Securities & Commodities Litigation

LP’s Securities & Commodities Litigation attorneys have many years of experience representing institutions and individuals in the financial markets with respect to litigation, arbitration, regulatory enforcement proceedings, and investigations, and counseling clients on compliance and alternative investment strategies.

The diverse backgrounds of our lawyers, which include former SEC enforcement attorneys, hedge fund managers, and registered representatives, enable us to represent participants in the securities and commodities markets effectively and efficiently in the full range of matters arising under federal and state law.

Our clients include:

  • Broker-dealers (and associated persons)
  • Investment banks
  • Investment advisers
  • Hedge funds
  • Institutional investors
  • Venture capital funds
  • Private equity funds
  • Commodities pools
  • Public and private issuers
  • Special committees
  • Senior officers and directors

Primary Service Areas:

(Clicking these links will take you to the appropriate section below.)

Investment Experience

Our Law Firm's experience with investments and trading strategies extends to both exchange-traded and non-correlated products, including among many others:

  • IPOs
  • Hedge funds
  • Debt instruments (munis, CMOs)
  • Options and other derivatives (e.g, spreads, hedges and SWAPs)
  • Mutual funds (A,B & C fund shares)
  • Commodities and futures (energy cash market and futures, S&P index futures)
  • Variable and fixed insurance products (variable annuities, equity indexed annuities)
  • Life settlements
  • LLCs, partnerships and other private placements

Litigation and Arbitration

Our attorneys have represented financial industry clients in hundreds of securities litigation and arbitration matters, including individual lawsuits, intra-industry trade disputes, class actions, derivative actions, and mass actions, in federal and state trial and appellate courts around the country, as well as in arbitration proceedings before the NASD, NYSE, NFA, and AAA. Our attorneys also provide coordinated representation in complex cases, including concurrent enforcement actions and internal investigations. Our dedicated team of litigators offer financial institution clients courtroom experience complemented by in-depth industry knowledge.

Subjects we have prosecuted and defended for our clients include, among others:

  • Hedge fund governance, redemption and lockup provisions
  • Failure to supervise
  • Improper sales practices (unauthorized or excessive trading, churning, suitability)
  • Insider trading
  • IPO spinning and flipping
  • Analyst research and recommendations
  • Market timing
  • Regulation SHO and improper short selling
  • Common law and statutory securities fraud
  • Blue Sky violations
  • Earnings management/accounting fraud

Regulatory Enforcement and Internal Investigations

Our attorneys understand that the initiation of an investigation and filling of an enforcement action by a regulator can severely impact our client’s business reputation and disrupt operations. We have successfully defended both institutional and individual clients (including associated persons, officers, and directors) in the full range of proceedings initiated by the SEC, CFTC, NASD, NYSE, state attorneys general, and state securities agencies. We are experienced at defending every stage of these matters – from the informal inquiry, the formal investigation process such as document production and witness interviews, to the “Wells Notice,” administrative proceedings, civil trials and appellate review, if necessary.

We have also assisted boards of directors and special committees of public companies in executing internal investigations of potential violations of securities laws and breaches of fiduciary duties by corporate officers and directors. Our depth of experience and appreciation of the various constituencies involved with internal investigations has enabled us to respond quickly and efficiently to these urgent matters.

Subjects we have defended for our clients as well as conducted internal investigations include, among many others:

  • Insider trading
  • Manipulation involving long and short-side manipulations in the securities and futures markets
  • Invalid initial public offerings, registration statements and private placements
  • Misuse of employee stock and stock option plans
  • False price reporting
  • Excessive markups and markdowns
  • Failure to execute trades consistent with investment strategy and standing orders
  • Failure to supervise outside business activities
  • IPO allocations (spinning and flipping)
  • International stock arbitrage by hedge funds (market timing)
  • Research analyst independence
  • Broker-dealer registration

Broker-Dealer Employment and Recruitment

We work within the unique time pressures involved in the employment and recruitment of registered persons. Our attorneys have represented broker-dealers, their affiliates and associated persons in connection with employment and recruitment matters in federal and state courts around the country swiftly and effectively to obtain or prevent the imposition of temporary restraining orders as well as in the ensuing arbitrations. We have substantial experience in a wide range of securities-related employment disputes, including:

  • Misappropriation and misuse of trade secrets
  • The Computer Fraud and Abuse Act
  • Restrictive covenants (non-solicit, non-accept, and non-compete agreements)
  • Tortious inducement to breach fiduciary duties
  • Group hires (or raiding)
  • Constructive discharge and wrongful termination
  • Separation and employment agreements
  • Compensation and book of business valuations
  • Defamation
  • Whistleblower status
  • Discrimination, sexual harassment and hostile work environment
  • Promissory notes and other inducement agreements

Compliance and Risk Management

Our attorneys in Chicago and Northbrook understand the increasingly complex regulatory environment facing our clients. We have counseled and advised clients to develop manuals, policies and procedures, reviewed existing procedures and operations to prevent violations, implemented remediation programs, consulted on complex trading strategies, and provided training with respect to:

  • Regulatory audits and inspections
  • Electronic document retention, review and destruction
  • Supervisory procedures
  • Independent contractors and outside consultants
  • Conflict of interest review
  • New and complex product analysis (e.g., life settlements, equity index annuities)
  • Registration and licensing, filing and disclosure (e.g., IA/RR, Forms U-4 / U-5)
  • Outside business activities and selling away
  • Wholesaling and sales agreements
  • Anti-money laundering, OFAC and FCPA
  • Regulation S-P
  • Regulation FD
  • Section 13 and Section 16 disclosures

Alternative Investment Counseling

Given our business and litigation experience with hedge funds and other alternative investment platforms, we are well positioned to help our clients avoid litigation in the first instance. Accordingly, we routinely advise institutional clients on issues unique to investing in hedge funds and other Private Equity investments. We have also counseled domestic and foreign hedge funds, their fund managers and other sub-advisers in dealing with investor issues. Subjects we have consulted on include:

  • Due diligence involving investment risk, operational risk, litigation risk and other red flags
  • Disclosure items in PPMs and Operating Agreements (investment strategy, allocation)
  • Representation of performance statistics
  • Distributions, redemptions, withdrawals, lockups and gating provisions
  • Accounting, audits and suspension of monthly NAV calculation

Representative Matters

Litigation and Arbitration

  • Defended former Managing Director of major New York broker-dealer in $900 million securities arbitration alleging fraudulent analyst research involving WorldCom. Arbitration Panel awarded a complete defense verdict.
  • Obtained complete defense verdict and expungement in a $450 million securities fraud arbitration brought against a major New York broker dealer and one of its former Managing Directors. The case involved a series of alleged improper hedging transactions in the over-the counter derivatives markets.
  • Defended a major New York broker-dealer in $10 million federal jury trial involving alleged securities fraud in connection with complex futures and derivative transactions on both the CME and Globex.
  • Prosecuting a complex securities fraud case on behalf of a major New York broker-dealer against principals of shell corporations. The case involves a novel enterprise theory of liability, and is proceeding simultaneously in the NYSE Department of Arbitration, Federal
    District Court and U.S. Bankruptcy forums.
  • Defended a major New York broker-dealer in a multi-million dollar CFTC Reparations proceeding alleging improper use of "held" versus "not held" orders in liquidating large equity futures positions.
  • Defended the director of a $1 billion international public company in a federal shareholder securities fraud class action brought by Milberg Weiss. Argued and won motion to dismiss with prejudice based on novel PSLRA arguments, and successfully defended this ruling on
    appeal before the 8th Circuit.
  • Defended several hedge funds in connection with market timing investigations and related civil litigation. Avoided imposition of any fines, penalties or other sanctions by regulators.
  • Argued and obtained dismissals with prejudice in federal and state civil actions brought by insurance companies seeking to prevent hedge funds from using variable annuities as an investment platform.

Enforcement and Internal Investigations

  • Represented public company in internal investigation and companion SEC investigation concerning possible misappropriation of assets, invalid registration and issuance of employee stock to consultants, manipulation and other improper conduct by former CEO and other outside parties. Completed investigation and reported analysis to internal and external constituencies in four months. To date, there has been no imposition of any fines, penalties, or other sanctions by regulators.
  • Represented a high-profile stockbroker in a variety of regulatory and civil investigations and proceedings before the SEC, NASD, NYSE and New York Attorney General's office, as well as in a number of customer arbitrations and civil actions. To date, there has been no imposition of any fines, penalties, or other sanctions by regulators, nor has there been an award of any civil damages by judges, juries or arbitrators.
  • Represented a hedge fund manager in regulatory and civil investigations and proceedings before the CFTC, NFA and SEC regarding allegations of misuse of fund assets, commodity pool fraud and misstatements contained in pool offering and accounting documents
    Representing a Fortune 500 company director in connection with an SEC insider trading investigation involving a series of exchange fund transactions. This case involves a novel and aggressive application of the insider trading rules and related penalty provisions by the SEC.
  • Defended a public company CFO in connection with an SEC investigation of complex accounting fraud and earnings management issues involving treatment of advertising expenses. Prepared Wells submission that resulted in SEC's declining to pursue any charges.
  • Defended a well-known, online stock analyst in SEC civil action seeking penalties under the Investment Advisers Act. Developed novel First Amendment defense to prevent the SEC from suppressing protected speech on the Internet.
  • Obtained favorable settlement on behalf of a private oil and gas company in connection with regulatory investigation by the Texas State Securities Board.
  • Defended the branch manager of a major New York broker-dealer in an SEC administrative enforcement action alleging that he failed to supervise a stock broker who engaged in a Ponzi scheme with his clients.
  • Represented a Fortune 500 company director in connection with an SEC insider trading investigation involving a series of exchange fund transactions. After sending a Wells notice, the SEC ultimately declined pursue charges in this matter, and did not impose any sactions or penalties.