Haviland v. TD Ameritrade Incorporated

Filing 41

ORDER that TD Ameritrade file by 08/07/15, a brief of no more than five pages explaining why the court should not grant Haviland's Motion for Reconsideration (Doc. 31 ). See order for details. Signed by Judge Neil V. Wake on 7/31/15. (NKS)

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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Douglas A. Haviland, Plaintiff, 10 11 ORDER v. 12 No. CV-15-00611-PHX-NVW TD Ameritrade Incorporated, 13 Defendant. 14 15 On June 25, 2015, the court granted Plaintiff Douglas A. Haviland’s Motion to 16 Confirm FINRA Arbitration Award (Doc. 1) “to the extent, and only to the extent, that 17 TD Ameritrade must continue to make good faith efforts to transfer to Haviland a 18 certificate recognizing ownership in his name of the 75,000 Bancorp X106 shares 19 currently held by the Depository Trust Company.” (Doc. 29 at 7.) At the time the court 20 issued that Order, it appeared from the parties’ briefing that the only ways TD 21 Ameritrade could satisfy the arbitrator’s Award were 1) to order the Depository Trust 22 Company to deliver a certificate recognizing ownership in Haviland’s name of 75,000 23 shares of Bancorp International Group stock, or 2) to purchase 75,000 shares of Bancorp 24 stock issued under CUSIP No. 05968X205, which were not registered with the SEC. 25 Because of a “Global Lock” imposed in August 2005, the Depository Trust 26 Company had already refused to honor a request by TD Ameritrade to transfer shares into 27 Haviland’s name. And TD Ameritrade represented that it could not purchase X205 28 shares for Haviland because section 5 of the Securities Act of 1933 makes it unlawful to 1 “offer to sell or offer to buy . . . any security, unless a registration statement has been 2 filed as to such security,” 15 U.S.C. § 77e(c), or to sell, or deliver after sale, any 3 unregistered security, id. § 77e(a). As TD Ameritrade acknowledged, however, these 4 prohibitions do not apply to “any security which is issued in exchange for one or more 5 bona fide outstanding securities, claims or property interests, or partly in such exchange 6 and partly for cash, where the terms and conditions of such issuance and exchange are 7 approved, after a hearing upon the fairness of such terms and conditions at which all 8 persons to whom it is proposed to issue securities in such exchange shall have the right to 9 appear, by any court, or by any official or agency of the United States, or by any State or 10 Territorial banking or insurance commission or other governmental authority expressly 11 authorized by law to grant such approval.” Id. § 77c(a)(10). 12 Haviland now moves for reconsideration of the court’s June 25, 2015 Order, 13 seeking confirmation of the arbitrator’s Award in full. (Doc. 31.) Attached to his Motion 14 is a copy of a January 6, 2006 order issued by an Oklahoma state court that authorizes 15 Bancorp’s issuance of unregistered shares under § 77c(a)(10), known as § 3(a)(10) of the 16 Securities Act. (Doc. 31-2 at 25-29.) Both in its original Motion to Vacate the FINRA 17 Arbitration Award (Doc. 14) and in its Response (Doc. 37) to Plaintiff’s pending Motion, 18 TD Ameritrade argues that it cannot purchase any Bancorp stock without performing an 19 illegal act, since the only shares for sale are unregistered shares for which there is no 20 registration exemption. But TD Ameritrade nowhere explains why it cannot purchase 21 shares issued pursuant to the Oklahoma state court’s January 6, 2006 order. 22 Those shares are exempt from registration under § 3(a)(10) and may therefore be 23 bought and sold. Although they may bear a different CUSIP number than the shares 24 Haviland purchased in July 2005, the arbitrator’s Award is noticeably silent as to the 25 CUSIP number of the shares that TD Ameritrade must transfer to Haviland. (See Doc. 1- 26 1 at 3.) In fact, when TD Ameritrade requested clarification from the arbitrator as to the 27 appropriate CUSIP number, the arbitrator declined to provide further information. (Doc. 28 29 at 4.) It therefore appears that TD Ameritrade may be able to satisfy the arbitrator’s -2- 1 Award in full by purchasing Bancorp shares issued under the Oklahoma state court’s 2 authorization and then delivering to Haviland a physical certificate that recognizes 3 ownership of those shares in his name. 4 5 IT IS THEREFORE ORDERED that TD Ameritrade file by August 7, 2015, a 6 brief of no more than five pages explaining why the court should not grant Haviland’s 7 Motion for Reconsideration (Doc. 31). 8 Dated this 31st day of July, 2015. 9 10 Neil V. Wake United States District Judge 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -3-

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