A Lawsuit Against a Former Director of a Bankruptcy Company is Being Sued By a Former Regional Manager
Blum Law Group, a prominent litigation support firm based in Miami Beach, Florida has recently filed a lawsuit against Regions Bank (Regions’), a bank subsidiary of Regions Financial Corporation(NYSE: RF). The lawsuit is based on the fact that Regions improperly marketed an unregistered stock through its websites and in its advertising efforts. The complaint further relates that during the promotion of the unregistered stock, which the defendant refused to list on its own stock exchange, it engaged in activities which were in violation of the securities laws of Florida and the federal securities laws. As a result of the fraudulent acts detailed above, the plaintiff has brought this lawsuit against the defendants.
The complaint in this class action lawsuit seeks to hold the defendants liable for injuries that arose as a result of their negligence in not promptly and effectively supervising the activities of its agents and Broker-dealers in selling the unregistered securities. The complaint further seeks to hold the Broker-dealer responsible for injuries that arose from the failure of the defendants to promptly exercise reasonable supervision over those agents and Broker-dealers. The complaint further seeks to hold the Broker-dealer liable for injuries that arose from the conduct of the defendants’ agents and Broker-dealers during the period when the unlisted stock was offered for sale. Finally, the complaint seeks to hold the defendants fully and jointly liable for injuries that arose from the conduct of the defendants’ agents and Broker-dealers during the time the unlisted stock was held in the hands of those persons who had been promoting it for Regions. Accordingly, the complaint is averred and warrants that the defendants be held and declared liable for damages alleged against them in the Class Action Lawsuit.
The Class Action Lawsuit further brings into question certain facts relating to the failure of the defendants to instruct their agents and Broker-dealers of the dangers of providing material support to the detriment of the interests of the investors in the unlisted securities. Specifically, the Class Action Lawsuit seeks to hold defendants accountable for failing to provide warnings that would have reasonably been foreseeable if they had honestly instructed their agents and Broker-dealers that the securities would be held in the hands of persons unconnected with them, including themselves, and in reliance on representations that the securities were held in the names of persons who did not have an ownership interest in them. In addition, the Class Action Lawsuit seeks to hold defendants fully and jointly responsible for injuries that arose from the commission of fraud by their agents and Broker-dealers in connection with the unlisted securities sale.
On April 6, 2021, the United States Department of Justice filed papers in this case in the United States District Court for the Northern District of Illinois, captioned “John Doe vs. R.G. Realty LLC, et al.” The complaint herein is a Class Action Lawsuit that is brought on behalf of a Class of all persons who were the subject of a Marketing Order (“MAO”) that was issued in November 2021 by the Departments of State of the United States Department of Housing and Urban Development. The Order instructed the defendant to sell the unlisted securities to a broker-dealer on the basis of an understanding that the broker-dealer would then represent and sell the securities in the name of the funds raised from the investors. It further instructed the broker-dealer that it could not provide assistance to the person buying the securities unless that person had a direct ownership interest in the underlying securities.
On December 7, the United States District Court for the Northern District of Illinois, after properly determining that the Marketing Order was contrary to federal law and therefore void, entered an order allowing the parties to settle their disputes through arbitration. On March 4, the United States Bankruptcy Court entered a decision in favor of the United States Claimant. In the bankruptcy court’s opinion, the defendants violated the requirement of Sec. IV(b) of the Bankruptcy Code. That section requires that a borrower to retain “a personal representative to act as his attorney-in-fact during the pendency of the bankruptcy case.” The court found that the defendants’ failure to hire such a representative, or their failure to instruct such a representative that the Bankruptcy Court would make its decision, caused the claim to become moot.
Jane Magnus-Stinson, a partner in an international real estate investment business, brought her case against Regions Bank. Ms. Magnus-Stinson was a former director of the now-defunct Ashburn Investment LLC, which was one of the banks involved in the Ashburn/ Regions case. In that case, Ashburn was held liable for failing to obtain necessary financial documents from Regions to properly register its commercial property for international use. Her lawsuit against Regions Bank is currently pending in a federal court in San Francisco.