In the Matter of Jeffrey L. Feldman

[Editor’s Note: The casebook Securities Litigation and Enforcement: Case and Materials (Donna M. Nagy, Richard W. Painter, & Margaret V. Sachs eds., 4th ed. 2017) misspells Jeffrey Feldman’s first name as “Jeffry” in both the title and body of the case excerpt.] In 1985, Pakistan developed a plan to sell foreign-exchange-bearer certificates (FEBCs), securities that allow the purchase of a foreign currency at a predetermined exchange rate. Pakistan’s central bank, through the New York offices of three Pakistani nationalized banks, intended to sell the securities in the US and sought guidance on how to comply with US securities regulations from law firm Dunn & Zuckerman. No one at Dunn & Zuckerman had previous experience in securities law. Jeffrey Feldman (defendant), a lawyer and partner at Dunn & Zuckerman, advised the Pakistani banks that the certificates were not securities and recommended that no action be taken. Feldman persisted in advising that there was no requirement to make filings or register with the Securities and Exchange Commission (SEC) (plaintiff). Feldman continued to repeat his erroneous advice, ignoring information and guidance to the contrary provided by the Office of the Comptroller of the Currency within the United States Department of the Treasury and the Division of Corporate Finance within the SEC. The SEC brought administrative proceedings against Feldman to determine whether he had violated § 5 of the Securities Act of 1933 by advising the Pakistani banks to act in violation of the Securities Act. Feldman made an offer of settlement, which the SEC accepted. Feldman, without any admission or denial, consented to the SEC’s issuance of findings and a cease-and-desist order.