10 Retailers to Watch for a Bankruptcy Filing in the Second Half of 2021

The tide has turned from last year! Slowly, the global pandemic is coming to an end. In its wake, the retail industry has been forever changed with technological innovations and advancements, including online ordering and delivery/pickup, warehousing, automation, and mobile self-check-out. Although most landlords and tenants have worked together during the adversity, there are still a number of problem tenants that may not be able to recover or who may now use the bankruptcy process to get rid of debt and actually restructure.

Following is our top 10 retailers to watch for possible Chapter 11 filing(s) in the year ahead.

  1. AMC – Why Go to the Movies When You Can Stream? According to the Motley Fool, despite the more than $917 million in cash infusion from the investors at the beginning of the year, there is still numerous obstacles for the movie theater company. The rise in streaming services, slow return of consumers to theaters, as well as a significant portion of their current debt being nonconvertible are all signs that there is a high likelihood of a bankruptcy filing to restructure the debt.

  2. Nine West – Footwear Company Walking into a Chapter 22? The women’s footwear company owned by Premier Brands Group Holdings previously filed for bankruptcy in 2018. At the time it reduce debt and sold the Anne Klein trademark. However according to Business Insider, the pandemic is caused a significant drop in revenue. The company looks poised for a Chapter 22 filing – a second Chapter 11 bankruptcy within a few years of the first filing.

  3. LA Fitness – A Footprint Reduction? The Wall Street Journal reports that although gyms are now re-open, the pandemic upended the fitness industry. However, out of all the gyms that suffer through the pandemic, LA Fitness seems to be in the best position to use the bankruptcy process to reduce its footprint and renegotiate leases.

  4. Jo-Ann Stores – Private Equity Debt. According to USA Today, the private-equity owned company has significant debt. This scenario is a classic reason for filing for bankruptcy – remember Toys R’ Us.

  5. Regal Entertainment Group – Significant Rent Arrears. CNBC reports that Regal’s reopening of approximately 500 locations on April 2 to limited capacity was a significant decision for the theater chain. However, like AMC, its owner, Cineworld Group PLC faces significant debt, streaming services and slow return of customers. In addition, numerous outlets report significant rent arrears to landlords.

  6. Barnes and Noble – Can It Survive? The acquisition of Paper Source was meant to create synergies between the two. However, the company is heavily reliant on food concessions as well as in-store customers. Have buyer habits changed for good due to the Pandemic? Forbes still has it on its list of specialty retailers to watch for a Chapter 11 filing.

  7. Rite Aid – A Healthier Population Hurts Business. com notes that the US pharmacy chain with 2,500 stores in 19 states, had a rough go during the Pandemic, as fewer people came down with colds or coughs as they sheltered at home. According to Moody’s, the company is in danger of default as it holds $1.5 billion in outstanding high-risk debt.

  8. Equinox – Another Gym Filing? According to Crain’s New York, landlords are pursuing the private health club for more than $6 million in back rent. Bloomberg noted in February 2021 that the company reached a deal that released it from a limited guarantee of SoulCycle’s $265 million credit facility with lender HPS Investment Partners. Still, the heavy back rent, multiple locations and other debt issues make the gym a perfect candidate for a Chapter 11 restructuring.

  9. The Children’s Place – Losses Keep Piling Up. According to the Forbes, the pandemic accelerated apparel filings. One retailer listed at the top of the list for this year is The Children’s Place. The largest children apparel retailer is on track to close more than 300 stores. Although the company negotiated about $13 million in rent abatements in the fourth quarter 2020 for the COVID-closure period, it may not be enough to avoid a filing.

  10. The Gap – Fall Into Bankruptcy? S. News & World Report’s notes that the company’s long-term debt increased from 1.24 billion to 2.21 billion in 2000 due to the pandemic. Although its business is expected to recover as malls reopened and shoppers return, there is still a concern of the decline in mall traffic long-term.

COPYRIGHT © 2021, STARK & STARK
For more articles on bankruptcy, visit the NLRBankruptcy & Restructuring section.

The Supreme Court’s Transgender Bathroom Case Rebuff, What Direction Should School Districts Take?

On June 28, 2021, the Supreme Court denied the Gloucester County School Board’s petition for a writ of certiorari or stated another way denied to hear an appeal from the School Board from a Federal Appellate court.  So at this juncture,  it appears the Justices don’t seem inclined to intervene in disputes over transgender rights and bathrooms.  So what are the implications of the Court’s action or more accurately inaction in Grimm v. Gloucester County School Board?

The Background and Twisting Litigation in Grimm v. Gloucester

Prior to appeal to the Supreme Court, the United States District Court for the Eastern District of Virginia denied a motion by the Gloucester County school board to dismiss the Title IX and Equal protection lawsuit brought by student Gavin Grimm.

In Grimm v. Gloucester County School Board the Plaintiff Gavin Grimm, a transgender student, challenged a school board resolution that required him—and other transgender students—to use the bathroom associated with his “biological gender.” G.G. ex rel. Grimm v. Gloucester Cty. Sch. Bd., 822 F.3d 709, 716 (4th Cir. 2016), cert. granted in part, No. 16-273, 2016 WL 4565643 (U.S. Oct. 28, 2016). Grimm sued the school board, alleging that the policy violated Title IX as well as the equal protection clause of the Constitution.

What does Title IX Protect?

Title IX of the Education Amendments of 1972 (Title IX) is a federal law that states in part:

“No person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance.”

What does the Equal Protection Clause of the Constitution Protect?

The Equal Protection Clause is part of the Fourteenth Amendment to the U.S. Constitution and the part most frequently litigated reads:

“No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

Specifically, the phrase “equal protection of the laws” has been used by the Supreme Court to find constitutional protection in a number of gender and public education related situations.

What Does the Due Process Clause of the 14th Amendment Protect?

The Due Process clause of the 14th Amendment which explicitly applies to the states,   essentially mirroring the protections of the 5th Amendment, which only applies to the Federal Government , thereby adding additional protections for individual rights from intrusion by the states.  The Due Process clause guarantees the following rights from interference by the states:

In addition to his Title IX and equal protection clause claims, the plaintiff in Grimm v. Gloucester relied heavily on a Department of Education (DOE) /  Office of Civil Rights Letter (OCR) known as a “Dear Colleague Letter” interpreting Section 106.33 (34 CFR 106.33 Comparable Facilities)  to require schools to “treat transgender students consistent with their gender identity.” G.G., 822 F.3d at 718.

In response to the Fourth Circuit Court of Appeals decision in Grimm v. Gloucester County School Board, 2016 WL 1567467 (4th Cir. April 19, 2016), on May 13, 2016, the Department of Labor (DOL) and the Department of Education under the Trump Administration issued a joint directive to school districts summarizing “a school’s Title IX obligations regarding transgender students and explains how the [DOE] and the [DOL] evaluate a school’s compliance with these obligations” or another a “Dear Colleague Letter.”

The Fourth Circuit’s majority opinion in Grimm (2106) relied heavily, if not exclusively, on the Obama Era’s DOE’s interpretation of Title IX and that requiring transgender students to use the restroom associated with their biological sex equated to discrimination on the basis of sex.

The school district in Grimm, along with several state attorney generals, petitioned the Fourth Circuit for a hearing before the full panel.  The Fourth Circuit denied the and School District appealed to the United States Supreme Court for review and the Supreme Court granted certiorari in 2016, but after the change of administration the Department of Education withdrew the “Dear Colleague Letter”, the Supreme Court opted to not to hear the case and vacated and remanded the case back to the Fourth Circuit.

Grimm then filed an amended complaint, and in 2020, the Fourth Circuit affirmed the district court’s ruling in favor of Grimm.  The Fourth Circuit, in its 2020 ruling relied on 2020 landmark Supreme Court case, Bostock v. Clayton County, which held that Title VII’s prohibition of discrimination on the basis of sex necessarily includes discrimination on the basis of sexual orientation and gender identity. The Fourth Circuit extended the Supreme Court’s reasoning in Bostock  to Title IX’s analogous prohibition of discrimination on the basis of sex.

The School District once again appealed and the Supreme Court refused to grant certiorari on June 28, 2021, so the underlying 2020 Fourth Circuit opinion stays intact.

What Impact will Grimm v. Gloucester Actually Have?

According to Shannon Farmer a Labor & Employment partner in the Philadelphia office of Ballard Spahr, with extensive litigation experience related to civil rights:

“As the Fourth Circuit’s decision and the Supreme Court’s denial of certiorari makes clear, the Court’s landmark ruling in Bostock changed the legal landscape surrounding LGBTQ+ discrimination. When Grimm was before the Court in 2016, the underlying Fourth Circuit decision was based on administrative guidance with limited authority. The Fourth Circuit’s most recent ruling, however, was grounded in the Court’s reading of statutory language. Although the Supreme Court explicitly stated that the Bostock opinion did “not purport to address bathrooms, locker rooms, or anything else of the kind,” its decision not to hear the Grimm case allowed Bostock to be extended to provide exactly those protections. In addition, the Biden Administration’s March 8 Executive Order and a subsequent memorandum from the DOJ have extended Bostock to the educational context.”

Although many institutions have created or are beginning to create policies for transgender students, the long and winding road of the Grimm case shows there are still challenges ahead and changes in direction from the DOL, DOE and OCR  with different administrations, can make keeping up with the rules a moving target. As it stands today, revisions to existing policies will call for more clearly-defined inclusivity provisions for the LGBTQ community.

According to Nikki Hatza, an associate in the Philadelphia office of Ballard Spahr with previous experience with the Employment Litigation Section of the U.S. Department of Justice’s Civil Rights Division:

“Given the Biden Administration’s guidance and the existing appellate court decisions interpreting Title IX and the Equal Protection Clause to prohibit discrimination on the basis of gender identity, schools should review and adjust their policies as needed to comply.”

Per Art Coleman, of EducationCounsel and past Deputy Assistant Secretary for Civil Rights, U.S. Department of Education, who along with his team, last year filed an amicus brief in the U.S. Court of Appeals for the Fourth Circuit on behalf of Gavin Grimm:

“The U.S. Supreme Court’s decision not to consider the appeal in the Grimm case is not surprising in light of the unbroken string of recent federal appellate decisions that affirm that the protections of Title IX extend to transgender students.  Coupled with recent U.S. Departments of Justice and Education actions that align with those rulings, clear consensus has emerged under federal law.”

The federal court rulings that affirm the extension of Title IX protections to transgender students have continued to affirm the reality of consequential harm to transgender students that occurs when they are denied from full participation and opportunities in education.  In the end, the cases really are about the indisputable harm to students that results from lack of equal opportunity—medically, psychologically and educationally.  The federal courts—and the Biden administration—have recognized that reality, and won’t countenance it.  Because the law doesn’t.

Jessica Clarke, a professor of law and co-director of the George Barrett Social Justice Program at Vanderbilt University believes that Grimm v. Gloucester will cause groups with concerns related to LGBTQ rights to shift their attention from the bathroom issue and served as the impetus for school districts to adopt more trans-friendly bathroom policies.

“The decision not to grant certiorari is important because it did not disrupt the emerging consensus among federal courts–not just the Fourth Circuit–that schools may not forbid transgender students from using restrooms consistent with their gender identities. One factor that has been important in this development is that school districts around the country have adopted trans-inclusive restroom policies without experiencing any of the disruption that was feared. As a result, we are likely to see conservative advocacy groups shift the focus of their attacks on the LGBTQ community from restrooms to other issues.”

Copyright ©2021 National Law Forum, LLC
For more articles on the Supreme Court, visit the NLRLitigation / Trial Practice section.

Should Virtual Depositions Survive the Pandemic? The Answer is Yes and No.

As the “new normal” of pandemic virtual legal proceedings appears to be waning, a question arises as to which, if any, practices initially born out of necessity, but no longer so, should continue to be utilized. One such device previously employed sparingly, but which became de rigueur during COVID, is the virtual deposition. In some but not all circumstances, virtual depositions can remain an effective tool for litigators.

The critical considerations in determining whether to continue using this mechanism will hinge on the purpose of the deposition and the stature of the particular witness. For example, if a deposition is being conducted for basic discovery purposes, i.e., understanding the broad strokes of a dispute, or determining generally what the opposing side knows or has, it might make sense to conduct it virtually. What may be obtained from such witnesses over video-link likely would not be enhanced by conducting the depositions in person. Moreover, the technical hiccups sometimes incidental to a video deposition, such as audio deficiencies and temporarily frozen screens, likely would not diminish the value of such “low-stakes” testimony.

But, if the purpose is to obtain testimony that will be presented to a trier of fact, there is no substitute for a live deposition. Like cross-examining an opponent’s witness during a trial, being in the same room to control that witness without the delay of a video feed or the interference of opposing counsel who may be present with the witness while you are not, makes a world of difference. Due to the unavailability of witnesses, cases may be won and lost during depositions. Consequently, it is important to treat these depositions as if you are eliciting trial testimony. Doing so live will give you the best chance at a successful examination.

A second important consideration is the stature of the witness. A virtual deposition would certainly be appropriate for a low ranking company employee with no ability to bind an organization, or a document custodian whose elicited testimony would likely be mechanical in nature. However, the deposition of a critical fact witness, high-ranking company official, or corporate designee most definitely should be conducted live, if possible. There simply is no substitute for looking a witness in the eyes during questioning to gauge their credibility, or obtaining a face-to-face assessment of their composure and demeanor. That type of evaluation is simply not possible over a video-link, particularly given the possibility of technical mishaps.

These considerations should not be viewed in a vacuum, of course. For more and more clients, a primary concern is legal cost containment. For those attorneys with national practices, being able to conduct the video deposition of a witness who resides on the other side of the country surely will provide significant cost savings for such a client. Similarly, a busy litigator’s life will be made easier by having the option of deposing a witness virtually, rather than committing to otherwise avoidable travel time.

Like most legal conundrums, the answer to this question is not clear-cut. But, having options like those outlined above to address the different types of witnesses and circumstances will increase the likelihood of eliciting valuable testimony.

©2021 Epstein Becker & Green, P.C. All rights reserved.
For more articles on depositions, visit the NLR Litigation / Trial Practice section.

Their Aim Wasn’t True – The NRA and Bad Faith Bankruptcy Filings

Bankruptcy offers a temporary sanctuary for parties seeking relief from a variety of problems – financial crisis, lawsuits, collection actions, repossessions, foreclosure, and pandemics.

Filing bankruptcy before a money judgment is entered or on the eve of a foreclosure sale is – often to the consternation of creditors – perfectly valid.  Creditors often complain that the debtor is acting in bad faith, and the bankruptcy court should toss the case.  Those arguments almost always fail.

But not all bankruptcy cases survive long enough for a debtor to reorganize.  When a case is truly filed in “bad faith,” the bankruptcy court can and often will dismiss it.  So when a Bankruptcy Court in Texas recently dismissed the Chapter 11 case filed by the National Rifle Association, it provided an opportunity to look at what constitutes a bad faith filing under the Bankruptcy Code.

The NRA was sued by the New York Attorney General, who alleged the NRA had committed a variety of illegal acts in violation of New York’s laws governing not-for-profits.  The New York Attorney General has the power to bring enforcement actions against charities like the NRA and, if successful, one of the potential remedies is the dissolution of the charity.  The NRA sought to avoid the enforcement action – and particularly the specter of dissolution – by filing bankruptcy and moving to Texas.

When a party files a bankruptcy petition, it must do so for a valid bankruptcy purpose; otherwise, it is a bad faith filing.  Valid bankruptcy purposes include avoiding foreclosure, avoiding having to shutter operations, reducing operating costs, addressing burdensome contracts and leases, streamlining and consolidating litigation, attempting to preserve a business as a going concern, or simply obtaining a breathing spell to deal with creditors.  A petition filed merely to obtain a tactical litigation advantage is a bad faith filing.

To determine good faith versus bad faith, the courts must consider the totality of the circumstances based on the debtor’s financial condition, motives, and the local financial realities.  No single factor is dispositive.  Since the court must evaluate and decide the issue, witness testimony – particularly from the parties who decided to file the case – is a critical factor.  The burden is on the party seeking dismissal to prove bad faith by the debtor.  If that party can muster enough evidence to suggest bad faith, then the burden shifts to the debtor to prove that it was acting in good faith.

After a 12-day trial with 23 witnesses, the Bankruptcy Court found that the NRA’s bankruptcy petition was not filed in good faith based on the totality of the circumstances. The NRA was not in financial distress and had funds to pay all their creditors in full.   The NRA filed their petition to gain an unfair litigation advantage in the New York Attorney General enforcement action.  New York might still be able to get a money judgment, but the NRA wanted to take dissolution off the table.  The enforcement action was different than a lawsuit by a disgruntled vendor.  It was to enforce New York’s regulatory scheme for charities, and the NRA was using bankruptcy to try to avoid that regulatory scheme.  This was not a legitimate bankruptcy purpose.

The lesson for creditors is that, although infrequent, there are circumstances when a bankruptcy court will dismiss a case.  If the debtor has filed a case for a patently improper purpose, you may get it dismissed.  But to pursue dismissal and succeed, you need to be prepared to go to trial and present compelling evidence of bad faith to the court through documents and witness testimony.

© 2021 Ward and Smith, P.A.. All Rights Reserved.
For more articles on bankruptcy, visit the NLR Bankruptcy & Restructuring section.

FTC Files Much-Anticipated Monopolization Charges Against Broadcom

Also Paves Way for Private Actions

As predicted by some, the Federal Trade Commission issued a complaint charging Broadcom Inc. with illegally monopolizing several markets for semiconductor chips used to deliver television and broadband internet services. The Commission simultaneously issued a proposed consent order that, if approved, would settle the FTC’s charges against Broadcom and allegedly restore competition in the impacted markets. But this is likely just the beginning of Broadcom’s antitrust issues in the U.S. because the FTC’s complaint provides an effective roadmap for Broadcom customers to collect treble damages for their overpayments.

The Complaint and Consent Decree

The FTC alleges that Broadcom has monopoly power in three separate semiconductor chip markets: (i) systems-on-a-chip (“SOCs”) for set top boxes, (ii) SOCs for DSL broadband devices, and (iii) SOCs for fiber broadband devices. It also determined Broadcom is one of a few significant suppliers of other chips relevant to the investigation, which include wi-fi chips that enable the devices to connect to wireless internet and front-end chips that convert analog signals to digital signals for the devices. Collectively, the FTC refers to these chips as the “Relevant Products.”

According to the FTC, Broadcom maintained its monopoly power through unlawful practices beginning in 2016. At that time, Broadcom began facing competitive threats from nascent rivals in the monopolized markets, which was largely fueled by Broadcom customers (cable and internet service providers and original equipment manufacturers (“OEMs”)) attempting to lessen dependence on Broadcom and foster competition in these markets. Around the same time, customer demand began shifting significantly from broadcast STBs (i.e., traditional cable STBs) to streaming STBs that access content via the home’s broadband modem.

In response to the competitive threats and changing market dynamics, Broadcom endeavored to maintain its monopoly power rather than compete on the merits.

Through a series of long-term contracts entered with service providers and OEMs, and through an accompanying campaign of threats and retaliation, Broadcom induced customers to purchase or use Broadcom’s relevant products on an exclusive or near-exclusive basis.

Broadcom’s misconduct had significant anticompetitive effects, including: (i) foreclosing competitors from a substantial share of the relevant markets, (ii) causing higher prices for customers, (iii) preventing rivals from reaching necessary scale by stopping OEMs and service providers from purchasing relevant products from them, (iv) reducing customer choice and innovation by impeding rivals’ development efforts and/or causing them to divert money and resources from the relevant markets, and (v) erecting significant barriers to entry and expansion.

The consent order prohibits Broadcom from entering into these same types of exclusivity or loyalty agreements with its customers for the supply of the monopolized chips. Broadcom also must stop conditioning access to or requiring favorable supply terms for these chips on customers committing to exclusivity or loyalty for the supply of other relevant chips. And, finally, the consent order explicitly prohibits Broadcom from retaliating against customers for doing business with rivals. The consent order will remain in place for 10 years and Broadcom is required to submit a compliance report to the court annually. The FTC will publish the consent agreement package in the Federal Register with instructions for filing comments. Comments must be received 30 days after publication. The Commission provided an analysis of the agreement to assist those who wish to comment.

The complaint and consent decree are significant for several reasons beyond restoring competition in the relevant markets.

For one, the complaint bestows purchasers of Broadcom’s relevant products with most facts needed to plead a Section 2 monopolization case for treble damages. The complaint defines the relevant markets, explains that Broadcom has monopoly power in at least the monopolized markets, describes how Broadcom unlawfully maintained its monopoly power, and explains how Broadcom’s misconduct harmed competition and caused purchasers to pay higher prices.

Second, the complaint substantiates claims that Broadcom’s anticompetitive conduct extends beyond the relevant markets identified in the complaint. For example, Western Digital, the largest manufacturer of hard disk drives in the U.S., alleged that Broadcom engaged in strikingly similar misconduct in that market. Specifically, Western Digital alleged in a 2017 public court filing that Broadcom demanded that Western Digital buy certain components for its hard disk drives exclusively from Broadcom and eliminate avenues from which it could buy these components from rivals. Broadcom threatened to cut off supply of necessary components if Western Digital did not capitulate.

Broadcom customers in any market should consider whether they have been impacted by misconduct like that flagged by the FTC.

If so, then they should analyze two things: (i) whether they have made sufficient purchases to warrant filing a private action to recover treble damages and (ii) whether they should file a comment during the notice period concerning the adequacy (or lack thereof) of the consent decree. Given that Broadcom is subject to both judicial oversight for the next 10 years and an anti-retaliation clause in the consent order, companies should feel comfortable filing an action or comment against Broadcom.

© MoginRubin LLP
For more articles on the FTC, visit the NLRAntitrust & Trade Regulation section.

Top Legal Industry News June 2021: Attorney Hiring, Law Firm Pro Bono Recognition & Legal Industry Innovation

We’re back with another edition of our legal industry news roundup. Read on for the latest news on law firm attorney moves, pro bono work and recognition, innovation and inclusion.

Law Firm Moves

Rick Pearl rejoined Faegre Drinker Biddle & Reath LLP as a partner in the Benefits and Executive Compensation practice group at the Chicago office. Mr. Pearl is a nationally recognized authority on the Employee Retirement Income Security Act of 1974 (ERISA) and employee stock ownership plan (ESOP) matters. Mr. Pearl is a member of the ESOP Association’s Public Policy Council and Valuation Advisory Committee. Mr. Pearl previously worked for Drinker, Biddle & Reath from 2016-2018.

“Rick is a trusted adviser with a successful track record in high-stakes ERISA and ESOP litigation. His experience working with businesses across industries on ESOP matters will be a great value to our clients as we guide them through complex ERISA and valuation issues,” said Jeremy M. Pelphrey and Philip J. Gutwein of Faegre Drinker.

Kevin Halloran joined Quarles & Brady’s  Indianapolis office as partner in the firm’s Business Law Practice Group focusing on transactional taxation, specifically mergers and acquisitions. Mr. Halloran additionally provides analysis, financial and tax modeling, and advice on deal structuring for both financial and strategic acquirers and has extensive experience structuring stock and asset acquisitions, corporate mergers, reorganizations and dispositions.

“We are excited for Kevin to join our Indianapolis office and to make an immediate contribution to the firm and our clients,” said Joel Tragesser, Indianapolis office managing partner. “Kevin brings extensive experience in handling tax aspects of M&A deals and deal structuring for corporate clients.”

Venable LLP added  Thomas E. Perez as a Partner in its Washington, DC office. Previously, Mr. Perez was the chair of the Democratic National Committee (DNC), the secretary of labor, and assistant attorney general for civil rights under President Obama.

“Tom is extremely well respected nationwide for his deep knowledge and successful track record on public policy issues at every level of government. He has served as a trusted advisor to many of our country’s leaders and been at the center of issues impacting American businesses and their employees. I am confident that our clients will benefit from his experience and counsel,” said Stu Ignis, Venable LLP’s Chairman.

Stroock added White Collar/Securities Litigation partners in its Litigation and  Government Affairs and Regulatory Services (GARS) practice.  SEC enforcement lawyer Richard Morvillo joined Strook in Washington, D.C., while partners Scott Morvillo, and Ellen Murphy will be based in New York.  Each new partner draws on experience before government agencies, lawmakers and regulatory bodies to counsel clients on complex civil and criminal investigations.

“Our clients will benefit greatly from the collective experience of Richard, Scott and Ellen with white collar cases, and particularly their work with securities and the financial services industry,” said Firm Co-Managing Partner Alan Klinger, who heads the GARS practice. “Their move deepens our securities, white collar and traditional litigation bench.”

Mr. Morvillo will lead Stroock’s White Collar & Investigations practice. A former branch chief with the SEC’s Division of Enforcement, he is a nationally recognized authority in SEC enforcement and other white collar matters. Mr. Morvillo has been a part of several high-profile cases, including securities matters involving Enron, Dick’s Sporting Goods, Liberty Media, Capital One and Prestige Brands.

Scott Morvillo, a former Assistant United States Attorney for the Eastern District of New York, regularly represents clients before district courts and regulatory bodies, focusing on matters involving securities fraud, public corruption, bank fraud, bribery, wire and mail fraud, accounting fraud, health care fraud, insurance fraud and violations of the Foreign Corrupt Practices Act.

Ms. Murphy’s practice centers on advising financial institutions, public and private companies, boards and executives in a variety of regulatory, criminal, internal and civil investigations and litigations, including extensive experience with both civil and criminal trials as well as mediations and arbitrations.

Amelie Metivier joined Stikeman Elliott as a partner in the Corporate group of the Montreal office. Ms. Metivier regularly acts for companies, underwriters, and investors in a variety of corporate law matters and advises on disclosure obligations, corporate governance matters, and other securities law issues.

“Amelie is highly regarded for her outstanding track record of bringing exceptional expertise and value to clients on significant domestic and cross-border transactions. Her addition to the team will provide even greater depth to our strong corporate practice,” said Warren Katz, Stikeman Elliott’s Managing Partner.

Law Firm Pro Bono Work & Civil Justice Recognition

The Arent Fox Center for Racial Equality and Howard University School of Law’s Thurgood Marshall Civil Rights Center announced the production of policy recommendations and research papers to address institutionalized racism in the United States. Howard Law School Professors and Arent Fox attorneys will work together to identify, research and present policy analysis and research projects on systemic racism and racial injustice.

“We are immensely proud to be partnering with Arent Fox. Through this initiative, we will be able to create a nationally recognized partnership that brings important research and thought leadership to initiatives that can support our goal of moving this country closer to racial equality,” said Professor Justin Hansford of Howard Law School.

Their first joint project will be the Mike Brown Project, which aims to help pass legislation to provide mental health services to families and communities affected by police violence.

“As the former Chair of Arent Fox, one of the initiatives I am most proud of is the founding of the Arent Fox Center for Racial Equality. In a time when our country was under tremendous stress from the global pandemic and protests sparked by systemic inequalities, our firm collectively responded in a meaningful way. This partnership with Howard Law is a key part of the work we are doing and will help address issues surrounding racial injustice,” stated Mark A. Katz of Arent Fox.

DLA Piper received a 2021 Beacon of Justice Award from National Legal Aid & Defender Association. This year’s award honors law firms whose pro bono work has helped to address racial disparities in 2020, regarding civil rights and other issues that have racial significance. The National Legal Aid & Defender Association recognized DLA Piper for their racial justice work and for their efforts with Compassionate Release Clearinghouse to assist incarcerated individuals with serious medical conditions during the pandemic.

“We are proud of our efforts to advance racial justice through our compassionate release pro bono work,” said Lisa Dewey, a pro bono partner at DLA Piper. “Assisting elderly, terminally ill, high-risk prisoners by providing them with representation and advocacy, and ultimately helping many of them obtain compassionate release, is rewarding and crucial work, and we look forward to continuing to help these vulnerable individuals.”

The National Black Lawyers Top 40 Under 40  included Hunton Andrew Kurth LLP’s Alyson Brown  on its Virginia’s 2021 list. This association celebrates the legal excellence of African American attorneys who demonstrate superior leadership, reputation, influence, and stature in their communities.

Ms. Brown represents employers in all aspects of labor and employment law before federal and state agencies, counsels on compliance with state and federal labor and employment laws, and represents clients in employment based litigation.

Legal Industry Innovation & Law Office Workplace Honors

The Minneapolis Star Tribune named Barnes & Thornburg’s Minneapolis office a Top Workplace. The Star Tribune recognized Barnes & Thornburg for its engaging and fulfilling work culture.

“Our commitment to inclusivity, diversity and supporting our team has remained a priority and has allowed us to maintain our strong workplace culture,” said Connie Lahn, managing partner of Barnes & Thornburg’s Minneapolis office. “We take great pride receiving this recognition again in 2021, especially amid the major changes we have all experienced in the workplace this year.”

Barnes & Thornburg earned the Top Workplace distinction in 2020 and 2009. In 2020, Barnes & Thornburg partnered with local nonprofit All Square to promote diversity, inclusion, and racial justice, awarding the foundation a grant.

Leadership Kalamazoo selected Miller Canfield associate Barbara Moore to participate in its intensive nine-month community leadership development program.

“Barbara is an impressive up-and-coming leader,” said Miller Canfield CEO Megan Norris. “We are tremendously proud of not only her work in the firm, but also her deep commitment to serving the community.”

Ms. Moore is an associate in Miller Canfield’s Employment and Labor Group. She previously worked at the National Housing Law Project and was a legal intern for the Michigan House of Representatives. Ms. Moore is a member of the Board of Directors for Dégagé Ministries, a nonprofit serving people experiencing homelessness.

The New York Law Journal selected IMS Expert Services as a nominee for 13 of its Best Of reader’s favorite categories for 2021. The categories are selected by New York’s attorneys, judges, law firm officers, in-house counsel, and others throughout the U.S. legal industry, and encompass nearly 70 categories overall.

The New York Law Journal nominated IMS Expert Services for the following categories:

  • Best Trial Consulting
  • Best Company for Remote Trial Services
  • Best “Hot Seat” Trial Technicians
  • Best Overall Expert Witness Provider
  • Best Expert Witness Referral Service
  • Best Demonstrative Evidence Provider
  • Best Forensic Experts
  • Best Forensic Accounting Provider
  • Best Corporate Investigations Provider
  • Best End-to-end Litigation Consulting Firm
  • Best Jury Consulting
  • Best Online Jury Research Provider

The winners will be announced in a late September edition of the publication.

Copyright ©2021 National Law Forum, LLC
For more articles on the legal industry, visit the NLR Law Office Management section.

Do What You Learned in Kindergarten: Fight Fair and Play by the Rules—Avoiding Litigation Misconduct

Holding

In Performance Chemical Company v. True Chemical Solutions, LLC, No. W-21-CV-00222-ADA (W.D. Tex. May 21, 2021), Judge Albright of the Western District of Texas found that True Chemical Solutions (“True Chem”) violated the Court’s discovery order in bad faith and caused substantial prejudice to Performance Chemical Company (“PCC”). The district court granted PCC’s motion for sanctions against True Chem and dismissed the case.

Background

PCC filed suit alleging that True Chem infringed PCC’s patented Automated Water Treatment Trailers, or frac trailers. Id. at 2. Throughout the litigation, a key issue was whether True Chem automated its frac trailer by using a programmable logic controller (“PLC”) to automate the pumps within the trailer.

During discovery, PCC requested that its expert be allowed to inspect a True Chem frac trailer, which True Chem resisted. Id. The Court ordered True Chem to allow the inspection. When PCC expressed concern that True Chem would present an incomplete trailer for inspection, the Court specifically ordered that the inspection be of a trailer that was complete and included all relevant components. Id. at 3.

In response to the Court’s order, True Chem produced trailers for inspection. However, when PCC inspected the trailers, it found no PLC automation device, even though the trailers were manufactured to be capable of automation. Id.

PCC also tried to ascertain from True Chem’s employees in depositions whether True Chem’s frac trailers were automated. Under oath, True Chem employees repeatedly testified that True Chem did not automate frac trailers by installing a PLC. Id. Due to these representations, PCC could only rely on circumstantial evidence to prove its infringement theories regarding automation. Id. at 4.

After the close of discovery and in response to a court-ordered document search, True Chem produced more than 50,000 new documents. Id. Those documents contained information appearing to show that third-party automation companies had been retained by True Chem to automate its frac trailers. Id.  PCC deposed representatives of these third-party companies, which confirmed that, in 2019, True Chem had hired a third party to install a PLC on frac trailersand that those PLC devices were still mounted the last time the third-party company interacted with the trailer. Id. at 5.  The PLC device in question was large and would have required considerable effort to install and maintain. Id. PCC argued, and the Court agreed, that removing it from a trailer would have required considerable effort. Id.

True Chem did not dispute that the third-party company installed a PLC on frac trailers but, unsurprisingly, disputed the implication that it removed the PLC device specifically to dodge discovery.

Legal Standard

Under the Federal Rules of Evidence, a court may issue sanctions against a party who “fails to obey an order to provide or permit discovery.” Fed. R. Civ. P. 37(b)(2)(A). One of the sanctions allowed by Rule 37 is “rendering a default judgment against the disobedient party.”

The Fifth Circuit requires a finding of bad faith or willful conduct for the severest sanctions under Rule 37, such as striking pleadings, dismissing a case, or rendering default judgment. Additionally, before dismissing a case for discovery abuse, the Fifth Circuit requires that several factors be met. The factors include: (1) that the violation of the discovery order be attributable to the client instead of the attorney; (2) that the violating party’s misconduct must cause substantial prejudice to the opposing party; and (3) a finding that less drastic sanctions would not be appropriate. Performance Chemical Co., No. W-21-CV-00222-ADA (W.D. Tex. May 21, 2021), at 2 (citing FDIC v. Conner, 20 F. 3d 1376, 1380-81 (5th Cir. 1994)).

First Factor: Violation of the Discovery Order be Attributable to the Client Instead of the Attorney

The Court found that True Chem committed discovery violations with a pattern of “contumacious conduct and delay.” The Court issued a specific order that True Chem make all components in its custody or control, whether attached to trailers or not, available for inspection.

A True Chem employee testified that the company did not employ automation—even though True Chem had received an invoice for the automation project. Id. at 6. True Chem had not produced the PLC, or even notified counsel of the PLC’s existence, or taken steps to amend pleadings, supplement interrogatories, or notify opposing counsel or the Court, until a year later. Id. at 7. In fact, it was only after PCC subpoenaed a third-party company that it could determine the nature of the invoices and discover the PLC device.  It was only 154 days after the close of discovery as part of a 50,000-piece document dump that True Chem produced invoices pertaining to the allegedly non-existent automation. Id. at 4, 7.  Even then, True Chem still had not turned over the PLC device for inspection.

The Court found that, for a full year, True Chem stonewalled production of the PLC device. This led the Court to determine that the first factor, violation of the discovery order, was attributable to True Chem.[1]

Second Factor: Violating Party’s Misconduct Must Cause Substantial Prejudice to the Opposing Party

The Court found that PCC was forced to incur unnecessary attorneys’ fees and discovery costs as a result of the misconduct of True Chem and its counsel. Specifically, PCC was forced to engage in thorough and extensive third-party discovery, including up to the week before trial, when True Chem finally disclosed the PLC device. Id. at 8.

True Chem tried to use its failure for its own gain by arguing that, since PCC forced disclosure by True Chem of the PLC project, PCC had to limit its timeframe for damages. Id. at 8-9. The Court rejected that argument, stating that it “cannot understand why any attorney would attempt to use its own blatant discovery violations as a sword to argue that the opposition must limit its properly pleaded claims.” Id. at 9.

The Court found that True Chem’s actions caused substantial prejudice to PCC, preventing PCC’s “timely and appropriate preparation for trial.” Therefore, the Court found that the second factor was satisfied.

Third Factor: Less Drastic Sanctions Would Not be Appropriate

The Court held that the third factor was satisfied because True Chem demonstrated “flagrant bad faith and callous disregard of its responsibilities.” Id. at 9.  Specifically, the Court found that had it not been for the diligent comb through of 50,000 documents at the eleventh hour, the continuous and lengthy egregious conduct of the case would have gone undiscovered. Id. at 10.

Since all three prongs were satisfied, the Court held that it was only adequate to sanction True Chem with a “death-penalty sanction,” and that anything less would not provide sufficient deterrence from similar behavior in other cases. Id. at 10.

The Court granted PCC’s motion for sanctions and struck True Chem’s non-infringement defense and invalidity counterclaims. The Court further found that True Chem willfully infringed the asserted patents, ordered that True Chem be permanently enjoined from continuing its infringing activity, and that PCC be awarded its attorneys’ fees.

Further Developments

On June 7, 2021, PCC moved for entry of a damages award of $16.9M (representing treble lost profits through 2019 ($5.6M) plus prejudgment interest ($0.6M)) and attorneys’ fees. PCC argued no damages trial was necessary for a number of reasons: the Court’s inherent powers in connection with its sanctions ruling, the status as a default case with no party entitled to a jury trial on damages, the fact that PCC’s evidence conclusively established lost profits, and the fact that True Chem’s damages expert’s opinions had been struck “in their entirety.”

On June 15, 2021, Judge Albright granted True Chem’s attorneys’ motion to withdraw from the case.

Takeaways

While this case may seem like an outlier, it is important to remember that litigation is supposed to be a fair fight. Each side should timely disclose any relevant documents during discovery and adhere to any Court orders to allow trial to proceed in a timely manner and to prevent undue burden on the opposing party. Flagrantly disrespecting these principles may lead to an unforgiving response by the court.

The same is true in patent prosecution. The duty of good faith and candor set forth in Rule 56 is supposed to guarantee that patents are procured in a fair and timely proceeding that avoids placing an undue burden on the USPTO. As prosecution counsel, you should ask hard questions, which here would have involved questions regarding possible public use or sale. The prosecutor should consider asking those questions in writing. And if the patent prosecutor has suspicions of untruthful statements or other misconduct by the applicant, withdrawal from prosecution may be the best move.

[1]Note that on March 25, 2021, PCC seems to have argued TrueChem’s counsel was also complicit.  According to a Law360 article, in PCC’s Response in Opposition to True Chemical Solutions LLC’s Motion to Strike Scott Weingust’s Expert Report (sealed), “PCC replied that True Chem’s response highlighted for the first time that True Chem’s former attorneys . . . were ‘complicit’ and that they made things worse in the two months since they were informed of the misconduct.” Hu, Tiffany, “Chemical Co. Wants to Skip IP Damages Trial After Sanctions,” Law360, June 16, 2021. Although Judge Albright only assigned responsibility to True Chem and not its counsel, in the sanction order he commented, “it is worth noting that True Chem’s counsel . . . knew of the existence of the automation project on January 20, 2021, two months before such information was revealed to PCC.” See Order, FN1, (emphasis in original). Also, “PCC located invoices that were either concealed or overlooked as the result of willful incompetence on the part of the attorneys and then had to engage in third-party discovery to determine the nature of the invoices. Id. at 7.

© 2021 Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
For more articles on IP law, visit the NLR Litigation / Trial Practice section.

Forced Labor Sanctions in the Solar Industry – What You Need to Know

U.S. Customs and Border Protection (“CBP”) issued a Withhold Release Order (“WRO”) against Hoshine Silicon Industry Co. Ltd. , a company located in China’s Xinjiang Uyghur Autonomous Region (“XUAR”). The WRO has instructed personnel at all U.S. ports of entry to immediately begin to detain shipments containing silica-based products made by Hoshine and its subsidiaries. The WRO applies not only to silica-based products made by Hoshine and its subsidiaries but also to materials and goods derived from or produced using those silica-based products. CBP’s investigations into allegations of forced labor have produced six WROs this fiscal year.

CBP’s move comes the day after the Department of Commerce placed Hoshine and four other companies operating out of the XUAR on its Entity List. The Department imposed a license requirement for all items subject to the Export Administration Regulations (EAR) and a license review policy of case-by-case review for certain Export Control Classification Numbers (ECCNs) and certain items designated as EAR99. The administration made clear at the G7 summit that it would take action to ensure global supply chains are free from the use of forced labor. We noted in March that the Biden administration would use all of the tools at its disposal to combat forced labor, and we continue to expect the pace and scope of enforcement to increase.

Companies in the solar industry should take increasing care to ensure compliance programs are up to date, that new (and current) suppliers are carefully vetted, and supply chain audits are completed to their satisfaction. The State Department has recently noted that the employees of at least one supply chain auditor located in China were detained and interrogated for several days, and that supply chain audit companies are beginning to fear for their employees’ safety. If these allegations are credible, companies sourcing materials from China will need to reevaluate the effectiveness of their compliance programs and diligence procedures and, if they are dissatisfied with the results of their supply chain audits, consider sourcing from elsewhere.

Companies doing business with Hoshine – particularly those who have shipments en-route to U.S. ports – should review their contracts for force majeure and other compliance provisions. Companies should also review their commercial project contracts to determine the impact of supply chain delays and determine compliance with relevant notice provisions. Companies importing silicon of any kind should evaluate whether they have sufficient tracing information to ensure compliance with the WRO. CBP will be on the lookout for potential transshipment attempts by Chinese companies, to try to evade the WRO. If your company acts as an importer of record, it will be held responsible for any such attempt, underscoring the importance of full-spectrum supply chain due diligence for the solar industry.

© 2021 Foley & Lardner LLP
For more articles on the solar industry, visit the NLR Environmental, Energy & Resources section.

District of Columbia Increases Minimum Wage to $15.20, and Tipped Minimum Wage to $5.05, Effective July 1, 2021

As we previously reported, starting in 2016 the District of Columbia by statute gradually increased its minimum wage to $15.00 per hour, and its tipped minimum to $5.00, effective July 1, 2020. However, included in the statute were provisions for subsequent increases of both these rates based on the annual average increase in the Consumer Price Index for All Urban consumers in the Washington Metropolitan Statistical Area. See D.C. Code §32-1003(a)(6) and (f)(2).  The D.C. Department of Employment Services (DOES) recently announced that pursuant to these provisions, effective July 1, 2021 the minimum wage for all employees will increase to $15.20 per hour, and the tipped minimum to $5.05. The same rate applied to the Living Wage Act covering various government contractors.

D.C. employers should make sure that their payroll systems are adjusted to reflect these new rates. They should also post the updated DOES poster available here.

©2021 Epstein Becker & Green, P.C. All rights reserved.
For more articles on minimum wage, visit the NLR Labor & Employment section.

“C.T.A.,” NOT “Chicago”

In the late 1960s when I was in law school, rock bands began to name themselves after public utilities and transportation entities, such as “Pacific Gas & Electric” with its gospel-tinged sound and even more famously the instrumental powerhouse (forgive the pun) the “Chicago Transit Authority.” In both cases, those choices were not well-received by the entities after which they were named. In the face of threatened legal action, “Pacific Gas & Electric” became “PG & E,” ironically foreshadowing what that utility now calls itself. Similarly, the “Chicago Transit Authority” became “Chicago.” Nonetheless, for American capital markets, “C.T.A.” became even more important than “Chicago.” Indeed, the C.T.A. became the “information grid” of those capital markets.

By the late 1970s, all stock exchanges registered with the U.S. Securities and Exchange Commission (“SEC”) were required to send a record of their trades AND quotes to a central consolidator, the Consolidated Tape System (“CTS”) in the case of trades and the Consolidated Quotation System (“CQS”) in the case of quotes. Both the CTS and the CQS are operated and governed by the Consolidated Tape Association (“CTA”), established by the SEC in 1974 under the authority of the Securities Exchange Act of 1934, as amended.

The Consolidated Tape System

The name “Consolidated Tape” comes from the ticker tape created by Edward Calahan in 1867. It was improved by Thomas Edison and patented in 1871. By the end of the 19th Century, most stockbrokers had offices near the New York Stock Exchange (“NYSE”) at 11 Wall Street in the south end of Manhattan Island, just up from The Battery. The brokers received a steady supply of the ticker tape reports of transactions on the NYSE. Messengers (called “pad shovers”) delivered these reports of trades by running (quite literally) between the Exchange’s trading floor and the brokers’ offices, where a shorter distance meant more up-to-date quotes. The ticker tapes were the common “confetti” for “ticker tape parades” of politicians and champion athletic teams on lower Broadway.

Mechanical ticker tapes gave way to electronic ones in the 1960s, but the “confetti” use continued through the celebration of the unexpected World Series victory of the New York Metropolitans in 1969 (I was in a third base box seat at Shea Stadium for the fifth and final game and watched the ensuing ticker tape parade a few days later).

Capital Markets

By 1976, there was a consolidated tape reporting transactions at each of the participating stock exchanges. Each entry on the tape displays the stock symbol for the issuer, the number of shares traded, the price per share, a triangle pointing up or down (showing whether the trade price is above or below the previous day’s closing price, a number showing how much higher or lower the trade price was from the last closing price and the exchange where the trade occurred). By 1978, the CQS was operational, providing the quotations for stock traded on an exchange (identifying the exchange) as well as stock traded by members of the Financial Institution Regulatory Authority, Inc. (“FINRA”) on the third market. By 1979, both NASDAQ and the Cincinnati Stock Exchange had become CQS participants.

These developments arose in the course of the capital markets working their way out from the close call of the market collapse in the late 1960s – early 1970s in dealing with what had been a marketplace of paper certificates and manual record keeping. See my April 29, 2021, blog post, “Tightening the Reins: SEC Approves Proposed Rule Change to Clearing Agency Investment Policy,” for some of the history of this period and the development of Clearing Agencies to respond to the need to automate and otherwise modernize the capital markets. These American market developments stand in stark contrast to the disarray extant in Europe, where there is no “consolidated” system of trading information. See my November 5, 2020, blog post, “The European Stock Markets: Still at Sixes and Sevens,” and especially the inability to trade the stock of Danone SA when one exchange shut down.

SEC Notice of Participants

In 2020, came increases to the membership of the CTA. The members, called Participants, were, as of June 29, 2020, the following:

  • Cboe BYX Exchange, Inc.
  • Cboe BZX Exchange, Inc.
  • Cboe EDGA Exchange, Inc.
  • Cboe EDGX Exchange, Inc.
  • Cboe Exchange, Inc.
  • FINRA
  • The Investors’ Exchange LLC
  • Long-Term Stock Exchange, Inc.
  • MEMX LLC (formally admitted in the Summer of 2020)
  • Nasdaq BX, Inc.
  • Nasdaq ISE, LLC
  • Nasdaq PHLX, Inc.
  • The Nasdaq Stock Market LLC
  • New York Stock Exchange LLC
  • NYSE American LLC
  • NYSE Arca, Inc.
  • NYSE Chicago, Inc.
  • NYSE National, Inc.

On July 29, 2020, the SEC issued a Notice that the Participants proposed to amend the CTA Plans to include MEMX LLC as a Participant. MEMX (standing for The Members Exchange) is an interesting new capital market development, a technology-driven stock exchange founded by its members in early 2019 seeking to create a lower-cost exchange for the benefit of its members. Those members were:

  • BofA Securities
  • Charles Schwab  Corporation
  • Citadel LLC
  • E-Trade
  • Fidelity Investments
  • Morgan Stanley
  • TD Ameritrade
  • UBS
  • Virtu Financial

Nine other firms invested in the MEMX: Blackrock, Citigroup, J.P. Morgan, Goldman Sachs, Wells Fargo, and Jane Street.

One might note that Citadel LLC and Virtu Financial are the two leading wholesale trading houses in the U.S. and have been the subjects of intense Congressional and regulatory scrutiny because they together handle some 70+% of stock trades and provide great amounts of payment for order flow, all of which figured prominently in the GameStop and other so-called “meme” stock trading excesses in the first half of 2021.

In October 2020, the CTA membership was amended again to add MIAX PEARL, LLC. MIAX PEARL is owned by Miami Holdings Inc., a financial services firm that owns and operates a number of trading bodies, including the Minnesota Grain Exchange. MIAX PEARL is focused primarily on option trading.

Trading and Reporting

Beginning in January 2020, the CTA entertained a series of proposed adjustments to its operations to address how accurately to report the effect of a regulatory halt to trading and then the reestablishment of trading in that security culminating on May 28, 2021, of approval by the SEC of the 36th Amendment to the CT Plan and the 27th Amendment to the CQ Plan. Finally, 2020 saw the CTA engaged in lengthy and complex discussions and revisions both to improve the transparency of Participant actions AND to enhance the disclosure of conflicts of interest, as detailed knowledge of trading and quotation information can potentially give Participants inappropriate insight into trading strategy and market anomalies. The revisions proposed in an SEC Notice of January 8, 2020, included required disclosures by professional advisers to the Participants, such as auditors and attorneys.

In connection with the January 8 Notice, the SEC posed 14 specific requests for comments. Those proposals, with some modifications by the SEC in response to comments submitted, were approved by the SEC on May 6, 2020, and deserve careful reading by Participants, their advisors, and others interested in the functioning of the U.S. capital markets and the flow of information about their operations. The SEC, in its May 6 action, emphasizes that “responses to the required disclosures must be sufficiently detailed to disclose all material facts to identify applicable conflicts of interest.” Further, the May 6 action requires Participants to identify situations where service providers are constrained from making full disclosure due to “potentially conflicting laws or professional standards” and to discuss “the basis for its inability to provide a complete response,” specifically citing concerns for attorney-client privilege.

Protecting Investors

The May 6 SEC action concludes with a reference to a Congressional finding that:

“It is in the public interest and appropriate for the protection of investors and the maintenance of fair and orderly markets to ensure the prompt, accurate, reliable and fair collection, processing, distribution, and publication of information with respect to quotations and transactions in…securities and the fairness and usefulness of the form and content of such information. The conflicts of interest Amendments, as modified by the Commission, further these goals…”

©2021 Norris McLaughlin P.A., All Rights Reserved
For more articles on SEC, visit the NLR Securities & SEC section.

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