In an ongoing lawsuit by the Securities and Exchange Commission (SEC) against a Texas man it has accused of defrauding investors in a Ponzi scheme involving the popular "virtual currency" Bitcoin, Federal Magistrate Judge Amos Mazzant of the Eastern District of Texas re-affirmed in August his earlier denial of the defendants' motion to dismiss. In his ruling, Judgef Mazzant held that Bitcoin is "money" and that contracts involving the investment of Bitcoin rather than traditional currency are nonetheless subject to federal securities law. In an ironic twist, the ruling lends credibility to Bitcoin as a currency while simultaneously allowing the government to proceed in a case highlighting Bitcoin's risks and to potentially subject it to closer regulation-certainly an uncomfortable situation for a currency whose entire point is to serve as an alternative to government-sponsored legal tender.
According to a series of reports from ABC News 8 in Dallas, public records reveal that Yellow Cab may be in violation of a statewide passenger safety requirement that mandates taxi companies carry $750,000 in insurance when transporting Medicaid patients. The state of Texas is now investigating News 8's findings to determine if Yellow Cab is in compliance with insurance standards for a contract that's paid the taxi company nearly $82 million over a four-and-a-half year period. This follows a series of reports, from News 8 that the city of Dallas has given Yellow special treatment for 12 years, allowing the taxi company to operate without sufficient insurance intended to ensure the safety of passengers. The city of Dallas forced Yellow to obtain new insurance coverage after it learned Yellow's existing policy was insufficient.
This week, Rep. Lamar Smith of Texas introduced into Congress a bill entitled the "Lawsuit Abuse Reduction Act" ("LARA"). If passed, this bill will amend Rule 11 of the Federal Rules of Civil Procedure to remove federal judges' discretion in awarding sanctions for improper pleadings and remove the "safe harbor" provision of the rule which allows parties or lawyers to voluntarily withdraw or amend pleadings when the other party has filed a motion for sanctions. While the purpose of this bill is purportedly to combat "lawsuit abuse," its only effects will be to clog our courts with unnecessary hearings and to increase litigation costs for both plaintiffs and defendants.
Obligatory pun aside, this post deals with a serious issue for many retail investors-scam artists who use hot news items to cheat you out of your money. On August 20, 2013, the Financial Industry Regulatory Authority (FINRA) published an Investor Alert warning of potential scams involving marijuana-related stocks. In today's economic environment, and particularly after so many Americans saw their retirement savings evaporate in 2008, an investment tip promising big returns in a hot new business can be very tempting.
On September 3, 2013, Western Sky Financial, a payday lender based in the Cheyenne River Indian Reservation in South Dakota, shut down amid lawsuits by several states alleging Western Sky engaged in usury and other illegal practices in making loans to their citizens. Maryland's commissioner of financial regulation, for example, found that some Western Sky loans carried as much as 1,825% interest! In press releases and court filings, Western Sky claims that this is a case of regulatory overreach, and that it is immune from federal and state law due to tribal sovereign immunity. This would include federal and state law enacted to protect consumers and to regulate consumer debt collection, interest rates, and other lending practices.
According to its website, the National Collegiate Athletic Association (NCAA) was founded "to protect student-athletes." Recently, however, six college football players became the first current athletes to join a lawsuit against the NCAA for its unauthorized use and profit of athletes' identities in video games. The lawsuit, originally started by a group of former college athletes, alleges that the NCAA allowed video game manufacturer Electronic Arts (EA), commonly known as EA Sports, to exploit the names and traits of college athletes for use in video games in exchange for huge sums of money, none of which went to the athlete.
Following the merger of Continental and United Airlines, many loyal customers were left high and dry as United cut benefits for frequent fliers. A federal judge recently denied United Airline's motion to dismiss allowing a lawsuit brought on behalf of many United customers to proceed. The lawsuit is expected to be certified as a class action barring any settlement agreements.
Walmart, one of the largest retailers in the world, has been criticized for many years regarding its labor practices. It has been a constant target for various wage and hour litigation in the past few years. In fact, last year the Supreme Court blocked a class action brought on behalf of approximately 1.6 million women who worked at Walmart and who alleged that Walmart failed to provide training to female employees. Walmart has also made news for its hostile position toward unions.