November 2013 Newsletter


•  Scott+Scott Ranked In U.S. News & World Report’s “Best Law Firms”

•  Scott+Scott Achieves Victory In Puerto Rico Over UBS

•  SEC’s Proposed Crowd funding Financial Disclosure Rules Offer Little Protection for Investors

•  Regulators Announce Worldwide Civil and Criminal Investigations Into Foreign Exchange Market Manipulation

•  On The Record

•  Conferences and Educational Seminars

Scott+Scott Ranked In U.S. News & World Report’s “Best Law Firms”

Scott+Scott is pleased to announce its ranking by U.S. News & World Report as a “Best Law Firm” in commercial litigation in the New York region. Scott+Scott has a proven record of successfully handling complex litigation and class actions, achieving substantial settlements and, where necessary to secure the best relief for its clients, taking cases to trial. 

In January and February of this year, Scott+Scott served as co-trial counsel in a five-week antitrust class action trial in New York, challenging arbitration clauses as a restraint of trade.  See Ross v. American Express Co., No. 1:04-cv-05723 (S.D.N.Y.).  In addition to its recent trial in Ross, Scott+Scott is actively involved in numerous complex antitrust cases throughout the United States.  Scott+Scott’s class action antitrust experience includes serving as co-trial counsel in In re Scrap Metal Antitrust Litigation, No. 02-cv-0844-KMO (N.D. Ohio), where it helped obtain a $34.5 million jury verdict, which was subsequently affirmed by the United States Court of Appeals for the Sixth Circuit.  In addition to antitrust class actions, Scott+Scott represents clients in opt-out antitrust litigation.  Past clients include publicly-traded Fortune 500 corporations. Representative opt-out litigation prosecuted by Scott+Scott includes In re Rubber Chemicals Antitrust Litigation, MDL No. 1648 (N.D. Cal.); In re Polychloroprene Rubber (CR) Antitrust Litigation, MDL No. 1642 (D. Conn.); and In re Plastic Additives Antitrust Litigation (No. II), MDL No. 1684 (E.D. Pa.).

Scott+Scott has been recognized for its expertise in handling many other types of complex and commercial litigation.  Regarding its it performance in litigation relating to the Madoff Ponzi scheme, the Supreme Court of the State of New York, New York County stated, “It is this Court’s position that Scott+Scott did a superlative job in its representation, which substantially benefitted Ariel . . .  For the record, it should be noted that Scott+Scott has demonstrated a remarkable grasp and handling of the extraordinarily complex matters in this case. . .  They have possessed a knowledge of the issues presented and this knowledge has always been used to the benefit of all investors.”  New York University v. Ariel Fund Ltd., No. 603803/08, at 9-10 (N.Y. Sup. Ct. Feb. 22, 2010).  (Appendix at APP033-034.)

Scott+Scott has over 30 attorneys located in offices in New York, Connecticut, California, and Ohio.  As the firm’s many accomplishments show, Scott+Scott is willing and able to commit the necessary resources to fully and effectively prosecute complex litigation, class actions, and other commercial litigation.

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Scott+Scott Achieves Victory In Puerto Rico Over UBS

Scott+Scott recently received a highly favorable ruling in the case of In re: UBS Financial Services, Inc. of Puerto Rico Securities Litigation, Case No. 3:12-cv-01663 (D.P.R.).  On September 30, 2013, the United States District Court for the District of Puerto Rico denied defendants’ motion to dismiss in its entirety and permitted the entire complaint to go forward.

Scott+Scott was appointed Lead Counsel on October 16, 2012 and subsequently filed a Consolidated Amended Complaint.  The Securities and Exchange Commission (“SEC”) conducted interviews and discovery pertaining to allegations similar to those set forth in the Complaint.  These interviews provided additional evidence of the claims, and thus, plaintiffs filed a Second Consolidated Amended Complaint on January 17, 2013 (the “Complaint”), which defendants then moved to dismiss.

The case concerns an alleged scheme by UBS Puerto Rico, UBS Financial Services, Inc., and some of the lead executives at UBS Puerto Rico, involving investments called closed-end funds (“CEF”s) sold in Puerto Rico.  As set forth in the Complaint, the CEFs were marketed as safe and capable of producing a monthly dividend income, which was, thus, attractive to seniors and retirees who depended on the CEF dividends to supplement retirement and social security income.  However, as alleged in the Complaint, the market for CEFs was entirely distorted by Defendants.  For example, defendants would publish “prices” for the CEFs, which were not even remotely tied to market supply and demand, to lure investors into purchasing and holding the investments.  Meanwhile, defendants benefited financially from generous salaries and bonuses based on the fees charged on the sale of the CEFs.  Furthermore, defendants themselves were over-invested in CEFs and were ultimately forced to reduce their inventory levels.  To do so, as alleged and unknown to investors, defendants launched an operation to sell their own holdings over and above any pending customer sales needs.  Ultimately, investors were left holding millions of dollars of illiquid assets of diminished value.

The Complaint alleges that these actions violated the anti-fraud provisions of the Securities Exchange Act of 1934 and the Puerto Rico Uniform Securities Act, and at the motion to dismiss stage, the Court agreed.  In a decision constituting a mere paragraph, it denied defendants’ motion to dismiss and permitted the case to go forward through discovery.

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SEC’s Proposed Crowd funding Financial Disclosure Rules Offer Little Protection for Investors

On October 23, 2013, the Securities and Exchange Commission (“SEC”) issued proposed rules on crowdfunding. “Crowdfunding” is a term used to describe websites that allow investors to invest in or lend to entrepreneurs, small businesses, and startup ventures. With the explosion of social networking websites over the last decade, it is no surprise that the internet would give rise to new ways of bringing investors and entrepreneurs together.

When the JOBS Act was passed in 2012, the federalgovernment afforded a measure of legitimacy to the innovative crowdfunding concept by exempting certain limited securities offerings from SEC registration, disclosure, and marketing rules. Without these exemptions, the cost of complying with the federal securities laws could be so prohibitive that many entrepreneurs and small businesses would find many crowdfunding doors to be closed to them. Nevertheless, these exemptions come with an increased risk of fraud.

The crowdfunding rules recentlyproposed by the SEC reduce risk to investors by: (1) limiting the amount of an exempt offering to $1 million; (2) limiting the amount of a crowdfunding investment to 5% of an investor’s annual income or net worth, whichever is greater, if the investor’s annual income and net worth are less than $100,000 (the limit is raised to 10% if the investor’s annual income and net worth are greater than $100,000); (3) requiring certain minimum disclosures by the issuer; and (4) only allowing securities to be offered or sold from a registered broker-dealer or registered funding portal.

The proposed crowdfunding rules on financial disclosures are tiered. For offerings of $100,000 or less, the issuer must provide its tax returns to investors and make its tax returns available to potential investors. For offerings of more than $100,000, but not more than $500,000, the issuer must provide financial statements that have been reviewed by an independent public accountant to its investors and make available the reviewed financial statements to potential investors. For offerings over $500,000, issuers must provide audited financial statements to its investors and make available the audited financial statements to potential investors.

It is no doubt important for issuers seeking crowdfunding investment to disclose the financial condition of the company. However, many of these companies are in very early stages of development and have such limited operating history as to render the financial disclosures almost meaningless.

An obvious and related risk to investors is fraud. However, unlike larger offerings, investors may find it difficult, if not impossible, to avail themselves of securities fraud provisions because of the limited amount invested as well as the size and financial condition of the issuers.

Comments on the proposed crowdfunding rules must be submitted by January 21, 2014.

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Regulators Announce Worldwide Civil and Criminal Investigations Into Foreign Exchange Market Manipulation


            Various international regulatory bodies have announced that they are investigating whether several international banks have illegally manipulated the benchmark rates underlying the foreign currency exchange (“Forex”) market.  By manipulating the Forex market, the banks sought to illegally secure increased profits.  Worse, however, is that the alleged manipulation of the Forex rates may have had huge impacts on worldwide economies. 

The Forex market offers trading 24 hours per day, five days each week, and is less rigorously regulated than similar markets.  It represents the largest and most liquid market in the world.  Trading in the Forex market averaged $5.3 trillion per day in 2013, according to the Bank For International Settlement.  Governments, multinational corporations, and other large organizations conduct the bulk of Forex trading, as they require access to massive amounts of foreign capital to conduct international trade.

            On June 12, 2013, the United Kingdom’s Financial Conduct Authority (“FCA”) announced that it was reviewing allegations and collecting information on whether traders at several large banks had schemed to rig foreign exchange benchmarks by pushing client trades before and while the exchange rates on those currencies were established.

            Then, on October 4, 2013, the Swiss Financial Market Supervisory Authority (“FINMA”) announced that it was examining several Swiss financial institutions and was working with authorities in other nations.  In the release announcing its investigation, FINMA stated that “multiple banks around the world are potentially implicated.”  The FINMA release posits that the banks would push through their trades and manipulate the Forex exchange rates for several less-liquid currencies on the trading system to boost their own profits. 

            On October 12, 2013, the United States Department of Justice announced that it was opening a criminal investigation into the allegations of Forex manipulation, and the Federal Bureau of Investigation noted that it was in the early stages of a currency market inquiry.  Then, on October 16, 2013, the FCA announced that it had opened a probe into the allegations of Forex manipulation, and noted that it was working with other governmental agencies worldwide.

Regulators have thus far not named the specific banks under scrutiny.  Given the fact that regulatory bodies from both Europe and the United States are involved in the investigations, however, it appears that the wrongdoing may be quite significant.         Systemic illegal manipulation of the Forex market could potentially pose a great threat to global economic stability.  The worldwide economy depends on the anticipated flow of currencies to fund international trade.  If regulators determine that the banks under scrutiny have illegally influenced the Forex benchmark rates, the repercussions could be massive.  Regulators are examining electronic messages, emails, and postings on business forums to search for evidence of misconduct.

            Several of the world’s largest banking institutions, many of which may be implicated in the Forex investigations, have already come under substantial scrutiny for their manipulation of the London Interbank Offered Rate (“LIBOR”), alleged manipulation of another global benchmark interest rate, known as the ISDAfix, as well as of crude oil prices and other commodities markets.  Four banks, Barclays PLC, UBS AG, The Royal Bank of Scotland PLC, and ICAP PLC, have already settled LIBOR-related claims with various federal authorities for a total of approximately $2.6 billion.

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On the Record


“Litigation is the pursuit of practical ends, not a game of chess.”

Felix Frankfurter, Indianapolis v. Chase Nat’l Bank, 314 U.S. 63, 69 (1941)

DOB: November 15, 1882



November Events


Conferences and Educational Seminars


+November 2nd – 6th, 2013


National Pension Education Association (NPEA)

The Mills house Wyndham Grand Hotel

Charleston, South Carolina


This is the 33rd Annual National Pension Education Association Conference.  This year’s conference once again includes topics on ethics, reporting and communicating under the “New Rules”.  Pension legal issues and legislative changes as well as how to most efficiently use available technology and which technology is most user friendly for the tasks at hand. The conference will provide information to participants that empowers them to make better fiduciary decisions and encourage its members to work together to maximize opportunities in retirement investments.  


+November 12th – 15th, 2013

State Association of County Retirement Systems Annual Fall Conference (SACRS)

Renaissance Esmeralda Conference Hotel

Indian Wells, CA


SACRS is an association of twenty California county retirement systems formed in 1937 under the California County Employees Retirement Law.  The California Government Code sets forth the policies and regulations governing the actions of the county retirement systems.  Those  who serve on a Board of Retirement (or Board of Investment) and those who lead and staff  county pension systems  will  be required to know more about managing retirement plans as more regulations are legislated, etc.  In these turbulent economic times the members, beneficiaries and stakeholders of  member systems  want to be assured,  more than ever, that their interests are appropriately served by the fiduciaries they elected or appointed to the governing Boards and that the management of the retirement systems is as professional as ever.  The SACRS conference provides the trustees a venue for education, problem solving and networking.


+November 13th -16th, 2013


National League of Cities  (NLC)

Washington State Convention Center

Seattle, Washington


The four day Annual National League of Cities conference is dedicated to providing city leaders with resources for building better communities.  The NLC works in partnership with 49 municipal leagues and serves as an advocate for more than 19,000 communities. Cities and towns join NLC and the elected officials and staff from those cities and towns participate in NLC’s programs, activities and governance.  State municipal leagues guide the organization’s priorities and serve as an important link to cities in their state.  NLC, unlike most municipal leagues, offers membership opportunities for members of the private sector.  The annual conference allows through its Corporate Partners Program the private sector to exchange ideas between corporate leaders and leaders of America’s cities in order to strengthen local government and promote corporate civic engagement.  Participation in the NLC Corporate Partners Program is by invitation of the NLC Leadership.


+November 24th -26th, 2013

County Commissioners Association of Pennsylvania (CCAP) Annual Conference

The Hotel Hershey

Dauphin County, Pennsylvania


The County Commissioners Association of Pennsylvania is a statewide, nonprofit, bipartisan association representing the commissioners, chief clerks, administrators, their equivalents in home rule counties, and solicitors of Pennsylvania's 67 counties.  The County Commissioners Association of Pennsylvania (CCAP) and its member counties are committed to excellence in county government.  CCAP advocates for and provides leadership on those issues that will enhance and strengthen the ability of county commissioners to better serve their citizens and govern more effectively and efficiently.  The Association strives to educate and inform the public, administrative, legislative and regulatory bodies, decision makers, and the media about county government.  The fall conference is exhibit free, however, networking activities take place throughout the conference.  There are more than a dozen committee meetings from agriculture committee meetings to shareholder action committee meetings which meet the first day of the conference.  Most participants belong to at least one committee.  The second day there is a time block set aside for those who participate in the democrat or republican caucus sessions.


Government Finance Officers’ Association Conferences


+November 7yh -8th, 2013

Municipal Finance Officers’ Association (MFOA)

Marriott Northwest

Dublin, OH


+November 19th, 2013

Connecticut GFOA

Aqua Turf Club

Planstville, CT


+November 19th – 22nd, 2013

Colorado GFOA

Beaver Run Conference Center

Breckenridge, CO 


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Scott + Scott LLP is a nationally recognized law firm headquartered inConnecticut with offices in New York City, Ohio and California. The firmrepresents individual as well as institutional investors who have suffered from corporate stock fraud. Scott+Scott has participated in recovering billions of dollars and achieved precedent-setting reforms in corporate governance on behalf of its clients. In addition to being involved in complex shareholder securities and corporate governance actions, Scott+Scott also has a significant national practice in antitrust, ERISA, consumer, civil rights and human rights litigation. Through its efforts, Scott+Scott promotes corporate social responsibility.

Scott+Scott’s PT+SM System is the firm’s proprietary investment portfolio tracking service. Carefully combining the firm’s proprietary computer-based portfolio monitoring software with Scott+Scott’s hands-on approach to client  relations is a proven method for institutional investors and their trustees to successfully

  • Monitor their investment portfolios  
  • Identify losses arising from corporate fraud    
  • Consider what level of participation any given situation requires   
  • Recover funds obtained on their behalf through investor litigation action  

To obtain more information about Scott+Scott’s PT+SM services or to schedulea presentation to fund trustees, fund advisors or asset managers, please contact:    David R. Scott + Toll Free: 800.404.7770     email: + UK Tel: 0808.234.1396