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New England Securities Litigation & Arbitration Blog

Preti Flaherty's Financial Services Group offers the full range of dispute resolution services when it comes to financial advisors, broker-dealers, registered investment advisors, banks, insurers, and other financial institutions, including FINRA arbitration, regulatory enforcement actions, and litigation in state and federal courts.

Recent Blog Posts

  • Maine Joins Other States by Requiring Mandatory Reporting of Suspected Financial Exploitation To enhance prompt reporting of financial exploitation to state securities regulators and adult protective services, on April 2, 2019 Maine joined 25 other states by enacting the Act to Protect Vulnerable Adults from Financial Exploitation, Public Law 2019 Ch. 17.  The Act makes broker-dealers and others mandatory reporters of suspected financial exploitation of seniors and vulnerable adults.   The Act is intended to combat financial exploitation of elderly and disabled persons, a not infrequent occurrence.  According to one reputable source as many as 20%... More
  • Unpaid Arbitration Awards: An Unabated Problem Earlier posts highlighted a long-recognized problem in the securities industry: investors who've proven that they were harmed by bad actors  all too often wind up recovering little or nothing even after winning a legal claim.  An analysis of arbitration awards a few years ago revealed that about 25%, nearly $1 out of every $4 awarded to customers in arbitration went unpaid.  There are solutions to the problem, like requiring insurance (as is required to register an automobile), requiring that broker-dealers maintain higher... More
  • Expungement: A Seriously Flawed Process? In 2017, this blog featured a post examining the standard applied to requests by brokers to cleanse (erase) their public records of customer complaints, a process called "expungement," here.  A recently released (October 2019) study by the investor protection foundation run by the Public Investors Arbitration Bar Association (PIABA) reports that the process is “broken” as a result of being “systematically gamed, exploited and abused” by brokers and brokerage firms.    Among the problems found, according to PIABA's study are sham cases seeking... More
  • Lessons From "Arbitration Nation:" an Empirical Study of 40,000+ Consumer Arbitrations A recent study identifies a problem -- "we know little about what actually happens in" arbitration -- and offers a solution: find out what happened in more than 40,000 consumer arbitrations administered by four major arbitration forums over the course of six years.  In the study, "Arbitration Nation: Data from Four Providers," Professors Andra Cann Chandrasekher and David Horton analyzed "40,775 consumer, employment, and medical malpractice arbitrations filed between 2010 and 2016 in four major arbitration administrators: the AAA, Judicial Arbitration... More
  • New Maine Restrictions on Non-Compete Agreements; Bans Restrictive Employment Agreements A new Maine law will make it more difficult for Maine employers to enforce non-compete agreements, an issue of particular interest in the securities industry where non-competition agreements often have been used to deter brokers from changing jobs. In enacting the new legislation, Maine joins other New England states, including Rhode Island, Massachusetts, and New Hampshire, which also have new laws on the books limiting the enforceability of non-compete agreements.  On June 28, 2019, Governor Mills signed LD 733 (“An Act... More
  • Investing in Private Companies: Opportunities Abound, But So Do Risks More retail investors than ever are investing in private companies, but doing so can be "high-risk" and "more opaque" and private companies tend to be a magnet for fraud, according to the Wall Street Journal.  "More opaque" means "more secretive"--subject to lesser regulatory oversight and fewer obligations to disclose to the public how their business is performing.  Also problematic is that it can be hard to sell investments in private companies, which means that buying private companies can "tie up... More
  • Public Investors Bar Association Report: Draft Reforms to FINRA Supervision Rules Leave Investors Vulnerable  In a report titled, FINRA’s Attempt to Gut Investor Protections: Proposed Reforms to FINRA Supervision Rules, Public Investors Arbitration Bar Association (PIABA) argues, “FINRA is currently contemplating the evisceration of crucial protections that have been in place for decades to safeguard investors against investment schemes by brokerage firms’ registered representatives, including ‘selling away’ schemes. If FINRA’s proposed changes are approved, there will likely be more investment scams perpetrated by registered representatives. If these proposals are adopted, brokerage firms will no... More
  • FINRA Arbitration Requirements Take Priority over Forum Selection Clause The Third Circuit Court of Appeals recently ruled that Bear Stearns must comply with the Financial Industry Regulatory Authority (FINRA) rules that require arbitration of a customer’s claims despite the existence of a forum selection clause. That ruling, in Reading Health System v. Bear Stearns & Co., n/k/a J.P. Morgan Securities, LLC, involved a broker-dealer agreement between Bear Stearns (now J.P. Morgan Securities) and Reading Health System regarding offerings of certain securities by Reading Health through which J.P. Morgan Securities... More
  • FINRA Issues Guidance on Heightened Supervision for Persons with a History of Past Misconduct  To reiterate the supervisory obligations of FINRA member firms regarding associated persons with a history of past misconduct that may pose a risk to investors, FINRA recently published Regulatory Notice 18-15. FINRA Rule 3110 (Supervision) requires member firms to establish and maintain systems to supervise activities of associated persons to comply with applicable securities laws and FINRA rules. Member firms have a fundamental obligation to implement a supervisory system that is tailored to the member firm’s business and addresses the... More
  • Blockchain, Digital Currencies, and Securities Regulation  As with any new investment product or asset class, cryptocurrencies and related blockchain technology have been the subject of a great deal of investor interest and regulatory activity, particularly as bad actors have exploited public interest to peddle unsuitable investments or--even worse--perpetrate frauds.  A blockchain is a public, distributed ledger that is replicated and hosted on numerous computers, creating thousands of identical digital copies that give the system credibility and oversight needed to create a secure public list of an asset.  That list... More
  • FINRA to Investors: Beware of "Regulator" Impostor Scams The Financial Industry Regulatory Authority (FINRA) recently issued an Investor Alert, warning investors to beware of financial scammers posing as regulators.  Gerri Walsh, FINRA’s Senior Vice President for Investor Education warns, “Financial fraudsters go to great lengths to appear legitimate, making it difficult for investors to recognize their ruses.” “That’s why we are telling investors flat out that FINRA does not guarantee investments, and our officers play no role in facilitating investment opportunities. We want people to know that and to understand... More
  • FINRA Proposes Special Procedure for Simplified Cases The Financial Industry Regulatory Authority (FINRA) proposes to amend the Code of Arbitration Procedure for Customer Disputes and the Code of Arbitration Procedure for Industry Disputes to include a Special Proceeding for Simplified Arbitration. FINRA claims involving $50,000 or less would benefit by having an additional, intermediate form of adjudication that would provide the chance to argue cases before an arbitrator in a shorter, limited telephone hearing format. The Special Proceeding would be limited to two hearing sessions.  The highlights:  A Special... More
  • FINRA 2018 Regulatory and Exam Priorities Released The Financial Industry Regulatory Authority (FINRA) recently released its 2018 Regulatory and Examination Priorities Letter (the “Priorities Letter”), highlighting topics FINRA will focus on in 2018. FINRA regulates brokerage firms doing business with the public in the United States. FINRA writes rules; examines for and enforces compliance with FINRA rules and federal securities laws; registers broker-dealer personnel and offers them education and training; and informs the investing public. FINRA provides surveillance and other regulatory services for equities and options markets, as... More
  • FINRA Proposes Amendments to the Codes of Arbitration Procedure Regarding Requests to Expunge Customer Dispute Information Through Financial Industry Regulatory Authority (FINRA) Regulatory Notice 17-42, FINRA proposes establishing a roster of arbitrators with certain training, backgrounds, or experience to handle requests to expunge customer dispute information. These arbitrators would decide expungement requests where the underlying customer-initiated arbitration is not resolved on the merits (e.g., settled) or the associated person files a separate claim requesting expungement of customer dispute information.   FINRA also proposes additional changes to the expungement process, such as changes to the timeframe in which... More
  • FINRA Board Accused of Conflicts of Interest As reported in InvestmentNews, the Public Investors Arbitration Bar Association (PIABA) issued a report asserting that certain “public governors” on the Financial Industry Regulatory Authority’s (FINRA) 24-person board serve on too many corporate boards and/or have connections to Wall Street such that they cannot represent the publicly effectively and face conflicts of interest.  FINRA is a self-regulatory organization which oversees thousands of broker-dealers on behalf of the Securities and Exchange Commission (SEC). It has 13 public governors, 10 industry governors and... More

Firm Highlights

Event

2020 Employment Law Series: A Legislative Update for HR Professionals

For more than 25 years, Preti Flaherty's Employment Law Group has been keeping clients, business partners, and friends up to date on recent developments in employment law. Join us as we continue that tradition...

Publication

The Potential of the Blockchain for Asset Protection Planning

While many legal scholars focus on the challenges and complications seemingly inherent to blockchain and cryptocurrency, others look past the fear and see potential. In this article for Cumberland Law Review , Ian Huyett and Brian Quirk...

Event

2020 Cannabis Law Breakfast - Winter Update

Event

2020 Employment Breakfast Series: Strengthening Your Company's Management of Accommodation Requests

For more than 25 years, Preti Flaherty's Employment Law Group has been keeping clients, business partners, and friends up to date on recent developments in employment law. Join us as we continue that tradition...

News

Preti Flaherty Attorney Benjamin S. Piper Promoted to Partner

Preti Flaherty is pleased to announce that the firm’s partnership has named attorney Benjamin S. Piper as a partner. Ben is a member of the firm's Environmental, Litigation, and Media Law Practice Groups and works...

News

Preti Flaherty Welcomes Government Relations Liaison Andrew I. Roth-Wells to the Firm

Preti Flaherty is pleased to announce that Andrew I. Roth-Wells has joined the firm as a Government Relations Liaison. Andrew will help manage legislative and regulatory advocacy efforts for the firm’s Government Affairs Team...

Press Coverage

Bangor superintendent blocked BDN reporter on Twitter after critical news coverage

In an apparent violation of the First Amendment, Bangor schools superintendent Betsy Webb temporarily blocked a journalist on Twitter following a report that news of a student suicide was announced over the loudspeaker at...

Press Coverage

Maine State Police May Be Spying on You

Police and governments are increasingly turning to new tracking and monitoring methods in their efforts to prevent and record evidence of crimes. A Portland Press Herald investigation examines these expanding law enforcement abilities and the...

Publication

Litigation and Arbitration Venue Provisions in Construction Contracts: When and How They Work

Venue and choice-of-law provisions are fairly standard in construction contacts, but can be overlooked due to their location within a contract. When drafted effectively, these provisions can help limit uncertainty about where and how...

Publication

WC Alert: Recent Developments from Maine's Workers' Compensation Board

Frank A. Graf, MD, Reappointed to Approved List of § 312 Examiners At the February 11 meeting of the Maine Workers’ Compensation Board, Frank Graf, MD, was reappointed to the list of approved § 312...