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Rating:Sihpol Case May Cost BofA its NYC Lease ... and More Not Rated 0.0 Email Routing List Email & Route  Print Print
Thursday, May 19, 2005

Sihpol Case May Cost BofA its NYC Lease ... and More

by: Sean Hanna, Editor in Chief

A number of financial services firms are in news because of real estate deals.

Fidelity is moving up to 1,000 employees, including some fund managers to a low rise office building at 245 Summer Street near Boston's South Station, reports the Boston Herald. Those employees now work at One Federal Street, a high-rise tower. The move is expected to take place in early 2007, giving workers plenty of time to pack.

The paper plays up the views and amenities that Fido's workers will lose. The current office is in the same building as the Harvard Club and has panoramic views of Post Office Square Park. The new office, according to the Herald, is "a dark brown, squat office complex tucked up against South Station that was once home to nuclear power plant designers."

It does admit that "Fidelity has extensively renovated the building since acquiring it a few years ago."

Fidelity is apparently making the move for cost reasons. It rents at One Federal but owns 245 Summer Street outright.

Fidelity has also been moving some of its 8,600 Boston-based employees out of other downtown tower leases and moving to company-owned real estate, including two new high-rises at the World Trade Center complex on South Boston's waterfront.

* * *

Speaking of the waterfront, Bostonians are hoping that ManuLife will revitalize South Boston's waterfront area with its move to the old financial district. The Boston Herald wonders if the move will do for that neighborhood what John Hancock and Prudential did for the Back Bay. The paper credits the latter two firms with building the modern Back Bay.

ManuLife purchased Hancock last year and is preparing to move the Hancock headquarters from Back Bay to "a sparkling new glass high-rise overlooking the waterfront." That building will become the office for 1,500 employees, including 120 newly created jobs.

Boston developers are already enthusiastic, reports the Herald. "I see them in our restaurant and in our hotel," it quotes waterfront developer John Drew as saying (Drew worked with Fidelity Investments on another Boston project). "You can feel the activity in the streets."

The paper also speculates that ManuLife may expand on three nearby sites owned by the Massachusetts Port Authority.

* * *

Moving from Boston to Manhattan, Banc of America Securities may lose a lease in Midtown New York City if Eliot Spitzer triumphs in his trial against BofA trader Theodore Sihpol. Law.com reports that a New York judge allowed that if Sihpol is convicted the bank could be likened to drug dealers, houses of prostitution and gambling dens.

The bank's landlord, Solow Building Co., has been fighting to evict the bank (presumably to get a better rental deal) from 650,000 square feet of offices it leases at 9 West 57th Street and is citing a local law designed to allow landlords to evict tenants conducting illegal activities. The two sides have already been in court fighting over renovations made by BofA and electric charges levied by the landlord.

Civil Court Justice Joan Kenney allowed that the Real Property Actions and Proceedings Law 715 could apply in the case and is staying the action until after the jury in the Sihpol case renders a verdict. That verdict could come in Mid-June.

"[I]t is not a leap in logic to suggest that the crimes Sihpol is accused of, as well as BAS' acquiescence, if any, to the alleged late trading scheme, could trigger the provisions of RPL 231(1) and RPAPL 715, thereby creating a forfeiture of BAS' lease as a matter of law," Justice Kenney wrote in Solow Building Co. v. BAS, L&T 105656/04.

Sihpol is charged with grand larceny, securities fraud and falsifying business records in order to help Canary Capital Partners place late trades in mutual funds.

The good news for BofA is that court watchers are becoming increasingly convinced that the prosecution is losing its case in the courtroom.

Even if Spitzer does win, BofA's investment banking division is already planning to move to a new Tower near Times Square. The only catch: the tower is yet to be built.  

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