Blog by Bill Singer Esq WEEK IN REVIEW

February 22, 2020
As Wall Street lawyer Aegis Frumento sees it, we don't really understand why we don't like insider trading as a thing in itself. Also, Frumento notes that any insider trading statute can be gamed, and the more precise it is drafted, the more loopholes it creates. Which may explain the Houston Astros' approach to winning a World Series.
In today's featured case, we have a dispute involving a customer's sales of shares of microcap Cannabis Science, Inc. One court says the customer ain't a customer. On appeal, another court says he is. Put that in your bong and smoke it! To say that this is a case that goes up in smoke but then gets re-lit wouldn't be too far from the truth.
It's a very risky proposition for a brokerage firm to accept purchase orders from a customer without sufficient funds on hand or covering margin equity -- and if a customer only has a Cash Account, then margin would not be an option. In two recent FINRA Arbitrations, brokerage firm Ustocktrade sought damages after two customers failed to deposit sufficient funds to cover securities purchases. Those debits raise lots of questions about the customers' intentions and the industry's compliance and regulatory practices.