Carefully Crafting Reasons for a Registered Representative’s Departure from a Broker-Dealer Investment Firm Is Critical to Minimizing U-5 Defamation Liability

Chicago, IL, July 1, 2014 – Broker-dealer investment firms are required to file a Form U-5 when terminating their relationship with a registered representative. On the U-5, investment firms describe the specific reason(s) that the registered representative was terminated or resigned. Because the Form U-5 is published, if any of the information is false, misleading, exaggerated, or otherwise inaccurate, potential liability exists for investment firms.

Download: Carefully Crafting Reasons for a Registered Representative’s Departure from a Broker-Dealer Investment Firm Is Critical to Minimizing U-5 Defamation Liability (pdf)

Disparaging remarks on a registered representative’s U-5 form can make obtaining another position extremely difficult, if not impossible. “If these comments or remarks are found to be untrue, intentional, or reckless, the potential liability is massive,” says Ankur Shah, an associate attorney with Ali Law Practice LLC. “Registered representatives may seek several remedies including expungement (having the comments removed) and compensatory and punitive damages.”

More recently, FINRA arbitrations have led to substantial compensatory and punitive damages awards for defamatory comments left on a registered representative’s U-5 forms. For example, FINRA recently awarded over $3M in damages to a former broker dealer representative for defamation and other related damages. The case is Gorter v. Questar Capital Corp, FINRA Case No. 08-03514 (award signed Jan. 13, 2012). In another case, Greg Kipple, a former representative at Wells Fargo Advisors obtained $1M for defamation, as part of a $6.8M total award. The arbitration case is Greg Kipple v. Wells Fargo Advisors LLC and Wachovia Securities LLC, No. 10-2871.

“Because FINRA has intensified its regulatory functions, firms reasonably feel more unsure about what details to disclose on Form U-5 than they did before,” says Tawfiq Ali, principal attorney of Ali Law Practice. “The risk of a defamation or wrongful-termination suit looms for even truthful disclosures, if they are perceived to be false and disparaging.”

Shah and Ali recommend that firms and registered representatives recognize the potential dangers inherent to the submission and publication of Form U-5, especially if the termination is less than amicable. Because so much is at stake, parties should consider hiring qualified counsel to advise them and protect their interests before and after a firm terminates a registered representative.

###

Tawfiq I. Ali, principal attorney of Ali Law Practice LLC, graduated from Harvard College and received his Juris Doctor from Harvard Law School. He served and trained at the famed Harvard Legal Aid Bureau, and at the internationally and nationally renowned law firms of Kirkland & Ellis LLP and Grippo & Elden LLC. He is a trusted litigator who has successfully prosecuted and defended high-stakes civil lawsuits and arbitrations for businesses and executives, obtaining favorable results for his clients. He is available for media inquiries and engagements regarding these and other matters.

Ankur Shah, an associate attorney with Ali Law Practice LLC, graduated from the University of Wisconsin at Madison and the University of Minnesota Law School. He is a trusted litigator and advisor who has successfully negotiated favorable settlements and argued and won in court. He is available for media inquiries and engagements regarding these and other matters.

Ali Law Practice LLC is a law firm dedicated to helping businesses solve and prevent legal disputes in ways that other law firms cannot or will not, to make a meaningful difference. The firm focuses on achieving successful outcomes for clients in business negotiations, disputes, and litigation.

Contact: Ali Law Practice LLC, 200 E Randolph St, Ste 5100-24, Chicago, IL 60601 · (312) 970-1847

 

Emerging Supply-Chain Strategies Necessary to Expand Margins and Market Share, but Also Have Risks

MEDIA RELEASE

Chicago, IL, June 27, 2014 – Users are demanding higher quality and faster delivery times from suppliers, manufacturers, and distributors. Meanwhile, competition is driving margins down. Therefore, it is more important than ever that firms optimize their supply-chain strategy – both upstream and downstream.

“It used to be that most suppliers and customers would see each transaction as a zero-sum game,” says Tawfiq Ali, principal attorney of the Chicago-based firm Ali Law Practice LLC. “But now we know that while zero-sum negotiation strategies might maximize one party’s bottom-line in the short run, they may be non-ideal in the long run.”

Companies in the tools, engineering, and industrial manufacturing sectors, in particular, are moving to optimize procurement, sales, and logistics through strategic relationships rather than one-off transactions. Some have criticized these sectors for lagging behind others in supply-chain optimization.

“For sustainable cost reduction, speed, and retention, parties should consider collaborative agreements,” Ali says, “where they agree to exchange information that they might have otherwise wanted to withhold to maintain a negotiator’s edge, all to create a win-win long-term relationship.”

Emerging supply-chain integration strategies, however, offer not only opportunities for profit and growth, but also potential risks of conflict or litigation.

As companies change their supply-chain strategies, it is inevitable that some will want to renegotiate old arrangements, says Ali, “and sometimes that means that some parties will break (or be perceived to break) promises.” Ali further notes that “as suppliers and manufacturers enter into longer and deeper agreements,” which are often customized or exclusive (and may include deeper disclosure of potentially sensitive information), “there is always the possibility that those relationships that were originally thought to be mutually beneficial might go sour.”

“When they do, the stakes are usually higher than they would be in a one-off transaction, so it is important that potential conflicts be resolved as early and painlessly as possible,” Ali says. “But if you feel that you are wronged, you must still maintain a strong position so that if there is no immediate resolution, you can limit your losses and protect your rights.”

“Negotiate the supplier-customer relationship with your eyes wide open, monitor the relationship to make sure the parties are living up to the letter and spirit of their agreements, and act promptly and strategically when there is a potential conflict,” Ali recommends. “Your goal is to maintain your edge in markets that are becoming more and more competitive while significantly limiting the risks inherent in supply-chain integration.”

###

Tawfiq I. Ali, principal attorney of Ali Law Practice LLC, graduated from Harvard College and received his Juris Doctor from Harvard Law School. He served and trained at the famed Harvard Legal Aid Bureau and at the internationally and nationally renowned law firms of Kirkland & Ellis LLP and Grippo & Elden LLC. He is available for media inquiries and engagements regarding these and other matters.

Ali Law Practice LLC is a law firm dedicated to helping businesses solve and prevent legal disputes in ways that other law firms can’t or won’t, to make a meaningful difference. The firm focuses on business negotiations, disputes, and litigation.

Contact: Tawfiq I. Ali, Principal Attorney, Ali Law Practice LLC, 200 E Randolph St, Ste 5100-24, Chicago, IL 60601 · (312) 970-1847

 

Tawfiq Ali to Speak at Solo and Small Law Firm Event

Special thanks to the Indian American Bar Association of Chicago and The Barrelhouse Flat, who are sponsoring a special event for solo and small law firms.

The event is on April 17, 2013, at The Barrelhouse Flat located at 2624 N Lincoln Ave., Chicago, IL 60614. It begins at 6:00pm.

Organizers for the event include Dhenu Savla of SwagatUSA and Himani Bhardwaj of HBM Law Offices, LLC.

Tawfiq Ali, Principal Attorney of Ali Law Practice LLC, will be leading a discussion entitled, “How to Make and Receive High Quality Attorney Referrals.”

“I believe that the process of making a quality referral is all too often overlooked by even thoughtful attorneys,” Ali says. “But when we get it right, we serve our clients and friends in the best way possible.”

Moving Away from Meal Customization Smart Move for Many Restaurants, But Surprising Risk of Discrimination Claims Looms

MEDIA RELEASE

Chicago, IL, April 15, 2013 – Many restaurants, especially upscale and higher-end independents, are moving toward prix-fixe menus, tasting menus, and policies that restrict additions, subtractions, and substitutions. Such policies afford restaurants and their chefs several advantages. They allow restaurants to honor their chef’s creative visions, systematically execute proprietary recipes, manage the dining experience, and control ingredient inventory.

Yet, at the same time, awareness of severe food allergies and autoimmune illnesses, such as celiac disease, is also on the rise. This leads to concerns that strict anti-customization policies might result in lawsuits under the Americans with Disabilities Act [ADA] and state discrimination laws.

“The [U.S.] Department of Justice [DOJ] has clearly taken the position that celiac disease and various food allergies may be disabilities under the ADA,” says Tawfiq Ali, a Chicago lawyer who advises restaurants and represents them in court. “That position is controversial—and should be vigorously debated—but the food-service industry should be aware that legal fights are looming.”

The ADA generally defines food establishments as covered “public accommodations,” and prohibits any “failure to make reasonable modifications in policies, practices, or procedures, when such modifications are necessary to afford … goods, services, facilities, privileges, advantages, or accommodations to individuals with disabilities, unless the entity can demonstrate that making such modifications would fundamentally alter the nature of such goods, services, [etc.]”

Ali notes that an expansive settlement was recently reached between the DOJ and Lesley University, after students complained that inadequate gluten-free and allergen-free meals were available to those suffering from celiac disease or severe food allergies. Under the settlement, the university agreed to make significant changes to accommodate the students.

“The settlement does not amount to legal precedent because it is not a court or administrative ruling,” says Ali, “but it certainly indicates where things may be heading.”

Because restaurants, like universities, are covered under the ADA, Ali predicts that anti-customization policies on restaurant menus may come under fire.

“I can see food allergy sufferers arguing that ‘no-subtraction’ and ‘no-substitution’ policies fail to reasonably accommodate their dietary needs.”

Ali recommends that food service establishments, especially those aiming to eliminate customization, immediately begin training employees on how to communicate with customers who have dietary restrictions. They should also assess and fully document the feasibility (or lack thereof) of various options to accommodate such restrictions, possibly with the help of a qualified restaurant lawyer.

“We want to be able to demonstrate with high certainty that, if we are unable to accommodate dietary restrictions, it is not just because the costs are too high, but also because doing so will fundamentally alter the nature of the goods or services offered,” Ali advises.

Ali also recognizes compelling freedom of speech concerns under the First Amendment.

“Great chefs will tell you that their culinary creations are some of the highest forms of artistic expression. Their right to freely choose what foods they will offer or what ingredients they will use or not use is one no one should interfere with lightly.”

Tawfiq Ali is principal attorney of Ali Law Practice LLC, a graduate of Harvard Law School and Harvard College, and started his career with two of the most prominent law firms in Chicago. He is available for media inquiries or engagements regarding these and other matters.

For Smart Businesses: Mobile Wallet Systems May Be a Boon for Sales, But What Are the Risks?

MEDIA RELEASE

Chicago, Ill., April 10, 2013 — One trend is clear: more and more retailers are accepting payment through so-called “mobile wallets” in lieu of traditional plastic credit cards. Experts predict that in coming years, the local and global market for mobile wallet technology will grow exponentially, especially within retail and hospitality industries. The growth will stem from wider availability and ownership of affordable smart phones equipped with Near Field Communication (NFC) technology, as well as aggressive moves from mobile network providers and payment networks to compete for the expanding market.

“Many customers and retailers will appreciate the convenience of not having to carry or handle traditional plastic credit cards,” says Tawfiq Ali, a litigating attorney with the Chicago firm Ali Law Practice LLC. “At the same time, there are understandable concerns as the technology becomes more widespread.”

Possible risks of the technology include potential data leaks of private information from local Point-of-Sale [POS] devices, mobile phones, transmission networks, or merchant hosts. Customers also may fear that such technology might allow a proverbial “big brother” to track their behavior or purchase history.

Ali argues, however, that “merchants should already be concerned about privacy and security. The traditional ways of accepting payment have always carried risks.”

“At least with a mobile wallet solution, it is less likely that an employee will have to touch a physical plastic credit card. It is one way to reduce or eliminate a longstanding risk factor for identity-theft liability.”

Still, as with any emerging technology, users should protect against potential risks.

“Retailers should ensure that their local payment systems are updated with the latest software and hardware security fixes, and they should limit and monitor physical and remote access to those systems to prevent invasive malware or disclosure of confidential information. These should be documented policies.”

“Among many other things, [merchants should] ask providers about encryption standards and know, with clarity, what information is recorded or kept locally, as well as what is transmitted.”

“Of course, they should also consider a backup system to accept payment if and when the mobile wallet system stalls or fails.”

Ali predicts that lawsuits are on the horizon when the inevitable security breach occurs, or when defects in the technology are discovered, resulting in measurable business losses. “Retailers may be served well to be insured against such risks and losses, but would be even better served if they also have robust indemnification and defense agreements from their providers,” he says. Ali also notes that the users of new technology, at least indirectly, are often affected by the patent disputes that follow.

“But despite the risks, which one should protect against by all legal means, mobile wallets are here to stay,” says Ali. “They should be embraced as more and more customers expect retailers to accommodate them. One hopes that the technology will also result in cost savings, simpler procedures, and increased revenues for businesses.”

Tawfiq Ali is available for media inquiries or engagements regarding these and other matters. Please contact:

Tawfiq Ali, Principal Attorney
Ali Law Practice LLC
200 E Randolph Dr. Ste. 5100-24
Chicago, IL 60601
(312) 970-1847
www.alilawpractice.com

###

All rights reserved to Ali Law Practice LLC