Business Law

Although courts will pierce the corporate veil “to prevent fraud or achieve equity,” Morris v. N.Y. State Department of Taxation & Finance , 82 N.Y.2d 135, 140 (1993) (quoting Int’l Aircraft Trading Co. v. Mfrs. Trust Co. , 297 N.Y. 285, 292 (1948)), they are, nevertheless, reluctant to disregard the corporate form. TNS Holdings Inc. v. MKI Sec. Corp. , 92 N.Y.2d 335, 339 (1998). After all, the purpose of incorporating is to allow individuals to avoid personal liability. See

On July 13, 2017, Charlotte-based LPL Financial, the largest retail investment advisory firm and independent broker-dealer in the United States, announced that it planned to provide its advisers with a new mutual fund platform early next year to improve the way its advisors offer mutual funds in brokerage accounts with participating fund companies, reduce fees for investors and standardize adviser compensation. “With this platform, LPL is striving to preserve choice for inve

On June 26, 2017, the U.S. Supreme Court ruled, in a 5-4 decision, that the three-year statute of repose in Section 13 of the Securities Act of 1933 (the “Securities Act” or the “’33 Act”) is not subject to equitable tolling under American Pipe & Construction Co. v. Utah , 414 U.S. 538 (1974). California Public Employees’ Retirement Sys. v. ANZ Sec., Inc. , No. 16-373 (U.S.) ( here ). Background ANZ Securities arose from the demise of Lehman Brothers Holdings Inc. (“Lehman”)

On June 27, 2017, the United States Supreme Court agreed to consider whether state courts retain concurrent jurisdiction over lawsuits brought under the Securities Act of 1933 (the “’33 Act” or the “Securities Act”), or whether the Securities Litigation Uniform Standards Act of 1998 (“SLUSA”) pre-empts them from considering such cases. ( Here .) Resolution of the issue will address a concern for issuers, underwriters and others involved in initial public offerings (“IPOs”) –

Arbitration is an alternative to a court proceeding. It is an adversarial proceeding in which the parties can call witnesses and present evidence to a neutral arbitrator or panel of arbitrators. The rules of discovery and evidence are relaxed to make it a shorter and more cost-efficient process.  An attorney or retired judge, who works for a private firm, conducts the proceeding.  Often, the parties select the arbitrator or panel of arbitrators. Arbitration can be binding, in

In previous posts, this Blog has written about certain parts of the recently proposed Financial CHOICE Act 2.0; namely, the provision that: (a) bars “co-conspirators” from recovering whistleblower awards under the SEC's Whistleblower Program, (b) prevents the DOL's Fiduciary Duty Rule from becoming effective, and (c) imposes a heightened pleading standard on plaintiffs claiming a breach of fiduciary duty under the Investment Company Act by their investment advisor.  ( Here a

Since his retirement, former Mets and Phillies outfielder, Lenny Dykstra (“Dykstra”), has been involved in many civil and criminal proceedings. Recently, for example, Dykstra was sued by Noah Scheinmann (“Scheinmann”), the former ballplayer’s social media ghost writer, for breaching a contract in which Dykstra hired Scheinmann to create a social media presence to promote Dykstra’s book, “House of Nails: A Memoir of Life on the Edge.” According to the complaint ( here ), Sche

Attorneys are often asked whether an oral agreement is enforceable. Most will say that the answer depends on the law and the facts surrounding the agreement. As an initial matter, to be enforceable, an oral agreement must contain the elements of a binding contract, e.g. , an offer, acceptance, consideration, mutual assent, an intent to be bound, and agreement on all essential terms. (This Blog wrote about these elements here and here .) Even if these elements are present, t

The limited liability company (“LLC”) is a relatively new business form that combines features of a corporation (a separate legal entity and limited liability) and those of a partnership (pass-through taxation and contractual flexibility). This Blog previously wrote about the advantages and disadvantages of this business structure. ( Here .) In the past several years, the LLC has become the business structure of choice for entrepreneurs and small business owners. Unfortunate

The New York Department of Financial Services' ("DFS") cybersecurity regulations became effective March 1, 2017, but the rules are slated to be phased in on a rolling basis 180 days after the effective date. The rules apply to financial institutions, financial services companies, insurance firms and other entities regulated by the DFS ("Covered Entities").  The rules require Covered Entities to establish and maintain cybersecurity programs in order to identify internal and ex

Your client is engaged in negotiations to sell his company’s widgets in a purchase and sale transaction. After months of negotiations, the parties verbally agree to the salient terms of the transaction – that is, they agree to price, quantity, and specifications. You summarize these terms in an email on the same day. Your email also confirms that a formal contract will follow. The following day, you send the contract to the buyer and its counsel. The agreement contains the a

Over the past few weeks, this Blog has explored the advantages and disadvantages of forming a limited liability company (“LLC”), as well as the fiduciary obligations of non-managing members in manager-managed LLC to each other and the LLC itself ( here and here ). In today’s installment, this Blog will explore the circumstances under which a member in a multi-member LLC can obtain a judicial dissolution of the company. The Law Governing the Dissolution of an LLC   An LLC i

This Blog has previously written about the bases upon which the losing party in an arbitration can challenge the award. ( Here .) Among the bases discussed include the arbitrator’s impartiality and his/her authority to hear the dispute and rule on the matter. What happens when a party to an arbitration is unhappy with the rulings and the proceeding before an award is issued? Can the unhappy party challenge the fairness of an ongoing proceeding, and, more particularly, the in

On the same day that he signed a directive ordering a review of the Labor Department's fiduciary rule (discussed here ), President Trump signed an executive order directing the Treasury Secretary and other regulators to review existing regulations to determine whether they support six core principles. Included in those principles are: Empowering Americans to make independent financial decisions; Fostering economic growth through more rigorous regulatory impact analysis; Advan

In this Blog’s last entry , we discussed the advantages and disadvantages of forming a limited liability company (“LLC”). Today’s entry discusses whether non-managing members of a manager-managed LLC owe fiduciary duties to the other LLC members and to the LLC itself. An LLC is a hybrid business entity having the attributes of both a corporation and a partnership. E.g. , Willoughby Rehabilitation & Health Care Ctr., LLC v. Webster , 2006 NY Slip Op. 52067(U) (13 Misc. 3d 123

New business owners have many decisions to make when they start a business. Many of these decisions will impact the business for years to come. Among them is the correct type of business to form. One of the most common business forms used by entrepreneurs is the Limited Liability Company (“LLC”). While LLCs share many of the same attributes as an S-Corporation or C-Corporation, they are more flexible and require less formalities and paperwork. An S-Corporation (formerly kno

The enforceability of a covenant not to compete is an issue that commercial and business lawyers often consider in their practice. Sometimes, the issue arises when an employee leaves a business to open his/her own shop, while other times the issue arises in the sale of a company.  On January 18, 2017, in Shimon v. Paper Enterprises, Inc. , 2017 NY Slip Op. 30101(U) , Justice Sylvia G. Ash of the Supreme Court, Kings County, Commercial Division, issued an injunction enforcing

What is the fate of the fiduciary rule under the Trump Administration? In May of last year, this Blog wrote about the Department of Labor's fiduciary rule, which requires financial advisors to put their clients' interests first when making investment recommendations for retirement accounts, such as 401(k)s and IRAs. The rule, designed to prevent conflicts of interest, has strong support from the Obama administration and investor advocates who argue that inappropriate recomme

What could this legislation mean for New York businesses? New York Attorney General Eric T. Schneiderman recently introduced legislation intended to reduce the use of non-compete agreements in the workplace. The bill is designed to protect the rights of workers to find better employment opportunities, particularly for low-wage earners who have been hindered in their ability to move to new jobs because of non-compete agreements. Schneiderman’s bill includes: A ban on all non

In an article entitled “Why You Won’t Get Your Day in Court” appearing in The New York Review of Books, Judge Jed S. Rakoff of the United States District Court for the Southern District of New York, tried to explain why this is so. According to Judge Rakoff, there are several reasons for this occurrence. These include: the “cost of hiring a lawyer”; “the increased expense, apart from legal fees, that a litigant must pay to pursue a lawsuit to conclusion”; the “increased unw