Posts from April 2016.

Tennessee fraudulent misrepresentation claims - and "investment contract" claims under the State's Blue Sky Law - fail the "reasonable reliance" requirement, where the plaintiff himself asserts it's a fraud because nobody would believe such a thing.

In a case the Court of Appeals charitably called "astonishing," a lawyer and his successful businessman friend and client paid large amounts of cash over time to a promoter running a "Black Money" scam that also borrowed elements from the "Nigerian Prince" script. The scammers obtained money from both Lambert and ...

Posted in: Tennessee

The Municipal Securities Rulemaking Board ("MSRB") issued a concept release last month suggesting that market transparency trumps the direct Congressional prohibition against federal regulations requiring filing of information by (or by broker-dealers, from) municipal issuers (the "Tower Amendment").

Regulators are concerned that direct purchases of municipal debt (akin to private placements) and bank loans to municipal entities might avoid the municipal securities regulatory regime, yet affect the priority and integrity of municipal securities:

The MSRB has ...

Posted in: MSRB

An article in this weekend's Wall Street Journal called for FINRA to make the database underlying its BrokerCheck ® system (of reports on stockbroker registration and disciplinary history) more widely available for data mining and analysis by public-sector participants.

The article roundly criticized FINRA's interface that limits public access to peep-show, one-broker-at-a-time reports: "In the age of Big Data, it is time to liberate the BrokerCheck files. Only when information is set free can it turn into insight." J. Zweig, "Is Your Stockbroker Great or Mediocre?" Wall ...

Posted in: FINRA, MSRB

The SEC recently affirmed its ALJ's ruling barring Alan Stanford's former CCO from the industry and ordering monetary penalties of $260,000 together with $591,992 in disgorgement.

The Commission held the CCO approved false and/or misleading marketing and training materials in the face of red flags and without adequate due diligence or verification, instead relying upon superficial explanations of other company insiders.

"But the evidence shows that Young approved material misrepresentations without verifying them or establishing any reasonable or independent basis for ...

Posted in: SEC

It is not uncommon for registered representatives to change broker-dealers over the course of their career.

In most cases, their customers will typically switch firms as well, as they follow their representative to wherever he or she may go. Seems like a non-issue, right? FINRA did not think so. FINRA became concerned that when the representatives contacted the customers to discuss the switch, the customers may not be provided all the information necessary to make an informed decision on whether to transfer their assets. Accordingly, FINRA proposed a rule that requires ...

Posted in: FINRA, SEC

On April 12, the Tennessee Republican Party filed a petition in the US Sixth Circuit Court of Appeals, seeking to invalidate the SEC's approval of new rules extending the MSRB's long-standing "pay-to-play" prohibitions to new municipal advisors.

The MSRB has prohibited "pay-to-play" practices in the municipal securities space since its Rule G-37 was promulgated in 1994. The Rule does not prohibit political contributions by bond dealers outright, but instead prohibits them from doing business with issuers to who's elected officials a dealer has made political ...

Posted in: MSRB, SEC, Tennessee

The Fifth Circuit Bar Association's summary reports: "Appellants were investors who suffered financial losses as a result of R. Allen Stanford's Ponzi scheme. In their arbitration complaint, they sought $80 million in damages. After a two week hearing, a Financial Industry Regulatory Authority panel rejected Appellants' claims, but it awarded them $10,000 in compensation for certain arbitration-related expenses. "On November 7, 2014, Appellee filed, pursuant to Section 9 of the Federal Arbitration Act, a motion to confirm the arbitration award. Because the arbitration ...

Posted in: FINRA

The Tennessee Court of Appeals recently held that a trustee's signature of brokerage account agreement containing a pre-dispute arbitration clause did not bind the trust's minor beneficiary. The Court held that an "all powers allowed by law" clause in the trust agreement did not authorize the Trustee to enter a pre-dispute arbitration agreement. Instead, another more specific clause providing the "Trustee may settle, by compromise, arbitration or otherwise any and all claims" limited the grant of that authority only to claims that have arisen. See Tenn. Code Ann. § ...

Jump to Page
Arrow icon Top

Contact Us

We use cookies to improve your website experience, provide additional security, and remember you when you return to the website. This website does not respond to "Do Not Track" signals. By clicking "Accept," you agree to our use of cookies. To learn more about how we use cookies, please see our Privacy Policy.

Necessary Cookies

Necessary cookies enable core functionality such as security, network management, and accessibility. These cookies may only be disabled by changing your browser settings, but this may affect how the website functions.

Analytical Cookies

Analytical cookies help us improve our website by collecting and reporting information on its usage. We access and process information from these cookies at an aggregate level.