Dear Law Planet Blog Readers,

Welcome to LaBovick Law Group, P.A.

We are delighted to incorporate The Law Planet Blog into our family of law blogs.

A little history on the firm:
Established: 1992
Founder: Brian F. LaBovick, P.A.
Locations: Palm Beach Gardens (Headquarters), West Palm Beach, Boynton Beach
Attorneys: 9
Practice Areas: Plaintiffs Firm handling: Financial Services, Commercial Litigation, Qui tam, Personal Injury, Employment Law and Workers' Compensation

We have some new exciting additions and changes coming soon to the Law Planet Blog. Here is a hint: It involves listening...Soon you will be able to hear our attorneys discuss topics such as investments, securities, and stockbroker issues.

Stay Tuned...

Today is the last day of The Law Planet as it has existed for the last two years.

Starting March 30, I will be an attorney with LaBovick Law Group, P.A. starting up that firm's Financial Services Department.

I will continue posting on the new and improved Law Planet.

So, I'm on the move this weekend. See you at www.Labovick.com.

Dilbert is always on top of things. I read this panel this morning and it made me laugh.

Scott Adams, the strip's creator, is a genius.

That's the fiduciary view from The Law Planet, Jupiter, Florida.

The Eleventh Circuit Court of Appeals, which covers Florida, is a "manifest disregard" circuit. In Montes v. Shearson Lehman Hutton, the court found that a closing argument in an NASD arbitration that acknowledged the law, but encouraged the arbitrators to ignore it, was evidence of manifest disregard of the law. The arbitrators agreed and Shearson won the case.

On a motion to vacate, ultimately decided by the 11th Circuit, Shearson lost. The court found that the test is that the arbitrators were aware of the law and chose to ignore it. Montes may be the only case decided on this basis for the movant. In other words, in establishing "manifest disregard" as a basis for vacating an arbitration award, Shearson lost.

Over time, and mergers, Shearson became part of Citigroup Global Markets. That entity, Citigroup, recently lost a FINRA securities arbitration award to a woman from Texas. Citigroup thought it had a good argument, that the arbitrators manifestly disregarded the law. The trial court agreed. The Fifth Circuit did not.

In Citigroup v. Bacon the Fifth Circuit said that "manifest disregard of the law" is no longer available as grounds to vacate an award. The court based its decision on a recent US Supreme Court decision in Hall Street Associates v. Mattel. The US Supreme Court in Hall Street found that "manifest disregard" is not part of the statute allowing vacatur of arbitration awards. The Court pronounced for the entire nation that "manifest disregard" does not exist any longer. (Other circuits, by the way, have found their way around this ruling.)

Florida currently is a "manifest disregard" state, but the 11th Circuit said that Montes is the only case it has found worthy of that moniker. In fact, in Harbert v. Hercules Steel,, the 11th Circuit warned that sanctions may be appropriate for weak motions to vacate arbitration awards based on "manifest disregard."

There you have it. Citigroup has managed to establish that "minfest disregard" is and is not a basis for vacating an arbitration award. For those of you non-lawyers who read this, I can't explain it other than to say, that's the way the law is sometimes.

My sister, the bankruptcy lawyer, sent me an email to explain the credit crisis. Since my brain is pea-sized, she used points of reference I understand.

John is the proprietor of a bar in Sydney. In order to increase sales, he decides to allow his loyal customers, most of whom are unemployed alcoholics, to drink now but pay later. He keeps track of the drinks consumed on a ledger (thereby granting the customers loans). Word gets around and as a result increasing numbers of unemployed alcoholics flood into John's bar.

Taking advantage of his customers' freedom from immediate payment constraints, John significantly increases his prices for wine and beer, the most popular drinks. His sales volume ncreases massively. A young and dynamic customer service consultant at the local bank recognizes these customer debts as valuable future assets and increases John's borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral.

At the bank's corporate headquarters, expert bankers transform these customer assets into DRINKBONDS, ALKBONDS and PUKEBONDS. These securities are then traded on markets worldwide. No one really understands what these abbreviations mean and how the securities are guaranteed. Nevertheless, as their prices continuously climb, the securities become top-selling items because Lehman Bros recommended them as a good investment.

One day, although the prices are still climbing, a risk manager of the bank, (subsequently of course fired due to his negativity), decides that the time has come to demand payment of the debts incurred by the drinkers at John's bar. But of course they cannot pay back the debts.
John cannot fulfill his loan obligations and claims bankruptcy.

DRINKBOND and ALKBOND drop in price by 95 %. PUKEBOND performs better, stabilizing in price after dropping by 88 %. The suppliers of John's bar, having granted her generous payment due dates, and having invested in the securities, are faced with a new situation. His wine supplier claims bankruptcy, his beer supplier is taken over by a competitor.

The bank is saved by the Federal Government following dramatic round-the-clock consultations by leaders from the governing political parties.

The funds required for this purpose are obtained by a tax levied on the non-drinkers.

There, do you feel educated now?

That's the view from The Law Planet - Jupiter, Florida.

By now anyone who has any interest in investing knows about Bernie Madoff. Mr. Madoff has admitted his guilt in a Ponzi scheme of gargantuan proportions. But I think this is just the beginning.

Mr. Madoff has stated, through others, that no other person knew about his fraud. I find that impossible, not just difficult, to believe. I think he is pleading guilty to protect others.

What can a Madoff investor do? I have spoken with some of them and the stories are heartbreaking. People's lives have been ruined and will never be fixed. Securities arbitration and litigation is one recourse. But the Madoff entities are in receivership. So the feeder funds and moneyraisers are the next targets. But those cases will not be easy. A lawyer familiar with securities arbitration and litigation should have an opinion on this.

In my opinion, the investigation is not over. The SEC, which has been raked over the coals recently, will likely dig deeper. They will find out who else knew about the fraud, or ignored it, and when they found out. They will look at the feeder funds and the moneyraisers. And others will suffer consequences.

It's a shame that the public trust was violated in such a manner. This remains a black eye for the investment industry. It will take a long time to restore this confidence.

That's the view from The Law Planet - Jupiter, Florida.