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Most Americans now struggle to save for retirement.  The ones fortunate enough to have some savings set aside often don’t have much.  For help allocating those savings, many turn to commission-compensated stockbrokers.  In many instances, these stockbrokers give their clients “suitable” advice.  The advice might not be the best, but decent, suitable advice often helps substantially.

Of course, not all stockbrokers give suitable advice.  Sometimes, a financial adviser decides to chase a bigger commission and pushes a client into a direction that isn’t in his or her best interest.  One financial adviser coined Brown’s Law of Broker Compensation to explain the dynamic.  In short, the worse a product is for clients, the more a broker will be paid to sell it to clients.

Access to representation shifts with the amount of damages in play.  Clients with big problems can often find a eager lawyer.  Clients that suffer $15,000 in damages may struggle to find representation.  These cases are complex.  They require substantial skill and diligence to resolve.  The potential compensation for these relatively smaller cases may not motivate the private bar to provide representation.

Securities arbitration clinics provide an option.  These relatively rare clinics take on a few of…

Christmas is just a couple of days away, and we all know what that means – the end of Winter break is in sight and preparation for the Spring semester must begin in earnest!

In these last few vacation days, however, I leave you with a few articles on the changing face of the Christmas business:

The down-and-out Mall Santa reinvents himself for a modern age

Sorry. Wrap It Yourself, Say Overwhelmed Online Shops

Holiday Windows Brighten a Bleak Retail Scene, but How Long Will They Last?

Merry Christmas to all who celebrate, and for the rest of us – well, I know a great Chinese place :-)!

As a follow-up to my last post, the comment period on whether Non-Attorney Representatives (NARS), should be allowed to represent investors in FINRA arbitration has now closed.  By my count, fifty-seven different commentators weighed in on the issue.  Although securities industry groups and the plaintiffs’ bar often disagree over the right course, they share concerns about the impact of NARS on the forum.

For example, the Securities Industry Financial Markets Association, an organization that styles itself as “the voice of the U.S. securities industry,” cautioned against allowing NARS to represent investors in the forum, pointing out that “FINRA has no current means to measure or ensure competency, nor respectfully, should it put itself in the business of doing so” for NARS.  The Public Investors Arbitration Bar Association (PIABA), filed an entire report, arguing that FINRA should significantly restrict NARS from representing clients in FINRA’s forum.  The PIABA report also points out that a NAR’s appearance in an arbitration has resulted in an investor receiving no recovery because Kansas law prohibited the representation.  That arbitration award explained that:

The Kansas Supreme Court and the Rules of Professional Conduct have consistently and firmly held non-attorney representatives are not authorized to practice law in

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This week, the Delaware Supreme Court reversed and remanded Chancery’s appraisal determination in Dell et al. v. Magentar Global Event Driven Master Fund et al..  The decision amplified the Supreme Court’s earlier opinion in DFC Global Corp. v. Muirfield Value Partners, LP, et al..

In DFC, the Delaware Supreme Court held that courts entertaining appraisal claims should place heavy emphasis on the deal price, at least for arm’s length negotiations with no apparent flaws.

Dell, however, was a slightly different animal.  Unlike DFC, it involved a management buy-out, which is a scenario rife with potential conflicts of interest.  It was precisely because of these conflicts that the Chancery court refused to accept the deal price, and instead used its own discounted cash flow analysis to determine that the stock was worth more.

On appeal, the Delaware Supreme Court reversed.  Though the Court acknowledged that there may be cause for concern in the MBO context, the Court concluded – based on Chancery’s own findings – that those concerns had been allayed in this particular case due to, among other things, an efficient market for the company’s stock, a robust sales process with full disclosure, and…

Thank you to the BLPB for the chance to write some for the platform. Reading the BLPB has informed my work, and it has kept me up to speed on breaking developments.  For readers that don’t know me, I’m at the University of Nevada, Las Vegas.  My teaching and scholarship focus on business, securities, and professional responsibility issues.

On that note, the Financial Industry Regulatory Authority (FINRA) now considers a live securities and professional responsibility issue.  It has a request for comment out about whether non-attorney representatives (NARS) should continue to represent persons in FINRA’s arbitration forum.  States approach unauthorized practice in different ways.  Florida has vigorously policed the unauthorized practice of law.  New York, on the other hand, has allowed NARS to represent persons in arbitration. 

There may be good reason to be concerned about representation quality from non-attorney advocates.  The New York Times covered the issue in 2010, profiling Stock Market Recovery Consultants, an outfit that represents investors in securities arbitration.  The Times pointed out that one of the firm’s principals “pleaded guilty in 2004 to insurance fraud in a million-dollar scam involving jewelry.”  Another one of the firm’s principals suggested that the Times speak with an attorney…

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The SEC’s Investor as Owner Subcommittee of the Investor Advisor Committee has just posted a discussion draft regarding dual class share structures in advance of the December 7 meeting at which such structures were under consideration.  (As of this posting, details of what transpired at the meeting are not online).

Dual class structures are increasingly common these days; presumably, that’s in large part due to the fact that institutional investor power has become a serious threat to management control, and dual class shares are a mechanism for pushing back.  (Staying private is another mechanism, and the more that companies choose that route, the more bargaining power they have when they eventually go public, etc etc).

Suffice to say that despite various defenses of dual class shares that have been offered, the Investor as Owner Subcommittee is not impressed.  It highlights a number of risks, which basically come down to that public investors may have different views about corporate strategy than the control group – precisely the feature that endears the structure to some commenters – and that controllers may use their control to further cement their own control (i.e., Google and the nonvoting shares).  And then of course…