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securities, futures & derivatives litigation: matters
Summary Professionals Matters News Events Publications
Ongoing
Madoff Case - Hedge Fund Representation
Representation of several hedge funds that invested tens of millions of dollars with Bernard Madoff, in derivative and class action lawsuits.
Ongoing
Financial Service Firm - Insider Trading Investigation
Representation of a financial service firm and key executives in an SEC insider trading investigation.
Ongoing
Regional Securities Firm - FINRA Investigation
Representation of a regional securities firm in a FINRA investigation in connection with the firm’s hiring of a statutorily disqualified person.
Ongoing
Investment Advisor - Litigation Related to Failed Merger and $700 Million in Asset Losses
Representing a registered investment advisor, its managers and the RIA's proprietary funds in a series of four consolidated securities class actions lawsuits, two concurrent state court actions, and a Bermuda and SDNY bankruptcy, involving more than $700 million in claims arising out of a failed merger between the funds and a public shell company.
Ongoing
Broker-Dealer and Its Principal - FINRA Disciplinary Hearing
Representing an embattled broker-dealer and its founder in a 12-day disciplinary hearing initiated by FINRA alleging multiple counts of fraud, failure to supervise and general violations of FINRA rules.
Ongoing
Brokerage Firms - Internal Investigations
Conducted numerous internal investigations for broker-dealers to identify fraud and wrongdoing and defend against criminal and regulatory enforcement actions.
Ongoing
Senior Broker - FINRA Investigation
Representation of a registered senior broker in a FINRA investigation into possible selling-away activities.
Ongoing
Madoff Litigation - SIPC Trustee Actions
Representation of Madoff victims named as defendants in actions filed by the SIPC Trustee to recover monies withdrawn from their Madoff securities accounts. Those actions, which are commonly referred to as "clawback" claims, are before the Bankruptcy Court for the Southern District of New York.
Ongoing
FINRA Investigation - Failure to Supervise
Representation of a major broker dealer investigated by FINRA for failure to supervise brokers in connection with the sale of speculative securities.  
Ongoing
U.S. Southern District Federal Court Action - Trust Fund Beneficiaries
Representation of a group of trust fund beneficiaries against a major foreign bank and foreign advisors in connection with fraud and possible conversion of their managed assets leading to the loss of nearly $7 million in offshore investments. 
2014
FINRA Employment Arbitration
Representation of a broker-dealer in a complex employment arbitration brought by six former employees seeking over $10 Million in collective damages.   This FINRA arbitration proceeded for 60 sessions, including 32 hearing days, and resulted in a virtually complete defense verdict for the firm, including for attorneys' fees.  The award was confirmed in its entirety by the Southern District of New York.
2014
Compliance Director - CFTC Investigation 
Represented a futures compliance director in connection with a CFTC investigation into exchange for related positions trades (EFRPs)
2014
Futures Commission Merchant Employee - ICE Investigation
Successfully defended an associated person of a futures commission merchant in an enforcement investigation commenced by the Intercontinental Exchange (ICE) alleging that the associated person had improper pre-trade communications, pre-hedged a position on behalf of the FCM and charged improper mark-ups in executing a futures trade in the sugar market.
2014
Philadelphia Stock Exchange and FINRA Investigation
Representation of a regional brokerage firm in a FINRA and Philadelphia Stock Exchange investigation into payment of transaction based compensation to unregistered persons in numerous violations of the just and equitable principles of trade.
2013
Former MF Global Officer - DOJ, CFTC and SEC Investigations
Representation of a former senior officer of MF Global in investigations being conducted by the Department of Justice, the CFTC and the SEC in connection with the collapse and bankruptcy of the company.
2013
Madoff Litigation - Filings Against the SEC
We represent a number of victims of Bernard Madoff's Ponzi scheme. In January of 2009, we filed notices of claim with the Securities & Exchange Commission alleging negligence under the Federal Tort Claims Act. The SEC rejected our claims six months later, and on Wednesday, October 14, 2009, we filed the hitoric and first known lawsuit against the SEC seeking monetary damages under the FTCA, Molchatsky and Schneider v. United States.  We were lead counsel on the Molchatsky case and filed two additional cases against the United States on behalf of other Madoff victims. While the Second Circuit ultimately dismissed the action, essentially saying that the SEC had absolute immunity, the case sent a message that Herrick will leave no stone unturned on behalf of its clients. The firm continues to defend Madoff victims in clawback actions initiated against them by the Madoff bankruptcy trustee.
2013
Witness - SEC Action
Representation of a key witness in an SEC lawsuit charging kickbacks, failures to disclose and overvaluing of assets involving the owners of a registered investment adviser which claimed to have had over $130 million in assets under management.
Ongoing
Broker Dealer - SEC Investigation
Representation of a broker dealer in connection with an SEC insider trading investigation.
2013
Successful Resolution to FINRA Selling Away Investigation
Successfully represented a registered representative of a broker dealer against allegations of selling away (FINRA Rule 3040) in an investigation initiated by FINRA. The registered representative concluded the matter with a letter of caution. 
2013
Private Equity Firm - Settlement with SEC - Alleged Violations of Broker-Dealer Registration Requirements
Represented a prominent real estate private equity firm in a precedent-setting settlement with the Securities and Exchange Commission related to the use of a finder in raising capital and the application of broker-dealer registration requirements.  
2013
Broker-Dealer - Sales Practice Investigation by FINRA  
Successfully defended a broker-dealer in a sales practice investigation initiated by FINRA concerning allegations that the firm made false and/or misleading representations to customers in connection with the sale of certain mortgage backed securities. 
2012
Investment Advisor - Successful Conclusion to SEC Investigation and Wells Notice Alleging Fraud Against Senior Executive - Stanford Ponzi Scheme
We represented a senior executive investment advisor formerly associated with the now infamous Stanford Financial Group in a Securities and Exchange Commission investigation.  In 2011, the SEC issued a Wells Notice concerning our client's alleged fraudulent disclosures and affirmative misrepresentations in the sales of Stanford International Bank CDs, allegedly a massive Ponzi scheme.  After making two submissions in response to the Wells Notice and an oral presentation to the staff at the SEC's Fort Worth office, we successfully persuaded the SEC to issue a no-action letter stating that it will not bring any charges against the client.
2012
Futures Commission Merchant - Class Action
Defend an FCM in a class action lawsuit against claims alleging that the firm engaged in, or assisted, a scheme to manipulate the prices of palladium and platinum futures contracts traded on NYMEX.
Regional Brokerage Firm - Investor Claims
Representation of a regional brokerage firm in multiple investor claims alleging fraud and misrepresentation in connection with a failed private placement.
2012
Futures Commission Merchant - Bankruptcy Trustee Claims
Defended an FCM against a Bankruptcy Trustee's allegations that funds transferred to the debtor's trading account were fraudulent transfers and, although largely lost in futures trading, should be returned to the estate by the FCM.
2012
Commodities Trader - Felony Charges over Alleged 'Wash Trades'
Successfully defended a veteran commodities trader facing federal felony charges related to alleged “wash trades” executed on behalf of a customer suspected of having ties to Russian organized crime.   Obtained a non-prosecution agreement with the U.S. Attorney’s Office for the Eastern District of New York.   
2011
Futures Commission Merchant - Fraud Claims
Defended a Futures Commission Merchant ("FCM") in a federal civil lawsuit alleging that a former employee of the FCM assisted the employees of a bank to overvalue the bank's over-the-counter natural gas options book. Damages in excess of $500 million were sought.
2011
Investment Adviser - Successful Conclusion to Internal Investigation
Conducted an internal investigation for a nationally recognized investment adviser to a series of hedge funds following a whistleblower's complaint concerning SEC compliance and operational issues. Upon submission of a report of our investigation, which determined that the whistleblower's allegations had no merit, the SEC never brought charges.
2011
Brokerage Firm - Customer Litigation
Representation of a leading independent broker in connection with a customer default on over-the-counter credit derivative swap transactions.
2011
Futures Commission Merchant - Bankruptcy Trustee Claims
Defended two FCMs against fraudulent transfer claims asserted by a Bankruptcy Trustee to recover funds deposited into trading accounts of the debtor, which ran a Ponzi scheme.
2011
Futures Commission Merchant - NFA Investigation
Defense of an FCM in an NFA investigation of a customer, which ran a Ponzi scheme, including compliance with Anti-Money Laundering regulations and internal policies.
2011
Futures Commission Merchant - NYMEX Arbitration
Obtained a complete defense award in favor of an executing FCM in a NYMEX arbitration which involved allegations that a guaranteed floor broker violated exchange rules resulting in substantial trading losses and other consequential damages.
2011
Brokerage Firm - Former Employee Claims
Defended an FCM in federal court against a broker's claims to recover commissions and compensation allegedly resulting from breaches of an employment contract. 
2011
Brokerage Firm - Defamation Litigation
Representation of a leading independent broker-dealer against claims of defamation and tortious interference asserted by a competitor firm.
2010
Securities Brokers - State Insurance Department Investigation
Representation of more than 275 securities brokers of a number of national retail brokerage firms in proceedings before the NY State insurance department on issues concerning annuity exchanges. We were successful in convincing the department to drop approximately 90% of the cases with no formal action and received favorable settlements in the case of the other 10% of the advisor.
2010
Online Retailer - Grand Jury Subpoena
Representation of an online retailer in response to a grand jury subpoena from the Manhattan DA's Office.
2010
Global Financial Services Firm - FINRA Action
Defense of a premier global financial firm in a FINRA action involving claims brought by an investor for losses to retirement account resulting from alleged flawed asset allocation.
2010
Brokerage Firm - Restrictive Covenant Claims
Represented brokerage firm in enforcing common law and contractual obligations against a former employee who removed confidential and proprietary information from the firm.
2010
Futures Commission Merchant - Internal Investigation
Conducted an internal investigation of a foreign exchange desk in Asia and advised on suspicious activity reporting requirements.
2010
International Insurer - FINRA Arbitration
Representation of a major international insurer in a FINRA arbitration brought by a group of customers alleging improper selling- away by an account executive.
2010
International Insurance Carrier - Indebtedness Recovery
Representation of international insurance carrier in its attempts to recover a two million dollar indebtedness from a former account executive.
2010
FINRA Investigation - Gift and Gratuity
Representation of a senior trader in a FINRA investigation into the possible violation of FINRA gift and gratuity rules.
2009
Futures Commission Merchant - CME and CFTC Investigation
Represented an FCM in investigation by the CFTC and the CME in connection with futures trading by a customer in violation of capital and trading limits, implicating pre-trade and post-trade risk management.
2009
Futures Commission Merchant - Software License Dispute
Represented a futures commission merchant in an arbitration brought by a software developer to recover fees allegedly owed for the use of a platform to support OTC brokers in the fixed income and derivative markets.
2009
Futures Commission Merchant - Commodities Fraud Claims
Obtained the dismissal with prejudice of federal and state court complaints asserted against an FCM by investors in a commodity pool who alleged that the FCM aided and abetted a Ponzi scheme perpetrated by the pool operator.
2009
Commodity Futures Broker - SEC Investigation
Representation of a commodity futures broker in an SEC investigation into allegations that the broker participated in a Ponzi scheme fraud perpetrated by a hedge fund manager. After we made a Wells submission, the SEC determined to close the investigation and not to pursue any enforcement action against our client.
2009
Rogue Employee - CFTC and CME Investigations
Conducted an internal investigation into massive trading losses incurred by a rogue employee of a futures commission merchant, and representing the FCM in connection with investigations into the conduct by the CFTC and CME.
2009
Broker-Dealer - Employment Contracts
Representation of a regional bank broker-dealer in preparing employment contracts to hire an account executive.
2009
Investor - SEC Investigation
Representation of an investor in multiple inquiries by governmental authorities in connection with alleged insider trading.
2009
Branch Manager - FINRA Investigation
Representation of the branch manager of a national retail brokerage firm in a FINRA investigation involving the failure to supervise in connection with a major defalcation from a customer account by an administrative employee.
2009
National Retail Brokerage Firm - Civil Litigation
Representation of a national retail brokerage firm in a state court action alleging sales practice violations.
2009
General Counsel - Options Backdating Class Action
Representation of the former General Counsel of a major technology company in a class action against the company concerning stock options backdating.
2009
Principal of Securities Brokerage - NASD Arbitration
Representation of the principal of a brokerage firm in an NASD customer arbitration for breach of contract.
Ongoing
Fund of Funds - Investment Litigation
Representation of a fund of funds in investment-related litigation.
2009
Trader - FINRA Investigation
Representation of a former trader at a national retail brokerage firm in a FINRA regulatory investigation into charges of front-running one of the firm's customers.
2009
Hedge Fund Collapse - SEC Investigation
Representation of the chief operating officer of a $1 billion hedge fund in connection with an SEC investigation into the fund's collapse and liquidation.
2008
Commodities Broker - Dismissal of Complaint
Representation of a leading futures commission merchant in an action brought by another FCM who accused our client of violating the Commodity Exchange Act, breach of contract and negligence in connection with futures and options trading in an omnibus clearing account.  After the Southern District of New York dismissed the complaint, we obtained a dismissal with prejudice of a new complaint filed in state court.
2008
Securities Broker - Summary Judgment
Representation of a broker-dealer and its employees in a "raiding" dispute brought by a rival broker-dealer, including claims of corporate espionage and theft of trade secrets.  After a number of the plaintiff's claims were dismissed at the pleading stage, we obtained summary judgment in favor of our clients and dismissal of the remaining causes of action.
2008
Futures Commission Merchant - CFTC Investigation
Representation of a futures commission merchant against potential claims by a hedge fund receiver whose manager committed fraud. We defended the FCM in an investigation by the CFTC, which asserted no charges.
2008
Investor Group - Fraud and Misrepresentation Claims
Representation of an investor group in connection with fraud and misrepresentation claims against an investment manager in various private investments.
2008
International Investigation -  Market Manipulation
Representation of a foreign citizen in connection with an indictment by the U.S. Attorney’s Office and an SEC investigation alleging market manipulation of multiple OTC securities in the U.S. markets via the internet.
2008
Stock Brokers - FINRA Investigation
Representation of multiple stock brokers of a national retail brokerage firm in a FINRA investigation into various sales practice violations.
2008
Individuals - Insider Trading
Representation of two foreign citizens in connection with an SEC lawsuit alleging insider trading of a New York Stock Exchange listed security.
2008
Securities Finder - SEC Investigation
Representation of securities finder in a joint U.S. Attorney and SEC action alleging fraud in connection with securities lending.
2007
Securities Trader/Broker-Dealer - Investigations
Representation of the principal of a securities trader/broker-dealer in connection with investigations by the New York State Attorney General and the SEC into mutual fund trading practices including market timing and late trading.
2007
Futures Broker - CFTC Investigation
Representation of a futures commission merchant in a CFTC investigation arising from a $200 million fraud perpetrated by a hedge fund manager and commodity pool operator who hid trading losses.
2007
Executive - SEC Investigation
Representation of an executive of a national retail brokerage firm in a joint U.S. Attorney and SEC action alleging fraud in connection with securities lending.
2007
National Retail Brokerage Firm - Arbitrations
Representation of a national retail brokerage firm and its employees in over 75 arbitrations alleging various sales practice violations.
2007
Senior Executive - U.S. Attorney/SEC Investigation
Representation of a senior executive of a national retail brokerage firm in a joint U.S. Attorney/SEC investigation relating to market timing activities. No charges were instituted against the executive.
2007
Retail Brokerage - NASD Investigation
Representation of a retail broker of a national retail brokerage firm in a NASD investigation alleging numerous sales practice violations in connection with customer accounts. No charges were instituted after the filing of a Wells submission.
2007
National Retail Brokerage - NASD Arbitration
Representation of a national retail brokerage firm and its employee in an NASD customer arbitration alleging sales practice violations.
2007
Commodities Broker - Civil Litigation
Representation of a leading futures and options broker in a civil litigation stemming from a $200 million fraud perpetrated by a hedge fund manager.
2007
Retail Brokerage - NYSE Investigation
Representation of a national retail brokerage firm in claims brought by the Enforcement Division of the New York Stock Exchange relating to proxy procedures used on an industry-wide basis. The case was favorably resolved after discovery.
2007
Commodities Broker - Dismissal of Class Action
Representation of a major commodities broker in a class action brought in a Florida state court.  The plaintiffs were investors in a foreign exchange hedge fund whose principal perpetrated a multi-million dollar fraud.  The investors alleged that our client, which executed trades on behalf of the fund, violated Florida blue sky laws and aided and abetted the fraud. After twice dismissing the complaint and granting plaintiffs leave to replead, the court finally dismissed all claims with prejudice and awarded our client its costs and attorneys' fees. The appellate court affirmed.
2007
Securities Broker - State Regulatory Proceeding
Representation of a securities broker in a regulatory proceeding brought by the New Jersey Bureau of Securities alleging unregistered and unauthorized transactions.
2007
Independent Broker-Dealer - State and NASD Litigation
Representation of a national independent broker-dealer in a New York State civil litigation and in a related NASD arbitration against former employees to recover fees and restitution payments made by the firm as a result of the misconduct of its former employees.
2007
Financial Services Firm - FINRA Arbitration
Representation of a major financial services firm and one of its brokers in an arbitration brought by three customers seeking over $20 million in damages. Following 16 days of hearings before a FINRA panel, the customers received an award (less amounts awarded on our client’s counterclaim) of $28,430. The panel granted the broker’s request for an expungement of the matter from his CRD record.
2007
National Exchange Department Head - SEC Investigation
Representation of a department head of a national exchange's regulatory division in an SEC investigation into the exchange's failure to enforce its member surveillance program and filing false records with the SEC. The former department head received a cease-and-desist order with no monetary penalties assessed against him.
2007
Private Company Officers - SEC Investigation
Representation of officers of a non-public company in an SEC investigation of the company's unregistered offerings. The SEC alleged that the offerings violated various securities laws, but we convinced the SEC's New York Regional Staff to recommend that charges not be brought against these individuals.
2007
Securities Broker - Termination Disclosure Inquiry
Representation of a securities broker in an NASD regulatory inquiry relating to his termination disclosure concerning alleged forgery of customer signatures on new account forms.
2007
Retail Brokerage - NASD Arbitration
Representation of a national retail brokerage firm in an NASD customer arbitration alleging sales practice violations.
2006
Securities Broker - FINRA Arbitration
Representation of a broker-dealer and its employees in a multi-million dollar FINRA arbitration brought by an introducing broker/investment advisor and his customers.
2006
Brokerage Branch Manager - NASD Investigation
Representation of the branch manager of a regional brokerage firm in an NASD regulatory investigation into improper market timing activities that allegedly occurred in the branch office. No charges were brought against the branch manager.
2006
Securities Broker - NASD Regulatory Proceeding
Representation of a broker in an NASD regulatory proceeding alleging unsuitable and unauthorized transactions made in numerous clients' accounts.
2006
Securities Broker - Forgery Investigation
Representation of a broker in an NYSE regulatory investigation alleging that the broker forged managerial signatures on new accounts forms and disposed of original employer documents. The broker received an admonition letter in lieu of an enforcement proceeding being brought against him.
2006
Securities Brokers - Termination Litigation
Representation of brokers of a national retail brokerage firm in negotiating termination language on their form U-5s, in the subsequent NYSE regulatory inquiry into their terminations, and in making a written submission to recover allegedly forfeited deferred compensation.
2006
First Allied Securities - NASD Arbitration
Representation of First Allied Securities in an NASD arbitration in Seattle, Washington involving claims against a competitor for raiding an entire division of the company, including mutliple brokers in multiple offices.
2006
Investment Advisor - SEC Investigation
Representation of an investment advisor in an SEC investigation of the "cherrypicking" of trades.
2006
Pharmaceutical Company - Insider Trading Investigation
Representation of the senior management of a pharmaceutical company in an SEC insider trading investigation of a PIPE offering.
2006
Retail Brokerage Branch Manager - NASD Charges
Successful defense of a branch manager of a national retail brokerage firm. Following a hearing, the hearing panel dismissed all of the NASD's charges, including allegations of supervisory failures. The dismissal was upheld on appeal by the NASD to the NASD's National Adjudicatory Council.
2006
Retail Brokerage - Federal Investigation
Representation of a national retail brokerage firm in a joint U.S. Attorney/SEC investigation of illegal "frontrunning" trading activity.
2005
National Retail Brokerage - State Court/NASD Arbitration
Representation of a national retail brokerage firm in successfully seeking a TRO, permanent injunction and monetary damages in connection with raiding of employees by a competitor.
2005
Hedge Fund Managers - SEC Investigation
Representation of two hedge fund managers in an SEC investigation relating to market timing activities. No charges were instituted.
2005
Mutual Fund Company - NASD Arbitration
Representation of an international mutual fund company in a NASD arbitration brought by a senior officer seeking alleged wrongfully withheld compensation and bonuses.
2005
Employees - SEC Investigation
Representation of multiple employees from a public company in an SEC investigation alleging misstatements in the company’s public filings. No charges were instituted.
2005
Boards of Directors - Internal and SEC Insider Trading Investigations
Conducted an insider trading investigation on behalf of the boards of directors of two affiliated publicly owned computer software companies, and represented them in a related SEC investigation.
2005
Corporate Director - Dismissal of Securities Class Action Complaint
Representation of the former CEO of a publicly owned telecommunications company in two securities fraud class actions stemming from the company's bankruptcy after the dot-com bubble burst.
Public Company - Securities Litigation
Representation of a public company in the successful defense of claims for violation of the federal securities laws.  The plaintiffs claimed that they were fraudulently induced to modify their stock conversion rights in reliance on promises by their employer, and the District Court and Second Circuit dismissed the claims.
2004
Independent Directors - Internal Investigation
Representation of the independent directors of a public corporation in leading an investigation into shareholder derivative claims.
Financial Institution - Junk Bond Dispute Mediation
Representation of a major financial institution in mediating a favorable settlement of a $135 million securities litigation. The plaintiffs alleged that the institution breached its duties as indenture trustee on a large junk bond offering.
Advertising Company - Securities Litigation
Representation of a public advertising company in defense of claims for violation of the federal securities laws.