LawFuel.com – US Law Information Service Daily –
NEW YORK (June 30, 2009) – The July issue of The American Lawyer reports that the surprising growth of Am Law 200 pro bono hours since 2004 appears to be continuing, despite the recession. The magazine’s annual survey results, released today, reveal that Am Law 200 firms logged a record 5.57 million pro bono hours in 2008, a 15 percent increase from 2007. At a blended hourly rate of $300, The Am Law 200 provided roughly $1.67 billion in free legal services to those who otherwise could not afford them or to groups and individuals seeking to litigate constitutional claims. Also in this issue, Munger, Tolles & Olson has again topped The American Lawyer’s “A-List” ranking of the most elite firms in the U.S. Drawn from four different ALM rankings, the 20-member A-List looks beyond business results to identify Am Law firms that set the standard for their peers. For these and other stories, visit www.americanlawyer.com.

Average pro bono hours per lawyer for the Am Law 200 rose 14 percent, to 61, and the percentage of lawyers who did more than 20 hours of pro bono work increased to 48 percent, also a new record. The ten firms with the greatest per-capita pro bono commitment each averaged more than 125 hours per lawyer. This group was led by Jenner & Block, which averaged almost 170 pro bono hours per lawyer in 2008, with 91 percent of the firm’s attorneys contributing 20 pro bono hours or more last year.

Editor in chief Aric Press will discuss and evaluate this year’s Am Law pro bono results in a free webinar at 1:00 p.m. ET on Wednesday, July 1. Click here to register for the webinar.

“In the face of the recession, and perhaps because of it, the Am Law 200 firms had a record pro bono year in 2008,” said Press. “The next big test is now. Will 2009 with fewer new associates serve as well?”

Munger, Tolles, headquartered in Los Angeles, combined the A-List’s highest diversity score with solid rankings in revenue per lawyer, pro bono work and associate satisfaction, to edge out runner-up Hughes Hubbard & Reed and continue its two-year run at the top of the A-List. This year, two firms made the A-List for the first time: Irell & Manella and Kirkland & Ellis, while the two that reappeared—Wilmer Cutler Pickering Hale and Dorr and Howrey—are veterans of past lists. Four New York firms fell completely off the list (Cravath, Swaine & Moore, Patterson Belknap Webb & Tyler, Shearman & Sterling and Simpson Thacher & Bartlett).

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LawFuel.com –
Sales Pitches Followed “Free-Lunch” Seminars for Florida Senior Citizens

Washington, D.C., June 30, 2009 – The Securities and Exchange Commission today instituted an enforcement action against a Poughkeepsie, N.Y.-based firm and several representatives and supervisors for their alleged roles in fraudulent and unsuitable sales of variable annuities to senior citizens who were lured through free-lunch seminars at restaurants in south Florida.

The SEC’s Division of Enforcement alleges that Prime Capital Services (PCS) and its parent company recruited elderly investors to attend the seminars, after which the seniors were encouraged to schedule private appointments with PCS representatives who then induced them to buy variable annuities. The sales pitches allegedly concealed high costs, lock-in periods, and other material information. While the firm and its representatives earned millions of dollars in sales commissions, the Division alleges that many of the variable annuities were unsuitable investments for the customers due to their age, liquidity, and investment objectives.

“They used free lunches as the low-tech bait for their high-scale scheme,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “These con men lured elderly and retired investors into purchasing highly unsuitable variable annuities, enriching themselves with commissions while ignoring the financial goals of their victims.”

James Clarkson, Acting Director of the SEC’s New York Regional Office, added, “No investor should be misled into investing in unsuitable products, but fraud against the elderly is especially egregious because they often never recover financially from ill-advised investments that devastate their retirement savings.”

According to the SEC’s order instituting proceedings, PCS is a registered broker-dealer and wholly-owned subsidiary of Gilman Ciocia, Inc. (G&C), an income tax preparation business headquartered in Poughkeepsie that offers financial services in New York, New Jersey, Pennsylvania and Florida. The individuals named in the SEC’s order were G&C employees during the time of the alleged misconduct.

The enforcement action alleges that Eric J. Brown of Highland Beach, Fla., Matthew J. Collins of Boynton Beach, Fla., Kevin J. Walsh of Viera, Fla., and Mark W. Wells of Boca Raton, Fla. were among those offering and selling variable annuities to senior citizens, obtaining most of their customers through the free-lunch seminars. During the seminars, the four representatives touted PCS’s financial services in general and sometimes variable annuities in particular. The seminars, arranged in such areas as Boca Raton, Delray Beach, Boynton Beach and Melbourne, were instrumental in providing a steady stream of variable annuity customers to PCS. G&C arranged the seminars, identifying prospective customers and sending them invitations. The company advertised the seminars, prepared presentation materials, and trained PCS representatives to make seminar presentations.

The enforcement action alleges that in one-on-one sales meetings with customers after the seminars, Brown, Walsh and Wells sometimes told customers they would have access to their invested money whenever they needed it, omitting to tell them about charges for early withdrawals above a certain amount. Some senior investors who wanted full access to their money were unlikely to outlive the period during which they would pay surrender fees. The representatives also allegedly told some customers that the principal invested in the variable annuity was guaranteed not to lose money, without disclosing that the guarantee was triggered by the death of an annuitant and the value could fluctuate and decline until the annuitant’s death.

According to the SEC’s order, certain written disclosures provided to customers and other records in customer files were incomplete or inaccurate. In some cases, the paperwork allegedly was altered after it was signed by the customer, making it appear that disclosures had been provided and the sales were suitable when, in fact, they were not.

The enforcement action alleges that the variable annuities sold by Brown, Collins, Walsh and Wells generally paid approximately six percent in total sales commissions, compared to other investment products that generally paid less than three percent in total commissions. PCS, Brown, Walsh and Wells each earned millions of dollars in sales commissions from variable annuity transactions, and Collins earned hundreds of thousands of dollars.

In addition to the fraudulent and unsuitable sales by Brown, Walsh and Wells, PCS and its president, Michael P. Ryan of Poughkeepsie, allegedly failed to implement the firm’s supervisory procedures in a way that reasonably would be expected to detect and prevent the representatives’ violations of the federal securities laws. Furthermore, Ryan, chief compliance officer Rose M. Rudden of Hyde Park, N.Y., and supervisors Collins and Christie A. Andersen of Green Acres, Fla., allegedly failed reasonably to supervise Brown, Walsh or Wells with a view toward detecting and preventing their violations of the federal securities laws. Collins also allegedly made misrepresentations on variable annuity paperwork. During times when Florida authorities had revoked or restricted Brown’s license to sell insurance, Collins signed as the associated person on the account for variable annuities that Brown solicited, thus misrepresenting who sold the investment.

An administrative law judge will determine whether the allegations against the respondents are true and, if so, whether they should be ordered to cease and desist from future violations and whether remedial sanctions and penalties are appropriate and in the public interest.