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

In Universal Health Services, Inc. v. United States ex rel. Escobar , the U.S. Supreme Court unanimously confirmed that the false certification theory “can be a basis for liability” under “some circumstances.” ( See Blog post here .) Those circumstances are: (1) the defendant does not merely request payment, but also makes specific representations about the goods or services provided; and (2) the defendant’s failure to disclose noncompliance with material statutory, regula

This Blog has previously written about the benefits of forming a limited liability corporation (“LLC”) and the perils of ignoring the corporate formalities that are attendant thereto. ( Here .) In today’s post, this Blog will examine the use of the corporate entity to commit a fraud on another and a court’s willingness to pierce the corporate veil to hold the owners or members personally liable for that wrongful conduct. When to Pierce the Corporate Veil: In general, the cour

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

On May 10, 2017, the Securities and Exchange Commission (“SEC”) announced the settlement of an enforcement action against Barclays Capital, Inc. (“Barclays”), the London-based bank, to refund advisory fees and/or mutual fund sales charges to clients who were overcharged by the bank in connection with two advisory programs. Barclays agreed to pay more than $97 million to settle three sets of violations that resulted in clients being overcharged by nearly $50 million. In the

The Justice Department has joined a whistleblower lawsuit against United Healthcare Group, Inc. ("UHG" or "United") in connection with payments made to the company for its Medicare Advantage Plan. ( Here .) The suit claims the insurer obtained inflated risk-adjusted payments from the Medicare program by providing false and inaccurate information about the health risks of patients enrolled in UHG's largest Medicare Advantage Plan, UHC of California. The original lawsuit was fi

On April 26, 2017, the House Financial Services Committee (the “Committee”) held a hearing, entitled “A Legislative Proposal to Create Hope and Opportunity for Investors, Consumers, and Entrepreneurs.” ( Here .) The purpose of the hearing, which lasted over three hours, was to examine the discussion draft of the “Financial CHOICE Act of 2017” (“CHOICE Act 2.0”), which was introduced by Committee Chairman Jeb Hensarling on April 19, 2017. (Discussed here .) The CHOICE Act 2.0

A FINRA arbitration panel recently awarded an investor over $1 million in compensatory and punitive damages related to claims that a Wilbank Securities Inc. broker misled her about the performance of a variable annuity. The investor alleged fraud, breach of contract, negligent supervision and breach of fiduciary duty in connection with the underperforming investment. The investor purchased the variable annuity at a Wilbanks branch in Colorado in 2008, and claims she was promi

One remedy the Securities and Exchange Commission ("SEC" or "Commission") has long relied upon in cases involving broker misconduct is disgorgement. In a nutshell, disgorgement is a remedy that requires a party who profits from illegal conduct to pay back any ill-gotten gains obtained from that conduct. On April 18, the U.S. Supreme Court heard oral argument in Kokesh v. Securities and Exchange Commission , a case involving a New Mexico-based investment adviser who was sued

After the 2016 presidential election, President Trump promised to dismantle the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”), and the regulations promulgated thereunder. ( Here .) The president, however, was silent on whether he intended to alter the Securities and Exchange Commission’s whistleblower program. ( Here .) Last year, House Financial Services Committee Chairman Jeb Hensarling sponsored the Financial CHOICE Act , as a road m

The False Claims Act (“FCA” or the “Act”) prohibits businesses and individuals from defrauding the government by knowingly presenting, or causing to be presented, a false claim for payment or approval. The FCA serves as the foundation upon which the states have structured their false claims act statutes. Notably, the FCA does not cover tax fraud and securities/commodities fraud. Blowing the whistle on tax fraud is covered by the Tax Relief and Health Care Act of 2006, and bl

Litigants and their attorneys who fail to comply with discovery demands and/or discovery orders do so at their peril. Such non-compliance can lead to penalties and sanctions, especially when the non-compliance arises from deliberate behavior. When a party deliberately fails to comply with discovery demands and/or discovery orders, the requesting party may file a motion to compel compliance pursuant to Section 3124 of the Civil Practice Rules and Procedure (“CPLR”) or a motio

Last year, this Blog wrote about the importance of assigning title to, or ownership in, a claim, when assigning the right to pursue an action to another party. ( Here .) Recently, the issue arose in connection with an action alleging, among other things, fraud and negligent misrepresentation in connection with the purchase and sale of residential mortgage-backed securities (“RMBS”). On April 12, 2017, in Royal Park Investments SA/NV v. Morgan Stanley ( here ), Justice Charl

Last month, the Fifth Circuit issued U.S. ex rel Abbott v. BP Exploration and Production, Inc . , --- F.3d ---, 2017 WL 992506 (5th Cir. Mar. 14, 2017), a decision in which it applied the materiality standard set forth by the Supreme Court in Universal Health Services, Inc. v. United States ex rel. Escobar , 136 S. Ct. 1989 (2016) (discussed here ), to dismiss a qui tam action using the implied certification theory as the basis for liability. In doing so, the Fifth Circuit j

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

Did Wells Fargo retaliate against whistleblowers who complained about sales pressure? In the wake of the sale's scandal last September that led to the ouster of Wells Fargo & Co.'s CEO John Stumpf, the bank's Board of Directors has been conducting an independent investigation to determine if retail bank employees who complained about sales pressure or practices were retaliated against. With an assist by a New York-based law firm, the bank recently released its findings, writ

In prior posts, this Blog has written about the financial exploitation and abuse of vulnerable investors ( here and here ). The financial exploitation and abuse of vulnerable investors ( e.g. , senior citizens and the disabled) takes many forms. The most common involves: churning, unauthorized trading, unsuitable investing, over-concentrating an investor’s portfolio in a single type of investment or industry segment, and misrepresenting the risk or potential returns of an i