• Brendan P. McGarry, Esq., Attorney in Kaufman Dolowich & Voluck, LLP Chicago, was quoted in an article by Brian O’Connell- Insurance News Net, on regulations under a Trump administration.

    Won’t Be Easy

    Others say that “dismantling” the DOL rule won’t be easy for Trump, if he decides to go in that direction. Eliminating the rule will be “more cumbersome than simply waiving a magic wand,” said Brendan McGarry, an attorney with Kaufman Dolowich & Voluck.

    That said, there multiple ways to accomplish that objective, he added:

    • Instruct the Department of Justice to “stand down” in defending the remaining federal lawsuits challenging the rule.
    • Directing the Secretary of Labor to produce a new rule that repeals the fiduciary rule published in April 2016.
    • Lobbying Senate Democrats for enough support to pass a bill by Rep. Jeb Hensarling, R-Texas, known as the Financial CHOICE Act.
    • Appointing a Supreme Court justice who will side with the opponents to the bill (assuming any of the lawsuits seeking to stay or repeal the rule make it to the Supreme Court).

    “None of these is a kill switch,” McGarry said. “But it appears standing down in the defense of the cases against the DOL may be the quickest road to staying the effects of the Fiduciary Rule.”

  • Jan 26, 2017

    Philip Voluck, Managing Partner of KDV at its Pennsylvania office, will be a co-presenter at the American Conference Institute’s (ACI) 25th National Forum on Employment Practices Liability Insurance in New York City.

    Session Title: The Latest on Pregnancy/Maternity Discrimination Claims and the Intersection with the ADA/FMLA
    Date: Thursday, January 26th, 2016
    Time: 3:20 PM

    This presentation will cover the following topics:

    • Examining the latest pregnancy discrimination issues and claims and their impact on coverage
    • The intersection of Title VII; ADA & FMLA; state discrimination laws; disability laws; wage & hour laws relating to lactation time; and state and local laws for paid and unpaid sick leave
    • ADA’s definition of pregnancy as a disability; when may pregnancy complications meet eligibility guidelines requiring employers to make accommodations?
    • Diabetes and pregnancy complications
    • New York pregnancy accommodations law as compared to other jurisdictions
    • EEOC guidance
    • Expanding state and local anti-discrimination and leave requirements
    • Defending pregnancy discrimination claims following the Young v. UPS case as the legal landscape has shifted in favor of claimants
    • Extending pregnancy benefits to fathers

    For more information about the event and to register, click here.


  • Jan 20, 2017

    By Stefan R. Dandelles, Esq. and Brendan P. McGarry, Esq.

    Last week, the Office of Compliance Inspections and Examinations (“OCIE”) of the U.S. Securities Exchange Commission (“SEC”) released its Examination Priorities for 2017 (“Priorities”). Generally, OCIE’s Priorities reflect certain practices, products and services that OCIE perceives to present heightened risk to investors and/or capital markets at large. OCIE’s Priorities are organized around three thematic areas:

    1. Examining matters of importance to retail investors;
    2. Focusing on risks specific to elderly and retiring investors; and
    3. Assessing market-wide risks.

    With respect to protecting retail investors, OCIE is pursuing a variety of examination initiatives to assess risks to retail investors that could arise from the enumerated areas, including:

    • Electronic Investment Advice: OCIE is examining RIAs and BDs that offer “robo-advisers” that primarily interact with clients online and firms that use automation as a component of their services. OCIE will review compliance programs, risk disclosures and marketing, as well as oversight of algorithms that generate recommendations.
    • Wrap Fee Programs: OCIE will expand its review of RIAs and BDs associated with wrap fee programs, including whether investment advisers are acting in a manner consistent with their fiduciary duties and meeting their contractual duties to clients.
    • Exchange Traded Funds (“ETFs”): OCIE will continue to examine ETFs for compliance with applicable exemptive relief under the Securities Exchange Act of 1934 and the Investment Company Act of 1940, as well as other regulatory requirements. OCIE will also continue its review of sales strategies, trading practices, and disclosures, particularly in niche or leveraged/inverse ETFs.
    • Never-Before Examined Investment Advisers: OCIE is expanding its initiative of examining newly registered advisers and those that have been registered for a longer period but never examined.
    • Recidivist Representatives and their Employers: OCIE will continue to use its analytic capabilities to identify individuals with track records of misconduct and examine the firms that employ them.

    With respect to senior investors and retirement investors, OCIE will continue to devote increased attention to issues affecting these groups, including:

    • ReTIRE: Continuing its multi-year initiative, OCIE will examine SEC-registered investment advisers and broker-dealers and the services they offer to investors with retirement accounts, which will include examining the reasonable basis for recommendations made to investors, conflicts of interest, supervision and compliance controls, and marketing and disclosure practices.
    • Public Pension Advisers: OCIE will review how investment advisers to public pensions manage conflicts of interest and fulfill their fiduciary duties, as well as pay-to-play and other risks specific to these advisers.
    • Senior Investors: OCIE will evaluate how firms manage their interaction with senior investors, and will focus on supervisory programs and controls relating to products and services directed at senior investors.

    With respect to assessing market-wide risks, OCIE has highlighted several areas it will evaluate for structural risks and trends that may involve multiple firms or entire industries:

    • Money Market Funds: OCIE will examine compliance with amendments to rules adopted in 2014, which became effective in October 2016, addressing redemption risks in money market funds.
    • Payment for Order Flow: OCIE will assess how certain BDs, such as market makers and those serving primarily retail customers, are complying with their duty of best execution when routing customer orders.
    • Anti-Money Laundering (“AML”): OCIE will continue to examine broker-dealers’ AML programs, focusing on whether the firms are able to adapt their AML programs to current risks.
    • Clearing Agencies: OCIE will continue to conduct examinations of clearing agencies for which the SEC is the supervisory agency pursuant to Dodd-Frank.

    OCIE also identified other areas of focus, including:

    • Municipal Advisors: OCIE will continue to evaluate municipal advisors’ compliance with SEC and MSRB rules.
    • Transfer Agents: OCIE will continue its review of transfer agents, focusing on those who service microcap issuers in order to detect issuers who may be engaging in unregistered, non-exempt offerings of securities.
    • Private Fund Advisers: OCIE will focus on conflicts of interest and disclosure of those conflicts, as well as actions that appear to benefit the adviser at the expense of investors.

    OCIE’s Priorities continue many of its initiatives from 2016, with particular emphasis on sales practices, especially those directed at senior investors, and issues that may provide market-wide risk. OCIE’s examinations are certain to make waters choppy for compliance departments of SEC-registered firms throughout 2017. The attorneys of Kaufman Dolowich & Voluck are prepared to help firms navigate this tumultuous regulatory environment.

  • Jan 12, 2017

    A California appellate court recently held that the plaintiff’s claims against her former lawyers — characterized as declaratory relief, breach of that retainer agreement, breach of the implied covenant of good faith and fair dealing in the retainer agreement, money had and received, accounting, and unfair competition — were subject to the legal malpractice statute of limitations in California Code of Civil Procedure §340.6 even though the plaintiff had not asserted a legal malpractice cause of action.  Because those claims arose solely from the lawyers’ performance of professional services, the Second Appellate District in Foxen v. Carpenter (2016) 6 Cal.App.5th 284 (filed 11/3/16; published 12/1/16), held that the limitations period in section 340.6 applied to bar those claims.

    According to the plaintiff in Foxen, the lawyers prosecuted her personal injury case and her husband’s loss of consortium action and settled both cases in February 2011.  (6 Cal.App.5th at 288-289.)  She claimed that the lawyers in April 2011 provided her with an itemization of her net recovery from the settlement proceeds following deductions for the lawyers’ contingency fee, litigation costs, and other debits. (Id. at 289.)  The plaintiff alleged that she discovered in December 2011 that the litigation costs in that itemization included certain vendor charges that she never authorized and other vendor charges which exceeded the amounts actually billed by the vendors. (Id.)  As a result, the plaintiff filed suit in May 2015, alleging the theories listed above to obtain the settlement proceeds that she claimed had been wrongfully withheld by the lawyers.  (Id. at 287.)

    The lawyers successfully demurred to the plaintiff’s complaint, and the plaintiff appealed.  (6 Cal.App.5th at 287.)  Foxen affirmed, holding that the limitations period in section 340.6 barred the plaintiff’s claims. (Id. at 292 & 296.)

    Section 340.6 provides that:

    “[a]n action against an attorney for a wrongful act or omission, other than for actual fraud, arising in the performance of professional services shall be commenced within one year after the plaintiff discovers, or through the use of reasonable diligence should have discovered, the facts constituting the wrongful act or omission, or four years from the date of the wrongful act or omission, whichever occurs first.”  (California Code of Civil Procedure §340.6(a).)

    Before the enactment of §340.6, legal malpractice lawsuits were subject to different limitations periods depending on whether the plaintiff pleaded breach of written contract (4 years), fraud (3 years), breach of fiduciary duty (2 years), or negligence (2 years). (See Lee v. Hanley (2015) 61 Cal.4th 1225, 1234.)  The California Legislature enacted section 340.6 so that the applicable limitations period for a malpractice claim against a lawyer would turn on the conduct alleged and later proven rather than the cause of action chosen by the plaintiff to allege such conduct. (Id. at 1236.)

    In 2015, the California Supreme Court in Lee v. Hanley held that the time bar in section 340.6 applies to claims whose merits necessarily depend on proof that the lawyer violated a “professional obligation” in the course of providing “professional services.”  (Lee v. Hanley, supra, 61 Cal.4th at 1236-1237.)  Lee explained that “a ‘professional obligation’ is an obligation that an attorney has by virtue of being an attorney, such as fiduciary obligations, the obligation to perform competently, the obligation to perform services contemplated in a legal services contract into which an attorney has entered, and obligations embodied in the Rules of Professional Conduct.”  (Id. at 1237.)  Additionally, Lee noted that “professional services”, as used in section 340.6, include not only legal services by the lawyer but also “include nonlegal services governed by an attorney’s professional obligations,” such as accounting, bookkeeping and holding property in trust. (Id.)

    Applying Lee’s construction of section 340.6, Foxen held that the plaintiff’s claims for declaratory relief, breach of the retainer agreement, breach of the implied covenant of good faith and fair dealing in that agreement, money had and received, accounting, and unfair competition were all subject to section 340.6’s limitations period. (6 Cal.App.5th at 292 & 296.)  Because proper allocation of the settlement monies was either part of the lawyers’ professional duties to plaintiff or nonlegal services closely associated with the performance of their professional duties as lawyers, Foxen reasoned that section 340.6 applied. (Id. at 292.)  Consequently, under section 340.6, the plaintiff had one year from her December 2011 discovery of those allegedly false charges on the itemization to bring suit, and those claims, which were first asserted in March 2015, were thus time barred. (Id.)

    Foxen is notable in a several respects.  Initially, it is the first reported decision to apply Lee’s holding when considering whether the claims asserted are subject to the limitations period section 340.6.  Additionally, Foxen adds declaratory relief, money had and received, accounting, and unfair competition to the growing list of claims against lawyers which may be subject to section 340.6’s time bar.  That list also includes claims for breach of contract (Southland Mechanical Constructors Corp. v. Nixen (1981) 119 Cal.App.3d 417, 431, overruled on other grounds in Laird v. Blacker (1992) 2 Cal.4th 606, 617), breach of fiduciary duty (Prakashpalan v. Engstrom, Lipscomb and Lack (2014) 223 Cal.App.4th 1105, 1121), malicious prosecution (Vafi v. McClosky (2011) 193 Cal.App.4th 874, 881), and, of course, legal malpractice. (Beal Bank, SSB v. Arter & Hadden (2007) 42 Cal.4th 503, 508.)

    For more information about the impact of the Foxen decision on attorney professional negligence claims, please contact KDV’s Scott K. Murch, Esq. (smurch@kdvlaw.com) or Louie H. Castoria, Esq. (lcastoria@kdvlaw.com).

  • Jan 6, 2017

    By Stefan R. Dandelles, Esq. and Brendan P. McGarry, Esq.

    On January 4, 2017, the Financial Industry Regulatory Authority (“FINRA”) released its 2017 Regulatory and Examination Priorities Letter (the “Letter”), in which FINRA outlined its areas of attention for the coming year. For 2017, FINRA has outlined five main areas on which it will focus: (1) High Risk and Recidivist Brokers; (2) Sales Practices; (3) Financial Risks; (4) Operational Risks; and, (5) Market Integrity. Within the broad areas, FINRA referenced several more narrow topics, such as product suitability and concentration; outside business activities; anti-money laundering (“AML”) controls; liquidity risk; market manipulation; and cybersecurity.

    The Letter indicates FINRA will devote particular attention to firms’ hiring and monitoring of high-risk and recidivist brokers, including whether firms establish appropriate supervisory and compliance controls for such persons. FINRA will concentrate its efforts in this regard in three areas. First, FINRA plans to utilize a recently established examination unit to identify and examine brokers who may pose a high risk to investors. Second, FINRA will review firms’ supervisory procedures for hiring or retaining statutorily disqualified and recidivist brokers. In doing so, FINRA will pay particular attention to the accuracy and completeness of the information contained in an applicant’s Form U4, and will continue to monitor for the timely submission of disclosures required on Forms U4 and U5. FINRA will pay particular attention to firms with a concentration of brokers with significant past disciplinary records or a number of sales practice complaints or arbitrations. Third, FINRA will continue to evaluate firms’ inspection programs and supervisory systems for branch and non-branch office locations, including, but not limited to, independent contractor branches.

    FINRA will also concentrate on Sales Practices, particularly in relation to senior investors, product suitability and concentration, and outside business activities of registered representatives. Protecting senior investors will remain a top priority for FINRA in 2017. FINRA will continue to assess firms’ controls to protect senior investors from fraud, abuse and improper advice, based largely on cases where registered representatives have recommended that senior investors purchase speculative or complex products in search of yield. More generally, FINRA will continue to concentrate on suitability issues and situations where registered representatives do not fully or properly understand important product features. FINRA will also continue to evaluate outside business activity review procedures with attention on whether such OBAs may compromise a registered person’s responsibilities to clients, or be viewed as part of the firm’s business.

    Two of FINRA’s priorities are not new for 2017 but remain on FINRA’s hot-button issues list: AML and cybersecurity. AML compliance was a priority for FINRA in 2015 and 2016, and will continue to be in 2017. This year, FINRA will focus on areas where it has observed shortcomings in the previous two years, including gaps in automated trading and money movement surveillance systems caused by data integrity problems, and poorly set parameters or surveillance patterns that do not capture problematic behavior such as suspicious microcap activity. With respect to cybersecurity, FINRA will review methods for preventing data loss, including understanding the sensitivity of customer data, as well as its flow through the firm and to third-parties. In addition, FINRA will continue to examine two areas in which it has observed repeated shortcomings: (1) cybersecurity controls at branch offices, and (2) failures to fulfill one or more obligations under Securities Exchange Act Rule 17a-4(f)(regarding record retention and availability for review or audit).

    FINRA’s priorities for 2017 are, once again, extensive and are sure to present many challenges for firms to stay abreast of the relevant developments within the enumerated issues. The attorneys of Kaufman Dolowich & Voluck are poised to bring the ever-changing regulatory environment into focus for your member firm.

    KDV Financial Services Team Contacts:

    Gregg Breitbart
    Managing Partner – Florida
    (561) 910-5651

    Stefan R. Dandelles
    Managing Partner – Chicago
    (312) 646-6742

    Louie H. Castoria
    Partner – San Francisco
    (415) 926-7638

    Brendan P. McGarry
    Attorney – Chicago
    (312) 646-6745


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Dean Herman and Hee Young Lee Join Kaufman Dolowich & Voluck as Partners in Firm’s Los Angeles Office; Senior Counsel and Three Associates Also Join LA Office

(June 3, 2013, Los Angeles, CA) — Kaufman Dolowich & Voluck, LLP (KDV), a leading national law firm, today announced that Dean B. Herman, who has more than 30 years of experience in insurance industry and business litigation, and Hee Young Lee, who has represented insurers and policyholders for more than a decade, have joined the firm as partners in its Los Angeles office. They will be accompanied by Craig D. Aronson as senior counsel and Steven S. Son, Andrew C. Johnson and Mikhaile P. Savary as associates.

Dean Herman defends and advises insurers and professionals on liability, first and third party insurance coverage issues, bad faith, and errors and omissions issues. His experience also includes sophisticated business and commercial litigation in state and federal trial and appellate courts on issues across a broad range of industry sectors and a diversified array of issues, ranging from IP to employment and contract disputes, executive risk exposures,  entertainment, wine industry,  as well as professional liability claims involving lawyers, insurance agents and brokers, real estate agents and brokers, directors and officers, business managers, financial advisors among others. He has also served as an expert witness and consultant and acts as a mediator in complex insurance coverage and other disputes. He comes to Kaufman Dolowich & Voluck from Mendes & Mount where he was a partner in the firm’s Los Angeles office.

Hee Young Lee also joins from Mendes & Mount, where she was a partner and her practice is focused on advising and defending insurers and their insureds in federal and state courts in matters involving intellectual property, environmental, construction defect, agribusiness, privacy, and personal lines claims. She also defends insureds in professional liability claims.

“Dean and Hee Young are preeminent insurance attorneys who will enhance not only our West Coast but our national presence in this field, which has always been a core strength of the firm,” said Ivan J. Dolowich, co-managing partner of KDV.  “This group enhances our practice on the West Coast providing insurance coverage, business litigation, professional liability, labor & employment and financial services for our clients.”

Herman will also be working out of the KDV San Francisco office due to the considerable work he does in the Bay area for clients based there.  He earned his B.A.  from California State University at Fullerton, his J.D. from Loyola Law School and his Master of Laws from the University of California, Berkeley. He is admitted to practice in California, and regularly handles matters in many other states either on a pro hac vice basis or an advisory or national coordinating counsel basis.

Lee will have a leadership role in the Los Angeles office. She earned her B.A. from the University of California, Los Angeles and her J.D. from the University of California Hastings College of the Law. She is admitted to practice in California, and also handles insurance coverage matters in many other states.

“Hee Young and I are excited to be joining a firm whose key practice areas are so compatible with our strengths,” said Herman. “We look forward to the opportunity to helping to grow KDV’s already strong insurance, professional liability and litigation practices on the West Coast and nationally.”

Craig Aronson, who has been practicing law for 30 years and whose practice focuses on coverage and professional liability, joins KDV from Gaglione, Dolan & Kaplan (Los Angeles) where he was a partner. He is admitted to practice in California. Aronson graduated summa cum laude and Phi Beta Kappa from Dartmouth College and earned his law degree from the University of Chicago Law School.

Steven Son, Andrew Johnson and Mikhaile Savary are litigation attorneys joining KDV from Mendes & Mount where they were all associates. Son, admitted to practice in California, earned his B.A. from the University of California, Los Angeles and his J.D. from the University of Illinois College of Law.  Johnson, admitted to practice in California and Nevada, received his B.F.A. from the University of Kansas and his J.D. from St. John’s University School of Law. Savary, admitted to practice in California and New York, received his B. A. from Cornell University and his J.D. from Columbia Law School.

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