participant in both private and public change-of-control transactions, advising bidders, activist investors, targets, independent directors, financiers and financial advisors. An early example was the 1996 unsolicited bid by Kuhlman Corporation for Communication Cable, where he guided Kuhlman in the first successful attempt by any bidder to acquire a target company while complying with North Carolina’s anti-takeover laws. Mr. Daugherty counseled arbitrageurs relative to the impact of Michigan anti-takeover laws and litigation on the Taubman Centers / Simon Property contest in 2002-2003. He also has been engaged by Wall Street and Magic Circle law firms in executing transactions within local markets and has been chosen to provide outside general counsel services to portfolio companies of private equity firms of diverse orientation such as Kohlberg, Kravis & Roberts, KPS Capital Partners and Strength Capital Partners. Mr. Daugherty conducted the research that justified the SEC’s adoption of Rule 144A and has helped foreign and domestic companies raise money in that particular market. He also worked on the SEC team that created Regulation S and has used his knowledge of the relevant rules, practices and market participants to help companies tap off-shore capital markets. Illustrative Transactions. Mr. Daugherty’s deal-making includes, by way of example: Taking Charlotte Motor Speedway and Atlanta Motor Speedway public on the New York Stock Exchange in a "world first" for the motorsports industry; Managing a series of divestitures by Tyco International after its 2002 change of management in what was then the largest divestiture program in the U.S.; Helping Cablevision secure SEC approval of a $10 billion going private transaction in less than 45 days, a project picked as "Deal of the Year" by The Deal magazine; Advising and representing TD Ameritrade in the 2012 bail-out of Knight Capital by major investment banks and brokerage firms when a technology glitch caused a $400 million trading loss for Knight in the space of a few minutes; and Designing and negotiating a series of loan sale transactions for a Mid-Atlantic bank in 2015 after it discontinued operations relative to a $3 billion loan portfolio and began to offer the loans for sale. Recently, he has represented underwriters led by Baird in successful initial and secondary public offerings by women’s handbag maker Vera Bradley and has advised commodity pool operators and commodity trading advisors on the launch of off-shore and on-shore hedge funds. He has executed asset sales for the bankruptcy trustee of Peregrine Financial Group (PFG Best) and has helped Nexteer Automotive raise senior debt in the United States and go public in Hong Kong. Nexteer is the largest Chinese-owned automotive supplier in the world outside of China. Mr. Daugherty routinely advises foreign private issuers seeking to facilitate the trading of their securities in U.S. markets. "363" Sales. One example of Mr. Daugherty’s deal-making success in the restructuring field is the sale of Noble European Holdings to ArcelorMittal in 2009. Noble International was a Nasdaq-traded automobile industry supplier whose business had been damaged in 2008 by the drastic downturn in demand for cars and trucks manufactured by the "Detroit 3" car companies (GM, Ford and Chrysler). Attempts to refinance Noble’s maturing debt obligations failed as the global credit crisis persisted, and the company was forced to file into Chapter 11 in Detroit. Thousands of jobs were put at risk by this bankruptcy. Noble had purchased the European laser-welding operations of ArcelorMittal, the world’s largest steel company, a year earlier. In bankruptcy, Noble obtained DIP financing from the Detroit 3, then Mr. Daugherty negotiated the resale to ArcelorMittal of the European operations acquired a year earlier, together with similar businesses in Mexico and Asia. This timely resale saved the jobs of all directly-affected employees. Likewise, the restructuring team managed by Mr. Daugherty effected several other "363" sales for Noble, each of which prevented a business shut-down and thus saved jobs while raising cash proceeds with which to repay the car companies. Advisory and Regulatory Practice Mr. Daugherty is called upon routinely to counsel boards of directors, board committees, senior officers and trustees with respect to challenging questions of business judgment (and the consequences of that judgment). He regularly coaches principals and fiduciaries in the course of decision-making calculated to comply with securities laws, the Sarbanes-Oxley Act, stock exchange rules, corporate codes and best practices. Independent Counsel. Increasingly in recent years, Mr. Daugherty has been engaged to advise directors of companies with which he and his firm have no other professional relationship. He helps independent directors grapple with the thorny questions, such as whether, when and how to replace senior managers and report financial crimes to the government. His experience is not limited to a single industry but, on the contrary, includes industries as diverse as banking, biotechnology, consumer discretionary, consumer staples, energy, food processing, forest products, health care, media and entertainment, motorsports, real estate, restaurants, retail, robotics, security, steel, utilities, telecommunications, textiles, utilities, vehicle assembly and vehicle parts manufacturing. Mr. Daugherty devotes much of his practice to the legal and business needs of banks, insurance companies, futures commission merchants, securities broker-dealers and other financial services firms, as well as financial technology innovators. An SEC Lawyer. Early in his career, Mr. Daugherty was counsel to SEC Commissioner Fleischman in Washington. Mr. Daugherty advised the commissioner on all major initiatives of the SEC, including the reform of U.S. financial market regulation after the 1987 stock market crash and the storied prosecutions of Ivan Boesky, Michael Milken and Drexel Burnham. Building upon this experience, today Mr. Daugherty routinely represents clients in dealings with every working "Division" of the SEC – not only the Division of Corporation Finance that regulates public offerings, public M&A and public companies, mentioned above, but also the Division of Trading and Markets, the Division of Enforcement and the Division of Investment Management. Examples of projects led by Mr. Daugherty involving these other regulators include: upon application to the Division of Trading and Markets – organizing NCNB Capital Markets, which became Banc of America Securities and is now one of the largest investment banks in the world; in line with the Division of Enforcement – recovering money for defrauded investors in the Lancer Partners hedge fund, the largest "penny stock" swindle in U.S. history; and in close consultation with the Division of Investment Management – inventing, with his colleagues, the CurrencyShares Euro Trust. Judged "the trade of the year" by SmartMoney magazine in 2006, this was the first currency-based exchange-traded fund ("ETF") listed on a stock exchange anywhere in the world. Mr. Daugherty also has been engaged as a private practitioner to help the SEC solve problems arising in the field. In 2014, the SEC intervened in the affairs of a stock transfer agent whose senior management had mishandled customer funds. On behalf of the SEC-appointed receiver, Mr. Daugherty recruited an industry leader to stabilize the business, identified all the logical bidders for the business and managed an auction resulting in the sale of the business as a going concern – all within two weeks. All rank and file employees kept their jobs, and the earn-out terms negotiated for the client’s benefit resulted in payment in full. Continuous ETF Innovation. Mr. Daugherty and the Foley ETF team have capitalized on the success of the Currency Shares Euro Trust by launching eleven other currency-based ETFs, representing equity investments in currencies such as the Australian dollar, the British pound sterling, the Canadian dollar, the Japanese yen, the Swiss franc and the Chinese renminbi. All are managed by Guggenheim Investments. ETFs have been the most rapidly-growing form of investment in the world, increasing from zero to more than $2 trillion under management in twenty years. This trend is continuing as investors are entrusting more dollars to ETFs than they are to mutual funds. Until 2008, however, all versions of the ETF were passive investment strategies. The holy grail of the ETF industry had been an actively-managed fund, in which the managers would employ subjective investment judgment in deciding what to buy and sell. For years, five major financial firms raced to produce the first actively-managed ETF approved by the SEC and launched on a stock exchange. In 2008, Mr. Daugherty and his Foley colleagues won that contest for their client, launching the Current Yield Fund on the New York Stock Exchange ahead of all competitors. The Foley team continues to provide thought leadership for its clients relative to new ETF concepts, some of which are patented. Non-transparent, or opaque, active management is the new frontier. An Expert Witness. In recognition of the breadth of his regulatory experience, Mr. Daugherty also has been called as an expert witness in litigation. He has been tendered and qualified as an expert in securities law in criminal fraud proceedings brought by the U.S. Department of Justice and has been tendered and testified as an expert witness for the defendants in civil fraud matters. Thought Leadership Patrick Daugherty earned a bachelor’s degree, with distinction, from Northwestern University and a law degree, cum laude, from Cornell University. He trained as a corporate and securities lawyer in Wall Street after clerking one year for Lloyd F. MacMahon and Edward Weinfeld, each a (late) Chief Judge of the U.S. District Court for the Southern District of New York (New York City). Today Mr. Daugherty participates in the MacMahon Association, a charity organized by Rudy Giuliani and other lawyers who clerked for Judge MacMahon. He is a director-at-large of the Northwestern Alumni Association and is on the committee charged with leading Northwestern’s $3.75 billion capital campaign. Mr. Daugherty was invited to join the American Law Institute at age 37 and participates in continuing education programs of the ABA Sections of Administrative Law and Business Law (Committees on Federal Regulation of Securities, Legal Opinions, Mergers and Acquisitions, Professional Responsibility and Small Business). He is on the Planning Committee of the Ray Garrett Jr. Corporate and Securities Law Institute. In the course of building client service teams at Foley, Mr. Daugherty won the firm’s Carl H. Hitchner "Mentor of the Year" award in its inaugural year upon the recommendation of associates in six different offices. Mr. Daugherty also has led pro-business initiatives of state and local bar associations. As a member of the Association of the Bar of the City of New York, he authored a white paper in 1982 that supported New York’s enactment of path-breaking governing-law-selection and forum-selection legislation, enabling business executives and financiers to contract cross-border with full confidence that their choices of New York law and New York courtrooms would be respected should a dispute arise. A decade later, in North Carolina, he served on Governor Jim Hunt’s Entrepreneurial Development Board, boosting investment and job growth throughout the Tar Heel State. A recognized thought leader on the SEC, the capital markets, M&A, corporate governance, financial innovation and regulatory reform, Mr. Daugherty has taught classes and made presentations at Cornell, Duke, Howard, Michigan State, Northwestern, Seton Hall and Wayne State law schools. He has published scholarly articles (e.g., "Rethinking the Ban on General Solicitation" in the Emory Law Journal), co-authored one book (Securities Arbitration: Practice and Forms, published by Matthew Bender) and edited another (Decennial Review of Developments in Business Financing, published by the ABA). Most recently Mr. Daugherty co-authored "Introduction to the Securities Act of 1933 and to the Securities and Exchange Commission" (in the Federal Securities Act of 1933 treatise, published by Matthew Bender). He lectures frequently to legal, accounting, business and financial groups, has been interviewed about legal developments on radio, TV and cable news programs, and has been quoted for his insight on legal topics in publications such as The Wall Street Journal, The New York Times and the Chicago Tribune. Peer Recognition and Awards* Mr. Daugherty has been selected by his peers for inclusion in The Best Lawyers in America© since 1995 and is currently listed in three unique categories: Corporate Governance and Compliance Law, Corporate Law, and Securities Law. In 2010, The Legal 500 recognized his mergers & acquisitions work. Also selected for the first and all subsequent editions of Super Lawyers® for his achievements in securities and corporate finance, he is now Peer Review Rated as AV® Preeminent™, the highest performance rating in Martindale-Hubbell's peer review rating system, and has been so rated since his first evaluation more than 20 years ago. Mr. Daugherty was selected as "Michigan Lawyer of the Year" by Michigan Lawyers Weekly in 2007. The only corporate lawyer so honored, he was labeled a "financial wiz" and a "mastermind." In 2011, he was named to DBusiness magazine's list of "Top Lawyers" in the areas of corporate governance and compliance law and securities law. He was named a Best Lawyers’ 2013 Detroit Corporate Governance Law "Lawyer of the Year" even though he lives and works in Chicago. According to Chambers USA: America's Leading Business Lawyers, Mr. Daugherty is "very practical and business-oriented" and is "top of the class for capital raising." Bar Admissions Mr. Daugherty is admitted to practice law and is a member in good standing of the bar in New York, Washington, D.C., North Carolina, Michigan and Illinois. He also is admitted to practice in the U.S. District Courts for the Southern District of New York (New York City) and for the Eastern and Western Districts of Michigan. * The Illinois Supreme Court does not recognize certifications of specialties in the practice of law and no certificate, award or recognition is a requirement to practice law in Illinois.