A rise in whistleblower claims is expected as the fallout from the COVID-19 pandemic continues. A similar swell of whistleblower claims occurred following other major events, including the terrorist attack on September 11, 2001, and the recession in 2008. The expected rise in whistleblower claims is not expected to be limited to COVID-19 related claims, but will also include an increase in whistleblower claims unrelated to the pandemic.
As part of its pandemic relief package, Congress introduced the Paycheck Protection Program (“PPP”), a loan program designed to provide forgivable loans to small businesses. The initial funds set aside for the program were quickly exhausted, however, the U.S. House of representatives ratified a bill that would add $321 billion to the PPP.
Following the market volatility caused by the COVID-19 pandemic, many expect an increase in enforcement actions from the U.S. Securities and Exchange Commission (“SEC”). The increase in enforcement action will likely lead to an increase in investor lawsuits as well.
In a class action lawsuit filed against Wells Fargo for its role in an alleged Ponzi scheme, a judge ruled that Plaintiffs had alleged sufficient facts to support two of their claims. Plaintiff’s claims that Wells Fargo aided and abetted fraud and also aided and abetted a breach of fiduciary duty will be allowed to proceed. A third claim alleging negligence by Wells Fargo was dismissed.
Former Morgan Stanley broker, Claire M. Cail, agreed to a $5,000 fine and a three-month suspension from association with any FINRA member firm in all capacities. According to FINRA Enforcement, Cail altered client-signed account documents
In the wake of the volatility in the market and other effects of the global pandemic, annuity suppliers are struggling to update their annuities – meaning make them more favorable because annuity purchasers received too good a deal the first time around. The market volatility and low treasury rate necessitate annuity repricing. In the current environment, changes are happening so fast that many insurance carriers have had to suspend the sale of annuities in order to give them enough time to make changes to the annuity policies.
The U.S. Supreme Court ruled that public sector employees can sue their employer when age bias has any effect on an adverse employment action. In doing so, the Supreme Court vacated a ruling by the Eleventh Circuit, which found that a public sector employee was required to show that the adverse employment action would not have happened if the individual was younger.
Securities regulators are expecting a steep increase in the number of complaints related to margin accounts. Specifically, regulators expect to see a dramatic increase in complaints about the suitability of such accounts. Margin accounts are suitable for a scant few; for most investors, they are unsuitable. In any turbulent market, losses in those accounts, due to forced liquidations, for example, can cause great financial damage.
Patrick M. Coogan, a former registered representative at LPL Financial, has agreed to a bar from the securities industry. On March 17, 2020, Coogan signed a letter of Acceptance, Waiver and Consent (“AWC”), agreeing to be barred from associating with any FINRA member firm in any capacity for making reckless misrepresentations in connection with loans obtained by a customer.
Former Morgan Stanley broker, Jacqueline Jacobsen, agreed to a $5,000 fine and a six-month suspension from association with any FINRA member firm in all capacities. According to FINRA Enforcement, Jacobsen used funds from her AFG account in a manner inconsistent with the Firm’s permitted use of those funds.
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In a significant development for investors in GPB Capital Holdings, the private equity firm will move into receivership following a prolonged legal battle.
The Securities and Exchange Commission (SEC) has charged Cantor Fitzgerald, L.P. with causing two special purpose acquisition companies (SPACs) under its control to make misleading statements to investors before their initial public offerings (IPOs).
The SEC recently charged Ken Leech, former Co-CIO of Western Asset Management, with fraud.
