Regulatory double standards gall me.

I represent brokers in regulatory matters.  It always amazes me at the lengths to which a regulator might go to get a result that could be spun in their favor.  I have also dealt with reasonable regulators who take all the facts into consideration before making a decision that could affect an individual’s career and family.

The SEC just released news about a settlement with a city in Michigan that did something laughably awful.

First, these geniuses decided, in late 2008 as the economy is swirling the bowl, to build a “movie studio project.”  First, I was thinking this is going to be about porn, but I was wrong.  It’s about stupidity.

Then, the geniuses decided that their idea was so good that members of the general public would surely want to get in on financing it.  So they floated bond issues.  The “float” analogy will pay off later.

Finally, they decided that they should put up a vocational school worth significantly less than the $146 million dollar pie-in-the-sky movie studio.  By the way, the city is Allen Park, Michigan, a southwest suburb of Detroit.  It’s here –

So instead of a movie studio, this town got a school. They issued two tranches of bonds, the second of which was in June 2010. The project collapsed two months later. Oh, and the debt service was 10% of the city’s budget, which they didn’t bother to mention in their financials, or at least they left out the effect of the debt service on the city.

So the City paid a $10,000 fine and said they won’t lie again. The two city officials said they won’t lie again and won’t do municipal bond offerings again, either. Wow, they must feel really terrible. No more muni bond deals. Just awful.

In the meantime, a broker who bends a rule to facilitate a customer’s wishes, with the customer’s full knowledge, can lose his or her license and livelihood. No lies. No busted bond issue. One bent rule.

Where is the equity?

That’s the view of one grumpy lawyer in Jupiter, Palm Beach County, Florida. I’m Marc Dobin.

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Ameriprise broker’s career survives alteration of computer records.

Suleman Din at On Wall Street reports that an Ameriprise broker, David Tysk, managed to keep his career, and his job, even though he was found to have committed a “capital” offense.

According to the FINRA Hearing Panel decision, Mr. Tysk altered his computer-based customer notes and produced them in discovery in arbitration.  He left out the part about altering the records when he produced them.  The arbitration panel took issue with this.  So did FINRA.

In a 53 page decision (I don’t count the lengthy list of people who received copies on page 54), the Hearing Panel described in detail just how badly a client can screw up his own case.  While doing this, he also put the ethics and careers of several people at risk.  The arbitration panel was not amused.  They awarded damages against Ameriprise and Tysk.  Then they referred the case to FINRA enforcement.  Frankly, you have to really anger an arbitration panel to buy yourself a referral.  Nice job there.

But what amazes me is that this guy is still employed at Ameriprise.  He’s now a target-rich environment for any customer or customer’s lawyer in a “he said/she said” type of case.  He’s proven that he’s willing to go over the line to shore up his past.  How can he be trusted in the future?

His manager needs to be extra vigilant in supervising him.  The firm’s compliance department needs to be on the lookout for anything he does.

But a 90 day suspension and a $50,000 fine will also cause problems with his state licensing.  And if he’s an Investment Advisor representative, that registration will be impacted as well.

That’s the view of one stunned lawyer in Jupiter, Palm Beach County, Florida.  I’m Marc Dobin.

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Dobin Law Group Successfully Represents FONU2, Inc. in AAA Arbitration.

A single AAA arbitrator denied all claims for relief against Fonu2, Inc., a publicly-held company headquartered in Fort Lauderdale, Florida.  Summit Trading, Ltd., a Bahamian company owned by the Weast Family Trust, filed an arbitration related to a Consulting Agreement entered into by Summit and Cygnus Internet, Inc. (“Cygnus”).  Fonu2 purchased the majority of Cygnus’ assets in March 2012.  In the arbitration, Summit demanded the value of 10 percent of the issued and outstanding shares of FONU2, as well as punitive damages, interest and any other appropriate relief.  Marc Dobin represented Fonu2 in the arbitration.  Jon Lieber was involved in the pre-trial issues and did most of the briefing.

In its Answer, Fonu2 alleged that Summit was required to be registered as a business broker pursuant to Fla. Stat. 475.41.  Because the payment under the subject contract was only required if a transaction occurred, we argued that the contract was illegal and unenforceable.  The arbitrator agreed.  A Florida lawyer was not involved in the drafting of the contract.  Would this have changed the outcome?  Maybe.  We won’t know.

When the testimony concluded, the parties agreed to waive oral closing and make written submissions after receiving a list of questions from the arbitrator.  This way, the parties were able to clear up any issues that the arbitrator believed to be outstanding.  The briefs were submitted just over two weeks after the arbitration concluded and the award was issued on September 26, 2014.

This case did demonstrate some of the efficiencies of arbitration.  There were no depositions.  Interrogatories and Document Requests were limited in number.  The case was completed in less than one year from start to finish.  This likely kept the legal fees down from what a full-blown jury trial in court would have cost.

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida.  I’m Marc Dobin.

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A scam email that I just have to share.

I received this one today.  I find it hard to believe that someone would fall for this, but if a woman thinks it’s smart to put their child in the trunk to avoid a car-seat ticket, then I guess there’s someone who would fall for this.

Here’s the email:


Attention Sir/M,

Please if you made any payment to any one in the past or present
through Western Union/Money Gram/Bank Transfer/ for any kind of
transaction contract payment/Inheritance Fund/Lottery Fund/Jackpot/and
so on.

Please you are hereby advised to send a copy of the payment mothered
you used if it’s Western Union/Money Gram or Bank Transfer, Just send
the copy the transaction to prove that you were scammed.

If you don’t keep any record of your payment then send to him the email
you have being receiving from the people or any office it maybe, That
will enable us to verify and then approve your compensation of
$800.000.00 USD. As it was instructed by the (UNN) Chairman to pay the
sum of USD$800.000.00 to each of the scam victim person,


So isn’t that great news?  The UNN Chairman has authorized payments of $800,000 to victims of scams.  I think the UNN is like the UN, except twice as good, hence the two “N”s.  Almost makes me wish I was a scam victim.  Now if I could only figure out what a “payment mothered” is.

These emails had slowed down for a while, but they’ve picked up again.  Maybe it was summer break.  The latest rash of emails contain requests for legal representation, sometimes just an amorphous request.  Other times, the inquirer is looking to start a collection lawsuit.  This is a scam that has actually worked on some unsuspecting lawyers.

Some tips.  If the English is bad, ignore the email.  If the email address is a free email service but the person writing to you claims to be from a large international corporation, ignore the email.  If the sender wants you to engage in a transaction that makes no sense for your type or size of practice, ignore the email.

Practice safe out there.

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida.  I’m Marc Dobin.

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FINRA issues expungement guidance and gets its own rules wrong.

It has been so long that I can’t remember my first expungement request. If it’s for the client I think it is, he’s still working as a broker. FINRA, the organization that is overseeing the expungement process in arbitration, issued new guidance today regarding expungements. You can find it here.

Expungements, which are, at their core, a removal of disclosures on a broker’s CRD record, have been an issue for quite some time. Early on, it was a simple stipulation between the parties. A Stipulated Award was entered and that was sent to the CRD department for processing. Then NASAA got involved (and maybe PIABA) and started complaining that, since the CRD system was used jointly by FINRA and the state securities administrators, this amounted to FINRA changing a state’s record.

So a new plan was hatched. Brokers would now be required to get a court’s stamp of approval on the expungement and FINRA would require specific findings. This requirement was ultimately codified in FINRA Rule 2080. Rule 2080 says that FINRA may waive its right to object to the expungement if the arbitrator(s) make one of three findings. But the rule also says that FINRA may waive its right to object in one other scenario – “(A) the expungement relief and accompanying findings on which it is based are meritorious; and (B) the expungement would have no material adverse effect on investor protection, the integrity of the CRD system or regulatory requirements.”  Meritorious is not defined.

My example would be this, because this actually happened. My client was named by two separate clients in one arbitration. The total claim was approximately $2.5 million. The broker-dealer was bankrupt so my client was the only pocket. My client settled with each individual client for an amount that, if each client had filed a separate claim, would have been non-reportable. But in the aggregate, the total settlement payment went over the reportable amount. Since it was one claim and not two separate claim, this large claim with a nominal settlement would have been on his record forever. We presented to the panel, and the panel agreed, that the combination of the two claims resulted in a reportable event that was not fair to be reported. The expungement was granted and FINRA waived its objection. I’m guessing this counted as “meritorious”.

So it’s not just the three specified reasons in the first part of Rule 2080 that applies. FINRA arbitrators, sitting in equity, can still decide to do what’s right. FINRA’s new pronouncement on expungement ignores this second part of the rule, which is unfair to brokers seeking expungements. FINRA is under immense pressure from NASAA, I am sure. And then there are the plaintiffs’ lawyers who, for years, were signing off on expungement deals all the time while beating their chests about investor protection. There are a few lawyers out there who refused to agree to expungement deals, but they were rare. FINRA stepped in and made it easy, though, by recently issuing rule 2081 which prohibits a settlement that, basically, requires the customer to agree to an expungement or not oppose it.

So are expungements dead? I don’t think so. It just may take more of a fight to get there. And that’s what lawyers are for.

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.

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LVMH enters into agreement with Google, but does it go far enough?

I’ve had some dealings with Google and how it deals with customer trademarks. Google’s basic policy was that a trademark, or a recognizable variation of it, could not appear in an Adword display or paid search results. So if a user input “Ford Mustang” a Google display ad would not “Just like Ford Mustang” and advertise something else. Or a client I had that had its share of legal problems. If one searched that name, it would serve up a list of lawyers in the AdWords section that had the client’s trademarked name in the ad. Google would take that down.

Today, LVMH and Google announced an agreement where LVMH could get Google to suppress search results that serve up counterfeit LVMH products. Bloomberg reports on it here. The terms of the settlement are not discussed, but it appears that this will suppress results when a user searches for, say, a Louis Vuitton handbag, Google won’t display “Just Like Louis Vuitton” handbags in the results. From what little I can find, LVMH will have to do its own policing and tell Google about it.

But this settlement does not seem to settle a more insidious problem. Google can sell, and has sold, trademarks as keywords to competitors. One of the more famous cases, which settled confidentially, was a lawsuit brought by American Airlines. American was made because users searching on Google for its airline would receive paid ads for other airlines and travel agencies. Why? Because Google was allowing these competitors to buy the term “American Airlines” as a keyword phrase. American Airlines was not pleased. Bloomberg describes the litigation and settlement here.

In a different article Google states that it did not make any special concessions related to keyword “sponsored ads.” But, magically, if you type American Airlines into a Google search bar, there are no sponsored ads and the American Airlines website appears at the top. It’s a miracle!

On the other hand, if you’re a small mom-and-pop company without the legions of resources of American (despite its bankruptcy), you’re hosed. Google, when I last dealt with the company, believes that it can sell trademarks as keywords to its heart’s content. That is, of course, it gets sued by a company with nearly bottomless pockets. Frankly, I don’t think Google’s policy was correct when I dealt with the company before and, if that policy is still in place, it seems unfair to me now. If a company goes to the trouble of protecting its trademark, why should a search engine make money selling that trademark as a keyword? The search engine couldn’t stick the name “Apple” on a phone and sell it. But it can sell the phrase “Apple computer” and serve up related results. Although, it seems, Apple has worked around this because I just did a Google search and the only thing that came up was the Apple website.

The law is trying to keep up with the technology. But sometimes, it just can’t. We need our government to step in and stop search engines from selling trademarks as keywords. Trademarks are not theirs to sell.

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.

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Carlos Ricca “-” we were all glad to know you.

My second “tour” at Prudential-Bache Securities began in August 1988. Even though I had worked there before, I was told I had to attend orientation. Another lawyer was starting at the same time. His name was Carlos Ricca. We didn’t know each other until then. Carlos was a big guy. He had a very expressive face and always had a smile for you. In a department with litigators with egos, Carlos stood out because he didn’t seem to have one. Or at least not the outsized ones possessed by others.

Because of his fabulous voice, Carlos was quite a presence. As I recall, he did some radio announcing in his life. But he was part of the group of crazies that was flying all over the country defending Prudential-Bache in arbitrations. We were comrades-in-arms. Whenever a group of us got together, there were stories.

We are all “kids” then. Some were single. Some newly-married. I might have been married the longest at that time, all 6 years of marriage. As I recall, Carlos married either just before or after I left the firm.

It was always good to see Carlos. He always smiled. In later years we talked about kids and family. With Carlos, as with many from that group, you felt like you could pick up right where you left off. Nothing seemed different about him.

I received a disheartening email this morning from an old friend. He told me that Carlos passed away this morning. I was stunned, speechless. I am dumbfounded. I know it’s part of life, but there are so many jerks out there, why would the fates claim a good guy? I’ve written before about how I feel like I’m becoming part of the “old guard.” Another friend told me that this is part of the process. I don’t like it, not one bit.

So I passed the information on to some friends who I thought would want to know. The reaction was universal shock. Then one friend reminded me of an incident where Carlos, I believe with some liquid encouragement, danced with a goat. I wasn’t there so I can’t remember if it was a fake or real goat. He did end up with a papier-mache goat in his office as a result. So I think the first goat was real. Then I remembered that, for a while, the joke was that Carlos’ Indian name would be “Dances with Goats.” (If you don’t understand the movie reference, then you’re not old enough). I chuckled to myself and I smiled. Because those really were “the days” and frequently the nights, too. Carlos will be missed by all who knew him.

Rest in peace, Carlos. When you see Generelli, tell him we all say hi.

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A Senior Citizen Scam “-” Michael Lieberman at 866-883-2294 who claims to be from a law firm.

I am not the only lawyer in my family.  My sister, Andrea, is a bankruptcy lawyer in New Jersey.  My dad is a retired lawyer after having practiced 40 years with one firm in Pennsylvania.  I have three other members of the extended family who are lawyers in Florida.  But this post is about my dad.

He’s been getting phone calls from an outfit claiming that they have to serve papers on him.  They have left him messages to call them.  The last message was from a Michael Lieberman (probably not his real name) from a law firm somewhere in the United States (I guess).  Dad smelled a rat and was ignoring them.  I called the number “Michael Lieberman” left 866-883-2294.  A woman answered the phone.

I identified myself as a lawyer and asked to speak to Michael Lieberman.  I was told he was “in court.”  I asked where I was calling.  I was told “Washington.”  I asked if it was the State of Washington or the District of Columbia.  There was a pause, then she said the state.  I asked if she was in Seattle and she hesitantly agreed that she was there.  (I’m skeptical, by the way)  I asked for the name of the law firm.  She said “Feldman & Feldman”  Ah-ha, I thought, now we’re on to something.  So while I was talking to this woman, I went to Google and looked for Feldman & Feldman in Washington.

Surprise! No Feldman & Feldman in Washington state.  No Michael Lieberman in Washington state. She “brought up” my dad’s account.  She had the last four digits of his Social Security number.  I asked for the specifics.  She said that he owed HSBC some money and that he could pay it or they would “serve him with a judgment.”  I told her that he hasn’t had an account with HSBC and before they could “serve hims with a judgment” they would need to serve him and prove that he owed the money.  (They would also have to go through me, which she may have figured out.) I explained to her that it was not that simple.  And since she was in “Washington” it wasn’t going to happen overnight.  We got “disconnected.”

I called back.  I tried to resume the conversation.  We got “disconnected” again.  I was starting to feel like she didn’t want to talk to me any more.

I called again.  This time I was sent to voice mail.  I can’t remember if I left a message.

So, “Michael Lieberman” from Feldman & Feldman in Seattle, Washington, if you’re out there and reading this blog.  Call me.  We should talk.

And if you get a call from Michael Lieberman who leaves the number 866-883-2294, tell him I’m waiting for a call back.  I won’t be holding my breath.

That’s the view of one “fraud-fighting” lawyer in Jupiter, Palm Beach County, Florida.  I’m Marc Dobin (and not Elliot Ness).

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Ex-Newbridge Securities Broker Sentenced to Six Years in Prison “-” No Surprise Here.

The Palm Beach Post reports that Brent Deviney had a gambling addiction.  He blames that gambling addiction for the theft of funds from his in-laws.  If anyone had looked at Deviney’s record with any sort of jaundiced eye, they would have realized that he was a ticking bomb waiting to go off.

For all the brouhaha about the FINRA Brokercheck system, this case pretty much confirms that Brokercheck does not help people avoid bad brokers.  Prior to his problems at Newbridge, he was accused of forging customer names on account documents so that he could become the servicing broker on annuity accounts.  The State of Florida delayed his registration for 3 months, fined him $5,000 and put him on a supervision agreement for 2 years.  FINRA suspended his license for 6 months (but gave him credit for the 3 months that Florida meted out) and fined him the same $5,000 that Florida did.  In fact, FINRA gave him full credit for the money paid to Florida.  But he managed to stay in the business because a firm was willing to hire him.

Fast forward a couple of years and, SURPRISE!, he’s stealing money from his in-laws and his wife’s IRA.  He was also the subject of a million dollar arbitration award, but that was after he was fired.  Based on the description of the claims, it appears that at least some of the money he stole from his wife came from a Merrill Lynch account.  His wife and his mother-in-law’s estate both obtained awards against him.

Society will get its revenge.  This miscreant will be put away for 6 years starting in a couple of weeks.  That will give him plenty of time to think about what went wrong here.

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida.  I’m Marc Dobin

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Wait. There are corrupt public officials? SEC enjoins a municipal bond offering.

This is unbelievable. The city of Harvey (named after the invisible rabbit?), Illinois, is the subject of an injunction order obtained by the SEC which alleges that its offering documents are fraudulent. I don’t even know where to begin.

Let’s see — according to the SEC press release a prior offering was to fund a Holiday Inn. Huh? Even worse, the funds were diverted from the Holiday Inn just so the town could pay its bills. From the press release – “According to news reports, the proposed Holiday Inn hotel and conference center stands as a decrepit shell. The hotel’s façade has many holes in it, and the interior of the hotel appears gutted in places with dangling wires and exposed studs.” Yeah, but in season I’ll bet they get at least $100 a night for a room. Is there even a “season” in Harvey?

I tried to locate said Holiday Inn, which was to be a refurbished Ramada Inn, and I couldn’t find it on Google Maps.  But Harvey, at least near the Interstate, looks like a depressing place.  A Holiday Inn might have been a step up.  The Chicago Tribune writes “The Tribune revealed in July the failed deal to redevelop the aging former Ramada Inn off Halsted Street, which sits near Interstate 80 adjacent to a strip club.”

After I read the article, I found the hotel — the giveaway was that it was next to a strip club.  You can see the depressing picture here and click on Street View.

But there’s more. The comptroller of the town allegedly pocketed $269,000 derived from the $1.7 million in bond proceeds. A corrupt politician? Can’t be.

So the SEC decided that enough was enough. They swooped in and stopped the offering, alleging that the current offering contained misstatements about the use of the proceeds. The city didn’t include that the comptroller was going to take 15% for himself? I guess that might have hurt the offering’s prospects. The comptroller, by the way, has agreed not to make any “extraordinary” expenditures. At least he wasn’t using the funds for a nooner at the Holiday Inn given its state of affairs.

You can’t make this stuff up.

That’s the view of one bemused Lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.

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