At a prior firm, David Bissinger defended the former chief financial officer of major energy merchant in multiple legal proceedings arising out of an accounting restatement that reclassified more than a quarter billion dollars of cash flow from operations as cash flow from financing activities. The representation spanned more than three years, including an extensive SEC investigation, a large shareholder class action, three federal ERISA class actions, a state court derivative case, a federal court derivative case, and other matters.

At a prior firm, David Bissinger defended former mutual fund chief investment officer in connection with SEC/Eliot Spitzer investigation regarding alleged market timing.

We defended a registered representative of major brokerage firm in a matter in which our client admitted to having commingled customer’s funds in representative’s personal bank account. After extensive written discovery and on-the-record interviews, FINRA issued “no action” letter.

FINRA initiated an inquiry against Ryan O’Hara, a financial advisor in the municipal bond industry, after O’Hara blew the whistle on a longstanding price-fixing scheme in the municipal bond business. In that scheme, according to O’Hara, RBC Capital Markets, LLC (“RBC”) had contracts with 98 municipalities to act as “financial advisor.” RBC assigned those financial advisory contracts to Rathmann for Rathmann to become financial advisor – sort of an outside CFO function for municipal issuers. In exchange, Rathmann agreed that in those instances in which he acted as financial advisor, Rathmann would cause RBC to be named as the senior managing underwriter and to get RBC to receive an above-market underwriting discount.

FINRA’s inquiry suggested wrongdoing not by Rathmann or RBC, but by O’Hara for uncovering the scheme and reporting it to various participants via anonymous emails. Yet another enforcement authority, the Texas Attorney General, obtained a settlement from Rathmann and RBC in which they paid $450,000 “in lieu of civil penalties and fines and in partial reimbursement” of the Texas AG’s costs and expenses. Rathmann contended that “[n]either Rathmann & Associates nor myself were assessed any penalties or fines.” These statements, in which Rathmann minimized the Texas AG settlement, inspired O’Hara to adopt the pseudonym “Nathan Thurm” from the 1980s Saturday Night Live character, portrayed by Martin Short, in which Thurm, a shady, sweaty, cigarette-smoking lawyer, would nervously deny his clients’ various misdeeds.

O’Hara responded to FINRA by asserting his First Amendment right to use anonymous speech on these matters of very public concern, observing that “[a]nonymity is a shield from the tyranny of the majority . . . . It thus exemplifies the purpose behind the Bill of Rights and of the First Amendment in particular: to protect unpopular individuals from retaliation . . . at the hand of an intolerant society.” McIntyre v. Ohio Elections Comm., 514 U.S. 334, 341 (1995). FINRA took no further action.

We represented Carriage Services in its challenge of a rule of the Texas Department of Banking had issued in which the Department sought to penalize Carriage for cancelling contracts with customers who defaulted on their obligations to Carriage. Carriage sold contracts for pre-need funeral services. Occasionally, purchasers default. Upon default, the Texas Finance Code required Carriage to refund some of the payments under a formula designed to reflect the funds Carriage would no longer need to provide the funeral services. However, the Texas Department of Banking’s new rule would have increased Carriage’s refund to defaulting customers to 100% of all principal paid in, plus interest, regardless of cost to Carriage. The Department based its new rule for this draconian refund on another statute that had nothing to do with defaulting customers, but that imposed such draconian refunds on unscrupulous sellers who “churn” or “twist” by soliciting customers to cancel one contract only to replace that contract with another. This draconian refund made sense with respect to so-called “solicited cancellations,” but Carriage challenged its application to customers in default.

Within a few months of filing suit in Travis County district court, the Carriage entered into an agreement that allowed Carriage to continue its practice of providing refunds to defaulting customers without having to pay the penalties associated with solicited cancellations.

We represented a local broker in responding to a FINRA inquiry in which the broker’s former firm alleged that it fired him because the broker had tampered with paperwork reflecting customer orders. According to FINRA and our client’s former employer, the broker sent the home office forms with blacked out fields. However, the broker located the documents he had sent the firm and those versions of documents, in the condition in which he faxed them to his home office, contained no blacked out fields. They were intact. This led to the conclusion that the blacking out of the documents occurred not under our broker’s watch, but in the home office of the brokerage firm.

We argued that the brokerage firm had a motive to tamper with the documents because our client refused to submit to a new supervisory program that would have delegated the firm’s home office (in the Midwest) of its supervisory responsibilities to another broker in the Dallas-Fort Worth area. (Our client was located in the Houston area.) Because this delegation of supervisory authorities would have cost our client more money (by forcing him to pay an outsider for work our client already paid the home office to do), our client had refused. To make matters worse, the brokerage firm also had asked our client to increase his indebtedness under his outstanding note to the firm and to repay sums not due to the firm. Our client had refused these demands too. We cited these demands in our response to FINRA, arguing that the firm decided to retaliate by the manufacturing the forgeries. After receiving our response, FINRA took no further action against our client.

The firm represented of local issuer in connection with SEC’s investigation into various aspects of municipal-bond industry.

We defended an early-stage investor in publicly-held company in private state-court securities litigation in which another investor sought to disgorge our client’s gains, alleging that our client had knowingly aided a supposed pump-and-dump scheme. We obtained a favorable settlement for our client early in the litigation, which continued against other defendants for more than five years.

In this unusual dispute between bond brokers, we defended Institutional Capital Management, Inc. (“ICM”) in an eight-day NASD hearing filed by Len Claus and his brokerage firm, IMS Securities (“IMS”). ICM and its broker, Jerry Short, had initially indicated that it would buy $2.4 million of “inverse floater” collateralized-mortgage obligation bonds from Claus/IMS, but then ICM instructed Claus/IMS to sell the bonds to another broker-dealer, Sterling Financial Investment Group. However, Sterling refused to buy Claus’s bonds.

Claus and IMS alleged fraud and breach of contract. In response, ICM and Sterling alleged that Claus bought bonds before finalizing his sale to Sterling, contrary to securities industry rules. Claus alleged more than $400,000 in losses because, according to Claus, no one would buy Claus’s bonds as they plummeted in price.

We demonstrated in cross-examination that Claus’s own trading history undermined his damages theory. Claus claimed that he engaged in an “aggressive marketing campaign” throughout February 2005 to mitigate his losses, and that he had to sell the bonds for a steep discount in order to mitigate his losses. However, buried in Claus’s own trade report, an entry showed that he sold the bonds for the same price he had paid – 89½ – to another brokerage firm. This trade destroyed the heart of Claus’s damages theory. So, to revive some substance to his theory, Claus then testified that “he had given his word” to that buyer that he would resell the bonds to another firm “by the end of February.” This story raised another problem for Claus: it appeared that he had “parked” the bonds in violation of industry rules that forbid a broker from agreeing to repurchase securities with no loss to the party accommodating the broker.

The NASD panel appeared to agree with this theory in its award (per NASD policy, it contained no reasoning) to Claus of $20,000 in actual damages and $40,000 in attorney’s fees, far less than the $400,000 that Claus demanded.

We defended registered representative of major broker-dealer against FINRA customer claim. The customer accused our client of selling real-estate limited partnerships without broker-dealer’s authorization. The customer sought more than $15,000,000 in damages, including $4,400,000 in out-of-pocket losses.  After an eight-day hearing, a FINRA arbitration panel awarded $1.3 million, a fraction of what the customer demanded and significantly less than the broker and firm had offered in mediation.

We filed, prosecuted, and obtained a favorable settlement for senior executive arising out of Parsons Corporation’s acquisition of 3D International, Inc. (“3D/I”).  Our client alleged 3D/I forced him to sell his shares for book value despite 3D/I’s concealed knowledge of pending merger at rumored premium of two or three times book value. (The actual merger price remains confidential.) The case settled confidentially within nine months of service of process.

We represented Sexton Interests, a privately held entity, who had followed the advice of its broker at a major firm to invest large seven-figure amount into instruments known as “Auction Rate Preferred Securities,” a variety of auction-rate securities that collapsed in the credit crisis of 2008.

The broker had assured Sexton that these “ARPS” were as good as cash, and the brokerage firm listed the instruments as “cash equivalents” on Sexton’s account statements. Secretly, however, the firm knew that the ARPS were far less stable for investors, and paid better compensation to brokers, than typical “cash equivalents,” such as certificates of deposit or money-market instruments.

After our firm conducted thorough discovery that revealed, in the firm’s internal records, the disparity between what the brokerage firm knew versus what it had told Sexton, the brokerage firm settled subject to a confidential agreement.

Represented Trustee claimant in FINRA arbitration concerning unsuitability of municipal bond funds. Case settled favorably before final hearing.

We represented an investor in real estate fraud case who suffered losses when the real-estate management company enticed investor to release the liens the investor held in certain properties but failed to provide investor new liens in other properties, despite the company’s promise to do so. After we filed suit, obtained a motion for temporary restraining order, and secured a lis pendens on company’s real-estate holdings, the case settled confidentially.

Representation of the claimants in then-largest reported securities arbitration claim in history of NYSE arbitration. The dispute involved broker’s falsified account statements to portray customers as holding blue-chip stocks and bonds; in reality, broker had put vast majority of customers’ funds in “the shadowy world of Canadian gold stocks” that paid broker large kickbacks.

Represented claimant in NASD customer claim of securities fraud; broker used forged account transfers in taking portfolio of millions of dollars in investment-grade municipal bonds and degrading it into portfolio consisting of obscure and speculative “junk.” After eight-day hearing, NASD arbitration panel awarded claimant $375,000, more than 100% of claimant’s out-of-pocket losses against respondent Corporate Securities Group, Inc. (n/k/a Wachovia Securities Financial Network). Three other firms settled for confidential amounts.

In two successive NASD arbitrations, we represented four investors in cases against then-First Union Securities broker Dan O’Brien, later suspended for “selling away,” for the sale to elderly, retired, and inexperienced investors of explosive and unsuitable high-tech money managers; and fraudulent sale of illiquid and unsuitable variable and equity-indexed annuities. Among these investments was a variable annuity issued by American Skandia and marketed to brokers as “the little blue pill” for brokerage commissions. Both arbitrations settled for confidential sums.

We represented a family and a family limited partnership in a churning case against Global, its principals, and the broker, Eduardo Bustani, whom FINRA later barred from the securities industry. Mr. Bustani had churned the Canavatis’ accounts as much as 40 times on an annualized basis, buying and selling more than $66 million in securities in a fifteen-month period. (Turnover rates of more than six are presumptively fraudulent.)

Bustani compounded Global’s churning by trading the accounts on margin and using short selling and put writing to further undermine the stability of the accounts. Bustani capped off this reckless trading in March 2008 by buying substantial long positions in Bear Stearns (just as it was imploding) and shorting Lehman Brothers (just as it was rebounding from losses that spring, and well before its collapse later that fall). This “long Bear/short Lehman” position created a perfect storm of losses in an already dangerously explosive portfolio.

After Global fired its original Washington, D.C., law firm and reassigned the case to a skilled Houston securities litigator, the parties settled for a confidential sum.

We represented a family and its privately-held business to recover losses suffered when UBS recommended “100% Principal Protection Notes” to them as appropriate to fulfill the family’s desire (reflected in their emails to their broker) to get “out of the market.”

In reality, UBS knew that the “100% Principal Protected Notes” were based on the shaky credit of Lehman Brothers and the toxic assets that Lehman Brothers held. UBS also knew that these so-called “Notes” paid substantially more commissions to its brokers than certificates of deposit or U.S. Treasuries. Yet to investors, including the D’Agostaros, UBS marketed the “Notes” as part of its “Investment Strategies for Uncertain Markets.”

After a short discovery phase, the case settled under a confidentiality agreement.