Art Basel Guide, Miami Beach, December 6-9, 2012

Art Basel, now in its 11th year, runs this weekend, December 6-9, in Miami Beach, Florida.

Recognized as one of the most prestigious art shows in the Americas, Art Basel features more than 260 leading galleries from North America, Europe, Latin America, Asia and Africa. Works by more than 2,000 artists of the 20th and 21st centuries will be on display.

Click on the link for the official Art Basel website.

If you are looking for places to eat or information on the many independent art events that surround the Art Basel show, click on the link for the Sun-Sentinel’s Guide to Art Basel.

A giant floating alligator head is one of the more unique features of Art Basel 2012. Hollywood artist Lloyd Goradesky and Everglades historian Cesar Becerra, joined by a team of collaborators, plan to launch a 40-ton alligator head, measuring 230 feet long and 50 feet wide, today or tomorrow from Port Everglades. The mobile head, with a mouth that opens and closes, will float down to Miami for Art Basel. Read more here.

A Public Service Announcement from the Fort Lauderdale Law Firm of
Kahn & Resnik, P.L.

The Florida lawyers at Kahn & Resnik, P.L. are available to service your legal needs.

Our concierge approach to the practice of law reflects our philosophy of personalized and confidential attention. When you retain an attorney at Kahn & Resnik, P.L., we work efficiently and effectively to help you achieve your business and personal objectives.

We can assist you in legal matters relating to commercial litigation, divorce, disability law, real estate litigation, securities litigation, and corporate transactions.

We serve business owners, professionals and individual clients across Florida, including Miami, Fort Lauderdale, Boca Raton, West Palm Beach, Naples, Orlando, Tampa, Daytona Beach, Jacksonville, Tallahassee, and other cities throughout the state. Contact Howard N. Kahn, Esq. at 954-321-0176 or online.

South Florida Personal Income Decline in 2009 at Historic Levels

Making ends meet in South Florida has been a challenge in recent years, and the U.S. Government issued a report this week that confirmed a drop in local personal incomes.

Residents of the metropolitan statistical area (MSA) that runs from Miami-Dade County through Fort Lauderdale up to Pompano Beach experienced a significant drop in personal income in 2009, according to the Bureau of Economic Analysis. The chart below shows historical trends for South Florida personal income.

Miami Income Chart

In a recent story titled, “The worst year for South Florida since the Great Depression: 2009,” the Miami Herald reports “… no income drop came even close to what we saw in 2009 — a 5 percent drop in Miami-Dade and an 8 percent plunge in Broward. Personal income includes government aid, and without the state and federal dollars, the decline would have been even worse.”

Income declines of this magnitude have not been seen since the 1930s. Fortunately, South Florida incomes started bouncing back in 2010.

The Fort Lauderdale Law Firm of  Kahn & Resnik, P.L.

The Florida lawyers at Kahn & Resnik, P.L. are available to service your legal needs.

Our concierge approach to the practice of law reflects our philosophy of personalized and confidential attention. When you retain an attorney at Kahn & Resnik, P.L., we work efficiently and effectively to help you achieve your business and personal objectives.

We can assist you in legal matters relating to commercial litigation, divorce, disability law, real estate litigation, securities litigation, and corporate transactions.

We serve business owners, professionals and individual clients across Florida, including Miami, Fort Lauderdale, Boca Raton, West Palm Beach, Naples, Orlando, Tampa, Daytona Beach, Jacksonville, Tallahassee, and other cities throughout the state. Contact Howard N. Kahn, Esq. at 954-321-0176 or online.

Bank Uses Business Records Exception to Overcome Hearsay Exception and Foreclose Property

Deutsche Bank National Trust Company, etc. v. Maria de Brito, 2017 WL 5163048 (Fla. 3d DCA Nov. 8, 2017)

In 2006, Mr. and Mrs. Brito, agreed to a modification of an adjustable rate mortgage through a principal only payment plan. The plan called for the interest portion of the loan to be deferred and added to the loan’s outstanding principal balance.

The lender reserved the right to adjust the interest rate at any time in the plan. For the next two years, the Britos made the required payments. Then, in 2008, Ocwen, the servicing agent for the lender, rejected a payment and returned the check to the Britos. Ocwen waited two years to notify the Britos in writing that they were in default of their loan and what steps were necessary to reinstate the loan.

When the Britos did not respond, the lender filed a foreclosure action. Two days before the trial, the Britos took the deposition of an Ocwen representative. At the trial, the Ocwen representative testified about the loan process, the payment history, and the notice of default on the loan. The trial court was given a copy of the original mortgage and the default letter that was sent to the Britos.

The trial court determined that Ocwen’s testimony was hearsay and the lender failed to prove that notice was sent to the Britos about the default. Consequently, the trial court dismissed the case in favor of the Britos.

On appeal, the Third District Court of Appeal reversed the trial court’s hearsay decision that excluded Ocwen’s testimony during the trial on the basis of the business records exception. This exception allows for a party to introduce business records that would normally not be allowed. Section 90.803(6), Florida Statue does not require the person providing the business record be the actual person who prepared the record. The person testifying on behalf of the records may be a records custodian or other qualified witness.

Section 90.803(6), Florida Statute requires that the records being introduced must have been made at or around the time of the event being discussed; the person communicating the information for that record had personal knowledge of the event; the records are kept in the ordinary course of a regularly conducted business activity; and the business has a regular practice to maintain such records.

The Third District also addressed the trial court’s determination that the lender had failed to prove the existence of a default letter being sent to the Britos because this issue was never raised during the proceeding. The Third District directed that a final judgment of foreclosure be entered by the trial court in favor of the lender.

It is important to understand exceptions for hearsay. The business exception rule allowed a party to introduce its records and have a witness testify to those records, even if the person was not responsible for creating the record in the first place.

Father gets Second Bite to Stop Paying Child Support

L.G. v. Department of Children and Families, 227 So.3d 653 (Fla. 4th DCA 2017)

In this case, Florida’s Fourth District Court of Appeal reversed an order denying a father’s (L.G.) request to renounce his paternity of a child. While the father and the mother were never married, L.G.’s name was listed as the father on the birth certificate. After a DNA test revealed that L.G. was not the biological father, he asked the trial court to remove him as the father to alleviate any financial obligations to support the child. The trial court denied the request on the basis that another father would first have to assume the paternity of the child and the related support obligations. However, in 2006, the Florida legislature enacted Section 742.18, Florida Statutes that provided a mechanism for paternity to be terminated.

Section 742.18, permits a father to renounce his paternity of a child or terminate a child support obligation, when he is found to not be the biological father. The petitioning father must present newly discovered evidence from the time he had assumed the child support obligations or from the initial paternity determination. A scientific test, such as a DNA test, must be administered within 90 days of the request to terminate or renounce the paternity obligation. Additionally, the petitioning father must be current on all child support payments and cannot have adopted the child.

Because the Statute does not require someone else to first stand in place of the petitioning father and assume the financial obligations for the child, the First District ruled that the trial court erred in its decision to deny L.G.’s petition without giving consideration to the above discussed statutory factors.

This case provides the method that a father can challenge his paternity or terminate his child support obligation without the requirement that another “father” step in and assume the financial responsibility.

SEC Fiduciary Standard for Brokers Faces Delay

The SEC recommended a uniform fiduciary standard of conduct for broker-dealers and investment advisers in January 2011. Investment advisers and broker-dealers are regulated extensively under different regulatory regimes, but many retail investors do not understand this and are confused by the roles played by investment advisers and broker-dealers.

SEC Chairman Mary Schapiro’s pending departure in December will further delay finalization of these investor protections. She raised concerns as early as 2009, in a letter to broker-dealer CEOs stating that some enhanced compensation arrangements could induce brokers to engage in conduct that is not in investors’ best interest. She reminded CEOs that they have an obligation to police for such conflicts. Click on the link for the full SEC letter to broker-dealer CEOs.

According to a recent Reuters article, “… at issue are the varied rules that apply to different types of financial advisers. Financial advisers who register with the SEC must act as fiduciaries, or in their clients’ best interests. But brokerage firm advisers, who register with the industry’s private regulator, the Financial Industry Regulatory Authority, only have to suggest investments that are “suitable,” based on factors such as a client’s age and risk tolerance.” Click on the link to read the full article titled, “Schapiro’s exit leaves broker fiduciary plan up in air.”

The agency’s goal is to achieve no less stringent requirements for broker-dealers than currently apply to investment advisers under the Advisers Act when those financial professionals provide personalized investment advice about securities to retail investors.

The SEC’s 2011 study on the topic “recommends that the Commission . . . adopt and implement, with appropriate guidance, the uniform fiduciary standard of conduct for broker-dealers and investment advisers when providing personalized investment advice about securities to retail customers.” The standard, according to the study, should be “no less stringent than currently applied to investment advisers under [the] Advisers Act.”

Click on the link to read the January 2011 SEC Study on Investment Advisers and Broker-Dealers.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

SEC Chairman Schapiro to Step Down

SEC Chairman Mary L. Schapiro today announced that she will step down on Dec. 14, 2012. The move was widely expected.

Chairman Schapiro took office in the wake of the financial crisis in January 2009. She focused on a more rigorous enforcement and examination program, and shaped new rules for Wall Street.

The SEC is now “more adept at pursing tips and complaints provided by outsiders, better able to identify wrongdoers through vastly upgraded market intelligence capabilities, and more strategic, innovative and risk-focused in the way it inspects financial firms,” according to an agency release.

In each of the past two years, the agency has brought more enforcement actions than ever before, including 735 enforcement actions in fiscal year 2011 and 734 actions in FY 2012.

In addition, the SEC engaged in one of the busiest rulemaking periods in decades. Due to new rules now in place, investors can get clear information about the advisers they invest with, vote on the executive compensation packages at companies they invest in, benefit from additional safeguards that protect their assets held by investment advisers, and get access to more meaningful information about company boards and municipal securities.

President Obama announced that he intends to designate Elisse Walter, a current SEC Commissioner, as Chair upon Ms. Schapiro’s departure next month. Prior to her appointment as an SEC Commissioner in 2008, Ms. Walter served as Senior Executive Vice President, Regulatory Policy & Programs, for FINRA. She held the same position at NASD before its 2007 consolidation with NYSE Member Regulation.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

Mortgage Foreclosure Review Available

Florida homeowners involved in a foreclosure on their primary residence in 2009 and 2010 may be eligible for a free Independent Foreclosure Review.

Homeowners in mortgage foreclosure who qualify for this program will receive a letter in the mail by December 31, 2011 with more details. If you want your case reviewed, you
must respond to the letter no later than April 30, 2012. Continue reading “Mortgage Foreclosure Review Available” »

SEC Charges Matthew Martoma of Boca Raton in $276 Million Insider Trading Scheme

Hedge fund advisory firm CR Intrinsic Investors LLC, based in Stamford, Conn., its former portfolio manager Matthew Martoma, and a medical consultant for an expert network firm were charged by the Securities and Exchange Commission for their roles in a $276 million insider trading scheme involving a clinical trial for an Alzheimer’s drug being jointly developed by two pharmaceutical companies. The illicit gains generated in this scheme make it the largest insider trading case ever charged by the SEC.

CR Intrinsic Investors LLC is an affiliate of SAC Capital Advisors, a firm owned by hedge fund manager Steven A. Cohen.

The SEC alleges that Mathew Martoma illegally obtained confidential details about the clinical trial from Dr. Sidney Gilman, who served as chairman of the safety monitoring committee overseeing the trial. Dr. Gilman was selected by Elan Corporation and Wyeth to present the final drug trial results to the public.

In phone calls that were arranged by a New York-based expert network firm for which he moonlighted as a medical consultant, Dr. Gilman tipped Martoma with safety data and eventually details about negative results in the trial about two weeks before they were made public in July 2008. Martoma then caused several hedge funds to sell more than $960 million in Elan and Wyeth securities in just over a week.

Dr. Gilman, who lives in Ann Arbor, Mich., where he works as a medical school professor, has agreed to settle the SEC’s charges and cooperate in this action and related SEC investigations. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Martoma and a non-prosecution agreement with Dr. Gilman. Martoma lives in Boca Raton, Fla.

According to the SEC’s complaint filed in federal court in Manhattan, Martoma first met Dr. Gilman through paid consultations arranged by the expert network firm. Dr. Gilman provided Martoma with material nonpublic information concerning the Phase II trial of the potential Alzheimer’s drug called bapineuzumab (bapi). They coordinated their expert network consultations around scheduled safety monitoring committee meetings, and during their phone calls they discussed PowerPoint presentations made during the meetings and Dr. Gilman provided Martoma with his perspective on the results. Dr. Gilman developed a personal relationship with Martoma, eventually coming to view Martoma as a friend and pupil.

The SEC alleges that Martoma caused hedge funds managed by CR Intrinsic as well as hedge funds managed by an affiliated investment adviser to trade on the negative inside information he received from Dr. Gilman. Although Elan and Wyeth’s shares rose on June 17, 2008, on the public release of top-line results of the Phase II trial, market participants were disappointed by the detailed final results issued on July 29, 2008.

Double-digit declines in Elan and Wyeth shares ensued. After Martoma was tipped, the hedge funds not only liquidated their combined long position in Elan and Wyeth of more than $700 million, but went on to hold substantial short positions in both securities. This massive repositioning allowed CR Intrinsic and the affiliated advisory firm to reap approximately $82 million in profits and $194 million in avoided losses for a total of more than $276 million in illicit gains.

According to the SEC’s complaint, Martoma received a $9.3 million bonus at the end of 2008 – a significant portion of which was attributable to the illegal profits that the hedge funds managed by CR Intrinsic and the other investment advisory firm had generated in this scheme. Dr. Gilman, who was generally paid $1,000 per hour as a consultant for the expert network firm, received more than $100,000 for his consultations with Martoma and others at the hedge fund advisory firms. Dr. Gilman also received approximately $79,000 from Elan for his consultations concerning bapi in 2007 and 2008.

The SEC’s complaint charges each of the defendants with violating Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and seeks a final judgment ordering them to disgorge their ill-gotten gains plus prejudgment interest, ordering them to pay financial penalties, and permanently enjoining them from future violations of these provisions of the federal securities laws.

Dr. Gilman has agreed to pay more than $234,000 in disgorgement and prejudgment interest. He also agreed to a permanent injunction against further violations of the federal securities laws. The proposed settlement is subject to approval by the court, which also will determine at a later date whether any additional financial penalty is appropriate.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

Fort Lauderdale Thanksgiving Weekend Activities

2012 Fort Lauderdale 5K Turkey Trot and Paddle
Thursday, November 22, 2012

The 2nd Annual Fort Lauderdale Turkey Trot & Turkey Paddle Together, sponsored by iTRACE Foundation, Inc. and Emerge Broward, a program of the Leadership Broward Foundation, Inc., will raise funds to support healthy living across the generations with an emphasis on childhood obesity.

Course Details
Location: Fort Lauderdale beach (A1A)
6:00 A.M. Registration
7:30 A.M. Race start time
8:30 A.M. Awards presentation
954-767-8866

Pre-registration is closed, but you can still sign up at designated locations. See details. Discounts are available for members of the military. Details here.

The 5K Run/Walk is a USA Track & Field sanctioned event. Enjoy the beauty of the Atlantic Ocean on the race course that travels along A1A. From beginners to elite runners, this race is for everyone!

If you prefer to be on the water, take part in the 2M Stand-Up Paddleboard course. It starts at the same mileage marker as the 5K Run/Walk, heads north for 1 mile and then turns around to finish at the starting point.

Thanksgiving themed costumes are welcomed and encouraged!

Broward County Fair
November 15 – 25, 2012
Location: City Center, 10300 Pines Blvd, Pembroke Pines
954-922-2224

The Broward County Fair is an annual Broward County tradition with midway, free concerts, entertainment, art/music contests, pageants, the Great American Frontier Show, Belmont Magic Show, a petting zoo and more attractions. See hundreds of animal exhibits, student exhibits, horticulture displays, fair food and so much more. Fun for all ages! Visit http://www.browardfair.org for more information.

Thanksgiving Travel at Fort Lauderdale International Airport

Expect crowds at the Fort Lauderdale-Hollywood International Airport if you are flying or picking up visitors this weekend. More than 500,000 travelers will arrive at or depart from the airport this Thanksgiving season. Allow extra time for traffic and security lines.

A Public Service Announcement from the Fort Lauderdale Law Firm of
Kahn & Resnik, P.L.

The Florida lawyers at Kahn & Resnik, P.L. are available to service your legal needs.

Our concierge approach to the practice of law reflects our philosophy of personalized and confidential attention. When you retain an attorney at Kahn & Resnik, P.L., we work efficiently and effectively to help you achieve your business and personal objectives.

We can assist you in legal matters relating to commercial litigation, divorce, disability law, real estate litigation, securities litigation, and corporate transactions.

We serve business owners, professionals and individual clients across Florida, including Miami, Fort Lauderdale, Boca Raton, West Palm Beach, Naples, Orlando, Tampa, Daytona Beach, Jacksonville, Tallahassee, and other cities throughout the state. Contact Howard N. Kahn, Esq. at 954-321-0176 or online.

J.P. Morgan and Credit Suisse Pay to Settle SEC Charges

J.P. Morgan Securities LLC and Credit Suisse Securities (USA) agreed to pay more than $400 million combined to settle charges that the firms misled investors in offerings of residential mortgage-backed securities (“RMBS”).

The charges were filed recently by the Securities and Exchange Commission in coordination with the federal-state Residential Mortgage-Backed Securities Working Group. The SEC plans to distribute the money to harmed investors.

The SEC alleges that J.P. Morgan misstated information about the delinquency status of mortgage loans that provided collateral for an RMBS offering in which it was the underwriter. J.P. Morgan received fees of more than $2.7 million, and investors sustained losses of at least $37 million on undisclosed delinquent loans. J.P. Morgan also is charged for Bear Stearns’ failure to disclose its practice of obtaining and keeping cash settlements from mortgage loan originators on problem loans that Bear Stearns had sold into RMBS trusts. The proceeds from this bulk settlement practice were at least $137.8 million.

J.P. Morgan has agreed to pay $296.9 million to settle the SEC’s charges.

According to the SEC’s order against Credit Suisse, the firm similarly failed to accurately disclose its practice of retaining cash for itself from the settlement of claims against mortgage loan originators for problems with loans that Credit Suisse had sold into RMBS trusts and no longer owned. Credit Suisse also made misstatements in SEC filings about when it would repurchase mortgage loans from trusts if borrowers missed the first payment due. The firm made $55.7 million in profits and losses avoided from its bulk settlement practice, and its investors lost more than $10 million due to Credit Suisse’s practices concerning first payment defaults.

Credit Suisse has agreed to pay $120 million to settle the SEC’s charges.

According to the SEC’s complaint against J.P. Morgan filed in federal court in Washington D.C., federal regulations under the securities laws require the disclosure of delinquency information related to assets that provide collateral for an asset-backed securities offering. Information about the delinquency status of mortgage loans in an RMBS transaction is important to investors because those loans are the primary source of funds by which investors can earn interest and obtain repayment of their principal.

The SEC alleges that in the prospectus supplement for the $1.8 billion RMBS offering that occurred in December 2006, J.P. Morgan made materially false and misleading statements about the loans that provided collateral for the transaction. The firm represented that only four loans (.04 percent of the total loans collateralizing the transaction) were delinquent by 30 to 59 days, and that those four were the only loans that had had an instance of delinquency of 30 or more days in the 12 months prior to the “cut-off date” for the transaction. However, at the time J.P. Morgan made these representations, the firm actually had information showing that more than 620 loans (above 7 percent of the total loans collateralizing the transaction) were, and had been, 30 to 59 days delinquent, and the four loans represented as being 30 to 59 days delinquent were in fact 60 to 89 days delinquent.

The SEC’s complaint also alleges that Bear Stearns’ bulk settlements covered loans collateralizing 156 different RMBS transactions issued from 2005 to 2007. Loan originators were usually required by contract to buy back loans that suffered early payment defaults or had other defects. However, Bear Stearns frequently negotiated discounted cash settlements with these loan originators in lieu of a buy-back on loans that were owned by the RMBS trusts. The firm – both before and after the merger with J.P. Morgan – then kept most of the bulk settlement proceeds. The firm failed to disclose the practice to investors who owned the loans. Bear Stearns repurchased only about 13 percent of these defective bulk settlement loans from the trusts, compared to a nearly 100 percent repurchase rate when loan originators agreed to buy back the defective loans. For most loans covered by bulk settlements, the firm collected money from originators without paying anything to the trusts.

J.P. Morgan settled the SEC’s charges by consenting to pay $50.5 million in disgorgement and prejudgment interest and a $24 million penalty for the delinquency misstatements, which the SEC will seek to distribute to harmed investors in the transaction through a Fair Fund. J.P. Morgan agreed to pay $162,065,536 in disgorgement and prejudgment interest and a $60.35 million penalty for the bulk settlement practice misconduct, and the SEC will seek to distribute these funds to harmed investors through a separate Fair Fund. J.P. Morgan consented, without admitting or denying the allegations, to the entry of a final judgment permanently enjoining them from violating Section 17(a)(2) and (3) of the Securities Act of 1933. The settlement is subject to court approval.

According to the SEC’s order instituting a settled administrative proceeding against Credit Suisse, the firm and its affiliated entities misled investors in 75 different RMBS transactions through the bulk settlement practice. From 2005 to 2010, Credit Suisse frequently negotiated bulk settlements with loan originators in lieu of a buy-back of loans that were owned by the RMBS trusts. Credit Suisse kept the bulk settlement proceeds for itself and failed to disclose the practice to investors who owned the loans. In nine of the 75 RMBS trusts, Credit Suisse failed to comply with offering document provisions that required it to repurchase certain early defaulting loans. Credit Suisse also applied different quality review procedures for loans that it sought to put back to originators, instituted a practice of not repurchasing such loans from trusts unless the originators had agreed to repurchase them, and failed to disclose the bulk settlement practice when answering investor questions about early payment defaults.

The SEC’s order also found that Credit Suisse made misleading statements about a key investor protection known as the First Payment Default (FPD) provision in two RMBS offerings. The FPD provision required the mortgage loan originator to repurchase or substitute loans that missed payments shortly before or after they were securitized. Credit Suisse misled investors by falsely claiming that “all First Payment Default Risk” was removed from its RMBS, and at the same time limiting the number of FPD loans that were put back to the originator.

Credit Suisse settled the SEC’s charges by consenting to pay $68,747,769 in disgorgement and prejudgment interest and a $33 million penalty, which the SEC will seek to distribute through a Fair Fund to harmed investors in the 75 RMBS transactions affected by the bulk settlement practice. Credit Suisse agreed to pay $12,256,561 in disgorgement and prejudgment interest and a $6 million penalty, which the SEC will seek to distribute through a separate Fair Fund to harmed investors in the two transactions affected by the FPD misstatements. Credit Suisse agreed to an order, without admitting or denying the allegations, requiring them to cease and desist from violations of Section 17(a)(2) and (3) of the Securities Act and Section 15(d) of the Securities Exchange Act of 1934.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.