Business Arbitration Practicum Offers Practical Experience

The result of a Teaching Innovation Grant, Georgia State Law’s new Business Arbitration Practicum teaches students real-world skills in client representation, case management, negotiation and arbitration by working through simulated securities arbitration problems.

Nicole G. Iannarone, assistant clinical professor and Investor Advocacy Clinic director, developed the course to offer more experiential opportunities for students interested in the subject area. The course builds upon and expands the former seminar component of the clinic into a standalone course.

The additional, and separate, time focusing on arbitration from start to finish also enhances the Investor Advocacy Clinic, for which the new course is a co- or pre-requisite, and offer students an opportunity to practice law before working with clients.

“The practicum is an interesting way to present the material and practice a challenging area of the law. Students handle every aspect of the case, so they are able to better understand how the rules and laws apply,” she said. “With the practicum being separate from the clinic, students are able to get their feet wet before diving in head first into client representation. Because we offer the course in the evening, part-time students are able to participate and gain experience as well.”

Upon receiving a hypothetical case, students conduct interviews, research claims, initiate and answer proceedings, prepare for a final hearing and represent their clients in a live negotiation. During the entire process Iannarone, adjunct faculty and practicing attorneys provide substantial feedback on the students’ lawyering skills and professional development.

“We’re holding our students to high standards, and they are exceeding them,” Iannarone said. “I enjoy seeing their work improve week to week and how they transition from student to lawyer through the course of the semester.

Professors Iannarone invites expert attorneys and regulators to share their experiences and critique students’ work. Guest lecturers share best practices, outline common mistakes and help students understand how to respond and best represent clients. Guest lecturers include FINRA Executive Vice President and Director of Dispute Resolution Richard W. Berry and Southeast Regional Director for FINRA Dispute Resolution Manly Ray, as well as prominent lawyers, mediators, and arbitrators.

Students have found the course experience invaluable.

“I have grown as a student and as a lawyer as a result of the practicum. It forces me to challenge myself. Traditional doctrinal classes do a great job at teaching the law, but their focus is not on teaching students how to practice the law. The practicum teaches students invaluable practical skills,” said Hector J. Rojas (J.D. ’17). “Professors Iannarone and Doss are experts in the material and do an excellent job in explaining it in class.”

Rojas plans to use the skills he’s learned to become a better advocate on behalf of future clients. After graduation, he plans to specialize in tort and commercial litigation.

“This course has definitely helped me prepare for my career. I now know what it’s like to take a case from beginning to end, through the lens of an arbitration proceeding. I’ve also gained confidence to execute the skills I have learned in a real-world setting,” he said.

Michael Williford (J.D. ’17) enrolled in both the practicum and Investor Advocacy Clinic for the experiential aspect.

“It’s enlightening to approach a class from the perspective of filing, prosecuting and defending an action. It gives some real-world texture to academic material that feels like exists in a vacuum,” he said. “You realize you haven’t mastered the subtleties of pleadings and motion practice when you’re asked to do it based on a set of facts you’ve never encountered before. It forces you to stretch and grow—to get outside of you comfort zone.”

Alumni with experience in business arbitration or securities arbitration who are interested in potentially working with the practicum can contact Professor Iannarone.

Clinic Provides Opportunities Unique in Law School

By Siri Yellamraju, Spring 2016 Student Intern

Like most 24-year-olds, I have very little to no experience with investments. The most investment experience I have is saving my beanie babies from the 90s in hopes that they’d appreciate in value. Other than two corporate finance classes, I really did not have exposure to the stock market and did not understand how it worked in real life. For those reasons, I never applied to the Investor Advocacy Clinic. Maybe it was the blues and spur of the moment decision-making from realizing this was my last semester before graduating law school, but I found myself applying for the Investor Advocacy Clinic the night the application was due. I spent a lot of time on the application, so I was really excited that I had been chosen for the clinic. I was apprehensive about working in an Investor Advocacy Clinic when I had no investing experience and had never taken a Securities law class. I quickly realized, however, that this was not a problem.

One of the great things about the Investor Advocacy Clinic is that even though the subject matter is confusing, the applicable law is pretty easy to digest. In fact, it is really interesting. The law is not built around the confusing technicalities of the products, but instead is built around the way people interact with the products. One of the main claims that the Investor Advocacy Clinic brings against Investment Advisers and Brokers is “suitability.” Brokers and Investment Advisers are required to suggest products that are suitable for the investor based on their age, investment experience, background, personality, wealth, etc. Although this does relate to the technicalities of the products, as long as you understand the basic risk profile of the product it is easy to do a suitability analysis. Surprisingly, the risk profile is easy to understand in comparison to weighing the personality and background facts of the client.

Working in a clinic is a great experience that can’t be matched by even the most “practical” of classes. The homework and problems presented in practical classes is all fake. The problems are in a controlled environment where variables can’t throw the entire process off track. There’s no way a class can reflect the feeling you get when a client visibly becomes nervous and emotional while you’re in a meeting with them. There’s no way a class can teach you what to do when your client refuses to send you documents you’ve asked for 2-3 times. Group projects are a staple in school, but working as a team on a real life problem is different than working as a team on a problem that was tailored for group work. The clinic provides opportunities that cannot be recreated in any class.

I am extremely happy with my decision to participate in the Investor Advocacy Clinic. I really enjoyed the work, making new friends, and exploring a new area of law. I am leaving with tangible skills I know my future employers will appreciate. Working in the Investor Advocacy Clinic is a great investment of a semester of law school. I am hoping that one day, when my beanie babies are finally worth millions, I will still carry these skills and knowledge.

What Your Investment’s Performance Claim Might Not Be Telling You

By: Alexandra Hughes, Spring 2016 Clinic GRA

On April 15, 2016, the SEC’s Office of Investor Education and Advocacy issued an Investor Bulletin discussing Performance Claims. The SEC stated that investors “will likely come across sales and marketing materials that describe an investment’s performance” but that performance claims may be presented in a way that doesn’t disclose everything an investor would or should want to know. The SEC advises that before making an investment decision, the investor should understand how information underlying a performance claim “is calculated and presented—and whether or not the claim is reliable and applies to [the investor’s] particular circumstances.”

The Investor Bulletin breaks down understanding performance claims made about an investment into two categories: (1) understanding how the information underlying the performance claim is calculated and presented and (2) evaluating the reliability of that performance claim. Understanding these issues is vital to the prudent investor. The SEC recommends that before an investor relies on a performance claim, they understand these two categories. A summary of the Investor Bulletin is below. Continue reading

Investor Advocacy Clinics

By Kelly Robinson, Spring 2016 Student Intern

If you have been reading our blogs, you may wonder what else it is that we do at the Investor Advocacy Clinic and why we’re here. This week we’ll be discussing how an Investor Advocacy Clinic comes into existence and how it fills a very specific need in the community.

FINRA established the Investor Advocacy Clinic Program in 2007. FINRA realized there was an underserved sect of Americans who had a lack of access to justice when the damages for their investing claims were under $100,000. (If you are not already familiar with the regulatory agency, FINRA, and what it does, we have a wonderful blog post about it here). This is so because if damages are less than $100,000, it is not economically feasible for an attorney to take on the case either on an hourly or contingency basis. For example, when taking a case on a contingency basis, fees are typically about 30%, and that’s only if the case is successful. This means that the client is only able to recover 70% of their losses, again, this is assuming a win. Additionally, attorneys don’t charge on an hourly basis because of the type of work and length of time spent on these cases make it prohibitively expensive to the client. To compensate the attorney would price the client out of the services in the first place.

FINRA created the FINRA Investor Education Foundation to support innovative research and educational projects aimed at those segments of the investing public that could benefit from additional resources, such as grants to researchers and non-profits for educational programs and support.

The Investor Advocacy Clinic at GSU is one of the beneficiaries of the FINRA Investor Education Foundation as it received a grant to establish the clinic. To create the Clinic at GSU, the College of Law had to submit a project concept and application and, once approved, GSU Law was able to establish the Investor Advocacy Clinic in 2013. Currently, the GSU Law Investor Advocacy Clinic is one of eight operating clinics established by a FINRA Investor Education Foundation grant. There are several other clinics that were established outside of the grant process. No matter how they began, many of the clinics are not able to continue (whether funded by grants or otherwise), further demonstrating how hard and costly it is to represent clients with small claims, successful or not.

We have been very lucky here at GSU, not only to have the Clinic, but also to have a great community of lawyers and attorneys that realize there is a lack of access in their field and who want to help fix that. Thankfully, these attorneys are donating their time and resources to our clinic so that we are able to continue to provide services, hopefully well past the confines of the grant money. Not only does this allow us to help represent those who lack such access to justice, but we are also able to offer investor education presentations and write informative blogs such as the one you are reading right now!

What’s in a name? That which we call a Certified Financial Planner, by any other name, may not smell as sweet

By Kelly Robinson, Spring 2016 Student Intern

Shakespeare made a variation of this line famous in his play Romeo and Juliet, indicating that a name is an artificial and meaningless convention. However the sentiment can be lost if the person handling your money isn’t who you thought they were based on this designation. So what is a Financial Planner and what does that name mean for you and your money?

The designation of financial planner can be confusing, as it is a phrase that can encompass a variety of skills and services. Some financial planners may have no training in finances whatsoever and are completely unregulated. Others may be regulated under other professional designations such as investment advisers and accountants, who are be regulated by the SEC and the state Board of Accountancy, respectively. Some others have earned the designation of a Certified Financial Planner (CFP) and are subject to strict standards to both earn and maintain their CFP designation.

Just to put into perspective “what’s in a name,” to earn the title of Certified Financial Planner, the Certified Financial Planner Board of Standards requires the following: at least a bachelor’s degree from an accredited university, three years of full-time personal financial planning experience (2,000 hours equals one year for a total of 6,000 required hours), completion of a CFP-board registered program (or holding one of few graduate degrees related to finances), pass a final certification examination, and finally attend thirty hours of continuing education classes every two years.

So what does this mean for you? Clearly, the range of services and skill sets varies quite a bit. This is why it is important to do your homework and determine what type of planning you are looking for. If you are focusing on one particular aspect of your finances, versus looking for a more comprehensive life plan, you may not need the extra services (and extra cost) that a CFP offers. Additionally, it’s important to consider that the higher the designation, the higher the regulation, so you might have more protection in working with a more highly regulated professional (however, that NEVER eliminates all risk). Finally, it’s important to consider that if a financial planner offers products, they have an incentive to recommend those products. Keep these factors in mind as you look for a professional to help you achieve your goals. If you have a particular person in mind that you’d like to hire, you can look up their designation using FINRA’s Profession Designation tool to determine exactly how (or if) they are regulated.

SEC Approves FINRA Rule 4518

By Geoff Hafer, Spring 2016 Student Intern

FINRA Rule 4518 “applies to registered broker-dealer members of FINRA that contemplate acting as intermediaries in transactions involving the offer or sale of securities pursuant to the crowdfunding provisions of Title III of the JOBS Act and the SEC’s Regulation Crowdfunding.”

Well, that certainly sounds nice but what does all of that mean? Continue reading

FINRA Enforcement Part 2: Market Regulation

By Kelly Robinson, Spring 2016 Student Intern

In our previous post FINRA Enforcement Part 1: Member Regulation we discussed how FINRA ensures compliance with firms and individual brokers. While member regulation is an important aspect of FINRA’s enforcement of industry rules, those rules don’t matter much if market itself is unregulated. Today, we’ll be discussing what steps FINRA takes to ensure integrity in the securities market.

FINRA provides oversight and regulatory services for equities and options markets (most notably NASDAQ and the NYSE) and monitors trading activity of a variety of securities such as corporate bonds and municipal securities. FINRA implements surveillance programs within these markets and is able to analyze orders as they move through the market. This surveillance system then looks for suspicious activity using highly sophisticated technology. Currently, FINRA’s Market Regulation Department monitors approximately 99 percent of the equities market and approximately 70 percent of the options market.

Another aspect of market regulation involves examining firms and bringing disciplinary actions against non-compliant firms and their associated persons. To see what is of priority in the 2016 exam check out the 2016 Regulatory and Examination Priorities Letter. If FINRA determines there are violations, the Market Regulation Department files a complaint with the Office of Hearing Officers, an independent department from FINRA Market Regulation Department. There is then a three-person panel who hears the case with each side offering evidence. At the conclusion, the panel determines whether violations have occurred and if so, what sanctions should be put in place.

Without such enforcement, investors would be wary of entering the securities market and may find themselves subject to a lot more fraud. Additionally, market regulation allows some investors to achieve restitution. Just to put in perspective the kind of impact FINRA has had on the market: in 2014, FINRA brought 1,397 disciplinary actions against registered individuals and firms, and levied $134 million in fines. As a result, FINRA expelled 18 firms from the securities industry and was able to order $32.3 million in restitution to harmed investors.