Criminal Law

FL Court Rules Statute of Limitations Apply in Arbitration

Posted on May 17, 2013
We finally have a ruling on the questionable argument that is often advanced that the statute of limitations does not apply in arbitration. The argument is premised on a contorted interpretation of a Florida statute and requires one to believe that an arbitration proceeding is not a "civil action or proceeding...

SEC, FINRA Issue Investor Alert On Pension or Settlement Income Streams

Posted on May 14, 2013
The SEC and FINRA issued an investor alert entitled Pension or Settlement Income Streams – What You Need to Know Before Buying or Selling Them. The investor alert informs investors about the risks involved when selling their rights to an income stream or investing in someone else's income stream...

SEC Charges Former Medical Device Company Employee for Illegally Tipping Brother with Quarterly Earnings Data

Posted on April 23, 2013
The SEC charged a former employee at a California-based medical device manufacturer with illegally tipping confidential financial data to her brother, who illegally traded in the company's stock and enabled his hedge fund clients to do the same.The SEC alleges that the former employee, who worked in the finance department at Abaxis Inc...

FINRA Wants Your Facebook Account

Posted on April 23, 2013
You read that right, just as the SEC is embracing social media, FINRA wants access to brokers' Facebook accounts.We all know that an employer's demand for access to an employees Facebook account is illegal in many states, and probably illegal in all. It is simply an outrageous overreaching and an invasion of privacy...

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UBS Willow Fund Investors Filing Arbitrations

Posted on April 15, 2013
UBS WILLOW FUNDA CLASSIC CASE OF RISKY DERIVATIVE BETS GONE BADIn October 2012 investors were informed that the Willow Fund would be liquidated, after having sustained substantial losses. In a recent New York Times article on the UBS Willow Fund, it was reported that the fund had suffered losses of approximately 80% in the first three quarters of 2012 after its manager made a radical change in investment strategy and ?piled into some colossally bad derivative trades...

SEC Acknowledges the Use of Social Media for Regulation FD Disclosure

Posted on April 04, 2013
The SEC has acknowledged that public companies can use social media, such as Facebook and Twitter, to make corporate announcements, without running afoul of Regulation FD.Regulation FD requires companies to make announcements of material information to all investors at the same time...

SEC Charges Investor with Insider Trading

Posted on April 03, 2013
The SEC charged an investor for his role in the massive insider trading scheme spearheaded by his older brother, a hedge fund advisory firm Galleon Management.The SEC alleges that from 2006 to 2008, the investor repeatedly received inside information from his brother and reaped more than $3 million in illicit gains for himself and hedge funds that he managed at Galleon and Sedna Capital Management, a hedge fund advisory firm that he co-founded...

SEC Charges Financier with Stealing Investor Funds in Purported Offerings of Pre-IPO Facebook Shares

Posted on April 03, 2013
The SEC announced charges against a financier masquerading as a sophisticated fund manager who defrauded investors seeking to acquire highly coveted pre-IPO shares of Facebook and other social media companies.An investigation by the SEC?s Enforcement Division found that the financier, a former Oregon gubernatorial candidate who now lives in Florida, touted to investors that he had special access to scarce sources of pre-IPO stock in Facebook, LinkedIn, Groupon, and Zynga...

Hedge Fund Analyst Charged with Insider Trading

Posted on April 02, 2013
The SEC charged a California-based hedge fund analyst with insider trading in advance of a merger of two technology companies based on nonpublic information he received from his friend who was an executive at one of the companies.The SEC also charged the executive and another trader in the $29 million insider trading scheme...

SEC Obtains Asset Freeze Against Massachusetts-Based Investment Adviser Stealing Money from Clients

Posted on April 02, 2013
The SEC announced an asset freeze against a Massachusetts-based investment adviser charged with stealing money from clients who were given the false impression they were investing in a hedge fund.In a complaint unsealed today in federal court in Boston, the SEC alleges an investment advisor and Insight Onsite Strategic Management in Wilmington, Mass...

Challenges in Transitioning Away From Your BD

Posted on March 12, 2013
My securities law practice involves most every aspect of the brokerage industry, and at various times I represent a significant number of brokers who are leaving their broker-dealers, for what they hope are greener pastures. Over the years I have assisted brokers in all sorts of transitions - firm to firm, firm to independent firm, firm to investment adviser firms - even starting their own investment advisory firm...

State Regulators Attempting to Ban Customer Arbitration

Posted on March 09, 2013
According to InvestmentNews.com, state securities regulators are seeking federal legislation that would ban investment advisers from forcing their clients to use mandatory arbitration to settle claims against them. They also are urging Congress to prod the Securities and Exchange Commission to propose regulation that would ban pre-dispute arbitration clauses in brokerage contracts or to pursue legislation that would codify that change...

China-Based Company and Former CFO to Pay Penalties for Disclosure and Accounting Violations

Posted on March 07, 2013
The SEC charged a China-based petrochemical company and its former chief financial officer with accounting and disclosure violations, and they agreed to pay more than $1 million combined to settle the charges.The SEC alleges that Keyuan Petrochemicals, which was formed through a reverse merger in April 2010, systematically failed to disclose to investors numerous related party transactions involving its CEO, controlling shareholders, and entities controlled by management or their family members...

Reviewing Advisor Custody Issues

Posted on March 06, 2013
The SEC has just released a Risk Alert calling attention to the results of its recent examinations of investment advisor firms. Incredibly, the SEC found that 1/3 of the firms that were reviewed had significant issues with custody of their customers' securities...

Advisors Beware - Expect More SEC Civil Actions

Posted on March 05, 2013
While the Supreme Court decision in Gabelli vs. SEC was of interest to securities lawyers, it may have a collateral impact for advisors, brokers and others who are possible targets of SEC enforcement actions.The SEC has 5 years from the date that a fraud occurs to bring a proceeding...

Banks, Brokers With New Facebook and Twitter Problem

Posted on February 21, 2013
No, not problems with employees and social media - this problem is of the firms' own making. Many web sites allow users to log in to the site using their Twitter, Facebook or LinkedIn account. It makes the log in process easier for the user, they don't have to remember additional passwords, and simply click a link to use their social media account to log in...

FINRA's Latest Attempt to Expand Its Authority - New Membership Rules

Posted on February 21, 2013
FINRA is again trying to expand its power and authority over its members. Its earlier attempt to expand its memberhsip rules, to reguire additional and more frequent reporting of routine business activities was severely criticized, and abandoned. But they are back again...

Think Email Retention is not a Big Deal?

Posted on February 21, 2013
Think again. If your email retention is not compliant, you need to address it. FINRA Fines ING Affiliates $1.2 Million for Email Retention and Review Violations

Heinz Trader was Goldman Client?

Posted on February 21, 2013
From the WSJ Law Blog - Heinz Trader Tied To SEC Probe Was Goldman ‘Private Wealth Client’

SEC Charges Virgin Islands-Based Investment Adviser with Defrauding Clients

Posted on February 21, 2013
The SEC charged an investment adviser located in the U.S. Virgin Islands with defrauding clients from whom he withheld the fact that he was receiving kickbacks for investing their money in thinly-traded companies. When he faced pressure to pay clients their returns on those investments, he allegedly used money from other clients in a Ponzi-like fashion to make payments...

SEC Freezes Assets in Swiss Account in Heinz Insider Trading Investigation

Posted on February 18, 2013
SEC Freezes Assets in Swiss Account in Heinz Insider Trading Investigation

SEC Charges Real Estate Executives in Florida-Based $300 Million Investment Scheme

Posted on February 13, 2013
The SEC charged five former real estate executives who defrauded investors into believing they were funding the development of five-star destination resorts in Florida and Las Vegas when they were actually buying into a Ponzi scheme.The SEC alleges that Cay Clubs Resorts and Marinas raised more than $300 million from nearly 1,400 investors nationwide through a network of hundreds of sales agents, marketing seminars, and podcasts that touted the profitability of purchasing units at Cay Clubs resort locations...

SEC Charges Husband and Wife in Florida with Defrauding Seniors Investing in Purported Charity

Posted on February 12, 2013
The SEC charged a husband and wife who raised millions of dollars selling investments for a purported charitable organization in Tallahassee, Fla., while defrauding senior citizens and significantly exaggerating the amount of contributions actually made to charity...

Defending 10b5-1 Plans

Posted on February 11, 2013
We haven't seen much interest in Rule 10b5-1 plans recently. I suppose that a declining market during recent years tempered the desire to sell stock. If so, we should see a rise in the interest in such plans once again.For those unfamiliar with these plans, a 10b5-1 plan is used by insiders in public company to sell securities of their company, without running afoul of insider trading laws...

SEC to Hold National Compliance Event for Broker-Dealers

Posted on February 11, 2013
The SEC announced the opening of registration for its National Compliance Outreach Program for Broker-Dealers that will take place in Washington D.C. on April 9.The event is sponsored by the SEC's Office of Compliance Inspections and Examinations in coordination with the SEC's Division of Trading and Markets and the Financial Industry Regulatory Authority (FINRA)...

Who Called it Nemo?

Posted on February 10, 2013
Interesting piece of information..Who called it Nemo anyway?

Mary Jo White - Prosecutor, Defense Attorney, SEC Chair?

Posted on February 08, 2013
From The New York Times Mary Jo White at the S.E.C. She has smarts and guts, but she needs to make clear that she can be a strong regulator of Wall Street.

Justice Sues S&P Over Credit Ratings

Posted on February 07, 2013
Fro the Securities Law Professor Blog -DOJ Sues S&P Alleging Fraudulent Credit Ratings

SEC Charges Trader in Houston-Area Investment Scheme Targeting Lebanese and Druze Communities

Posted on January 30, 2013
The SEC charged a day trader in Sugar Land, Texas, with defrauding investors in his supposed high-frequency trading program and providing them falsified brokerage records that drastically overstated assets and hid his massive trading losses.The SEC alleges that the day trader particularly targeted fellow members of the Houston-area Lebanese and Druze communities, raising more than $6 million during a five-year period from at least 33 investors...

SEC Charges Former Jefferies Executive with Defrauding Investors in Mortgage-Backed Securities

Posted on January 30, 2013
The SEC charged a former executive at New York-based broker-dealer Jefferies & Co. with defrauding investors while selling mortgage-backed securities (MBS) in the wake of the financial crisis so he could generate additional revenue for his firm.According to the SEC?s complaint filed in federal court in Connecticut, the former executive arranged trades for customers as part of his job as a managing director on the MBS desk at Jefferies...

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