Here it is –
What’s next, is Snooki going to sit as a Hearing Officer at a Disciplinary Hearing?
This is just so wrong.
That’s the astonished view of One Lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.
The Wall Street Journal reports that Irving Picard, the Madoff Investment Trustee, intends to sue about 1,000 investors who withdrew more than they put into the Madoff fraud. Mr. Picard faces a December 2010 filing deadline to start his lawsuits. This is not just going to be an inconvenience for some people, it could mean the end of their lifestyle as they know it.
This will leave these investors with a predicament. Do they spend down some of their remaining money to fight the lawsuit and argue that they don’t owe the money back? Do they argue that it is unfair because they didn’t know about the fraud, or that they spent the money? Do the try and cut a deal with the Trustee, who seems determined to treat everyone “equally”.
And fairness issues become very tangled. What happens to the person who spent the money in an unrecoverable manner, like a round-the-world trip, or something less extravagant like a grandchild’s college education? Will Mr. Picard try to drill down and recover the funds? Will he require the sale of long-held assets that were unrelated to the fraud? These are difficulty legal, practical and moral issues that the trustee will have to address.
In the meantime, it is likely that a cottage industry of Madoff defense lawyers will develop. They will develop some sort of strategy to deal with the Madoff Trustee’s lawsuits. Time will tell.
That’s the view of one Lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin,
Holy crap this can be fun sometimes. Let’s see, customers have filed numerous arbitrations against their firms for mortgage-backed securities. Charles Schwab may have been among those firms, I haven’t taken a deep dive into the FINRA Awards database or Brokercheck, but I would venture a guess that there’s at least claim.
So Schwab thinks it’s been lied to, Investment News reports. So what does Schwab do? It files suit alleging misrepresentation against a number of the big players on Wall Street.
Notice that I said “suit” and not “arbitration.” Apparently someone at Schwab missed that part of the FINRA Constitution and Rules. So the first move should be to compel arbitration. I’m guessing that this is a strategic move to scare the broker/dealers into a settlement rather than face exhaustive discovery, either in court or arbitration, against a well-funded and angry opponent.
It seems like Claimants’ lawyers everywhere may want to see a bouquet of flowers to the General Counsel at Schwab.
That’s the view of one Lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.
In a terse press release, Jesup & Lamont announced that it is reducing its staff to a minimum. Jesup stated that it is terminating “all non-essential personnel.”
One can only hope that the firm’s general counsel, Todd Zuckerbrod, is shown the door. I don’t think it’s a coincidence that his treatment of FINRA put the firm in regulator’s crosshairs. And with the pending motion to confirm/cross-motion to vacate of the Devore decision, things will probably get worse. Devore is the case that Jesup actually won on liability but was sanctioned $60,000 for discovery violations.
And word on the street is that Jesup lost its big case with the former clearing firm for Empire Financial, Penson, and was ordered to pay Penson’s legal fees. I’m still waiting to see that award.
Mr. Zuckerbrod is not the only person to blame. The executives at Jesup allowed him to conduct himself in this manner. They ratified his boorish behavior, as described in the press, and kept him in place. In doing so, they encouraged him to act in a manner that appears to have resulted in a fight with FINRA that, ultimately, led to the firm’s near-death experience. Congratulations, boys, you managed to sully the name of an institution that survived any number of market crashes, economic downturns and the like.
But you just couldn’t survive your own bad behavior.
That’s the view of one Lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.
I came across this Microsoft site in a magazine. It is a password strength checker. It is very interesting to use. Some passwords that I have used on other sites come up as “weak” here.
I guess I’ll have to rethink my password strategy.
Yes, I have a few miles on me and more than my share of gray hair (although my driver’s license says it’s brown). But that sometimes gives me a good perspective. 7 years ago, my law partner and I handled a customer case against Securities America. At the time we handled the case, Securities America was a subsidiary of American Express Financial Advisors, itself a subsidiary of American Express.
The case involved a stolen identity for the broker, failure to supervise by the firm and giant damages award to our clients, including attorneys’ fees. One of the witnesses in the case was the head of compliance for Securities America, David O. Spinar. His underlings conducted an “audit” of the branch in question that I described as a “drive-by.” The arbitrators seemed to agree with that assessment.
Mr. Spinar is in the news. He apparently had misgivings about Securities America’s marketing of Medical Capital Associates and its affiliate products. Investment News reports that he voiced his concerns about the lack of audited financials. Interestingly enough, Mr. Spinar saw this as a warning sign. In the case we handled some years ago, there were plenty of red flags, but no one seemed to notice, until it was too late.
So it looks like Mr. Spinar, who no longer works for Securities America, will be in the witness chair again. At least, this time, American Express won’t see its name in the headlines. But Ameriprise, the spinoff that has since merged with H&R Block Financial, is likely to be fighting many battles to come.
But you have to ask yourself, what was Securities America doing selling this crap anyway? The Medical Capital Associates saga will likely continue for some time. Stay tuned.
That’s the view of one Lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.
I call it the “30-day rule.” Way back when, arbitrators issued awards and FINRA, then known as the NASD and New York Stock Exchange, really didn’t pay attention once the award was entered. The prevailing party, if owed money, was left to the courts to enforce the award through a motion to confirm the arbitration award. And the prevailing party was left to its collection devices.
Then, things changed. The regulators got interested. FINRA created a rule that required that the award or settlement be satisfied within 30 days of issuance. The “or else” was a summary suspension of the firm’s or broker’s license. This was accomplished through a Rule 9554 proceeding, essentially a “show cause” hearing.
One of the defenses that FINRA had been allowing is the “I can’t pay” defense. A firm or broker could demonstrate that there was a “bona fide inability to pay” and continue to be a broker, defeating the application for a suspension.
All that is changing now. Effective July 2, 2010, if a firm or broker receives a 9554 notice, advising that their license will be suspended, the registrant’s inability to pay is no longer a valid defense. FINRA has issued Regulatory Notice 10-31 explaining its position. Essentially, a loser in an arbitration now has three choices, pay (in one lump or over time), move to vacate the award or file for bankruptcy. If you can’t pay, FINRA says you can’t play.
This makes sense. Why should a broker continue in this business if they can’t honor a properly issued arbitration award? This flies in the face of the FINRA precept of highest standards of commercial honor and just and equitable principles of trade. Sometimes FINRA and I don’t see eye to eye. This time we do.
That’s the view of one Lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.
Today the Supreme Court vacated the criminal conviction of Jeffrey Skilling stemming from the collapse of Enron. Some of you may remember that Skilling served as the CEO of Enron until August 14, 2001. Less than 4 months after his departure, Enron spiraled into bankruptcy. On May 26, 2006, following a 4-month trial and nearly 5 days of deliberation, the jury found Skilling guilty of 19 counts, including honest-service wire fraud, money-or-property fraud, and securities fraud.
The Supreme Court vacated Skilling’s conviction because it found the “honest-services” wire fraud statute, 18 U.S.C. § 1346, to be void for vagueness. The Court held that the honest-services fraud statute is limited to schemes involving bribes and kickbacks. Since the government did not allege that Skilling solicited or accepted side payments from a third party in exchange for making the misrepresentations about Enron’s fiscal health, the Court determined that Skilling did not commit honest-service fraud and vacated his conviction.
Don’t worry, the Supreme Court did not give Skilling a get out of jail free card. So your 401k is still safe (at least for the time being). A new trial is likely in the works. The case has been remanded to the Fifth Circuit Court of Appeals for further proceedings.
That’s the Enron-free view of one other Lawyer from Jupiter, Palm Beach County, Florida. He’s James Duffy.
I can’t believe it. The SEC announced that it charged an investment adviser in Palm Beach Gardens, Florida with fraud for running a Ponzi scheme. Here is the Litigation Release.
OK, listen up. The release says that this “adviser” claimed to be making returns of 8% per month. Huh? Have we not learned anything? Surprise! They were lying.
Let’s repeat this again. If an investment return is too good to be true, they are going to steal your money. If you think that you’ve discovered the only investment adviser on the planet who can consistently deliver returns that are 30% better than the market, you are going to lose your money, your house, your dog and everything else you own.
That’s the angry view of one lawyer from Jupiter, Palm Beach County, Florida. My name is Marc Dobin.
You will recall that I have discussed the behavior at Jesup & Lamont in two prior postings. And it didn’t take long for the predicted result to occur. On Friday, FINRA shut down Jesup & Lamont Securities Corp., a principal unit of Jesup & Lamont, Inc.
You can read about it here. I don’t take joy in seeing these 300 brokers losing their livelihood. I don’t take joy in the stress caused to the unwitting customers of the firm. I only get to say “I was right.” Frankly, these 300 brokers will be better off working someplace where management seems to have a clue on how to run a brokerage firm.
I said this in a prior posting – don’t pull on Superman’s cape.
That’s the view of one Lawyer from Jupiter, Palm Beach County, Florida.
