Order-flow payments get new scrutiny

Article Abstract:

The SEC and Congress are examining the legality of order-flow payments, which can appear troublesome since they resemble kickbacks. These payments take place in the over-the-counter market apart from the New York and American Stock Exchanges and have been defended by some in the financial community as necessary to maintain fair competition between markets. Opponents' main argument is that these payments breach the broker-customer fiduciary duty. The National Assn of Securities Dealers has sought to regulate these payments by proposing a rule change requiring greater disclosure, but the SEC has yet to act on the proposal.

Laws, regulations and rules, Securities industry, Over-the-counter markets, Over the counter markets

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If silence equals fraud, the rules shift

Article Abstract:

The district court in US v Brown extended the definition of mail and wire fraud, saying that unlike securities fraud, they did not require the existence of a fiduciary duty to make silence fraudulent, but only the concealing of material facts with the intent to misrepresent. The case concerned sales practices of the General Development Corp, convicted of mail and wire fraud for not informing customers that their homes were priced as much as 50% above those of competitors. The jury instructions contained very little on where to draw the line between competitive practices and fraud.

Cases, Real estate development, Mail fraud

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The 5th Circuit's approval of a no-opt-out, mass tort settlement that forecloses the rights of future claimants raises basic due process issues

Article Abstract:

The US Court of Appeals for the 5th Circuit's upheld in In re Asbestos Litigation (Flanagan v. Ahearn) of a mass tort settlement in a class action. Future claims usually dwarf present ones in the mass tort field and the inclusion of no-opt-out provisions for possible future class members raises due process questions. The settlement allows the insurance companies and the Fibreboard Corp to limit their previously open-ended liabilities for asbestos injuries and the class members receive very little from Fibreboard in exchange for releasing it from future liability.

United States, Management, Class actions (Civil procedure), Class action lawsuits, Mass tort suits, Complex litigation

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