Events

Events

Events

CARES Act and PPP Loan Implications in Bankruptcy (CLE)
When: May 6, 2022
Conference: American Bar Association
People: Lindsay B. Powell
Un-PAUSE Your Business: In the Context of New York’s PAUSE Order, You Might Be More Essential than You Think
When: May 1, 2020
Conference: Italy-America Chamber of Commerce | Wilson Elser Italy Practice Team
People: Peter A. Lauricella and Cav. Nicholas R. Caiazzo
Litigation Finance and Medical Lien Companies Panel Discussion on Recent Trends and Litigation Strategies
When: November 19, 2019
Conference: Colorado Defense Lawyers Association Panel
People: Emily L.P. Aguero

Events

Duffy and Warin Secure Two Key Federal Court Victories for FINRA

Washington, D.C. partners Ryan Duffy and Kathleen Warin secured two significant victories in the U.S. District Court for the District of Columbia on behalf of the Financial Industry Regulatory Authority (FINRA). In two separate cases, former securities brokers sought to expunge customer dispute information from their registration records maintained by FINRA in the Central Registration Depository (CRD) system, which is publicly available through BrokerCheck as required under the Securities Exchange Act of 1934. The plaintiffs each asserted claims for equitable expungement, declaratory judgment, and a permanent injunction.

In both cases, the Wilson Elser team successfully argued that the plaintiffs failed to identify any cognizable cause of action against FINRA that would entitle them to expungement relief. Ryan and Kathleen demonstrated that neither the Exchange Act nor FINRA Rules create a private right of action against FINRA for expungement of customer dispute information from the CRD, and that the plaintiffs' claims for equitable relief, declaratory judgment, and a permanent injunction were remedies rather than cognizable causes of action.

Both courts agreed in full, granting FINRA's motions to dismiss with prejudice. They held that the Exchange Act's comprehensive regulatory scheme does not authorize private suits against FINRA for actions taken pursuant to its statutory obligations, and that federal courts have overwhelmingly declined to recognize any such private right of action. The courts also rejected the plaintiffs’ arguments that their inherent equitable powers could supply the missing cause of action, reaffirming the well-established principle that equitable expungement, declaratory relief, and injunctive relief are forms of remedy ‒ not independent sources of legal entitlement.

Together, these decisions provide critical legal authority and reinforce that brokers have no private right of action against FINRA for expungement of customer dispute information maintained pursuant to its statutory obligations. 

Ryan M. Duffy and Kathleen H. Warin

Belzer Prevails in Breach of Contract Case after Grueling Three-Year Battle

Geoffrey Belzer (Partner-Chicago) obtained a defense verdict on behalf of a private client in a commercial matter in which a Chicago-area bank sought to recover $1.5 million on loan guarantees and more than $1.1 million in attorney fees spent in prosecuting claims of breach of contract, tortious interference, fraud and conspiracy. The defense verdict followed a three-day bench trial in the Cook County Circuit Court. In ruling for our client and an additional co-defendant, the judge relied on the evidence produced during trial, including the cross-examinations of the bank’s president and loan officer, to determine that the bank did not meet its burden to establish that it had disposed of the collateral for the loan (primarily a bridal design company with significant consumer and industry brand-name recognition) in a commercially reasonably manner. The evidence at trial demonstrated that the bank had received an appraisal in excess of $3.8 million for the business, did not demonstrate significant activity to attempt to sell the business, and ultimately sold it for $775,000 or less than 20 percent of its appraised value.

Geoffrey Belzer

Barrett Secures Summary Judgment For Bank Officers Defeating Fraud Allegation

Stephen Barrett (Of Counsel-New York) obtained summary judgment in the Southern District of New York on behalf of Wilson Elser’s clients, two officers of a large regional bank accused of fraud in connection with a loan transaction. The plaintiff is an investment firm specializing in subordinated and other high-risk debt offerings. Our clients extended a seven-figure loan to a consumer lending company. When the lending company sought additional capital, the bank made an introduction to the plaintiff’s firm because of its specialized offerings. The lending company ultimately failed and could not repay the loan from our clients’ bank and the subordinated loan from the plaintiff. The plaintiff then sued our clients, alleging they fraudulently induced the plaintiff to make the subordinated debt offering to the lending company.

After successfully narrowing the scope of the plaintiff’s claims via a pre-answer motion to dismiss, the parties engaged in extensive discovery related to the various loan instruments at issue. After obtaining the complete record, Stephen filed a lengthy, detailed motion for summary judgment. In a comprehensive 32-page opinion, the district court judge accepted our clients’ arguments in their entirety. The court held that the plaintiff failed to identify any potentially fraudulent statements and, in any event, could not have reasonably relied on any such statements considering the plaintiff’s affirmative obligation to conduct due diligence regarding its loan offering. The complaint was dismissed with prejudice, and the plaintiff declined to file an appeal.

Stephen J. Barrett

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