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Category Archives: Securities Fraud

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Ten New Year resolutions that will help your firm

Posted in Breach of Fiduciary Duty, Broker-Dealer Regulation, Compliance and Supervision, Cyber-Security, Financial Industry Trends, FINRA Compliance, Public Customer Arbitrations, Registered Representatives, SEC Compliance, Securities Fraud, Securities Litigation

Most people say that New Year resolutions are only as good as the paper on which they are written. Notwithstanding that ringing endorsement, I will give it a shot. Here are some things that you should be resolved to doing in the New Year: Read the SEC and FINRA exam priority letters that each issue… Continue Reading

Why elder issues are not just about your clients

Posted in Books and Records, Breach of Fiduciary Duty, Broker-Dealer Regulation, Compliance and Supervision, Conflicts of Interest, Cyber-Security, FINRA Compliance, Ponzi Schemes, Registered Representatives, SEC Compliance, SEC Enforcement, Securities Fraud, Securities Litigation

The SEC and FINRA have made it very clear that they are focused on senior customers and elder abuse. Granted, firms must be focused on the elder customers, but, at the same time, must also focus on the fact that many advisors are included in the graying generation. What are firms to do about that?… Continue Reading

What Do Insider Trading And Data Breaches Have In Common

Posted in Cyber-Security, Federal and State Criminal Activities, Insider Trading, Money Laundering, SEC Enforcement, Securities Fraud

It is bad enough that firms and publicly traded companies have to make sure that their respective IT architecture is safe and secure, but recent developments demonstrate that you have to be weary regarding the media outlet with who you share material, non-public information. The SEC and the DOJ in a joint effort have brought… Continue Reading

The SEC May Be Getting A Longer Stick

Posted in Federal and State Criminal Activities, Financial Industry Trends, SEC Enforcement, Securities Fraud, Securities Legislation

Two years ago, the United States Supreme Court stated in an opinion that the five-year statute of limitations for the SEC to seek civil monetary sanctions began from the date of the fraudulent act, as opposed to when the SEC discovered the fraudulent act. In doing so, the Court rejected the discovery rule. The discovery… Continue Reading

You just suffered a cyberattack, now what

Posted in Cyber-Security, Financial Industry Trends, FINRA Compliance, Registered Representatives, Securities Fraud, Social Media

A recent Investment News article highlighted the pervasive problem associated with cyberattacks and offered some guidance in the event of an attack. Before visiting that guidance, understand how pervasive these attacks are. The SEC recently conducted a sweep on cyberattacks. This sweep revealed that 88% of broker-dealers and 74% of advisors have experienced some form… Continue Reading


Posted in Securities Fraud, Securities Litigation

The U.S. Court of Appeals for the Sixth Circuit affirmed a dismissal of investors’ securities claims in the wake of a bank liquidation, but left the door open to a possible “silent fraud” claim under Michigan law.  See Dailey v. Medlock, http://www.bloomberglas.com/public/document/Thomas_Dailey_et_al_v_Lisa_Medlock_et_al_2014_BL_9430_6th_Cir_Jan. A claim for silent fraud under Michigan law requires a plaintiff to establish… Continue Reading

Life Settlements and Fraud

Posted in Insurance Agencies, Securities Fraud

A federal court held that life settlements were securities under federal and Illinois law.  As such, certain sellers violated the securities laws when they lied about having done due diligence.  The court also found that a reasonable jury could conclude that the sellers violated the Illinois Consumer Fraud Act.  See Giger v. Ashmann (ND Ill).… Continue Reading

Is This The End of Arbitration As We Know It

Posted in Arbitration, Securities Fraud

FINRA arbitrations may never be the same because FINRA recently proposed to redefine “public arbitrator” to exclude anyone from the financial industry from falling within that definition.  Couple that proposal with the existing ability of a claimant to select an all public panel and you have a totally new arbitration system.  What does this proposal… Continue Reading

Data breaches and third-party vendors; what do you need to know.

Posted in FINRA Compliance, SEC Compliance, Securities Fraud, Securities Litigation

I recently blogged about the pervasive nature of data breaches and the particular risks presented to this industry.  Many firms may think that they are secure because they used a vendor to build a secure environment, but history tells us that is not the case.  Cyber-attacks do not always come from a direct hit, but… Continue Reading


Posted in Securities Fraud, Securities Litigation

A divided U.S. Court of Appeals for the Second Circuit affirmed the dismissal of securities law antifraud claims against a “trusted” investor in the pump-and-dump scheme perpetrated by two defunct broker-dealers, A.R. Baron & Co. and Bear Stearns Cos. Inc.  See Fezzani v. Bear Stearns & Co. Inc., 2d Cir. No. 09-4414-cv, 5/7/13,  http://op.bna.com/srlr.nsf/r?Open= jkoo-97hryk. … Continue Reading


Posted in Insider Trading, Securities Fraud

A court has held that the privacy rights of thousands of high-level federal employees could be violated if a provision of the Stop Trading on Congressional Knowledge Act (“STOCK Act”) were enforced.  The STOCK Act requires online disclosure of employees’ financial information, and it would have become effective but for the United States District Court… Continue Reading

Third Circuit’s “Scienter” Standard Against Corporations

Posted in Securities Fraud

In pleading a Section 10b/Rule 10b-5 claim, it is well established that a plaintiff must establish a “strong inference” of scienter.  In the Third Circuit, a strong inference may be established by:  (1) alleging facts to show that the defendants had both motive and opportunity to commit fraud; and/or (2) alleging facts that constitute strong… Continue Reading