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Summary judgment is a procedural device permitting a litigant to seek judgment without a trial in circumstances where all issues in a case can be decided by a judge as a matter of law.  The rules related to motions for summary judgment can be found in CPLR 3212 .  The Court of Appeals has described the virtues of summary judgment as follows: Since New York established its summary judgment procedure in 1921, summary judgment has proven a valuable, practical tool for resolving cases that involve only questions of law.  Summary judgment permits a party to show, by affidavit or other evidence, that there is no material issue of fact to be tried, and that judgment may be directed as a matter of law, thereby avoiding needless litigation cost and delay. Where appropriate, summary judgment is a great benefit both to the parties and to the overburdened New York State trial courts. Brill v. City of New York , 2 N.Y.3d 648, 650-51 (2004) (citations omitted).  Similarly, “ ince summary judgment is the equivalent of a trial, it has been a cornerstone of New York jurisprudence that the proponent of a motion for summary judgment must demonstrate that there are no material issues of fact in dispute, and that it is entitled to judgment as a matter of law ( Winegrad v. New York Univ. Med. Ctr. , 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642 <1985> ).”  Ostrov v. Rozbruch , 91 A.D.3d 147, 152 (1 st Dep’t 2012) (hyperlink supplied).   Despite the burden that a movant must meet on a summary judgment motion, such motions are frequently made due to the efficiencies recognized by the Brill Court, among others.  Accordingly, it is prudent to preserve the right to make a summary judgment motion.  Similarly, a summary judgment motion should be made if possible and meritorious.   Against this backdrop, we take a look at One West Bank, FSB v. Bernstein , decided on July 14, 2021, by the Appellate Division, Second Department.  Significant to a discussion of One West , is the requirement in CPLR 3212(a), that “ ny party may move for summary judgment in any action, after issue is joined ….”  (Emphasis supplied.) The One West facts are simple.  In December 2010, plaintiff commenced an action to foreclose a mortgage “that was given by defendants’ predecessor in interest.”  “By stipulation dated January 15, 2011, defendants agreed to submit to the jurisdiction of the court, and agreed that they would not submit an answer to the complaint or make a pre-answer motion to dismiss.”  Supreme court denied lender’s motion for an order of reference “on the ground that the plaintiff was not in possession of the most current note and mortgage at the time of the commencement of the action.”  Thereafter, defendants “moved for summary judgment dismissing the complaint, arguing that the fact that the plaintiff lacked standing to commence the action was now law of the case.”  [Editor’s Note -- this BLOG has addressed the issue of “standing” in residential mortgage foreclosure actions, inter alia , < here =">here"> , < here =">here"> , < here =">here"> , < here =">here"> , < here =">here"> , < here =">here"> and < here =">here"> .]  Supreme court denied the motion because “issue was never joined.” The Second Department affirmed the denial of defendant’s summary judgment motion and, in so doing, stated: Where, as here, the defendants have not served an answer before moving for summary judgment, issue has not been joined and the defendants are precluded from seeking summary judgment ( see JBBNY, LLC v. Begum , 156 A.D.3d 769, 67 N.Y.S.3d 284). The requirement that a motion for summary judgment may not be made before issue is joined ( see CPLR 3212 ), “is strictly adhered to” ( City of Rochester v. Chiarella , 65 N.Y.2d 92, 101, 490 N.Y.S.2d 174, 479 N.E.2d 810). Therefore, summary judgment was not warranted ( see Cremosa Food Co., LLC v. Amella , 164 A.D.3d 1300, 81 N.Y.S.3d 749).  (Hyperlinks added.) The defendants also argued that the complaint should be dismissed pursuant to CPLR 3215(c) , which encourages the prompt entry of default judgments, because plaintiff failed to “take proceedings for the entry of judgment within one year after the default.”  [Editor’s Note -- this BLOG has addressed CPLR 3215(c) < here =">here"> , < here =">here"> and < here =">here"> .]  In rejecting defendants’ argument, the Second Department stated: The defendants’ contention that the complaint must be dismissed pursuant to CPLR 3215(c) is without merit. A defendant may waive the right to seek dismissal pursuant to CPLR 3215(c) by serving an answer or taking “any other steps which may be viewed as a formal or informal appearance” ( Myers v. Slutsky , 139 A.D.2d 709, 711, 527 N.Y.S.2d 464; see De Lourdes Torres v. Jones , 26 N.Y.3d 742, 772, 27 N.Y.S.3d 468, 47 N.E.3d 747). Here, the defendants appeared in this action by stipulating to the jurisdiction of the court, and waived all defenses that they might have had, including their right to dismissal upon the plaintiff's failure to timely seek a default judgment under CPLR 3215(c), by stipulating that they would not serve an answer or make a pre-answer motion to dismiss and adhering to those terms ( see De Lourdes Torres v. Jones, 26 N.Y.3d at 772, 27 N.Y.S.3d 468, 47 N.E.3d 747).  (Hyperlinks added.) [Editor’s Note -- this BLOG has addressed informal appearances < here =">here"> and, as to formal appearances, the same article, noted that “< s=">s"> ection 320(a) of New York’s Civil Practice Law and Rules …, which sets forth, inter alia, the manner in which a defendant can appear in an action, provides that ‘ he defendant appears by serving an answer or a notice of appearance, or by making a motion which has the effect of extending the time to answer.’”]   TAKEAWAY It is not clear from One West why defendants executed the subject stipulation, pursuant to which they seem to have given up valuable and perhaps dispositive rights.  Litigants should be careful when entering into stipulations that may impact their rights in a litigation.  This is particularly so early on in litigation before all the relevant facts have had a chance to develop.  And so the time honored maxim goes – “be careful what you wish stip for”.

An investment adviser is a fiduciary, and as such is held to the highest standard of conduct and must act in the best interest of its client. SEC v. Capital Gains Research Bureau, Inc. , 375 U.S. 180, 194 (1963). This means, among other things, that an investment adviser has an affirmative duty of utmost good faith and full and fair disclosure of all material facts. Transamerica Mortgage Advisors, Inc. v. Lewis , 444 U.S. 11, 17 (1979). In broad terms, an investment adviser owes its client the duty of care, loyalty and candor.  The duty of loyalty requires an investment adviser to put his/her client’s interests first. An investment adviser must not favor his/her own interests over those of a client or unfairly favor one client over another. In seeking to meet this duty, an adviser must make full and fair disclosure to its clients of all material facts relating to the relationship. Additionally, an investment adviser must seek to avoid conflicts of interest with its clients, and, at a minimum, make full and fair disclosure of all material conflicts of interest that could affect the advisory relationship. The disclosure must be clear and detailed enough for a client to make a reasonably informed decision to consent to such practices, strategies or conflicts or reject them. An adviser disclosing that it “may” have a conflict is not adequate disclosure when the conflict actually exists.  On July 13, 2021, the Securities and Exchange Commission (“SEC” or “Commission”) announced ( here ) that TIAA-CREF Individual & Institutional Services LLC (“TC Services”), a subsidiary of Teachers Insurance and Annuity Association of America (“TIAA”), agreed to pay $97 million to settle charges of inaccurate and misleading statements and a failure to adequately disclose conflicts of interest to thousands of participants in TIAA record-kept employer-sponsored retirement plans (“ESPs”). According to the SEC, the $97 million will be distributed to investors affected by the alleged misconduct and settles both the SEC’s enforcement action and a parallel action brought by the New York Attorney General ( here ). According to the SEC’s order ( here ), during a six-year period, TC Services and its Wealth Management Advisers (“WMAs”) failed to adequately disclose the full nature and extent of their conflicts of interest in recommending to clients that they roll over their retirement assets into a managed account program called “Portfolio Advisor.” According to the SEC, respondent created positive incentives and negative pressures to prioritize the rollover of ESP assets into the Portfolio Advisor over lower cost alternatives for rollover-eligible ESP participants who were receiving advisory services as part of the financial planning process respondent offered. Those incentives and pressures allegedly included: (i) an incentive compensation plan that paid WMAs more in variable compensation when they signed clients up for the Portfolio Advisor program than for some alternatives; and (ii) negative consequences for failure to meet related targets, including the placement of some WMAs on performance improvement plans and the threat of termination of employment. Respondent also allegedly trained WMAs to use the rollover process to discover areas of vulnerability for these clients, called “pain points,” to “create pain” by helping clients “self-realize” the financial vulnerability, and then to recommend Portfolio Advisor as the solution to their problem. The SEC said that respondent and WMAs also made misleading statements to clients regarding the nature of the services provided by respondent and the WMAs’ role with respect to the client in the rollover recommendation process. Respondent and the WMAs allegedly represented to some clients that the firm and WMAs were “fiduciaries” and that they provided “objective” and “non-commissioned” investment advice when recommending rollovers to Portfolio Advisor. These statements were misleading, the SEC claimed, because respondent compensated WMAs more for rolling over assets into Portfolio Advisor than some alternatives; WMAs commonly presented managed accounts as the only option for a rollover and frequently did not present alternative options as required by respondent’s policies and procedures; WMAs were sometimes trained to avoid discussing fees associated with the rollover recommendation; and respondent did not treat or review rollover recommendations to Portfolio Advisor under a fiduciary standard. Moreover, the SEC found that TC Services failed to adequately disclose compensation practices that incentivized the firm and its WMAs to recommend Portfolio Advisor for reasons other than a client’s particular investment needs.  According to the SEC, TC Services trained its WMAs to make, and its WMAs made, representations that they offered “objective” and “non-commissioned” advice, “put the client first,” and acted in the client’s best interest while holding themselves out as fiduciaries.  This was misleading, claimed the SEC, because TC Services’ financial incentives for WMAs rendered their advice non-objective and TC Services did not ensure that WMA’s recommendations were, in fact, in the best interest of its clients.  According to the SEC, TC Services simultaneously applied continual pressure to compel WMAs to prioritize the rollover of ESP assets into Portfolio Advisor over lower cost alternatives.   Finally, the SEC found that TC Services failed to adopt and implement written policies and procedures reasonably designed to prevent violations of the Investment Advisers Act in connection with rollover recommendations.  “Rollovers of ESPs are of paramount importance to investors seeking financial security in retirement, and advisers acting in a fiduciary capacity need to provide their clients with complete and accurate disclosure so that they may make fully informed investment decisions,” said Melissa Hodgman, Acting Director of the SEC Enforcement Division. “Investment advisers must clearly and accurately disclose their conflicts of interest. Here, TC Services’ disclosures and misleading statements downplayed and obscured financial incentives that created conflicts between it and its WMAs on one hand and its clients on the other,” said Adam S. Aderton, Co-Chief of the SEC Enforcement Division’s Asset Management Unit. In the order, the SEC found that respondent willfully violated Sections 17(a)(2) and 17(a)(3) of the Securities Act and Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-7 thereunder. Without admitting or denying the SEC’s findings, respondent agreed to cease and desist from committing or causing any future violations of these provisions, be censured, and pay disgorgement, prejudgment interest, and a civil penalty totaling $97 million. The settlement, as noted, will be distributed to investors through a Fair Fund ( i.e. , a fund created under the Sarbanes-Oxley Act of 2002 for the benefit of investors who were harmed by the violation of the securities laws).

A recurring theme in the jurisprudence concerning claims of fraud and breach of contract is duplication – that is, whether the fraud claim duplicates the breach of contract claim. It is well settled that “ cause of action to recover damages for fraud will not lie where the only fraud claimed arises from the breach of a contract.” Gorman v. Fowkes , 97 A.D.3d 726, 727 (2d Dept. 2012); see also Selinger Enters., Inc. v. Cassuto , 50 A.D.3d 766, 768 (2d Dept. 2008); Tiffany at Westbury Condominium v. Marelli Dev. Corp. , 40 A.D.3d 1073, 1076 (2d Dept. 2007). “Mere unfulfilled promissory statements as to what will be done in the future are not actionable as fraud and the injured party’s remedy is to sue for breach of contract.” Brown v. Lockwood , 76 A.D.2d 721, 731 (2d Dept. 1980) (citation omitted). However, if the plaintiff alleges a misrepresentation of “present facts that collateral to the contract and served as an inducement to enter into the contract, a cause of action alleging fraudulent inducement is not duplicative of a breach of contract cause of action.” Did-it.com, LLC v. Halo Group, Inc. , 174 A.D.3d 682, 683 (2d Dept. 2019). Did-it.com="Did-it.com" here.=">here."> In Emby Hosiery Corp. v. Tawil , 2021 N.Y. Slip Op. 04214 (2d Dept. July 7, 2021) ( here ), the Appellate Division, Second Department, affirmed the denial of a motion to dismiss the plaintiff’s fraudulent inducement claim, holding that the claim contained misrepresentations of present fact that were collateral to the contract before it and, therefore, was not duplicative of the breach of contract cause of action.   Emby arose from the failure by defendants to pay for products they had ordered from plaintiff, an importer and distributor of goods. In addition to alleging breach of contract ( i.e. , the failure to pay), plaintiff alleged that the individual defendants induced it to continue selling and shipping products to the corporate defendants by misrepresenting to plaintiff that the corporate defendants would pay their debts to plaintiff. Thereafter, defendants stopped payment on checks previously tendered to plaintiff and allegedly gave false statements to various credit card companies so that the companies would reverse payments made to plaintiff.  Plaintiff filed suit, asserting the following causes of action: an account stated against the corporate defendants as the first cause of action; breach of contract as the second cause of action; implied and/or quasi contract against the corporate defendants as the third cause of action; unjust enrichment against the corporate defendants as the fourth cause of action; fraud as the fifth cause of action; and defamation as the sixth cause of action. Defendants moved to dismiss the complaint. The individual defendants moved to dismiss the complaint in its entirety and the corporate defendants moved to dismiss the third, fourth, fifth, and sixth causes of action. The motion court denied the motions to dismiss. Defendants’ appealed. The Second Department affirmed. Among other things, defendants argued that since the facts and circumstances supporting the fraud claim were the same as the breach of contract claim, the former claim was duplicative of the latter one. The Court rejected that argument, noting that “ lthough both causes of action based on the same facts, the plaintiff’s fraud cause of action” was based on a misrepresentation that was collateral to the contract, “ i.e. , that the defendants would pay the plaintiff all of the monies owed with respect to prior orders despite knowing that the corporate defendants’ bank accounts did not have sufficient funds to cover those costs.” Slip Op. at *2. Thus, concluded the Court, “the fraud cause of action not duplicative of the breach of contract cause of action.” Id. The Court also held that plaintiff alleged sufficient facts to pierce the corporate veil necessary to allege wrongdoing on the part of the individual defendants. Id. at *2-*3. “To survive a motion to dismiss the complaint, a party seeking to pierce the corporate veil must allege facts that, if proved, establish that the party against whom the doctrine is asserted (1) exercised complete domination over the corporation with respect to the transaction at issue, and (2) through such domination, abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice against the plaintiff such that a court in equity will intervene.” Olivieri Constr. Corp. v. WN Weaver St., LLC , 144 A.D.3d 765, 767 (2d Dept. 2016) (citations omitted). Finally, the Court held that plaintiff adequately alleged that the individual defendants, as officers of the corporate defendants, were liable for the alleged fraud by participating in or having knowledge of the misrepresentations that were made to plaintiff. Id. at *3 (citations omitted): “The plaintiff alleged specific misrepresentations, intentionally made by the individual defendants in the context of purchasing more goods from the plaintiff despite outstanding balances owed to the plaintiff, and that the plaintiff relied upon that misrepresentation to its detriment.” Id. Takeaway As this Blog has noted previously, New York courts will not permit a fraudulent inducement claim to survive a motion to dismiss when the claim arises from a breach of contract. Indeed, courts routinely dismiss a fraudulent inducement claim where “ he existence of a valid and enforceable written contract govern a particular subject matter.” Clark-Fitzpatrick v. Long Is. , 70 N.Y.2d 382 (1987). However, where, as in Emby , “a legal duty independent of the contract itself has been violated<,> ” or where the misrepresentation is “collateral or extraneous to the terms of the parties’ agreement,” a fraudulent inducement claim can stand side-by-side with “a simple breach of contract” claim.  Dormitory Auth. v. Samson Constr. Co. , 30 N.Y.3d 704 (2018) (citation omitted). Emby is interesting because the Court did not address whether the damages sought by the fraud claim were the same as those sought by the breach of contract claim. See also Did-it.com , supra . In the First Department, the Court has dismissed fraud claims in which the damages sought by the fraud claim are the same as those sought by the breach of contract claim. This is so even where the plaintiff successfully demonstrates that the alleged misrepresentation is collateral to the contract at issue. E.g. , Salamone v. EIP Global Fund LLC , 2021 N.Y. Slip Op. 2372 (1st Dept. 2021). This Blog wrote about this scenario here , here , and here . Whether there is a split between the Departments, or the facts underlying the decisions in the Second Department did not lend themselves to examination of the damages sought, is unclear. This Blog will continue to examine the duplication of claims doctrine in the two Departments to see if there is, in fact, a split between them.

Editor's Note: This article has been edited to make corrections. Courts are frequently faced with the need to adapt to changing technology.  This Blog < here =">here"> previously addressed the case of Forcelli v. Gelco Corp. , 109 A.D.3d 244 (2 nd Dep’t 2013), in which the Second Department found that emails could satisfy the “subscribed” writing requirement of CPLR 2104 .  Among other things, this Blog summarized the Forcelli Court’s analysis of the “subscription” requirement of CPLR 2104 as follows: As to the “subscription” requirement, the Forcelli Court noted that while e-mails cannot be signed in the traditional sense, “the lack of ‘subscription’ in the form of a handwritten signature has not prevented other courts from concluding that an e-mail message, which is otherwise valid as a stipulation between parties, can be enforced pursuant to CPLR 2104.”  Forcelli , 109 A.D.3d at 248.  In reaching its decision, the Forcelli Court also recognized the “widespread use of e-mail” and how “unreasonable” it would be to determine that, due to the absence of a traditional signature, an e-mail could not conform to CPLR 2104.  The Court also noted that the adjuster purposely added her name at the end of the e-mail and that it was not automatically generated by the e-mail software. Forcelli , 109 A.D.3d at 251.  (Emphasis supplied.) On July 8, 2021, the First Department decided Philadelphia Insurance Indemnity Co. v. Kendall , in which the holding in supreme court, which relied on Forcelli, was “clarif .”  Now, in the First Department at least, it is “the transmission of an email, and not whether an email “signature” can be shown to be retyped, is what determines that a settlement stipulation has been subscribed for purposes of CPLR 2104.”  Put another way, a “prepopulated” name on the address block of an email is sufficient to satisfy the subscription requirement of CPLR 2104, which provides: An agreement between parties or their attorneys relating to any matter in an action, other than one made between counsel in open court, is not binding upon a party unless it is in a writing subscribed by him or his attorney or reduced to the form of an order and entered…. The plaintiff in Kendall was involved in an automobile accident while driving her employer’s car.  Kendall accepted the full policy amount ($25,000) from the other driver’s insurance and made a claim against her employer’s $1,000,000 Supplementary Underinsured Motorist (“SUM”) policy written by appellant, Philadelphia.  The SUM claim was arbitrated before the American Arbitration Association and a hearing was held on August 15, 2019.  Settlement was frequently discussed by the parties “ efore, during, and after the arbitration hearing.”   On September 16, 2019, the arbitrator rendered a decision awarding Kendall $975,000 and a copy of the decision was sent to all counsel.  However, none of the counsel received the decision.  Accordingly, the parties continued to negotiate a settlement.  A settlement in the amount of $400,000 was reached on September 19, 2019, and: n that day, respondent's counsel emailed petitioner's counsel: "Confirmed - we are settled for 400K." Below this appeared "Sincerely," followed by counsel's name and contact information. Shortly thereafter, petitioner's counsel emailed in reply, attaching a general release, styled a "Release and Trust Agreement," and saying, "Get it signed quickly before any decision comes in, wouldn't want your client reneging." Respondent's counsel answered, "Thank you. Will try to get her in asap." This email concluded with the same valediction, name, and contact information as had respondent's counsel's earlier email.   Subsequently, but before the “Release and Trust Agreement” was executed by Kendall, her counsel received the arbitrator’s decision and advised Philadelphia’s counsel that Kendall demanded payment of $975,000 and would not execute the settlement documents. As a result, Philadelphia commenced a special proceeding to enforce the parties’ settlement and to vacate the award of the arbitrator.  Supreme court, relying on Forcelli , denied the relief sought by Philadelphia “finding that it did not appear that respondent's attorney had subscribed his email for purposes of CPLR 2104 by retyping his name in addition to his prepopulated contact information block.”  In addition, supreme court found that “Kendall's failure to sign the release was a necessary occurrence to finalize the settlement, and that this fact was recognized by Philadelphia's counsel's email in which she urged that Kendall's counsel get her to sign the release quickly, lest she "reneg ."   In reversing supreme court, the First Department held that: this distinction between prepopulated and retyped signatures in emails reflects a needless formality that does not reflect how law is commonly practiced today. lt is not the signoff that indicates whether the parties intended to reach a settlement via email, but rather the fact that the email was sent. Since 1999, New York State has joined other states in allowing, in most contexts, parties to accept electronic signatures in place of "wet ink" signatures. Section 304(2) of New York's Electronic Signatures and Records Act (ESRA) provides: "unless specifically provided otherwise by law, an electronic signature may be used by a person in lieu of a signature affixed by hand. The use of an electronic signature shall have the same validity and effect as the use of a signature affixed by hand." Moreover, the statutory definition of what constitutes an "electronic signature" is extremely broad under the ESRA, and includes any "electronic sound, symbol, or process, attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the record" (State Technology Law § 302 ). We find that if an attorney hits "send" with the intent of relaying a settlement offer or acceptance, and their email account is identified in some way as their own, then it is unnecessary for them to type their own signature. This rule avoids unnecessary delay caused by burden-shifting "swearing contests over whether an individual typed their name or it was generated automatically by their email account" (Princeton Indus. Prods., Inc. v Precision Metals Corp., 120 F Supp 3d 812, 820 ). Addressing concerns that the “ubiquity and ease” of emailing may “undercut its intentionality,” the First Department stated: It is fair to say that most email users have on occasion sent emails that they did not mean to transmit, or that they regretted soon after transmission. However, here we are considering a specific subcategory of email on a subject freighted with ethical obligations. A lawyer has ethical obligations to communicate all settlement offers to a client and to counsel the client on the consequences of settlement. New York's Rules of Professional Conduct (22 NYCRR 1200.0) rule 1.2(a) states that " lawyer shall abide by a client's decision whether to settle a matter." Rule 1.4(a)(iii) requires a lawyer to "promptly inform the client of ... material developments in the matter including settlement or plea offers." These ethical obligations help to ensure that an attorney considers their authority before communicating settlement offers and acceptances to opponents, whatever the mode of communication.  (Footnote omitted.) The Court also, made plain that its holding is not meant to suggest that “every email purporting to settle a dispute will be unassailable evidence of a binding settlement.”  First, because “hacking” is a problem, such emails will have to be authenticated.  Second, settlement emails must set forth all material terms of the subject settlement.  In this regard, the Court rejected Kendall’s argument that the “settlement was conditioned on signing the release”; the Court finding that the return of a signed release was a “ministerial condition precedent to payment”. Takeaway In the context of legal settlements, business and personal affairs and otherwise, it is important to exercise caution before hitting “send” on an email.

Today’s Blog relates to extensions of time to serve a defendant under CPLR 306-b, a topic previously addressed by this Blog < HERE =">HERE"> and < HERE =">HERE"> .  The background discussion in today’s Blog was taken from one of the linked prior Blogs.   Under the present “commencement by filing” system, an action (or proceeding) (collectively, an “Action”) is commenced by filing (CPLR 304(a))the initiatory paper(s) with the “clerk of the court in the county in which the ction … is brought or any other person designated by the clerk of the court for that purpose (CPLR 304(c)).  Once an Action is commenced, the plaintiff (or petitioner) (collectively, a “Plaintiff”) must effectuate service of process pursuant to the parameters of CPLR 306-b , which provides: Service of the summons and complaint, summons with notice, third-party summons and complaint, or petition with a notice of petition or order to show cause shall be made within one hundred twenty days after the commencement of the ction, provided that in an ction, except a proceeding commenced under the election law, where the applicable statute of limitations is four months or less, service shall be made not later than fifteen days after the date on which the applicable statute of limitations expires.  If service is not made upon a defendant within the time provided in this section, the court, upon motion, shall dismiss the action without prejudice as to that defendant, or upon good cause shown or in the interest of justice, extend the time for service. Among other things, CPLR 306-b provides that, in general, service of process on a defendant (or respondent) (collectively, a “Defendant”) must be effectuated within 120 days of the commencement of an Action.  The Court of Appeals in Leader v. Maroney, Ponzini & Spencer , 97 N.Y.2d 95 (2001), explained the history of CPLR 306-b. According to Leader , “ s originally enacted in 1992, CPLR 306-b transformed New York from a commencement-by-service to a commencement-by-filing jurisdiction.”  Leader , 97 N.Y.2d at 100 (citation omitted).  Plaintiffs were “considerabl benefit ” by “making the act of filing the point at which a claim is interposed for Statute of Limitations purposes.”  Leader , 97 N.Y.2d at 100 (citation omitted).  Under the old statute, a Plaintiff was afforded 120 days to effectuate service of process and the Action would be “deemed dismissed” if service was not timely made.  Leader , 97 N.Y.2d at 100 (citation omitted).  “The plaintiff was free to commence a new ction and serve process within a second 120-day period from the date of the automatic dismissal, even if the Statute of Limitations had expired.”  Leader , 97 N.Y.2d at 100 (citation omitted).  For a variety of reasons, the “deemed dismissed” provisions of the old statute were considered “unnecessarily harsh” and were amended to provide that if service of process is not made within the 120-day period after the commencement of the Action, an unserved Defendant can move for the dismissal, without prejudice, or the court could extend Plaintiff’s time to serve a Defendant “upon good cause shown or in the interest of justice.”  Leader , 97 N.Y.2d at 101 (citing CPLR 306-b). The Leader Court, in a trio of cases, was called upon to determine the circumstances under which a Plaintiff would be permitted to avail itself of the extension provisions of CPLR 306-b.  Importantly, the Leader Court made clear that, under CPLR 306-b, “good cause” and “the interest of justice” are “two separate standards by which to measure an application for an extension of time to serve” a Defendant if service is not made within 120 days of the commencement of an Action.   Good Cause “To establish good cause, a plaintiff must demonstrate reasonable diligence in attempting service.”  Bumpus v. New York City Tr. Auth. , 66 A.D.3d 26, 31 (2 nd Dep’t 2009) (citing Leader ).  “Good cause will not exist where a plaintiff fails to make any effort at service or fails to make at least a reasonably diligent effort at service.”  Bumpus , 66 A.D.3d at 31 (citations omitted).  Where “good cause” is not established, “courts must consider the ‘interest of justice’ standard of CPLR 306-b.”  Bumpus , 66 A.D.3d at 32 (citations omitted). Interest of Justice To satisfy the “interest of justice” standard, a court must “careful ” analyze “the factual setting of the case and … balance … the competing interests presented by the parties.”  Leader , 97 N.Y.2d at 105.  Significantly, the Leader Court made clear that to satisfy the “interest of justice” standard, “a plaintiff need not establish reasonably diligent efforts at service as a threshold matter,” although it may consider plaintiff’s efforts to serve a defendant as one of many factors in its analysis.  Leader , 97 N.Y.2d at 105.  In determining whether the “interest of justice” compels the granting of the extension, the court may consider “any other factor in making its determination, including expiration of the Statute of Limitations, the meritorious nature of the cause of action, the length of delay in service, the promptness of a plaintiff’s request for the extension of time, and prejudice to defendant.”  Leader , 97 N.Y.2d at 105-6 (footnote omitted).  The “interest of justice” standard is broader than that of “good cause” and is meant to “‘accommodate late service that might be due to mistake, confusion or oversight, so long as there is no prejudice to the defendant.’”  Nationstar Mortgage, LLC v. Wilson , 176 A.D.3d 1087 (2 nd Dep’t 2019) (quoting Leader ). JPMorgan Chase Bank, NA v. Gluck In deciding JPMorgan Chase Bank, NA v. Gluck on June 23, 2021, the Second Department had occasion to address several issues under CPLR 306-b.  JPMorgan was a mortgage foreclosure action commenced against Gluck in May of 2011.  Shortly after the commencement of the action, Gluck transferred his interest in the subject property to Landau.  Subsequently, Gluck moved to dismiss the complaint pursuant to CPLR 306-b and, in December of 2013, supreme court granted Gluck’s motion because “plaintiff failed to establish due diligence in attempting to serve Gluck via the personal service method in CPLR 308(1) or the “leave and mail” method in CPLR 308(2), and thus, … service pursuant to the “nail and mail” method in CPLR 308(4) was not authorized.”   In August of 2014, eight months after the order dismissing the action, Landau transferred his interest in the property back to Gluck.  In September of 2018, supreme court “denied … plaintiff’s motion to serve a supplemental summons on Gluck, without prejudice to the plaintiff commencing a new action against Gluck or moving to extend the time to serve Gluck.”  Thereafter, based on supreme court’s prior decision, plaintiff moved pursuant to CPLR 306-b to extend the time to serve Gluck in the pending action alleging good cause because “it promptly moved for the extension after being directed to do so by the .”  Supreme court denied the motion “holding that the court had already dismissed the action insofar as asserted against Gluck for lack of personal jurisdiction.”   On plaintiff’s appeal, the Second Department affirmed, but for different reasons.  The Court rejected supreme court’s denial of the motion “because the complaint had already been dismissed insofar as asserted against Gluck,” and, in so doing, stated: his Court recently "reject the view that motion pursuant to CPLR 306-b to extend the time for service, made in a pending action but after the Supreme Court issued an order granting a motion to dismiss based on lack of personal jurisdiction, should denied without consideration of its merits" (State of New York Mtge. Agency v Braun , 182 AD3d 63, 64). An action is deemed pending until there is a final judgment (see CPLR 5011; State of New York Mtge. Agency v Braun, 182 AD3d at 68; Cooke-Garrett v Hoque , 109 AD3d 457, 457). Here, no judgment has been entered. "Inasmuch as no judgment was entered dismissing the action, the action was pending when the plaintiff moved to extend the time to serve with process" ( U.S. Bank NA. v Saintus , 153 AD3d 1380, 1382; see State of New York Mtge. Agency v Braun, 182 AD3d at 69). Accordingly, the Supreme Court erred in denying the plaintiff's motion without consideration of the merits (see State of New York Mtge. Agency v Braun, 182 AD3d at 67-69).  (Hyperlinks added, brackets in original.) After explaining the “good cause” and “interest of justice” standards along the lines set forth supra , the Court found that plaintiff satisfied neither standard and stated: Here, when the Supreme Court granted Gluck's motion to dismiss the complaint insofar as asserted against him for lack of personal jurisdiction-in 2013-the court specifically stated that the plaintiff had failed to exercise diligence in attempting to serve Gluck pursuant to CPLR 308(1) and CPLR 308(2). The plaintiff fails to dispute that conclusion on appeal, and thus, the plaintiff has failed to demonstrate good cause within the meaning of CPLR 306-b.  Nor has the plaintiff demonstrated that an extension of time is warranted in the interest of justice. supra, in leader, 97 n.y.2d at 105-106).> supra, in leader, 97 n.y.2d at 105-106).> Here, in view of the more than five-year delay of the plaintiff in seeking this extension of time, and the lack of any excuse for the delay, the extension is not warranted in the interest of justice (see Slate v Schiavone Cons tr. Co. , 4 NY3d 816; Rodriguez v Consolidated Edison Co. of NY., Inc. , 163 AD3d 734, 736).  (Hyperlinks and bracketed language added.)

The Securities Exchange Act of 1934 (“Exchange Act”) governs the way in which the nation’s securities markets and its brokers and dealers operate. Under the Exchange Act, most “brokers” and “dealers” must register with the Securities and Exchange Commission (“SEC” or the “Commission”) and join a “self-regulatory organization,” or SRO. Section 15(a)(1) of the Exchange Act, 15 U.S.C. §78o(a). Under Section 3(a)(4)(A) of the Exchange Act, 15 U.S.C. §78c(a)(4)(A), a broker is defined as a person or entity that regularly: (i) participates in the solicitation, negotiation, or execution of securities transactions, (ii) receives transaction-based compensation contingent on the value or success of securities transactions or (iii) handles investor funds or securities.  Apart from the foregoing, individuals and businesses need to register as a broker when, among other things, they act as “finders” – e.g. , they find investors or customers for, making referrals to, or splitting commissions with registered broker-dealers, investment companies (or mutual funds, including hedge funds) or other securities intermediaries; they find investment banking clients for registered broker-dealers; they act as “placement agents” for private placements of securities; they provide support services to registered broker-dealers; they act as “independent contractors,” but are not “associated persons” of a broker-dealer; and they are otherwise engaged in the business of effecting or facilitating securities transactions. Unlike a broker, who acts as agent, a dealer acts as principal. Section 3(a)(5)(A) of the Exchange Act defines a “dealer” as a person or entity that (i) holds himself/herself out as being willing to buy and sell securities on a continuous basis or (ii) originates securities that they buy and sell. Individuals who buy and sell securities for themselves generally are considered traders and not dealers. The SEC considers the regulatory regime applicable to broker-dealers to be a cornerstone of the U.S. federal securities laws because it provides important safeguards to investors and market participants. Among other things, registered broker-dealers must (a) satisfy comprehensive recordkeeping, reporting, and supervisory obligations, and (b) pass inspection and examination by the SEC and SRO. In addition, broker-dealers must address conflicts of interest and implement policies and procedures that are reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA rules, including, without limitation, safeguarding customer information and preventing identity theft.  On June 29, 2021, the SEC announced ( here ) that Neovest Inc. (“Neovest”), a provider of an order and execution management system (“OEMS”) that facilitates electronic trading, had agreed to pay a $2.75 million penalty for its failure to register as a broker-dealer in violation of the federal securities laws.  This is the SEC’s first case charging an OEMS provider for operating as an unregistered broker-dealer. According to the SEC’s order ( here ), Neovest, a subsidiary of JPMorgan Chase & Co., operates an OEMS that allows customers to route orders for stocks and options to more than 360 customer-selected destination brokers for execution.  The OEMS had been Neovest’s primary product. The SEC found that prior to being acquired by JPMorgan Chase, Neovest engaged in this activity through its registered broker-dealer, Neovest Trading Inc. The SEC also found that although Neovest withdrew its broker-dealer registration after it was acquired, it continued to operate the OEMS as an unregistered broker-dealer by, among other things, participating in the order-taking and order-routing process and soliciting customers and destination brokers through the firm’s website and direct outreach at industry conferences and trade shows.  Neovest played a role in determining the routing options that were available to its customers by entering into agreements with the destination brokers.  According to the SEC, in exchange for its OEMS services, Neovest also continued to receive transaction-based compensation by having payments from destination brokers redirected to J.P. Morgan Securities LLC, a registered broker-dealer, which then transferred the proceeds to Neovest. The SEC further found that Neovest’s failure to register as a broker-dealer deprived its customers of protections associated with registration, including inspections and examinations by the SEC and the requirement to establish policies and procedures to safeguard customer information.  As detailed in the SEC’s order, during the period that Neovest failed to register, the firm replicated a database containing customer authentication information, including user names and passwords, to one of its most active customers and failed to exercise any supervision over the customer’s use of the database.  “According to the SEC’s order, Neovest circumvented the regulatory regime that grants broker-dealers the privilege of operating in our markets,” said Joseph Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit.  “Today’s charges underscore the SEC’s commitment to securing the important investor protections that flow from broker-dealer registration.” By its order, the SEC censured Neovest and found that it willfully violated Section 15(a) of the Exchange Act.  Without admitting or denying the SEC’s findings, Neovest consented to the order and agreed to cease and desist from committing or causing any violations and any future violations of Section 15(a) of the Exchange Act, and to pay a $2.75 million penalty.

“It is a fundamental principle of our jurisprudence that the power of a court to declare the law only arises out of, and is limited to, determining the rights of persons which are actually controverted in a particular case pending before the tribunal.”  Matter of Darcy M. , ___ A.D.3d ___ *1 (2 nd Dep’t June 9, 2021) (quoting Matter of Hearst Corp. v. Clyne , 50 N.Y.2d 707, 713 (1980)) (internal quotation marks omitted).  Courts cannot issue “advisory opinions”.  Matter of Darcy , at *1.  Accordingly, courts are forbidden “to pass on academic, hypothetical, moot, or otherwise abstract questions….”  Matter of Hearst , 50 N.Y.2d at 713.  This principle “is founded both in constitutional separation-of-powers doctrine, and in methodological strictures which inhere in the decisional process of a common-law judiciary.”  Id ., at 713 – 14.  Typically, the doctrine of mootness is invoked where a change in circumstances prevents a court from rendering a decision that would effectively determine an actual controversy.”  Quinn v. 20 East Clinton, LLC , 193 A.D.3d 893, 894 (2 nd Dep’t 2021) (citations and internal quotation marks omitted). In many cases, circumstances change during the course of litigation.  Generally, courts are precluded “from considering questions which, although once live, have become moot by passage of time or change in circumstances.”  Id ., at 714.  In this regard, “an appeal will be considered moot unless the rights of the parties will be directly affected by the determination of the appeal and the interest of the parties is an immediate consequence of the judgment.”  Matter of Darcy , at *1. There are exceptions to the application of the mootness doctrine that permit “a court to pass on moot issues.”  Quinn , 193 A.D.3d at 895.  The exception applies where there is: “(1) a likelihood of repetition, either between the parties or among other members of the public; (2) a phenomenon typically evading review; and (3) a showing of significant or important questions not previously passed on, i.e., substantial and novel issues.”  Id. (citations and internal quotation marks omitted). The parties in Quinn were owners of adjacent property.  The defendant’s property contained a 170-year-old residence that was undergoing extensive interior and exterior renovations.  During the renovations, defendant’s contractors frequently entered plaintiff’s property without permission and much debris from the construction found its way to plaintiff’s property.  After informal efforts to resolve defendant’s encroachments failed, plaintiff commenced action and moved for, inter alia , injunctive relief enjoining defendant “and its contractors from performing any further construction work on the subject premises or, in the alternative, … convert the motion to a proceeding pursuant to RPAPL 881.”  Id . at 894.  [This blog has written about RPAPL 881 < here =">here"> and < here =">here"> , which permits an adjoining property owner or lessee to commence action against a neighbor to obtain a limited license to enter the neighbor’s property to make improvements to owner’s property if voluntary consent is refused.]  By the time that Quinn’s action was commenced, the renovation work was completed and, accordingly, defendant opposed the motion on the ground that it was academic.  Supreme court agreed with defendant and denied the motion.  The Second Department in Quinn , affirmed.  In so doing the Court stated: Here, that branch of the plaintiff's motion which was to preliminarily enjoin from any further construction work was rendered academic by completion of the project.  Enjoining further construction work where no further construction work is needed, or planned, would have no practical effect on the parties.  In reaching this determination, we note that the plaintiff, despite alleging that the defendants were, inter alia, trespassing and injuring her property, took no legal action to enforce her rights, enjoin the work, or preserve the status quo until after the work was nearly complete. Quinn , 193 A.D.3d at 894-95 (citations omitted).  The Court also found that none of the exceptions to the application of the mootness doctrine were applicable in Quinn . On June 17, 2021, the Appellate Division, Fourth Department, decided Matter of Sportsmen’s Tavern LLC v. New York State Liq. Auth. , which analyzed the mootness doctrine.  The petitioner in Sportsman’s commenced a “hybrid CPLR article 78 and declaratory judgment action challenging COVID-19 pandemic-related guidance issued by respondent-defendant New York State Liquor Authority (SLA).”  The guidance “which Sportsmen's was required to abide by pursuant to certain executive orders, prohibited advertised and ticketed main-draw music shows at licensed bars or restaurants and restricted live music at such establishments to only that which was incidental to the dining experience and not the draw itself.”  Supreme court “declared that the guidance constituted an unlawful content-based restriction, both facially and as applied, under the First Amendment of the United States Constitution and corresponding provisions of the New York State Constitution; declared that the guidance was arbitrary, capricious, and an abuse of discretion; and permanently enjoined SLA from enforcing the guidance.”  The Fourth Department dismissed SLA’s appeal as moot “ lthough neither party contend that the appeal should be dismissed” because "mootness is a doctrine related to subject matter jurisdiction and thus must be considered by the court sua sponte. "  (Citation and internal quotation marks omitted.) Discussing caselaw akin to that which is referenced supra , the Court recognized that “an appeal is moot unless an adjudication of the merits will result in immediate and practical consequences to the parties.”  (Citations, internal quotation marks and brackets omitted.)  The Court reasoned that “due to recent easing of pandemic-related restrictions, the prohibitions challenged in this case are no longer in effect the rights of the parties cannot be affected by the determination of this appeal and it is therefore moot." In finding that the exceptions to the application of the mootness doctrine were inapplicable to the appeal, the Court stated: We conclude that the exception to the mootness doctrine does not apply here. In our view, although the issue of the lawfulness of the prior challenged guidance implemented as part of the extraordinary response to the COVID-19 pandemic is substantial and novel, that issue is not likely to recur.  Moreover, the issue is not of the type that typically evades review. Indeed, as the parties have acknowledged, the guidance at issue here prohibiting advertised and ticketed main-draw music shows has been reviewed on the merits by at least two other courts.  In any event, under the circumstances of this case, we would decline to invoke the mootness exception. (Citations and internal quotation marks omitted, emphasis in original.)

In New York, contracts are to be construed in accordance with the parties’ intent. See , e.g. , Slatt v. Slatt , 64 N.Y.2d 966 (1985). “The best evidence of what parties to a written agreement intend is what they say in their writing.” Slamow v. Del Col , 79 N.Y.2d 1016, 1018 (1992). Thus, a written agreement that is clear and unambiguous on its face must be enforced according to the plain meaning of its terms. See , e.g. , W.W.W. Assoc. v Giancontieri , 77 N.Y.2d 157, 162 (1990). Extrinsic evidence of the parties’ intent may be considered only if the agreement is ambiguous. Id. A contract is unambiguous if “on its face is reasonably susceptible of only one meaning.” Greenfield v. Philles Records , 98 N.Y.2d 562, 570 (2002). Parol (or extrinsic) evidence cannot be used to create an ambiguity where the words of the parties’ agreement are otherwise clear and unambiguous. Innophos, Inc. v Rhodia, S.A. , 38 A.D.3d 368, 369 (1st Dept. 2007), aff’d , 10 N.Y.3d 25 (2008). Conversely, “ contract is ambiguous if the provisions in controversy are reasonably or fairly susceptible of different interpretations or may have two or more different meanings.” New York City Off-Track Betting Corp. v. Safe Factory Outlet, Inc. , 28 A.D.3d 175, 177 (1st Dept. 2006) (internal quotation marks and citation omitted). The existence of ambiguity is determined by examining the “entire contract and consider the relation of the parties and the circumstances under which it was executed,” with the wording to be considered “in the light of the obligation as a whole and the intention of the parties as manifested thereby.” Kass v. Kass , 91 N.Y.2d 554, 566 (1998), quoting Atwater & Co. v. Panama R.R. Co. , 246 N.Y. 519, 524 (1927). Whether a contract is ambiguous is a question of law for the court to decide. Kass , 91 N.Y.2d at 566. Significantly, a court may not, in the guise of interpreting a contract, add or excise terms or distort the meaning of those used to make a new contract for the parties. Teichman v. Community Hosp. of W. Suffolk , 87 N.Y.2d 514, 520 (1996); Morlee Sales Corp. v. Manufacturers Trust Co. , 9 N.Y.2d 16, 19 (1961). In transactions involving the purchase and sale of real estate, the Court of Appeals has made clear that the rule requiring a written agreement to “be enforced according to its terms” has special importance: We have … emphasized this rule’s special import in the context of real property transactions, where commercial certainty is a paramount concern, and where … the instrument was negotiated between sophisticated, counseled business people negotiating at arm’s length.  Vermont Teddy Bear Co. v. 538 Madison Realty Co. , 1 N.Y.3d 470, 475 (2004), quoting Matter of Wallace v. 600 Partners Co. , 86 N.Y.2d 543, 548 (1995). The foregoing principles were recently considered in Villager Capital Advisors, LLC v. Union Settlement Assn., Inc. , 2021 N.Y. Slip Op. 04003 (1st Dept. June 22, 2021) ( here ), a case involving the payment of a commission in connection with the sale of real property. Villager Capital arose out of a brokerage agreement between plaintiff, Villager Capital Advisors, LLC, a real-estate broker, and defendant Union Settlement Association, Inc. (“Union”). Union is the sole member of two housing development fund corporations (“HDFC”), defendants East 103rd Street Housing Development Fund Corporation and East 104th Street Housing Development Fund Company.  here.=">here."> Union owned and operated the St. Lucy’s Apartments through the two funds. Union wanted to sell its interest in the St. Lucy's Apartments. To do so, Union and the HDFCs entered into a brokerage agreement with plaintiff. Under the terms of the brokerage agreement, Union agreed to pay plaintiff “a Sale Commission equal to the sum of (i) 5% of the first $1,000,000 of gross sale price of the Project Interest, plus (ii) 3% of the portion of the gross sale price in excess of $1,000,000.” Plaintiff was to receive the commission “immediately upon the closing of the sale transaction.” Following a bidding process, Union and L&M Development Partners (L&M”) signed a purchase agreement that acknowledged plaintiff as the broker that procured the deal. L&M agreed to assume Union’s debts and to pay $5,747,574 in cash for the St. Lucy’s Apartments. The assumed debt consisted of two Housing Development Corporation-financed mortgage loans, totaling approximately $3,466,000. The assumed debt plus cash payment totaled $9,214,294. The sale was later approved by both the Attorney General and Supreme Court. ( See Not-For-Profit Corporation Law (“NPCL”) §§ 510, 511.) In the petitions submitted for such approvals, the parties represented the purchase price to $9,214,294 for the St. Lucy’s Apartments—the sum of the cash purchase price and the value of the mortgages assumed by L&M. Supreme Court, New York County (Masley, J.), approved the sale by two orders dated December 22, 2017. In those orders, Justice Masley listed the purchase price as $9,214,294.  Plaintiff submitted an invoice for its commission to Union. The commission sought was based on a purchase price of $9,214,294. The amount due, less a pre-payment of $10,000, was $286,429. Union replied that the assumed debt was not part of the consideration for plaintiff’s commission. Plaintiff responded, arguing that the gross purchase price of $9,214,294 was confirmed in Justice Masley’s orders. Union made no further mention of the commission. L&M and Union closed the transaction on January 31, 2018, without informing plaintiff that it was taking place. A week later, on February 6, 2018, plaintiff was advised that the transaction had closed. Plaintiff received payment from Union for $182,427.22 on February 26, 2018— $104,001.78 less than the amount in plaintiff’s commission invoice. Union included a cover letter explaining that the commission calculation was based only on the cash payment paid by L&M and did not include the value of assumed mortgages. Plaintiff brought the action for breach of contract and quantum meruit, seeking payment of the alleged shortfall.  Plaintiff moved for summary judgment on its breach of contract claim. Union cross moved for summary judgment, seeking to dismiss plaintiff’s claims. Plaintiff argued that “gross sale price” unambiguously referred to the entire consideration paid for the apartments, including the value of the mortgages that L&M assumed. Plaintiff contended that a commission payment based on the entire consideration paid by the buyer is the industry standard and is thus commercially reasonable. Any interpretation of “gross sale price” that did not include the assumed debt, said plaintiff, effectively excised the word “gross” from “gross sale price.” In response, Union contended that plaintiff’s interpretation was “unheard of in the real estate industry.” Union argued that, if L&M assumed the mortgages and there was no cash payment, plaintiff would still receive a commission—which would be an absurd result.  The motion court concluded that neither party had demonstrated that the party’s interpretation of “gross sale price” was the only one flowing from the text of the brokerage agreement. Instead, held the motion court, “ he agreement is … ambiguous.” The motion court explained that it was reasonable, as plaintiff asserted, for a broker who facilitated an agreement for a buyer to assume millions of dollars in mortgages to be paid a commission based on the value of those mortgages. This was particularly true because the text of the brokerage agreement reflected the parties’ understanding that the mortgages could be assigned to a buyer and that plaintiff’s services were being enlisted to help bring about that assignment. Thus, the motion court reasoned, it would be reasonable for the agreement to provide that plaintiff’s commission would be calculated based upon the value of the mortgage debts it helped get assigned from Union to L&M, as well as the cash payment by L&M. On the other hand, said the motion court, Union’s interpretation—that “gross sale price” refers only to the cash payment—was also reasonable. The mortgage debts at issue were held by a third-party lender and were not Union’s to sell. Thus, if the mortgages were not Union’s to sell, explained the motion court, but merely part of the overall structure of the agreement, then the parties could not have intended the mortgages to be part of the “gross sale price.” The motion court concluded that neither position would rule the day, holding that the term was ambiguous.  The motion court also held that the parties’ reliance on extrinsic evidence – e.g. , the two court orders and petition – underscored the ambiguity of the term in the agreement: “When parties seek to use extrinsic evidence to resolve an ambiguous term of a contract, summary judgment remains inappropriate when determining the meaning of that term would require ‘a choice among inferences to be drawn from extrinsic evidence.’” (Quoting, Amusement Bus. Underwriters v. American Intl. Grp. , 66 N.Y.2d 878, 880 (1985)). Accordingly, the motion court denied plaintiff’s motion for summary judgment on its breach of contract claim and denied defendants’ cross motion for summary judgment to the extent it sought dismissal of the claims for breach of contract and account stated ( here ). On appeal, the Appellate Division, First Department unanimously modified, on the law, to grant plaintiff’s motion, and otherwise affirmed the motion court’s order. The Court held that the term, “gross sales price” was “plain and unambiguous”; the term included the value of assumed debt, in addition to the cash payment made by the buyer in exchange for the purchase. Slip Op. at *1. “To apply a different interpretation”, reasoned the Court, “would negate the unambiguous language in the agreement.” Id. (citation omitted). Thus, concluded the Court, “Defendants simply attempting to rewrite the term ‘gross sale price.’” Id. The Court also rejected Union’s argument that the breach of contract claim should have been dismissed as against the HDFCs because they were not in privity with either party to the brokerage agreement ( i.e. , plaintiff and Union). The Court reasoned that the HDFCs were third-party beneficiaries of the brokerage agreement. Id. The Court explained that “ lthough the HDFCs did not sign the brokerage agreement, Union Settlement Association, Inc. represented in the agreement that it sought to sell all of its interest in the project, including 100% ownership of the HDFCs along with all of the interests and assets held by the HDFCs.” As such, “the HDFCs were intended third-party beneficiaries of the brokerage agreement.” Id. (citing Mendel v. Henry Phipps Plaza W., Inc. , 6 N.Y.3d 783, 786 (2006)). [Ed. Note: To assert third-party beneficiary rights under a contract, a party must establish “(1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for benefit and (3) that the benefit to is sufficiently immediate, rather than incidental, to indicate the assumption by the contracting parties of a duty to compensate if the benefit is lost.” Burns Jackson Miller Summit & Spitzer v. Lindner , 59 N.Y.2d 314, 336 (1983). Takeaway Village Capital underscores the fundamental principle of contract interpretation – i.e. , contracts are to be construed pursuant to the parties’ intention. As the Court of Appeals explained almost two decades ago, “ he best evidence of what the parties … intend is what they say in their writing. Slamow , 79 N.Y.2d at 1018. When the parties’ writing is clear and unambiguous on its face – that is, the terms are reasonably susceptible to only one meaning – it should be enforced according to the plain meaning of those words.  In Village Capital , the Court made clear that, in the context of the underlying transaction, the word “gross” included every payment of value. This meant the value of the assumed mortgages and the cash payment. To conclude otherwise would “negate” the clear and unambiguous meaning of the word “gross”.

Cherry picking is the process of selecting securities to invest in by mimicking the trading of other investors (both individual and institutions) who are successful over a long period of time. In other words, cherry-pickers base their trading around the techniques and strategies of other investors.  Anyone can implement a cherry-picking strategy. Indeed, cherry picking is used by both professional and retail investors alike.  Cherry picking can be an effective way to generate returns. It can also be helpful for novice investors – i.e. , investors who are unfamiliar with the process of stock selection and investment research.  Cherry picking can also be used by investment advisers in a fraudulent way. Under this scenario, an investment adviser will allocate winning trades to his/her personal account or to a favored client(s) at the expense of other clients.  Typically, an investment adviser trades in securities through an omnibus trading account. An omnibus trading account allows an investment adviser to buy and sell securities on behalf of multiple clients simultaneously, without identifying to the broker in advance the specific accounts for which a trade is intended. For example, if an adviser separately purchases the same security for several clients on the same day, the adviser might obtain different prices on each transaction as a result of normal market fluctuation. Rather than placing individual orders in each client account, the adviser can place an aggregated order, or “block trade,” in the omnibus account and subsequently allocate the trade among multiple accounts using an average price. When used properly, an adviser will fairly and equitably allocate the block trade among client accounts, ensuring that no account receives preferential treatment over another. The fraudulent act of cherry picking involves an investment adviser selecting specific profitable or unprofitable trades and allocating them in a manner of their choosing. For example, the investment manager might allocate the profitable trades to his/her personal account or to certain clients in order to give them preferential treatment. Conversely, trades that incur losses might be allocated to the accounts of less preferred clients of the investment adviser.  When used fraudulently, cherry picking violates the securities laws. Indeed, the Securities and Exchange Commission (“SEC” or the “Commission”) has been vigilant in cracking down on investment advisors who engage in fraudulent cherry picking.  In January 2017, the SEC charged Michael J. Breton and his firm Strategic Capital Management, LLC with fraud for engaging in a cherry-picking scheme whereby Breton placed trades through a master brokerage account and then allocated profitable trades to himself and unprofitable trades to client accounts ( here ). According to the SEC, defendants defrauded their clients out of approximately $1.3 million. On September 6, 2019, the U.S. District Court for the District of Massachusetts entered final judgment against defendants ( here ). In September 2018, the SEC filed a complaint in the Western District of Louisiana against Lafayette, Louisiana-based World Tree Financial, LLC and its majority-owner and co-founder, Wesley Kyle Perkins, for operating a cherry-picking scheme that defrauded World Tree clients ( here ). According to the SEC, for more than four years, Perkins enjoyed substantial profits at his clients’ expense by cherry-picking trades. Perkins allegedly traded securities in World Tree’s omnibus account and delayed allocating the securities to specific client accounts until he had observed the securities’ performance over the course of the day. He then allocated profitable trades to favored accounts, like his own, while allocating unprofitable trades to two accounts with substantial assets controlled by one person. The SEC also alleged that World Tree and Perkins made false and misleading statements about their trade allocation practices – i.e. , that all trades would be allocated fairly and equitably. In addition, the SEC alleged that World Tree, Perkins and Priscilla Gilmore Perkins, Perkins’ wife and the firm’s co-founder and co-owner, falsely represented that they were not trading in the same securities as World Tree's clients. On January 15, 2021, following a week-long, bench trial, the court entered final judgment in favor of the SEC against World Tree, Wesley Perkins, and Priscilla Perkins ( here ). The court ordered Wesley Perkins and World Tree to pay civil penalties of $160,000 and $300,000, respectively, ordered them to disgorge, $347,947, plus prejudgment interest jointly and severally, and enjoined them from future violations of the securities laws. On August 21, 2019, the District Court for the Central District of California entered a settled final judgment against Strong Investment Management (“Strong”) and its owner, Joseph B. Bronson (“Bronson”), both of whom the SEC previously charged with securities fraud for their involvement in a cherry-picking scheme ( here ). According to the SEC ( here ), which commenced the action in February 2018, for more than four years, Bronson traded securities in Strong’s omnibus account but delayed allocating the securities to specific client accounts until he had observed the securities’ performance over the course of the day. As alleged, Bronson enjoyed substantial profits at his clients’ expense by cherry picking the trades, disproportionately allocating profitable trades to himself and unprofitable trades to Strong’s clients. The SEC also alleged that Strong and Bronson misrepresented their trading and allocation practices in the firm’s Forms ADV, including by falsely stating that all trades would be allocated in accordance with pre-trade allocation statements and that the firm did not favor any account, including those of the firm’s personnel. Less than one week later, on August 26, 2019, the SEC announced (here) that Laurel Wealth Advisors, Inc., a registered investment adviser based in La Jolla, California, and its former investment adviser representative, Joseph C. Buchanan, agreed to settle charges relating to Buchanan’s multi-year cherry-picking scheme. According to the SEC, from at least March 2013 to June 2015, Buchanan disproportionately allocated profitable trades to his personal accounts, and disproportionately allocated unprofitable trades to his clients’ accounts. The SEC found that Buchanan’s allocation scheme resulted in $56,075 in net same-day profits to Buchanan and $60,821 in net same-day losses to his clients.  Last week, on June 17, 2021, the SEC announced that it obtained an asset freeze and other emergency relief, and filed fraud charges, against a Miami-based investment professional and two investment firms for engaging in an alleged cherry-picking scheme in which they funneled millions of dollars in trading profits to preferred accounts ( here ). In the complaint filed by the SEC in the Southern District of Florida ( here ), the SEC alleged that defendants Ramiro Jose Sugranes (“Sugranes”), UCB Financial Advisers Inc., and UCB Financial Services Limited engaged in an approximate six-year scheme to divert profitable trades to two accounts believed to be held by Sugranes’ relatives, while at the same time saddling other clients with losing trades. Defendants allegedly used a single account to place trades without specifying the intended recipients of the securities at the time they placed the trades. As alleged, after defendants established a position, if the price of the securities increased during the trading day, defendants usually closed out the position and allocated those profitable trades to the two preferred accounts. Conversely, said the SEC, if the price of the securities decreased during the trading day, defendants usually allocated the unprofitable trades to other client accounts. According to the SEC, the preferred clients, who were named as relief defendants, received approximately $4.6 million from profitable trades, while other clients sustained more than $5 million in first-day losses. By its complaint, the SEC seeks to recover the relief defendants’ unlawful gains, plus prejudgment interest. The SEC alleged that Sugranes and the two UCB entities violated the antifraud provisions of the federal securities laws. As against Sugranes and the UCB entities, the SEC is seeking permanent injunctions, disgorgement, prejudgment interest, and civil penalties. On June 14, the court granted the SEC’s request for emergency relief, including an asset freeze, accounting, and expedited discovery.

Care should be taken when drafting contracts so that the intention of the parties is set forth in a clear and unambiguous way.  When contracts are clearly drafted, all parties should be aware of their rights, remedies and obligations thereunder.  Further, the existence of clear and unambiguous contracts could streamline litigation if a dispute arises. The law is clear that “ hen the terms of a written contract are clear and unambiguous, the intent of the parties must be found within the four corners of the contract, giving practical interpretation to the language employed and the parties’ reasonable expectations.”  Patsis v. Nicolia , 120 A.D.3d 1326, 1327 (2 nd Dep’t 2014) (citation omitted).  The Court of Appeals stated that “ e have long adhered to the sound rule in the construction of contracts, that where the language is clear, unequivocal and unambiguous, the contract is to be interpreted by its own language” because “when parties set down their agreement in a clear, complete document, their writing should as a rule be enforced according to its terms”.  R/S Associates v. New York Job Development Authority , 98 N.Y.2d 29, 32 (2002) (citations and internal quotation marks omitted). Indeed, when a contract is “clear and unambiguous on its face,” “extrinsic and parole evidence is not admissible to create an ambiguity.”  W.W.W. Assoc. v. Giancontieri , 77 N.Y.2d 157, 163 (1990) (citations and internal quotation marks omitted).  Whether a contract “is ambiguous is a question of law to be resolved by the courts.”  B&A Realty Management, LLC v. Gloria , 192 A.D.3d 851, 853 (2 nd Dep’t 2021) (citation omitted).  “A lease, like any other contract, is to be interpreted in light of the purposes sought to be attained by the parties.”  112 West 34 th Street Assoc. v. 112-1400 Trade Properties LLC , 95 A.D.3d 529, 531 (1 st Dep’t 2012) (citation and internal quotation marks omitted). On June 10, 2021, the Appellate Division, First Department, decided Noor Staffing Group, LLC v. 622 Third Avenue, LLC , a case that addresses the principals of contract construction discussed herein.  The facts of Noor , some of which were obtained from a review of the e-filed documents in supreme court, are summarized herein.  Plaintiff, as tenant, and defendant, as landlord, entered into a commercial lease for 20,000 square feet of space on the seventh floor of landlord’s building.  Pursuant to the lease, landlord was to build-out the space for tenant.  Landlord also intended to renovate common areas on the seventh floor, including the hallways and restrooms.  Section 2.04 of the lease set forth a “target date” for “substantial completion” of the “Landlord’s Work.” If the target date was not met, and tenant was not in default under the lease, among other things, landlord was obligated to credit tenant’s account $2,778.00 for each day of delay.   Further, Section 15.03 of the Lease provides that: Landlord shall have the right at any time without thereby creating an actual or constructive eviction or incurring any liability to Tenant therefor, to change the arrangement or location of such of the following as are not contained within the Demised Premises: … corridors, … toilets, and other like public service portions of the Building. All parts … of all walls, windows, and doors bounding the Demised Premises (including exterior Building walls, exterior core walls corridor walls, exterior doors and entrances, all space in or adjacent to the Demised Premises used for shafts, stacks, stairways, chutes, pipes, conduits, fan rooms heating, air cooling, plumbing and other mechanical facilities, service closets and other Building facilities are not part of the Demised Premises and Landlord shall have the use thereof, as well as access thereto through the Demised Premises for the purposes of operation, maintenance, alteration and repair.  (End parentheses omitted in original.) In addition, Section 21.03 of the lease provides that: Landlord reserves the right to temporarily interrupt, curtail or suspend the services required to be furnished by Landlord under this Lease when the necessity therefor arises by reason of alterations … or for any other cause beyond the reasonable control of Landlord. Landlord shall use due diligence to complete all required repairs or other necessary work as quickly as possible so that Tenant’s inconvenience resulting therefrom may be for as short a period of time as circumstances will reasonably permit ….  Tenant shall not be entitled to nor shall Tenant make claim for any diminution or abatement of minimum rent or additional rent or other compensation, nor shall this Lease or any of the other obligations of Tenant be affected or reduced by reason of such interruption, curtailment, suspension, work or inconvenience. More than two months after Tenant moved into its space, landlord had not completed work on the common area restrooms and hallways.  Tenant was advised by landlord that the restrooms on other floors were available for use by tenant’s employees and guests during the common area renovations to the seventh floor.  Tenant commenced action against landlord for breach of contract.  In its first cause of action, tenant alleged that landlord failed to timely deliver the premises and, accordingly, was entitled to the liquidated damages set forth in Section 2.04 of the lease.  By its second cause of action tenant sought monetary damages due to the failure of landlord to complete the common area renovations by the time tenant moved into the premises.  Among other things, tenant alleged that because the seventh-floor restrooms were not complete -- forcing employees to take elevators to other floors to use a restroom -- the “productivity and morale of employees” were “significantly impacted”. Landlord moved for summary judgment dismissing the second cause of action based on the plain language of the lease.  Supreme court denied the motion, finding, inter alia , that “on the present record, the Court is not persuaded that Sections 15.03 and 23.01 even apply to the circumstances described in the Complaint” and “ t a minimum, material questions of fact exist as to whether Landlord’s Work, as defined in the Lease, includes the restrooms and the common walkways….”   Relying on Section 15.03 of the lease, the First Department unanimously reversed, finding that “ his provision of the lease precludes ’s recovery related to ’s construction work on the shared restrooms and corridors.  Thus, the First Department held: “A written agreement that is complete, clear and unambiguous on its face must be enforced according to the plain meaning of its terms” ( Excel Graphics Tech. v CFG/AGSCB 75 Ninth Ave. , 1 AD3d 65, 69 <1st dept 2003> , lv dismissed 2 NY3d 794 <2004> ). First, it is clear from the terms of the lease that the restrooms and corridors were contained neither in the premises nor in the scope of work undertaken by the landlord pursuant to the terms of the lease. Moreover, the lease gave the landlord the right to change the arrangement or location of the restrooms and corridors without liability to the tenant. Dismissal is warranted when the documentary evidence –here, the lease –contradicts plaintiff’s pleading and conclusively establishes a defense to the asserted claim as a matter of law (id.). (Hyperlink supplied.)

On June 14, 2021, this Blog wrote about FINRA’s fight against the financial exploitation of seniors and vulnerable adults ( here ), in particular, the effort to amend FINRA’s Rule 2165 (“Financial Exploitation of Specified Adults”). Among other things, Rule 2165 permits a member firm to place a temporary hold on the disbursement of funds or securities from the account of a senior or vulnerable adult customer when the member reasonably believes that financial exploitation may be, is likely to be, or is occurring. Under the proposed amendments, member firms would be: (a) given additional time to address suspicious activity in the customer accounts of seniors and vulnerable adults, and allow adult protective services agencies, state regulators and law enforcement to conduct investigations into such activity; and (b) allowed to place a temporary hold on the disbursement of funds or securities or a transaction in securities for an additional 30-business days if the member firm reported the matter to a state regulator or agency or a court of competent jurisdiction. The proposed amendments to Rule 2165 coincide (whether intentionally or not) with World Elder Abuse Awareness Day, which was commemorated on June 15, 2021. World Elder Abuse Awareness Day was launched on June 15, 2006, by the International Network for the Prevention of Elder Abuse and the World Health Organization at the United Nations. The purpose of the day is to provide an opportunity for communities around the world to promote a better understanding of abuse and neglect of older persons by raising awareness of the cultural, social, economic and demographic processes affecting elder abuse and neglect. In recognition of World Elder Abuse Awareness Day, the U.S. Securities and Exchange Commission (“SEC”), the North American Securities Administrators Association (“NASAA”), and the Financial Industry Regulatory Authority (“FINRA”) announced on June 15, 2021 ( here ) a new resource intended to assist securities firms in implementing the training requirements of the Senior Safe Act. The training program, “Addressing and Reporting Financial Exploitation of Senior and Vulnerable Adult Investors,” can be used by firms to train associated persons on how to detect, prevent, and report financial exploitation of senior and vulnerable adult investors. The presentation serves as a resource for firms implementing the requirements of the Senior Safe Act and certain state training requirements relating to senior investment protection. The Senior Safe Act was modeled after a Maine statute with a similar name, the Senior$afe Program. That program was the result of a joint effort between regulators and the financial and legal communities to help financial and banking advisors identify and prevent the financial abuse and exploitation of seniors and vulnerable adults. Like the Senior$afe Program, the Senior Safe Act was intended to “empower and encourage our financial service representatives to identify warning signs of common scams and help prevent seniors from becoming victims.” The Senior Safe Act was included as Section 303 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, which was signed into law on May 24, 2018. The Senior Safe Act addresses barriers financial professionals face in reporting suspected senior financial exploitation or abuse to authorities. Specifically, the Senior Safe Act protects “covered financial institutions” – which include investment advisers, broker-dealers, and transfer agents – and their eligible employees, affiliated persons, and associated persons from liability in any civil or administrative proceeding for reporting a case of potential exploitation of a senior citizen to a covered agency. The immunity established by the Senior Safe Act is provided on the condition that employees receive training on how to identify and report exploitative activity against seniors before making a report. In addition, reports of suspected exploitation must be made “in good faith” and “with reasonable care.” This immunity applies to both individuals and firms. This Blog wrote about the Senior Safe Act here and here . In particular, we wrote about the immunity established under the Senior Safe Act here . “By partnering with FINRA and NASAA to offer this training program, we can help educate financial professionals on how to identify and report financial abuse of older adults,” said SEC Chair Gary Gensler. “I encourage all investors to use the education resources on Investor.gov to ensure they are working with a registered investment professional.” “We are pleased to work collaboratively with our counterparts at the SEC and FINRA to provide this important training resource in the hope that it will promote greater and earlier detection and reporting of suspected financial exploitation of older Americans,” said Lisa A. Hopkins, NASAA President and Senior Deputy Commissioner of Securities and General Counsel with the West Virginia State Auditor’s Office. “FINRA has a longstanding commitment to protecting senior investors through various regulatory programs and initiatives,” said Robert W. Cook, FINRA President and CEO. “FINRA is pleased to collaborate with NASAA and the SEC to provide this free resource to firms as we collectively work to support implementation of the Senior Safe Act and better protect senior and vulnerable adult investors.” The training presentation can be found on:  NASAA’s website at https://www.nasaa.org/industry-resources/senior-issues ;  NASAA’s Serve Our Seniors website at http://serveourseniors.org/about/industry ;  The SEC’s website at https://www.investor.gov/additional-resources/information/seniors ; and FINRA’s website at https://www.finra.org/rules-guidance/key-topics/senior-investors .  In a separate press release about World Elder Abuse Awareness Day ( here ), NASAA focused on the obligation of “financial professionals and the public to be on the lookout for signs of elder financial abuse, including potential exploitation by guardians.” A guardian has a legal obligation to act in the best interest of a protected individual. Guardians often are granted extensive access and control of a protected individual’s assets. Financial abuse or exploitation by guardians typically occurs when the guardian improperly uses the protected individual’s funds, securities, property, or other assets. “A trusted guardian can be a wonderful resource. But sometimes guardians may take advantage of the people or assets in their care,” said Lisa A. Hopkins, NASAA President and West Virginia Senior Deputy Commissioner of Securities. “Taking the time to understand the warning signs of guardian financial abuse and the steps that can be taken to report such abuse are key to helping those who cannot help themselves.” As explained in NASAA’s press release, the association developed resources to help identify the red flags of fraud and suspected financial abuse by legal guardians. One such resource is “Guarding the Guardians”, a publication that provides examples of exploitation and information on how to report suspected elder financial abuse. Examples of suspected guardian abuse include: The guardian takes money from the protected individual’s investment portfolio for personal use. The guardian overcharges for a caregiving service. The guardian does not take the protected individual to medical appointments or purchase their necessary medication. The publication, as well as other resources to help seniors, can be found on NASAA’s Serve Our Seniors website ( www.serveourseniors.org ).

As we have noted previously, the financial exploitation of seniors is a significant problem ( e.g. ,  here ,  here ,  here ,  here , and  here ). For many regulators, it is a top priority. here.=">here."> The Financial Industry Regulatory Authority, Inc. (“FINRA”) is one such regulator. To help combat the financial exploitation of seniors and vulnerable adults, FINRA enacted Rule 2165 (“Financial Exploitation of Specified Adults”) ( here ). Among other things, the rule permits a member firm to place a temporary hold on the disbursement of funds or securities from the account of a senior or vulnerable adult customer when the member reasonably believes that financial exploitation may be, is likely to be, or is occurring. here,  here and  here.=">here."> In August 2019, FINRA launched a retrospective review to assess the effectiveness and efficiency of its rules and administrative processes that help protect seniors and vulnerable adults from financial exploitation. The retrospective review indicated that Rule 2165 had been an effective tool in the fight against financial exploitation, but supported amendments to permit member firms to: (1) extend a temporary hold on a disbursement of funds or securities or a transaction in securities for an additional 30-business days if the member firm reported the matter to a state regulator or agency or a court of competent jurisdiction; and (2) place a temporary hold on a securities transaction where there was a reasonable belief of financial exploitation. Currently, Rule 2165 permits a member firm to place a temporary hold on a disbursement of funds or securities from the account of a “specified adult” customer when the firm reasonably believes that financial exploitation of that adult has occurred, is occurring, has been attempted or will be attempted. The Rule defines a “specified adult” as a natural person: (1) age 65 and older; or (2) age 18 and older who the member reasonably believes has a mental or physical impairment that renders the individual unable to protect his or her own interests. See Rule 2165(a)(1). The member firm’s reasonable belief is to be based on the facts and circumstances observed in the member firm’s business relationship with the person. Under the current version of the Rule, the temporary hold expires not later than 15 business days after the date that the member first placed the temporary hold on the disbursement of funds or securities, unless otherwise terminated or extended by a state regulator or agency of competent jurisdiction or a court of competent jurisdiction or extended pursuant to Rule 2165(b)(3), which permits an extension of the hold for up to an additional 10 business days. Importantly, a temporary hold may be placed on a particular suspicious disbursement(s) ( e.g. , a payment related to a commonly known scam, such as a lottery scam) but not on non-suspicious disbursements ( e.g. , a regular mortgage payment or assisted living facility payment). Notably, the Rule does not apply to transactions in securities. The retrospective review indicated that even if a temporary hold were placed on a disbursement out of the customer’s account, executing a related transaction could result in significant financial consequences for the customer ( e.g. , adverse tax consequences, surrender charges, the inability to regain access to a sold investment that has been closed to new investors or trading by a perpetrator in inappropriate high risk or illiquid securities). FINRA also surveyed member firms about their experience with Rule 2165. The survey revealed that member firms needed additional time to conduct investigations and resolve matters. Approximately 53% of the firms that responded to a survey on the Rule stated that they had been unable to resolve a matter within the 25-business day period. The most common reason was that the matter was under consideration by a state agency (such as APS) or a court. Other common reasons included: (1) the customer did not respond to inquiries from the firm; or (2) the customer did not believe that he or she was being financially exploited. For matters that took longer to resolve than the 25-business day period, approximately 35% of the survey respondents indicated that it took on average 26-50 days to resolve the matter and approximately 59% of survey respondents indicated that it took on average 51-100 days to resolve the matter.  With the benefit of the review, FINRA proposed the amendments to Rule 2165. By these proposed changes, FINRA seeks to provide member firms with additional time to resolve matters and for APS agencies, state regulators and law enforcement to conduct thorough investigations, and to extend the temporary hold on the disbursement of funds or securities or a transaction in securities for an additional 30-business days if the member firm reported the matter to a state regulator or agency or a court of competent jurisdiction. According to FINRA, if enacted, the proposed amendments will create the first uniform national standard for placing holds on securities transactions related to suspected financial exploitation.  FINRA explained that the proposed amendments will promote investor protection by allowing additional time for member firms to resolve matters and for APS agencies, state regulators and law enforcement to conduct thorough investigations of suspected financial exploitation. FINRA said customers would benefit from the extension because it would provide additional time for a member firm to obtain a positive identification of financial exploitation and prevent the disbursement of funds due to suspicious activities within the account. FINRA further explained that the proposed rule changes could prevent harm to exploited customers, such as being subject to adverse tax consequences, early withdraw penalties or investments that do not align with their investor profiles.  Anyone wishing to submit comments to the proposed amendments must do so within 21 days of their publication in the Federal Register.  The proposed rule changes can be found here .