By Paul J. Dubow A sophisticated investor that purchases mortgage-backed securities notwithstanding warnings that there were severe problems in the housing market cannot assert that it made the purchases in reliance on prospectus statements. Federal Home Loan Bank of Seattle vs. Barclays Capital, Inc., No. 75913-2-I (Wash. App., 12/11/17). In the Court Below In early […]

EXPLAINED AWARD: ANDERSON v. ALLEGIS INVESTMENT ADVISORS, LLC, AAA ID #01-16-0005-0320 (Salt Lake City, UT, 1/8/18). This 21-page AAA Explained Award, issued by a sole Arbitrator, holds an investment advisory firm liable to four of its customers for more than $900,000 in damages, including punitive damages awarded to three of them and damages for emotional […]

By Noah D. Sorkin An attorney who previously represented a broker in a prior proceeding with a substantial relationship to a pending criminal proceeding and who has information regarding the broker that is relevant to the criminal proceeding may not represent a co-defendant in the latter. USA vs. DiScala, No. 14-cr-399 (E.D. N.Y., 12/24/17). Past […]

The comment period closed December 18th on the FINRA Office of Dispute Resolution’s (“ODR”) Regulatory Notice on expungement. All commenters generally support the proposed changes, but all suggest improvements. As reported in SAAs 2017-48, -46, -41, -40 & -39, FINRA solicited public comments in Regulatory Notice 17-33 – Amendments to the Code of Arbitration Procedure […]

By David C. Franceski, Jr. SEC enforcement actions seeking only “obey the law” injunctive relief and similar prospective business conduct bars that serve no retributive or remedial purpose are penal in nature and subject to the five-year statute of limitation of 28 U.S.C. § 2462. SEC vs. Gentile, No. 16-1619 (D. N.J., 12/13/17). The SEC […]

No sign of the times could more surely signal that tectonic shifts have occurred in the securities marketplace than the decisions by Morgan Stanley and UBS Financial Services (and to a lesser degree, Citibank) to repudiate the Protocol on Broker Recruiting. Each, independently, but for relatively similar reasons, withdrew from this long-standing “peace treaty” among […]

By Noah D. Sorkin *Federal courts have jurisdiction over private suits alleging that securities exchanges violated §10(b) of the Securities Exchange Act. **Stock exchanges enjoy absolute immunity with respect to their conduct as regulators, but not with respect to the sale of products and services to investors. City of Providence vs. BATS Global Markets, Inc., […]

The comment period closed December 18th on the FINRA Office of Dispute Resolution’s (“ODR”) Regulatory Notice seeking comments on non-attorney representatives (“NAR”). With about 60 comments filed, a majority favor banning or restricting continued NAR use. As reported in SAAs 2017-48, -46, -41, -40, and -39, FINRA solicited public comments on Regulatory Notice 17-34 – […]

By Pete S. Michaels A party with unique or special expertise may have a duty to disclose information within that expertise to other parties with whom it deals. Kortright Capital Partners LP vs. Investcorp Investment Advisers Limited, No. 16cv7619 (S.D. N.Y., 6/27/17). An Investment Deal Kortright Capital Partners LP and Investcorp Investment Advisers Limited are both […]