Privacy, Business and Law

Before advertising or recruiting for a position, determine the specific duties and responsibilities for the position. Drafting job descriptions pursuant to ADA requirements will help this process. From the job description, determine the required qualifications for the position, including any physical requirements, and determine what physical requirements, if any, should be evaluated by a physician. (Read more…)

“At-will” employment or the right to terminate employment at any time AND FOR ANY OR NO REASON, i.e., with or without cause, has been the law in California and most other states for a very long time. Labor Code Section 2922, which provides that all employment is “at-will” (unless the employment arrangement is for a specified term) was enacted in 1937. (Read more…)

On October 15, the U.S. Securities and Exchange Commission filed suit and obtained a temporary restraining order and asset freeze against Mark Drucker of Atlanta, Georgia. The SEC alleges that Drucker raised $6.2 million from 80 investors by representing that he is a successful day trader and could get them returns of 50% or more on any money that he is permitted to invest for them. According to the SEC, Drucker “did not disclose to investors that he lost in excess of $630,000 trading in stocks in 1999, that he used the investment principal of recent investors to pay returns to earlier investors, and that he used money from investors to pay personal expenses, including hundreds of thousands of dollars to finance elaborate parties.” In an interesting twist to the case, the SEC has named a prominent Atlanta lawyer as a relief defendant in the proceeding. The attorney, Michael Weinstock, is not accused of any wrongdoing, but allegedly “invested approximately $1,035,916 and received approximately $1,575,514 from Drucker”. The SEC claims that he was “unjustly enriched” through his unwitting “participation in Drucker’s scheme” and, thus, seeks “disgorgement” of the amount he allegedly has been unjustly enriched, together with prejudgment interest. See SEC Gets TRO, Asset Freeze To Stop Ongoing Ponzi Scheme Operated by Atlanta Day-Trader, SEC Litig. Rel. No. 16335 (Oct. 15, 1999)

On October 14, Australia’s AFR Net Services reported that repeated outages at Australian e-brokers are beginning to “try the patience of professional traders”. According to the report, the previous week customers of Sanford Securities Ltd. online brokerage service “received repeated e-mails from the company, pleading for patience as if beefed up its computing power.” Likewise, Commonwealth Securities suffered an outage in July “caused by a router failure at internet provider, UUNET.” Such outages, of course, are not limited to Australia. U.S. e-brokers have suffered such outages and have found themselves the subject of scrutiny by federal regulators, legislative committees and at least one state attorney general’s office. See Blake A. Bell, Online Brokerages Under Siege for Trading Outages and Delays, 2(11) wallstreetlawyer.com 10 (Glasser LegalWorks Apr. 1999) <http://www.simpsonthacher.com/memos/art010.htm>.

On October 13, BNA, Inc.’s Electronic Commerce & Law Report issued a report on a fascinating decision by the United States District Court for the Southern District of California. The case involved is Aaron Abada, on behalf of himself and all others similarly situated v. Charles Schwab & Co., Inc., a California Corporation, and Does 1 through 10, No. 99-CV-0940 K(JAH). The plaintiff filed a state court action in which he alleged that he opened an online trading account with Schwab in reliance on representations at Schwab’s Web site stating “that Schwab would provide fast, high quality executions” and that “[m]arket orders entered while the market is open are subject to immediate execution”. (Read more…)

On October 13, the U.S. Securities and Exchange Commission accepted offers of settlement submitted by Scott P. Flynn and Strategic Network Development, Inc. to resolve an administrative proceeding that the Commission commenced on February 24, 1999. Flynn and Strategic reportedly consented to entry of an Order Making Findings and Imposing Remedial Sanctions and a Cease and Desist Order without admitting or denying the Commission’s allegations. The order finds that “Flynn and Strategic violated the anti-touting provision of the Securities Act by publishing profiles of ten different publicly-traded companies on Stockprofiles.com, an Internet website, and by e-mail, in exchange for over $180,000 in cash and a total of 322,500 shares of stock from issuers profiled on the website without properly disclosing their receipt of the compensation.” The order additionally finds that Flynn used Strategic Network to spam “low price stock alerts” to 500,000 people using unsolicited commercial e-mail. The order requires both to cease and desist from committing or causing the commission of any future violation of Section 17(b) of the Securities Act of 1933. Flynn also is “barred from association with any broker or dealer and from participating in any offering of penny stock, based upon an unrelated criminal conviction for federal securities fraud.” See SEC News Digest No. 99-198 (Oct. 14, 1999) <http://www.sec.gov/news/digests/10-14.txt> (scroll down to “Findings Made, Remedial Sanctions Imposed and Cease and Desist Order Issued in Administrative Proceedings Against Flynn and Strategic”).

On October 11, the City of Pittsburgh announced that it has finalized plans to use MuniAuction Inc. of Pittsburgh to conduct an online auction of the city’s bonds via the Internet. The auction reportedly will take place in early November and will be open to Wall Street dealers and more than 750 institutional investors. There reportedly are no plans in the works to permit individual retail investors to participate in the auction. See Gregory Zuckerman, Pittsburgh To Sell Bonds on Internet: Move Cuts Out Wall Street’s Middlemen, Wall St. J. special to MSNBC, Oct.

On October 8, the U.S. Securities and Exchange Commission announced that the Honorable Richard W. Story of the United States District Court for the Northern District of Georgia has entered a Consent Final Judgment of Permanent Injunction against International Heritage, Inc. (IHI), International Heritage Incorporated (IHI Incorporated) and Stanley H. Van Etten. In its complaint, filed on March 16, 1998, the SEC alleged that IHI, through Van Etten and others, solicited investors for a pyramid scheme through misleading promotional materials including Web pages. The scheme reportedly raised $150 million from over 155,000 investors. The Consent Final Judgment enjoins IHI and Van Etten from further violations of various sections of the Securities Act of 1933 and the Securities Exchange Act of 1934. IHI Incorporated is enjoined from further violations of various provisions of the Securities Exchange Act of 1934. IHI, IHI Incorporated and Van Etten consented to entry of the Consent Order of Judgment without admitting or denying the SEC’s allegations. “The court ordered disgorgement against IHI in the amount of $6,533,179, of which $4.1 million may be satisfied from a posted surety bond. The Court ordered disgorgement against Van Etten in the amount of $7,630,450, but due to a demonstrated inability to pay, the Court ordered Van Etten to pay $150,000, required Van Etten to waive certain claims against the bankruptcy estate of IHI, and waived payment of the remaining disgorgement, pre-judgment and post-judgment interest.”

As reported in BNA’s Securities Regulation & Law Report on October 8, a member of the staff of the Ohio Securities Division has concluded that day traders “who buy and sell securities for another person’s account in the reasonable expectation of compensation from profit on the trades, may be securities dealers” under section 1707.01(E) of the Ohio Revised Code. According to the staff member, Michael P. Miglet, in such circumstances, both the day trader and the day-trading firm he or she uses are deemed dealers, although “only one of them must be licensed in order for the other to take advantage of the exception from licensing requirement for transactions through or with a licensed dealer” under section 1707.14(A)(1)(a) of the Ohio Revised Code. For more, see Michael P. Miglet, Day Trading and Licensing Requirements Under the Ohio Securities Act, 99:2 Ohio Securities Bulletin 1 (visited on Oct. 17, 1999) <http://www.securities.state.oh.us/Bulletin/BUL992.pdf>. See also State News – Regulatory Briefs: Ohio – State News Briefs – Day Traders May Be Dealers, 31(39) Sec. Reg. & Law Rep. (BNA) 1337 (Oct. 8, 1999).

On October 7, the Chairman of the U.S. Securities and Exchange Commission, Arthur Levitt, spoke before the American Council on Germany. His remarks focused on the need for strengthened and more modern principles of corporate governance due to technological changes that are moving society increasingly toward global markets. The Chairman stated “Information is the lifeblood of markets. But unless investors trust this information, investor confidence dies. Liquidity disappears. Capital dries up. Fair and orderly markets cease to exist. As the volume of information increases exponentially, the quality of information for investors and the markets they comprise must be our signal concern. The promise of a global marketplace, like never before, depends on it. As more countries move to an equity culture, high-quality financial information becomes the currency that drives the marketplace. And nothing honors that currency more than a strong and effective corporate governance mandate. A mandate that is both a dynamic system and a code of standards. A mandate that is measured by the quality of relationships: the relationship between companies and directors; between directors and auditors; between auditors and financial management; and ultimately, between information and investors. See Speech by SEC Chairman: Remarks to the American Council on Germany “Corporate Governance in a Global Arena” by Chairman Arthur Levitt, U.S. Securities & Exchange Commission, American Council on Germany, New York, N.Y., Oct. 7, 1999