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Feature Articles

Supreme Court Rules That State Courts Can Adjudicate Class Actions Under the Securities Act of 1933 (04/09/2018)
By Jonathan E. Richman*
The Supreme Court ruled last month that the 1998 amendments to the federal securities laws did not strip state courts of jurisdiction over class actions alleging violations of only the Securities Act of 1933. The Court further held that those amendments do not empower defendants to remove those federal-law cases from state to federal court.
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Back to Arbitration Basics: Recent Federal Decisions (and a SCOTUS preview) (02/12/2018)
By Liz Kramer*

Remember when Maria sang “Let’s start at the very beginning, it’s a very good place to start”? Well, that seems to be what federal circuit courts are doing with their arbitration decisions recently. This article will run through some Do Re Mis of arbitration law, as articulated by those decisions (and will close with some arbitration cases on SCOTUS’s docket).
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Securities Cases to Watch this Term at the Supreme Court (10/16/2017)
By Brad S. Karp, Susanna M. Buergel, Charles E. Davidow, Andrew J. Ehrlich, Roberto J. Gonzalez, Daniel J. Kramer, Richard A. Rosen and Audra J. Soloway*
Last Term, the Supreme Court continued its recent trend of taking up significant securities litigation enforcement matters. For the first time in many years, in Salman v. United States, the Court waded into the thorny question of the scope of insider trading liability. It took a strong stand on the statute of repose for private plaintiffs under the Securities Act of 1933 in CalPERS v. ANZ, and imposed limits on the SEC’s ability to obtain disgorgement in Kokesh v. SEC. It was, by any measure, as active a Term as the Court has had in this area in years.

In this respect, the Term beginning this week appears to be a continuation of the last. The Court has already granted certiorari in three significant cases affecting securities litigation and enforcement, and parties have filed numerous additional petitions for certiorari that await decision. In this Alert, we preview the three cases already granted, and highlight a petition for certiorari of note.

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A Broker’s Guide to What Not to Do – FINRA’s Monthly Disciplinary Report (04/24/2017)
By James L. Komie*
Each month, FINRA publishes a summary of recent disciplinary actions taken against brokers and firms. It is something like a small-town newspaper police blotter for the industry. But instead of reading about a neighbor who was arrested for DUI, you learn that two brokers were disciplined last month for failing to update their Form U4s to reflect tax liens.
The monthly disciplinary report is worth reading for reasons other than prurient interest. It serves as a reminder for both industry professionals and attorneys of common compliance mistakes. It also shows what brings a modest fine or suspension and, more importantly, what can end a career.

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Signs, Signs, Everywhere a Sign: Changes in Store for SEC Enforcement under the Trump Administration (04/17/2017)
By Jodi L. AvergunScott CammarnBret A. CampbellJ. Robert DuncanDouglas H. FischerJoseph V. MorenoNihal S. Patel and Anne Tompkins*
Even before President Trump’s nomination of Jay Clayton as the next Chairman of the Securities and Exchange Commission (“SEC” or “Commission”), signs have been appearing that changes are afoot within the Division of Enforcement (“Enforcement Division”). The power of Enforcement Division attorneys in the field to issue subpoenas and open new investigations was recently scaled back, and now will require personal sign-off by the Director of Enforcement in Washington, D.C. With new incoming leadership at the top, and looming legislative proposals by the Republican-majority Congress that promise to take a hard look at the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), the Enforcement Division under the Trump Administration is likely to be more centralized and potentially will focus on a different set of priorities and a different approach than the SEC has taken in recent years.
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Salman v. United States: Supreme Court Considers Heightened Personal Benefit Standard for Tipper/Tippee Insider Trading Liability (10/17/2016)
By Matthew Rossi, Joseph De Simone, Richard M. Rosenfeld, Melanie M. Burke & Brantley Webb*
On October 5, 2016, the United States Supreme Court began hearing argument in Salman v. United States,1 one of the most closely watched insider trading cases to reach the high court in recent years. Salman could resolve a circuit split between the Second and Ninth Circuits and clarify generally what constitutes a personal benefit to the insider sufficient to establish insider trading under the longstanding tipper/tippee framework set forth in Dirks v. SEC, 463 U.S. 646 (1983). The personal benefit requirement is the line defining when a tippee trading on material, nonpublic information commits securities fraud. For that reason, lawyers and securities professionals alike hope that the Court’s decision in Salman will clarify the nature and type of personal benefit that must be shown in insider trading cases.

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Seems Like I May Be Right After All on One of My 2015 Predictions – Just a Little Late (09/12/2016)
by George H. Friedman*
SAC Contributing Legal Editor and Board of Editors Member
[This is adapted and updated from several postings originally published in the author’s blog at Arbitration Resolution Services, Inc. and in this publication. Reposted with permission of and thanks to ARS!]
Readers of my blogs here and at Arbitration Resolution Services may recall how I fared on one of my predictions for 2015. To refresh your recollections, prediction #4 for 2015 was “SCOTUS will rebuke the National Labor Relations Board on its anti-arbitration policy.” That didn’t happen in 2015, but it turns out I may just have been too aggressive in my timetable. In recent weeks, three petitions for certiorari have been filed seeking SCOTUS review of this very issue. And as discussed below I am confident the Supreme Court will take up at least one of these cases to resolve a major split among the Circuits.
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The Evolving Retirement Savings Market, Fiduciary Duty, And Our Capital Markets – Part II (08/22/2016)
By Norman B. Arnoff*

The Department of Labor’s (“DOL”) new Fiduciary Rule that this author reviewed in Part I of this article is conceptually sound in seeking to combine textual clarity, fact-specific inquiries to determine fiduciary status and breaches of the duty and the flexibility to apply norms of aspiration (i.e., a professional without conflict or engaging in conduct that, though it may present a conflict, substantially avoids and mitigates harm, both in perception and reality). Yet, the textually-based rules, at least from our perceptions, do not definitively resolve whether the conduct at issue complies with the appropriate standards of ethical conduct.

The other challenge is to make the forthcoming SEC Fiduciary Duty Rule, applicable to brokers, compatible with the DOL Fiduciary Duty Rule, so as to ensure that the law, regulations, and traditional industry customs and practices are premised on sound principles that are appropriately adaptable whatever the nature of the relationship between the financial service professional and the client–customer and always serve the investor’s best interest.
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The Evolving Retirement Savings Market, Fiduciary Duty, And Our Capital Markets - Part I (08/15/2016)
By Norman B. Arnoff*

This two-part article addresses the Department of Labor's (“DOL”) new Fiduciary Duty Rule for ERISA Plans and IRA accounts, published in April 2016, and its relationship to both the Fiduciary Duty Rule to be promulgated by the Securities and Exchange Commission (“SEC”) in April 2017, and to the broader category of accounts serviced by investment advisers and broker-dealers. Part I describes the scope of the duty created by the DOL Rule.
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A Guide to the Supreme Court’s Notable Decisions this Term — and Cases to Watch Next Term (07/05/2016)
By Brad Karp, Jay Cohen, Michael E. Gertzman, Roberto J. Gonzalez and Jaren Janghorbani*
The Supreme Court's 2015-2016 Term will be remembered for the unexpected death of Justice Antonin Scalia on February 13, 2016. Justice Scalia's passing and the delayed confirmation process for Judge Merrick Garland have impacted the Court in a number of ways, including a drop in certiorari grants and affirmances by an equally divided Court, including in the closely watched case United States v. Texas. The Court has nevertheless produced a number of notable decisions, from cases involving topics of broad social interest, such as affirmative action, reproductive rights, and public corruption, to cases relevant to business litigation in a number of areas, including class actions, standing, the False Claims Act, copyright, and employment discrimination. Below, we survey fifteen of these decisions and preview four cases scheduled to be argued next Term.
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