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FMG Law Blog Line

Archive for June, 2015

S.E.C. Warns Customers and Financial Advisors Regarding Overstated Credentials

Posted on: June 8th, 2015

By: John H. Goselin, II

They say everybody does it.  Embellishing your resume to get a job, attract business or get ahead in this highly competitive world.  Well, if you work in the financial services industry and are trying to attract customers to invest their money with you, you better think twice.  The S.E.C. is highlighting their efforts to crack down on overstated credentials and warning potential investors that overstated credentials are a red flag for fraud. 

On June 4, 2015, the S.E.C. issued “Invest Alert: Beware of False or Exaggerated Credentials”.  Although the investment alert is directed at potential investors, it is a shot across the bow for investment advisors, registered representatives, investment advisory firms and broker-dealers generally.   The S.E.C. is cracking down.  They want potential investors to check your credentials and if the potential investors cannot confirm what you claim …. call the S.E.C.  … so they can launch a fraud investigation. 

The S.E.C. Alert highlights five recent proceedings where the S.E.C. has included, within their charges, allegations relating to overstated credentials.   These include:

  • falsely touting that the advisor was a “Top 25 Rising Business Star;”
  • falsely claiming to have graduated from the University of Maryland;
  • falsely holding yourself out as a certified financial planner;
  • over-emphasizing appearances on financial media shows; and
  • using Linked In, Twitter, Facebook and other social media accounts to inaccurately bolster the credentials of the financial advisor.

The cases referenced by the S.E.C.in their Alert involved actual fraudulent conduct, but it is probably only a matter of time before the S.E.C. punishes an embellisher despite the complete absence of fraud.   Moreover, there are a host of regulatory actions short of a formal action that the S.E.C. or other regulators can initiate short of a formal action.

Fraud definitely exists; and fraudsters definitely will say anything to further perpetuate their fraudulent activities.  Diligence is important and customers should be cautious.  Thus, honest financial advisors have to be extra careful to only tout credentials that they can document and prove are legitimate.   Unfortunately, this is going to be a case by case exercise and financial advisors will need to closely monitor how the S.E.C. proceeds with its anti-embellishment enforcement actions.

The time, expense and inconvenience of a regulator (or a customer) challenging an embellishment on your resume is simply not worth the risk (or the cost).   So take a look at your resume.  Review your website and your marketing materials.  No more stretching the limits.   It may make the marketing a little harder, but that is much better than the headache of a regulator challenging your resume.

Employers May Have Duty to Inquire About Religious Accommodations Needed Regardless of Whether Requests are Made

Posted on: June 5th, 2015

By: Joyce  M. Mocek

Earlier this week the U.S. Supreme Court ruled in EEOC v. Abercrombie & Fitch Stores, Inc. that Abercrombie & Fitch, a retail chain,  may have violated Title VII of the Civil Rights Act of 1964 when they denied a female job applicant, Samantha Elauf, a job because she was wearing a head scarf which did not fit in with the Company’s “Look Policy.”  The Supreme Court maintained that an employer should engage a job applicant in a conversation to inquire about what, if any, accommodations are needed, regardless of whether the applicant inquires or requests an accommodation,  and then assess the reasonableness of a proposed accommodation.

In 2008, Samantha Elauf applied for a sales position at an Abercrombie & Fitch store.  She was rated as qualified, but was denied the job because her black headscarf or hijab did not comply with Abercrombie & Fitch’s dress and appearance policy.   Elauf, a practicing Muslim, was not questioned about her headscarf during the interview, nor told that it violated their policy.   She did not specifically state in the interview that she wanted Abercrombie & Fitch to provide a religious accommodation due to  her faith.   During the interview, the interviewee jotted in his notes that the applicant would not be able to comply with the Company’s “Look Policy”, even though they had not discussed it.   Abercrombie & Fitch denied Elauf the job.   With the assistance of the Equal Employment Opportunity Commission, Elauf filed suit against Abercrombie & Fitch. 

The Supreme Court, in reversing the prior appellate court decision, focused on whether the fact that Elauf was wearing a headscarf during the interview was a “motivating factor” in the employer’s decision to not hire her, noting that the law “prohibits actions taken with the motive of avoiding the need for accommodating a religious practice.”   Ultimately, the Supreme Court remanded the case back to the lower court for further review with specific guidance on the obligations of employers in religious accommodation situations.

In light of the ruling, employers should review their employee handbooks and policies to ensure compliance with the ruling and determine whether any of their policies could potentially be deemed discriminatory.   Additionally, the decision reinforces the need for continued management training on compliance with workplace discrimination rules.

MasterCard and Target’s Settlement Agreement Falls Through

Posted on: June 4th, 2015

By: Dave Cole

The proposed $19 million settlement between MasterCard and Target over the 2013 data breach has fallen through after not enough banks accepted the deal. Under the settlement announced last month, Target agreed to set aside $19 million for banks and credit unions that had issued MasterCards that were affected by breach. Banks and credit unions that accepted the deal would have been able to use the money to cover operating costs and fraud-related losses stemming from the breach. But the settlement needed 90% of the card issuers to accept the offer by May 20 in order for it to go into effect.

Both MasterCard and Target confirmed this week that not enough banks and credit unions accepted the offer by the deadline, thereby voiding the settlement. This means that MasterCard-issuing banks and credit unions no longer have the option to accept a portion of the proposed $19 million settlement pool to settle their claims against Target. As a result, all of their claims continue to be the subject of the consolidated class action pending in federal court in Minnesota. It is not known right now whether Target and MasterCard will go back to the drawing board to craft a new settlement, or if Target will abandon its attempt to obtain a private settlement and instead try to resolve the MasterCard claims through the pending federal court lawsuit.