The Law Planet Blog

The Public Investors Arbitration Bar Association has proposed a rule directly to the SEC that would effectively eliminate the “industry” arbitrator from the arbitration panel. The paranoia exhibited by this organization, without any true empirical basis, knows no bounds.

As a lawyer who represents both industry and investor clients, I have a unique position to assess this proposal (although I am not alone in representing both types of parties.) PIABA remains critical of the presence of a person experienced in the industry on an arbitration panel. Personally, having experienced arbitrations where the industry panelist was marginally affiliated and the public arbitrators knew next to nothing about securities, I suggest that we should all be afraid of PIABA’s proposal.

PIABA continually refers to the industry panelist as an advocate for the industry. There is no basis for this. The organization cites flawed research that states that claimants in arbitration win less than they “should.” But how does PIABA know that these cases would have fared better either in court or with an all-public arbitration panel? It doesn’t. I have stated before and I will say it again, that cases that go to hearing tend to be self-selecting. Those cases which can’t settle because the Claimant wants too much or the Respondent won’t pay enough are the ones that go to hearing. Therefore, these are the more difficult, or bad, cases depending on one’s point of view.

I have been involved in a number of cases where it was obvious that the industry panelist did not agree with the Respondent’s position. There is no evidence that the industry panelist serves as a patsy for the brokerage firms. Just because a flawed analysis finds that the “win rate” is down, does not mean that the system is bad. In arbitration, each case stands on its own. Two cases cannot be compared as every person’s situation is different.

PIABA has come up with some good ideas in the past. This is not one of them.

Rule Change Petition presented to the SEC from the Public Investors Arbitration Bar Association

Several years ago, my kids asked me what I “do”. They see the great computers, the phones, and all the other accoutrements of a successful law practice, but they wondered if I did anything other than surf the Internet during the day.

I told them that I try to help people with their problems. I reminded them of some of my more notorious cases, including one case where we recovered millions of dollars for a client who had lost virtually everything at the hands of a scam artist.

I was reminded of that conversation when I received something in the mail today. I recently represented a client who had never had a lawyer before. He was a stockbroker whose client had named him and his former employer in an arbitration. I was hired to protect him and be his advocate.

We met the day before the arbitration because he was in Orlando and I was in Jupiter. We talked about the case and a lot of other things. One thing he told me was that he never finished college. We won the case.

While I was driving home from the hearing, I talked to the client. I told him about how much I enjoyed working with him and he told me how glad he was to have me in his corner. He said that he had thought about going to law school. I asked him “why not go now?” Next thing I knew, he told me that he had decided to go back to college and get his degree. When I received the arbitration decision and called him, he was at the college getting registered.

One of the projects that he had to complete was an interview of someone who inspired him. He chose me. I was flattered (which is not easy). We talked for a while on the phone and he learned about my background, philosophy of practice and feelings about life and law school. I told him that I love being a lawyer. And he is one of the reasons why.

He sent me a copy of what he wrote for the class. It was very well written (despite its topic), he got a well-deserved “A” and it made me think, again, about why I love being a lawyer. It’s clients like him.

Congratulations Eddie. I look forward to your graduation

I was honored to serve my time as an MDA jailbird. After one hour behind bars, I was let go on probationary release and I still need your help to be set free! I’m trying to reach my goal of $3,200 and anything you can donate will help get me there. Your donation toward my bail will not only help set me free, but will also help many children and adults in Palm Beach County with muscle diseases by adding vital funds to MDA’s research efforts. You can help me and MDA by making a pledge toward my bail.

MDA serves people in our community with neuromuscular disease by providing clinics, support groups, assistance with the purchase and repair of wheelchairs, leg braces, and communication devices, and summer camp for kids. MDA also fund research grants to help find treatments and cures for some 43 muscle wasting diseases that affect people of all ages living right here in our community.

To make a donation please visit my website by clicking on the link below or mail a check to the Palm Beach County MDA Office at:
MDA
1903 S. Congress Avenue #400
Boynton Beach, FL 33426

MDA Link for Marc Dobin

I sincerely hope that you’ll take the opportunity to support MDA. If you have any questions, please don’t hesitate to call or email me.

On behalf of the families MDA serves, Thank you!

Today is the last day of The Law Planet as it has existed for the last two years.

Starting March 30, I will be an attorney with Labovick & Labovick, P.A. starting up that firm's Financial Services Department.

I will continue posting on the new and improved Law Planet.

So, I'm on the move this weekend. See you at www.Labovick.com.

Dilbert is always on top of things. I read this panel this morning and it made me laugh.

Scott Adams, the strip's creator, is a genius.

That's the fiduciary view from The Law Planet, Jupiter, Florida.

The Eleventh Circuit Court of Appeals, which covers Florida, is a "manifest disregard" circuit. In Montes v. Shearson Lehman Hutton, the court found that a closing argument in an NASD arbitration that acknowledged the law, but encouraged the arbitrators to ignore it, was evidence of manifest disregard of the law. The arbitrators agreed and Shearson won the case.

On a motion to vacate, ultimately decided by the 11th Circuit, Shearson lost. The court found that the test is that the arbitrators were aware of the law and chose to ignore it. Montes may be the only case decided on this basis for the movant. In other words, in establishing "manifest disregard" as a basis for vacating an arbitration award, Shearson lost.

Over time, and mergers, Shearson became part of Citigroup Global Markets. That entity, Citigroup, recently lost a FINRA securities arbitration award to a woman from Texas. Citigroup thought it had a good argument, that the arbitrators manifestly disregarded the law. The trial court agreed. The Fifth Circuit did not.

In Citigroup v. Bacon the Fifth Circuit said that "manifest disregard of the law" is no longer available as grounds to vacate an award. The court based its decision on a recent US Supreme Court decision in Hall Street Associates v. Mattel. The US Supreme Court in Hall Street found that "manifest disregard" is not part of the statute allowing vacatur of arbitration awards. The Court pronounced for the entire nation that "manifest disregard" does not exist any longer. (Other circuits, by the way, have found their way around this ruling.)

Florida currently is a "manifest disregard" state, but the 11th Circuit said that Montes is the only case it has found worthy of that moniker. In fact, in Harbert v. Hercules Steel,, the 11th Circuit warned that sanctions may be appropriate for weak motions to vacate arbitration awards based on "manifest disregard."

There you have it. Citigroup has managed to establish that "minfest disregard" is and is not a basis for vacating an arbitration award. For those of you non-lawyers who read this, I can't explain it other than to say, that's the way the law is sometimes.

That's the view from The Law Planet - Jupiter, Florida.

My sister, the bankruptcy lawyer, sent me an email to explain the credit crisis. Since my brain is pea-sized, she used points of reference I understand.

John is the proprietor of a bar in Sydney. In order to increase sales, he decides to allow his loyal customers, most of whom are unemployed alcoholics, to drink now but pay later. He keeps track of the drinks consumed on a ledger (thereby granting the customers loans). Word gets around and as a result increasing numbers of unemployed alcoholics flood into John's bar.

Taking advantage of his customers' freedom from immediate payment constraints, John significantly increases his prices for wine and beer, the most popular drinks. His sales volume ncreases massively. A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases John's borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral.

At the bank's corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items because Lehman Bros recommended them as a good investment.

One day, although the prices are still climbing, a risk manager of the bank, (subsequently of course fired due to his negativity), decides that the time has come to demand payment of the debts incurred by the drinkers at John's bar. But of course they cannot pay back the debts.
John cannot fulfill his loan obligations and claims bankruptcy.

DRINKBOND and ALKBOND drop in price by 95 %. PUKEBOND performs better, stabilizing in price after dropping by 88 %. The suppliers of John's bar, having granted her generous payment due dates, and having invested in the securities, are faced with a new situation. His wine supplier claims bankruptcy, his beer supplier is taken over by a competitor.

The bank is saved by the Federal Government following dramatic round-the-clock consultations by leaders from the governing political parties.

The funds required for this purpose are obtained by a tax levied on the non-drinkers.

There, do you feel educated now?

That's the view from The Law Planet - Jupiter, Florida.

By now anyone who has any interest in investing knows about Bernie Madoff. Mr. Madoff has admitted his guilt in a Ponzi scheme of gargantuan proportions. But I think this is just the beginning.

Mr. Madoff has stated, through others, that no other person knew about his fraud. I find that impossible, not just difficult, to believe. I think he is pleading guilty to protect others.

What can a Madoff investor do? I have spoken with some of them and the stories are heartbreaking. People's lives have been ruined and will never be fixed. Securities arbitration and litigation is one recourse. But the Madoff entities are in receivership. So the feeder funds and moneyraisers are the next targets. But those cases will not be easy. A lawyer familiar with securities arbitration and litigation should have an opinion on this.

In my opinion, the investigation is not over. The SEC, which has been raked over the coals recently, will likely dig deeper. They will find out who else knew about the fraud, or ignored it, and when they found out. They will look at the feeder funds and the moneyraisers. And others will suffer consequences.

It's a shame that the public trust was violated in such a manner. This remains a black eye for the investment industry. It will take a long time to restore this confidence.

That's the view from The Law Planet - Jupiter, Florida.

This has only a little bit to do with securities, litigation, investments or anything else.

But it made me smile and we all need to smile at least once before the year is out.

Have a safe, healthy, prosperous and Happy New Year.

That's the view from The Law Planet - Jupiter, Florida.

I have always been a big Dilbert fan. Scott Adams has the corporate mindset nailed.

I discovered some animated Dilbert shorts on MSN that are mildly amusing. (not Bermuda shorts with cartoon characters.).

This one's about the brokerage industry.
Dogbert's Discount Brokerage

Enjoy.

Marc

My father graduated from law school in 1960 and took a job, from which he retired 40 years later, with a small firm called Curtin & Heefner in Morrisville, Pennsylvania, in Bucks County. I don't really remember much about Mr. Curtin, but Mr. Heefner (one of the few lawyers on this planet that I would still call "Mr.") is burned into my brain.

He was a classy guy. Very distinguished. Always pleasant to me, both as a kid and as an adult. I learned from his obituary that he, like me, went to law school at night and worked during the day. One little-known fact about Mr. Heefner, not mentioned in the firm's press release, is that he knew how to operate an old-school style switchboard, the kind with the plug-in wires. I learned from him, and from my father, that no job is too small when it comes to making sure your law firm is operational. And it always paid to know how things worked.

Mr. Heefner was a mentor and model to those around him. He was generous to his community with his time and money. I remember more than one firm softball game at the gentleman's farm he had created in Perkasie. The world, the community and my family, are all better off because we knew Mr. Heefner and he will be remembered fondly by all.

Marc Dobin

A friend of mine sent me this picture claiming that it was a protest of Lehman Brothers employees outside their office.

I think he's pulling my leg.

This has nothing to do with the law, but everything to do with how I see the world. As I was backing my car out of the driveway, I heard an ad on the radio for a product called "Ass effects". I assumed that it was a gag ad on the talk show I like.

It wasn't. There is a heartburn remedy called Aciphex that is a heartburn remedy. Apparently, the folks developing the name didn't account for the potential for a regional pronunciation which, instead of pronouncing the "i" as "ih", the "i" is pronounced as "uh", thus giving us "ass effects".

Just thought I would share that with you.

That's the windblown view from The Law Planet, Jupiter, Florida.

This is exciting for me and not just because it might make my mother proud. I have read Registered Rep for almost as long as I've been in this business. Sometimes I agree with what is written, sometimes not.

I was called a few weeks ago and asked questions about Gary Gross, a broker with a reputation in Boca Raton, Florida. He has a significant number of customer complaints on his record. I was asked how this could happen. I explained that there were likely a number of small miscues along the way that resulted in what the article described as a massive blow-up. I called it the "failure chain" after something that I heard on a PBS special about plane crashes.

Lo and behold, the article is published. The cover of the magazine says "The Failure Chain." If you read the article, you will see how the term came up. I actually got emails from two lawyers in other parts of the country asking if I got extra credit for writing the cover headline. I didn't.

How does this count towards my 15 minutes of fame?

That's the view from The Law Planet - Jupiter, Florida.

I admit that there are times when I am easily entertained. And I am an avowed Microsoft-disliker. But I have to hand it to the folks in Redmond, they've got me interested in something. Click on this link. Then hover over the pushpin and select Zoom to Street level.

Here's the fun part. Then click on "Bird's Eye" view. That's Dobin & Jenks world HQ. The picture was taken since last October. I think this is very cool. I've used this feature to find sports fields and locate restaurants. It's much better than the plain old aerial view or map. I've used it to see my house (and the landscaping the builder added before I bought it).

The main URL is http;//maps.live.com. Enjoy it and use it well.

That's the bird's-eye view from The Law Planet, Jupiter, Florida.

When I'm not practicing law, you might find me at a Suncoast High School girls' lacrosse game, where I am an assistant coach. Truth be told, I have no special lacrosse talents, but I go there to help, provide some organization and maybe a few tips I've learned over the years as an amateur sports coach.

But, today, I'm writing about one of the players, Kelsey Sheridan. Kelsey is a senior who has been accepted to Northwestern University. Kelsey is the unofficial cheerleader of the team. She also was involved in getting the team started, I understand.

Tomorrow, Kelsey will be getting her head shaved for the St. Baldrick's Foundation. My head is going that way slowly and naturally, so I will stay with what I have. And I have some clients who look like they've already participated.

Ah, to have youth on your side for regrowth.

You can make donations for Kelsey's head shaving here. Kelsey's a great kid and very spunky. If any of my three readers can donate a little bit, that would be great.

That's the view from The Law Planet, Jupiter, Florida.

You may ask, what does a securities and employment firm like Dobin & Jenks, located in Jupiter, Florida, have to do with a girls' softball team in Royal Palm Beach, some 25 or 30 miles away? It's a long story, for which I will only brag about the highlights.

One of the softball boosters is the neighbor of one of our lawyers. I met this booster at a social function and he mentioned that the boys' baseball field has lights but the girls' team doesn't. He went on to explain how they have fofeited games on account of darkness. Now, I may not be sharpest knife in the drawer, but that didn't seem right, fair or legal.

We did some research, and Brian Buckstein of our office sent a letter to the school's principal. After a couple more letters, the School Board advised us that the boys were not permitted to use their lights until the girls' field was similarly equipped. We didn't like disadvantaging the boys in the process, but the two teams needed to be treated equally.

Over the summer and into the fall, the school board put up lights. The parents renovated other sections of the field and turned it into their "Field of Dreams." Brian, his family and I went to the first night game held at the field. It was gratifying to see tangible results of our successful work which, so often, is only represented in a check and a settlement agreement. The team was clearly enjoying its newly-refurbished home and we were glad to be a part of it.

By the way, the team won their first nighttime game.

That's the view from The Law Planet, Jupiter, Florida.