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Broker-Dealer/Investment Adviser

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Baker Donelson's Broker-Dealer/Investment Adviser Group represents a wide range of organizations engaged in providing broker-dealer, investment advisory, investment banking, and investment company services.

Featured Experience

Successfully defended a private equity/investment advisor firm in cases all across the country brought by exchange fund investors alleging common law securities fraud and mismanagement claims and seeking hundreds of millions of dollars in compensatory damages.

Represented SEC registered investment adviser in the establishment of more than 10 separate private "fund of funds" via a Series LLC structure. The work is notable in terms of structure as the Series LLC structure is not typically used. Further, establishing the funds required working through significant and complex investment advisory, broker-dealer, investment company, and commodities regulatory issues to establish a framework to permit the client's underlying investment advisory clients to participate in various investments that they would not otherwise be permitted to invest in because of the very large minimum investment amounts required per investor.

2013

Defended broker-dealer through trial in lawsuit concerning due diligence performed as lead underwriter on bond deal.

Practice Overview

Overview

Baker Donelson's Broker-Dealer/Investment Adviser Group represents a wide range of organizations engaged in providing broker-dealer, investment advisory, investment banking, and investment company services. Our clients include major national, regional and local broker-dealers, as well as investment advisers, dual-registered firms, municipal securities dealers, bank affiliated broker-dealers, bank dealers, investment companies, investment managers, and public and private funds and banks.

Our practice spans many different areas of the industry, including market regulation, securities enforcement, consulting, private client defense/arbitration, litigation and internal investigations. The group is comprised of attorneys with a wide range of experience in the broker-dealer, investment advisory and investment company areas. Our goal is to provide clients with a unique blend of backgrounds and to supply a full complement of legal services to large and small financial services organizations. Our group members' experience is widely varied and is not limited to a particular type of financial services organization or market segment. Our members have worked at the Securities and Exchange Commission, Office of the Comptroller of Currency and state securities agencies. They have also served as general counsel and other senior legal and compliance positions at broker-dealer and investment adviser organizations. This experience provides us with a unique perspective that allows increased sensitivity to the business goals and management of our client base.

Baker Donelson's lawyers have handled hundreds of arbitration matters across the country for broker-dealers, as well as litigation matters filed in state and federal courts. These matters concern customer disputes related to a vast array of equity, debt and insurance-related products involving claims such as traditional suitability allegations, selling away, unauthorized trading, churning, securities fraud and negligent supervision. Additionally, our attorneys have handled employment-related matters for broker-dealers including raiding cases and matters involving forgivable loans.

The group regularly advises clients on matters that directly affect the securities industry, including:

  • FINRA membership applications
  • FINRA continuing membership applications
  • Market making and floor brokerage issues
  • Regulatory examinations/audits/SEC and SRO inquiries (sales practice/trading and market making/financial/specialized sweeps), investigations and hearings
  • Arbitration/mediation (customer and industry disputes)
  • Market surveillance and enforcement proceedings and investigations
  • "Wells" submissions
  • Internal investigations
  • EB-5 Immigrant Investor Program compliance
  • Clearing agreements
  • State registration issues
  • Responsibilities of introducing firms versus clearing firms
  • Net capital and margin issues
  • Broker transition matters including raiding and unfair competition claims
  • Mergers and acquisitions
  • Corporate and capital structure; LLCs, partnerships, S corps, C corps, debt-equity considerations, and subordination agreements
  • Written supervisory procedures, compliance manuals, and other policy statements
  • USA PATRIOT Act compliance (anti-money laundering and customer identification programs and compliance)
  • Business continuity planning
  • Continuing education programs
  • Employment and consulting agreements and employment issues (wrongful termination, discrimination, severance, etc.)
  • Forms BD, U-4, U-5, and RE-3 issues
  • Statutory disqualifications -- consequences and proceedings

We also counsel investment advisory firms on issues such as:

  • SEC versus state registration and compliance
  • Written supervisory procedures, compliance manuals and other policy statements including codes of ethics, proxy voting and business continuity
  • Performance fees
  • Performance disclosures, Section 206(4) and solicitation fee agreements
  • Customer account structures, including wrap fee issues
  • Conflicts of interest
  • Section 28(e) and soft dollars
  • Form ADV preparation and disclosure issues
  • Internal audits and investigations.

In addition, Baker Donelson attorneys can provide counsel for public and private funds, hedge funds, offshore funds and other registered and unregistered investment companies and their advisers. Our experience allows us to provide advice regarding fund formation, registration, operation, and compliance, including those funds managed by registered investment advisers.

Representative Matters
  • Successfully defended a private equity/investment advisor firm in cases all across the country brought by exchange fund investors alleging common law securities fraud and mismanagement claims and seeking hundreds of millions of dollars in compensatory damages.

  • Represented SEC registered investment adviser in the establishment of more than 10 separate private "fund of funds" via a Series LLC structure. The work is notable in terms of structure as the Series LLC structure is not typically used. Further, establishing the funds required working through significant and complex investment advisory, broker-dealer, investment company, and commodities regulatory issues to establish a framework to permit the client's underlying investment advisory clients to participate in various investments that they would not otherwise be permitted to invest in because of the very large minimum investment amounts required per investor.

    (2013)
  • Defended broker-dealer through trial in lawsuit concerning due diligence performed as lead underwriter on bond deal.

  • Formed multiple private funds for an investment adviser, utilizing Delaware Series LLC structure for multiple funds.

  • Counseled broker-dealer and investment adviser clients on implications of DOL fiduciary rule.

  • Won an award favoring a broker-dealer client in a FINRA arbitration against an institutional investor seeking more than $3 million in damages for alleged fraud and unsuitable investment recommendations.

  • Defended broker-dealer in federal court action alleging violations of federal and state securities laws, aiding and abetting breach of fiduciary duties, and commercial bribery in the wake of the bankruptcy of a registered investment adviser.

  • Defended a broker-dealer in a class action concerning due diligence performed as lead underwriter on bond deal. Obtained dismissal of case on the pleadings.

  • Successfully represented broker-dealer firm and registered representative in action involving claims of securities fraud, suitability and failure to supervise in connection with retail customer's purchase of structured securities product.

  • Representing national banking association and its capital markets division and affiliated broker-dealer in FDIC, SEC and FINRA inquiries regarding sales of CDO notes.

  • Represented broker-dealer firm and registered representative in FINRA arbitration involving retail customer's claims of fraud, misrepresentation, suitability and failure to supervise in connection with customer's purchase of variable annuity product. After hearing testimony and considering evidence from all parties, the arbitration panel issued an award dismissing all claims against our clients.

  • Represented broker-dealers and bank dealers in connection with SEC’s Municipalities Continuing Disclosure Cooperation Initiative.

  • Represented broker-dealer firms and registered representatives in connection with FINRA enforcement actions related to sales of UITs and use of consolidated statements.

  • Representing broker-dealer firm and registered representatives in connection with FINRA cause exam and investigation relating to the sale of L-share variable annuities.

  • Represented national banking association and broker-dealer firm in action involving claims of fraud and misrepresentation in connection with retail customer’s purchase of auction rate securities.

  • Secured $4 million settlement for broker-dealer firm in an unfair competition case, where former employees attempted to misappropriate and use broker-dealer's trade secrets and confidential business information in a competitive start-up company.

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Everybody at Baker Donelson, and it goes without saying, is smart, professional and interacts with our clients very well. The team is really good.

Vice President and Regional Manager at an investment banking and mortgage banking services provider to health care, senior living and housing organizations

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