Marshall, Dennehey, Warner, Coleman & Goggin

Law Alerts

SECURITIES & INVESTMENTS PROFESSIONAL LIABILITY

By Samuel E. Cohen, Esq. (secohen@mdwcg.com or 215-575-2587)

U.S. Supreme Court Expands Liability Of Erisa Fiduciaries.
LaRue v. DeWolff, Boberg & Associates, 128 S.Ct. 1020, 169 L. Ed.2 847 (February 20, 2008)

Life as an ERISA fiduciary just became more expensive and uncertain. On February 20, 2008, the United States Supreme Court held that individual participants in 401k plans and other defined contribution plans can sue plan fiduciaries for breaches of fiduciary duties that affect the value of assets held in their individual account. The decision expands the universe of actions plan participants can bring, and may give them a short cut to court.

The Federal Arbitration Act (FAA) Preempts The California Talent Agencies Act, So An Arbitrator Decides Contract Validity.
Presten v. Ferrer, 552 U.S. ___, Docket: 06-1463 (2008)

The Unites States Supreme Court has held that in cases arising under the FAA, where a party challenges the enforceability of a contract that contains an arbitration clause, the arbitrator designated under the agreement must determine the validity of the agreement. State laws giving primary jurisdiction under such circumstances to another forum, whether judicial or administrative, are pre-empted by the FAA. The Supreme Court held that when a contract contains an arbitration provision, any challenges to the validity of the contract as a whole must be considered by the arbitrator, not a court or an administrative agency. In contrast, state law governs where the challenge is only to the enforceability of the arbitration provisions.

Statute Of Limitations For Claim Under Federal Securities Act Is A Jury Question.
Betz v. Trainer Wortham & Co., Inc., 2008 U.S. App. Lexis 4081 (February 26, 2008)

An investor brought a securities fraud action against her bank and brokerage company after allegedly suffering losses, despite supposedly being promised a definite return on her investment. The defense argued that her lawsuit was time barred, having been brought more than two years after discovery of the alleged violation of Section 10(b) of the Securities Exchange Act of 1934. The Ninth Circuit Court of Appeals reversed summary judgment in favor of the defendants. The Ninth Circuit held that whether the statute of limitations was tolled was a question for the jury to decide by looking to the total circumstances to determine whether a reasonable investor would have discovered the fraud while receiving active assurances from the highest levels of the securities firm that there was no problem with her account and all would be made right.