Securities Law Prof Blog

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

Tuesday, March 15, 2011

State Regulators Urge Federal Court not to Enjoin State Administrative Proceedings Against Securities America

As I have previously blogged, a judge hearing a class action brought against Securities America  granted plaintiffs' request for a TRO to restrain individual arbitration hearings brought against the firm, citing his power under the All Writs Act (Billitteri v. Securities America, Feb. 18, 2011, N.D. Tex.). NASAA and state regulators in Massachusetts and Montana filed briefs urging the court to deny a request for a preliminary injunction to halt administrative proceedings brought by state regulators against Securities America Inc. and Securities America Financial Corporation and other defendants.

A hearing has been scheduled for March 18 in the federal court in Dallas.

State securities regulators in Massachusetts and Montana have initiated investigations into allegations of wrongdoing by Securities America and others involving the offer and sale of securities.

In its brief, NASAA said: “The state regulators have dedicated significant resources and expended great effort in the course of these investigations and now face the potential of having this Court halt those proceedings.

"The request by the Plaintiffs to enjoin the state regulators will not only terminate the efforts of the Massachusetts and Montana regulators, but it will have a chilling effect on all state securities regulators in that, despite their clear statutory authority to take steps necessary to police illicit conduct in their states, they potentially face having that authority impaired by defendants who would run to federal courts to plead poverty. The Court should, therefore, refrain from interfering with the states’ proceedings as they seek to fulfill their critical function.”

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