Category Archives: Trusts & Estates

SEC Chairman’s Remarks at the Securities Regulation Institute

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Speaking at Washington, DC, on January 22, 2018, Securities and Exchange Commission Chairman, Jay Clayton spoke about two issues before the Commission: (1) his expectations for market professionals, particularly when dealing with new products or new forms of old products, especially concerning Initial Coin Offerings (“ICO”)and (2) the SEC’s approach to remaining Dodd-Frank rulemaking mandates.

Chairman Clayton said “Market professionals, especially gatekeepers, need to act responsibly and hold themselves to high standards….It is expected that they will bring expertise, judgment, and a healthy dose of skepticism to their work. Said another way, even when the issue presented is narrow, market professionals are relied upon to bring knowledge of the broad legal framework, accounting rules, and the markets to bear…The SEC is undertaking significant efforts to educate the public that unregistered securities investments offered by unregistered promoters, with no securities lawyers or accountants on the scene, are, in a word, dangerous….The SEC is looking closely at the disclosures of public companies that shift their business models to capitalize on the perceived promise of distributed ledger technology and whether the disclosures comply with the securities laws, particularly in the case of an offering.”

As to the remaining Dodd-Frank mandates, the Chairman noted that the Commission is actively working on “ pursuin(g) an agenda that is true to the agency’s mission as viewed through the lens of long-term Main Street investors…(including) the broad dissatisfaction with the current regulatory approach to retail investment advice, which is commonly referred to as the “fiduciary rule.”…Executive compensation rules for both public companies and SEC-regulated entities…e rules are challenging…as a result of the complexity and scope of the existing executive compensation disclosure regime, as well as the nature of the mandates, I believe a serial approach is likely to be most efficient and best serve the SEC’s mission. I am pleased that we recently issued interpretive guidance to help companies comply with the new pay ratio rules.

The Chairman also discussed the interplay of the Securities Laws with the Administrative Procedure Act and the Congressional Review Act and the Court rulings on that subject, He indicated that the Staff is “crafting rules” sensitive to the substantive constraint of those statutes.

Concerning clawbacks related to executive compensation, the Chairman remarked that although several companies have publicized clawback policies, some going beyond what Dodd-Frank requires, few companies have attempted clawback compensation this is one area that will be given rulemaking priority.

Carl H. Perdue, JD, LLM
Senior Counsel and Partner
Business and Finance

The above material is for information purposes only; and is not to be considered legal or financial advice.

ASSOULINE & BERLOWE, P.A.

1801 N. Military Trail, Suite 160

Boca Raton, Florida 33431

Main: (561) 361-6566

Fax: (561) 361-6466

Email: CHP@assoulineberlowe.com

http://www.assoulineberlowe.com/

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Need Help Finding Investors? Can I Hire A “Finder? Yes. But, At Your Peril!

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We often hear from Start-Up and Emerging Growth Company entrepreneurs about their difficulty in sourcing venture capital. With no, or limited, operating/revenue history, getting funding to move from concept, to prototype, and to commercialization is challenging. And often, without hiring experienced financial and legal counsel, what could be a successful financing deal ends in disappointing failure.

The earlier the business life cycle, the greater capital needs. Family and friends are usually the first source of venture capital. “Angel Investors” (high-net worth individuals) the next tranche; and for more mature companies, “Institutional Investors,” (boutique and corporate Venture Capital and Private Equity firms, Insurance Companies, and the like) investing in the next successive financing rounds. If these sources are unavailable, a frustrated entrepreneur in need of cash sometimes turns to a so-called “Finder;” an individual or firm receiving compensation based on successfully finding potential investors.

Section 3(a)(4)(A) of the federal Securities Act of 1933 defines a “broker” broadly as any person engaged in the business of effecting transactions in securities for the account of others. Although Section 2(a)(1) defines a “Security” in 153 words. Simply, a “Security” is a debt or equity interest or participation in a business or other venture where the interest or participation holder (the investor) relies on the business or venture for his or her profit or loss and not on his or her own efforts.  Under the Securities Act of 1933, the following are some, but not all, activities requiring individual or entity registration:

  • Finding investors for entities issuing securities, even in a “consultant” capacity;
  • Engaging in, or finding investors for, venture capital or “angel” financings, including private placements;
  • Finding buyers and sellers of businesses (i.e., activities relating to mergers and acquisitions where securities are involved);
  • investment advisers and financial consultants;
  • persons that market real-estate investment interests that are securities;
  • persons that act as “placement agents” for private placements of securities;
  • persons that effect securities transactions for the account of others for a fee, even when those other people are friends or family members;
  • finding investors or customers for, making referrals to, or splitting commissions with registered broker-dealers, investment companies or other securities intermediaries;
  • finding investment banking clients for registered broker-dealers;

Under Florida Statute Section 517.12(1), a person who, for compensation, refers; solicits; offers; or negotiates for the purchase or sale of securities is required to register with the State of Florida’s Office of Financial Regulation.
Relying on an unregistered Finder’s “pitch” about a supposed or real list of very well healed contacts sometimes leads to fraud and disappointment. Unregistered Finders may be subject to severe sanctions under State and Federal Securities Laws. Investment contracts between company and investor, having Finder involvement are voidable and subject to Rescission. Those contracts may be cancelled, with the investors getting their money back!

Carl H. Perdue, JD, LLM
Senior Counsel and Partner
Business and Finance

The above material is for information purposes only; and is not to be considered legal or financial advice.

ASSOULINE & BERLOWE, P.A.

1801 N. Military Trail, Suite 160

Boca Raton, Florida 33431

Main: (561) 361-6566

Fax: (561) 361-6466

Email: CHP@assoulineberlowe.com

http://www.assoulineberlowe.com/

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Litigation Partner Eric N. Assouline to Speak at Circuit Court Boot Camp CLE

Eric N. Assouline, Litigation Partner of The Business Law Firm Assouline & Berlowe, P.A., has been again invited to present as a panelist at the upcoming Circuit Court Boot Camp for Practical Trial Litigation Skills. 

Mr. Assouline has been involved in a wide range of business and commercial litigation.  At this seminar, he and other distinguished panelist, will share their experiences practicing in the state courts.

Learn tips of the trade from experienced members of the bar and bench about litigation skills. 

Circuit Court Boot Camp (4th Annual)

A Practical Trial Litigation Skills Program (Fort Lauderdale 2015)

April 10th, 2015 9:00 a.m. – 5:00 p.m. Sheraton Fort Lauderdale Airport & Cruise Port Hotel 1825 Griffin Road  Dania, FL 33004

Click here for more information or to register.

Can’t Attend? Click here to order the home study audio CD. Want the CD now?  Order the recording of our 2014 boot camp here

What you’ll learn when you attend:

  • Case Development & Theories
  • Motions for Summary Judgment/Adjudication
  • Other Motions
  • Discovery and E-Discovery
  • Depositions
  • Oral Arguments
  • Heading to Trial
  • Pre-Trial Matters
    • Bench trial pointers
    • Client and witness preparation
    • Jury selection – voir dire and questionnaires
    • Jury instructions and jury verdict forms
    • Opening trial briefs
    • Motions in Limine, motions to exclude witnesses from courtroom
    • Requests for Admissions of Fact
  • Trial Presentation
    • Opening statements
    • Direct and cross examinations
    • Objections
    • Exhibits
    • Expert witnesses and reports
    • Closing arguments
  • Post-Trial Motions

Full and partial scholarships are always available to legal aid firm attorneys.

We hope to see you there.

Best wishes,
Eric N. Assouline

Business Litigation

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ERIC N. ASSOULINE, ESQ.

Business Litigation Partner

ASSOULINE & BERLOWE, P.A.

213 E. Sheridan Street, Suite 3

Ft. Lauderdale – Dania, FL 33004

Telephone: 954-929-1899

Facsimile: 954-922-6662

Email: ena@assoulineberlowe.com

www.assoulineberlowe.com

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Intellectual Property, Labor & Employment Law,  Real Estate, International Disputes, Commercial Litigation, Corporate Law, and Bankruptcy

Miami · Ft. Lauderdale · Boca Raton

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I Lost the Case…Should I Appeal?

Courthouse Litigator - Miami Assouline & Berlowe Business Law Firm “When a party comes to us with nine grounds reversing the district court, usually there are none.”  Best said by a jurist from the Sixth Circuit Court of Appeals in a recently issued appellate opinion.

Civil cases are often long, drawn out, expensive, and unpleasant affairs.  Litigants may encounter innumerable pleadings, extensive document production requests and witness depositions, seemingly never ending pre-trial motions, and pre-trial conferences and settlement discussions. All this, even before the jury trial begins. Then we have jury selection, opening statements, direct and cross examination (and possibly redirect and re-cross), and closing statements, jury instructions, jury deliberations, and a then final judgment. In some cases, the emotional impact of this process can be devastating.

But the story may not end there. A losing party may then consider appellate review of the final judgment. A federal administrative agency’s decision may be reviewed by a court of appeals. Also, in certain cases, review may be obtained, first in a district court, rather than a court of appeals.

In most bankruptcy courts, an appeal of a ruling by a bankruptcy judge may be taken to the district court. Several courts of appeals, however, have established a bankruptcy appellate panel consisting of three bankruptcy judges to hear appeals directly from the bankruptcy courts. In either situation, the party that loses in the initial bankruptcy appeal may then appeal to the court of appeals.

Let’s consider some statistics. According to recent statistics, during the year ending September 2013, a total of 284,604 new civil cases were filed in the US District Courts:

  • Florida Northern District,  2,016
  • Florida Middle District,     8,443
  • Florida Southern District, 8,398.

The Median time from filing to trial:

  • Florida Northern District,  25.7 months
  • Florida Middle District,     19.8 months
  • Florida Southern District, 16.5 months

Number of civil cases over 3 years old:

  • Florida Northern District, 49;
  • Florida Middle District, 1,423
  • Florida Southern District, 94

During the same period, the 11th Circuit Court of Appeals (covering Alabama, Florida, and Georgia District Courts) had a total 6,366 new cases filed and 3,352 still pending. And, the median time from Notice of Appeal to Final Disposition: 7.6 months.

Considering the nature of the case and the complexity of issues, attorneys fees and costs can realistically reach six and seven figure dollar amounts.  To begin with, the Federal District Courts pursuant to Title 28 U.S.C. § 1332(a) may hear cases and controversies where “the matter in controversy exceeds the sum or value of $75,000.” Then, unless otherwise specifically provided for by statute, attorneys fees are subject to the so-called “American Rule,” That is, each party pays its own attorneys fees (unlike the “English Rule” in United Kingdom where the winner is usually awarded those).

Certainly, the volume and backlog of civil cases in appellate courts, as well as the potential costs of further litigation, a disappointed losing party must carefully consider, in concert with trial and appeals counsel, the ramifications of pursuing an appeal.

At times, emotion, the need to establish legal precedent, or some other idiosyncratic factor may a be primary driver.  However, unless permitted by statute to review factual issues de novo (anew), an appellate court will only review legal error. And then, generally, trial counsel at the district court must have preserved legally sufficient grounds to appeal; in the case of an administrative agency decision, the hearing record. Trial counsel may also preserve grounds for appeal in a post-judgment motion; bringing up new issues very rarely prevails.

Moreover, counsel should decide which issues to assert in an appeal.  Appealing a litany of issues (the kitchen sink approach) may tell the appellate body that you are grasping at straws and there are no genuine appealable issues.  See Fifth Third Mortg. Co. v Chi. Title Ins. Co., 692 F.3d 507 (6th Cir. 2012).  In Fifth Third Mortg. Co., a title company appealed nine (9) issues to the Sixth Circuit in an attempt to overrule the district court.  The opinion from the appellate court opens with: WHEN A PARTY COMES TO US WITH NINE GROUNDS REVERSING THE DISTRICT COURT, USUALLY THERE ARE NONE.  This is a classic line that every litigant should consider when analyzing how many issues to argue should be reversed on appeal.

Ultimately, the Sixth Circuit affirmed the district courts granting of summary judgment requiring the title company defend and indemnify the bank in a property dispute.

Litigation, at all stages requires comprehensive and reasoned legal analysis, strategic planning, and zealous but thoughtful advocacy.  Civil appeals require the same level diligence. However, constrained by the trial record, appellate counsel in written briefs and, in most instances, at oral argument before a panel of appeals court judges must know and artfully articulate the law.  One commentator has said “they have a refined skill set, an often academic focus on the nuances of the law and the precedent, and a preference for cool and collected analysis that remains “above it all.”

Should you appeal? It is not an easy question to take lightly or answer quickly. Each case is unique. And, only a dispassionate and reasoned analysis can only help provide perspective.

For more information contact:

Carl H. Perdue, JD, LLM

Senior Counsel and Partner

ASSOULINE & BERLOWE, P.A.

1801 N. Military Trail, Suite 160

Boca Raton, Florida 33431

Main:  (561) 361-6566

Fax: (561) 361-6466

Email: CHP@assoulineberlowe.com

http://www.assoulineberlowe.com/

Intellectual Property, Labor & Employment Law, Bankruptcy, Commercial Litigation, and Corporate Law

Miami • Ft. Lauderdale • Boca Raton

This article was edited by Litigation Partner Eric N. Assouline and Patent Attorney Greg M. Popowitz, who can be reached at their Email addresses: ena@assoulineberlowe or gmp@assoulineberlowe.com respectively.

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Court: Garnish the Discretionary Spendthrift Trust!

“Oh what a tangled web we weave when we first practice to deceive.”

Those are the initial words of a judicial opinion of the Florida District Court of Appeals, Second District, filed November 27, 2013. (Berlinger v. Casselberry; Case No. 2D12-6470). The Court affirmed the trial court’s finding that a garnishment order can reach otherwise protected monies of a discretionary trust.

Although a probate and family law matter, the case is also instructive for general creditor and debtors claims. A trail of factual and legal maneuvers that at first blush seemed reasonable, later are found to be perhaps counterproductive; considering the complex interplay of statutory interpretation, equity, and public policy.

In 2007, after 30 years of marriage, a former husband (Beringer) and former wife (Casselberry) divorce. Amicably reaching a financial settlement, the former husband continues to pay his $16,000 a month permanent alimony obligation until early 2011. Before a hearing is held on the former wife’s petition to the former, husband agrees to liquidate his IRA to satisfy the alimony arrearages. The Court then issued a writ of garnishment to the discretionary trust bank trustee. Subsequently, without supplementing his financial disclosures and effected by an attorney who was a longtime friend of his personal attorney, the former husband transferred his interest in real property (that included his residence) to a discretionary Irrevocable Life Insurance Trust.  After he established the trust, the former husband was deposed; swearing that there were no life insurance trusts. Interestingly, the bank, as corporate co- trustee, issued the former husband a credit card from which his personal expenses (e.g., travel, entertainment, clothing, medical expenses, grooming, gifts, and his current former wife’s credit card bills) were paid.

Confronted with those facts, the former wife filed a civil contempt and enforcement action against the bank trustee. Neither the former husband nor the bank trustee objected; and the Court issued writs of garnishment against the bank trustee.  Finally, the former wife filed a motion for a continuing writ of garnishment against the bank trustee to attach the present and future distributions made to or for the former husband’s benefit from any trust. She alleged that traditional methods of enforcing alimony were insufficient.

At a hearing seeking a declaration that the family trusts were discretionary trusts, the trustee argued that, subject to Florida Code §736.0504 they had greater protection from creditors. Specifically in this case: “prohibiting any creditor including (the former wife) from attaching distributions on behalf of or for the benefit of (the former husband).” Rejecting that argument, the Trial Court granted continuing writs of garnishment. It substituted the trustee for the former wife as the garnishee. And, it further ordered all distributions made directly or indirectly to, on behalf of, or for the benefit of the former husband made payable to the former wife unless, at the time of any future distributions, there was no alimony or alimony arrears owed. Moreover, if trustee wished to make distributions to the former husband beyond the amount of the then outstanding amount of alimony, trustee must seek court approval before doing so to ensure that there remained sufficient assets in the trust to secure the continued payment of alimony.

Because its decision required statutory interpretation, the Appellate Court was permitted to review the matter de novo (anew). That is, as in the Trial Court, its case analysis and decision involved examining the specific facts in light of the statutory mandate.

The trusts were indeed, in light of the statute, determined discretionary spendthrift trusts. Discretionary: since the distributions were completely within the fiduciary discretion of the trustee; spendthrift: since the statute protects the trust funds from creditor attachment or assignment.

On similar facts in an earlier Florida Supreme Court case (Bacardi v. White, 463 So.2d 218 (Fla. 1985)), and given the former wife’s standing spousal support order, the Appellate Court denied the trusts statutory protection. Specifically tracking the language of Florida Statute § 736.0503, the Court upheld “an order attaching present or future distributions to or for the benefit of the beneficiary (because this is the former wife’s) last resort (and) that traditional methods of enforcing the claim are insufficient.”

Interestingly, the Appellate Court pronounced that “Florida has a public policy favoring spendthrift provisions in trusts and protecting a beneficiary’s trust income; however it gives way to Florida’s strong public policy favoring enforcement of alimony and support orders.”

Not within the four corners of the decision, the Appellant former husband’s actions to “ring fence” trusts, transfer his interest in real property, and testimony at a subsequent deposition proved counterproductive. In an action in equity, they could be characterized as demonstrating “unclean hands.” In such case, equity could deny a claimant protection.

Whether a personal estates and trusts matter or a commercial debtor–creditor transaction, professional guidance and factual scenario planning is critical: an ounce of crisis planning is worth a pound of crisis management!

For more information contact:

Carl H. Perdue, JD, LLM

Senior Counsel and Partner

chp@assoulineberlowe.com

ASSOULINE & BERLOWE, P.A.

The BUSINESS LAW Firm

Intellectual Property, Labor & Employment Law, Bankruptcy, Commercial Litigation, and Corporate Law

Miami · Ft. Lauderdale · Boca Raton

Miami: 305-567-5576

Ft. Lauderdale: 954-929-1899

Boca Raton: 561-361-6566

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