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Dharmi is an excellent securities lawyer who understands the law as it pertains to these cases. She is extremely proactive and represents her clients well. I highly recommend Jacko and Dharmi.
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Danielle Martin
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I’ve had the privilege of working closely with this firm in my role as Chief Compliance Officer and I can confidently say they are an exceptional compliance partner. Their depth of experience is immediately evidentand they bring a level of practical knowledge. What I truly enjoy is their ability to translate complex regulatory requirements into plain English, often using real, everyday examples that make implementation far more manageable. They are also incredibly responsive and reliable. In a field where timing matters, their prompt communication and thoughtful guidance have been invaluable. If you’re looking for a compliance attorney who combines expertise, clarity, and professionalism, I highly recommend them.
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Curt Rocca
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Michelle and the team at Jacko Law Group have helped guide through a variety of critical circumstances as we ventured through the uncharted and unfamiliar territory of becoming and successfully operating as an RIA. I have particularly appreciated Michelle's personal involvement and genuine caring about us and our organization. She has been responsive and her counsel has been consistently on-point and helpful. She artfully guided us through our initial filing process and first SEC exam process - which went very well. Very grateful to Michelle and her team.
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Nicholas Di Paolo
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Michelle and her team were excellent to work with, front to back. They helped me to understand the challenges ahead and were always proactive in their consultation through every step of my transition. JLG truly know the wealth management industry very well and did a great job of understanding the challenges unique to my business. Without them, I can confidently say I would not have felt as comfortable through the transition as I did. Fortunately, that's not something that stops there - Michelle and her team have kept in touch to ensure that I'm on top of certain administrative issues, trends, and simply showing me that they care about my business and success. I look forward to continuing to work with them for many years to come.
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Margery Neis
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Dharmi Mehta was extremely helpful when my business partner and I transitioned to a new RIA firm. She and her staff were all very professional. Her guidance during our transition was invaluable. I highly recommend Dharmi and Jacko Law Group.
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Joseph Burwell
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Dharmi and Amandeep were a delight to work with. They assisted me with a claim and stuck with me the entire way through. Dharmi's advice was invaluable, and I was most impressed by her clear and professional communication. From beginning-to-end, both Dharmi and Amandeep kept me well informed. Their entire team are proud of their work and rightfully so. Thank you!
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Faruk Jaffer
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My mentor once told me that a good attorney is worth their weight in gold — and that couldn't be more true of Michelle and Amanda. Their expertise, professionalism, and responsiveness were top notch every step of the way. It's rare to find legal partners who are not only sharp and thorough, but also genuinely invested in your success. I’m grateful for their guidance and highly recommend them to anyone seeking trusted legal counsel.
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everistus etafo
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It is my great Privilege to share my Review of what Atty Dharmi Mehta of Jacko Law Group did for me and by extension for my family. From the first time complimentary conversation we had having spoken to several other Lawyers ,l knew she was the right person for the Job .Because of her background as a former RR ,she was professional,kind, Empathetic,listened and was focused on fighting for me. From a potential of been terminated with cause ,l was able to walk away with a clean U5 with a validation that l did nothing wrong except what was in the best Interest of my clients. I hope nobody ever has to go through what l have Experienced, but if you do ,you want Dharmi Mehta beside you .Rest assured your service Deserve 10 stars but this forum only allows 5. Me and my family are forever grateful and will make sure that any RR who needs an advocate will know about you . Everistus Etafo
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Karen Althaus
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I have worked with Jacko Law Group for 2 different business situations that necessitated an attorney. In both cases, the team was very thorough & competent. Their attention to our situation and the extra effort they put into our case(s) was very much appreciated. I would highly recommend Jacko Law Group!
With its decision in Gabelli v. SEC, The United States Supreme Court significantly compressed the ability of the Securities and Exchange Commission ("SEC") to bring enforcement actions for violations of the Investment Advisers Act.
The Investment Advisers Act makes it illegal for investment advisers to defraud their clients, and authorizes the SEC to seek civil penalties, but as per the general statute of limitations for civil penalty actions, the SEC has only five years to seek such penalties.
In Gabelli v. SEC, the court decided the statute of limitations for the SEC to seek civil penalties begins when the violation takes place, not when the violation was or should have been discovered.
While the court decision appears to be a win for Investment Advisers and Mutual Funds, the end result may be a more determined SEC bent on "beating the clock" of enforcement.
The heart of the SEC's argument in the case was the application of the "Discovery Rule," a common law doctrine that suggests that the statute of limitations begins, not at the time of the unlawful event, but rather from the time that the suing party became aware of the breech.
In its decision, the Supreme Court:
Declines to extend the Discovery Rule to government civil penalty enforcement actions
Asserts the discovery rule applies only to victims of the fraud itself, not government regulators seeking civil penalties; and
Asserts regulatory agencies are subject to the standard rule, which initiates the standard of limitations upon the perpetration of the fraud.
The original case brought by the SEC against defendants Mark Gabelli, then portfolio manager for the Gabelli Global Growth Fund (" GGGF") and Bruce Alpert, then Chief Operating Officer of Gabelli Funds involved "Time Zone Arbitrage," a practice that takes advantage of the time difference between domestic markets and those abroad but that may harm overseas investors. The SEC alleged that Gabelli allowed an investor in the mutual fund they managed to engage in this type of market timing. The Commission alleged that Gabelli committed securities fraud by allowing such a practice while simultaneously representing to the mutual fund board of directors that market timing would not be tolerated.
On April 24, 2008, the SEC sued the defendants and alleged that Gabelli and Alpert knew of the investor's market timing but deliberately mislead GGGF's Board and shareholders in violation of the Securities and Exchange Act of 1934.
On August 17, 2010, the District Court dismissed the SEC's claims for failure to bring the suit within the five-year statute of limitations, and the SEC appealed.
On August 1, 2011, the Second Circuit reversed the District Court ruling accepting the SEC's argument that because the underlying violations involved fraud, the Discovery Rule applied, meaning that the statute of limitations did not begin until the SEC discovered the fraud.
On Feb 27, 2013, on appeal, the United States Supreme Court reversed the lower court and noted that it had never applied the Discovery Rule in a matter where the plaintiff is the government bringing an enforcement action for civil penalties.
One possible implication of this decision is the SEC is likely to seek "Tolling Agreements" from potential defendants or respondents to an enforcement action. A Tolling Agreement is an agreement to waive a right to claim that litigation should be dismissed due to the expiration of a statute of limitations.
The SEC's Enforcement Manual States:
"If the assigned staff investigating potential violations of the federal securities laws believes that any of the relevant conduct may be outside the five-year limitations period before the SEC would be able to file or institute an enforcement action, the staff may ask the potential defendant or respondent to sign a "tolling agreement." Such requests are occasionally made in the course of settlement negotiations to allow time for sharing of information in furtherance of reaching a settlement. By signing a tolling agreement, the potential defendant or respondent agrees not to assert a statute of limitations defense in the enforcement action for a specified time period. A tolling agreement must be signed by staff at the Assistant Director level or above. Tolling agreements may not be entered without the approval of the Director of Enforcement."
It may turn out respondents are more willing to sign such an agreement rather than face an aggressive SEC up against the clock set by this court decision. However, some firms may place themselves at risk when signing these agreements as some forms of liability insurance may be voided if such an agreement is signed.
The timing of this decision is impactful; five years have already passed since the financial collapse of 2008, leaving the SEC potentially unable to pursue enforcement actions that led to the collapse. Clearly, the full impact of this court decision is not fully known. It is likely, however, that the end result could be a more aggressive investigation of potential violations by the SEC.
For more information on these and other considerations, please contact us at [email protected], or (619) 298-2880. Also, please visit our website at www.jackolg.com.Authors: Michelle L. Jacko, Esq., Managing Partner, Jacko Law Group, PC. JLG works extensively with investment advisers, broker-dealers, investment companies, hedge funds and banks on legal and regulatory compliance matters.This article is for information purposes and does not contain or convey legal advice. The information herein should not be relied upon in regard to any particular facts or circumstances without first consulting with a lawyer.
Michelle L. Jacko, Esq. is the Managing Partner and CEO of Jacko Law Group, PC (“JLG”), which offers securities, corporate, real estate, and employment law counsel to broker-dealers, investment advise...
