Investor Advocacy Clinic Not Currently Accepting Cases

Though we will continue to post to this blog throughout the summer, the Investor Advocacy Clinic is not currently accepting any case inquiries or providing any legal advice and is not currently planning to be operational in the 2019-2020 school year.  If you believe you have a problem with your financial professional, we recommend that you contact another lawyer as soon as possible because the passage of time can adversely impact a legal claim.  This link provides information that may assist you in finding an attorney.

Making an Impact

By G. Kevin Mathis, Spring 2019 IAC Student Intern

I returned to the Clinic because last semester I gained some valuable practical legal experience while helping harmed investors.  I hoped to continue my efforts representing investors. I also wanted the chance to assist Clinic I students learn how to assist with investor matters.  Just like last semester, my experience was not only great but it was more than I expected. Continue reading

#FyreFraud and Investment Scandals: The Fyre Festival as a Warning in the New Age of Investing, Part 4

By: Esmat Hanano, IAC 2019 Spring Intern

Welcome back to the next installment in our series on the Fyre Festival. Today, we focus on the fallout from the Fyre Festival and similarities that it shares with other recent investment scandals. When the first weekend of the Festival arrived, McFarland and his team were still woefully unprepared. After making grand promises about the experience that attendees would have, they didn’t at all meet expectations. For weeks leading up to the event, attendees had been reaching out to gather more information on the structure of the Festival, travel details, and supplies they would need for their stay. Instead of answers, attendees received cryptic responses and were passed off from one employee to the other. This all culminated on the first weekend of the festival when guests began arriving at the airport. Upon landing, guests were immediately lost with no idea where to go or how to get to the event site. When guests did arrive at the site, they found absolute chaos. Eventually, flights back to Miami were chartered and the organizing team went into damage-control mode as they faced serious accusations. Continue reading

Georgia State Investor Advocacy Clinic Participates in SEC Summit

As part of the Georgia State Law Investor Advocacy Clinic’s efforts to represent the interests of retail investors, the Clinic regularly participates in events that highlight the experiences retail investors face in the securities industry. On April 4, 2019, student interns Brook Ptacek, Kevin Mathis, Caitlyn Scofield, Caleb Swiney, and Esmat Hanano, along with Associate Clinical Professor Nicole G. Iannarone, participated in the inaugural U.S. Securities and Exchange Commission (SEC) Investor Advocacy Clinic Summit. The SEC invited the Georgia State Clinic, along with other investor advocacy clinics from all over the country, to SEC headquarters in Washington D.C. The Summit brought together students who routinely work with retail investors to share their experiences with the SEC.

Investor Advocate Rick Fleming welcomes securities arbitration clinics to the SEC

The Summit opened with welcome remarks from Rick Fleming, SEC Investor Advocate, and Tracey McNeil, SEC Ombudsman.

Gerri Walsh, President of the Financial Industry Regulatory Authority (FINRA) Foundation, also welcomed the clinics and thanked them for the work that they do for retail investors.

Next, the students heard from SEC Commissioner Robert J. Jackson Jr. about how important the clinics’ work is and shared lessons  he learned on his journey to becoming an SEC Commissioner.

Following Commissioner Jackson’s remarks, the clinics participated in breakout discussion sessions focused on three main topics: 1) private placements and the accredited investor definition, 2) fund retail investor experience and variable annuities, and 3) combating retail investor fraud.

Esmat Hanano shares group discussion results with Summit attendees

Georgia State took part in the breakout session on fund retail investor experience and variable annuities. The students met with Marc Sharma, Chief Counsel of the SEC Office of the Investor Advocate, and Michael Kosoff, Rachel Loko, and Michael Pawluk from the SEC Division of Investment Management. During the breakout session, the students offered their thoughts on different tools that the SEC could implement to improve disclosure procedures for retail investors.  After the breakout sessions, the clinics came together to share the highlights of their sessions with the group and continue the conversation on how better to protect retail investors. Esmat Hanano represented GSU during the group session.

Over lunch, the clinics heard remarks from SEC Commissioner Elad L. Roisman. Commissioner Roisman shared his three keys to success as a young lawyer starting out on his or her career. He shared his views on some of the biggest challenges facing the SEC today and remarked on the necessity of clinics in giving voice to retail investor concerns. In the afternoon, the clinics heard from Charu Chandrasekhar, Assistant Regional Director of the SEC Division of Enforcement in New York, and Rick Berry, Director of FINRA Dispute Resolution. Director Chandrasekhar remarked on the types of cases the SEC was seeing in New York and how clinics can help with the mission of the SEC Division of Enforcement. Director Berry spoke on the role of clinics during FINRA Dispute Resolution and how they can continue helping retail investors navigate arbitration proceedings with institutional actors and broker-dealers.

Georgia State presents #NoShame at the SEC

Lastly, the clinics each gave presentations on a number of topics. The clinics were asked to give a PowerPoint presentation in a Pecha Kucha format—20 PowerPoint slides with 20 seconds for each slide. Georgia State ended the day with a presentation on empowering investors to speak up about their experiences with securities industry. The students proposed starting a social media campaign to destigmatize the conversation around money to create a community of investors sharing their experiences with each other.   The views expressed during the presentations were the presenters’ own and do not necessarily represent the views of the Commission, individual Commissioners or members of the Commission staff.  The Georgia State law presentation can be found here.

The Clinic thanks the SEC for inviting us to such an important event and allowing us to give voice to the experiences that retail investors have when dealing with the securities industry.

Investor Advocacy Clinic Comments on FINRA Discovery Rule Change Concerning Firm Insurance Information

The Investor Advocacy Clinic continues to give all investors a voice. On September 24, 2018, the clinic commented on FINRA Regulatory Notice 18-22, a proposal that would amend the Discovery Guide’s Firm/Associated Persons Document Production List to require brokers and firms to produce documents concerning third-party insurance coverage upon request.

The clinic’s comment, authored by student attorneys Lynn Mckeel , Ben Dell’Orto , Edward Greenblat , Matthew Haan, Kevin Mathis, Brook Ptacek, and W. Dowdy White, support FINRA’s efforts to allow investors to evaluate whether they should go forward with a claim if there is little chance of discovery. Nevertheless, the clinic urged FINRA to take their proposal a step further and adopt the automatic mandatory disclosure of third-party insurance coverage regardless of any formal written request. Georgia permits any litigant to receive insurance information, upon request, before a suit is even filed.  Moreover, federal and many state courts mandate disclosure of insurance information without a formal request.   Requiring firms to produce insurance information early in an arbitration proceeding helps claimants evaluate whether they are throwing good money after bad.  The clinic’s comment is available in full here.

Lucia v. SEC: Who’s the Officer in Charge Here?

By: Esmat Hanano, IAC Student Intern Spring 2018

The Securities and Exchange Commission (SEC) is in the spotlight again, but not for any regulations or judgments it issued. Rather, the very structure of the SEC is the newsworthy topic because of a pending Supreme Court case: Lucia v. SEC. Lucia has not been set for oral argument; however, it is already causing quite a stir within the legal community because of the potential implications a decision by the Court will have. The main issue to be decided in Lucia is “[w]hether administrative law judges of the Securities and Exchange Commission are Officers of the United States within the meaning of the Appointments Clause.” While this seems like a boring issue worthy of only the most avid Supreme Court nerd, a decision one way or the other will have lasting impact that goes well beyond the SEC. Administrative law judges (ALJs) hand down enforcement orders for the SEC and a myriad of other agencies such as the Federal Deposit Insurance Corporation (FDIC). The work that ALJs perform is integral to the functioning of a regulatory agency and they are one of the main enforcement tools available to the Executive branch when it comes to civil remedies. Continue reading

To Thine Own Elders Be True: New Rules in Effect Today

By Abigail Howd, Spring 2018 IAC Student Intern

New rules to protect investors who have reached retirement age go into effect today. Now that our nation’s baby boomers are turning 65 or older, a large portion of the population is now being targeted by fraudsters in the investment industry. A survey conducted in 2012 showed that older investors were 34% more likely to lose money to fraudulent investments than investors in their 40s. More specifically, the study found that “[r]espondents age 65 and older were more likely to be solicited (93%), more likely to engage (49%), and more likely to have lost money (16%) than younger respondents.”

FINRA’s new rules seek to prevent fraudsters from being able to take advantage of these older investors. The new Rule 2165 (Financial Exploitation of Specified Adults) allows FINRA members to temporarily place holds on funds or accounts of seniors or otherwise incapacitated adults in four potential scenarios: Continue reading