Articles Posted in Uncategorized

Published on:

Our firm welcomes Dina Keever, who is joining the firm as Senior Counsel.

Dina is an exceptionally talented and skilled lawyer, having served as a federal prosecutor in both the Southern District of Florida and the Eastern District of Pennsylvania.

She is a former law clerk to Judge Peter Fay of the United States Court of Appeals for the Eleventh Circuit and while in law school served as the Editor-in-Chief of the FSU Law Review.

Published on:

Florida’s Legislature has unanimously passed Senate Bill 1300 (the “Bill”) aimed at updating the state’s decades-old limited liability company (LLC) laws. The Bill will first take effect on January 1, 2014.

Florida’s LLC laws date back to 1982, when the state was the second in the nation, after Wyoming, to pass such laws. Since then, every state has passed a set of LLC laws, which has created a competitive environment among states seeking to attract new businesses within their borders. As Florida’s outdated LLC laws increasingly drove new businesses to other states, lawmakers, state officials, and the legal community sought to update Florida’s LLC laws to gain back that competitive advantage.

Notably, the Bill expands protections afforded to LLC members. While LLC laws generally emphasize the ability of parties to contract freely, Florida’s Bill increases the number of non-waivable provisions from the previous six to the current sixteen. These protective provisions include appraisal rights for LLC members, and the ability to form special litigation committees (SLC) in actions between members, managers, or the LLC. Like shareholders of a corporation who disagree with extraordinary actions taken by the corporation, LLC members now have the right to sell back their interest to an LLC at an appraised value. Further, LLCs may now form an SLC to determine the merits of an action brought forth by an LLC’s members against the managers or the LLC itself. This provision mirrors a corporation’s ability to form an SLC following a shareholder derivative action.

Published on:

An Alabama-based subcontractor for the U.S. Department of Defense, Robbins, LLC, has settled a False Claims Act retaliation lawsuit brought by its former employee James Brown of Temple, Georgia.

According to Brown’s lawsuit, Robbins used an expired ingredient, Elastomag 170, when it made a rubber compound used in making sonar nose cones for U.S. Navy ships. Brown said that the nose cones house and protect the ultra-sensitive sonar equipment on Navy ships against the buildup of barnacles and other organisms that would interfere with the operation of the system.

Court documents alleged that when Robbins realized it had used an ingredient that was out-of-date, it decided that creating a new batch would be too expensive. Robbins allegedly altered the paperwork to make it appear that the Elastomag 170 was still good.

Published on:

WEST PALM BEACH – The law firms of McCabe Rabin, P.A. and Bruce E. Reinhart, P.A. announce the payment of a $3.1 Million qui tam settlement, including attorney’s fees, that they and Department of Justice attorneys reached with Midtown Imaging, LLC (“Midtown”) and its former owners for claims alleged by two radiologists (the “Relators”). Midtown owns several diagnostic imaging centers in Palm Beach County, Florida. The Relators worked for a radiology group that provided medical services to Midtown. The Relators filed their claims under the Federal False Claims Act (31 U.S.C. S 3729), known as the federal whistleblower statute.

On November 12, 2009, the Relators filed their qui tam action in the United States District Court for the Southern District of Florida (Case No. 09-82209). The complaint alleged that Midtown submitted false claims to Medicare between 2000 and 2008 by entering into certain leasing and professional services agreements with referring physicians and physician groups that violated the federal Anti-Kickback Statute and Stark Law.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid or other federally-funded programs. The Stark Law prohibits a medical center from profiting from patient referrals made by a physician with whom the center has an improper financial arrangement.

Published on:

The SEC, state regulators, and FINRA have announced today that Morgan Keegan & Co. and an affiliate have agreed to pay $200 million to settle fraud charges related to subprime mortgage-backed securities. Two Morgan Keegan employees also agreed to pay penalties for their misconduct,

The SEC’s order settling the charges finds that Morgan Keegan failed to employ reasonable pricing procedures and consequently did not calculate accurate “net asset values” for the funds. Morgan Keegan nevertheless published the inaccurate daily NAVs and sold shares to investors based on the inflated prices.

The SEC’s order finds that James Kelsoe, Morgan Keegan’s former portfolio manager, instructed Morgan Keegan’s fund accounting department to make arbitrary “price adjustments” to the fair values of certain portfolio securities. The price adjustments ignored lower values for those same securities provided by outside broker-dealers as part of the pricing process, and often lacked a reasonable basis. In some instances, when price information was received that was substantially lower than current portfolio values, fund accounting personnel acted at the direction of Kelsoe and lowered values of bonds over a period of days in a series of pre-planned reductions to values at or closer to the price confirmations. As a result, during the interim days, Morgan Keegan did not price those bonds at their current fair value.

Published on:

The SEC has charged Teresa Kelly and Catherine Kissick from Colonial Bank and Lee Farkas and Desiree Brown from TBW with fraud for their various roles in a seven and half year kiting scheme between Colonial Bank and Taylor, Bean & Whitaker Mortgage Corporation totaling approximately $1.5 billion. The four persons charged worked together to pass off fictitious or impaired securities and loans for high-quality liquid assets. The four collaborated using a method referred to as “kiting” to hide their $15 million dollar per day debts. Kiting is a practice where debits are not entered until after the credits for the following day are entered. Aiding the SEC with their investigation is the Fraud Section of the U.S. Department of Justice’s Criminal Division, the FBI, the Office of the Special Inspector General for the TARP, FDIC’s Office of the Inspector General, the U.S. Department of Housing, the Urban Development’s Office of the Inspector General, and the Civil Division of the U.S. Attorney’s Office for the Eastern District of Virginia. The SEC brought its enforcement action in coordination with these other members of the Financial Fraud Enforcement Task Force.

Published on:

The SEC has issued a Wells notice to UBS regarding secondary market trading of closed-end funds sold in Puerto Rico in 2008 and 2009.

UBS, a former financial adviser to Puerto Rico’s Employees Retirement System that provides pensions for government workers, led the 2008 sale of $2.9 billion in bonds. The sale resulted in $27 million in fees for UBS and its co-underwriters. A UBS manager bought $1.5 billion of the securities and put them into 20 mutual funds. The bonds represented about 17 percent of the funds’ $8.9 billion in assets at the time.

The Puerto Rican Employees fund had assets of $1.9 billion and liabilities of $18.9 billion as of June 2009, leaving it 90 percent underfunded.

Published on:

The SEC has charged TD Ameritrade for failing to supervise its brokers who misled clients who bought shares in the Reserve Yield Plus Fund.

Various brokers at the firm violated securities laws when they misrepresented the mutual fund as a money market fund, with the safety of a cash investment and with guaranteed liquidity. They also failed to disclose the nature or risks of the fund when offering the investment to customers.

The SEC found that TD Ameritrade supervisors failed to prevent the misconduct because it failed to establish adequate supervisory policies and procedures.

Published on:

The SEC charged the former financial advisor Kenneth Ira Starr, Jonathan Star Bristol, with aiding and abetting Starr’s multi-million dollar fraud by allowing Starr to use his attorney trust accounts as conduits for money Starr stole from his clients.

The SEC claims that over $25 million of Starr’s clients’ money came through Bristol’s trust accounts. Starr would transfer client funds into the attorney trust account, and Bristol would transfer the stolen funds to Starr for personal use.

Account statements listing the names of Starr’s clients as the source of the incoming transfers were sent directly to Bristol’s home address instead of his law firm.

Published on:

In an effort to determine the utility of creating a universal fiduciary-duty standard in the retail investment advice industry, a recent study by the Securities Industry and Financial Markets Association shows that a potential universal standard could be costly to investors without adjustments being made for special broker-dealer practices. Broker-dealers, who currently adhere to a suitability standard, can charge commissions and sell proprietary products. Under a universal fiduciary duty standard, broker-dealers run the risk of violating these duties by adhering to traditional broker-dealer practices. Accordingly, a shift of wealth toward fee-based investments advisors would result in additional fees (between 25-75%) being charged to the investors.

Critics claim the study has no value because the Dodd-Frank law already says selling proprietary products and charging commissions are not fiduciary breaches. The study also shows the universal fiduciary-duty standard would limit access to municipal and corporate bonds, 93% of which are purchased through brokerage accounts. Ultimately, SIFMA is looking to define the best possible standard of care for giving personalized investment advice to retail investors, regardless of whether the person giving the advice is an investment advisor or broker-dealer.