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FMG Law Blog Line

Archive for September, 2012

Employer Reporting Deadlines Fast Approaching

Posted on: September 20th, 2012

By: Ben Mathis

For many employers, the deadline to file various reports to federal agencies regarding their employers is September 30th.  This includes filings for EEO-1, the Employer Information Report, and the Veterans Employment Report, commonly known as the VETS-100 or VETS-100A.  The EEO-1 filing requirement applies to private employers with 100 or more employees, as well as certain federal government contractors with 50 or more employees.  The filing includes delineating an employer’s work force by job categories and race, ethnicity, and sex.  The EEOC has an online filing system which may be found at

Federal contractors holding contracts valued at $25,000 or more and entered into prior to December 1, 2003, must file VETS-100 reports.  A contractor with a federal contract in the amount of $100,000 or more and entered into or modified as of December 1, 2003, must file a VETS-100A report.  Many employers will need to submit the VETS-100 and the VETS-100A reports if they have contracts entered into after December 1, 2003.  The Department of Labor has sample report forms at


FINRA Clarifies “Know Your Customer” and “Suitability” Rules

Posted on: September 17th, 2012

By: Joyce Mocek

FINRA Rule 2090, effective July 9, 2012, has streamlined and replaced the former NASD Rule 405, the “Know Your Customer” standard.  The new rule contains a “reasonable diligence” standard, compared to the old rule requirement of “use due diligence.”  Rule 2090 provides that “Every member shall use reasonable diligence, in regard to opening and maintenance of every account, to know (and retain) the essential facts concerning every customer and concerning the authority of each person acting on behalf of such customer.”  “Essential facts” are now defined.  The new Rule places additional obligations on member firms to not only comply with the “Know Your Customer” rule when opening an account, but also in maintaining an account.

Working in conjunction with the “Know Your Customer” rule, is a new “Suitability” rule, FINRA 2111.  The new Suitability rule, which replaced NASD Rule 2310, expands the scope of information that a broker must attempt to obtain through reasonable diligence.  It also requires firms and associated persons to document with specificity their reasonable basis for believing a factor is not relevant in order to be relieved of the obligation to obtain further information on that factor.  It expands the suitability obligations and requires “reasonable basis” to believe, based on “reasonable diligence” that an investment is suitable.  These new rules expand the obligations of member firms and associated persons, and also provide more clarity and structure in understanding the rules.

Hospital Found Liable After Lawyers Intimidate Expert

Posted on: September 17th, 2012

By: Scott Rees

A default judgment was recently entered against a local hospital, based on the actions of its attorneys.  In entering the default judgment, the judge determined that the local hospital’s attorneys intimidated the plaintiff’s expert physician witness to the point he refused to continue on as plaintiff’s expert.  According to the judge’s order, after learning that the plaintiff’s expert was a Northside Hospital employee, the local hospital’s attorneys contacted the expert’s superior to notify her that the expert would be testifying in support of plaintiff’s medical malpractice claims against the local hospital.  The judge rejected the local hospital’s argument that the call to Northside Hospital was made only as a professional courtesy.  The order went on to provide that the expert’s boss then telephoned the expert and threatened his job if he testified for the plaintiff.  The expert then refused to continue as plaintiff’s expert, because he was fearful of losing his job and being blackballed in the medical community.  The judge found that the intimidation destroyed plaintiff’s case, because it would be too difficult to find a replacement witness, and therefore entered the default judgment.  This lawsuit is ongoing, and we will provide an update as additional information becomes known.

Use of Drones in Law Enforcement – A Good Idea?

Posted on: September 14th, 2012

By: Sun Choy

USA Today recently reported that the International Association of Chiefs of Police issued advisory guidelines for the use of drones by law enforcement.  While the number of drones in use is relatively low, the IACP anticipates the increased use of drones as costs come down.  Not surprisingly, the guidelines discourage the use of “armed” drones that have the capability of delivering stun-gun projectiles, tear gas, and rubber balls.  The guidelines also recommend that officers obtain a search warrant before using the drones for surveillance.  With such advancements in technology, there will certainly be litigation as the law plays catch-up.


Data Breach Rising Liability Concern For Businesses

Posted on: September 11th, 2012

By: Kelly Morrison

Data breaches and technology-related legal claims against companies, along with their officers and directors, are increasing.  As this is a developing area of the law, awareness of the risk and associated liabilities are a weak point for many businesses.  It is key for businesses to have key social networking and technology policies in place, as well as an understanding of the extent of any E&O and D&O coverage for such claims.