Articles Posted in Legal Terms and Concepts

Prohibited Activities of Corporate Officers and Directors – Broward and Palm Beach County, Florida Corporate Misconduct Litigation and Arbitration Attorney:

It is a cardinal principle, in Florida, that an officer or director of a corporation will not be permitted to make profit out of his official position and because of their fiduciary character, officers and directors will not be permitted to acquire for their own advantage interests adverse or antagonistic to the corporation. While it is true that corporate officers or directors are not precluded, because of the fiduciary nature of their position, from entering into and engaging in another similar enterprise separate from the corporation, they must refrain from interfering with the business of the corporation and they must act in good faith. 

Examples of such activity include:

Accountant’s Liability to Third Parties – Florida Accounting Negligence Litigation and Arbitration Attorney – Russell L. Forkey, Esq.

WHEN AN ACCOUNTANT FAILS TO EXERCISE REASONABLE AND ORDINARY CARE IN PREPARING THE FINANCIAL STATEMENTS OF HIS CLIENT AND WHERE THAT ACCOUNTANT PERSONALLY DELIVERS AND PRESENTS THE STATEMENTS TO A THIRD PARTY TO INDUCE THAT THIRD PARTY TO LOAN TO OR INVEST IN THE CLIENT, KNOWING THAT THE STATEMENTS WILL BE RELIED UPON BY THE THIRD PARTY IN LOANING TO OR INVESTING IN THE CLIENT, IS THE ACCOUNTANT LIABLE TO THE THIRD PARTY IN NEGLIGENCE FOR THE DAMAGES THE THIRD PARTY SUFFERS AS A RESULT OF THE ACCOUNTANT’S FAILURE TO USE REASONABLE AND ORDINARY CARE IN PREPARING THE FINANCIAL STATEMENTS, DESPITE A LACK OF PRIVITY BETWEEN THE ACCOUNTANT AND THE THIRD PARTY?

The Florida Supreme Court answered this question in the affirmative in the case of First Florida Bank, N.A. v. Max Mitchell & Co., 558 So. 2d 9 (Fla. 1990). In this matter, the court provided two examples to illustrate this circumstance.

Financial Elder Abuse and Elder Exploitation – Boca Raton, Delray Beach, West Palm Beach and Fort Lauderdale, Florida Litigation and Arbitration Attorney:

Florida Statute Section 415.1111 grants to vulnerable (elder) adults a cause of action as a result of financial and other types of abuse. It provides that a vulnerable adult who has been abused, neglected, or exploited as specified in the law has a cause of action against any perpetrator and may recover actual and punitive damages for such abuse, neglect, or exploitation. The action may be brought by the vulnerable adult, or that person’s guardian, by a person or organization acting on behalf of the vulnerable adult with the consent of that person or that person’s guardian, or by the personal representative of the estate of a deceased victim without regard to whether the cause of death resulted from the abuse, neglect, or exploitation. The action may be brought in any court of competent jurisdiction to enforce such action and to recover actual and punitive damages for any deprivation of or infringement on the rights of a vulnerable adult. A party who prevails in any such action may be entitled to recover reasonable attorney’s fees, costs of the action, and damages. The remedies provided in this section are in addition to and cumulative with other legal and administrative remedies available to a vulnerable adult.

As the elder population in Florida has increased, incidents of financial elder abuse has accelerated at an alarming rate. An area of financial elder abuse that has recently exploded is the twisting (unnecessary sale and purchase of annuities) of variable and fixed annuities.

Post-Employment Restrictive Covenants – Insurance and other Businesses:

This post provides a general discussion concerning post-employment restrictive covenants that may be found in employment agreements in the State of Florida. The statute governing this issue is Florida Statute 542.335.

Florida, by statute, has determined that post-employment restrictive covenant agreements are valid restraints of trade or commence under certain conditions. Specifically, section 542.335, Florida Statutes (2005), which took effect on July 1, 1996, contains a comprehensive framework for analyzing, evaluating and enforcing restrictive covenants contained in employment contracts. A violation of an enforceable restrictive covenant creates a presumption of irreparable injury. Section 542.335 employs the term “restrictive covenants” and includes all contractual restrictions such as noncompetition/nonsolicitation agreements, confidentiality agreements, exclusive dealing agreements, and all other contractual restraints of trade. If valid, a restrictive covenant may be enforced by way of temporary and permanent injunctive relief. § 542.335(1)(j), Fla. Stat. (2005).

Common Stocks, Preferred Stocks, Corporate Bonds, Municipal Bonds, Promissory Notes, Exchange-Traded Funds (ETF’s), and Mutual Funds – South Florida Securities and Investment Fraud, Negligence and Breach of Fiduciary Duty FINRA Arbitration and Litigation Attorney:

The elements of a breach of fiduciary duty action are (1) the existence of a fiduciary duty and (2) the breach of that duty that was the proximate cause of the plaintiff’s damages. A fiduciary relationship exists when confidence is reposed by one party and trust accepted by the other. Such a relationship exists where confidence is reposed on one side and there is resulting superiority and influence on the other. When a fiduciary relationship has not been created by an express agreement, the question of whether the relationship exists generally depends upon the specific facts and circumstances surrounding the relationship of the parties in a transaction in which they are involved.

The law is clear that a broker owes a fiduciary duty of care and loyalty to a securities investor. The type and extent of this duty is fact specific. In other words, your relationship with, in the case, your broker/dealer and/or account executive will be determinative of the type of duty that you are owed. However, please keep in mind that the extent of this duty is organic. It is constantly changing. It is for this reason that your specific circumstances need to be reviewed by a qualified professional.

Miami, Fort Lauderdale, Boca Raton and West Palm Beach Florida Investment Fraud and Misrepresentation FINRA Arbitration, AAA Arbitration, JAMS Arbitration, State and Federal Court Litigation Attorney, Russell L. Forkey, Esq.

Who can be classified as a “Broker”.

Before considering if you were impacted by broker/dealer fraud, misrepresentation, mismanagement, breach of fiduciary duty or negligence, it is necessary for the reader to understand what constitutes a broker/dealer and what the difference is between the two. Section 3(a)(4)(A) of the Act generally defines a “broker” broadly as any person engaged in the business of effecting transactions in securities for the account of others.

Master Limited Partnership v. Public Limited Partnership – Florida Limited Partnership – Federal and State Litigation Attorney: Fraud in the Inducement, breach of the partnership agreement, mismanagement of the partnership, self-dealing and fraud in the operation of the partnership.

A limited partnership is a form of legal entity created under the law of a particular state. In Florida, the statute dealing with limited partnerships is Florida Statute Sections 620.1101 through 620.2205. To review a complete copy of this state, please follow the highlighted link:

http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&URL=0600-0699/0620/0620PartIContentsIndex.html&StatuteYear=2013&Title=%2D%3E2013%2D%3EChapter%20620%2D%3EPart%20I

Investment Scams That Exploit The Immigrant Investor Program:

Recently, the United States Securities and Exchange Commission’s Office of Investor Education and Advocacy and the United States Citizenship and Immigration Services (USCIS) jointly issued an Investor Alert to warn individual investors about fraudulent investment scams that exploit the Immigrant Investor Program, also known as “EB-5.”

The EB-5 program provides certain foreign investors who can demonstrate that their investments are creating jobs in this country, with a potential avenue to lawful permanent residency in the United States. Business owners apply to USCIS to be designated as “regional centers” for the EB-5 program. These regional centers offer investment opportunities in “new commercial enterprises” that may involve securities offerings. Through EB-5, a foreign investor who invests a certain amount of money that is placed at risk, and creates or preserves a minimum number of jobs in the United States, is eligible to apply for conditional lawful permanent residency. Toward the end of the two-year period of conditional residency, the foreign investor is eligible to apply to have the conditions on their lawful permanent residency removed, if he or she can establish that the job creation requirements have been met. Foreign investors who invest through EB-5, however, are not guaranteed a visa or to become lawful permanent residents of the United States. For more details, read the EB-5 Immigrant Investor section of USCIS’s website at www.uscis.gov.

New Issue – South Florida Common and Preferred Stock and Bond Investment Loss – FINRA Arbitration and Litigation Attorney:

A “New Issue” is a stock or bond being offered to the investing public for the first time, the distribution of which is covered by various Securities and Exchange Commission (SEC) rules and regulations.  New issues may be initial public offerings by previously private companies or additional stock or bond issues by companies already public and often listed on an exchange.  New public offerings must be registered with the SEC.  Private placements avoid SEC registration but are subject to its own set of SEC rules and regulations.

Please keep in mind that the above information is being provided for educational purposes only.  It is not designed to be complete in all material respects.  Thus, it should not be relied upon as legal or investment advice.  If the reader has any questions concerning the contents of this post, you should contact a qualified professional.

SEC Approves Registration Rules for Municipal Advisors

The Securities and Exchange Commission recently voted to adopt rules establishing a permanent registration regime for municipal advisors as required by the Dodd-Frank Act.  The rule is currently slated to become effective 60 days after publication in the Federal Register.

The Final Rule:

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