Broker-Dealer Litigation - Greenberg Traurig LLP

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then to his own bank account. The Commission barred Mutascio from association, and from participating in any offering of a penny stock. In re Gallardo, Release No. 65422, 2011 SEC LEXIS 3370 (Sept. 28, 2011). Q.1.c(i) An administrative law judge entered a default order against Gallardo, a former registered representative. The Commission’s complaint alleged that Gallardo had solicited foreign investors to provide him with approximately $1.2 million that he represented would be invested by “professional traders” for a guaranteed rate of return. Instead, Gallardo invested a portion of the money himself, returned approximately $275,000 as “distributions,” and misappropriated approximately $685,000 for his personal use. The ALJ barred Gallardo from association and from participating in the offering of any penny stock, ordered him to cease and desist from violating the anti-fraud provisions of the federal securities laws, and ordered him to pay $876,193 in disgorgement, $178,682.58 in prejudgment interest, and a $260,000 civil penalty. In re Paganes, Release No. 65957, 2011 SEC LEXIS 4401 (Dec. 15, 2011). Q.1.c(i) An administrative law judge entered a default order against Paganes, a former managing member of a former registered investment adviser and a former associated person of a former registered broker-dealer, both of which served as trustee for a hedge fund. In a related action brought by the Commission, a federal district court ordered Paganes to pay disgorgement of $650,000, prejudgment interest of $90,339, and a $650,000 civil penalty. The Commission alleged that Paganes approved hedge fund transactions and disbursed investor funds for uses not permitted by relevant organizational documents, and that he had a direct, undisclosed financial interest in at least one of the transactions he approved. The ALJ permanently enjoined Paganes from engaging in conduct in connection with the purchase or sale of any security, and barred him from association. In re Caccioppoli, Release No. 66060, 2011 SEC LEXIS 4569 (Dec. 28, 2011). Q.1.c(i) The Commission accepted an offer of settlement from Caccioppoli, a former securities lending representative associated with a registered broker-dealer (the “Firm”). In an earlier proceeding brought by the Commission, a federal district court entered a judgment by consent against Caccioppoli, permanently enjoining him from violating the antifraud provisions of the federal securities laws. The Commission’s complaint alleged that Caccioppoli knowingly engaged in a scheme to defraud the Firm in connection with the lending and borrowing of securities. The Commission barred Caccioppoli from association. 408
(ii) Misrepresentation Q.1.c.(ii) In re Blech, Release No. 63801, 2011 SEC LEXIS 345 (Jan. 31, 2011). The Commission accepted an offer of settlement from Blech, a registered representative and Chief Executive Officer of a registered broker-dealer. In an earlier criminal proceeding in federal court, Blech pleaded guilty to three counts of securities fraud and wire fraud. The court sentenced him to 72 months in prison followed by three years of supervised release and ordered him to make restitution of $18,128,599. The criminal complaint alleged that Blech defrauded investors and obtained money and property by means of fraudulent statements. The Commission barred him from association. In re Demizio, Release No. 63922, 2011 SEC LEXIS 649 (Feb. 17, 2011). Q.1.c(ii) The Commission accepted an offer of settlement from DeMizio, a securities lending representative of a registered broker-dealer. In an earlier criminal proceeding, a jury convicted DeMizio of conspiracy to commit securities fraud and wire fraud. The criminal indictment alleged that DeMizio conspired to execute a scheme and artifice to defraud and obtain money and property from the registered broker-dealer by means of false and fraudulent pretenses, representations and promises, and to deprive the broker-dealer of its right to honest services of its employees in connection with securities of issuers with a class of securities registered under Section 12 of the Securities Exchange Act of 1934. The Commission barred DeMizio from association. In re Beachy, Release No. 614100, 2011 SEC LEXIS 970 (Mar. 18, 2011). Q.1.c(ii) The Commission accepted an offer of settlement from Beachy, a former registered representative of a registered broker-dealer. In an earlier proceeding brought by the Commission, a federal district court entered a final judgment by consent against Beachy, permanently enjoining him from future violations of the broker-dealer registration and antifraud provisions of the federal securities laws. The Commission’s complaint alleged that Beachy sold investment contracts to investors in at least 29 states using a fictitious name, made false statements to investors, distributed false account statements, and sold unregistered securities. The Commission barred Beachy from association and from participating in an offering of penny stock. In re Biddlecome, Release No. 64500, 2011 SEC LEXIS 1725 (May 16, 2011). Q.1.c(ii) The Commission accepted an offer of settlement from Biddlecome, a former registered representative associated with a registered broker-dealer and the founder and president of a formerly registered investment adviser. In an earlier proceeding brought by the Commission, a 409
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Broker-Dealer Litigation 2011 Annua
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Rocky Pozza Miller, Canfield, Paddo
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3. Safe Harbor/Bespeaks Caution Def
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(iii) Falsification of Documents...
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SECURITIES LITIGATION A. Definition
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Purvis v. Arizona Corp. Comm’n, N
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allegation of fraud. The complaint
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Silverstrand Investments v. AMAG Ph
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complaint lacked named plaintiffs w
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egarding loan-to-value ratios repor
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appraisers’ alleged acceptance of
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that statutes of repose are not sus
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Pension Trust Fund for Operating En
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Securities Exchange Act of 1934. Th
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authorities versus those reported i
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In re Oppenheimer Rochester Funds G
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claims as to the appraisal standard
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under Section 12 and declined to ex
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however, the court found that the s
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that a mutual fund’s share price
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allege a material misrepresentation
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over common questions, given the nu
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lending practices; and its solvenci
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partnership and worked to obtain in
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Section 12(a)(2) required the court
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initially inflated the company’s
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B.2 Self v. Chase Bank, N.A., 2011
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“associated with,” or “acted
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Gibbons v. Nat’l Real Estate Inve
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avoid ambiguous, potentially mislea
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B.3 SEC v. Kelly, 2011 WL 44331161
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B.3 SEC v. Woodruff, 778 F. Supp. 2
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C. Liabilities under the Securities
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easonable juror could conclude that
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Claimants requested compensatory da
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C.1.d Ashland Inc. v. Morgan Stanle
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C.1.d AnchorBank, FSB v. Hofer, 649
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experiencing large operating losses
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C.1.d Resnik v. Woertz, 744 F. Supp
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substantial likelihood that disclos
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C.1.d In re Evergreen Ultra Short O
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In re Merrill Lynch Auction Rate Se
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fiduciary duty and negligent misrep
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corporation’s earnings forecasts
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C.1.e In re Bank of America Corp. S
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f. Affirmative Defenses Wilson v. M
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that the complaint failed to allege
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immaterial; or (3) made without act
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of the Private Securities Litigatio
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held that the statute of limitation
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C.1.f In re Novatel Wireless Securi
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parent company liable for statement
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C.1.g SEC v. Tecumseh Holdings Corp
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C.1.g Fishman v. Morgan Keegan & Co
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C.2 Litwin v. Oceanfreight, Inc., 2
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Hysong v. Encore Energy Partners LP
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and created an uncertainty that KBR
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consented to the entry of a final j
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3. Section 15(c) C.3 SEC v. Ficeto,
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SEC v. Stifel, Nicolaus & Co., Inc.
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settled with the SEC prior to the c
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equity interests in real estate ass
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noted that the SEC had “merely re
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ing such court actions (the “1990
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D. Liabilities under the Securities
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its’ liquidity problems and plans
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few of defendant’s employees were
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D.1 Dronsejko v. Thornton, 632 F.3d
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In re Smith & Wesson Holding Corp.
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particularized as materially mislea
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D.1 Stephenson v. Pricewaterhouseco
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D.1 Russo v. Bruce, 777 F. Supp. 2d
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D.1 Jacquemyns v. Spartan Mullen Et
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granted the defendants’ motion to
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D.1 Egan v. Tradingscreen, Inc., 20
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City of Roseville Employees’ Reti
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D.1 Solow v. Citigroup, Inc., 2011
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Local 731 I.B. of T. Excavators and
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D.1 Love v. Alfacell Corp., 2011 WL
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disregarded and resulted in omissio
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dismiss finding that plaintiff’s
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from a decline of defendant’s sto
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plaintiffs failed to (i) create str
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D.1 In re St. Jude Med., Inc. Sec.
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D.1 Scala v. Citicorp Inc., 2011 WL
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granted defendants’ motion to dis
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improperly recognized revenue on sa
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D.1 Henning v. Orient Paper, Inc.,
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plaintiffs alleged that defendants
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in various contracts of the company
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D.1 In re Crocs, Inc. Securities Li
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Phila. Fin. Mgmt. of S.F., LLC v. D
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Waterford Twp. Police & Fire Ret. S
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Group met the requirements of Fed.
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appointed a lead plaintiff. The cou
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IBEW Local 90 Pension Fund v. Deuts
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D.2 Vandevelde v. China Natural Gas
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typicality.” Accordingly, the cou
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D.2 Sparano v. Lief, 2011 WL 830109
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argument was irrelevant because the
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issue, and therefore qualified for
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was not available. Moreover, the co
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misstatements were shielded from li
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D.3 Hopson v. MetroPCS Commc’ns,
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D.3 In re St. Jude Med., Inc. Sec.
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D.3 Curry v. Hansen Med., Inc., 201
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D.3 In re Coinstar Sec. Litig., 201
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Plumbers and Pipefitters Local Unio
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E. Backus v. Conn. Cmty. Bank, N.A.
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Securities Litigation Uniform Stand
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willfully ignored numerous red flag
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material facts “relating to” th
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E. Northstar Fin. Advisors, Inc. v.
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precluded or removable under SLUSA.
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circumvent SLUSA, the Court of Appe
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of defendant purchased ARS bonds fr
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2. Consumer Protection and Other St
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F.3 Borsellino v. Putnam, 2011 WL 6
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F.4 Haase v. GunnAllen Fin., Inc.,
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that the complaint failed to allege
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eing directed to return improperly
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H.1 U.S. v. Reyes, 660 F.3d 454 (9t
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to dismiss the complaint pursuant t
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Act of 1934 alleging it made false
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and Rule 10b-5 of the Securities Ex
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exert control over the content of c
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H.2 In re Sanofi-Aventis Sec. Litig
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Camofi Master LDC v. Riptide Worldw
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solvency. The district court held t
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(1) the investment corporations’
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held that, in taking plaintiffs’
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Rule 10b-5 claims were pleaded with
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to judgment as a matter of law beca
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H.2 Rafton v. Rydex Series Funds, 2
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those reasons, the court granted th
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Genesee County Employees Ret. Sys.
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Fernea v. Merrill Lynch, Pierce, Fe
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3. Aiding & Abetting H.3 Janus Capi
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of trades by defendants did not amo
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violation of securities laws. To st
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H.3 Merkin v. Gabriel Capital, L.P.
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allegedly illegal fundraising at de
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to any of the claims except the “
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mere suspicion that the broker-deal
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H.4 U.S. v. Speer, 419 F. App’x 5
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equirements of Federal Rule of Civi
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compliance officer testified as a r
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In re Torrey Pines Sec. Inc., Relea
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In re Torrey Pines Sec. Inc., Relea
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or nationally-recognized statistica
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activity, including activity in the
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timely and complete information upd
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J. RICO J. MLSMK Inv. Co. v. JP Mor
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J. In re Refco Inc. Sec. Litig., 20
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Beaman v. Barth, 2011 Bankr. LEXIS
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General Retirement System of City o
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K. Damages and Other Relief in Priv
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K.2 U.S. v. Gushlak, 2011 WL 315917
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K.2 Elipas v. Jedynak, 2011 WL 1706
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are wanton and reckless when done i
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settlement agreement constituted an
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The court held that the trustee was
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L. Contribution, Indemnification L.
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L. MBIA Ins. Corp. v. Credit Suisse
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warranted under these circumstances
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1933. In opposition to the motions,
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M.1 SEC v. Wyly, 788 F. Supp. 2d 92
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as barred by the statute of repose
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equitable estoppel did not apply as
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support the FINRA arbitration as pr
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N.1 Citibank, N.A. v. Franco, 2011
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ecause it overlapped with and was p
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2. Eligibility/Limitations N.2 Yuan
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the legislature did not intend the
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Plaintiff in fact derived a direct
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arbitrator the right to determine w
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and ordering of all parties into ar
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impeachment upon proof of changed c
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N.4.c Aviles v. Charles Schwab & Co
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S.Ct. 1784 (2010). Prior to Merck,
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market sector downturn rendered the
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defendants had misrepresented the n
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Page 383 and 384: 5. Discovery O.5 Mori v. Saito, 802
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Page 387 and 388: censure, a civil money penalty of $
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Page 391 and 392: In re Application of Kaminski, Admi
Page 393 and 394: prejudgment interest. The payment w
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Page 397 and 398: In re Pagliarini, Admin. Proc.File
Page 399 and 400: firm settled charges that it violat
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Page 405 and 406: The hearing panel found respondents
Page 407 and 408: firm also consented to findings tha
Page 409 and 410: In re Keybanc Capital Markets, Inc.
Page 411 and 412: $30,000 civil fine, disgorgement of
Page 413 and 414: The Commission’s complaint allege
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Page 419 and 420: Q.1.c(ii) In re Chiaese, Release No
Page 421 and 422: The Commission censured the Firm. A
Page 423 and 424: particular, CSIM and CS&Co. markete
Page 425 and 426: Q.1.e.(i) SEC v. Devlin, Litig. Rel
Page 427 and 428: clearance trades without being a re
Page 429 and 430: Q.1.e(ii) In re Huntleigh Sec. Corp
Page 431 and 432: assisted in the Firm’s creation o
Page 433 and 434: Q.1.e(iii) In re Schaefer, Release
Page 435 and 436: and hedge fund accounts, to the det
Page 437 and 438: f. Failure to Supervise Q.1.f In re
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Page 441 and 442: The Commission alleged that Lopez-T
Page 443 and 444: suspension concerning his complianc
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Page 449 and 450: (ii) Falsification of Documents . N
Page 451 and 452: unavailable, Gizankis and FINRA agr
Page 453 and 454: j. Procedural Issues (i) Evidence N
Page 455 and 456: FINRA Rule 2010 by submitting an an
Page 457 and 458: R. Broker-Dealer Employment Litigat
Page 459 and 460: discovery responses was also meritl
Page 461 and 462: R. Frankel v. McDonough, 2011 WL 50
Page 463 and 464: must not have ruled on that defense
Page 465 and 466: FINRA award was entitled to full fa
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Lorbietzki v. Merrill Lynch, Pierce
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failed to show that it was prejudic
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Antelis v. Freeman, 2011 WL 6009609
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Berman v. Morgan Keegan & Co., 2011
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Citigroup Smith Barney v. Henderson
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Department of Enforcement v. Hedge
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FINRA Department of Enforcement v.
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Grecco v. Local.Com Corp., 806 F. S
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IAC/InterActiveCorp v. O’Brien, 2
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In re Cell Therapeutics, Inc. Class
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In re Franklin Bank Corp. Sec. Liti
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In re Kim, Release No. 64862, 2011
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In re Mutascio, Release No. 65351,
Page 493 and 494:
In re Shankar, Release No. 64714, 2
Page 495 and 496:
In re Wash. Mut. Mortgage-Backed Se
Page 497 and 498:
KeyBank, N.A. v. Bingo, Coast Guard
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Marini v. Adamo, 2011 WL 4442710 (E
Page 501 and 502:
McCafferty v. A.G. Edwards & Sons,
Page 503 and 504:
Murray v. Citigroup Global Mkts., I
Page 505 and 506:
Picard v. Madoff (In re Bernard L.
Page 507 and 508:
Rafton v. Rydex Series Funds, 2011
Page 509 and 510:
SEC v. Aragon Capital Advisors, LLC
Page 511 and 512:
SEC v. N. Am. Clearing, Inc., Litig
Page 513 and 514:
Solow v. Citigroup, Inc. , 2011 WL
Page 515 and 516:
U.S. Bank N.A. v. Cold Spring Grani
Page 517:
West Va. Laborers Trust Fund v. STE
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