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Category Archives: Securities Litigation

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Take Away From The NSCP New York Regional Conference

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

It was great speaking at the May 17 New York NSCP regional conference on risk issues facing firms where Ernie Badway and I discussed cyber-security, risk issues, regulatory matters, issues involving elder clients and ways compliance personnel can protect themselves.  For those of you who could not make the conference, these topics are frequently discussed… Continue Reading

Why stupid clients should not ruin your business model

Posted in Books and Records, Broker-Dealer Regulation, Compliance and Supervision, Financial Industry Trends, FINRA Compliance, Registered Representatives, SEC Compliance, Securities Litigation

Unlike lawyers, especially litigators, the business model of a financial advisor is not dependent upon clients being stupid. Instead, financial advisors depend on their clients making smart decisions after full disclosure and consideration after speaking with their financial advisor. So what do you do when clients make stupid decisions? In defending brokers over the years,… Continue Reading

Are regulations regarding elder investors inevitable

Posted in Breach of Fiduciary Duty, Broker-Dealer Regulation, Compliance and Supervision, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, Investment Adviser Regulation, Registered Representatives, SEC Compliance, SEC Enforcement, Securities Litigation

With the exception of those of you who have literally been asleep for the last few years, you are well-versed in the attention FINRA and the SEC are giving to issues surrounding elder investors. Among other things, there is a real focus on elder abuse. Some commentators believe that all of this attention may inevitably… Continue Reading

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

Who wants to know more risk avoidance techniques

Posted in Breach of Fiduciary Duty, Compliance and Supervision, Conflicts of Interest, Financial Industry Trends, FINRA Compliance, Registered Representatives, SEC Compliance, Securities Litigation

Ernie Badway and I have prepared a series of podcasts dealing with the relationships between broker-dealer, investment advisors and their customers.  Here is the third part of that series focused on risk avoidance techniques.  Here is the link: https://soundcloud.com/fox-rothschild-llp/securities-best-practices.

A Recidivist; Here We Go Again

Posted in Broker-Dealer Regulation, Compliance and Supervision, Financial Industry Trends, FINRA Compliance, FINRA CRD, FINRA Enforcement, Securities Litigation

One area of focus for FINRA has been on recidivist registered representatives. A recidivist is an associated person who has repeated rule violations or customer complaints of a specific nature. FINRA has used a risk-based approach in order to be proactive to identify the bad behavior that these undesirable registered representatives tend to display. In… Continue Reading

Who wants to hear about pitfalls in the advisor/broker-client relationship

Posted in Arbitration, Breach of Fiduciary Duty, Compliance and Supervision, Conflicts of Interest, FINRA Compliance, FINRA Enforcement, Registered Representatives, SEC Compliance, Securities Litigation

Ernie Badway and I have prepared a series of podcasts that highlights client-issues and risk avoidance techniques for broker-dealers and investment advisors.  We hope you’ll take a listen.  

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

Fox’s Frank Razzano Publishes New Securities Article in Securities Regulation Law Journal

Posted in Securities Litigation

Our partner, Frank C. Razzano, has recently published an article, entitled “What Lies Ahead: Halliburton v. Erica P. John Fund, Inc.,” in the Securities Regulation Law Journal (Spring 2015).  It is a great article discussing a recent United Supreme Court decision dealing with class actions.  Kindly let us know if you would like a copy for your review.   

How to avoid being sued 2.0

Posted in Arbitration, Compliance and Supervision, FINRA Compliance, FINRA CRD, Public Customer Arbitrations, Registered Representatives, Securities Litigation

Over the years that I have defended financial advisors and their firms, I have frequently spoken and written about ways to avoid the risk of being sued. I prepared a guidebook a couple of years ago that detailed some common sense approaches to risk avoidance. I have updated that guidebook to take into account new… Continue Reading

What Does The “E” in Email Mean?

Posted in Broker-Dealer Regulation, Cyber-Security, Financial Industry Trends, FINRA Compliance, FINRA CRD, FINRA Enforcement, Securities Litigation

Recent history shows that FINRA is going after brokers who alter client’s records.  This, unfortunately, reminded me of my own bad experience as a young lawyer when defending a broker. That broker had great “contemporaneous” notes of his communications with the client that made the case very defendable.  My opponent questioned the authenticity of these… Continue Reading

Is the SEC that good? SEC Wins Every Administrative Case

Posted in Dodd-Frank, SEC Enforcement, Securities Litigation

In what is sure to add more “fuel to the fire,” it was recently reported that the SEC has won every case brought in its administrative courts over the last year.  The SEC has not been so successful with its federal court cases, winning 61% of those cases over that same period. Of course, regular blog readers know that the… Continue Reading

SILENT FRAUD . . . OR OMISSIONS

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

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

SECOND CIRCUIT REQUIRES DIRECT COMMUNICATION FOR EXCHANGE ACT SECTION 10(b) LIABILITY

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

Former AP of Defunct Firm May Enforce FINRA Arbitration Pact

Posted in Arbitration, Securities Litigation

The California Court of Appeals reversed a lower court’s refusal to compel a dissatisfied investor to arbitrate its dispute with a former associated person of a now defunct FINRA member firm.  See Ronay Family Limited Partnership v. Tweed, Cal. App., D062195, 5/23/13. A FINRA rule rendering a claim against a former member ineligible for arbitration… Continue Reading

COLLUSION CLAIMS AGAINST PRIVATE EQUITY FIRM PROCEEDS

Posted in Corporate Governance, Hedge and Private Equity Funds, Securities Litigation

Former shareholders may pursue narrowed claims against some large private equity firms who allegedly conspired with one another minimizing competition for target companies.  See Dahl v. Bain Capital Partners LLC, D. Mass., 07-12388, 3/13/13), http://www.bloomberglaw.com/public/document/Klein_et_a_v_Bain_Capital_Partners_LLC_et_at_Docket_No_107cv1238. The plaintiffs previously held shares in various public companies that were, ultimately, acquired by private equity firms.  The complaint alleged… Continue Reading

You Need To Be an Investor for FINRA Arbitration

Posted in Securities Litigation

An allegedly defrauded investor may not compel a broker-dealer to arbitrate claims over his allegedly unsuitable investments.  See Berthel Fisher & Co. Financial Services Inc. v. Frandino, D. Ariz., No. DV-12-02165-PHX-NVW, 5/14/13.  The investor was not a “customer” of the firm’s registered representative for purposes of the FINRA arbitration code since the registered representative was at… Continue Reading

COURT AVOIDS DEALING WITH ARBITRATION AWARDS

Posted in Arbitration, Securities Litigation

The Tennessee Supreme Court ruled that it has subject matter jurisdiction to review a trial court’s order vacating an arbitration award while remanding the dispute to a new arbitration panel without expressly declining to confirm the award.  See Morgan Keegan & Co., Inc. v. Smythe, Tenn. Sup. Ct., No. W2010-01339-SC-R11-CV, (4/25/13); http://op.bna.com/srlr.nsf/r?Open=jkoo-979qp7. The Court interpreted… Continue Reading