Support the IAC in the Associates’ Campaign for Legal Services

The Atlanta Bar Association’s Atlanta Council of Younger Lawyers Section is continuing its long running Associates’ Campaign for Legal Services to support legal services and raise awareness of pro bono legal services.  Since 2000, the Campaign has raised over $500,000 for legal services organizations in Atlanta.

The Investor Advocacy Clinic is one of several beneficiary organizations participating in the Campaign this year. We hope you will consider supporting us.  Learn more about the Campaign here.  If you are interested in supporting the Investor Advocacy Clinic through the Campaign, you may do so here.  The Campaign runs through October 31, 2016.

SEC Whistleblower Program

By Geoff Hafer, Fall 2016 Student Intern

The SEC, on August 30, 2016, announced that awards to whistleblowers have surpassed the $100 million dollar mark. Considering the whistleblower program has only been around for about five years, that’s pretty remarkable.

Well what exactly is the whistleblower program?

The program was established by Congress to encourage individuals with specific, timely, and credible information about federal securities law violations to report to the SEC.  As an incentive, whistleblowers may be eligible for an award if their information leads to a successful enforcement action.  The awards can range anywhere from 10 percent to 30 percent of the money collected.  To date, more than $107 million has been awarded to 33 whistleblowers, with the largest award being more than $30 million!

 How does it work?

First, you submit a tip through the Office of the Whistleblower.  This can be done anonymously, however you elect to proceed anonymously, you must be represented by counsel if you would like to be eligible for an award.  By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might reveal a whistleblower’s identity.  After the tip is submitted, attorneys and analysts at the SEC review the data and determine how best to proceed.  If the tip leads to an investigation, the SEC then determines whether to charge an individual, entity or both with securities violations.  Once a matter in which $1 million dollars in sanction is ordered is final, a Notice of Covered Action is posted on the SEC website.  From there, you have 90 days to submit a Form WB-APP to apply for an award.  The SEC then takes several factors into account when deciding the percentage to award; (1) the significance of the information provided by the whistleblower, (2) the assistance provided by the whistleblower; (3) any law enforcement interest that might be advanced by a higher award, and (4) the whistleblower’s participation in internal compliance systems.  And finally, pay day!

Click here for a list of the top ten pay outs to date.

Clinic Comments on FINRA Proposal to Change Arbitrator Chair Qualifications

As part of its mission of serving regular investors, the Investor Advocacy Clinic reviews FINRA rule proposals and submits comments after fully evaluating the proposal.  Earlier this week, the clinic commented on FINRA SR-2016-033, a proposal that would require change the qualifications necessary to become a public chair qualified arbitrator.

The clinic’s comment, drafted primarily by fall 2016 student intern Geoffrey Hafer, praised FINRA for taking steps to increase the roster of public, chair qualified arbitrators.  Hafer noted that FINRA should also revisit the definition of “public” arbitrators and consider revisions in light of the size of the current pool due to a recent change in the definition.  Moreover, the clinic recommended that alternative training be available to arbitrators who wish to serve as a chair to ensure that FINRA arbitrators continue to be of the highest quality.  Click here to read the Clinic’s comment letter in its entirety.

SEC Legal News: Form ADV

By Michael Williford, Fall 2016 Student Intern

Rules promulgated under the Investment Adviser Act of 1940 include a requirement that investment advisers deliver to each client or prospective client something called a Form ADV. The part of the form often referred to as the “Brochure Rule,” contains some basic information the law requires investment advisers to disclose before or at the time the adviser enters into an investment adviser contract with a client. The Brochure Rule compels an adviser to disclose to clients information about potential conflicts of interest, even if the adviser believes the conflicts will not affect the advice the adviser provides to clients. The rule also requires advisers to disclose information about how the adviser is compensated.

We all know the joke about the government— “there’s a form for that.” But, the form ADV is a powerful tool investors can use to assess an adviser with whom they may consider doing business. The Securities and Exchange Commission adopted some changes to the form last month that are worth pointing out. The changes to the form are designed to increase the quality of the information available to customers by increasing the degree of transparency in the information required. Continue reading

Investor Advocacy Clinic Partners with Secretary of State Office on Investor Education

Beginning this semester, Georgia State University College of Law’s Investor Advocacy Clinic is partnering with Georgia Secretary of State Brian Kemp’s office to enhance investor education in Georgia.

“Our partnership is driven by the need for improved and more highly visible investor education,” stated Secretary Kemp. “We want to provide Georgians with dynamic resources that will better enable them to manage their savings investments and avoid being victimized by investment schemes and scams.”

Under the direction of Nicole G. Iannarone, assistant clinical professor and clinic director, students are working with the Securities Division by developing informational resources for investors to make informed investment decisions and avoid investor fraud.

“Our goal is to meet investors where they are with information that is interesting, easy to understand and meaningful,” Iannarone said.

As part of the partnership, clinic students also are helping the division’s attorneys with cases, investigating compliance matters and complaints.

“In the clinic, we historically only represented clients with claims against broker dealers associated with FINRA, the Financial Industry Regulatory Authority,” Iannarone said. “Now, we can give students a 360-degree view of securities regulation and administration. Our students will explore how regulation affects investment advisers, how investment professionals are overseen and how the state securities framework operates.”

According to Noula Zaharis, director of the Securities Division, the partnership with Georgia State Law is one that could serve as a model for other states and law schools.

“By working with the clinic, we are able to expand our resources for cases and educational outreach efforts,” said Zaharis. “This is also a valuable educational experience for the students.”

Georgia State Law alumni Candice Broce (J.D. ’14) and Benjamin Martin (J.D. ’11) work at the Secretary of State’s office and plan to work with clinic students in various capacities.

“Ben and I both had terrific experiential learning opportunities while at Georgia State Law,” Broce said. “I’m excited that now we can pay it forward by working with current students.”

The Securities Division of the Secretary of State’s Office is charged with the implementation and enforcement of the Georgia Uniform Securities Act of 2008. The Securities Division registers securities offered or sold in Georgia, oversees firms and individuals selling securities or providing investment advice in Georgia, enforces the Securities Act through criminal, civil and administrative penalties, and promotes investor education.

Wednesday’s Word: The Fed

mary-annBy Mary Ann Hanke, Fall 2016 Student Intern

A July 2016 headline from the Wall Street Journal read, “Fed Officials Gain Confidence They Can Raise Rates This Year.” A few follow-up questions spring to mind:

  • Who is “The Fed?”
  • How do they have the authority to raise my interest rates?
  • Why does it seem like raising interest rates is a good thing?

This Wednesday Word post will, hopefully, answer these very important questions in turn. Continue reading