Shustak Reynolds & Partners welcomes new Partner John Barkley to the firm. John, who practices from the firm’s San Diego office, is a tax and business attorney who’s represented and advised clients on a range of matters relating to taxation and all aspects of operation of clients’ businesses. John also provides services in estate planning and representation of creditors in bankruptcy proceedings. He started his legal career as a sole-practitioner at Barkley Law Group, APC in Coronado, working with clients on Coronado as well as throughout southern California. Before becoming an attorney, John was a Commissioned Officer in the U.S. Army, serving for (4) years, including a tour of duty overseas. Schedule a free initial consultation by calling Shustak Reynolds & Partners, P.C. toll free at 888-748-8748, or contact us online.

2013 Top Rated Lawyers In Securities Law Erwin J. Shustak, Esq. and Jonah A. Toleno, Esq. have been selected as “2013 Top Rated Lawyers in Securities Law.” American Lawyer Media, a leading provider of news and information to the legal industry teamed with Martindale-Hubbell to highlight top rated lawyers in the September issue of The American Lawyer & Corporate Counsel. We are also very pleased to announce that one of our associates, George C. Miller, was recently named as a Semi-Finalist for the San Diego Daily Transcript’s “Top Attorneys 2013” publication in the Corporate Litigation category. Through its “Top Attorneys” publication, The Transcript conducts a peer voting process to determine the best lawyers in private, corporate, academic and government practice in San Diego County. Based in the firm’s San Diego office, George’s practice focuses primarily on securities arbitrations, business and corporate litigation, employment litigation, contractual and real property disputes and judgment collection proceedings. George routinely appears before California state and federal courts and the Financial Industry Regulatory Authority (FINRA) Arbitration Division in litigations and arbitrations and has substantial trial experience. Mr. Miller also was recently named a 2013 “Rising Star” by International-Referral, one of the world’s largest exclusive networks of professional services organizations. The award recognizes the highest quality attorneys at both domestic and international law firms who represent the future of the international legal community. We congratulate George on his recent awards and recognition. Schedule a free initial consultation by calling Shustak Reynolds & Partners, P.C. toll free at 888-748-8748, or contact us online.

Every public company has a duty to make certain disclosures to investors. Many companies are now turning to the power of social media to connect with investors and keep them informed. But what are acceptable best practices for companies that choose to disseminate information via social media? In an April 2 announcement, the U.S. Securities and Exchange Commission outlined a new report offering guidance to companies that wish to connect with investors through Facebook, Twitter and other social media outlets. Material information must be distributed uniformly to investors The SEC's Regulation Fair Disclosure is a law that pertains to how companies distribute information to the public. When a company releases information that is material to the general financial health of the organization, it must be distributed widely and nonexclusively. It is only fair that investors have access to information that may affect their investment at the same time as their peers, and Regulation Fair Disclosure maintains this level playing field. Social media is a relatively new tool in terms of its use to communicate with investors; even for company websites, it was not until 2008 that the SEC offered guidance clarifying that a website could be an effective means of disseminating information to investors. As such, the ambiguity surrounding social media and the Regulation Fair Disclosure is not surprising. Enter Reed Hastings. Hastings is the CEO of Netflix – and also an active user of social media. After learning that the Netflix monthly online viewing surpassed one million hours, a new record for the company, Hastings celebrated with a Facebook posting. The problem? The posting was on his personal Facebook page, a resource Hastings had not previously used to communicate information about Netflix to investors. Shortly after the information was released on Hastings' Facebook page, the price of Netflix stock soared by…

Shustak Reynolds & Partners Obtain A Large Arbitration Award San Diego, CA – Shustak Reynolds & Partners, P.C., announces that it obtained a $622,000.00 FINRA arbitration award against Fidelity Brokerage Services LLC (“Fidelity”) on behalf of an 86 year old investor who had opened a joint account at a San Diego Fidelity office. The amount awarded the Shustak firm’s client is approximately $100,000.00 more than the total compensatory damages requested and includes an award of $272,000.00 in legal fees and costs. According to Erwin Shustak, the firm’s managing partner, the elderly investors opened an account at a San Diego Fidelity branch and wanted to transfer into that account the contents of their existing account which consisted of stocks, cash and margin debt. The elderly couple told the Fidelity advisor who met them at the Fidelity office and opened the account that they did not have wills; both were in their 80’s and they wanted to ensure the account assets would transfer one to the other without probate in the event of either’s death. The claim alleged that the Fidelity representative who opened the account knew the substantial assets being transferred into Fidelity were coming from an account the couple had at TD Ameritrade which was specifically titled as a "Joint Tenancy", meaning the assets would pass to the survivor, by operation of law, without the need for any probate. The Fidelity representative who met the couple and opened up the account, however, mistakenly opened the Fidelity account as "Joint Tenants in Common". The evidence proved the Fidelity form was improperly written-as there is no legal form of ownership known as "Joint Tenants In Common"-and the Fidelity representative was not knowledgeable about the types of co-ownership available. When the wife died a few months later, Fidelity refused to correct their error;…

The Securities and Exchange Commission has filed a formal complaint against Kevin G. White of Plano, Texas, and two entities through which the SEC alleges he operated a significant Foreign Exchange (Forex) trading scheme, KGW Capital Management, LLC and Revelation Forex Fund, L.P. According to the […]

Massachusetts Secretary of the Commonwealth William Galvin recently announced the state has issued subpoenas to Morgan Stanley, UBS, Fidelity, Merrill Lynch, Wells Fargo and Schwab in connection with an investigation the state recently launched concerning sales of Real Estate Investment […]

Dismissal Of All Claims Won For Shustak Reynolds & Partners' Client SAN DIEGO, CA, June 29, 2012 /24-7PressRelease/ – Shustak Reynolds & Partners, P.C. announces that it won summary judgment for a large financial institution, and successfully obtained the dismissal of all claims asserted against the company, avoiding a long and potentially costly jury trial. The firm's client, a conglomerate of four independent broker-dealer firms with more than 5,000 independent financial professionals and 700 affiliated financial institutions, was sued for millions of dollars in damages by the sellers of a California based broker-dealer arising out of a $12 million acquisition that closed in the spring of 2008, just before the unprecedented collapse of the economy. The case involved more than 600,000 documents, numerous depositions of witnesses in Sacramento, Los Angeles, New York and Atlanta, and multiple parties and counsel. Nine months after we took over the case, we obtained summary judgment for our client who was thrilled. In addition to avoiding a long and costly jury trial, our client is entitled to recover the substantial costs and disbursements incurred in defending the claims. Partner Erwin J. Shustak and Senior Associate Robert L. Hill, along with paralegal Dominic Giovanniello, were primarily responsible for the case. Shustak Reynolds & Partners, P.C. is a specialty law firm with a national practice focused on complex securities, financial and business law. We have offices in California and New York. Please contact us toll free at 888-748-8748.

San Diego, CA – Shustak Reynolds & Partners, P.C., of San Diego, New York and San Francisco announces that it has successfully obtained an order dismissing, pre-hearings, a Financial Industry Regulatory Authority (“FINRA”) arbitration claim due to the Claimant’s failure to cooperate in discovery. While dismissals of FINRA claims prior to hearings are extremely rare, the rules expressly authorize arbitrators to dismiss a claim when a party materially and intentionally fails to comply with a prior order of the panel. The case, titled Lieberman v. Financial Northeastern Securities, Inc. (FINRA Case No. 10-00231), involved a Claimant who alleged she lost money in her investment accounts during the calamitous market downturn of 2008the worst financial crisis since the Great Depression. While Claimant alleged her former broker-dealer, Financial Northeastern Securities, Inc. (“FNS”), was responsible for her alleged losses and sought more than $600,000 in total damages, her allegations were directly contradicted by hundreds of telephone recordings FNS maintained as part of its fastidious recordkeeping process. The recordings revealed that Claimant’s self-directed, sometimes risky investment decisions and substantial withdrawals of principal during a declining market caused her lossesnot any wrongdoing on the part of FNS. Schedule a free initial consultation by calling Shustak Reynolds & Partners, P.C. toll free at 888-748-8748, or contact us online.

FINRA issued its latest “investor alert” warning the public about increasingly-popular alternative mutual funds. According to FINRA, alternative mutual funds–sometimes referred to as “alt funds”–are publicly offered, SEC-registered funds that hold more non-traditional assets and employ more complex […]

We are proud to announce that three of our partners recently received recognition from several publications. Erwin J. Shustak and Jennifer S. Hegemier were selected by San Diego Magazine as “Top Lawyers in San Diego – March 2013” and Jonah A. Toleno was awarded with an “AV” rating from Martindale-Hubbell: Erwin was honored for his excellence in Securities, Finance and Complex Business Litigation and highlighted as one of San Diego’s “Top Attorneys That You Need to Know”. As the founding and managing partner of the firm, he has handled and overseen several hundred litigations and arbitrations in Federal and State Courts and arbitration forums across the country. His vast trial and arbitration experience includes business, securities, and financial fraud; breach of contract; real estate transactions and disputes; employment disputes; unfair competition, non-compete and restrictive covenant cases; probate and estate disputes and intellectual property disputes including copyright and trademark infringement. Jennifer was honored for her excellence in Civil Appeals and Writs. Ms. Hegemier heads the firm’s Appellate Practice Group with 18 years of expertise in a wide variety of issues on appeal, including Complex Business Litigation; Real Estate and Land Use; Bankruptcy; Civil Procedure; Civil Rights; Commercial Contracts; Constitutional Law; Environmental Law; Governmental Agencies: Construction Defect; Anti-SLAPP; Personal Injury; Premises Liability; Animal Law; Family Law; Insurance / Bad Faith; Labor and Employment; Products Liability; Intellectual Property; Professional Malpractice and many others. She litigates appeals in all Districts of the California Court of Appeal, California Supreme Court, U.S. Court of Appeals for the Ninth Circuit, and the United States Supreme Court. Mr. Shustak also was named a “Top Rated Lawyer in New York” by the National Law Journal and the American Lawyer publications and was featured on the cover of the special feature edition of those magazines. Jonah Toleno was awarded with…

Shustak Reynolds & Partners, P.C. Obtains FINRA Arbitration Award San Diego, CA – Shustak Reynolds & Partners, P.C.,  announces that it obtained a $486,615.77 FINRA arbitration award against Morgan Stanley Smith Barney ("MSSB"), Citigroup Global Markets Holdings, Inc. and Citigroup Global Markets, Inc. ("Citigroup") on behalf of a financial advisor formerly employed by Citigroup's Smith Barney division ("Smith Barney") and its successor, MSSB. The FINRA Arbitration Panel unanimously concluded Citigroup and MSSB made negligent misrepresentations to the broker during his recruitment. Smith Barney began recruiting the broker to join its downtown, San Diego office in the spring of 2009, several months before Smith Barney's joint venture with Morgan Stanley was scheduled to close. At the time, the broker was employed by Merrill Lynch as an international financial advisor, having spent the past 13 years at the firm building a substantial book of business comprised exclusively of international clients. Those clients required unique international lending and brokerage services. During the recruitment process, the broker gave Smith Barney representatives detailed information concerning the specific investments and loans his customers held and stressed the importance of having all of those assets and loans transfer without issue to Smith Barney and MSSB. After discussing those investments and loans with the broker, Smith Barney representatives assured the broker that his clients' assets would transfer, without a problem, in-kind to Smith Barney and MSSB. They also assured him that after the joint venture MSSB would offer international loans and brokerage services equivalent to or better than those available at Merrill Lynch. Based on those assurances, the broker resigned from Merrill Lynch and joined Smith Barney in mid-2009, days before the MSSB joint venture closed. As is standard practice in the industry, he was paid a seven figure up-front bonus in the form of a promissory note…

An Industry is Born Most people do not associate Philadelphia with the birth of the modern American securities industry, instead picturing early traders auctioning stocks under trees on the street corners of downtown Manhattan. But in 1790, the “City of Brotherly Love” spawned the nation’s first market maker. It was first called the “Board of Brokers” and operated out of the Merchants Coffee House in downtown Philadelphia. The Coffee House later became City Tavern, which is still in business today. The exchange, meanwhile, moved around to several different locations in downtown Philadelphia before settling about a mile west of City Tavern on Walnut Street. It wouldn’t change its name to the Philadelphia Stock Exchange until 1875. By then, the industry it fostered  was in full blossom and the New York Stock Exchange had assumed its role as the largest exchange in the country. The founders of the Philadelphia Exchange could have never appreciated the magnitude of the industry they helped create and the effects (both positive and negative) it would have on the global economy.  Without an organized exchange, the brokerage business could not have grown into the multi-trillion-dollar industry it is today.  And while Wall Street remains the hub of the U.S. securities industry, as of the summer of 2012, the U.S. Bureau of Labor Statistics estimated the industry employs more than 803,000 individuals across the country.1 Most of those employed in the industry work as stock brokers and financial advisors. Recruitment in the Modern Securities Industry According to FINRA, the nation’s largest securities regulator, there are roughly 635,000 licensed registered representatives in the country. Those representatives, in turn, work for approximately 4,300 securities firms. The biggest names left standing on Wall Street—Morgan Stanley, Merrill Lynch and UBS—are undoubtedly most familiar to the public. But there are hundreds of smaller…

A two-decades-old rule by the Securities and Exchange Commission prevents companies from going public if the company attempts to limit the rights of shareholders from filing a class-action lawsuit. The ruling has prompted the Carlyle Group, a multinational asset management firm, to remove a mandatory arbitration clause in its initial public offering. Seeking to go public after 24 years as a private equity group, the Carlyle Group recently abandoned the provision rather than file a lawsuit against the SEC. It faced opposition from the SEC and various members of Congress. Senator Richard Bloomenthal, D-Conn., said in an interview with Bloomberg that a mandatory arbitration clause in an IPO would “open the door to arbitration clauses in all IPOs, and thereby eviscerate shareholder rights.” However, Hal Scott, a professor at Harvard Law School, told Bloomberg that “competitiveness is at stake,” and that if the SEC was going to block Carlyle’s IPO, it was entitled to know why the SEC found class action lawsuits by stockholders helpful, as opposed to arbitration. From 2001 to 2010, settlements from class action lawsuits by shareholders have totaled $52.7 billion, according to Cornerstone Research. The U.S. Supreme Court in recent years has held that arbitration is the preferred method of resolving stockholder disputes. In addition, Carlyle is a limited partnership, which would be key to any decision by the Supreme Court. Delaware state law, which governs most U.S. corporations, allows partnerships more leeway regarding fiduciary duties to shareholders. Thus, many legal experts have speculated that if the Carlyle Group had taken the issue to the Supreme Court, it would have allowed the private equity firm to go public with a ban on class action lawsuits. The Supreme Court has held that brokerages can force arbitration for customer disputes, but has yet to rule on whether public companies can extend…

Introduction The global financial crisis brought unprecedented change to the securities industry. Investment banks and brokerage firms once thought to be insulated from the ebbs and flows of the market failed outright or were brought to the brink of bankruptcy. Thousands of stockbrokers, investment advisers and others employed in the industry found themselves unemployed, sometimes overnight. Public sentiment for Wall Street fell to an all-time low. At the same time, main street investors still needed investment advice and a place to invest their savings. More than ever, they sought unbiased, conservative advice to help avoid the risky products and investments that contributed to the financial crisis in the first place. Unlike stockbrokers, who sometimes are motivated to “sell” certain products to investors to generate enhanced commissions (usually the riskier or more exotic the product is, the higher the broker’s commission), investment advisers typically are compensated through annual advisory fees, ranging from .5-2% of total account value. As their compensation is not directly tied to the individual products they recommend to clients, there is, in theory, less of a chance their recommendations will be biased. According to a study recently published by Fidelity Investments,2 most investors turned to investment advisers for advice following the financial crisis. In fact, more than 90% of investors surveyed ranked their adviser as being more helpful during the financial crisis than any other source. As the securities industry continues trending away from the traditional wirehouse model, however, it has become increasingly difficult for the public to differentiate between stockbrokers and investment advisers. This article expounds upon California’s definition of “investment adviser” and highlights some of the key differences between brokers and advisers. “Investment Adviser” Defined In California, an investment adviser is defined as “any person who, for compensation, engages in the business of advising others, either directly…

We are proud to announce that our firm took top honors for cash donated and number of suits collected in the small firm category of LAWSUITS, a cash and professional clothing drive for local law firms organized by Second Chance and Chaired by San Diego District Attorney Bonnie Dumanis. Our firm collected 18 suits and other professional clothing and $500 in cash donations which will be made available to graduates of Second Chance’s job readiness training program. The program helps at-risk youth, the homeless, recovering addicts and former prisoners reenter the community and workforce. Thank you to everyone who made our first year in the annual LAWSUITS competition a tremendous success. We plan to up the ante next year! Schedule a free initial consultation by calling Shustak Reynolds & Partners, P.C. toll free at 888-748-8748, or contact us online. 

Investors in UBS Willow Fund, L.L.C. (the “Willow Fund”), which was sponsored and sold by UBS Financial Services, Inc., have begun filing claims to recover significant investment losses allegedly caused by the fund manager’s decision to shift his investment strategy and invest […]

Shustak Reynolds & Partners, P.C. announces that it has been retained to represent several individuals in connection with the Ponzi scheme fraud allegedly perpetrated by PAUL TABET, his wife,JENIFER TABET and former Oregon politician CRAIG BERKMAN. PAUL TABET and CRAIG BERKMAN purportedly managed venture capital fund VENTURES TRUST II which, they claimed, had […]

March 25, 2013. The North American Securities Administrators Association (NASAA) was founded in 1919 and is one of the oldest investor protection organizations in the country. NASAA routinely publishes a list of its “top investor threats.” For 2013, a rapidly growing, often risky investment […]

FINRA recently issued new guidance to arbitrators further tightening the already limited grounds under which brokers may obtain expungement of customer information from their CRD record. The move follows a recent tide of criticism against FINRA and the SEC for, critics say, looking the other way when member […]

Just over one year ago, FINRA initiated disciplinary proceedings against Charles Schwab & Co. claiming, amongst other things, that the firm violated FINRA rules by requiring customers to sign agreements containing broadly-worded class action waivers. In an unusually long, 48-page written decision issued last […]