Which Laws Apply to Broker-Dealers? Federal Laws? State Laws? Both? General Principles Leading to an Answer

TAMAR FRANKEL

BU Law emerita professor Tamar Frankel explains the law of preemption as it pertains to broker-dealers and their investor clients. She predicts, among other things, that either the clients will demand that broker-dealers adhere to a fiduciary duty, or else that states will impose that duty on them.

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Zhang v. Chu

Court: California Courts of Appeal

Docket: B292418(Second Appellate District)

Opinion Date: March 5, 2020

Judge: Wiley

Areas of Law: Professional Malpractice & Ethics

The Court of Appeal affirmed the trial court's grant of defendant's special motion to strike plaintiff's malicious prosecution suit as meritless. The court held that plaintiff lacked proof he probably would succeed in proving defendant maliciously added him as a defendant in the underlying wage-and-hour lawsuit where it was common for plaintiffs to search for people they suspect may be alter egos of corporate shells. In this case, plaintiff failed to establish that this reason was not the subjective purpose defendant had for adding plaintiff as a defendant.

Hill, Kertscher & Wharton, LLP v. Moody et al.

Court: Supreme Court of Georgia

Docket: S18G1436

Opinion Date: February 28, 2020

Judge: Boggs

Areas of Law: Legal Ethics, Professional Malpractice & Ethics

“Under longstanding Georgia law,” when a client sues his former attorney for legal malpractice, the client impliedly waives the attorney-client privilege with respect to the underlying matter or matters to the extent necessary for the attorney to defend against the legal malpractice claim. The issue this case presented for the Georgia Supreme Court’s review was whether the implied waiver extended to the client’s communications with other attorneys who represented the client with respect to the same underlying matter, but whom the client chose not to sue. The trial court held that the waiver did not extend to such other counsel and therefore denied a motion for a protective order in this legal malpractice case. The Court of Appeals reversed. The issue presented was a matter of first impression for the Supreme Court, which held that when a client sues his former attorney for legal malpractice, the implied waiver of the attorney-client privilege extends to the client’s communications who represented the client with respect to the same underlying transaction or litigation.

In re Stone

Court: North Carolina Supreme Court

Docket: 242A19

Opinion Date: February 28, 2020

Judge: Per Curiam

Areas of Law: Legal Ethics, Professional Malpractice & Ethics

The Supreme Court ordered that Respondent Michael A. Stone, a judge of the General Court of Justice, District Court Division 16A, be censured for conduct in violation of Canons 1, 2A, and 2B of the North Carolina Code of Judicial Conduct and for conduct prejudicial to the administration of justice that brings the judicial office into disrepute in violation of N.C. Gen. Laws 7A-376, holding that the Judicial Standards Commission's findings were adequately supported by clear and convincing evidence and supported the Commission's conclusions of law. The Commission filed a statement of charges against Respondent alleging that he had engaged in conduct inappropriate to his judicial office by, among other things, demonstrating a lack of respect for the office and by making a number of misleading and grossly negligent assertions regarding his representation of a former client. Based on its findings of fact and conclusions of law, the Commission recommended that the Supreme Court censure Respondent. After weighing the severity of Respondent's misconduct against his candor and cooperation, the Supreme Court concluded that the Commission's recommended censure was appropriate.