Blog by Bill Singer WEEK IN REVIEW

February 7, 2015

In Fezzani v. Bear, Stearns & Co., Inc. (Opinion  on Petition For Rehearing, United States Court of Appeals for the 2nd Circuit, 14-3983,09-4414-cv, January 30, 2015), Appellants sought a rehearing of a portion of a May 7, 2013, 2nd Circuit Opinion and Summary Order affirming the district court's dismissal of federal securities law fraud claims against a clearing broker and individual investors. In part, the Appellants cite Levitt v. J.P. Morgan (2d Cir., 710 7 F.3d 454, March 15, 2013), as inconsistent with the appealed May 7, 2013, Order as it pertains to Bear Stearns' clearing broker liability for introducing broker A. R. Baron's alleged fraud. The 2nd Circuit denied the petition with a concurrence and dissent in part by Judge Lohier. READ

In reading through the Complaint of a customer's lawsuit, the stockbroker is somewhat relieved:  The caption does not contain my name and I'm not even mentioned by name anywhere in the document! Unfortunately, a few days later, you are informed by your employer that because you were "involved" in the case, your regulatory disclosures must be updated to reflect that. You protest that you weren't even the servicing stockbroker but merely some shlub who picked up the telephone when the customer called to complain -- or you merely recommended what turned out to be a toxic product that was on the firm's "Approved List." In today's Blog, we consider an arbitration in which a customer didn't name the stockbroker as a respondent and the circumstances suggest that the customer may not have been all that angry with the registered person.  Nonetheless, an ordeal ensues. READ

While still with Destiny's Child, Wall Street regulator Beyonce admonished:

Say my name, say my name
You actin' kinda shady

Rumor has it that the diva was upset with the Financial Industry Regulatory Authority's often inexplicable policy about naming or not naming an affiliated bank of one of its larger member firms. Unknown and unappreciated back-up singer Bill Singer (yes . . . Singer, the singer) launched a failed career as a solo act in which he too tried to sing a similar tune. In today's Blog, we pay homage to the efforts of the famous and less famous singer and Singer to shine a light on the puzzling inconsistency with which FINRA says a bank's name. READ

It's often about crossing lines. At some point, you're only preparing to engage in a business; however, further ahead in time, you're actually engaged in that business. On Wall Street, the difference between intending to engage in an outside business activity and actually being deemed to have started that business is a dangerous line to cross. Consider this recent regulatory settlement. READ

On February 3, 2015, the Department of Justice ("DOJ") and 19 states plus the District of Columbia announced a $1.375 billion settlement agreement with Standard & Poor's Financial Services LLC, ("S&P") and its parent corporation McGraw Hill Financial Inc.. The settlement addresses DOJ's allegations that S&P had defrauded investors in structured financial products and resolves DOJ's and the states' 2013 lawsuit against S&P, which alleged that investors incurred substantial losses on Residential Mortgage-Backed Securities ("RMBS") and Collateralized Debt Obligations ("CDOs") as a result of inflated ratings issued by S&P. Among the assertions were that the ratings had been compromised by S&P's business relationships with issuer investment banks. READ

Stockbroker, Compliance, Legal, and Regulatory Jobs READ

In 2014, FINRA was hit with a Complaint alleging that the SRO had engaged in a number of improper acts in an effort to secure its role as Wall Street's dominant self regulator and as an ongoing course of harassment against a member firm and its principals. John J. Hurry et al. v. Financial Industry Regulatory Authority, Inc. (Amended Complaint, DAZ, CV-14-2490-PHX-JWS, November 26, 2014). Given my historic bias and animosity towards both self-regulation and FINRA, I have decided to allow the litigants to speak for themselves via the excerpts below and my commentary follows at the end. Let me clearly note that I do not take ANY personal or professional position on the merits of the parties' respective positions. READ