Online Dating Scams

How Do Online Dating Scams Work

Legal AssistantCriminal Law, Resources

Looking for love online has always been a dicey affair. In the unique times that we’re currently living in, more people are turning to online dating sites and social media in the hope of meeting that special someone.

Sadly, while there are genuine people signed up on these sites, many of them are riddled with scammers posing as eligible singles whose sole mission is to fleece them of hard-earned money.

According to the Federal Trade Commission (FTC), online dating scams accounted for more than $304 million in losses in 2020 alone, with that number expected to rise with each passing year.

The initial belief was that women were more susceptible to these online scams. On the contrary, the FTC scam report indicates that men, particularly those aged 50 and up, are getting increasingly duped.

If you’re looking for love online, you need to learn how to spot a scammer from the get-go to avoid getting more than just your heartbroken. Here’s what you need to know.

How Do Romance Scams Work?

Online scammers are quite sleek and sophisticated in their techniques. Forget about those old-school Nigerian prince scams that you would be able to spot a mile away. Dating scammers are patient – charming even.

They worm their way into your heart, often waiting several weeks, months, and in some cases, even years to win your trust.

They weave an elaborate web of realistic tales in a bid to get you to send gifts, money, or sensitive financial information like your credit card or bank account details.

That’s when they strike – when you’re at your most vulnerable. At the point when you genuinely believe that you’re in a relationship with a genuine person; someone who has your best interests at heart and would never take advantage of you; someone who you feel connected to on an emotional and spiritual level; someone you’re planning to spend the rest of your life with.

The genesis of this illusion is a fake profile on a dating site. Romance scammers painstakingly craft every aspect of their online persona to appear legit. Many of them often use fake photos to sell the illusion.

In other instances, they use popular social media sites like Facebook and Instagram to initiate contact with unsuspecting targets. It’s usually a game of numbers, so they send out hundreds of friend requests hoping that someone takes the bait.

How to Tell if Someone Is Scamming You Online

There are several red flags to look out for if you suspect someone might be trying to pull a fast one on you.

For instance, if you meet someone on a dating app and a few short contacts later, they’re already professing their love for you, that’s a definite warning sign. If they ask you to communicate with them outside the dating platform via email or chat, that’s a red flag as well.

The other thing to look out for is consistency. Their dating app profile or social media account should be consistent with what they tell you.

For instance, if the individual’s profile description in question states that they are university-educated, but their grammar and overall proficiency in English seems a little off, that’s another red flag.

Moreover, if every time you arrange to meet with them in person, they always seem to have some type of excuse for why they can’t travel on the agreed date, then you know you’re dealing with a scammer. Here are two of the most common online dating scams you need to watch out for.

Offshore Oil Rig Scams

Offshore Oil Rig Scams

While several people genuinely work on offshore oil rigs, the mention of this profession on an online dating app or website should set off your alarm bells. It doesn’t even have to be an oil rig per se.

It is usually any remote location that gives them a pretty solid excuse not to have a phone conversation, video call, or in-person meeting with you.

After a few weeks of communication, they’ll eventually ask you to wire cash to purchase a plane ticket to come and see you, to sort out a family emergency, or for any well-crafted fallacy. Those who don’t ask for cash may request gift cards instead.

Military Romance Scams

If you recently started talking to someone online who claims to be a member of the military, that’s another warning sign that you might have a scammer on your hands.

Victims who fall prey to military romance scams often believe that they play their role in supporting an individual who’s willing to put their life on the line for their country.

These scammers will often give fictitious, service-related stories to lure their victims into sending them money to purchase a secure phone-line, pay medical fees, process a marriage license, pay for transportation, etc.

What to Do If Scammed Online

You’ve purchased a gift card and sent it to a romance scammer, or you’ve wired funds to the account they provided you with. You realize shortly after that you’ve been duped. Now what? Who do you report scams to?

In the case of gift cards, you’ll need to contact the issuing company right away explaining that you’ve been scammed and ask if they can cancel the card and refund your money. Do the same with your bank if you transferred funds from your account that of the scammer.

Ensure that you also notify the dating app/website admin where you met the scammer using the report scam functionality.

You’ll often find it somewhere within their profile. Finally, you should also report scams to the FTC and have law enforcement authorities investigate the crime.

Punishment for Online Scamming

18 USC § 1343 of federal law covers wire fraud. It has now been generally understood that the statute covers all forms of cyber fraud perpetrated via the internet or through email. If convicted, online scammers face up to 20 years in federal prison.

Spot the Warning Signs Early On

Falling in love is a beautiful thing regardless of where you find your soulmate. Just make sure you keep your guard up and learn to spot the red flags early on.

Never send money to a stranger you met online, no matter how desperate their situation appears to be.

Think you may have fallen victim to a romance scam? Chat online with a Laws101 attorney today to get legal advice.

Railway Station Scene

Who Is Liable if a Person Is Hit by a Train

Legal AssistantAdministrative Law, Personal Injury Law

If a pedestrian gets hit by train, it is unlikely that they would survive such an accident. If they do live through it, it won’t be without severe and permanently disabling injuries.

According to statistics from the Federal Railroad Administration, there have been more than 8,000 train accidents or incidents in the last year alone. Close to 800 of these have resulted in fatalities.

For the pedestrian hit by a train or their surviving kin to recover damages, the burden of proof lies with establishing who was at fault and why, for them to prove liability. With that in mind, here’s everything you need to know about train accident lawsuits.

Determining Who Is at Fault

The first step in any train accident claim is to determine who the at-fault party is. It means establishing whose negligent actions caused the accident or incident in question.

If the person hit by train is to blame for the accident and the associated injuries, or the fatality that resulted from it, recovering damages is unlikely. This is aside, of course, from the compensation that the victim’s insurance company would pay out.

However, in most cases, it is usually another party that’s to blame for the train accident/incident. For instance:

  • Another pedestrian may have pushed the victim into the train’s path
  • A vehicle may have hit the victim, pushing them onto the railroad
  • A train operator may have failed to stop at the railroad crossing
  • A train maintenance company or employee may have failed to check that the brakes were working as they should
  • The city may have failed to provide safety barriers and maintain safe conditions that could potentially have prevented the accident

Any entity deemed to have acted negligently would be named the at-fault party in a lawsuit.

Proving Negligence and Causation

Once the at-fault party has been determined, the next step involves proving negligence and causation. Negligence, by law, is defined as an unreasonable and unsafe act.

On the other hand, causation is described as the act of negligence being the direct cause of an individual’s injuries or death. To prove negligence, you would have to show that the at-fault party:

  • Failed to maintain the railroad, the corresponding railroad warning lights, the caution fixtures, or the train itself
  • Was operating the train while under the influence of an intoxicating substance
  • Failed to provide or maintain a safe walking path causing the pedestrian to slip and fall into the path of the oncoming train
  • Acted in a manner that wouldn’t be considered prudent by a reasonable person

Once you prove negligence, you’ll then need to prove causation. In other words, you, through your lawyer, will need to show that the train accident could have been avoided entirely had the at-fault party not acted negligently.

If you have evidence that shows negligence and causation, you can recover damages from the at-fault party.

Recovering Damages in a Pedestrian Train Accident

If the injured pedestrian is filing the lawsuit themselves, below is a list of some of the damages they may recover:

  • Emotional distress
  • Financial losses
  • Loss of life enjoyment
  • Loss of wages
  • Medical expenses
  • Pain and suffering

If the pedestrian’s surviving kin is filing a wrongful death lawsuit on behalf of the deceased, they can claim the above damages, as well as loss of guidance and consortium. A competent train accident lawyer can help you get the compensation you deserve.

List of Rail Accidents in the United States

Below is a brief overview of some of the worst train accidents that have occurred in recent years.

Train Accident Causes Chemical Spill

On January 6, 2005, two trains collided head-on near Graniteville, South Carolina. One of the trains was directed towards a warehouse where it hit a stationary locomotive, spilling chemicals on the ground and releasing chlorine fumes into the air.

10 people were killed in the accident, with hundreds more experiencing chronic complications, including pulmonary edema, difficulty breathing, blurred vision, and several other associated illnesses resulting from the chlorine in the air.

The cause of the train accident was attributed to human error when train track operators failed to throw a switch. This effectively sent the train in the wrong direction.

School Bus Hit by Train

On January 25, 2019, a 13-year-old boy was killed while a 9-year-old girl was gravely injured when a freight train plowed into a school bus as it was crossing at a railroad intersection in Athens, Texas.

Reports indicate that the crossing had no gates or warning lights to alert motorists and pedestrians of an oncoming train.

According to eye-witnesses, the bus had initially come to a halt before proceeding to cross the tracks, at which point the collision happened. The 78-year old driver of the bus was later indicted on manslaughter and child-injury charges.

Crude Oil Rail Car Accidents

On December 22, 2020, a train derailment occurred in Washington State near the Canadian border, causing two of the train cars to rupture and spill the volatile Bakken oil they were carrying.

The oil then ignited and burned, prompting a major emergency response that also led to the temporary closure of Interstate 5 in both directions.

Train Explosion

On February 23, 2021, a huge explosion erupted in Cameron, Texas, after an 18-wheeler truck crashed into a fuel train.

The rail cars were ferrying coal, gasoline, and petroleum products, which ignited on impact, setting off a fire that took several days to put out.

The driver of the truck lost control of the vehicle and was unable to stop. It swerved around a parked vehicle before heading towards the railroad crossing and colliding onto a passing fuel train.

Train accidents are some of the most devastating and gruesome mishaps that can occur. If you or a loved one was harmed in a public train accident, ensure you get experienced legal counsel to help you get the compensation you deserve.

Have any legal questions for us? Live Chat with one of our attorneys today.

Is Secession Legal

Is Secession Legal?

Legal AssistantAdministrative Law, Constitutional Law

Every few months, the Texas secession issue always seems to crop up. With renewed “Texit” calls, some of the questions on people’s minds are – Is secession legal? Can Texas secede from the United States? Why would a state want to secede anyway?

Many political analysts and legal scholars believe that secession threats should not be taken literally. According to them, it is merely rhetorical and meant to draw attention to how political and cultural differences track geographical divides.

Whether or not it’s a real possibility still calls into question its legality. Is secession constitutional? This article explores everything you need to know about it.

What Is Secession

Secession definition in a historical context refers to the exit of 11 southern states from the Union, culminating in the American Civil War.

The term session, in general, refers to the act of withdrawing from membership of a political state, body, or federation.

In the Secession Crisis of 1860-61, the southern states withdrew from the Union and declared themselves a separate nation – the Confederate States of America.

Even before the establishment of the confederacy, secession threats were nothing new. South Carolina, for instance, had tried to break away from the Union thirty years before. Before that, the Hartford Convention of 1814-15 brought together the New England states that wanted to secede.

In December 1860, however, South Carolina passed an Ordinance of Secession, becoming the first state to successfully leave the Union.

According to the state’s Declaration of Secession, the main reason for its exit was its desire to preserve slavery. The document also cited that the proposed actions and opinions of the then president, Abraham Lincoln, were “hostile to slavery.”

Arguments for the Right of Unilateral Secession

The US Constitution doesn’t recognize or deny the right of state secession in general. Nonetheless, the argument for the right of unilateral secession can be supported by the very nature of the US Constitution itself.

By the terms of Article VII of the Constitution, its legal enforceability came from the ratification of nine states. The document derived its initial power from these sovereign states’ voluntary act consenting to be a party to it.

However, secessionists argue that in the same way the states voluntarily ratified the Constitution, they could, in the same way, voluntarily and unilaterally withdraw their consent and cease to be part of the Union.

From this perspective, one could argue that the Constitution is a multilateral treaty of sorts. Its power and legal effect came from the sovereign states’ consent that agreed to be a party to it.

In the same way that sovereign nations can withdraw from a treaty, the same argument can be made for sovereign states seceding from the Union.

Arguments Against the Right of Unilateral Secession

On the other hand, we have to consider the arguments against the right to secede. Most of these can be found in President Lincoln’s inaugural address in March 1861.

If you’ve always wondered – Why did President Lincoln oppose secession – here’s what his thoughts were on the subject.

First, Lincoln asserted that the idea of a national government agreeing to its termination was absurd. No constitution in the world would offer provisions supporting its dissolution.

Second, Lincoln disputed that the Union was merely a “voluntary association.”

He further argued that even if it were, the very principles of contractual law would bar unilateral secession. Consent from all parties to a contract is required to rescind it. If one party pulls out, then they would be in breach of the terms.

Third, Lincoln further claimed the Union existed long before the Constitution, dating as far back as the Articles of Association of 1774.

All 53 signatories were British colonies, and as such, they declared their independence as a Union – the United States. According to him, this shows that the states were never “sovereign” to begin with.

Finally, Lincoln opposed claims that the Constitution doesn’t recognize or deny secession. The Constitution’s immediate predecessor – the Articles of Confederation-proposed creating a “…perpetual… more perfect… Union.” It sought to further strengthen the existing bonds between the states.

We can infer from Lincoln’s arguments that when the states entered the Union, they gave up their sovereignty and the rights that came with it, which is the right to unilaterally secede.

The Constitution on Multilateral Secession

So far, we’ve established that states cannot withdraw from the Union unilaterally.

The Supreme Court settled this matter in Texas v White, which also prohibits the expulsion of a state by the national government if the state in question wishes to remain part of the Union. The question is – Does the law allow secession if all parties are in agreement?

In Texas v White the Supreme Court made an exception for secession in two scenarios:

  • Through the consent of all the states in the Union
  • Through a revolution

The likelihood of the latter happening is slim to none. What is more probable is secession through mutual consent. This would have to be enacted by Congress.

In the same way that the legislature can approve a new state’s admission to the Union, so can it also let an old state leave.

In the case of the recently filed Texas Secession Bill, the legislation allows state residents to vote on whether the state should secede from the United States.

According to supporters of the proposed legislation, the move to secede is in response to a federal government that “…does not represent the values…” of Texas residents.

This would be the first step in a very long process that would require the rest of the states in the Union and the national government to consent to it.

Only Time Will Tell

The Texas annexation into the United States was not immediate. When Texas got its independence from Mexico and wanted to join the Union, the national government was concerned that doing so would trigger a war between the two countries. To avoid this, Texas remained an independent nation known as the Lone Star Republic from 1836-45.

It appears that Texas still craves the independence it once had. Whether or not their umpteenth secession attempt will work remains to be seen.

If the state is to secede, it will have to be by multilateral agreement. Unilateral secession, however, is out of the question.

Have any legal questions for us? Live Chat with one of our attorneys today.

Is Short Selling Illegal

Is Short Selling Illegal

Legal AssistantCriminal Law, Resources

Short selling has long been a popular investment strategy for speculators, hedge fund managers, arbitrageurs, individual investors, and gamblers alike.

It is a risky technique and is suited to investors with a huge risk appetite since it comes with the very real possibility of losing a substantial amount of capital.

Securities law is broad and complex. As a result, the legality of a particular stock trade is not always as straightforward as you might think.

The question of whether or not a given trade is legal often revolves around various forms of insider trading and, to some extent, short selling stocks.

Is short selling illegal? Here’s what you need to know.

What Is Short Selling

Shorting, short trading, shorting a stock, and selling short, are all different terms that refer to the same thing – short selling. The terms “short” and “long” as used in stock market trading refer to how the trade was initiated, i.e., by selling first or buying first.

In a traditional long position, an investor initiates a trade by purchasing a stock at its current market rate, expecting that they’ll sell it at a higher price in the future to realize a profit. The rule of thumb when taking this approach is to buy high and sell low.

When an investor takes a short position, they initiate a trade by selling a stock at its current market rate, expecting that they’ll repurchase it at a lower price in the future to realize a profit. In this case, the rule of thumb is to sell high and buy low.

At this point, you might ask – What is a short seller trying to do? Investors in long trades bet on the company’s success. They want to see the share price go up. The company’s prosperity is tied to its success as investors.

Short traders do the opposite. They bet against the company. The success of their investment is tied to the company’s falling share price, so they try to profit off its failing performance.

Did Robinhood Act Illegally in the Gamestop Short Squeeze

How Does Short Selling Work

In long trading, an investor owns the shares once they purchase them. They make (or lose) money when they sell them at a future date.

In a short position, a trader also sells stocks, only in this case, they don’t own them. At this point, you might be wondering – How can you sell shares of stock you don’t own? Here’s how it works.

To short a stock, an investor approaches a brokerage firm and asks to borrow a specific number of shares for a particular company.

The broker then lends them the shares derived from their clients’ stock portfolios, with the agreement to get them returned at a future date. This will be subject to various terms and conditions as set out by the brokerage.

Once the investor receives the stock, they then sell them at their current market price. The short trader waits, hoping for the share price to go down in value over time.

Once (or if) this happens, they have the opportunity to buy back the same number of shares they initially sold, only this time, it will be at a much lower price.

They would then return the shares they borrowed to the brokerage and pocket the leftover cash they have from buying back the stock at a lower market rate. All this is legal.

Short Selling Example

Let’s say you believe that the shares for Corporation X, which currently trades for $100 each, are overpriced. To short the stock, you approach a brokerage firm and ask to borrow 100 shares.

The broker pulls the requested stock from one of their clients’ portfolios and lends them to you. Once the shares are credited to your trading account, you sell all one hundred of them for a total of $10,000.

Let’s also say there’s an outbreak of a highly-contagious pandemic that forces the government to institute a nationwide lockdown that lasts several months. Corporation X is adversely affected by these measures, and its stock price plummets to $50 per share.

You then buy back the 100 hundred shares you had initially sold, only this time, you’re getting them for $5,000. You return the borrowed stock to the broker and keep the extra $5,000 you’re left with.

What Would Make Short Selling Illegal

Short selling, as we’ve explained so far, is legal. Naked short selling, on the other hand, is not and constitutes a form of securities fraud.

When short selling, a trader needs to borrow a stock that:

  1. Has been determined to exist, and
  2. Has been determined that it can be borrowed

If the stock satisfies both criteria, only then can a trader sell it short. Despite it being illegal, these short selling rules continue to be flouted due to discrepancies and loopholes in electronic and paper-based trading systems. This gives rise to naked short selling – selling stocks that don’t exist or can’t be borrowed.

The other thing that would potentially make shorting stocks illegal is a bear raid. This is a systematic smear campaign against a particular stock to drive down the share price. This illegal practice allows unscrupulous short sellers to buy back stock at a lower price and profit from the trade.

Finally, shorting a stock can become illegal if it coincides with insider trading. If a trader has insider information that the current share price of a particular stock is about to drop for any number of reasons, short selling based on that information will constitute criminal conduct.

Short Sell Restriction Rule

The Short Sell Restriction (SSR) rule is a Securities and Exchange Commission (SEC) regulation restricting traders from shorting stocks as the share price goes down. While there’s no restriction from buying a stock as its price rises, the SSR rule is designed to guard against downward volatility.

As such, if the price of a stock or any other security has gone down by 10 percent or more, compared to what its closing price was the previous day, SEC regulations prohibit traders from shorting that particular stock.

While short selling may look like a great way to make money off a stock’s falling price, it does come with its fair share of inherent risk.

For one, you may not always be able to buy back the stock when you want, at the price you want. Market forces may force you to close your position earlier than you had anticipated, which may result in significant capital losses.

Recognizing that there’s no such thing as a “sure-thing” in the stock market also means there’s no definitive way to tell the direction in which the price of a stock will move. Case in point: The GameStop short squeeze.

Either way, short selling is bound by the SEC rules. Violating any of them is tantamount to a white-collar crime.

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Did Robinhood Act Illegally in the Gamestop Short Squeeze

Did Robinhood Act Illegally in the Gamestop Short Squeeze

Legal AssistantBusiness Law, Resources

A few weeks ago, a group of investors on Reddit gave new meaning to the term “social movement” after banding together and encouraging anyone who would listen to invest in GameStop shares.

The movement, which first started on WallStreetBets – a forum on the popular social platform –, was aimed at punishing Wall Street investors, many of whom were hedge funds that bet against the one-time retail giant’s stock.

If you’re one of those “yester-year” gamers, who grew up having to endure long queues outside GameStop stores for their console launches, then the move by these Wall Street short-sellers likely struck a nerve.

It certainly did among contributors of Reddit WallStreetBets, who went ahead to launch an all-out attack against shark investors who profit from the destruction of well-known retail brands. Their weapon of choice: Robinhood.

The real question is: Did Robinhood act illegally in the GameStop short squeeze? Furthermore, is it illegal for Robinhood to restrict trading? Before we can answer these questions, let’s start from the beginning.

What Does It Mean to Short a Stock

For most people, investing in the stock market is a long-term affair. You buy stock belonging to a specific entity at the current share price, hold on to the said stock, and sell it for a profit in the future when the price goes up.

It’s all pretty straightforward. In this investment strategy, you’re betting on the company’s success since it is directly tied to your success as a retail investor.

A lesser-known investment strategy involves short trading, or short selling, as it’s often called. In this case, you profit off a drop in the share price of the company you invest in. Short-selling is often used when an investor anticipates that the price of a particular security will fall.

Rather than take the traditional buy-low-sell-high approach for long stock positions, an investor does the reverse: sell-high-buy-low, except, in this case, they aren’t using any of their money to do it.

How Short Selling Works – An Example

Let’s say you want to short a stock belonging to Acme Corp. You would approach an investment brokerage that allows short trading on its platform. Remember, the broker holds a large portfolio of stocks belonging to several different investors.

You would then “borrow” X number of shares from the brokerage with an agreement to return them at a later date.

This agreement would be subject to a predetermined interest rate, collateral, and all other applicable fees the broker may require. It would then transfer the requested shares, which it currently holds in its portfolio (on behalf of other investors), to you.

Once the transfer is complete, and you now have X number of shares in your trading account, you then proceed to sell them at their current market price. From that point on, it’s a waiting game.

When the share price falls, you then go back and buy the same number (X) of shares, except, this time, it will be at a significantly lower price point. You’ll then “payback” the borrowed shares to the broker and pocket the difference in cash.

Keep in mind that this strategy only works if the share price falls. If it goes the other way, you will lose a significant amount of money since you would have to buy back the stock at a much higher price per share.

Short Squeeze Stocks

Sometimes, the market forces of demand and supply could have a big impact on the price of stocks.

If big sharks and a huge number of retail investors start buying lots of shares in a particular company, it drives up their demand. This, in turn, drives up their share price even when the company’s outlook has not changed.

When this surge in demand kicks in, the brokers need to get back the shares they lent out to short traders.

These individuals are left with no choice but to yield to pressure and buy up the shares they owe at a higher price than what they initially sold them to close their positions.

The result? They end up losing a significant amount of money. This standoff is referred to as a short squeeze.

GameStop Short

It’s no secret that the GameStop share price has been on a downward spiral for several years now. Short-selling hedge funds have been making a fortune from the falling stock price of the former gaming retail giant.

However, a recent surge in the number of subscribers triggered a spike in the company’s share price, which went up by more than 14,000%.

This put the “squeeze” on these hedge funds and other short investors that bet on the company’s downfall. Retail trading in GameStop stock was made easier through commission-free platforms like E-Trade and Robinhood.

What Is Robinhood

Robinhood was founded in 2013 as a financial services provider whose primary mission, according to the firm, is to “democratize the financial sector” to give regular Joes the chance to make retail investments at no cost.

Its most popular product is its trading app, which is designed to make it simple and fun to trade stocks without any third-party intervention from financial brokers and all the associated fees that come with them.

In addition to stock trading, the company also specializes in cryptocurrency trading and cash management accounts.

Can you short sell on Robinhood? The short answer is – no, you can’t.

The app targets startup investors. As a result, it does not have many of the sophisticated trading tools that other mainstream brokerage firms offer.

The Genesis of the Wallstreetbets Robinhood Showdown

When Robinhood became the app of choice for enthusiastic investors looking to trade GameStop stocks, it hit a record high of 2.5 million+ active users daily.

While some traders were using the app to buy GameStop shares, several others used the Robinhood options trading feature to bet on the opposite side of the shorts.

These option bets involved getting into long-term contracts that give users the “option” to purchase GameStop stock at a specific predetermined price in the future. If the stock price goes up, the trader can purchase the stock at that price and sell it for a profit.

Everything appeared to be going well until the company restricted users from buying stock or taking part in any other form of trading in GameStop shares, as well as those of other companies like Nokia and AMC.

It only allowed them to sell their existing securities and close their positions.

Naturally, the company received a lot of backlash from users over its handling of the entire fiasco, with many accusing it of market manipulation. However, Robinhood asserted that the trading restrictions it enforced all complied with the existing market regulations.

Day trading is a strategy some investors employ to buy and sell stock throughout the day, hoping that their price will continue to rise for the few minutes (or seconds) they own the stock.

The idea behind this is to quickly lock-in profits to get an immediate return on their investment. While this practice is not illegal, nor is it unethical, there’s an inherent amount of risk involved with this approach.

For one thing, day traders usually buy stock using borrowed funds. Most retail investors don’t have the patience, financial muscle, risk appetite, or temperament to make profitable long-term stock investments and handle the devastating losses that may come with day trading. If anything, it is more of gambling than it is actual trading.

The Financial Industry Regulatory Authority (FINRA) has put in place a series of measures to curb pattern day-trading to protect investors from themselves.

According to the rules set out by the regulator, if you buy and sell a stock or open and close an option contract, all within the same day, that’s considered a day trade.

This isn’t necessarily an issue if it happens once in a long while, for any number of reasons.

On the other hand, executing four or more trades representing more than six percent of all the transactions in your margin account, you would be considered a pattern day trader within a five-day trading period.

Robinhood Day Trading Rules

The Robinhood day trading rules generally limit users to making no more than three day-trades within a five-day trading period, except in instances where the trader in question has a portfolio value of at least $25,000 (excluding cryptocurrency positions) at the end of the previous day.

A trader’s portfolio value, according to the brokerage, is the total sum of their cash, stocks, and open option contracts.

Traders, who don’t meet this minimum requirement, and exceed the number of day trades allowed within the five-day window, can expect to have their accounts flagged and restricted for 90 days.

You would only be able to resume trading once this period elapses or when you raise your portfolio value to the required $25,000-threshold.

It is entirely likely that the majority of individuals who traded in GameStop stock were not aware of this rule when they had their accounts restricted.

If this was indeed the case, then the brokerage firm did not violate the regulator’s FINRA guidelines. As a result, any Robinhood lawsuit brought against the broker on this basis would have no merit in a court of law.

However, that wasn’t the only reason behind the Robinhood restrictions placed on GameStop trades – at least, not the main one.

NSCC Capital Requirements

As the price of GameStop stock continued to soar, with more and more people jumping on the Robinhood app to trade, the brokerage needed to have a substantial amount of money on standby to process all the trades coming in through its clearinghouse.

That’s where cash and shares get sent back and forth between the firm and other clearinghouses to complete the trades.

The National Securities Clearing Corporation (NSCC), whose role is to provide central custody, clearing, and settlement services to the financial markets, imposes a capital requirement on broker firms.

The regulator has a formula it uses to determine how much money the brokers need to deposit with them.

This is based on the value of shares being traded at any given time and the associated risk exposure should the stock price plummet. The risk factor has a multiplier effect on the capital requirement.

The NSCC issued Robinhood with a deposit request of $3 billion. By that point, the company had only managed to put together $2 billion.

As a result, it had to suspend trading on GameStop stock and that of a few other companies until it fulfilled the regulator’s capital requirements to cover stock trades.

This move infuriated many retail investors, with the majority wanting to know: Can Robinhood be sued for restricting trades on GameStop stock amid an unprecedented rise in the share price?

Robinhood Class Action Lawsuits

At the time of this publication, the brokerage was facing more than 35 civil complaints against them.

Brendon Nelson was the first to sue the company for what he described as “willfully, purposefully, and knowingly” depriving users of the ability to invest in the open stock market. Several internet users welcomed the move, with many wanting to join the Robinhood class action lawsuit.

Robinhood’s terms and conditions, which users agree to when they first signup on the platform, give the broker the right and sole discretion to restrict, cancel, block, and even delete users’ accounts on its platform.

There’s also an arbitration clause that limits the avenues through which aggrieved customers can seek legal redress.

In part, it states that by using its services, both the firm and its customers give up the right to file lawsuits against each other in a court of law and the right to trial by jury.

While class-action suits are a way to by-pass arbitration clauses, it is up to the plaintiffs’ lawyers to convince the judge to hear the matter in court instead of going through an arbitration process.

What’s the Verdict?

Did Robinhood act illegally in the GameStop short squeeze? It would appear not.

By users trading on the platform, they agree to the terms of use and conditions of the app as set out by the brokerage.

One of these includes restricting users if they exceed their day trading limits.

Moreover, it would have been illegal for the firm to allow trading to continue on GameStop stocks before meeting the capital requirements set out by the NSCC.

If, however, the Securities and Exchange Commission (SEC) finds evidence that Robinhood used underhanded tactics to manipulate trading activity on its platform, then it will have a case to answer.

Have any legal questions for us? Live Chat with one of our attorneys today.

Securities and Exchange Commission

What Is the Role of the Securities and Exchange Commission (SEC)

Legal AssistantAdministrative Law, Business Law, Regulatory Law, Resources

Have you ever wondered what a world without the stock market would look like? Let’s just say things would be very different from what they are now.

For one thing, getting business funding would be virtually impossible. Business growth would progress at an unbelievably slow pace, if at all, and the economy would stagnate.

Now, picture a world where the stock market exists, except, in this case, it’s a free-for-all affair. No checks and balances. Anything goes. What would that look like?

Think – Wolf of Wall Street on steroids. The gap between the haves and the have-nots would be the widest it’s ever been, with no sign of letting up. It would be complete and utter mayhem.

This is precisely why the Securities and Exchange Commission (SEC) exists – to ensure that no entity tips the balance in their favor.

What is the Securities and Exchange Commission, and what role does it play in the US stock market? Here’s everything you need to know.

Black Tuesday – Where It All Began

The period right after World War I was an interesting and exciting time in US history. The Roaring 20s, as they were affectionately called, saw an unprecedented economic boom during which overproduction, consumerism culture, and debt were at an all-time high. Everyone wanted to strike it rich, and they turned to the stock market to make this happen.

With no federal oversight, people invested in stocks, often buying shares on margin and taking on a huge amount of risk in the process – and then it happened. The now infamous Black Tuesday when everything came crumbling down. The stock market crashed on October 29, 1929.

In a single day, people lost billions of dollars’ worth of investment. More than 5,000 banks shut down.

Thousands of companies went bankrupt. Massive unemployment swept across the nation. People lost their homes and their livelihoods. They lost everything. This triggered the onset of the Great Depression.

To help identify the root cause of this devastating crash and develop measures to prevent the likelihood of a similar event occurring in the future, the US Senate Banking Committee convened a series of meetings in 1932, which were later named the Pecora hearings.

What emerged from the proceedings was that several financial institutions had not only misled investors with misinformation, but they had also engaged in unethical and irresponsible business practices, one of which included insider trading.

The Securities Act of 1933

Before the establishment of the SEC, Blue Sky Laws existed on paper at the state-level.

These so-called rules were supposed to regulate securities trading and curb fraud. Despite their existence, they were widely ineffective at streamlining the operations of the stock market.

After the Pecora hearings, however, Congress enacted the Securities Act of 1933. The Act’s goal was to avert securities fraud and ensure that investors receive accurate and truthful financial information about the securities on sale. Moreover, it now gave the Federal Trade Commission the authority to block the sale of securities if they deem it not to be in the public’s interest.

Additionally, the Pecora hearings also led to the enactment of the Glass-Steagall Act of 1933.

The legislation separated commercial banking from investment banking to build public trust and confidence in the financial sector and restore the economy to what it once was before the Black Tuesday crash.

The Act established the Federal Deposit Insurance Corporation (FDIC) to play an oversight role in the regulation of banks, safeguard customers’ bank deposits, and manage customer complaints.

The Securities and Exchange Act of 1934

In June 1934, the Securities and Exchange Act was signed into law. This legislation established the SEC, giving it extensive authority to regulate all aspects of the securities sector.

The SEC has five divisions, each of which is led by a commissioner who the President himself appoints. They consist of:

  • The Division of Corporation Finance – Regulates all publicly-traded corporations
  • The Division of Economic and Risk Analysis – Monitors the state of the economy to identify the effects any new SEC rules would have on the markets
  • The Division of Enforcement – Investigates the potential violation of securities laws
  • The Division of Investment Management – Oversees and regulates the investment management sector and associated entities
  • The Division of Trading and Markets – Ensures that trade markets remain fair and efficient

The new law also gave the SEC the power to bring civil charges against companies and individuals who break securities laws.

Common SEC violations include insider trading, manipulation of market prices, sale of unregistered stocks, violation of broker-customer integrity, disclosure of false financial information, and theft of customer funds.

The Trust Indenture Act of 1939

In 1939, Congress enacted the Trust Indenture Act in a bid to protect individuals and entities investing in bonds. The TIA prohibits the sale of debt securities valued above $5 million if they are not issued under a formal written agreement or “indenture.”

Both parties, i.e., the bondholder and the bond issuer, have to sign the indenture and disclose all the details surrounding the bond issue.

A trust indenture is designed to protect the interests of the bondholders and must receive approval from the SEC. All parties are bound by the terms of the contract for the entire lifetime of the bond.

The TIA was introduced as an amendment to the Securities Act of 1933 to give indenture trustees a more proactive role.

It achieved this by placing reporting requirements, as well as other regulatory obligations on them. The SEC is responsible for administering the TIA.

Bondholder Rights

The Act also gave investors more substantive power. Before its enactment, an individual bondholder couldn’t use legal channels to receive any payment due to them. The TIA changed all this.

If the bond issuer goes through an insolvency process, the law now gives the appointed trustee the authority to go after all assets belonging to the issuer and sell them to recover the bondholder’s investment.

The Investment Company Act of 1940

While the Securities Act of 1933 focused on enhancing transparency for investors, the Investment Company Act of 1940 was enacted to regulate how investment companies are organized and the activities they engage in.

It provides a list of requirements for publicly-traded retail investment products like unit investment trusts, closed-end mutual funds, and open-end mutual funds.

It requires investment companies to adhere to guidelines regarding their fiduciary duties, financial disclosures, service charges, and many more. All investment companies must register with the SEC before their securities can be traded in the public market.

The category they register under depends on the specific product or range of products they wish to issue to and manage on behalf of public investors.

Investment companies generally fall into one of three categories as per federal securities laws:

  • Closed-end management investment companies/closed-end funds
  • Open-end management investment companies/mutual funds
  • Unit investment trusts

The requirements for each one vary based on the class they fall under and the products they offer.

The Investment Advisers Act of 1940

The Investment Advisers Act

In 1935, the SEC prepared a report on investment companies and investment trusts which it later presented to Congress. The provisions of this report lay the groundwork for the enactment of the Investment Advisers Act of 1940.

It defines the roles and responsibilities of investment advisers. According to the legislation, any person or entity making a recommendation or advising on securities would be considered an adviser.

The Investment Advisers Act defines three criteria to address who is and isn’t an adviser. It looks at:

  1. What kind of advice is being offered
  2. The method of compensation for the advice in question
  3. Whether or not the bulk of the adviser’s revenue is derived from offering investment advice

The Act further states that any individual who presents themselves to a client as an investment adviser will be considered one. The law applies to entities and individuals who offer investment advice to institutions, individuals, and/or pension funds.

The Sarbanes Oxley Act of 2002

The Sarbanes-Oxley Act of 2002, also known as the SOX Act, was enacted to protect investors from corporations engaging in fraudulent financial reporting.

The legislation came about due to the rising number of financial scandals in the early 2000s involving large, publicly-traded corporations like Tyco International and Enron. These high-profile frauds eroded investor confidence in the legitimacy of corporate financial statements.

The SOX Act was established to complement and amend certain sections of the existing securities regulations, including the provisions of the Securities Exchange Act of 1934, in addition to other pieces of legislation enforced by the SEC. It also imposed stricter penalties on corporations and individuals flouting securities laws. SOX laws focus on four principal areas:

  1. Accounting regulations
  2. Corporate responsibility
  3. Stiffer criminal penalties
  4. New protections

The major provisions of the SOX Act are found in three sections. Here’s a brief overview of what each one entails.

Section 302

It requires senior corporate executives to certify in writing that the company’s financial statements are accurate, trustworthy, and in compliance with the disclosure requirements mandated by the SEC.

If a company’s executive officer signs off on financial statements they know to be falsified, they face criminal penalties, which may include a jail term of up to 20 years.

Section 404

This section of the SOX Act mandates auditors and management to establish adequate reporting methods and internal controls. These mechanisms should be designed to prevent fraud, promote accountability, and guarantee accounting and financial information integrity.

Section 802

This section has three rules that focus on corporations’ recordkeeping practices. These rules touch on three major areas.

  1. Record falsification and destruction
  2. The required record retention period
  3. The specific business records that corporations need to preserve

The SOX Act also has provisions related to how IT departments handle electronic records. Additionally, it offers protection to whistleblowers who report SEC violation practices and prohibits companies from altering their employment contract terms.

This means that employees can testify in court against their employer and still retain their job. The Act also offers similar protections to contractors.

White Collar Crime

Any non-violent crime committed for the sole purpose of monetary gain is classified as a white-collar crime.

It encompasses all activities characterized by deceit, the violation of trust, or intentional concealment, either gain or avoid the loss of money or property, or to secure a competitive advantage in personal or business-related dealings.

Common examples of white-collar crimes include money laundering, corporate fraud, embezzlement, and securities fraud. Aside from the FBI, the SEC also has a division charged with investigating white-collar crimes.

The Responsible Corporate Officer (RCO) doctrine fronts the presumption that any high-ranking corporate executive in an organization is aware of any illegal activity within the corporation.

This means that the officer in question can be found guilty of a white-collar crime, even if they did not know about the said criminal activity.

In the United States v. Park, the Supreme Court upheld the conviction of the president of a national chain of food store outlets, who was charged for failing to contain and eradicate a rodent infestation at one of the corporation’s warehouses.

In his appeal, the defendant asserted that he had delegated responsibility to a trusted member of his corporation. However, the Supreme Court upheld the ruling citing that he was entirely responsible given that he was the senior-most executive in the company.

As far as the penalties for white-collar crimes go, the government usually charges individual offenders. However, it does have the authority to sanction corporates for offenses of a similar nature. If convicted, penalties include:

  • Community confinement
  • Fines
  • Footing the cost of prosecution
  • Forfeitures
  • Home detention
  • Restitution
  • Supervised release
  • Imprisonment

According to federal sentencing guidelines, longer prison terms are usually instituted whenever a victim of the crime suffered grievous financial harm.

Leveling the Playing Field

The SEC makes it safe for investors to buy stocks and bonds and invest in mutual funds without the fear of being manipulated or defrauded. Keep in mind that the regulator does not play an oversight role when it comes to hedge funds and derivatives.

For more information on securities litigation, get in touch with an SEC lawyer today.

does homeowners cover frozen pipes

Does Homeowners Insurance Cover Frozen Burst Pipes?

Legal AssistantPersonal Injury Law, Real Estate Law

Contrary to their snappy jingles and marketing slogans, many insurance companies have amassed huge profits simply by denying the claims of the people they insure. These practices are not simply confined to auto insurance companies, but rather exist in many other industries where insurance is necessary. For example: homeowners’ insurance.

The State of Texas recently experienced winter weather that had not been seen for generations. Temperatures dipped as low as -2 degrees in some parts of the Lone Star State. These conditions, combined with power outages across the state, left many Texans struggling to stay warm. The combination of severe weather and electrical outages also damaged many homes and caused water pipes to burst.

Texans will undoubtedly recover from this storm, but the property damage issues will remain. Fortunately, most homeowners have insurance, right?

Not so fast.

If history is any indicator of the future, many insurance companies will deny claims, delay processing, and underpay claims, just as they did following Hurricane Harvey.

Fortunately, the legal system provides remedies for homeowners dealing with unscrupulous insurance companies. This article discusses the legal remedies available to Texas homeowners and recommendations for Texans dealing with a potentially greedy insurance company.

What does homeowners insurance cover?

Relief may quickly turn to surprise, frustration, and uncertainty for people all over Texas regaining power and heat for the first time in days when frozen, burst pipes begin to thaw and gush water inside walls and ceilings.  Power regulators reported as many as 4 million homes out of the approximately 12 million homes in Texas were without power the week of February 15, 2021. Many of those millions are asking the same question: will insurance cover this?

Whether insurance covers burst pipes depends on the language of the homeowner’s insurance policy. The only way to be sure is to request a copy of the policy from the homeowner’s insurance company or agent and review it with a licensed attorney.

Luckily, in Texas, many homeowners policies are similar. Before 2003, all insurers in Texas were required to use one of the specific policy forms approved by the Texas Department of Insurance. Many Texas policies still use similar language as a result.

Homeowners Insurance in Texas

There are two primary forms for homeowners insurance in Texas and each one treats burst pipes differently:

  • “Named Peril” (sometimes called ISO HO-1 or Texas Form HO-A); or,
  • “All Risk” (ISO HO-3 or Texas Form HO-B) – which is the most common type.

There are plenty of places you might get unreliable information about your coverage. Most burst pipe claims, before this past week, did not involve a statewide power outage, and that might make a difference.

That means insurance companies’ usual practices, and many articles written about burst pipe claims, may not arrive at the right answer for you. Your coverage depends on what your own policy says and your individual facts.

So, what your adjuster says may not be accurate for you.

Below are the most common questions and answers regarding Texas homeowners insurance coverage for frozen burst pipes.

Homeowners Insurance Claims in Texas - FAQs

Can the insurance company deny my claim?

Maybe.

The “All Risk” policy has exclusions. It does not insure for loss “caused by: (1) freezing of a plumbing… system or by discharge, leakage or overflow from within the system or appliance caused by freezing” unless the insured “used reasonable care to: (a) maintain heat in the building; or (b) shut off the water supply and drain all systems and appliances of water.”

An insurance company trying to deny a claim might ask whether the heat was on in the building or whether the homeowner had drained the water lines in the house. If the answer to both questions is “no,” insurance company could try to use those answers to deny the claim.

But the key question is whether the insured “used reasonable care” to keep the heat on or drain the lines. What is reasonable is usually a question for a jury to answer, and an attorney for the insured could argue that reasonable care was taken to maintain heat based on the actions of the insured, even if the heat was off because of a statewide power outage, which is not in the control of the insured.

How is coverage from a frozen pipe different from other burst pipes?

The “All Risk” policy excludes “wear and tear,” “deterioration,” and “mechanical breakdown.” However, there is an exception for “accidental discharge or overflow of water or steam from within” a plumbing system, though that exception does not “cover the loss to the system… from which the water or steam escaped.”

In short, if the loss is caused by a failure of the plumbing system not related to a freeze, the insurance company may not approve payment for the repair of the damaged plumbing if the insured does not fight back with evidence they used reasonable care to keep the heat on.

Does a Named Peril policy cover burst frozen pipes?

A “Named Peril” policy differs from an “All Risk” policy because it specifies what it covers instead of what it does not cover.  Specifically, the Texas Form HO-A “Named Peril” policy covers physical loss caused by “Explosion.”

A Texas appeals court case in 1978 held that a jury should decide “whether or not a bursted water line was the result of an ‘explosion.’” Ormsby v. Travelers Indem. Co. of Rhode Island, 573 S.W.2d 281, 285 (Tex. Civ. App.—Waco 1978, no writ).

As a result, anyone in Texas who has a “Named Peril” policy may need an attorney to present the issue to a jury to determine whether burst pipes are covered.

What other reasons would cause an insurance company to deny my claim?

In addition to the issues and questions already discussed, there are other questions that may impact the payment an insured receives for a bust pipe:

  1. What is the reasonable or necessary cost of repair?
  2. What portion of the damages were caused by a covered cause and what portion were due to “wear and tear,” “deterioration,” or “breakdown?”
  3. Did the insured properly mitigate damages?
  4. To what degree are damages caused by mold or mildew?
  5. Is any of the policy language ambiguous, or subject to more than one reasonable interpretation?

What should I do to get the most out of my damage claim?

Following a few basic rules will help the insured get started on the right foot:

  1. Report the claim to insurance as soon as practicable.  Power and phone interruptions and surviving the crisis may cause in delays, but the insurance company should be notified as soon as there is an opportunity.
  2. Mitigate damages.  Do not let the damages get worse. For example, if a pipe has burst, turn off the flow of water, and do what you can to help the damaged property dry out.
  3. Document everything.  Take videos or photos of everything damaged.  Keep records of every penny spent mitigating damages, making repairs, or replacing damaged property.
  4. Contact an attorney as soon as something doesn’t feel right.  Many insurance attorneys charge no fee for consultations and get paid only when the insured makes a recovery.

When to hire an insurance attorney

If you need to hire an attorney because an insurer engaged in a prohibited practice, Texas Insurance Code Chapter 541 allows recovery of “actual damages, plus court costs and reasonable attorney’s fees” and if the insurer acted “knowingly”, an award of up to “three times the amount of actual damages.”

In addition, under Texas Insurance Code Chapter 542, up to 18 percent interest per year is available on the amount of the claim.

If you’re unsure of whether or not your situation warrants filing a claim against your homeowners insurance company, use the quick questionnaire below.  If you do qualify, you can get a free case evaluation from an attorney who specializes in Texas homeowners insurance claim denials.

DISCLAIMER:  Nothing in this article is intended for residents of states other than Texas. Contact an attorney licensed in your state for information about the laws of that state. This article is intended for educational purposes. Nothing in this article is legal advice, and reading this article does not create an attorney-client relationship.

ABOUT THE AUTHORS

Attorney Paul Ready is the Managing Attorney of Ready Law Firm (1300 McGowen St. Ste. 120, Houston, TX 77004), PLLC and practices general civil litigation, including insurance disputes.  Paul Ready was first admitted to the Missouri Bar in 2011, the Kansas Bar in 2012, and the Texas Bar in 2013.  He can be reached by email or by phone.

Attorney Andrew Cobos is the principal attorney at the Cobos Law Firm (1300 McGowen St., Ste. 140, Houston, TX 77004) and represents plaintiffs in civil litigation, including insurance disputes.  He offers free consultations and can be reached by phone.  Attorneys of the Cobos Law Firm are licensed in the State of Texas.

Will the COVID-19 Vaccine Be Mandatory

Will the COVID-19 Vaccine Be Mandatory?

Legal AssistantFamily Law, Medical Malpractice

As the number of coronavirus cases continues to rise at an alarming rate, the recent rollout of the COVID-19 vaccine has been met with mixed reactions. Some people view it as a shining light at the end of a very dim tunnel, while others are concerned about how quickly it was approved, which is atypical for a vaccine.

Regardless of which side of the fence you sit on, the question on most people’s minds is – Will COVID vaccine be mandatory?

Here’s everything you need to know about mandatory vaccination laws.

The Federal Government on Mandatory Vaccination

Can the federal government make it a requirement for all Americans to get the shot? The short answer is no. A nationwide mandate for the general population to receive the vaccine is not enforceable. However, the government can make it mandatory for certain groups to receive it, most notably, those who work in the healthcare industry.

Nonetheless, just because the federal government can’t do it doesn’t mean that businesses, cities, or states have to play by those rules. These entities can make the vaccine mandatory within their respective jurisdictions.

It’s important to keep in mind that a mandatory COVID vaccine shot doesn’t mean “forced” immunization. Nobody will hold you down and give you a shot against your will. A mandate simply means that there will likely be legal consequences for refusing to follow it. It could be in the form of a tax, fine, or other penalties.

The US Constitution gives the federal government limited powers to mandate a vaccine. Most of this power lies with the states. It has some ways of getting around it, such as making it a requirement to get a passport. Although this has never happened before, it is within the federal government’s powers to do so.

Cities and States on Mandatory Vaccination

Unlike the federal government, individual states have the power to regulate public health. It wouldn’t be the first time either. In the 1905 case of Jacobson v. Massachusetts, the Supreme Court upheld the state’s decision to enforce laws that made it compulsory for citizens to be immunized against smallpox.

Even cities have powers to mandate vaccines. In 2019, New York City made it a requirement for people living in four zip codes in Brooklyn to get immunized against measles or, at the very least, prove that they’d had it before. Those who didn’t comply faced a $1,000 fine.

While it feels like an infringement on an individual’s civil liberties, the real question is – Should vaccines be mandatory? From an ethical standpoint, a mandatory vaccination significantly reduces the risk of harming or even killing others. It protects the vulnerable sections of the population.

It accelerates herd immunity, which benefits the entire society collectively. Although there are certainly less restrictive ways of achieving herd immunity, there’s always the risk that the threshold might fall later, causing a new upsurge of the disease in question.

Mandatory vaccinations in the US can be justified for highly contagious diseases with severe and often fatal consequences.

Mandatory Vaccines for School

With all this talk of compulsory immunization, you’re probably wondering – When did vaccines become mandatory for schools? Contrary to what you might think, the concept of mandating vaccinations isn’t new.

The first state law for mandatory vaccines was enacted in Massachusetts more than 200 years ago. The state later enacted the first-ever school vaccination requirement in 1855.

The Advisory Committee on Immunization Practices (ACIP) arm of the CDC establishes the recommended vaccines children of school-going age should receive, as well as the recommended schedule on when they’re due. The current vaccines required for daycare, pre-K, and school attending children in both middle school and high school include:

  • Diphtheria, Tetanus, and Whooping Cough (DTaP or Tdap)
  • Haemophilus influenzae Type-B Conjugate (Hib)
  • Hepatitis-B
  • Measles, Mumps, and Rubella
  • Meningococcal Conjugate Vaccine (MenACWY)
  • Pneumococcal Conjugate Vaccine (PCV)
  • Polio
  • Varicella (Chickenpox)

As far as the COVID-19 vaccine goes, schools may have similar vaccination requirements for children before they’re allowed to attend. Universities may also make it mandatory for students, faculty, and staff to be immunized before going on campus. They would be acting within the law if they did.

Mandatory COVID-19 Vaccine in the Workplace

Can your employer fire you if you refuse the shot? Yes, they can – with some exceptions, of course.

It is within your employer’s rights to want to make the workplace environment safer. If getting the shot is integrated into the occupational health and safety rules, failing to adhere to them might cost you your job.

Nonetheless, if you’re part of a union, you may be exempt from the immunization requirement. Anti-discrimination laws may also provide some cover if you would rather not get the vaccine but still keep your job.

The Americans with Disabilities Act, for instance, would require your employer to accommodate you if you cannot get the vaccine for medical reasons. That could be classified as a disability. However, your employer may require that you limit contact with other people and wear a mask while you’re working.

The Civil Rights Act of 1964 could also offer some protection. If you have a religious objection to receiving the COVID-19 vaccine, your employer would have to make a reasonable accommodation, provided they can afford it.

Keep in mind that these anti-discrimination laws only apply to companies that have at least 15 or more employees. The same level of coverage isn’t provided for smaller businesses.

Stores, Restaurants, Airlines, and Stadiums on Mandatory Vaccination

Businesses can refuse to serve you for any reason. They can, therefore, make the vaccine a requirement before you’re allowed into their premises. It is pretty much the same as the “No Shirt, No Shoes, No Service” policy you’re likely already familiar with. In this case, it would be – “No Vaccine, No Service.”

That being said, given the backlash business received (and continue to receive) against mandating customers to wear masks before they can receive service, enforcing a vaccine-before-service mandate will be far more difficult. The point is – if they were to do it, they wouldn’t be breaking any laws.

Have a question? Live Chat with one of our legal experts today.

Where Does Stimulus Money Come From

Where Does Stimulus Money Come From?

Legal AssistantBusiness Law, Constitutional Law

A few weeks ago, President Trump signed the $900 billion stimulus funding legislation into law. This effectively circumvented a looming government shutdown after demanding critical changes to the sprawling package.

The money was channeled towards providing enhanced federal unemployment benefits, extending financial aid to struggling households in the form of stimulus checks, and providing funding for childcare, schools, small businesses, and vaccine distribution. It also repurposed $429 billion left over from the CARES Act and channeled it towards emergency lending programs that the Federal Reserve runs.

When the pandemic first hit in March 2020, Trump signed the $2 trillion economic rescue package – the biggest stimulus package in history at the time – into law. The COVID relief bill, better known as the CARES Act, was also meant to keep individuals and businesses across the country afloat, given the unprecedented freeze brought on by the coronavirus.

The question on most people’s minds is – Where does stimulus money come from? Here’s everything you need to know.

What Is Federal Stimulus Money?

A stimulus check refers to money sent out to a US taxpayer by the government. It is meant to stimulate the economy by giving consumers some money to spend. Spending this money boosts consumption and ramps up retail and manufacturer revenues, which in turn spur the economy.

Who gets stimulus money? All taxpayers – whether working, unemployed, unable to work, or retired – are eligible for stimulus checks. Individuals collecting Social Security benefits for disability, retirement, or Supplemental Security Income (SSI) qualify as well.

Small and medium-sized businesses also have access to these funds to keep their doors open and subsidize their payrolls.

How Much Is the Stimulus Check?

Taxpayers received the first stimulus check after Congress enacted the coronavirus relief funding legislation on March 27, 2020. Single adults who reported an adjusted gross income (AGI) of less than $75,000 qualified for a one-time check amounting to $1,200. Married couples who filed jointly qualified for a $2,400 check. Families also got an extra $500 for every child under the age of 17.

On December 27, 2020, the President signed yet another coronavirus stimulus relief bill into law. The eligibility criteria for the second stimulus check remained largely the same, only that this time, individuals with an AGI of up to $87,000, couples filing jointly with an AGI of up to $174,000, and individuals filing as head of household with an AGI of up to $124,500, would also receive a check.

Those with an AGI of up to $75,000 would receive a $600 check, couples filing jointly with an AGI of $150,000 would receive a $1,200 check, and an individual filing as a head of household with an AGI of up to $112,500 would receive a $600 check.

Those with incomes above these amounts but below the maximum AGI limits would receive $50 less for every $1,000 above the $75,000, $150,000, and $112,500 thresholds, respectively.

Where Does Stimulus Money Come From?

As the government continues to spend trillions of dollars in response to the reeling effects the coronavirus pandemic has had on the US economy and American households across the country, where exactly is this money coming from? Here’s an overview of the various funding sources the government is using.

Savings

Before COVID-19 hit, interest rates on US Treasury debt, as well as that of many foreign governments, were quite low. The reason for this was that the world had, and still appears to have, a lot of money saved up. This leaves ample room for the government to borrow money at relatively low costs.

Portfolio Shifts in US National Debt

Private and public institutions with savings, foreign governments, as well as individuals with cash saved up are particularly eager to invest their money in US Treasury debt. In times of crisis, like what is being witnessed with the pandemic, these entities often prefer the safety net that comes with Treasuries, as opposed to putting their money in volatile investments like real estate, the stock market, or corporate bonds (IOUs).

Billions of dollars that were previously invested in money market mutual funds that typically invest in short-term corporate bonds have shifted to money market funds that exclusively invest in US Treasury debt. This allows the Treasury to borrow huge amounts of money without having to pay high-interest rates.

The Central Bank

The Federal Reserve can create or “print” virtual money, and it can use that money to buy US Treasury bonds. That’s exactly what it is doing right now, and it wouldn’t be the first time either. It did this in the Great Recession of 2007-2009. A few strokes on a computer and the Fed can create new dollars out of thin air.

It then injects this “money” into the commercial banking system, adding it to the reserves of banks like Morgan Stanley, Goldman Sachs, and Wells Fargo, and the US Treasury as well.

To be clear, the Fed isn’t actually giving the Treasury money directly. In effect, it is buying government bonds – which are essentially IOUs – alongside private investors and/or foreign governments that have lent money to the Treasury as well.

This is great for two reasons. First, the more government bonds that the Treasury buys, the lower the interest rates the government has to pay on additional borrowing. Second, it allows the US Treasury to keep borrowing without driving up the interest rates. However, there’s a limit to how much it can borrow.

Why Can’t the Government Just Print More Money?

There’s only so much money the government can borrow without crowding out private investment and increasing interest rates. On the other hand, based on historic standards, the rates are likely to remain quite low, so for now, the Fed can continue “printing” money and using it to buy Treasury bonds, and the government can spend as much of it as it wants in stimulus packages to protect the economy.

Keep in mind, however, that there’s a direct correlation between printing money and inflation. If the central bank prints too much money, it results in inflation. This is a situation where there are too many dollars floating about the economy chasing too few goods.

The same correlation exists between GDP and inflation. GDP is short for Gross Domestic Product and is the value of the commodities produced within a country over a specific period.

While stimulus money is great for boosting the country’s GDP, which, for the most part, is good for economic growth, a rapid rise has the opposite effect since it puts upward pressure on the prices of goods, services, and wages. This, in turn, leads to a higher rate of inflation.

With Great Power Comes Even Greater Responsibility

For now, since the interest rates are still quite low and inflation remains on the back burner, it leaves a lot more room for the Fed to keep printing money and for the government to keep borrowing. That money can be used to keep the economy moving and make it larger than it otherwise would have been.

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Can a President Pardon Anyone

Can a President Pardon Anyone?

Legal AssistantConstitutional Law

A pardon is a government decision that allows an individual to be exempt from the legal consequences resulting from a criminal conviction. The power to grant a pardon, which is an inherent right of the people, is vested in whomever they choose.

State constitutions usually stipulate where that pardoning power lies. The pardoning power for a federal crime, on the other hand, is vested in the President of the United States.

We’ve already seen Trump grant presidential pardons to several of his closest associates and allies. From Joe Arpaio, the former Maricopa County Sheriff, to Michael Flynn, his former National Security Adviser, they all pretty much received a free federal get-out-of-jail card.

The real clemency issue is – Can a president pardon himself before he leaves office? The answer to this might surprise you. Here’s everything you need to know.

What Is a Presidential Pardon

According to the US Constitution, “The President… shall have the power to grant Reprieves and Pardons for Offences against the United States, except in Cases of Impeachment.” (US Const. art. II, § 2, cl. 1).

This essentially grants the President broad powers to pardon, with very few limitations. However, it’s important to note that this power only extends to individuals charged with federal crimes and not state offenses.

Therefore, a state prosecutor still has the power to file state criminal charges against a sitting president or anyone else receiving a presidential pardon. Trump’s business dealings in the state of New York are already the subject of an investigation by Manhattan District Attorney Cyrus Vance Jr.

Preemptive Pardon

There is a precedent for presidential pardons to be used preemptively. This was seen when President Gerald Ford granted a presidential pardon to Richard Nixon in 1974 after his resignation.

This was to exempt him from facing criminal charges for acts he allegedly committed in the infamous Watergate scandal between January 1969 and August 1974. Ford did this preemptively even though Nixon had no formal charges leveled against him.

Nonetheless, it’s important to understand exactly how preemptive pardons work. These only extend to past criminal acts and not those yet to be committed. The official document that grants the pardon usually identifies the specific offense(s) being exempted in a specific past time frame.

Can a President Pardon Anyone

Pardons are viewed as an expression of the President’s forgiveness, leniency, or act of grace. It is typically granted in recognition that the applicant has accepted full responsibility for the crime they committed and has established good conduct while incarcerated for a significant period after their conviction.

However, that is not to say the President can’t grant pardons for purely political reasons. Some of the Trump presidential pardons witnessed during his tenure in office are not the only ones that have historically been granted for personal reasons.

As mentioned before, the US Constitution gives the President broad pardoning powers. This means that he can pardon anyone he deems deserving before they’re formally convicted, during a formal investigation, or even after the individual in question has been convicted of the crime. He can even pardon a family member.

One of the most famous family presidential pardons happened in 2001 when former President Bill Clinton used his pardoning powers to exempt his half-brother from a cocaine possession and distribution conviction that had occurred several years earlier.

President

Can a President Pardon State Crimes

A presidential pardon does not extend to state crimes. There are some presidential pardon limits that even he can’t side-step.

His constitutional power to grant pardons is only limited by impeachment. He cannot pardon someone facing impeachment, nor can he undo the penalties resulting from a Senate conviction. He also cannot grant pardon in civil actions and congressional investigations.

The next logical question would be: How many pardons can a president give? The short answer is – there’s no limit.

Nonetheless, Congress may still vote to impeach a president for abusing his constitutionally-granted pardoning power. That is the mechanism designed to hold the president accountable for his decisions.

Can a President Pardon Himself Before He Leaves Office

So far, there hasn’t been anyone in the history of Anglo-American law who has ever tried to pardon themselves for crimes committed during their tenure in office. The idea of a president pardoning himself has never been legally tested, so there hasn’t been any set precedent to indicate that it is constitutionally permissible.

This question arose after sources close to the Trump administration hinted that he was thinking about pardoning himself and others for all offenses related to the recent insurrection at the US Capitol. However, with the constitution’s explicit impeachment exception, it might be possible to strip him of that power to hold him accountable for his role in inciting the insurrectionists.

Congress can use the ongoing impeachment process to intentionally strip the President of his pardoning powers to preempt his attempts to exempt himself and the radicals from the crimes committed at the Hill.

What if he was somehow able to grant a blanket pardon to the rioters? Can a presidential pardon be reversed? No, it cannot. Presidential pardons are irreversible. Neither the courts nor Congress has the power to veto or override them.

Presidential Pardons List

Since he took office in 2017, President Trump has granted clemency to more than 90 people. Some were well-deserving, while others sparked public outrage. Nonetheless, he wouldn’t be the first president to grant pardons marred with controversy.

Here are some of the craziest presidential pardons in history:

  • Trump pardoned former New York City commissioner Bernard Kerik who pleaded guilty to charges of fraud and lying to the government
  • Obama commuted the charges of Chelsea Manning, a former Army Intelligence analyst who was sentenced to 35 years behind bars for leaking classified information on controversial military activities around the world
  • Bill Clinton pardoned his half-brother Roger Clinton who pleaded guilty for cocaine possession and distribution charges in a clear case of nepotism
  • Andrew Johnson pardoned every soldier who fought for the Confederacy during the Civil War despite them being traitors to the union
  • George Washington pardoned two men who had been sentenced to death for treason after participating in the Whiskey Rebellion of 1794

Because of how uncommon pardons are and the fact that the decision-making process for granting clemency isn’t transparent, you need to consult with an experienced attorney to explore your options.

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