Not Just Another Pair of Suits

Andrew Brown, Fall 2018 HeLP Legal Services Clinic Intern

“Hello, my name is Andrew Brown and I am with the HeLP Legal Services Clinic. I am taking over your case this semester. How are you?”


That’s how my first case started this semester. Cases will rarely be completed in one semester in the HeLP Clinic. Accordingly, the Clinic will have quite a few transfer cases. Matters that involve the Social Security Administration are a great example of cases that take longer than one semester to complete. When I participated in the HeLP Clinic last fall, I did not really have to deal with a transfer case. I forgot that clients may be confused by the process and what it is we do exactly.

This interaction made me think about how frustrating the whole process must be for clients. They have to deal with a different set of law students every four months and go through the entire process of explaining their case, again. I could hear the frustration in my client’s voice, especially when I asked questions that were easily answered in the file. “I already told y’all that!” Not the greatest way to start a professional relationship.

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Musk Mondays: Be an Informed Investor

By: Dowdy White, Fall 2018 IAC Student Intern

It’s a good philosophy not believe everything that you read, which is ironic considering the fact that you’re reading this. However, it’s probably easier to believe something if you know that it comes directly from the SEC. Throughout this “Elon Musk tweet” fiasco we’ve learned just how powerful words are and how important it is that we second-guess everything we read—especially on social media.  But how do we protect ourselves as investors?

The SEC has been talking about how to be safe about investing when social media comes into play long before its case against Elon Musk.  In 2014, the SEC released an investor alert informing investors how to avoid fraud when it comes to social media and investing. Well, the SEC simply states that the key to avoiding investment fraud on the Internet is to “be an educated investor.” That tried and true advice is important, and you should use it whenever you think you might want to invest.  To become an educated investor, the SEC recommends that you follow these five steps: Continue reading

Just Breathe

Brieanna Smith, Fall 2018 HeLP Legal Services Clinic Intern

Last summer, in celebration of finishing finals, my cousins and I decided to go to a concert at Lakewood Amphitheater. I was so excited to see one of my favorite artists, and spend time with my family. As the night went on, I started to get really hot. At first it was tolerable, until I started to get dizzy. I decided to go and get some water from a concession stand. As soon as I bought the water, everything went dark. A kind stranger next to me grabbed my arm just in time before I hit the ground too hard.

I panicked because I had never felt this way before. My heart was racing, and my breathing was out of control. One of my cousins helped me sit down in the grass and grabbed my hand and told me to just breathe. I did not know at the time, but I was experiencing a panic attack. The stress of three weeks of finals had taken a toll on me. My body was trying to get my attention. I had formed extremely bad habits of not eating enough or drinking enough water on top of minimal sleep. My body was exhausted, but my mind had not been listening. My cousin was eventually able to calm me down by telling me to just take deep breaths. “Just breathe,” she told me.

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Musk Mondays: Pesky Business

By: Dowdy White, Fall 2018 IAC Student Intern

I’ve always heard that if you aren’t able to say something nice, then it’s best to say nothing at all. This phrase was always especially applicable when I got in trouble as a child. As soon as I opened my mouth to say something “smart” back to my parents, my punishment would just get infinitely worse. While I took this lesson to heart, some people still take a shot at insulting or demeaning the authority figure when he or she gets into hot water.

One of the most notable examples of this type of situation is Elon Musk and his feud with the U.S. Securities and Exchange Commission. On October 4, 2018, weeks after the SEC filed a complaint against Musk and Tesla for a variety of reasons, Musk sent out a sarcastic tweet stating: “Just want to [say] that the Shortseller Enrichment Commission is doing incredible work. And the name change is so on point!” Continue reading

Killing the Messenger: A Deep Dive into Lorenzo v. SEC (Part 3 of 6)

By: Matthew Haan, IAC Student Intern Fall 2018

Hello again, faithful readers! In this six-part series, we are chronicling Francis Lorenzo’s dispute with the SEC as it makes its way through the courts. Last time, you read about the fateful e-mails sent by Lorenzo that got us where we are. In case you missed that, take a look at yesterday’s post. Today you will read about what we in the legal community like to call the procedural history. The procedural history covers everything that happened in the lower courts before the Supreme Court agreed to hear the case. Sounds interesting, right?

Let’s start with the SEC Rule at issue here. Rule 10b-5 is an antifraud provision, meaning that a violation requires proof of “scienter.” Like you, I had no idea what that word meant when I first heard it in my Contracts class. All it really means for this case is the SEC must have shown that Lorenzo had “an intent to deceive, manipulate, or defraud.” It is important to know that scienter can be shown by a high degree of recklessness. In other words, Lorenzo must have wanted to trick people with those e-mails, or at least acted with enough recklessness to show he ignored the potential falsity of the statements. The first part of Rule 10b-5 at issue is subpart (a). Rule 10b-5(a) prohibits employing “any device, scheme, or artifice to defraud” in connection with buying or selling securities. Subpart (b) is not as broad; it prohibits making an untrue statement of material fact or failing to state a material fact in order to make a statement not misleading. A claim under 10b-5(b) here would require proof that Lorenzo made an untrue statement, or failed to include a material fact necessary to make his statements true. Continue reading

Killing the Messenger: A Deep Dive into Lorenzo v. SEC (Part 2 of 6)

By: Matthew Haan, IAC Student Intern Fall 2018

Welcome back to our six-part series discussing an important upcoming Supreme Court case involving the Securities and Exchange Commission. Last time, I gave you a brief introduction to Lorenzo v. SEC. If you missed it, go back and catch up. This time, I will give you the factual background you need to understand what is going on in this case. Without further ado, let’s get to it.

All the way back in 2009 (this actually is not a long time in Supreme Court context), Francis Lorenzo—the petitioner in the case—was the director of investment banking at Charles Vista, LLC, an SEC-registered broker-dealer. One of Charles Vista’s clients was a public company called Waste2Energy Holdings, Inc. (W2E). According to Lorenzo’s certiorari petition, W2E made representations about a new technology and included the technology in its June 2009 Form 8-K, which valued W2E’s tangible assets just over $10 million. When the new technology did not work out, W2E filed an amended Form 8-K on October 1, 2009 in which it valued its assets at $370,552 as of March 2009. On the same day, W2E filed a Form 10-Q in which it valued its assets at $660,408 as of June 2009. Continue reading

Killing the Messenger: A Deep Dive into Lorenzo v. SEC

By: Matthew Haan, IAC Student Intern Fall 2018

Close your eyes and think back to a time in your childhood when you and a group of friends played telephone. You know, that game where everyone sits in a circle and each person takes a turn whispering a phrase to the person next to him? By the time the last person in the circle heard the phrase, it almost always was never what it started out as. Whose fault was it when the phrase changed? The person who started the game? The person who misheard the phrase? What about the person who simply relayed the message? These questions likely remain unanswered. Luckily, the Supreme Court of the United States has agreed to hear a case that could finally provide us with some answers! Well, not really, but it’s pretty close for layman’s terms.

The Securities and Exchange Commission has been in the Supreme Court a good bit recently, and it is due to make another appearance. This term, the Supreme Court will hear the case of Lorenzo v. Securities and Exchange Commission. The central issue in the case will be “whether a misstatement claim . . . can be repackaged and pursued as a fraudulent-scheme claim.” Back in 2011 the Court heard Janus Capital Group, Inc. v. First Derivative Traders and, in an opinion authored by Justice Thomas, ruled five to four that a mutual fund investment adviser is not liable for making false statements under SEC Rule 10b-5(b) when the allegedly false statements come from the mutual fund prospectus. I know this sounds elementary right now, my dear reader, but there are reasons why the holding in Janus Capital Group was not as obvious as it seems. You are probably wondering how someone could ever be liable for statements that he never made. Continue reading