Harry Frischer

Blogs: Corporate Defense and Disputes, Minding Your Business

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SEC Overrules Its Own Administrative Law Judge to Clear Customer of Fraud Charges

By Harry Frischer & Philip Arnold on August 25, 2016

In a rare reversal of its own administrative law judge in the Matter of optionsXpress, the full Securities and Exchange Commission unanimously held that the SEC’s Enforcement Division had not met its burden of proof that the customer of a broker-dealer had committed securities fraud in connection with his clearing broker-dealer’s failure to deliver stock as required by Regulation SHO. The customer in this case implemented an option trading strategy which exploited the price…

Corporate Defense and Disputes

In Conflict With Other Circuits, Seventh Circuit Rules That Certain Transfers Involving Financial Institution Intermediaries Not Immune From Recovery By Bankruptcy Trustee

By Harry Frischer & James Anderson on August 2, 2016

Section 546(e) of the bankruptcy code prohibits a bankruptcy trustee from avoiding “settlement payment[s]”, or payments “made in connection with a securities contract,” that are “made by or to (or for the benefit of)” qualifying financial entities, including financial institutions, stockbrokers, commodities brokers and others. In a ruling that conflicts with precedent from the Second, Third, Sixth, Eighth, and Tenth Circuits, a decision last week by a Seventh Circuit panel held that the safe harbor…

Corporate Defense and Disputes

Eleventh Circuit Clarifies Broker-Dealer’s Liability For Employee’s Fraud

By Harry Frischer & Massiel Pedreira on June 2, 2016

Will a broker-dealer be liable when a financial advisor employed by the firm solicits investments as part of a fraudulent scheme, where the firm specifically prohibited the advisor from soliciting the investment, the fraudulent investment was made away from the firm, and the investors never became customers of the firm? The Eleventh Circuit recently answered that question with a resounding “maybe,” and clarified that the employer could be liable in negligence if it knew or…

Corporate Defense and Disputes

Supreme Court’s Manning Decision Leaves Questions Unanswered

By Harry Frischer on May 17, 2016

The U.S. Supreme Court’s decision yesterday in Merrill Lynch v. Manning clarified the scope of federal jurisdiction under the Exchange Act in certain important respects, but also left open critical issues that may arise in future cases. Although the Court rejected federal jurisdiction in resolving the sole issue that was before it, the Court also stated that federal courts might well have jurisdiction over state law claims that “necessarily raise” substantial issues under federal law.…

Minding Your Business

NY Court Of Appeals Rejects No-Opt Out Class Action Settlement In Shareholder Litigation

By Harry Frischer on May 10, 2016

In Jinnaras v. Alfant, decided on May 5, 2016, the New York Court of Appeals rejected a proposed settlement of a shareholder class action, where the proposed settlement would have deprived out-of-state class members of a “cognizable property interest” by failing to provide a mechanism for class members residing outside of New York to opt out of the settlement. The Jinnaras case arose from a 2009 merger agreement between Google and On2 Technologies, a…

Corporate Defense and Disputes

FINRA Proposes Arbitration Rule Change to Permit Offset of Awards

By Harry Frischer on May 10, 2016

Last week, FINRA sought approval from the SEC for a proposed change to the FINRA arbitration rules, under which monetary awards requiring the parties to pay each other damages would be offset, so the party owing the larger award would be required to pay only the net difference. If the arbitrators do not intend monetary awards to be offset, they must specifically say so in the award.…

Corporate Defense and Disputes

NY Court Of Appeals Rejects No-Opt Out Class Action Settlement In Shareholder Litigation

By Harry Frischer on May 6, 2016

Corporate Defense and Disputes

No General Jurisdiction Over Out-of-State Firms Registering to Do Business in Delaware

By Harry Frischer & Russell Kostelak on April 19, 2016

The Delaware Supreme Court ruled yesterday that out-of-state corporations no longer would be subject to general personal jurisdiction in Delaware merely because they had registered to do business in Delaware. In making that ruling, the Court overruled prior state precedent, under which foreign corporations were deemed to have consented to jurisdiction in Delaware when they registered to do business within the state.…

Corporate Defense and Disputes

Ketchum Clarifies How FINRA Will Assess a Firm’s Culture of Compliance

By Harry Frischer on April 18, 2016

In an April 15, 2016 speech to the Brookings Institution, FINRA CEO Richard G. Ketchum addressed the fundamental question of whether the equity markets are sufficiently fair, flexible, and efficient to encourage the participation of retail investors. Ketchum described the substantial concerns of some investors regarding these issues and outlined recent action by FINRA to alleviate these concerns, including the steps FINRA will take to assess a firm’s culture of compliance. As we reported here…

Corporate Defense and Disputes

First SEC Case Against Municipal Advisor Under New Fiduciary Duty

By Harry Frischer & Calvin Cohen on March 16, 2016

Yesterday the SEC announced its first enforcement proceeding for breach of the fiduciary duty for municipal advisors created by the 2010 Dodd-Frank Act.…

Harry Frischer

SEC Overrules Its Own Administrative Law Judge to Clear Customer of Fraud Charges

In Conflict With Other Circuits, Seventh Circuit Rules That Certain Transfers Involving Financial Institution Intermediaries Not Immune From Recovery By Bankruptcy Trustee

Eleventh Circuit Clarifies Broker-Dealer’s Liability For Employee’s Fraud

Supreme Court’s Manning Decision Leaves Questions Unanswered

NY Court Of Appeals Rejects No-Opt Out Class Action Settlement In Shareholder Litigation

FINRA Proposes Arbitration Rule Change to Permit Offset of Awards

NY Court Of Appeals Rejects No-Opt Out Class Action Settlement In Shareholder Litigation

No General Jurisdiction Over Out-of-State Firms Registering to Do Business in Delaware

Ketchum Clarifies How FINRA Will Assess a Firm’s Culture of Compliance

First SEC Case Against Municipal Advisor Under New Fiduciary Duty

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