Pastore is defending a major securities industry action in Los Angeles. The case involves the alleged misappropriation of client information and involves major players in the international financial markets such as KKR, Fortress, FTI Consulting, Abrams Capital, Guggenheim Partners, Citadel, Highbridge Capital, and Beachpoint Capital among others.
Pastore & Dailey won a complex securities and M&A action in the United States District Court for the District of Delaware arising from a derivative rights holder agreement and related investment banking engagement agreements. This is the latest iteration in the saga between the Defendant, Pastore & Dailey’s client, and the Plaintiff, a representative of the shareholders to a company seeking to invalidate investment banking fees owed following a series of complex insurance corporate mergers.
After Pastore & Dailey successfully defended its client in the United States District Court for the District of Nebraska and then successfully defended its client in the appeal before the Eight Circuit that followed the District of Nebraska decision, its Motion to Dismiss was granted in the District of Delaware. In its Memorandum Opinion, the District Court agreed that Plaintiff’s claims were batted by the doctrine of res judicata and that the Plaintiff lacked standing to assert its claims.
Pastore & Dailey attorneys have vast experience arguing and defending matters in various federal courts across the country and are well-situated to handle similar claims involving complex contractual and investment banking issues.
Pastore & Dailey successfully represented its client, a Registered Investment Adviser, in a preliminary injunction hearing against a national bank on an issue regarding a Paycheck Protection Program (“PPP”) loan. The hearing was held virtually in the Supreme Court of New York. The bank had taken out PPP loan money from Pastore & Dailey’s client’s account and provided default notices to the client. Pastore & Dailey filed for injunction on behalf of its client and the Court agreed with Pastore & Dailey that the bank had interfered with its client’s ability to apply for forgiveness. The Court directed the bank to put the money in an escrow account and allow the client’s application for forgiveness to proceed through the proper channels. If the loan is forgiven, the money will be released to its client.
Pastore & Dailey successfully defeated a Motion to Dismiss in a case against a billionaire and an AM Law 200 firm in a case in front of the Complex Litigation Docket in Stamford. The case involves complex direct and derivative shareholder claims in which the claim for damages is more than $65 million. Pastore & Dailey’s client is one of the shareholders of a two-shareholder company and defendant billionaire is the other shareholder. The Motion to Dismiss sought to dismiss certain counts of the complaint for lack of subject matter jurisdiction. The Court, however, agreed with Pastore & Dailey’s contention that a shareholder in a two-shareholder action can bring a derivative action against the other shareholder and denied the Motion to Dismiss.
Pastore & Dailey won a complex securities and M&A action in the United States District Court for the District of Delaware arising from a derivative rights holder agreement and related investment banking engagement agreements. This is the latest iteration in the saga between the Defendant, Pastore & Dailey’s client, and the Plaintiff, a representative of the shareholders to a company seeking to invalidate investment banking fees owed following a series of complex insurance corporate mergers.
After Pastore & Dailey successfully defended its client in the United States District Court for the District of Nebraska and then successfully defended its client in the appeal before the Eight Circuit that followed the District of Nebraska decision, its Motion to Dismiss was granted in the District of Delaware. In its Memorandum Opinion, the District Court agreed that Plaintiff’s claims were batted by the doctrine of res judicata and that the Plaintiff lacked standing to assert its claims.
Pastore & Dailey attorneys have vast experience arguing and defending matters in various federal courts across the country and are well-situated to handle similar claims involving complex contractual and investment banking issues.
Pastore & Dailey successfully defeated a Motion to Dismiss in a case against a billionaire and an AM Law 200 firm in a case in front of the Complex Litigation Docket in Stamford. The case involves complex direct and derivative shareholder claims in which the claim for damages is more than $65 million. Pastore & Dailey’s client is one of the shareholders of a two-shareholder company and defendant billionaire is the other shareholder. The Motion to Dismiss sought to dismiss certain counts of the complaint for lack of subject matter jurisdiction. The Court, however, agreed with Pastore & Dailey’s contention that a shareholder in a two-shareholder action can bring a derivative action against the other shareholder and denied the Motion to Dismiss.
Pastore & Dailey won a complex securities and M&A appeal taken to the United States Court of Appeals for the Eighth Circuit arising from a derivative rights holder agreement and related investment banking engagement agreements. This matter was an appeal filed by Plaintiff-Appellant after Pastore & Dailey successfully defended this case in the United States District Court for the District of Nebraska.
Plaintiff-Appellants, who were shareholders to a company, brought suit against Pastore & Dailey’s client in the District Court seeking to invalidate investment banking fees owed to Pastore & Dailey’s client following a series of complex insurance corporate mergers, in which the company was acquired and merged with another company. In its appeal to the Eighth Circuit, Plaintiff-Appellants argued that the District Court erred in denying certain Post-Judgment motions made by Plaintiffs arguing their lack of standing. The Eighth Circuit affirmed the District Court ruling in Pastore & Dailey’s favor that Plaintiff-Appellants lacked standing.
Pastore & Dailey attorneys have vast experience arguing and defending matters in various federal courts across the country and are well-situated to handle similar claims involving complex contractual and investment banking issues.
Pastore & Dailey has been retained, in connection with an SEC investigation by one of the largest private equity firms in the world, that allows investments by retail investors. Pastore & Dailey attorneys have served as Chief Compliance Officer at multi-billion-dollar investment advisers and two of the largest banks in the world. Thus, the firm is uniquely positioned to handle this and similar matters. Pastore & Dailey attorneys have also served as General Counsel and in-house counsel of some of the largest Wall Street firms and have served as regulators at the Securities Exchange Commission (SEC), New York Stock Exchange (NYSE) and the Financial Industry Regulatory Authority (FINRA).
Pastore & Dailey has been retained by a leading cryptocurrency firm specializing in decentralized finance in connection with regulatory and compliance matters in the Cayman Islands and internationally. Pastore & Dailey has substantial experience and the burgeoning business of cryptocurrency having represented in 2020 a cryptocurrency mining company, and defended a Department of Justice (DOJ) investigation into an initial coin offering.
Pastore & Dailey attorneys have served as Chief Compliance Officer’s at multi-billion-dollar investment advisers and two of the largest institutional banks in the world. Thus, the firm is uniquely positioned to handle this and similar matters.
Recently, Pastore & Dailey advised clients on a unique issue related to accredited investors. The client, an SEC registered investment advisor, asked Pastore & Dailey whether the death of an accredited investor had any legal implications for the funds it manages when the accredited investor bequeathed his investment to a non-accredited investor. The simple answer is no.
Under the securities laws, the term “sale” is defined as to include every contract of sale or disposition of a security or interest in a security, for value. Additionally, the term “offer to sell”, “offer for sale”, or “offer” is defined to include every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value. 15 U.S.C. § 77b(a)(3).
Thus, an involuntary transfer by operation of law, such as a divestment of an investment upon death to beneficiaries will not be considered a “sale” or an “offer to sell.” Therefore, the recipient is not required to be an accredited investor.
Pastore & Dailey also advised the client on the legal implications of this unique circumstance when the accredited investor is a family office.
An accredited investor now includes any family office as defined in Rule 202(a)(11)(G)-1 under the Investment Advisers Act of 1940 (“Advisers Act”): (i) with assets under management in excess of $5,000,000, (ii) that is not formed for the specific purpose of acquiring the securities offered, and (iii) whose prospective investment is directed by a person who has such knowledge and experience in financial and business matters that such family office is capable of evaluating the merits and risks of the prospective investment. 17 C.F.R. § 230.51(a)(12).
The accredited investor definition was also expanded to include a family client, as defined in Rule 202(a)(11)(G)-1 under the Advisers Act. A family client as defined in Rule 202(a)(11)(G)-1 is: (i) Any family member; (ii) Any former family member; or (vi) Any estate of a family member, former family member or key employee. 17 C.F.R. § 275.202(a)(11)(G)-1(d)(4).
In the Adoption Release, the SEC explained that it is not excluding from the accredited investor definition a beneficiary that temporarily qualifies as a family client under the family office rule. Thus, a beneficiary who receives the stocks from the decedent will be considered a family client for purposes of the accredited investor definition for exactly one year. SEC Release No. 33-10824, August 26, 2020.
There are limitations to this rule. Although a beneficiary would not be required to unwind any of the securities received in an involuntary transfer, the beneficiary would not be considered an accredited investor in connection with the purchase of additional securities, unless the beneficiary qualified as an accredited investor on another basis.[1]
In conclusion, the requirement that an offering or sale of restricted securities be made to an accredited investor applies at the “time of sale of the securities to that person.” Thus, an involuntary transfer such as a divestment of shares to a beneficiary upon death of the accredited investor should not pose a problem for a testator and their funds.
As the requirement that an offering or sale of restricted securities be made to an accredited investor applies at the “time of sale of the securities to that person,” a involuntary transfer, such as a divestment of shares to a beneficiary upon death of the accredited investor should not pose a problem for an RIA and its funds.
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[1] SEC Expands the “Accredited Investor” and “QIB” Definitions and the Permitted Scope of “Testing the Waters.” Proskauer. September 9, 2020. https://www.proskauer.com/alert/sec-expands-the-accredited-investor-and-qib-definitions-and-the-permitted-scope-of-testing-the-waters#_ftnref3
