Securities Litigation & SEC Enforcement

Featured Publication:

The ‘Ripple’ Effect: A Striking Development on Defending Digital Asset Securities Litigation

In an article published by Thomson Reuters Westlaw, Kara Kapp discusses the implications of the court’s acceptance of Ripple Labs’ fair notice defense in the SEC litigation against the company and two of its executives, which has potentially wide-ranging implications for digital asset markets.

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Litigation and arbitration in the securities and financial services industry is continually evolving, and securities enforcement priorities are constantly shifting. Businesses today must be prepared at all times to respond to actions by government agencies, self-regulatory organizations, shareholders, and customers. 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 have a deep understanding 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, broker-dealers, investment advisers, hedge funds, private equity and venture capital funds, officers and directors, 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 arbitrations, investigations, examinations, administrative proceedings, disciplinary hearings, and other regulatory matters brought by the U.S. Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), the Commodity Futures Trading Commission (CFTC), 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 hearing or 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, applicable arbitration rules, corporate governance laws, and securities-related white-collar criminal laws. Moreover, they are seasoned trial and arbitration 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 secure positive results for our clients, but to do so efficiently, discreetly, and with minimal business disruption.

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
  • Defend and prosecute intra-industry disputes between FINRA member firms

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, and the American Board of Criminal 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, arbitrations 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

The ‘Ripple’ Effect: A Striking Development on Defending Digital Asset Securities Litigation

April 21, 2022

In an article published by Thomson Reuters Westlaw, Kara Kapp discusses the implications of the court’s acceptance of Ripple Labs’ fair notice defense in the SEC litigation against the company and two of its executives, which has potentially wide-ranging implications for digital asset markets.

SEC Suspends Trading in 15 Public Companies for Suspicious Social Media & Trading Activity [Alert]

March 04, 2021

Joe Dever and Luke La Rocca discuss the SEC's February 26, 2021 order that suspended the trading of securities in 15 OTC public companies due to questionable trading activity and social media promotions that the SEC suspects to have been part of a coordinated attempt to artificially inflate stock prices.

SEC Compliance and Enforcement Answer Book, Practicing Law Institute (2021 ed.)

January 15, 2021

Joe Dever, a member of Cozen O'Connor's Securities Litigation & SEC Enforcement practice groups, co-authored Chapter 16: “SEC Market Manipulation Investigations” of the 2021 edition of SEC Compliance and Enforcement Answer Book, published by Practicing Law Institute and edited by Cravath, Swaine & Moore LLP.

SEC Proposed Exemption Offers Regulatory Clarity For Unregistered Finders [Alert]

October 13, 2020

Seth Popick, Lindsey Stillwell, and Joe Dever discuss the SEC's proposed exemption to allow unregistered natural persons, referred to as finders, to engage in certain limited activities to assist issuers in raising capital from accredited investors.

Has the SAFT Been KIKed to the Curb?

October 02, 2020

Kara Kapp discusses the court's decision in Securities and Exchange Commission v. Kik Interactive, Inc.

Supreme Court Appears Unlikely to Further Curtail SEC Disgorgement Authority

March 06, 2020

Linda Regis-Hallinan and Joseph Dever discuss the Supreme Court case Liu v. SEC and the questions that the Justices asked that may point to which way the Court will rule.

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.”

In The News

Cozen O’Connor Secures FINRA Arbitration Win for Investment Bank

March 30, 2022

Cozen O’Connor securities litigators Joe Dever, Calli Padilla, and Harper Seldin recently obtained a complete defense victory in a $2.4 million FINRA securities arbitration.

In Corporate Crackdown, U.S. SEC Takes Aim at Executive Pay

October 22, 2021

Joseph Dever was quoted in an article published by Reuters that discusses how the SEC said it would revive a rule left unfinished from the 2007-09 financial crisis that would require U.S. listed companies to implement a plan to recoup executive compensation in the event they have to correct financial statements due to compliance failures.

How Cozen O'Connor Scored A Win For Investors In Ponzi Case

October 07, 2021

Matthew Elkin and Martin Bloor were quoted in a Law360 article that discusses Cozen O'Connor's victory for investors in a Ponzi case.

Cozen O'Connor Attorneys Win Securities Fraud Case in Del. Federal Court's First In-Person Trial

October 04, 2021

Martin Bloor and Matthew Elkin were quoted in an article published by the Delaware Court Insider, which discusses a securities fraud case victory.

Three Cozen O’Connor Attorneys Selected to Best Lawyers in Canada

August 26, 2021

Cozen O’Connor is pleased to announce that Best Lawyers has selected three Cozen O’Connor lawyers for inclusion in the 2022 edition of The Best Lawyers in Canada.

Cozen O'Connor Represents Underwriters in Cannabis Finance REIT Readies $100M IPO

February 03, 2021

AFC Gamma, a Florida-based real estate investment trust that finances cannabis ventures, set terms for a roughly $100 million initial public offering.

Cozen O’Connor Expands New York Corporate Governance & Securities Practice with the Addition of Mehrnaz Jalali

January 26, 2021

Jalali brings significant experience advising on corporate governance and securities disclosure and reporting on significant public equity and debt offerings, as well as a strong background in Environmental, Social, and Governance (ESG) matters. The Corporate Governance & Securities Practice has experienced significant growth in activity.

Ripple XRP is ‘unregistered security’ and here’s our suit: SEC

December 23, 2020

Joseph Dever was quoted in an article published by CoinGeek titled, "Ripple XRP is ‘unregistered security’ and here’s our suit: SEC."

Cozen O’Connor Continues its West Coast Expansion, Adding Three Veteran Southern California Litigators to its Los Angeles Office

March 04, 2020

Thomas Lombardi, Devin Donohue and Brett Watson — from one of southern California’s leading litigation boutiques Lombardi & Donohue — have joined the firm as members.

Cozen O’Connor Recognized As a Best Law Firm in 24 Practice Areas Nationwide, 106 Practice Areas Regionally

November 05, 2019

The U.S. News – Best Lawyers “Best Law Firms” rankings are based on a rigorous evaluation process that includes the collection of client and lawyer evaluations and peer review from leading attorneys in their field.

Share Class Settlements won’t Kill 12b-1 Fees but Resuscitation Comes Through Disclosure

March 21, 2019

Joe Dever was quoted in Regulatory Compliance Watch's article about the state of advisers receiving 12b-1 fees for placing clients in certain mutual fund share classes.

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.

Contacts

Joseph Dever

Chair, Securities Litigation & SEC Enforcement

jdever@cozen.com

(212) 453-3916

People

Awards

Cozen O’Connor Recognized As a Best Law Firm in 24 Practice Areas Nationwide, 106 Practice Areas Regionally

November 05, 2019

The U.S. News – Best Lawyers “Best Law Firms” rankings are based on a rigorous evaluation process that includes the collection of client and lawyer evaluations and peer review from leading attorneys in their field.

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.

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