Securities Industry Commentator by Bill Singer, Esq

November 20, 2017

Yelp Inc., Petitioner, v. The Superior Court of Orange County, Respondent; Gregory M. Montagna et al., Real Parties in Interest - AND - Gregory M. Montagna et al., Plaintfiffs and Respondents, v. Yelp Inc., Objector and Appellant (Opinion, Court of Appeal of the State of California, Fourth Appellate District, G054358 consolidated with G054422 / November 13, 2017)

As set forth in the "Syllabus" [Ed: footnotes omitted]:

Yelp Inc., which operates a website for consumer reviews, has petitioned for a writ of mandate to overturn an order compelling its production of documents that may reveal the identity of an anonymous reviewer on its site. Yelp also appeals from a separate order imposing $4,962.59 in monetary sanctions against it for failing to comply with the subpoena requiring production of the documents. Pursuant to the parties' stipulation, we have consolidated the writ proceeding with the appeal. 

Yelp argues the orders must be reversed because: (1) the trial court erroneously concluded Yelp lacked standing to assert the First Amendment rights of its anonymous reviewer as grounds for resisting the subpoena; and (2) the court further erred by concluding plaintiff Gregory M. Montagna, Sr.,1 made a prima facie showing the content of the review posted on Yelp's site by "Alex M.," the anonymous reviewer, was defamatory. 

We agree the trial court erred in ruling Yelp lacked standing to assert the First Amendment rights of its anonymous reviewer, Alex M., but find no error in its determination Montagna made a prima facie showing the challenged review was defamatory. Consistent with the recent opinion ZL Technologies, Inc. v. Does 1-7 (2017) 13 Cal.App.5th 603 (ZL Technologies), we conclude the latter finding was sufficient to support the trial court's order compelling Yelp to produce the subpoenaed documents in the circumstances of this case. We consequently deny the petition for writ of mandate. 

However, given the dynamic nature of this area of law-the primary cases we rely upon were decided after the trial court issued its ruling-we also conclude Yelp's opposition to Montagna's motion to compel was substantially justified. We thus reverse the order imposing sanctions against Yelp

The Commodity Futures Trading Commission ("CFTC") obtained $1,127,855 in restitution for defrauded pool participants and $3,383,565 in civil monetary penalties in a federal court Default Judgment Order against Defendants Gerard Suite (who is known by numerous aliases, including Rawle Gerard Suite, Jerry Suite, and Jerry Snead) and his company, STA Opus NR LLC (STA Opus), as well as a Consent Order against Frank Collins for knowingly or recklessly misappropriating at least $50,000 of STA Opus customers' funds. As set forth in pertinent part in the CFTC Press Release, from at least 2013 through May 6, 2016:

[S]uite and STA Opus fraudulently solicited customers by falsely representing that STA Opus' commodity pool had positive annual rates of return, when in fact, STA Opus' three commodity futures trading accounts had lost virtually all of the funds Defendants committed to trading, and failing to disclose a prior disciplinary history with the CFTC and State of California that included $2.5 million in restitution and fines in connection with conducting business as an unregistered investment advisor in California.

The Default Order also finds that Suite and STA Opus misappropriated $1,127,855 of pool participants' monies and issued false account statements to participants that concealed their misappropriation of participants' monies.

The Default Order further finds that STA Opus was acting as an unregistered commodity pool operator (CPO) and that Suite was acting as an unregistered associated person of the CPO when they fraudulently solicited pool participants.

CEO CCO FINOP Fined And Suspended Over Classification Of Personal Expenses ( Blog) 

A FINRA regulatory settlement presents the case of a CEO, CCO, and FINOP who was fined and suspended for classifying his personal expenses and business expenses. That's a lot of titles for one person. Last month, his brokerage firm's FINRA registration was terminated. All of which makes for some interesting reading and raises some provocative questions.