Commercial Litigation Update

On August 20, 2019, the Securities and Exchange Commission (“SEC”) charged Mosaic Capital, LLC, formerly known as AOC Securities, LLC (“AOC”), and its CEO with failing to adequately supervise an employee who engaged in securities fraud. Pursuant to the SEC Orders, AOC and its CEO were ordered to pay penalties of $250,000 and $40,000, respectively. The SEC’s actions serve as a reminder to broker-dealers—and members of firm management—of the potential for liability based on the actions of a self-dealing employee, and the need to guard against such activities.

The ...

Broker-dealers (“BDs”) should be aware that, on June 5, 2019, the SEC adopted “Regulation Best Interest” (“Reg BI”), which requires BDs and their registered representatives (“RRs”) to “act in the best interest of the retail customer,” when “making a recommendation” regarding “a securities transaction or investment strategy.” In addition, the SEC’s new rules require BDs to deliver Form CRS relationship summaries (“Form CRS”) to retail customers. BDs will need to be in compliance with Reg BI and Form CRS, which were accompanied by more than ...

On June 19, 2019, the New York State Senate and Assembly passed legislation that would, if signed into law, broaden the scope of last year’s ban on clauses requiring employees to arbitrate sexual harassment claims so as to prohibit such clauses with respect to all types of discrimination claims. As reported on this blog, this ban on mandatory arbitration clauses was deemed invalid, as contrary to federal law, by the June 26, 2019 decision of the U.S. District Court for the Southern District of New York in Latif v. Morgan Stanley & Co. LLC, et al. (S.D.N.Y. No. 18-11528). It is too early ...