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Last 20 posts indexed in the Securities Law category on Justia

In a recent post, I noted that while companies may face investor and regulator pressure to address ESG-related issues, ESG-related actions can also entail operational and financial risks — and litigation risks, as well. In the latest example of a company whose ESG-motivated actions went awry, leading to securities litigation, Wells Fargo has been sued in a securities class action lawsuit after media reports that its efforts to diversify its work force led to fake job interviews, allegedly contrary to the company’s disclosures concerning its diversity efforts. A copy of the June 28, 2022 complaint against Wells Fargo can be found here.   Background According to the recently filed securities lawsuit complaint, in 2020, Wells Fargo, as part if its efforts to diversify its work force, instituted a “Diverse Search Requirement,” also referred to as a diverse slate hiring policy. The policy specified that at least 50% of job interview candidates must,…
Author: Kevin LaCroix
Posted: June 28, 2022, 8:55 pm
            Advisors terminated by their broker-dealer should immediately retain experienced legal counsel. The broker-dealer has 30 days after termination to file the mandatory U-5.  Legal counsel can help you negotiate fair and accurate language for this critical and potentially public disclosure.  Moreover, how the U-5 is completed above and beyond the narrative “reason for termination” can be pivotal.           Many advisors fail to appreciate that, for the most part, their broker-dealer can terminate them without cause.  But there are contractual and public policy exceptions to this general rule that must be evaluated.  Cosgrove Law Group has extensive experience working with financial advisors who have been terminated, including not just U-5 issues, but also issues such as promissory notes and other compensation matters.
Author: David Cosgrove
Posted: June 28, 2022, 7:55 pm
Investors’ Allegations Against Centaurus Financial Broker Include Unsuitability, Misrepresentations, and Concentration  Our experienced Texas broker misconduct attorneys are looking into claims of losses involving current and former customers of William Charles Burks, also known as Bill Burks II, in Flower Mound. Bill Burks is a Centaurus Financial broker who has been named in several customer disputes, most of which are settled or still pending. Customer Disputes Involving Centaurus Financial Broker Bill Burks II Continue Reading › The post Centaurus Financial Broker Bill Burks Named in Several Customer Disputes appeared first on Investor Lawyers Blog.
Author: Shepherd Smith Edwards & Kantas, LLP
Posted: June 28, 2022, 5:28 pm
The following law review articles relating to securities regulation are now available in paper format: S. Burcu Avci, Cindy A. Schipani, H. Nejat Seyhun & Andrew Verstein, Insider Giving, 71 Duke L.J. 619 (2021). James A. Fanto, Looking Forward: Professor...
Author: Eric C. Chaffee
Posted: June 28, 2022, 3:04 pm
By Rodney F. Tonkovic, J.D.The SEC has unanimously adopted final rules requiring the electronic filing of documents by investment advisers, institutional investment managers, and others that had previously been filed on paper. In short, the amendments will require the filing or submission of: applications for orders under the Investment Advisers Act; confidential treatment requests for Form 13F filings; and Form ADV-NR. Other technical amendments are intended to enhance the quality of the date reported on Form 13F. The rules are effective upon publication in the Federal Register, except for the amendments to Form 13F, which are effective on January 3, 2023, and there will be a six-month transition period (Electronic Submission of Applications for Orders under the Advisers Act and the Investment Company Act, Confidential Treatment Requests for Filings on Form 13F, and Form ADV-NR; Amendments to Form 13F, Release No. 34-95148, June 23, 2022).The new requirements are intended to…
Author: John Jascob
Posted: June 28, 2022, 2:04 pm
On 27 June 2022, the PRA published a letter sent to firms concerning its proposed approach concerning the submission of new market risk internal model approach (IMA) applications. The Basel 3.1 framework removes the existing IMA methodologies, replacing them with a completely new framework. The PRA expects existing internal model permissions for market risk to become redundant as part of the legislative changes required to introduce Basel 3.1 in the UK. Given the new market risk rules introduced by the Fundamental Review of the Trading Book (FRTB) are substantially different to the existing rules, it is not currently the PRA’s intention to consult on any temporary extension of the existing modelling regimes or permissions. The PRA has previously announced that it will consult on the UK implementation of Basel 3.1, including the FRTB, in Q4 2022 and as part of the consultation will consult on a planned implementation date of 1 January 2025. The PRA will be providing…
Author: Jochen Vester (UK) and Simon Lovegrove (UK)
Posted: June 28, 2022, 1:35 pm
On 27 June 2022, the House of Commons’ Treasury Sub-Committee on Financial Services Regulations issued a call for views on the PRA’s ‘Strong and Simple Framework’ proposals. The PRA is seeking to mitigate the ‘complexity problem’ that can arise when the same prudential requirements are applied to all firms of different sizes and business models. The PRA has published draft proposals which aim to mitigate against this problem through its ‘strong and simple’ initiative that would seek to simplify the prudential framework for non-systemic domestic banks and building societies, while maintaining their resilience. Given that the “strong and simple framework” proposals amount to a major change in prudential policy for banks and building societies, the Sub-Committee is calling for written evidence submissions, from stakeholders, that examine the impact of the proposals on the safety and soundness of smaller firms, and whether…
Author: Simon Lovegrove (UK)
Posted: June 28, 2022, 1:33 pm
On 27 June 2022, the European Securities and Markets Authority (ESMA) published a letter it had sent to the European Commission setting out its findings from its call for evidence to gather information on the market structure for ESG rating providers in the EU. In the letter the ESMA provides a brief introduction to the broader context in which its call for evidence was launched and the key objectives that guided its development. The ESMA then sets out its key findings, both overall, and for the different categories of respondents. Key findings include: The structure of the ESG rating provider market shows that there is a small number of very large non-EU providers, and a large number of significantly smaller EU entities. While the legal entities of respondents are spread out across almost half of the EU Member States, a large number of these are clustered in a small number of Member States. Users of ESG ratings are typically contracting for these products on an investor-pays…
Author: Daniel Nevzat (UK)
Posted: June 28, 2022, 1:31 pm
On 27 June 2022, the European Central Bank issued a statement containing details of the methodology that will be used for exercising supervisory discretion regarding cross-border intra-European Banking Union (EBU) exposures in the global systemically important bank (G-SIB) assessment framework. The Basel Committee on Banking Supervision (Basel Committee) has completed a targeted review of the treatment of cross-border exposures within the EBU on the G-SIB assessment framework noting that progress had been made. The Basel Committee has agreed to give recognition in the G-SIB assessment framework to this progress through the existing methodology, which allows adjustments to be made according to supervisory judgement. A parallel set of G-SIB scores will be calculated for EBU-headquartered G-SIBs and used to adjust their bucket allocations. These parallel scores recognise 66% of the score reduction that would result from treating intra-EBU exposures as domestic exposures under the…
Author: Michael Born (DE)
Posted: June 28, 2022, 1:29 pm
On 27 June 2022, the FCA published a Dear CEO letter concerning its supervisory strategy for the mainstream consumer credit lenders (MCCL) portfolio. The Dear CEO letter follows an earlier letter published in December 2020 and: Provides an updated view of the key risks that MCCL firms pose to their consumers and the markets in which they operate. This includes: the rising cost of living and the treatment of borrowers who fall into financial difficulty. Against a backdrop of higher inflation and increasing interest rates, ensuring that customers in financial difficulty receive fair and appropriate support remains a key priority for the FCA; inadequate assessments of affordability. Firms should apply reasonable and proportional checks on customers applying for credit including, taking reasonable steps to determine or reasonably estimate to establish a customer’s income. Furthermore, firms are reminded of their obligations under CONC 5.2A.12 (5) that repayments should not…
Author: Simon Lovegrove (UK) and Matthew Gregory (UK)
Posted: June 28, 2022, 1:26 pm
In its October 2021 release reopening the comment period for its proposed clawback listing standard rules, the SEC floated the idea of including “little r” restatements as triggers for a compensation recovery analysis under the rules. Earlier this month, the SEC’s Department of Economic Research and Analysis issued a memorandum addressing the impact of including little r restatements with the scope of the rules. This excerpt says that while requiring little r restatements to be included would increase the total number of restatements that might trigger clawbacks, those restatements may be less likely to trigger a recovery of previously paid comp (also see Liz’s blog on We estimate that “little r” restatements may account for roughly three times as many restatements as “Big R” restatements in 2021, after excluding restatements by SPACs. Accordingly, if the final rules were to encompass both types of…
Author: John Jenkins
Posted: June 28, 2022, 10:30 am
We’ve been operating in a low inflation environment for so long that I think the last time anybody cared about the impact of inflation on inventory accounting was when I was taking my undergrad Financial Accounting 101 class – and in case anybody from the Division of Enforcement is reading, I want to point out that this was my only accounting class. Unfortunately, inflation is back, and according to this WSJ article, so are investor concerns about its impact on companies that use the “Last In, First Out” (LIFO) method of accounting for inventories: In 2021, approximately 15% of companies in the S&P 500 used LIFO as their primary inventory method and 50% used FIFO, according to Credit Suisse Group AG , citing annual reports. The remainder used an average-cost method, a combination of methods, or methods that couldn’t be determined, Credit Suisse said. Investors are scrutinizing accounting methods like the use of LIFO amid recent declines in the…
Author: John Jenkins
Posted: June 28, 2022, 10:15 am
The Securities and Exchange Commission today charged Ernst & Young LLP (EY) for cheating by its audit professionals on exams required to obtain and maintain Certified Public Accountant (CPA) licenses, and for withholding evidence of this misconduct…Read the Full Press ReleaseHave a securities law question? Call New York Securities Lawyers at 212-509-6544.
Author: Mark Astarita
Posted: June 28, 2022, 10:10 am
The comment period for the SEC’s SPAC rule proposals recently expired and as usually happens during in response to a major rule proposal, a flurry of comment letters from heavy hitters arrived during the days before and shortly after the expiration of the comment period.  Notable letters include those from: – The ABA’s Federal Regulation […]
Author: John Jenkins
Posted: June 28, 2022, 10:00 am
If investors are scrutinizing LIFO companies more carefully, it almost goes without saying that those companies need to be prepared for the Staff to take a close look at disclosure practices as well. In addition to addressing the potential impact of inflation on LIFO inventory valuations and their current and future results of operations in the Risk Factors & MD&A sections of their filings, companies should keep an eye out for potential comment trends on LIFO issues. I did a quick search on EDGAR and haven’t found any 2022 comment letters referencing LIFO that have been released yet, but I did find a handful of comment letters from 2021 that raised issues that are likely to be relevant this year as well. These include: – Comments directed at non-GAAP presentations that exclude changes in LIFO reserves, which the Staff has challenged as potentially involving “tailored accounting.” The company in question was able to successfully resolve this…
Author: John Jenkins
Posted: June 28, 2022, 10:00 am
On June 22 2022, the SEC published its Spring 2022 regulatory agenda in which it outlined the Commission’s short and long-term regulatory interests. The SEC appears intent on proceeding with its fast-paced stream of proposed rule makings that have dominated the first half of this year. The agenda includes rule making related to climate change, diversity, human capital management, executive compensation, cyber security, and other subjects that would add to the current regulatory landscape of the financial markets. Three high-profile examples are the adoption of  final rules related to, (1) climate change disclosures, as discussed in this article, (2) investment company and advisor disclosures relating to ESG factors designed in part to combat “greenwashing,” as discussed in this article, and (3) disclosure of cyber security risks, as discussed in this article. When publishing the agenda, SEC Chair Gary Gensler emphasized that the SEC’s determined…
Author: Kevin Harnisch (US), Seth Kruglak (US), Todd Batson (US) and Nicholas Joynson (US)
Posted: June 28, 2022, 9:30 am
On July 12, 2022 our financial services and risk advisory teams will be holding a panel discussion event on the key financial crime issues facing financial services firms. The event, held at our offices in 3 More London Riverside, will include a keynote speech by Louise Stanway, chair of the Joint Money Laundering Steering Group. Following the keynote speech we will be joined by senior individuals from across the sector to discuss themes including anti-money laundering, sanctions, and market abuse, as well as the governance firms must employ to manage these challenges. The agenda and timings for the event are: 17:00 pm – Welcome reception 17:30 pm – Keynote speech by Louise Stanway, Head of Compliance, Ruffer and Chairman, Joint Money Laundering Steering Group 17:45 pm – Panel discussion 18:30 pm – Drinks and canapés Places are limited, to register please click here.
Author: Haney Saadah and Katie Stephen (UK)
Posted: June 28, 2022, 8:18 am
The California Corporations Code includes provisions governing a wide variety of nonprofit organizations.  However, the "Big 3" categories of nonprofit corporations are the public benefit, mutual benefit and religious corporations.  While the drafters of these laws had intended that each be a self-contained law, their provisions are in many cases identical.  However, one key distinction can be found in the statement of purpose required under each of these laws.  Notably, only the Public Benefit Corporation Law requires that the articles abjure private gain: “This corporation is a nonprofit public benefit corporation and is not organized for the private gain of any person. It is organized under the Nonprofit Public Benefit Corporation Law for (public or charitable [insert one or both]) purposes.” Cal. Corp. Code § 5130(b)(1) (a different statement is required if the corporation is a public bank).  In contrast, the…
Posted: June 28, 2022, 7:15 am
Last February, the Securities and Exchange Commission proposed to “modernize” the reporting of beneficial ownership of a company’s stock under section 13(d) of the 1934 Securities Exchange Act.  As I explained in a recent comment letter to the SEC, the proposal is flawed in several ways. First, it risks suppressing proxy contests, which are the principal, if not the sole, method for holding corporate managers accountable to shareholders. Second, to the degree the Commission is concerned about improper tipping of information related to activist engagements, that concern can and should be addressed by developing new rules specific to such tipping and trading rather than by the proposal’s ambiguous new definition of a “group.” Third, in light of the SEC’s concerns about the use of swaps to disguise potential control positions, I propose a “safe harbor” for parties entering into certain swaps that clearly do not implicate…
Author: Jeffrey N. Gordon
Posted: June 28, 2022, 4:05 am
Shareholder resolutions filed in the 2022 proxy season reflect continuing investor concern over lobbying activities and whether they are consistent with a company’s public positions and aligned with shareholder interests. However, the passage of only two such resolutions indicates that the majority of shareholders are satisfied with company efforts to address these concerns. In this series of snapshots, ISS Corporate Solutions examines the key corporate issues raised by this season’s shareholder resolutions. This time, we look at resolutions on lobbying, including activities focused on climate. Voting results are based on filings by companies up to June 13, 2022. More shareholder resolutions were filed during the 2022 proxy season than the previous year, with 586 environmental and social shareholder proposals submitted at U.S. companies so far, compared to 561 in 2021. Though many have since been withdrawn, many have been or will be voted on. According to data…
Author: Paul Hodgson
Posted: June 28, 2022, 4:01 am

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    Mark J. Astarita, Esq. is a securities lawyer who represents investors, financial professionals and firms in litigation, arbitration and regulatory investigations across the country. He is a partner in the national securities law firm of Sallah Astarita & Cox, LLC and can be reached by email at or by phone at 212-509-6544.

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