A group of Fordham Law students from the Securities Litigation and Arbitration Clinic traveled to Washington, D.C. in early April to participate in an SEC Investor Advocacy Clinic Summit organized by the Securities and Exchange Commission (SEC).
Joined by their supervisor Prof. Paul Radvany, the group attended the one-day summit with more than 60 fellow students and clinic directors from 10 Law School investor advocacy clinics from across the country. In the morning, they participated in a session on ways to reduce fraud against retail investors; in the afternoon, they made a presentation recommending changes to ensure that brokers made suitable investments for low-income and inexperienced investors.
One of the students, Maureen Paparo (2L), said that the students used their experience representing clients in the clinic to propose some suggestions for the SEC to prevent future cases of investor fraud. “Our clients tend to be people who do not have a lot of investing experience and tend to be taken advantage of, such as elderly people or immigrants with limited English proficiency,” Paparo explained.
The clinic’s clients would not be able to obtain representation from attorneys because, according to Whitney Rosser (2L), another student from the clinic, “there is a lack of pro bono work in securities arbitration. These are the types of claims that law firms are not incentivized to take on.”
The goal of the summit was to provide the SEC and FINRA (the Financial Industry Regulatory Authority) with feedback and suggestions on how they can improve their regulatory systems so that low-income and inexperienced investors are not taken advantage of by brokers.
In most of the clinic’s cases, brokers complete the account opening forms on behalf of their clients and include false information that allows them to make riskier investments, often because they have higher commissions. But the brokers don’t give the clients time to read the forms and don’t provide them with a copy of the documents they’re signing. This can lead the clients not to realize that the investments chosen by the broker are unsuitable or highly risky until they experience financial losses.
At the summit, the Fordham Law students proposed to translate the account opening forms into the five languages spoken by those who have limited English proficiency, so that these investors can understand what they are signing. Another proposal they discussed was to require the investors to approve with their initials each answer on the form, to ensure that they have an opportunity to review their answers.
The students who worked on the presentations are Liliya Avshalumova, John Bradshaw, Dmitriy Gelfand, Maureen Paparo, John Reklaitis, Ayelén Rodriguez, and Whitney Rosser.
“The students put a great deal of time and effort into preparing for the summit, and their hard work paid off as they made excellent presentations,” Prof. Radvany said. “This experience was a chance for them to think about how their work can be used to make suggestions on how to improve the system. These recommendations will help prevent fraud and help countless investors down the road.”
At the summit, members of the clinic also asked questions of two of the SEC Commissioners, Robert J. Jackson and Elad L. Roisman who spoke at the summit.
“Prof. Radvany encourages his students to take the reins,” said Whitney Rosser. “He lets us lead client meetings and phone calls, but he’s always there to support us. The most rewarding part of this experience,” she concluded, “was to be in a room with important government officials who are really appreciative of our work.”
