Cozen O’Connor: Securities Litigation & SEC Enforcement

Securities Litigation & SEC Enforcement

Featured Publication:

SEC Compliance and Enforcement Answer Book 2015 [Practising Law Institute]

Joseph Dever co-authored the chapter on "Market Manipulation Investigations" (Chapter 14) in Practising Law Institute's "SEC Compliance and Enforcement Answer Book 2015."

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Securities and financial services enforcement priorities are constantly shifting, which means that businesses today must be prepared to respond to actions by government agencies, self-regulatory organizations, shareholders and customers at all times. Companies may confront litigation, investor disputes, government investigations or enforcement proceedings, all of which carry the threat of business disruption, economic cost, and injury to reputation and investor relations. At Cozen O’Connor, we are fully aware of our clients’ business interests and are adept at achieving swift and seamless resolutions to major securities-related disputes and investigations.

The firm serves public and private companies, officers and directors, broker-dealers, investment advisers, hedge funds, private equity and venture capital funds, as well as municipal securities issuers, underwriters and advisers. Our attorneys regularly appear in state and federal courts throughout the country, defending clients in class action securities and shareholder derivative actions. They represent clients in investigations, examinations, administrative proceedings, disciplinary hearings, arbitrations, and other regulatory matters brought by the U.S. Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), securities exchanges and state regulatory authorities. They also conduct internal investigations and counsel management and boards of directors on all types of securities industry matters.

Cozen O’Connor attorneys base their advice on a thorough understanding of each client’s unique business model, circumstances and specific goals. Whether the optimal approach is negotiating an early settlement, filing motions to dismiss or summary judgment or contesting class certification, our attorneys pursue these goals with a high rate of success. In some instances, of course, securities disputes must go to trial. When that occurs, our team of experienced attorneys is ready. Cozen O’Connor attorneys have full command of the necessary disciplines—federal securities laws, state “blue-sky” laws, investment company and investment adviser laws, corporate governance laws and securities-related white-collar criminal laws. Moreover, they are seasoned trial attorneys who remain effective and innovative throughout complex proceedings.

Legal practitioners and clients sometimes approach securities and financial services litigation fatalistically, believing that these cases must be prolonged, expensive and distracting affairs. Our attorneys reject that assumption. Our goal is not simply to get good results for our clients, but to get those results efficiently discreetly and with minimal business interruption.

SERVICES

Securities Litigation and Arbitrations

  • Defend complex shareholder class actions arising under Section 10(b) of the Securities Exchange Act of 1934 and Sections 11 and 12 of the Securities Act of 1933
  • Defend shareholder derivative actions arising under Delaware and other state corporation laws for breach of fiduciary duty, self-dealing and corporate waste
  • Defend broker-dealers and their registered representatives in securities industry arbitrations brought by public customers before FINRA’s dispute resolution forum

Enforcement Investigations and Regulatory Matters

  • Represent clients in investigations, examinations and regulatory matters brought by the SEC, FINRA, and other industry regulators and agencies
  • Counsel clients through all stages of formal and informal investigations, from subpoenas for documents and witness testimony through the “Wells” process, settlements and litigation
  • Defend clients in contested SEC administrative proceedings and FINRA disciplinary hearings and appeals
  • Handle clients’ FINRA membership and registration issues and prepare change of business applications
  • Review client’s compliance programs and written supervisory procedures and conduct training programs to proactively help prevent regulatory problems before they occur

CLIENTS

  • Public and private companies, officers and directors, boards of directors, audit and special litigation committees
  • Broker-dealers, investment advisers, compliance personnel and registered representatives
  • Hedge funds, private equity and venture capital funds
  • Municipal securities issuers, underwriters and advisers

TEAM

Our team is made up of experienced securities and financial services attorneys, including a former Assistant Director from the SEC’s Division of Enforcement, a former Chief Counsel in FINRA's Department of Enforcement, several former Assistant U.S. Attorneys, members of the prestigious American Law Institute and several fellows of the American College of Trial Attorneys, the American Board of Criminal Lawyers and the International Academy of Trial Lawyers. Our litigators trained at some of the nation’s best law schools and clerked for federal court judges, including a Justice of the U.S. Supreme Court.

In today’s environment, companies may have to simultaneously respond to government investigations and civil litigation. Parallel actions frequently raise interdisciplinary legal questions. Cozen O’Connor actively incentivizes cross-practice consultation and our securities litigators routinely collaborate with their colleagues in the white collar criminal defense and corporate securities practices.

The firm’s Washington D.C.-based bipartisan Public Strategies group is also available to represent clients when sensitive business matters provoke government or public response. Their services include advocating for clients before legislative and executive branch officials, crafting sophisticated and thoughtful messaging and coordinating public and legal strategies. A win in the courtroom is not enough; we want to make sure that our clients come through any dispute with their reputation and relationships intact.

Experience

Securities Enforcement and Regulatory Defense

Represented two former employees of a major Wall Street investment bank in connection with an investigation by the NY Attorney General’s Office into Residential Mortgage Backed Securities (RMBS).

Represented a municipal authority in connection with a municipal bond tender offer investigation by the SEC Enforcement Division.

Represented an investment banker in connection with a market manipulation investigation by the SEC Enforcement Division.

Represented a registered broker-dealer firm in connection with an examination by the SEC Broker-Dealer exam staff.

Represented a registered investment advisory firm in connection with an examination by the SEC Investment Adviser/Investment Company exam staff.

Represented a Big Four accounting firm and, after Wells submission, convinced the Commission to reject staff recommendation to initiate enforcement proceedings.

Represented and obtained a favorable settlement for a bank director in an alleged insider trading investigation by the SEC.

Broker-Dealer Securities Arbitrations

Represented a broker-dealer firm in a FINRA arbitration against claims for unsuitability, breach of fiduciary duty and misrepresentation involving sale of variable deferred annuity invested in hedge fund subaccounts. 

Represented broker-dealer firm and registered representative in an NASD arbitration against claims for unsuitability, unauthorized trading, churning and research conflicts of interest. Caraway v. Merrill Lynch, NASD-DR (2001)

Represented broker-dealer firm and registered representative in an NASD arbitration against claims for unsuitability, unauthorized trading and churning. Hagy v. Merrill Lynch, NASD-DR (2001)

Represented broker-dealer firm and registered representative in an NYSE arbitration against claims for unsuitability, unauthorized trading and churning. Zaykowski v. Merrill Lynch, NYSE (2002)

Represented broker-dealer firm and registered representative in an NASD arbitration against claims for unsuitability, unauthorized trading and breach of fiduciary duty. Esterly v. Merrill Lynch, NASD (2002)

Represented broker-dealer firm and registered representative in an NASD arbitration against claims for unauthorized trading.  Moravek v. Merrill Lynch, NASD (2000)

Class Action Securities Fraud

Represented accounting firm in consolidated class action against publicly traded food brokering corporation, its officers, directors, investment bankers and accounting firm alleging claims under Section 10(b) of the Securities Exchange Act of 1934 and Section 11 of the Securities Act of 1933. In re: Suprema Specialties, Inc. Securities Litigation, U.S. District Court, DNJ (2003); Special Situations Fund, III, L.P. v. BDO Seidman, U.S. District Court, DNJ (2003)

Represented Big Four accounting firm in several 10b-5 class actions over the past 25 years, including the first 10b-5 class action ever to go to a jury trial. (Case settled after one week of trial.) 

Shareholder Actions

Represented officers and directors of public company in shareholder derivative action involving claims of breach of fiduciary duty and self-dealing following officers and directors’ conversion of class B shares of stock upon sale of company.  Roger Copland v. Fischer & Porter Co., Pa. Ct. Comm. Pleas (1993)

Represented public company in breach of contract action by former officer concerning provisions of shareholder agreement and underwriting lock-up restrictions for sale of stock obtained during company’s IPO.  Lawrence Husick v. Infonautics Inc., Pa. Ct. Comm. Pleas (1998) 

Represented privately held Delaware corporation in a Section 220 books and records action. G. William Carlson et al. v. CR Services Corp., Del. Ct. of Chancery (2002)

Represented publicly traded Delaware corporation and several officers and directors in shareholder derivative action involving breach of fiduciary duty claims.  Infinity Investors Limited v. Visual Edge Systems, Inc., Del. Ct. of Chancery (1999)

Publications

A Rare Statute-Of-Limitations Victory Against The SEC [Law360]

July 30, 2018

Joseph Dever, a member in the firm's Commercial Litigation Department, and Matthew Elkin, an associate in the firm's Commercial Litigation Department, co-authored, "A Rare Statute-Of-Limitations Victory Against The SEC' for Law360.

A Series Of SEC Enforcement Cases Against Microcap Attys [Law360]

May 31, 2018

Joseph Dever, a member, and William Lesser, an associate, in Cozen O'Connor's Commercial Litigation Department, co-authored this article highlighting the SEC Chairman Jay Clayton's warning shot across the bow of practicing securities attorneys.

NJ Case Bolsters The Limitations Defense Against SEC

January 02, 2018

Joseph Dever and Matthew Elkin, of Cozen O'Connor's Commercial Litigation Practice, co-authored, " NJ Case Bolsters The Limitations Defense Against SEC," for Law360.

SEC Compliance and Enforcement Answer Book 2017 [Practising Law Institute]

May 31, 2017

Joseph Dever co-authored the chapter on “Market Manipulation Investigations” (Chapter 14) in Practising Law Institute's “SEC Compliance and Enforcement Answer Book 2017.”

SEC Charges 71 Issuers under its Municipalities Continuing Disclosure Cooperation Initiative

August 29, 2016

Joseph Dever and Gregory M. Tears discuss the 71 municipal issuers and other obligated persons charged by the SEC for selling municipal bonds with offering documents that contained materially false statements or omissions about compliance with continuing disclosure obligations.

SEC and FINRA Announce 2015 Exam Priorities [Securities Litigation & Enforcement Alert]

January 15, 2015

The U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) recently announced their 2015 exam priorities for their respective examination programs. Both the SEC and FINRA have prioritized review of certain investment-related issues affecting the growing senior population. This regulatory focus echoes increasing national concern about the financial security of the retirement-aged baby boomer generation. It means continued attention to issues affecting senior investors, including suitability matters and broker communications with seniors. Both regulators also plan to focus much of their attention on the municipal securities market, a sector that has seen a robust uptick in regulatory and enforcement activity over the past year.

SEC Quietly Seeks Industry Bars Against Muni Officials [The Bond Buyer]

December 17, 2014

In an article titled “SEC Quietly Seeks Industry Bars Against Muni Officials,” Joseph Dever, a member of Cozen O’Connor’s Commercial Litigation Department, reviews several recent Securities and Exchange Commission muni enforcement cases and explains that the agency is quietly seeking a new sanction: "industry bars" against municipal officials. Industry bars are court orders that prohibit municipal officials from participating in future offerings of municipal securities. The significance of this new SEC enforcement strategy should not be overlooked, as an industry bar can essentially serve as a career-ending sanction for an individual working in the municipal finance sector.

Supreme Court Takes on Knowledge Standard in Securities Suits [The Legal Intelligencer]

November 09, 2014

In an article titled “Supreme Court Takes on Knowledge Standard in Securities Suits,” Stephen Miller, a member of Cozen O’Connor’s Commercial Litigation Department, and Kaitlin DiNapoli, an associate in the Commercial Litigation Department, discuss Omnicare v. Laborers District Council Construction Industry Pension Fund, in which shareholders invoked the securities laws to sue Omnicare for proclaiming in its U.S. Securities and Exchange Commission registration statement that its contracts with drug companies were lawful. This term, the U.S. Supreme Court will explore the pleading standard necessary to proceed on such a securities claim: May the plaintiffs merely allege that such a statement was objectively wrong, or must the plaintiffs also allege that the speaker did not believe that the statement was true?

Compliance Officers Beware: A Firm's Failure Can Get Personal [New York Law Journal]

August 18, 2014

In an article titled, ‘’Compliance Officers Beware: A Firm’s Failure Can Get Personal,” Linda Riefberg and Joseph Dever, members of Cozen O’Connor’s Commercial Litigation Department, discuss the different approaches taken by the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) with respect to individuals acting as Anti-Money Laundering, Legal and Compliance Officers (hereinafter jointly referred to as CCO). The SEC requires as a threshold matter that the CCO had supervisory responsibility over other individuals. FINRA, on the other hand, is satisfied if the individual has supervisory responsibilities over businesses or program areas that had failures even if the person was not an actual supervisor.

U.S. Supreme Court to Scrutinize Securities Class Actions [The Legal Intelligencer]

February 06, 2014

In two sets of cases this term, the U.S. Supreme Court is set to decide questions that could significantly alter securities litigation on behalf of large groups of investors under both federal and state law.

SEC's First Free Pass Under Cooperation Program...But Don't Expect a Trend [New York Law Journal]

June 12, 2012

The U.S. Securities and Exchange Commission (SEC) announced on March 19, 2012 that it was giving the proverbial "free pass" to an alleged securities law violator who cooperated in an SEC Investigation.

Events & Seminars

Past Events

2014 Ethics & Compliance CLE Institute

December 04, 2014 - Philadelphia, PA

In The News

126 Cozen O’Connor Attorneys Named to the Best Lawyers in America

August 22, 2018

One hundred twenty-six Cozen O’Connor lawyers from 20 of the firm’s national offices have been selected for inclusion in the 2018 edition of The Best Lawyers in America.

2018 U.S. News & World Report – Best Lawyers "Best Law Firms" Ranks Cozen O’Connor

February 01, 2018

In the 2018 U.S. News - Best Lawyers® "Best Law Firms, Cozen O’Connor is ranked nationally in 17 practice areas and regionally in 64 practice areas.

Cozen O’Connor Names Six New Shareholders

September 07, 2017

Cozen O’Connor is proud to announce the promotion of six members to shareholders of the firm: David Brisco (San Diego), Michael de Leeuw (New York), John Dickenson (West Palm Beach), Jonathan Lichtenstein (Philadelphia), William Walsh (Seattle), and Ingrid Welch (Philadelphia).

100 Cozen O’Connor Lawyers Named to the Best Lawyers in America

August 23, 2017

Lawyers were selected for inclusion in the 2018 edition based on a rigorous peer-review that has been developed and defined for more than 30 years.

Cozen O'Connor ranked in 2017 U.S. News & World Report – Best Lawyers "Best Law Firms"

November 23, 2016

Firms included in the 2017 "Best Law Firms" list are recognized for professional excellence with persistently impressive ratings from clients and peers.

Michael de Leeuw Discusses 2015's Securities Cases to Watch in Law360

January 02, 2015

In an article titled ''Securities Cases To Watch In 2015,'' Michael de Leeuw, a member of Cozen O’Connor’s Commercial Litigation Department, comments on the closely watched Supreme Court case Omnicare Inc. et al. v. Laborers District Council Construction Industry Pension Fund et al. and the Second Circuit’s recent decision in US v. Newman et al.

Joseph Dever Discusses the SEC's Policing of the Municipal Debt Market in The Wall Street Journal

December 19, 2014

In an article titled “SEC Tightens Policing of Municipal Debt Market,” Joseph Dever, a member of Cozen O’Connor’s Commercial Litigation Department, discusses the Securities and Exchange Commission’s oversight of the municipal debt market and its new initiative that encourages municipalities as well as their bankers to come forward with instances in which they included misleading information in their bond-offering documents. The terms of the program entail favorable settlements for the municipalities and banks, but not for individuals who may be banned from the market for their involvement in the alleged fraud.

Joseph Dever and Linda Riefberg Discuss the Burden of FINRA and SEC Exams in Bloomberg Brief

September 26, 2014

In an article titled ''Regulatory Exams May Push Small Firms to Deregister or Restructure, Attorneys Say,'' Linda Riefberg and Joseph Dever, members of Cozen O’Connor’s Commercial Litigation Department, discuss the burden of FINRA and SEC exams and the impact of the SEC’s ''broken window'' policy on smaller firms. They told Bloomberg’s Melissa Karsh that the cost to comply with longer and more extensive enforcement exams by U.S. regulators could drive smaller firms out of the market.

Cozen O’Connor Continues to Grow in South Florida with the Addition of Jeffrey Gilbert

September 23, 2014

Continuing its strategic growth in South Florida, Cozen O’Connor is pleased to announce the arrival of commercial litigator Jeffrey Gilbert as a partner in the firm’s Miami office. Most recently a shareholder with Greenberg Traurig, Gilbert is an accomplished and experienced real estate, business and trusts and estates litigator.

Joseph Dever Discusses the SEC's Broken Window Policy in Law360

September 10, 2014

In an article titled, "SEC's 'Broken Windows' Gambit Leaves No Room For Error," Joseph Dever, a member of Cozen O'Connor's Commercial Litigation Department, discusses the SEC's broken window policy, which is based on the premise that no securities law violation is too small to prosecute and that minor enforcement actions lead to greater overall compliance. "You see press releases now touting enforcement actions that involve either no or negligible investor harm, low dollar amounts for insider trading, and these are cases that the SEC a couple of years ago certainly would not have touted in a press release," observed Joseph.

Cozen O’Connor Team Secures FINRA Arbitration Win

May 12, 2014

Cozen O’Connor litigators Fred Jacoby and Joseph Dever recently obtained a complete victory in a $2 million FINRA securities arbitration in New York.