The SEC recently announced another issuer settlement under its Continuing Disclosure Cooperation Initiative (see our blogs First Settled Proceeding (July 23, 2014) here). In this settled action, Kansas consented to the standard sanctions offered municipal issuers under the Initiative - a settled administrative action (without admitting or denying) charging negligence under '33 Act §17(a)(2-3) and requiring remedial efforts (new policies and procedures), disclosure of the sanction during the next five years, and continuing cooperation. The charges arose from eight bond ...
When a member or shareholder of a company or corporation sustains a loss, is that member's loss directly compensable by a direct suit? Or does the member have to bring a derivative suit on behalf of the corporation? While it may sound like an easy question, the inquiry involved to arrive at the answer can be confusing. Recently, the Third District Court of Appeals in Florida shed some light on the analysis. In Dinuro Investments, LLC v. Camacho et al., 2014 WL 3290609, ---So.3d--- (Fla. 3d DCA July 9, 2014), the plaintiff and the two defendants established an LLC to develop real property. The ...
The United States Supreme Court clarified the duty of prudence that employee stock ownership plan fiduciaries owe to plan participants in its June 25, 2014 decision Fifth Third Bancorp v. Dudenhoeffer 134 S.Ct. 2459 (U.S. 2014). The "presumption of prudence" no longer exists and employee stock ownership plan fiduciaries are subject to the same standard of prudence and liability as any ERISA fiduciary, aside from the duty to diversify. The United States Supreme Court addressed the "presumption of prudence" for employee stock ownership plan ("ESOP") fiduciaries. ESOPs are a type of ...
The MSRB proposed a Revised Draft of Rule G-42 ("Duties of Non-Solicitor Municipal Advisors") by Reg. Not. 2014-12 issued July 23, 2014. We addressed the original proposal in our January 23 blog post, here. The Revised Draft Rule G-42 contains the same basic structure and objectives as originally proposed. It establishes (a) DUTIES owed by Municipal Advisors ("MA's") to Municipal Entity ("ME") clients and to Obligated Person ("OP's"); (b) An engagement-letter-type disclosure regime with certain required DISCLOSURES; (c) A suitability requirement MA's must follow ...
On July 22, the SEC approved amendments to FINRA Rule 2081 that prohibit member firms from conditioning arbitration settlements (or seeking to) upon a customer's assent to CRD expungement relief. The Rule amendments prohibit paying any consideration or compensation for expungement relief and apply even if a customer suggests such a bargain. SEC Rel. No. 34-72649 (July 22, 2014). In cases that may warrant expungement relief under the conditions specified in Rule 2081, SIFMA's comment letter suggested, and FINRA responded approvingly to, using settlement-agreement language ...
On June 30, 2014, the Financial Industry Regulatory Authority ("FINRA") sent its proposed rules to limit the definition of "public arbitrators" to those without any experience in the securities industry. Previously, an arbitrator who had in the past worked in the securities industry but did not currently work in the industry could qualify as a "public" rather than a "non-public" or "industry" arbitrator. See FINRA Rules 12100 and 13100. According to FINRA, people "who represent investors or the financial industry as a significant part of their business would also be classified as ...