Articles Posted in Securities Law

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In reliance on the advice of her investment advisor, Morgan Financial Advisors, Inc. (MFA), Plaintiff invested three-quarters of her retirement savings in a hedge fund that became insolvent, resulting in the loss of her entire investment. Plaintiff filed suit against MFA and its sole owner and officer (collectively, Defendants) alleging that Defendants violated the Massachusetts Uniform Securities Act (Act), committed fraud, and breached their fiduciary duty to her. The trial judge concluded that Defendants were liable under the Act and entered judgment in Plaintiff’s favor. The Supreme Judicial Court affirmed, holding (1) the district judge did not err in finding that Defendants were “sellers” of securities under the Act; (2) Plaintiff timely filed her action under the Act; and (3) the evidence was sufficient to support the convictions. View "Hays v. Ellrich" on Justia Law

Posted in: Securities Law

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The Funds, closed-end investment companies registered under the Investment Company Act of 1940, 15 U.S.C. 80a- 5(a)(1)(2), are organized as Massachusetts business trusts under G.L. c. 182. Plaintiffs are beneficial owners of preferred shares of each of the Funds. The Funds’ declarations of trust state that meetings shall be held “so long as Common Shares are listed for trading on the New York Stock Exchange, on at least an annual basis." After plaintiffs delivered written notice stating an intention to nominate one of their partners for election as a preferred shares trustee of each fund at the 2011 annual meeting, the Funds issued a press release stating that their annual meeting was being rescheduled to July 2012, the last day of the Funds' 2012 fiscal year. Plaintiffs claimed that the bylaws require that an annual shareholders’ meeting be held within 12 months of the last annual shareholder meeting. The Funds argued that the bylaws require only that one meeting be held each fiscal year. The Massachusetts Supreme Court held that "on at least an annual basis" means that a shareholders' meeting for each Fund must be held no later than one year and 30 days after the last annual meeting. View "Brigade Leveraged Capital Structures Fund, Ltd. v. PIMCO, Income Strategy Fund" on Justia Law

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The Secretary filed an administrative complaint alleging that three hedge funds offered by Bulldog Investors violated section 301 of G.L.c. 110A by offering unregistered securities to a Massachusetts resident through a publicly available website and an e-mail message. The Secretary adopted the hearing officer's finding of a violation and ordered Bulldog Investors to cease and desist from committing any further violations and to take all necessary actions to ensure that future offers and sales of securities complied with section 301. The court held that the challenged provisions of the Massachusetts law were part of a constitutionally permissible disclosure scheme and, to the extent that they restricted speech, they were tailored in a reasonable manner to serve a substantial state interest in promoting the integrity of capital markets by ensuring a fully informed investing public. Accordingly, the court affirmed the judgment. View "Bulldog Investors, et al. v. Secretary of the Commonwealth" on Justia Law