The SEC, through its Division of Examinations, has published its exam priorities for 2021. According to the SEC, these priorities reflect certain practices and products that may present more risk to investors and/or the integrity of the U.S. capital markets. This article contains several items of interest to Registered Investment Advisers and Broker-Dealers.
Matthew T. Boos
Assistant: Nicole Bartz, 612.492.7554
“Matt delivers exceptional legal advice and service in the investment management space, consistent with our firm’s values and evolving needs. Matt is knowledgeable and responsive and is an invaluable partner who instills confidence as we navigate an ever-changing business and regulatory landscape. Through his work with us on our recent SEC exam, Matt again affirmed his value as a ‘go-to’ trusted legal advisor for our firm.”
–$4B Registered Investment Advisory Firm
Matt is an experienced business and securities litigator and investment management lawyer who regularly represents clients in complex business disputes, including regulatory proceedings by the SEC, FINRA and other regulators.
Matt has over 25 years of experience litigating in federal, state and administrative forums around the country. He is head of Fredrikson & Byron’s Investment Management Group, and is also a shareholder in the firm’s Business, Securities, Trusts & Estates and Insurance Litigation Groups.
Matt serves as outside general counsel to many Registered Investment Advisory firms advising clients on a wide array of regulatory and compliance matters, including those arising under the Investment Advisers Act of 1940. Matt represents wealth management firms, investment adviser representatives, financial planners, broker-dealers, advisers to private funds, investment companies, insurance companies, public and private companies and individuals being examined, investigated or sued by the United States Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), other SROs and state and federal regulators. In addition to his regulatory defense work, Matt advises many RIAs on day-to-day regulatory and compliance matters.
For much of his career, Matt has worked with organizations dedicated to ensuring that those without sufficient economic resources have access to legal representation, including the Volunteer Lawyers Network (past Board Chair); and he has worked as Co-Chair of the Legal Access to the Disadvantaged (LAD) Committee of the Minnesota State Bar Association. Matt was appointed by the Minnesota Supreme Court and served for six years on the Legal Services Advisory Committee (LSAC), which makes grants to legal services programs serving low-income clients in Minnesota. Matt also volunteers through Children’s Law Center.
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SECURITIES LITIGATION AND INVESTMENT MANAGEMENT
- Successfully defended FINRA regulatory action against brokerage firm and broker involving allegations of unsuitability, excessive trading, improper exercise of trading discretion and failure to supervise.
- Represented large dually-registered RIA/brokerage firm in SEC investigation into possible conflicts of interest, representations to investors, private investments and internal controls and processes. After two years of proceedings, depositions and multiple interviews and document requests, the SEC recommended no enforcement action.
- Obtained “nuisance value” settlement for former registered representative sued along with numerous others in FINRA arbitration arising out of alleged sale of investments issued by DBSI, Inc. Thereafter obtained court order under North Dakota indemnification statutes requiring former employer to indemnify client for costs relating to defense of the arbitration as well as “fees on fees” for the costs of enforcing his indemnification rights. See Anderson v. Capital Financial Holdings, Inc., Civil No. 51-2016-CV-0808 (Ward Cty. Dist. Ct., N.D., July 20, 2017)
- Obtained complete dismissal of registered representative’s FINRA case against former broker-dealer after a four-day hearing. The claimant alleged defamation, gross negligence, malicious filing of a false instrument (U5 and U4), tortious interference with business relationship, breach of the covenant of good faith and fair dealing, breach of contract and mental distress. The claimant alleged damages of $3,200,000. After claimant’s presentation of his case-in-chief, we made a motion to dismiss the claimant’s claims and grant our client’s counterclaim for breach of contract. The motions were granted. All of claimant’s claims were dismissed with prejudice. See Thomas W. Ottman v. Feltl and Company, Inc., et al., FINRA Case No. 14-01955, July 16, 2015.
- Successfully defended a broker-dealer, its president and one of its registered representatives in numerous FINRA arbitrations filed around the country by investors in various alternative investments, including real estate investment trusts (REITS) and limited partnerships. Successfully resolved multiple FINRA investigations arising out of the same circumstances.
- Represented a group of investors against insurance agents who sold life settlements in violation of state securities laws. The defendants tendered the matter to their insurer and the insurer denied a duty to defend and indemnify. After the defendant-insureds abandoned efforts to obtain coverage, Matt’s clients litigated with the insurer, defeated the insurer’s summary judgment motion and settled on the eve of trial for over 90% of their investment losses.
- Obtained victory before the American Arbitration Association (AAA) on behalf of an investor and a trust. Matt’s clients alleged that the client’s broker-dealer unlawfully recommended certain securities without performing adequate due diligence and via misrepresentations about the true nature of the investments. They alleged breach of fiduciary duties, negligence, and violation of the applicable securities laws. After a three-day trial, Matt’s client was awarded nearly $1,000,000 in damages with joint and several liability against the brokerage firm and the individual broker. See McClure v. Okoboji Financial, Inc., AAA case no., 65 148Y 00043 09, March 24, 2010.
- Obtained arbitration victory on behalf of an energy company client. The client alleged the unauthorized trading of oil futures contracts in its account. The brokerage firm refused to acknowledge the trade and, instead, claimed that Matt’s client had authorized the trading, that the brokerage firm sent valid confirmations, and that the client failed to mitigate its losses. After a three-day hearing, the arbitration panel awarded the full amount of the claim plus interest – over $950,000 – to Matt’s client. See Northern Oil & Gas, Inc. v. UBS Financial Services, Inc., FINRA Case No. 08-04398, November 12, 2009.
- Ongoing representation of numerous RIAs and advisers to private funds in matters initiated by the SEC, FINRA, DOL and/or State regulators. The matters include, among others, allegations of insider trading, misrepresentation, negligence, breach of fiduciary duty, unsuitability, unauthorized trading, breach of contract, fraudulent transfer, excessive trading, violations of SRO rules, violations of the state and federal securities laws
- Counseling large RIA in SEC examination focused on management of private funds, including review of disclosures, fees and expenses, conflicts of interest and valuation.
- In 2017-2018, represented multi-billion dollar wealth management RIA in 14-month examination by Washington D.C. office of the SEC. Exam focused on dozens of issues, included over 130 separate requests for documents and information and interviews of numerous officers and employees. Following completion of the examination, the SEC made no referral to its enforcement division.
- Represented multi-billion dollar registered investment advisory firm in SEC proceedings arising out of theft of client funds by a rogue employee. Following months of discovery and a forensic investigation, the firm was neither fined nor sanctioned. Also represented the client in obtaining insurance coverage for the costs of the defense and forensic investigation.
- Defended registered investment advisor against allegations that it had wrongfully advised institutional client to purchase auction rate securities (ARS).
- Defended broker in FINRA enforcement matter alleging qualitative and quantitative unsuitability and unauthorized trading.
- Represented broker-dealer in breach of contract action arising out of client’s independent contractor agreement (ICA). Obtained award exceeding $2.5 million for breach of contract for failure to pay amounts owed to broker-dealer following termination of the ICA and for breach of the ICA’s indemnification provisions. All of representative’s counterclaims, including discrimination, defamation, and interference with contract, were dismissed. See SunAmerica Securities, Inc. Sherwin Brown, et al., NASD Award No. 02-05755.
- Represented relief defendants in connection with ponzi scheme clawback action initiated by Securities and Exchange Commission (SEC) receiver against over 225 defendants.
- Defended broker-dealer in federal court litigation by bankruptcy trustee alleging ponzi scheme, breaches of fiduciary duty, negligence, violations of state and federal securities laws, and fraudulent transfers.
- Defended registered investment adviser in securities litigation and related investigations by the SEC, CFTC and the FBI.
- Represented investment adviser in connection with SEC and State investigations and federal court litigation involving alleged sales of securities without a license.
- Defended broker in FINRA investigation into sales of over $7 million of deferred variable annuities.
GENERAL BUSINESS LITIGATION
- Obtained complete dismissal of plaintiff’s claims alleging violations of the Americans With Disabilities Act (ADA) and under New York City and State law for failure to offer gift cards containing braille. The Court held that a gift card is a “good” that a public accommodation need not modify under the ADA. See Thorne v. American Dairy Queen Corporation, 19-CV-9933 (JPO), U.S. District Court, Southern District of New York, Order filed Oct. 14, 2020.
- Represented insurance field marketing office in multi-state litigation to enforce non-solicitation and confidentiality agreements and to enforce a multi-year joint venture agreement. Asserted claims including, among others, breach of contract, tortious interference with contract, breaches of fiduciary duty, misappropriation of trade secrets and violations of the Minnesota Deceptive Trade Practices Act. Obtained temporary restraining order in Minnesota, defeated efforts to transfer litigation out of state, obtained a temporary injunction and negotiated favorable settlement shortly before trial. First Income Advisors, Inc. v. Andrew S. Dodge, Financial & Tax Architects, Inc., et al., No. 27-cv-19-8961, Hennepin County District Court, Order Granting Temporary injunction, July 11, 2019.
- Successfully defended numerous companies in Florida, New York, Pennsylvania and California against allegations that websites failed to comply with the Americans With Disabilities Act for alleged failure to make reasonable accommodations to permit blind and visually impaired persons full access to the websites. Currently representing additional businesses in similar website – and/or mobile app-related claims.
- Obtained reversal on behalf of trust beneficiary after district court erred in finding that the trustee’s expenses for outside counsel were reasonable and by ruling that potential remedy was limited to beneficiary’s proportional share of the value of the subject trust. In the Matter of the Trusteeship under that certain Indenture Trust dated as of April 1, 2010 by and between the Economic Development Authority of the City of Vadnais Heights and U.S. Bank National Association, as Indenture Trustee, A16-1133 (Minn. Ct. App., April 3, 2017)
- Successfully defended bank in class action lawsuit asserting violations of the American Disabilities Act for alleged failure to make reasonable accommodations to permit blind and visually impaired individuals to use ATMs independently. Sawczyn v. Farmers State Bank of Hamel, No. 13-CV-2731 (D. Minn. 2013).
- Representing publicly-traded retail firm in coverage litigation arising out of nationwide securities class action and shareholder derivative litigation.
- Successfully represented The Metropolitan Council over a three-year period in a complex litigation involving rights to operate the light rail transit on property adjacent to the Mall of America. The matter was settled shortly before trial. MOAC Land Holdings, LLC v. Metropolitan Airports Commission, et al., Henn. Cty. Dist. Ct., No. 27-CV-07-617.
- Represented a shareholder/registered investment advisor and its principal and won dismissal of all claims against them by a former CEO/Board Chair who sued after waging an unsuccessful proxy contest and being removed from the board. Plaintiff had asserted breaches of fiduciary duty, interference with contract, and various statutory claims, all of which were dismissed by the Court. Gerry Fisher v. Alebra Tech, Inc., et al., Henn. Cty. Ct. File No. 27-CV-06-13967 (Henn. Dist. Ct., Oct. 23, 2006), aff’d., A07-0630 (Minn. App., April 8, 2008).
- Served as lead counsel in a successful trial on behalf of a national investment banking firm. The client was a substantial bondholder seeking to prevent the corporate trustee from selling trust assets comprised of a business and real estate. Matt and the client established that the trust assets were worth substantially more than the proposed sale price, obtained a denial of the trustee’s petition, obtained an order to replace the receiver overseeing the assets, and obtained complete reimbursement of the client’s attorney’s fees. In the matter of the Trusteeship created by the city of Arbemarle, North Carolina, Ram. Cty. Ct. File No. C2-04-200063 (Ram. Dist. Ct., Apr. 15, 2005); and Order for Judgment, Jan. 31, 2007.
- Represented closely-held corporation and won dismissal of all claims brought by several former preferred stockholders asserting rights to preferred dividend payments. Vernon J. Krupa v. Extrusion Dies Industries, LLC, et al., Chipp. Cty. Ct. File No. 04-CV-386, (Chipp. Dist. Ct., Oct. 20, 2005).
- Successfully defended a CEO and CFO against negligence, breach of fiduciary duty, and conspiracy claims asserting damages in excess of $100 million. Post-Confirmation Trust v. Digital Exchange Systems, Inc., Civil Action No. 5:05-CV-165 (E.D. TX 2005).
- Represented physician in a defamation lawsuit and succeeded in obtaining six-figure arbitration award. Mahjouri v. Blue Cross Blue Shield of Minnesota (arbitration).
- Successfully represented numerous defendants around the country in ADA (Americans with Disabilities Act) website accessibility cases. These cases often involve aspects of machine learning and artificial intelligence (A.I.), particularly where they involve the use of scanners by hearing or visually impaired persons.
- Advised Fortune 100 company on director and officer protections, including director and officer liability insurance.
- Advised Fortune 100 company on bylaws and agreements regarding indemnification and advancement.
- Served as independent counsel to the audit committee of a publicly-held company in the restaurant industry for purposes of conducting an internal investigation of potential fraud and accounting irregularities.
- Conducted internal investigation of stock-option backdating for a publicly-held Silicon Valley tech company.
- Served as special legal counsel to a publicly-held company to determine eligibility for advancement of legal fees and indemnification for 18 present and former officers and directors named in a series of class-action securities lawsuits.
- Advised company and prepared director and officer indemnification agreements for manufacturing company in connection with its initial public offering.
- Served as lead counsel in lawsuit relating to entitlement to indemnification and advancement of legal fees under Minnesota Statute § 302A.521.
Articles & Presentations
May 6, 2020
Are RIA firms required to disclose to clients a successful PPP loan application? One can imagine circumstances requiring disclosure, but what if the circumstances were different?
March 31, 2020
The SEC issued an updated order regarding a temporary exemption from certain requirements of the Investment Advisers Act of 1940.
March 17, 2020
On Friday, in response to the outbreak of COVID-19, the SEC issued an Order providing a temporary exemption from certain requirements of the Investment Advisers Act of 1940.
January 17, 2020
According to the SEC, these priorities reflect certain practices and products that may present heightened risk to investors and/or the integrity of the U.S. capital markets.
November 1, 2018
Over the last few years, the securities industry has seen increased efforts from the FINRA, the SEC and other state and federal regulatory authorities, to generally increase protections afforded to senior investors and prevent financial exploitation of seniors.
January 22, 2018
The Financial Industry Regulatory Authority (FINRA) published its 2018 Annual Regulatory and Examination Priorities Letter on January 8, 2018.
July 27, 2017
On June 5, 2017, the Supreme Court placed a significant limitation on the SEC’s use of disgorgement in enforcement actions.
FINRA Enacts New Rules Addressing Financial Exploitation of Seniors, as Regulators Increase Vigilance Protecting Senior Investors Generally
June 15, 2017
The Financial Industry Regulatory Authority announced a February 5, 2018, effective date for FINRA’s new rules aimed at addressing financial exploitation of seniors.
Financial Services Industry Targeted in Wave of Lawsuit Threats Over Websites Allegedly Inaccessible to the Visually Impaired
November 15, 2016
In a trend that began several years ago and has migrated through several industries, investment firms are among those being targeted by enterprising plaintiffs’ lawyers alleging that the firms’ website are inaccessible to blind or otherwise disabled users. The claim is that the firms are violating the Americans with Disabilities Act (ADA).
April 7, 2016
On April 6, 2016, the Department of Labor issued its much-anticipated conflicts of interest final rule. Like the proposed rule, the final rule broadens the definition of fiduciary and will likely require more investment advisers to comply with the fiduciary rules under the Employee Retirement Income Security Act of 1974 (ERISA), as it applies to advice provided to both qualified retirement plan participants and IRA account holders.
February 5, 2016
The Securities and Exchange Commission (SEC), through its Office of Compliance Inspections and Examinations (OCIE), has published its exam priorities for 2016. According to the SEC, these priorities reflect certain practices and products that may present heightened risk to investors and/or the integrity of the U.S. capital markets.
PUBLICATIONS & PRESENTATIONS
- Co-Presenter, “Sharing Solutions: Implementing The New SEC Advertising Rule,” National Society of Compliance Professionals seminar, June 22, 2021
- Quoted in “SEC Turns to Video During Pandemic,” Regulatory Compliance Watch (compliance best practices), August 28, 2020
- “What an RIA Should Think About if it’s Considering Disclosing a PPP Loan,” InvestmentNews, June 8, 2020
- Quoted in “PPP Loans: Debating Disclosure,” Regulatory Compliance Watch (compliance best practices), May 14, 2020
- Quoted in “Tips Should You Ever be Deposed,” Regulatory Compliance Watch (compliance best practices), May 14, 2020
- Panelist, “Migration to RIA Platform and Increase in RIA Cases,” Securities Experts Roundtable 27th Annual Meeting Conference, August 2, 2019
- Presenter, “Everyday Ethics and Case Studies,” Financial Planning Association of Minnesota, July 16, 2019
- Presenter, “Everyday Ethics & The Legal Bases For Fiduciary Duty,” Society for Financial Services Professionals, October 4, 2018
- Panelist, “Don’t be Caught Off Guard: Strategies to Manage Risk for Investment Advisors,” Fredrikson & Byron program co-hosted with Charles Schwab and BMO Global Asset Management, June 26, 2018
- Presenter, “Trustee Duties,” The Estate Planning Probate & Trust Law 50, Minnesota CLE, February 2016
- Presenter, “Trustee Duties,” The Estate Planning Probate & Trust Law 50, Minnesota CLE, September 2014
- “SEC Publishes Its 2014 List of Examination Priorities,” co-authored with David E. Winkler, FredALERT: Investment Management, February 12, 2014
- “RIAs Must Be Prepared For Aggressive SEC Enforcement,” as published in Investment News, July 28, 2013
- Quoted in “Philip Falcone, firm agrees to pay $18 million in fraud case,” Star Tribune, May 12, 2013
Honors & Education
- William Mitchell College of Law, J.D., 1993, magna cum laude
- New York University, LL.M.
- University of Minnesota, B.A., 1989, Political Science, summa cum laude
- Minnesota, 1993
- New York, 2003
- U.S. District Court for the District of Minnesota, 1993
- U.S. Court of Appeals for the Eighth Circuit, 1994
- Minnesota State Bar Association, North Star Lawyer, 2020
- American Bar Association, Business Law Section, Federal Regulation of Securities Committee and Civil Litigation and SEC Enforcement Matters Subcommittee, Committee Member, 2012-present
- American Bar Association, Business Law Section, State Regulation of Securities Committee, Member, 2016-present
- American Bar Foundation, Fellow
- National Association of Compliance Professionals, Member, 2019-present
- Childrens’ Law Center, Volunteer Attorney, 2015-present
- Legal Services Advisory Corporation, Committee Member, 2013-2016
- Minnesota State Bar Association, Legal Access to the Disadvantaged (LAD) Committee, Co-Chair, 2009-2012
- American Bar Association, Co-Chair, Director & Officer Liability Committee, 2009-2012; Committee on Corporate and Business Litigation, Indemnification and Insurance Subcommittee, Member; Task Force on Director & Officer Liability, Section Task Force on Model Indemnification Agreement, Co-Chair, 2007-2012
- Annotated Model D&O Indemnification Agreement, Co-Executive Editor, as published by the American Bar Association, Business Law Section, Director and Officer Liability Committee, August 2013
- American Bar Association, Section of Litigation, Securities Litigation Subcommittee, Committee Member, 2008 to present
- Hennepin County Bar Association, Board of Directors, 2005
- Hennepin County Volunteer Lawyers Network, Board of Directors, 2000-2011
- Adjunct Professor, William Mitchell College of Law, 2005, 2006
- Honorable Margaret M. Marrinan, Ramsey County District Court, 1992-1993