Broker-Dealers and Investment Advisors

Honigman's Broker-Dealers and Investment Advisors industry group has extensive experience in advising and representing broker-dealers and investment advisors in many aspects of business and legal matters, including registration and formation of investment advisors, investment advisor compliance issues, regulatory and enforcement matters, arbitrations, and class action litigation. Our lawyers provide effective and meaningful solutions to clients through a cross-disciplinary, cost-efficient approach. Members of the Broker-Dealers and Investment Advisors group have been recognized as leaders in the legal profession by client- and peer-review publications, including Chambers USA: America’s Leading Lawyers for Business, The Best Lawyers in America, Michigan Super Lawyers, DBusiness, and Lawdragon. We have assisted many clients in the registration and formation of broker-dealer and investment advisor firms. For a number of years, members of the group have acted as outside general counsel to such firms, advising on daily or extraordinary registration and compliance issues. We also have substantial knowledge and experience advising broker-dealers and investment advisors about uncommon and/or sophisticated investment products and transactions.

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Members of the group regularly represent broker-dealers and investment advisors in a variety of regulatory investigations and enforcement actions, including matters before or against the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), and state securities regulators. Our lawyers have successfully represented broker-dealer and investment advisor clients in matters concerning trading practices, inside information, disqualification proceedings, anti-money-laundering (Patriot Act) requirements, adequacy of disclosure, marketing practices, registration, sales practices, Regulation S-P compliance, margin rule requirements, custody of client funds, and investment advisor rule compliance. In fact, some cases handled by our attorneys have received national attention. One of our lawyers represented a major university endowment and its endowment managers in congressional hearings and before the SEC regarding the impact of program trading on the markets.

We have extensively and successfully represented broker-dealers and investment advisors in arbitrations and state and federal court. Our record representing brokerage firms, as well as the general quality of our Litigation department, has created a highly favorable reputation among clients, attorneys, courts, and arbitrators. We believe that our competencies significantly reduce the risk of litigation by emphasizing efficient, skilled advocacy and effective problem solving aimed at producing superior results in settlement/awards and an overall reduction of risk and expenditure.

Our industry group has represented brokerage firms in hundreds of customer arbitrations with exceptional outcomes. We also have had significant success collecting debit balances from customers who are asserting claims against broker-dealers. For example, we recently obtained an award against a customer of $186,000 and the dismissal of the customer’s $900,000 claims against the brokerage firm.

We have successfully represented major wire houses and regional broker-dealers in various class action/mass action cases that have arisen from a particular investment or the conduct of certain brokers. These cases have concerned approved products and investment sold away from the brokerage firms. We have developed efficient and effective methods in successfully defending hundreds of arbitrations arising from the same activity or series of activities. Through our experience with such cases and our talented and technology-savvy lawyers and resources, we are able to provide top-shelf legal services and user-friendly websites and reports for clients concerning numerous sophisticated and complex cases at extremely competitive costs.

We have represented investment firms in some of the leading decisions in the Sixth Circuit, such as Cannon v. GunnAllen Financial, Inc. (M.D. Tenn) Memorandum Opinions 2/6/07, 8/14/07, and 9/15/08 (successfully obtained the dismissal of various claims and opposed certification of a class of investors who allegedly purchased securities through an unregistered broker); Roney & Co. v. Kassab, 981 F.2d 394 (6th Cir. 1992) (case establishing the requirement that courts must apply NYSE/NASD six-year eligibility rule for arbitration); Roney & Co. v. Goren, 875 F.2d 1218 (6th Cir. 1989) (establishing right of broker-dealer to use contractual forum and time limitations, which became the subject of an NASD/NYSE rule); and Brunetti v. Roney & Co., 807 F.Supp. 626 (E.D. Mich. 1992) (leading case establishing the elements for churning and misrepresentation).

Our lawyers also have achieved extraordinary results for clearing firms and broker-dealers in cases against SEC receivers. For example, in Phillip Stern v. Legent Clearing, LLC; 1:09-cv-00794 (N.D. Ill. 2011), we obtained a highly favorable outcome for a clearing firm client accused of assisting the fraudulent activities of a trust firm.

Finally, we are extremely knowledgeable and have extensive experience in advising and representing broker-dealers and investment advisors on non-solicitation, non-competition, and raiding issues. We have obtained injunctions prohibiting the hiring of brokers on a nation-wide basis based upon raiding claims and have successfully defended such claims for some of the largest broker-dealers.

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