Broker-Dealer Litigation - Greenberg Traurig LLP

Haarbauer v. Morgan Keegan & Co., 2011 WL 457971 (FINRA Feb. 1, 2011) (Gomez, Barrett,
Dorsey, Arbs.).
In an arbitration before the Financial Industry Regulatory Authority, claimants asserted
violation of, inter alia, Section 11 of the Securities Act of 1933, arising from respondent’s
alleged failure to disclose the nature and extent of risk from investing in certain bond funds.
After one pre-hearing session with a single arbitrator, four pre-hearing sessions with the panel,
and ten hearing sessions, respondent was found liable for an award one $210,000 in
compensatory damages and $375 in filing fees to one of the claimants. Issues raised by the
remaining claimant, who had not settled with respondents, were dismissed in their entirety and
with prejudice. All other relief not specifically addressed was denied, including requests for
punitive/treble damages and attorneys’ fees.
Clifford v. Morgan Keegan & Co., Inc., 2011 WL 5025045 (FINRA Oct. 11, 2011) (Pieroni,
Arb.).
In an arbitration before the Financial Industry Regulatory Authority, claimant asserted
violation of, inter alia, Section 11 of the Securities Act of 1933, arising from claimant’s purchase
of certain bond funds. After three pre-hearings and a recorded hearing with oral arguments
before a single arbitrator, respondent’s motion to dismiss was granted, with the arbitrator
dismissing all claims in their entirety and denying relief not specifically addressed therein,
because (i) the funds were purchased by an experienced investor who made his own
determinations and executed those decisions through brokerage firms; (ii) the funds were
purchased through a secondary market instead of through an initial public offering; and (iii) there
was no evidence that the claimant purchased the funds from respondent or relied on the
respondent for advice and/or recommendations.
B.1
B.1
2. Section 12
B.2
Plumbers’ Union Local No. 12 Pension Fund v. Nomura Asset Acceptance Corp., 632 F.3d 762
(1st Cir. 2011).
The court of appeals affirmed in part and vacated in part the district court’s dismissal of
the plaintiffs’ putative class action claims under Section 12(a)(2) of the Securities Act of 1933.
Plaintiffs argued that three sets of allegations concerning material misrepresentations were
adequately pled to survive 12(b)(6) dismissal: (1) that the defendants misrepresented their use of
lending standards despite alleged practices of not verifying borrowers’ employment and ability to
repay loans; (2) that the defendants did not comply with uniform appraisal standards in
determining property values despite representing their compliance in a prospectus; and (3) that
credit ratings were misleading because they were based on outdated models, lowered ratings, and
inaccurate loan information. The court affirmed the district court’s judgment that the plaintiffs’
24