Broker-Dealer


Broker-Dealer Litigation and Arbitration

Sidley offers a national practice in the field of broker-dealer litigation and arbitration. In recent years, we have represented the world’s largest brokerage firms in an array of complex disputes, including class actions and other proceedings attacking industry practices in the areas of fee-based accounts, money-market sweeps, bank deposit accounts, markups and compensation and marketing of proprietary or preferred products. Our leadership in this area is exemplified by our representation of the Securities Industry and Financial Markets Association (SIFMA) in numerous recent, high-profile matters, including as amicus curiae in the United States Supreme Court. 

Representative recent matters include:

  • Representation of a major bank and broker-dealer in a putative class action in which plaintiffs alleged that the bank instituted a delay policy under which it did not immediately transfer proceeds from the maturity of Treasury Bills and other securities received in non-interest bearing accounts to interest bearing accounts;
  • Representation of a leading broker-dealer in a suit filed by the New York Attorney General alleging violations of various state statutes and common law in connection with non-discretionary, fee-based brokerage accounts;
  • Representation of a major bank in a putative class action in which plaintiffs alleged that the bank breached its fiduciary duty, engaged in deceptive practices and violated the antitrust laws by sweeping transaction proceeds into bank deposit accounts rather than higher-yielding money-market accounts;
  • Representation of a major broker-dealer and its top institutional salesman against more than 200 plaintiffs alleging Section 10(b) violations arising from allegations of a pump-and-dump scheme;
  • Representation of a leading broker-dealer in a putative Section 10(b) class action in which plaintiffs alleged excessive markups on municipal bonds;
  • Representation of a leading broker-dealer in a Section 10(b) and Rule 12(a)(2) class action in which plaintiffs alleged that defendants failed to disclose incentives to sell proprietary and preferred mutual funds; and
  • Representation of a major broker-dealer in two “private attorney general” actions brought under California’s Business and Practices Code Section 17200 relating to municipal bond sales practices.

In addition, lawyers in our Chicago, Los Angeles, New York, San Francisco and Washington, D.C. offices have substantial experience representing brokerage firms and their management and employees in a wide range of disputes relating to and arising from securities, commodities, futures and foreign exchange trading. We routinely defend our clients against claims asserted by institutional and retail customers, such as those alleging fraud, unauthorized exercise of discretion, churning, unsuitability, failure to supervise, improper margin calls, unfair securities liquidations and failure to hedge a concentrated position. We have represented our clients in these disputes in state and federal courts around the country, as well as arbitration fora sponsored by self-regulatory organizations and exchanges, including the National Association of Securities Dealers, the New York Stock Exchange, the Chicago Board Options Exchange, the National Futures Association and various commodities exchanges. We have appeared in investment-related arbitrations administered by the American Arbitration Association and JAMS. Our lawyers have tried these disputes in arbitrations in more than ten states over the last five years.

Broker-Dealer Regulation and Enforcement

Sidley has an extensive practice defending broker-dealers in investigations and examinations by the SEC, FINRA (and predecessor SROs, NYSE, FINRA) and other securities regulators. We have represented some of the securities industry’s most prominent institutions in investigations involving high-profile issues including underwriting, short sales, prospectus delivery, gifts and gratuities, email retention, best execution, suitability, auction rate securities, mutual fund B shares, options trading and clearing firm responsibilities.

The firm’s experience in defending broker-dealers in litigation and regulatory investigations is broad, deep and geographically diverse with experienced practitioners located in our Chicago, Los Angeles, New York and Washington, D.C. offices. Our practitioners also bring the requisite subject matter experience to bear on these complex problems by involving professionals from Sidley’s Securities & Derivatives Enforcement and Regulatory and Investment Funds, Advisers and Derivatives practices. A number of Sidley’s securities partners are recognized in specific aspects of broker-dealer issues.

Sidley has defended broker-dealer clients in several recent, high-profile investigations before the SEC and SROs.

For example:

  • Underwriting Issues - Sidley successfully defended an underwriter in investigations by securities regulators into underwriting-related issues.
  • Short Sales - The firm has represented broker-dealers in a variety of SEC and SRO investigations concerning short sales, including matters involving allegations of manipulation, nuances of Regulation SHO, short interest reporting and Exchange Act Rule 105 restrictions involving short sales before securities offerings.
  • SRO Sweeps - Sidley has represented broker-dealers in several SEC or SRO “sweep” inquiries and investigations, including sweeps involving prospectus delivery, gifts and gratuities and auction rate securities. A number of these have involved parallel investigations by different regulators.
  • Email Retention - Sidley enforcement defense lawyers recently represented a major investment bank in a high-profile investigation into email retention policies.
  • Other - The firm has represented broker-dealers in matters involving proprietary trading, suitability, options trading on the AMEX and OATS reporting.

Broker-Dealer Litigation and Arbitration

Sidley offers a national practice in the field of broker-dealer litigation and arbitration. In recent years, we have represented the world’s largest brokerage firms in an array of complex disputes, including class actions and other proceedings attacking industry practices in the areas of fee-based accounts, money-market sweeps, bank deposit accounts, markups and compensation and marketing of proprietary or preferred products. Our leadership in this area is exemplified by our representation of the Securities Industry and Financial Markets Association (SIFMA) in numerous recent, high-profile matters, including as amicus curiae in the United States Supreme Court. 

Representative recent matters include:

  • Representation of a major bank and broker-dealer in a putative class action in which plaintiffs alleged that the bank instituted a delay policy under which it did not immediately transfer proceeds from the maturity of Treasury Bills and other securities received in non-interest bearing accounts to interest bearing accounts;
  • Representation of a leading broker-dealer in a suit filed by the New York Attorney General alleging violations of various state statutes and common law in connection with non-discretionary, fee-based brokerage accounts;
  • Representation of a major bank in a putative class action in which plaintiffs alleged that the bank breached its fiduciary duty, engaged in deceptive practices and violated the antitrust laws by sweeping transaction proceeds into bank deposit accounts rather than higher-yielding money-market accounts;
  • Representation of a major broker-dealer and its top institutional salesman against more than 200 plaintiffs alleging Section 10(b) violations arising from allegations of a pump-and-dump scheme;
  • Representation of a leading broker-dealer in a putative Section 10(b) class action in which plaintiffs alleged excessive markups on municipal bonds;
  • Representation of a leading broker-dealer in a Section 10(b) and Rule 12(a)(2) class action in which plaintiffs alleged that defendants failed to disclose incentives to sell proprietary and preferred mutual funds; and
  • Representation of a major broker-dealer in two “private attorney general” actions brought under California’s Business and Practices Code Section 17200 relating to municipal bond sales practices.

In addition, lawyers in our Chicago, Los Angeles, New York, San Francisco and Washington, D.C. offices have substantial experience representing brokerage firms and their management and employees in a wide range of disputes relating to and arising from securities, commodities, futures and foreign exchange trading. We routinely defend our clients against claims asserted by institutional and retail customers, such as those alleging fraud, unauthorized exercise of discretion, churning, unsuitability, failure to supervise, improper margin calls, unfair securities liquidations and failure to hedge a concentrated position. We have represented our clients in these disputes in state and federal courts around the country, as well as arbitration fora sponsored by self-regulatory organizations and exchanges, including the National Association of Securities Dealers, the New York Stock Exchange, the Chicago Board Options Exchange, the National Futures Association and various commodities exchanges. We have appeared in investment-related arbitrations administered by the American Arbitration Association and JAMS. Our lawyers have tried these disputes in arbitrations in more than ten states over the last five years.

Broker-Dealer Regulation and Enforcement

Sidley has an extensive practice defending broker-dealers in investigations and examinations by the SEC, FINRA (and predecessor SROs, NYSE, FINRA) and other securities regulators. We have represented some of the securities industry’s most prominent institutions in investigations involving high-profile issues including underwriting, short sales, prospectus delivery, gifts and gratuities, email retention, best execution, suitability, auction rate securities, mutual fund B shares, options trading and clearing firm responsibilities.

The firm’s experience in defending broker-dealers in litigation and regulatory investigations is broad, deep and geographically diverse with experienced practitioners located in our Chicago, Los Angeles, New York and Washington, D.C. offices. Our practitioners also bring the requisite subject matter experience to bear on these complex problems by involving professionals from Sidley’s Securities & Derivatives Enforcement and Regulatory and Investment Funds, Advisers and Derivatives practices. A number of Sidley’s securities partners are recognized in specific aspects of broker-dealer issues.

Sidley has defended broker-dealer clients in several recent, high-profile investigations before the SEC and SROs.

For example:

  • Underwriting Issues - Sidley successfully defended an underwriter in investigations by securities regulators into underwriting-related issues.
  • Short Sales - The firm has represented broker-dealers in a variety of SEC and SRO investigations concerning short sales, including matters involving allegations of manipulation, nuances of Regulation SHO, short interest reporting and Exchange Act Rule 105 restrictions involving short sales before securities offerings.
  • SRO Sweeps - Sidley has represented broker-dealers in several SEC or SRO “sweep” inquiries and investigations, including sweeps involving prospectus delivery, gifts and gratuities and auction rate securities. A number of these have involved parallel investigations by different regulators.
  • Email Retention - Sidley enforcement defense lawyers recently represented a major investment bank in a high-profile investigation into email retention policies.
  • Other - The firm has represented broker-dealers in matters involving proprietary trading, suitability, options trading on the AMEX and OATS reporting.
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