Justia Professional Malpractice & Ethics Opinion Summaries

Petitioner, a former stockbroker, sought review of an order of the Securities and Exchange Commission (SEC), which found that he willfully violated the antifraud provisions of the Securities and Exchange Act of 1934 (Exchange Act), 15 U.S.C. 78j(b), 17 C.F.R. 240.10b-5, by orchestrating a scheme that allowed certain customers to engage in late trading of mutual funds, and that he aided and abetted and caused the failure of his firm to keep accurate books and records, in violation of the Exchange Act's recordkeeping requirements. At issue was whether the SEC's order, which barred petitioner from working in the securities industry, issued a cease and desist order against him, ordered him to disgorge his unjust enrichment amount plus interest, and imposed a civil penalty, should be vacated. The court denied the petition and affirmed the SEC's order because petitioner's conduct clearly violated the Exchange Act's antifraud and recordkeeping provisions and because the penalties imposed by the SEC were not unreasonable. View "Vancook v. Securities and Exchange Commission" on Justia Law

Plaintiffs appealed from a judgment of the district court dismissing their class-action complaint, which asserted a single claim against MetLife under ERISA, 29 U.S.C. 1001 et seq. Plaintiffs alleged that through the use of "retained asset accounts" (RAAs), MetLife breached fiduciary duties imposed by ERISA by retaining and investing for its own profit life insurance proceeds due them under employee benefit plans that MetLife administered. The court held that the district court correctly determined that plaintiffs failed to state a claim, since MetLife discharged its fiduciary obligations under ERISA when it established the RAAs in accordance with the plans at issue, and did not misuse "plan assets" by holding and investing the funds backing the accounts. Accordingly, the court affirmed the judgment of the district court. View "Faber, et al. v. Metropolitan Life Insurance Company" on Justia Law

This case concerned petitioner's handling of accounts belonging to seven Wachovia Securities, Inc. (Wachovia) customers. Petitioner, a registered representative associated with Wachovia, a member of the New York Stock Exchange (NYSE), petitioned for review of an order of the SEC sustaining a disciplinary action against her by the NYSE. The court denied the petition for review and affirmed the SEC order because the court concluded that the SEC's decision was reasonable and supported by substantial evidence. View "Katz v. Securities and Exchange Commission" on Justia Law

A jury found defendant, a licensed attorney, responsible for trust fund recovery penalties imposed by the IRS pursuant to 26 U.S.C. (I.R.C.) 6672 for unpaid employment taxes owed by Iowa Trade Bindery, Inc. (ITB). Defendant appealed the district court's judgment and "all adverse rulings and orders in this case." The court held that the district court did not abuse its discretion in admitting defendant's signed Form 2751 and an IRS officer's testimony about the form, or by instructing the jury with respect to the form and its effect. The court also held that the district court did not err in denying defendant's motion for judgment as a matter of law where the jury's verdict was supported by substantial evidence. The court concluded that defendant's remaining claims were without merit. Accordingly, the court affirmed the judgment of the district court. View "Moore v. United States" on Justia Law

After an injury trial, plaintiff's attorney called jurors to ask about the award of damages and assignment of fault between the parties, apparently believing that there had been a clerical error on the verdict form. After a juror informed the magistrate judge, the judge concluded that the attorney had violated ABA Model Rule of Professional Conduct Rule 3.5 by initiating post-verdict contact with a juror. The Third Circuit vacated, first holding that the attorney had standing to appeal. The judge abused his discretion and denied the attorney's due process rights by not following the disciplinary procedures outlined in Local Rule 83.2(b) of the District Court of the Virgin Islands and by failing to give sufficient notice and an opportunity to be heard prior to finding misconduct and imposing sanctions. View "Adams v. Ford Mtr. Co." on Justia Law

This case arose when Pauline Thomas brought her daughter, Jane Doe and four of her grandchildren, including John Doe and R.N.T. to the Emergency Room at the Hennepin County Medical Center and reported her concerns that Jane Doe might have been sexually abused by R.N.T. Appellants brought suit against appellees claiming that the 72-hour hold placed on John Doe, the internal examination of Jane Doe, and the examination of John Doe violated the children's rights under the Fourth Amendment and that the seizure and search of both children violated the Fourteenth Amendment rights of all appellants. At issue was whether the district court properly granted summary judgment in favor of appellees and denied appellants' motion for partial summary judgment on their claims under 42 U.S.C. 1983. The court rejected appellants' contention that appellees failed to move for summary judgment on all of appellants' claims; that the district court ignored questions of material fact; and that the district court at times used the wrong legal standards when analyzing the facts. The court also held that because it affirmed the district court's adverse grant of summary judgment against appellants, the court did not reach the denial of appellants' partial motion for summary judgment. View "Doe, et al. v. Dr. Al Tsai, M.D., et al." on Justia Law

This case involved serious allegations against Robert E. Stark, the auditor-controller of Sutter County where the Sutter County District Attorney's Office claimed that Stark violated statutes, county rules, and Sutter County Board of Supervisors (Board) resolutions detailing the requirements of his office. At issue were four provisions of Penal Code section 424, all of which proscribe general intent offenses. Three of those provisions criminalize acting without authority or failing to act as required by law or legal duty. The court held that those offenses additionally required that defendant knew, or was criminally negligent in failing to know, the legal requirements that governed the act or omission. The court also held that a claim of misinstruction on the mens rea of a crime could be challenged under Penal Code section 995, subdivision (a)(1)(B) where it raised the possibility that, as instructed, the grand jury could have indicted on less than reasonable or probable cause. The court further held that based on the record, the court need not decide the question of whether willful misconduct under Government Code section 3060 required a knowing and purposeful refusal to follow the law. Stark did not disagree with the instruction on mental state given by the district attorney and accompanying PowerPoint slides invalidated the instruction on mental state, requiring that the accusation be set aside. The court addressed these claims as to the district attorney's argument and PowerPoint slides and concluded that it was without merit. The court finally held that, in a motion to set aside an indictment or accusation, a defendant claiming that the district attorney suffered from a conflict of interest during the grand jury proceeding must establish that his right to due process was violated. Accordingly, the judgment of the district court was affirmed. View "Stark v. Superior Court of Sutter County" on Justia Law

Plaintiff, the SEC, appealed from a judgment dismissing its complaint against Marc J. Gabelli, the portfolio manager of the mutual fund Gabelli Global Growth Fund (GGGF or the Fund), and Bruce Alpert, the chief operating officer for the Fund's adviser, Gabelli Funds, LLC (Adviser). The SEC's complaint charged defendants with failing to disclose favorable treatment accorded one GGGF investor in preference to other investors. As a preliminary matter, the court limited its jurisdiction to the SEC's appeal. The court held that the complaint adequately stated claims against Alpert for violations of Section 17(a) of the Securities Act of 1933, 15 U.S.C. 77q(a), and Section 10(b) of the Securities Exchange Act, 15 U.S.C. 78j(b). The court also held that the SEC's prayer for civil penalties survived defendants' motions to dismiss and must be reinstated where the court found that at this stage in the litigation, defendants have not met their burden of demonstrating that a reasonably diligent plaintiff would have discovered this fraud prior to September 2003. The court further held that the complaint sufficiently plead a reasonable likelihood of future violations and thus reversed the district court's dismissal of the SEC's prayer for injunctive relief. Accordingly, the court granted the SEC's appeal in all respects, dismissed the cross-appeals for want of appellate jurisdiction, and remanded for further proceedings. View "Securities and Exchange Commission v. Gabelli, et al." on Justia Law

Plaintiff sued defendants, the Bureau of Land Management (BLM), the Alaska Department of Transportation (Alaska), and the Alyeska Pipeline Service Company (Alyeska), in federal court, alleging causes of action for inverse condemnation, injunctive relief, nuisance, breach of fiduciary duties, and civil rights violations. At issue was whether the district court properly dismissed the action against the BLM and Alaska on the basis of sovereign immunity. The court held that federal sovereign immunity barred plaintiff's inverse condemnation, injunctive relief, and civil rights violations claims against the United States, but that the Federal Tort Claims Act, 25 U.S.C. 345, could provide a waiver of the government sovereign immunity for plaintiff's nuisance and breach of fiduciary duties claims. Additionally, the court held that the Eleventh Amendment barred plaintiff's action against Alaska in its entirety. Accordingly, the judgment was affirmed in part and reversed in part and remanded. View "Jachetta v. United States, et al." on Justia Law

This criminal appeal arose from a "finite reinsurance" transaction between American International Group, Inc. (AIG) and General Reinsurance Corporation (Gen Re). Defendants, four executives of Gen Re and one of AIG, appealed from judgments convicting them of conspiracy, mail fraud, securities fraud, and making false statements to the Securities and Exchange Commission. Defendants appealed on a variety of grounds, some in common and others specific to each defendant, ranging from evidentiary challenges to serious allegations of widespread prosecutorial misconduct. Most of the arguments were without merit, but defendants' convictions must be vacated because the district court abused its discretion by admitting the stock-price data and issued a jury instruction that directed the verdict on causation. View "United States v. Ferguson, et al." on Justia Law