Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Thursday, September 2, 2010

Can Brokerage Customers Get Two Bites of Apple?

The Nebraska Supreme Court recently held that investors who purchased unregistered securities through registered representatives of a brokerage firm, and who had previously received an arbitration award against the RRs and firm, could also sue the firm's holding company (apparently not a BD firm) and the individuals who were principals of both companies under the Nebraska Securities Act's "control person" provision.  While the claim against the principals sounds like impermissible claim-splitting to me, in fact, the Supreme Court does not directly address this issue, perhaps because the defendants did not raise it.  The Court's only reference to this issue was In response to the defendants'' argument that the damage award should have been reduced by the amounts the RRs paid to plaintiffs in the arbitration; the Court stated it did not address the issue because the record was "insufficient" to resolve it.  Hooper v. Freedom Group, Inc., 784 N.W.2d 437 (Neb. 2010).

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