The COVID-19 pandemic has caused mass-disruption to business across the country. The U.S. Securities and Exchange Commission (“SEC”) has been monitoring financial firms to see how they respond to these disruptions. The SEC has also provided guidance to investment advisers on how to handle some of the unique situations that arise due to COVID-19. This guidance can be found on the SEC’s website.
A whistleblower who submitted a tip to the U.S. Securities and Exchange Commission (“SEC”) received an $18 million award. The SEC listed several factors on which the award total was based. The SEC highlighted the fact that the whistleblower reported the problem internally multiple times and suffered hardship as a result of that reporting. The SEC also said that the whistleblower assisted SEC staff throughout the SEC’s examination, and the examination resulted in millions of dollars being returned to harmed investors.
Like all aspects of life, the COVID-19 pandemic is having a profound impact on courts and litigation in general. Courts have been forced to change their procedures to adopt to the social distancing required currently. Additionally, as has been discussed previously in the Eccleston Law blog, the pandemic has resulted in a flood of COVID-19 related lawsuits.
Due to the uncertain conditions created by the outbreak of COVID-19, LPL Financial has stopped selling several nontraded real estate investment trusts (“REITs”) as well as some publically traded property interval funds. Interval funds, a type of closed-end fund whose shares are not traded on a secondary market, had been growing in popularity over the last couple years. Interval funds are often comprised, at least in part, by nontraded REITs.
A rise in whistleblower claims is expected as the fallout from the COVID-19 pandemic continues. A similar swell of whistleblower claims occurred following other major events, including the terrorist attack on September 11, 2001, and the recession in 2008. The expected rise in whistleblower claims is not expected to be limited to COVID-19 related claims, but will also include an increase in whistleblower claims unrelated to the pandemic.
Following the market volatility caused by the COVID-19 pandemic, many expect an increase in enforcement actions from the U.S. Securities and Exchange Commission (“SEC”). The increase in enforcement action will likely lead to an increase in investor lawsuits as well.
Edward Jones announced that it is freezing wages and suspending overtime pay for one year. The decision, which the firm described as a proactive and preventative measure, comes in response to the issues that have arisen as a result of the COVID-19 pandemic.
In response to the outbreak of COVID-19, the Financial Industry Regulatory Authority (“FINRA”) announced that all in-person arbitration and mediation proceedings scheduled through May 31, 2020 will be postponed. FINRA specified that postponing hearings would not affect other case deadlines.
Experts expect the number of investor arbitration claims filed with FINRA to increase as a result of the market disruptions that have occurred from the COVID-19 pandemic. This comes after a prolonged bull market which had seen a relatively low number of FINRA arbitration cases. However, the recent market downturn has experts predicting an increase in FINRA arbitration cases.
The tide has gone out for many investments, revealing their issues, shortcomings and problems. Business development companies (“BDC”) are the latest investments to be exposed.
This was the best of all possible outcomes and I cannot thank you and the team enough.
WealthFeed leverages proprietary AI technology to collect nine real-time financial data points, including business sales, capital raises, inheritances, and job changes.
The Securities and Exchange Commission (SEC) is ramping up its enforcement efforts targeting off-channel communications, particularly text messages, among investment advisory firms.
B. Riley Financial Inc. has encountered a setback in filing its audited results within an extended timeframe, adding to existing pressure amid concerns raised by short sellers regarding its association with a former business partner.
