Sara focuses her practice on complex business and securities regulatory matters, litigation, and arbitration before federal and state court and arbitration forums. She represents financial institutions and public companies in securities litigation, FINRA arbitrations and government investigations and securities enforcement matters. She is also a key member of the eDiscovery team and has extensive experience leading eDiscovery, information management and governance, and other technology-related projects both within the Firm and for the Firm’s clients.
Dismissal of Claims under the Racketeer Influenced and Corrupt Organizations Act and Banking Regulations
PMA obtained the dismissal of multi-million dollar claims, arising of securities losses that were related to loans for the purchase of securities. The dismissal included claims for purported violations of Regulation U, 15 U.S.C. § 78g, and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 et seq., (the “RICO Act”). The United States District Court for the District of Puerto Rico determined that plaintiffs failed to state a claim against the defendants, including Banco Santander Puerto Rico, upon which relief may be granted: (1) for alleged violations of Regulation U because no private cause of action exists thereunder; and (2) under the RICO Act because plaintiffs’ claim stemmed from the purchase and sale of securities and was, therefore, preempted by the Private Securities Litigation Reform Act, 18 U.S.C. § 1964(c) (“PSLRA”). Néstor M. Méndez-Gómez and Sara L. Vélez-Santiago argued an appeal before the United States Court of Appeals for the First Circuit in November 2013, after which the First Circuit affirmed the District Court’s decision dismissing the entirety of the claims asserted in this action.
Dismissal of Claim for Securities Losses
PMA obtained the dismissal of a claim for $9.5 million against Banco Popular de Puerto Rico before the United States District Court for the District of Puerto Rico, seeking compensation for losses allegedly sustained in connection with the purchase of notes issued by the Puerto Rico Conservation Trust Fund. Néstor M. Méndez and Sara L. Vélez-Santiago successfully argued the appeal before the First Circuit Court of Appeals, which affirmed the dismissal.
Dismissal of $600 Million Putative Class Action in State Court
PMA also obtained the dismissal with prejudice of a putative class action suit against a major financial institution claiming compensation for over $600 million for alleged losses in connection with certain investments in notes issued by the Puerto Rico Conservation Trust Fund. The Court of First Instance dismissed the complaint in its entirety with prejudice, concluding that: (1) the claims were time-barred under the two-year period of repose pursuant to the Puerto Rico Uniform Securities Act; (2) the defendant acted as an indenture trustee with respect to the investments at issue and thus, did not breach fiduciary duties as alleged in the complaint; (3) the investments were exempt from application of the Trust Indenture Act invoked by the class representatives; and (4) plaintiffs failed to state a valid claim for damages and/or conflict of interests pursuant to Article 1802 of the Puerto Rico Civil Code, and any such claim, if valid, would be time-barred. This is the first Puerto Rico decision to apply the indenture trustee case law developed in the United States to a bank acting as trustee under Puerto Rico law. The decision also strongly enforced the statute of repose in the Puerto Rico Uniform Securities Act, requiring investors to be diligent in timely filing their claims.
Dismissal of Claims arising out of loans collateralized with securities
PMA recently obtained dismissal of a $2.9 million claim against one major banking institution that was filed before the Court of First Instance, San Juan. The claims stem from the loans obtained by plaintiffs to purchase securities. The plaintiffs contended the legality of the loans. On summary judgment, the Court dismissed the entirety of the claims. An appeal is currently pending.
PMA has successfully represented various broker-dealers in hundreds of FINRA arbitrations and mediations arising out of claims.
Néstor M. Méndez-Gómez and Sara L. Vélez-Santiago recently obtained an award dismissing a claim for losses, when the Panel granted a motion to dismiss at the close of claimants’ case in chief based on the Federal and Puerto Rico statutes of limitations applicable to securities claims. Sara L. Vélez-Santiago has also obtained dismissal of securities arbitration proceedings on arbitration eligibility grounds.
eDiscovery and Regulatory Investigations
PMA has represented major financial institutions and broker-dealers in regulatory investigations, which have resulted in no action letters by federal and local regulators. Sara Lydia Vélez-Santiago is a key member of the ESI and Corporate Investigations team and has led eDiscovery projects in which the Firm acts as eDiscovery counsel.
Significant published cases:
César Calderón and Teresita Palerm Nevares a/k/a Tessie Calderón v. Banco Santander Puerto Rico, et al., Appeal No. 12-2128, 747 F.3d 1 (1st. Cir. 2014).
César A. Calderón-Serra; Teresita Palerm-Nevares a/k/a Tessie Calderon v. Wilmington Trust Company; Banco Popular de Puerto Rico v. UBS Financial Services, Inc.; Insurance Company A, B, C, Appeal No. 11-2449, 715 F.3d 14 (1st. Cir. 2013).