Rahman v. Kid Brands, Inc., 2013 WL 6038246 Shah Rahman, the plaintiff and appellant, brought a federal securities class action in March 2011 against defendant Kid Brands, Inc. and against individual defendants Bruce Crain, Guy Paglinco and Raphael Benaroya, officers of Kid Brands. In the Second Amended Complaint, Rahman alleged that the defendants mislead investors in Kid Brands by artificially inflating its stock price and issuing deceptive public financial reports and press releases dealing with Kid Brands' compliance with custom laws and Kid Brands' overall financial ...

Maybe I'm just getting a head start on my "bah humbug" mood for the holidays, I don't know. Did it strike anyone else as discordant that almost a third of the record-setting JPMorgan RMBS settlement was ear-marked to fund "affordable housing / erase urban blight" policy initiatives? Is it right to fund the Administration's social policies through the settlement of civil litigation brought by DOJ? On November 19th, the Justice Department and various state AG's (among others) announced a $13Bn global settlement -- "the largest settlement with a single entity in American history" -- of ...

Posted in: FHFA, FIRREA, RMBS, SEC

The SEC announced November 12th that it has entered its first DPA (deferred prosecution agreement) with an individual respondent. In a DPA, the SEC rewards substantial assistance to an important investigation by agreeing not to prosecute so long as the cooperator complies with certain specified undertakings. DPAs are part of Enforcement's Cooperation Program, which adopted a suite of tools that are a long-standing part of the white-collar-crime canon. Those tools include:

  • Cooperation Agreements -recommending some credit for substantial assistance;
  • Deferred Prosecution ...
Posted in: DPA, SEC

PIABA, the securities-investor plaintiff's bar, issued an October 16th press release roundly criticizing industry self-regulatory rules allowing a broker to seek expungement of a customer-claim from her permanent record. PIABA's release relies on blunt statistics showing that about 60% of arbitration awards containing the word "expungement" granted that relief (with a higher 89-96% rate for awards entered on settlements). The group failed to mention, though, 2009 reforms requiring arbitrators to make an affirmative finding (after a hearing) that:

  • The claim was ...
Posted in: Expungement, FINRA, PIABA
On November 22, 2013, the SEC's Investor Advisory Committee voted to encourage the U.S. Securities and Exchange Commission to adopt a fiduciary duty for broker-dealers giving investment advice. The recommendation came from the Investor as Purchaser Subcommittee, and proposes either that the SEC conduct rulemaking under the Investment Advisers Act to narrow the broker-dealer exclusion from the Investment Advisers Act or that the SEC create a new rule under § 913 of the Dodd-Frank Act. In either case, the Committee recommended that the U.S. Securities and Exchange Commission ...
Posted in: SEC

In Regulatory Notice 13-40, FINRA announced that the SEC had approved amendments to its Discovery Guide. The Discovery Guide applies to customer cases (rather than intra-industry cases) and outlines presumptively discoverable documents that the parties to an arbitration should exchange without FINRA or an arbitrator intervening. The amendments concern three areas: (1) electronic discovery, (2) product cases, and (3) affirmations. First, the Discovery Guide was amended to clarify that electronic files are "documents" under the meaning of the Discovery Guide and that ...

Posted in: FINRA
Arbitration is an alternative to the traditional lawsuit filed in court in order to resolve a dispute. It is a formal dispute resolution process in which the parties-customers, brokers, or brokerage firms-select a neutral, third party (or parties) called an arbitrator to decide the matter. In the securities area, the Financial Industry Regulatory Authority, Inc. (FINRA) is a self-regulatory organization and the largest regulator of securities firms doing business with the public. Any arbitration filed that involves securities will likely be filed with FINRA, which then ...
Posted in: FINRA
To date, the Stock Market Crash of 1929 was one of the most instrumental events that shaped the securities industry and the laws the govern it. As a result of the crash, Congress enacted the Securities Act of 1933. The '33 Act's goals are to require full disclosure regarding securities offered for public sale, and to prohibit deceit, misrepresentations, and other fraud in the sale of securities. To achieve these goals, securities not subject to an exemption have to be registered so that the investing public can make informed decisions. The next year, Congress enacted the Securities ...

"Securities regulation and litigation is a field of law that covers various aspects of transactions and other dealings which involve securities or financial instruments. For example, debt securities, such as bonds, and equity securities, such as common stocks, that may be purchased through the New York Stock Exchange (NYSE) or the National Association of Securities Dealers Automated Quotations (NASDAQ).

Burr & Forman attorneys have the experience to assist clients in all forms of securities disputes, whether it is a dispute over the suitability of an investment, over a ...

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