Corporate & Securities Law

Good Ol' Fashioned Insider Trading Still In Vogue

Posted on December 17, 2009
For the past two years, Ponzi schemes have dominated the news headlines.  In fact, it still seems like a new scheme is being uncovered every week.  But what about insider trading?  Insider trading cases haven't received much press lately, but things may be changing...

E-mail Supervision Failures Lead To $1.2 Million FINRA Fine

Posted on December 01, 2009
The bar for supervising electronic communications has been raised.  The age of e-mail spot checks and reliance on brokers to forward to supervisors hard copies of their correspondence for review is gone.  According to a press release, FINRA has fined MetLife Securities and three affiliates $1...

Big Changes May Be In Store For The Securities Industry

Posted on November 25, 2009
The end of mandatory securities industry arbitration and broker fiduciary duty may be closer that you think.  In recent weeks, the House Financial Services Committee passed the Investor Protection Act of 2009, which contains these and other significant reforms...

Ponzi Schemes Going Green?

Posted on November 18, 2009
According to its website, the SEC has "charged four individuals and two companies involved in perpetrating a $30 million Ponzi scheme in which they persuaded more than 300 investors nationwide to participate in purported environmentally-friendly investment opportunities...

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SEC To Determine Mortality Of Life Settlement Securitization?

Posted on November 13, 2009
In case you didn't know, we are in a recession. Of course, whether we are at the beginning, middle or end depends on where you get your news, your political bent, and how well your investments have weathered the storm. One thing is certain though - desperate times call for desperate measures, and this can lead to unusual albeit creative ideas...

AM I A PONZI-SCHEME VICTIM?

Posted on August 19, 2009
The numerous national and even local Ponzi-schemes that have come to light in recent months share a common thread - victims are always left wondering how they could have better protected themselves. In the wake of a turbulent global economy with no immediate end in sight, it is almost certain more schemes will be revealed in the coming months, begging the question "am I Ponzi-scheme victim?" Unfortunately, there is no sure fire answer to this question...

Am I a Ponzi scheme victim?

Posted on August 19, 2009
The numerous national and even local Ponzi-schemes that have come to light in recent months share a common thread - victims are always left wondering how they could have better protected themselves. In the wake of a turbulent global economy with no immediate end in sight, it is almost certain more schemes will be revealed in the coming months, begging the question "am I Ponzi-scheme victim?" Unfortunately, there is no sure fire answer to this question...

Securities Fraud Aiders and Abettors Better Watch Out

Posted on August 17, 2009
Senator Arlen Specter (D-Pa.) has proposed a bill which would create a cause of action for private litigants seeking to sue individuals or businesses for aiding/abetting securities fraud. Since the Supreme Court's decision in Central Bank of Denver, N...

FINRA AND SEC GO AFTER SHORT SALES HARD

Posted on August 06, 2009
Yesterday FINRA and the SEC both issued news releases regarding separate actions against entities and individuals who allegedly consummated short sales in violation of regulatory rules. The timing of the releases and similarity in subject matter suggests there is more going on than just serendipitous timing...

A Securities Fraud Case For The Textbooks

Posted on August 05, 2009
On July 29, 2009, the Ninth Circuit United States Court of Appeals issued an opinion in the case Desai v. Deutsche Bank Securities Limited, a securities fraud class action in which the Ninth Circuit affirmed the district court's denial of plaintiffs' motion for class certification...

Another Day, Another Ponzi-Scheme...

Posted on July 30, 2009
Anyone following recent blog posts or the news in general should rightfully be shocked by the recent number of Ponzi-schemes being discovered. Every day it seems the regulators are uncovering another one and there appears to be no end in sight. The question everyone should be asking is why are so many schemes coming to light now? And a follow-up question should be how can we prevent this from happening in the future? For those of you unfamiliar with securities jargon, a Ponzi-scheme basically takes the shape of a pyramid in which the perpetrator (at the top) takes money one from one or more individuals with the promise to repay them at some point, usually at an attractive interest rate often unobtainable through traditional investments particularly in a troubled economy...

Broker Operating Ponzi-Scheme Permanently Barred From FINRA

Posted on July 28, 2009
There are probably a dozen or so sure-fire ways a person could get himself barred from FINRA; operating a Ponzi-scheme is one of them. Yesterday, FINRA announced in a news release that Kenneth George Neely, a St. Louis broker formerly employed by Stifel Nicolaus & Co...

FINRA Speaks to Small Firms (Part II)

Posted on July 24, 2009
Last week, as you may recall, I wrote about FINRA's Small Firm Conference, which took place in Chicago, IL on July 16. In this author's opinion, there were so many key points made by the regulators and attendees, I have decided to post a follow-up article to highlight a few additional issues and "best practices" that were discussed...

FINRA Speaks To Small Firms

Posted on July 17, 2009
Yesterday I had the pleasure of attending FINRA's 2009 Small Firm Conference in Chicago, IL. The event was well-attended; the speakers were excellent; and there were many good questions from the audience. As you can imagine, all of this made for a worthwhile event as current "hot button" issues were discussed and attendees were given an in depth look at what to expect when FINRA shows up at your doorstep for an examination...

Securities Fraud Plaintiffs Cannot Switch "Loss Theory" Midstream During Litigation

Posted on July 06, 2009
A Minnesota Federal District Court recently held that plaintiff-investors of a medical device company could not switch theories of loss recovery for securities fraud claims during litigation, as doing so would defeat the heightened pleading requirement and principles underlying enactment of the Private Securities Litigation Reform Act (PSLRA)...

"Tweeting" Running "Afowl" of SEC Rules?

Posted on April 27, 2009
With the rise of internet blogging and now Twitter, more and more individuals are finding an audience for their message, whatever that message may be. Even corporations have jumped on the bandwagon, with brick and mortar giants like Wal-Mart and General Motors joining the ranks of internet-based companies who have set up their own corporate blogs...

So, Who is Taking Care of Business? The Compliance Officer in Times of Economic Distress

Posted on April 22, 2009
It is not a startling revelation to observe that a principal side-effect of the current tribulations affecting the financial services industry is a marked shrinkage in revenues. Inevitably, there is a domino effect to the diminution in revenues and profits, and the financial services community, which potentially encompasses a wide array of businesses, including securities brokerage, investment advisory services, insurance, and banking, are under pressure to dramatically cut costs and reduce expenses, which often is interpreted to mean reduce headcount...

Broker-Dealer Litigation/Arbitration: Preparing for Sunami?

Posted on March 11, 2009
In an apparent effort to address perceived procedural deficiencies, to level the playing field so that customers are not disadvantaged in arbitration, and perhaps in anticipation and preparation for a virtual deluge of new filings, FINRA has revised and/or introduced a number of arbitration-related processes...

Broker-Dealer Litigation/Arbitration: Preparing for a Tsunami?

Posted on March 11, 2009
In an apparent effort to address perceived procedural deficiencies, to level the playing field so that customers are not disadvantaged in arbitration, and perhaps in anticipation and preparation for a virtual deluge of new filings, FINRA has revised and/or introduced a number of arbitration-related processes...

NEW FINRA RULE REQUIRES EXPLAINED DECISION

Posted on February 20, 2009
On February 4, 2009, the SEC approved FINRA’s proposed rule change to amend arbitrator rules relating to arbitration decisions. The new rule requires arbitrators to provide a written explanation of their decisions upon a joint request of the parties...

Treasury Blueprint for Regulatory Reform Likely to Get Longer Look

Posted on September 25, 2008
This March, the Treasury Department released its Blueprint for a Modernized Financial Regulatory Structure.  The Blueprint called for a thorough restructuring – and even deeper federalization – of the financial services regulatory system...

Reserve Fund Accused of Securities Fraud in Giant Money Market Fund.

Posted on September 24, 2008
Recent events show the breadth of the financial crisis rocking this country, with concerns of fraud impacting nearly every financial sector.  News reports today indicate that the FBI is investigating possible mortgage fraud involving collapsed financial giants Fannie Mae, Freddie Mac, Lehman Brothers and AIG...

The Federal Judiciary Skeptical of Regulators?

Posted on September 16, 2008
In today's battered economy, where venerable giants like Lehman Brothers and Merrill Lynch now face bankruptcy or sale, a more subtle but equally intriguing phenomenon has taken hold. Beginning a few years ago and continuing today, more and more federal courts across the country have been standing up to the regulators, most notably evidenced by the rising number of dismissals of enforcement actions brought by the U...

Short Sellers Leave Banks Feeling Anxious Following Unprecedented Weekend On Wall Street

Posted on September 15, 2008
According to the New York Times, the heads of several major financial institutions held an emergency meeting over the weekend to urge the SEC to reinstate a temporary rule limiting short selling, the risky but often lucrative practice of betting on a firm’s falling share price...

SEC Issues New "ComplianceAlert"

Posted on July 31, 2008
Last week, the SEC released its second “ComplianceAlert,” discussing recent exam priorities and summarizing some of the Commission’s key findings and observations. Last year, the Commission put out a similar Alert for the first time, and – observing that the first Alert was well-received – appears poised to make this a regular communication...

State Securities Administrators to Host Public Forum on Arbitration

Posted on June 03, 2008
The North American Securities Administrators Association will be holding a public forum on securities industry arbitration, on June 24 in New York City.  NASAA, which is the organization of heads of securities departments from each of the American states and territories, as well as the Canadian provinces and Mexico, has long perceived industry securities arbitration as unfair to investors...

FINRA issues proposed revisions to Rules, with substantial changes in supervision and supervisory controls rules

Posted on May 15, 2008
On May 14, FINRA released proposed Rule revisions, reflecting its efforts to merge the old NYSE and NASD rulebooks, refining and clarifying previous rules, and offering a few new wrinkles. The proposed revisions are open for comment until June 13...

New CFP Standards Effective July 1

Posted on May 13, 2008
Last month, the Certified Financial Planner Board of Standards issued updated Standards of Professional Conduct for CFP-certified financial planners. Those standards take effect on July 1, 2008.The new CFP Standards highlight the increasing convergence, from a regulatory standpoint, between the once clearly distinct worlds of broker-dealers and investment advisors...

Wearing the Bull's-eye: The Compliance Officer as Line Supervisor

Posted on April 28, 2008
It is axiomatic that smaller firms do not have available the cadres of specialized compliance personnel that larger firms do. Out of necessity, senior compliance staff at smaller firms may be called upon to handle a multitude of home office functions in addition to compliance, and to serve in multiple capacities...

Auction Rate Securities Sales In Regulators' Cross-Hairs

Posted on April 10, 2008
The recent slew of lawsuits brought against some of the nation's largest broker-dealers that sold Auction Rate Securities ("ARS") to customers has not gone unnoticed. The SEC and FINRA, on the heels of the lawsuit filings, have each launched independent investigations of their own into the sales and marketing practices employed by firms selling ARS...

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