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Contributor: George H. Friedman ([email protected])

(ed: This column follows recent items of interest to securities experts and relating to arbitration practice. These items are drawn from recent editions of the Securities Arbitration Alert, updated where necessary, and appear here with the permission of the Alert’s publisher. This issue’s column is compiled by the SAA’s publisher and Editor-in-Chief, George H. Friedman. Note that any 2021 back issues of the Alert referenced below can be downloaded free of charge here.)

FINRA TO RESUME IN-PERSON HEARINGS IN ALL HEARING LOCATIONS EFFECTIVE AUGUST 2. Beginning August 2, all 69 FINRA Dispute Resolution Services (“DRS”) hearing locations will be open for in-person proceedings. 

FINRA DRS POSTS STATS THROUGH MAY: CUSTOMER CLAIMS STILL UP (BARELY) WHILE INDUSTRY CLAIMS CONTINUE TO PLUMMET. THE COVID-19 PENDING CASES BACKLOG IS GONE, AND THE AAA RELEASES STATS ON “VIRTUAL EVENTS” IN ARBITRATIONS. FINRA Dispute Resolution Services (“DRS”) posted case statistics through May, with the overall case filing trends essentially unchanged from April. Also, the AAA released new data on “virtual events” in the case administration process. READ MORE

FINRA GOES BACK TO THE DRAWING BOARD ON EXPUNGEMENT RULE. On the last day for SEC review of FINRA’s latest proposal for improving the expungement process, the Authority temporarily withdraws the rule filing.  READ MORE

WELLS’ CEO TELLS SENATE BANKING COMMITTEE FIRM IS LIBERALIZING CUSTOMER ARBITRATION AGREEMENTS. GOLDMAN IS LOOKING AT ITS EMPLOYMENT ARBITRATION POLICY. AND AMAZON DROPS PDAA FROM TERMS OF USE. Wells Fargo’s Chief Executive Officer and President, Charles W. Scharf, testified at a May 26 Senate Banking Committee hearing that the firm is in the process of improving the predispute arbitration agreement (“PDAA”) it uses in customer account agreements. Also, Goldman Sachs announced that it was reviewing the firm’s employment arbitration policy. And Amazon has dropped the PDAA from its Terms of Use.  READ MORE

ARE WE SEEING THE START OF A TECTONIC SHIFT ON MANDATORY PDAAS IN THE FINANCIAL SERVICES FIELD? This is less a letter and more your editor’s musings, but I wonder whether we are seeing the start of a tectonic shift on mandatory predispute arbitration agreements (“PDAA”) in the financial services field. READ MORE

Contributor: George H. Friedman ([email protected])

(ed: By reading how courts and arbitrators value, view and utilize testifying experts or decide issues experts encounter on a regular basis, one can better serve the fact-finder, more effectively help the client, and more likely avoid a bad experience. For selected court decisions, we draw again from the Securities Arbitration Alert (SAA), and other resources. Note that any 2021 back issues of the Alert referenced below can be downloaded free of charge here.

Badgerow v. Walters, 975 F.3d 469 (5th Cir. 2020). As reported in SAA 2021-19 (May 20), the Supreme Court on May 17 granted Certiorari in a case involving application of the “look through” standard. Here is an elaboration. READ MORE

Jefferies LLC v. Gegenheimer, No. 20-2273-cv (2d Cir. Jun. 3, 2021) (summary order). A unanimous Second Circuit Panel in Jefferies LLC v. Gegenheimer, No. 20-2273-cv (2d Cir. Jun. 3, 2021) (summary order), denies a “manifest disregard” challenge to a FINRA Award, finding that none of the elements of this “doctrine of last resort” are present.

READ MORE

Charles Schwab & Co., Inc. v. Spadoni, No. 2:21-cv-00635-JCZ-JVM (E.D. La. Mar. 30, 2021). Oops! Schwab Brings Arbitration to Recover Over $1 Million Mistakenly Sent to Former Client. READ MORE

Customers Win Three COVID-era Awards. This analysis of three large COVID-era Awards in favor of customers is provided by Harry Jacobowitz, Esq. Mr. Jacobowitz is a graduate of the University of Pennsylvania Law School with more than 30 years of experience in the legal and legal publishing fields, is a former manager of SAC’s securities Awards database and currently serves in a consulting capacity to SAC and the Alert. His company, HAJ Research and Writing LLC, is available to perform customized searches of the database for SAC subscribers and others. Customized searches may be ordered by emailing [email protected]. He can also be reached at [email protected]. The words that follow are his. READ MORE

HEARD THROUGH THE REGULATORY GRAPEVINE, COMMENT LETTERS, & SPEECHES

Contributors: SEC-Hollie Mason ([email protected])

(ed: Keeping abreast of rulemaking and other regulatory initiatives can be a full-time job. We include a few recent changes in rulemaking, legislation, regulatory notices and policy speeches that are creating "buzz" in the securities community. This compilation is a summary of regulatory actions and comments and is not meant to be an all-inclusive substitute for individual research via the various regulatory sites.)

On June 11, 2021, the US Securities and Exchange Commission (“SEC” or “Commission”) announced that it would focus on cybersecurity disclosures made by public companies as part of its regulatory agenda. The SEC adopted its cybersecurity disclosure guidance in 2018, which marked the first time that the Commission provided official guidance to public companies about their cybersecurity disclosure obligations. Although it will be some time before a final rule on cybersecurity risk disclosures is issued, a proposal from the SEC is expected in October 2021. In the meantime, public companies should begin preparing for what is likely to be a new SEC rule mandating cybersecurity disclosures.

On June 17, 2021, the Securities and Exchange Commission (SEC) issued an order (the “Order”) approving a revision to Rule 205-3 under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), which exempts investment advisers from the general prohibition against charging clients performance fees when the client is a “qualified client,” increasing the dollar amount thresholds that must be met in order for a client to be considered a qualified client.

Contributor: Geraldine Genco "GG" Dube ([email protected])

(ed: SER’s Committees are composed of two Board Member, and most have one or more members at large. Our Committees and members are listed under the “About Us” button on our Home Page. Committees either support the business needs of our organization or aim to develop and enhance the skills and expertise of our members.)

Contributor: Patti Koetting ([email protected])

SER Member Joining the Institute for Enterprise Engineering at Duke SER member Craig Hurwitz will join the Institute for Enterprise Engineering at Duke University’s Pratt School of Engineering as Executive-in-Residence in FinTech and Cybersecurity beginning July 1. READ MORE

SER Member Keeps Active Blog In addition to his expert work and serving on SER committees, SER member Gontran de Quillacq posts regularly to a Blog on his website covering timely industry topics of interest. You can bookmark his page or sign up to receive a monthly update of these posts via email.

MEET OUR NEWEST MEMBERS! (Click on a name to view the full profile on SER's website, where you can also access their contact info and website. If you have a new member to nominate, please contact SER's Membership Chair Alan Besnoff ([email protected]).

William Klun - Mr. Klun's background includes comprehensive transaction experience in corporate finance, project finance, M&A, derivatives and trading. Credentialed as a Certified Fraud Examiner (CFE), his expertise includes: financial crimes investigation; money laundering; securities fraud; financial statement fraud; bankruptcy fraud; tax fraud; and racketeering.

Contributor: Patti Koetting ([email protected])

Final Note: The Contributors are members of the SER Public Relations Committee. They have designed this newsletter for the membership and worked to gather material for this issue. Members can help by sending Contributors information and suggestions for content in future issues. Members should also visit SER's "Newsroom" section of the Website periodically, as many of the items that appear here will be first posted in the Newsroom.

Copyright 2021 Securities Experts Roundtable - publication appears three times a year and is available as a membership benefit to experts of the Securities Experts Roundtable. Comments - suggestions welcome. Email [email protected] with comments.

Mission Statement: SER provides continuing professional education and promotes ethics and integrity among its members while remaining dispute neutral as an organization.

Disclaimer: This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. The publisher is not engaged in rendering legal, accounting or other professional service or advice. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.