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

Financial exploitation and abuse is all too common in today’s day and age. In fact, it is one of the fastest-growing forms of abuse of seniors and adults with disabilities. According to a recent MetLife study, titled “ Broken Trust: Elders, Family & Finances ,” about one million seniors lose an estimated $2.6 billion annually from financial exploitation and abuse. Last October, the Financial Industry Regulatory Authority (“FINRA”) announced that it had submitted proposed ru

On March 29, 2017, Sen. Chuck Grassley and Sen. Ron Wyden, the founding members of the Senate Whistleblower Protection Caucus, introduced the IRS Whistleblower Improvements Act of 2017 , bipartisan legislation intended to improve communication between the IRS and whistleblowers and strengthen the protections for whistleblowers against workplace retaliation. “Whistleblowers are a crucial line of defense against waste, fraud and abuse,” said Wyden in a joint statement . “This

Being a whistleblower involves personal sacrifice and professional risk. Many violations of the law go unreported because people who know about them are afraid of being disciplined, losing their job, being demoted, or being passed over for promotion. Recognizing the financial, reputational and professional risks associated with whistleblowing, Congress included in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act” or the “DFA”) stron

As many investors know, the securities industry settles securities transactions ( e.g. , the purchase and sale of equities, as well as corporate and municipal bonds) on the third day after a transaction is executed by sending payment for the transaction to the seller and the securities to the buyer. This settlement cycle is known as “T+3” – shorthand for “trade date plus three days.” Prior to 1995, the financial markets operated on a longer settlement cycle – “T+5”. In 1995,

This Blog previously wrote about a case involving a whistleblower’s claim, under the “alternate remedy” provision of Section 3730(c)(5) of the False Claims Act (“FCA”), to settlement proceeds obtained in a later-filed action brought by the government even though the whistleblower had voluntarily dismissed his earlier qui tam action. Earlier this month, Judge William H. Pauley, III had the opportunity to address the issue in United States ex rel. Kolchinsky v. Moody’s Corp .

Medicare and Medicaid fraud costs taxpayers billions of dollars each year. In 2016, the Government Accountability Office (“GAO”) estimated that in fiscal year 2015, taxpayers lost almost $90 billion to improper payments from Medicare and Medicaid providers. The GAO defines an improper payment to be any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or ot

The Department of Justice ("DOJ") recently announced that CA Technologies ("CA") has agreed to pay $45 million to resolve allegations under the False Claims Act related to a General Services Administration ("GSA") contract awarded to the company for software licenses and maintenance services. CA is an international information technology management software and services company with headquarters on Long Island, New York. The government alleged that CA made false statements

The Financial Industry Regulatory Authority, Inc. ("FINRA") has proposed a rule change that will allow broker-dealers to project the performance of investment strategies or asset allocations, but not specific stocks, in communications with clients. If approved, the new rule would put brokers on an equal footing with registered investment advisers that are currently allowed to use these projections in their communications. The self-regulatory organization ("SRO") is currentl

Last November, this Blog discussed the faithless servant doctrine under New York law. ( Here .) As explained, the courts have applied the doctrine to a wide variety of misconduct, including, but not limited to, conflicts of interest, stealing money or goods, and secretly starting a competing business. Any act that can give rise to a claim for breach of fiduciary duty will trigger the doctrine. The penalty for violating the doctrine is harsh: the employee must forfeit all com