Building On A Record Of Succcess In Complex Commercial Litigation And Securities Matters

Saturday, April 1, 2006 - 00:00

Editor: Congratulations on being named a "Super Lawyer" in May 2005. What makes a lawyer "super"?

Salomon: Each year, New Jersey Monthly sends out questionnaires asking lawyers to rate their colleagues. I was very gratified and honored to be selected by my peers as a "Super Lawyer" in the area of Securities Litigation and Regulation.

Editor: How did you develop your expertise in complex commercial litigation and securities matters?

Salomon: I began my legal career with Legal Services and then in the Public Defender's Office. After then working for a small Manhattan law firm, I enjoyed a long and happy career in the New Jersey Attorney General's Office. My varied assignments included litigation, contract negotiations and other counseling for the State's Office of Consumer Protection, Board of Public Utilities, Division of Youth and Family Services, Department of Energy and special assignments with other agencies. I also represented the State in federal litigation seeking disgorgement of massive amounts of overcharges by major oil companies. My later representation of New Jersey's Bureau of Securities gave me the background to later serve as a Trial Counsel for the New York Stock Exchange.

Editor: The number of women specializing in securities litigation and regulation is small, but growing. How have opportunities for women changed since you began your legal career?

Salomon: When I attended Columbia Law School, women students comprised only eight to ten percent of our class. Not only are more women attending law school today, but also women have many more opportunities at the highest levels of the legal profession, whether in government, corporations or private practice. Our firm benefits from the leadership roles contributed by its women lawyers. More and more women serve as general counsel and other decision makers for the clients we serve. They expect to see their law firms, like their in-house legal teams, reflect the increased diversity of our culture.

Editor: What attracted you to St. John & Wayne?

Salomon: Mid-sized, our firm enjoys the best of all worlds. Our clients and their matters have a sophistication and complexity comparable to what large Manhattan law firms handle. At the same time, we enjoy the collegial atmosphere of a small firm.

Editor: What is the depth and breadth of the firm's expertise in handling securities issues?

Salomon: We have a very knowledgeable group of lawyers who have had extensive experience working for regulators as well as in private practice. My experience of working for the New York Stock Exchange is mirrored by colleagues who have been with the American Stock Exchange and other self-regulatory agencies. We represent a broad range of clients and handle a great variety of matters within the securities field. Our securities law expertise is complemented by our corporate department on the transactional side. We work seamlessly to bring the regulatory focus to bear on the corporate transactions as well as to bring the corporate view to regulatory issues.

Editor: What types of clients do you represent?

Salomon: I enjoy serving a great variety of clients. In the securities industry, they include broker-dealers and investment advisers, and their associates and employees. We handle arbitrations heard by panels offered by self-regulatory agencies such as the NASD, because most securities-related disputes, including customer claims and employment matters, are required to go to arbitration instead of litigation in the courts. I also represent companies and individuals outside the securities industry on such matters as disputes among members of partnerships, limited liability companies and closely held corporations. We also represent public companies and their officers and directors in class action litigation.

Editor: Do you get involved in trans-Atlantic securities issues?

Salomon: Yes. I was recently asked by a United States broker-dealer to look at securities laws that govern potential operations in Europe. With the globalization of the securities industry, it is more and more common for foreign firms to buy American broker-dealers or to set up offices in the U.S. Similarly, many U.S. broker-dealers are setting up offices in the EU and other European countries. Some of the regulations are very similar to those in the U.S. and others are quite different. This is a very interesting area of my practice.

Editor: What issues are getting most of your attention today?

Salomon: The regulatory agencies, like the SEC, and industry governing bodies, like the New York Stock Exchange and NASD, have become much more aggressive, and their requirements have become more and more all encompassing. Regulation is now becoming tighter and reaching issues that 10 years ago would not have been on the radar screen.

The financial penalties for violating these regulations have become heavier. In addition, regulators are imposing stiffer requirements on both firms and individuals, who now must undergo more rigorous reeducation and revision of internal policies and procedures. For example, the New York Stock Exchange and the SEC together recently censured and fined a major broker-dealer. The total amount paid by the firm was $250 million, of which $90 million was a penalty. The bulk of the fine was disgorgement and interest for securities violations dealing with fraudulent market timing and late trading in mutual fund shares. This firm is one of several who were targets of investigations and prosecutions in this area. The broker-dealer must also comply with a variety of undertakings. It has to retain an independent compliance consultant and an independent distribution consultant to administer distribution of restitution to those harmed. The firm must also implement an effective training and education program, as well as to develop a compliance and oversight structure, set up hotlines and have its senior officers certify its compliance. This is a whole package of remediation and heavy fines for conduct that 10 years ago was not perceived as a widespread problem.

Editor: What steps should be taken to avoid running afoul of intensified scrutiny?

Salomon: The securities industry is probably the most highly regulated industry in the country. It is important for people in the industry to have adequate compliance, which requires effective internal procedures, adequate staffing and knowledgeable management. In addition, they should have knowledgeable counsel to keep them up to date with the various notices and requirements that are coming down the pike. The sources of the changes range from legislation, pronouncements and prosecutions by regulatory and enforcement agencies to private enforcement by means of class actions.

For individual investors, it is important to ask questions about their investments and whether they meet the investor's risk level and objectives. They should make sure they understand what the investment is before they get involved in it, and continue to reevaluate whether the investment is right for them as their lives and fortunes change. They should keep asking questions until they understand the information provided by their financial professional, be it a broker, an investment adviser, or a financial planner. If they do not understand what they are told, they should ask to speak with a supervisor. If they do not understand what the supervisor is saying, they should ask to speak with a compliance person. After all, it is the investor's money at risk.

Today most employees have a multitude of investment choices. Whether in an IRA or 401(k) program, investment decisions are no longer made by the employer, as had been in pension plans. The choices are with the employees, and the consequences of ill-informed investment decisions can be very serious and severe.

If an individual needs to select a financial professional, she should get several recommendations from people she trusts and interview the professional at length before placing her money with one. It is important for people to know that.

Editor: Please tell our readers about your leadership role in the New Jersey State Bar Association.

Salomon: For the last several years, I have served as the co-chair of the Securities Litigation and Regulatory Enforcement Committee of the New Jersey State Bar Association. The committee is involved in litigation, arbitration and regulation, whether with the state securities bureau, the federal government or the regulatory agencies involved in the securities field. We try to maintain cordial and informative relationships with the regulatory and criminal enforcement agencies.

Our committee activities include discussions in public forums about policy issues related to the securities industry. In addition to speaking engagements, we write articles and newsletters to reach a broader audience.

One of our primary events is an annual securities regulation overview for legal specialists and others involved in the industry. Speakers include leading senior members of the regulatory community who discuss highlights of the past year. They also engage in what is a frank discussion about what they will focus on in the next year. Their dialog helps us to keep our clients, and the public, informed about what is happening in this fast changing area.

Editor: How does your leadership role in bar association activities help your clients?

Salomon: My bar activities compliment my duties as counselor and representative to the clients. It is important to make sure that when clients ask a question or have a concern about a securities issue that their counsel has access to the regulators. Over the years, I have developed and continue to enjoy very good relationships with the state and federal regulators as well as the self regulatory organizations.

The NJSBA's annual conference puts faces to names, which helps to establish the relationships needed to speak to a regulator informally. The forum also provides a good understanding of the process of how regulators do their investigations and make their determinations as to whether to proceed on a formal basis.

It is important to clients to try to get issues resolved either before a formal proceeding ensues or, if formal proceedings are initiated, that they be resolved as best they can in the client's interest.

Editor: What advice do you have for younger lawyers who would like to follow in your footsteps?

Salomon: Securities law is a fascinating area because there is always something new. I would encourage any attorney who is interested to contact me to talk about a career in this area.

Please email the interviewee at ces@stjohnlaw.com with questions about this interview.