Here's one answer to making rec's online and thinking only SEC can go after you, no civil or criminal penalties, t'ain't me, jest bidness, disclaimer for making rec's that were just moderated discussions no legal liability - I filed it in Texas federal court:
IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
OLIVIER L. F. ASSER,
Plaintiff,
vs.
PHILIP R. BERBER,
LESLIE M. MOOR,
CHRISTOPHER J. REA and
TRADING PLACES, INC.,
Defendants.
...3.11 Pursuant to the IAA, Moor is “a person associated with an investment adviser.” (“The term ‘person associated with an investment adviser’ means…any person directly or indirectly controlling or controlled by such investment adviser, including any employee of such investment adviser.” 15 U.S.C. § 80b-2(17).)
3.12 Through the kickbacks he ordered, Moor directly influenced Trading Places’ investment advice. Sites such as TP are to be regarded as investment advisers.
The Court notes initially that Defendants meet the basic definition of an “investment adviser” in that over the Internet they “for compensation, engage in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issue or promulgate analyses or reports concerning securities.” 15 U.S.C. § 80b-2(a)(11); cf. Lowe, 472 U.S. at 203-04, 105 S. Ct. 2569. Thus, Defendants must fall within an exclusion in order to not be considered an “investment adviser.” Moreover, in order to avail themselves of the publishers exception, Defendants' publications over the Internet web site must be both “bona fide” and have a “general and regular” circulation. See id. at 206, 105 S. Ct. at 2571. The SEC has alleged that Defendants' publications are neither.
…a "bona fide" publication is one that is genuine in that it would contain disinterested commentary and analysis and not be promotional material disseminated by a "tout." …The SEC has alleged that Defendants' publications were not disinterested. On the web site, Defendants persuaded subscribers to purchase, sell, or hold specific stocks using several methods, including posting effusive testimonials and misleading performance results, urging subscribers to hold stocks until they reached certain target numbers, and falsely stating Societe Anonyme's intentions to purchase certain stocks. Further, the SEC maintains that in certain instances, Defendants were acting as "touts," by promoting stocks in which they either had an interest or for which they were being paid to recommend without revealing their interests.
United States SEC v. Gun Soo Oh Park a/k/a Tokyo Joe and Tokyo Joe’s Societe Anonyme Corp., 99 F. Supp. 2d 889, 895-896 (D. Ill., 2000)
3.13 TP provided specific, updateable, “live” securities recommendations for fees. Amended Complaint, e.g. 81. Therefore, TP is to be regarded as an investment adviser. Through the kickback payments he provided TP, Moor gained direct or indirect control and undue influence over the TP recommendations. Therefore, Moor is to be regarded as a person associated with an investment adviser. The undisclosed kickback payments, if deemed arbitrable, are in direct violation of 15 U.S.C. § 80b–6, which prohibits (1) “any device, scheme, or artifice to defraud any client or prospective client”; (2) “any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client”; and (4) “any act, practice, or course of business which is fraudulent, deceptive, or manipulative.” If the Moor kickback payments to TP in return for excessive securities recommendations by TP are deemed arbitrable, within the purview of the *****-Asser agreement that never disclosed the payments to Plaintiff, then the agreement is in direct violation of 15 U.S.C. § 80b–6 (1), (2) and (4). The IAA mandates that:
(b) Rights affected by invalidity. Every contract made in violation of any provision of this title and every contract heretofore or hereafter made, the performance of which involves the violation of, or the continuance of any relationship or practice in violation of any provision of this title, or any rule, regulation, or order thereunder, shall be void (1) as regards the rights of any person who, in violation of any such provision, rule, regulation, or order, shall have made or engaged in the performance of any such contract, and (2) as regards the rights of any person who, not being a party to such contract, shall have acquired any right thereunder with actual knowledge of the facts by reason of which the making or performance of such contract was in violation of any such provision.
15 U.S.C. § 80b–15(b).
3.14 Moor seeks to acquire rights under the *****-Asser contract. Moor violated the IAA when he ordered the payment of the kickbacks to TP. If the performance of the agreement is read to encompass the kickback payments, then it is null and void under the IAA. If not, then the contract stands, but the kickback payments are beyond the purview of the contract and therefore not arbitrable. Either way, arbitration is barred.
IV. CONCLUSION
For the foregoing reasons, the Moor – and identical Berber – motion to compel arbitration should be denied. |
