Recent Blog Posts
Supreme Court Upholds and Adjusts “Fraud on the Market” Theory
On June 23, 2014, the United States Supreme Court issued its ruling in the case of Halliburton v. Erica P. John Fund, Inc., closing the door on a question of extreme importance to securities fraud law. At the heart of the Halliburton case was a legal theory known as “fraud on the market.” As… Read More »
Florida “Blue Sky” Laws
The federal government’s authority over the U.S. securities market is far reaching. The FBI and the Justice Department investigate allegations of fraud. The Securities and Exchange Commission polices industry professionals and wrongdoing investors. Even FINRA’s oversight of brokers and brokerages has its roots in a federal law requiring its existence. Indeed, the federal securities… Read More »
FINRA Arbitration Statistics Shed Light on Securities Disputes
As a principal forum for dispute resolution in the securities context, FINRA has overseen thousands of arbitration and mediation proceedings. In simple terms, arbitration is an often-required method of resolving disputes between investors and their brokers or brokerages, in which a FINRA arbitrator provides a binding decision on both parties. And mediation is a… Read More »
Damages in Form U5 Defamation Cases
When a brokerage firm terminates a financial adviser, disclosure rules require the firm to file a Form U.5. This form typically includes, among other disclosures, the nature of the termination and the reasons behind it. And while termination of a broker may simply be the result of layoffs or other neutral reasons, Form U5s… Read More »
Dark Pools Brought Further into the Light
In recent years, more and more securities have been traded away from the public eye, exposing markets to new kinds of possible securities fraud. As Bloomberg reported in 2012, only 68 percent of all trades occurred on public markets, like the NASDAQ or New York Stock Exchange. This number, down from 74 percent as… Read More »
Power of “Failure to Supervise” Affirmed by Federal Appeals Court
When one person is wronged by another—in the securities context or otherwise—fault can sometimes be placed at the feet of more than just the person who actively committed the wrong. For example, the courts and the regulatory agencies overseeing the financial markets (including FINRA and the SEC) have long recognized “failure to supervise” as… Read More »
The Frequency of Ponzi Schemes
Not every Ponzi scheme—a fraudulent financial operation where the operator pays returns on old investments from new investors—makes the national news. Certainly, the implosion of Bernie Madoff’s scheme in 2009 was uniquely destructive. Investors with Madoff lost approximately $17 billion (the next worst Ponzi scheme of all time also unraveled in 2009, with $7… Read More »
The Difficulty of Getting Around Arbitration Clauses
Disputes between a broker and investor—like many other disputes in the commercial and financial world—are often resolved through arbitration. Arbitration, which is a court-free, less formal proceeding resolved by a neutral third party, is commonly required by agreements signed at the outset of the broker/investor relationship (and most commonly carried out by FINRA, the… Read More »
Top 10 Investor and Small Business Threats
The North American Securities Administrators Association (“NASAA”)—of which Florida’s Office of Financial Regulation is a member—is an organization made up of state securities regulation agencies. It endeavors to root out financial and securities fraud. And every year, the NASAA releases a helpful top 10 list of the “financial products and practices that threaten to… Read More »
New Rule Limits Self-Trading
Algorithmic trading—highly technical and advanced computerized financial trading of large amounts of securities—is here to stay. What began as a tool for institutional investors has exploded in popularity in recent years. According to a 2011 report from New York University, between 3,000 and 15,000 of these computerized orders are processed every day, totalling about 30… Read More »
