                            PUBLISHED

UNITED STATES COURT OF APPEALS
                 FOR THE FOURTH CIRCUIT


PATRICK V. MORRIS, Individually and      
on behalf of all others similarly
situated,
                   Plaintiff-Appellee,
                                                 No. 05-1217
                  v.
WACHOVIA SECURITIES, INCORPORATED,
             Defendant-Appellant.
                                         
PATRICK V. MORRIS, Individually and      
on behalf of all others similarly
situated,
                  Plaintiff-Appellant,
                                                 No. 05-1281
                  v.
WACHOVIA SECURITIES, INCORPORATED,
              Defendant-Appellee.
                                         
           Appeal from the United States District Court
         for the Eastern District of Virginia, at Richmond.
                  Robert E. Payne, District Judge.
                          (CA-02-797-3)

                       Argued: February 1, 2006
                        Decided: May 17, 2006

    Before MICHAEL, SHEDD, and DUNCAN, Circuit Judges.


Affirmed in part, vacated in part, and remanded with instructions by
published opinion. Judge Michael wrote the opinion, in which Judge
Shedd and Judge Duncan joined.
2                MORRIS v. WACHOVIA SECURITIES, INC.
                             COUNSEL

ARGUED: James Alwin Murphy, LECLAIR RYAN, P.C., Rich-
mond, Virginia, for Appellant/Cross-Appellee Wachovia Securities,
Incorporated. Arthur Raphael Miller, HARVARD LAW SCHOOL,
Cambridge, Massachusetts, for Appellee/Cross-Appellant Patrick V.
Morris, Individually and on behalf of all others similarly situated. ON
BRIEF: Cameron S. Matheson, LECLAIR RYAN, P.C., Richmond,
Virginia, for Appellant/Cross-Appellee. Mark J. Krudys, Richmond,
Virginia; Peter G. A. Safirstein, MILBERG, WEISS, BERSHAD &
SCHULMAN, L.L.P., New York, New York, for Appellee/Cross-
Appellant.


                              OPINION

MICHAEL, Circuit Judge:

   An individual investor’s securities fraud claims against a brokerage
firm were rejected when the district court granted the firm a summary
judgment and dismissal. The firm then invoked a provision of the Pri-
vate Securities Litigation Reform Act of 1995 (Act or Reform Act),
15 U.S.C. § 78u-4(c), contending that the investor’s complaints and
briefs violated Federal Rule of Civil Procedure 11(b) and that mone-
tary sanctions were mandated. The district court found three Rule
11(b) violations, one in the investor’s complaints and two in his brief
opposing summary judgment. The court, however, declined to impose
any sanctions. Both sides appeal. We affirm for the most part, but
vacate the district court’s order to the extent that it imposed no sanc-
tion at all. The Reform Act mandates a sanction in any private securi-
ties action where a party or lawyer violates Rule 11(b). Accordingly,
we remand for the district court to enter an order that identifies and
admonishes the lawyers responsible for the three Rule 11(b) viola-
tions committed in this action.

                                   I.

  Patrick V. Morris owned shares of The Proctor & Gamble Co.
worth about $1.6 million when he retired from the company in 1999.
                 MORRIS v. WACHOVIA SECURITIES, INC.                  3
Morris decided to sell the shares and invest the proceeds in a diversi-
fied retirement portfolio. In December 2001 he invested roughly $1.4
million with the Masters Program, an investment service offered by
Wachovia Securities, Inc. The Masters Program allows investors with
more than $100,000 to have their portfolios handled by money man-
agers who usually work with accounts exceeding $1 million.
Wachovia describes participation in the program as involving three
steps: first, a Wachovia financial advisor helps the investor choose an
investment strategy; second, the advisor recommends money manag-
ers who will implement the strategy by selecting and monitoring suit-
able securities; and third, the advisor and the investor periodically
assess investment results.

   Morris selected five money managers who had contracted with
Wachovia to participate in the program. Morris signed several docu-
ments disclosing numerous fees associated with the program. Con-
trary to his expectations, Morris’s initial account balance of
approximately $1.4 million decreased by $300,000, or 21 percent,
within "several months." Morris v. Wachovia Sec., Inc., 277 F. Supp.
2d 622, 626 (E.D. Va. 2003).

                                  A.

   In November 2002 Morris sued Wachovia in the U.S. District
Court for the Eastern District of Virginia. His complaint attributed his
losses to Wachovia’s operation of the Masters Program in violation
of the securities laws (specifically, section 10(b) of the Securities
Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. § 78j(b), and the
Securities and Exchange Commission’s Rules 10b-5 and 10b-10).
Morris amended his original complaint as a matter of right. See Fed.
R. Civ. P. 15. The district court granted Wachovia’s motion to dis-
miss the first amended complaint without prejudice, and Morris then
filed his second amended complaint. Morris, 277 F. Supp. 2d at 625.
Wachovia filed a counterclaim against Morris seeking indemnity
under one of the parties’ agreements.

   Among the allegations contained in the first amended complaint,
but not the second amended one, was that Wachovia never disclosed
that the firm profited by lending to third parties stocks held in Mor-
ris’s account. SEC rules sharply constrain such lending, but permit it
4                MORRIS v. WACHOVIA SECURITIES, INC.
for stocks held by investors who have bought on margin. See 17
C.F.R. § 240.8c-1. Morris never bought any stocks on margin. His
lawyers based the stock loan allegation on the knowledge that such
lending takes place generally in the securities industry, but they had
no evidence that Wachovia had lent any of Morris’s stocks to third
parties. The district court later determined that the stock loan allega-
tion violated Rule 11(b).

   The second amended complaint contained numerous claims under
section 10(b) of the Exchange Act and section 206 of the Investment
Advisers Act of 1940, 15 U.S.C. § 80b-6. The district court grouped
the section 10(b) claims into four categories: (1) claims involving
selection and monitoring of money managers; (2) those involving
aggregation of trades; (3) those involving rounding up and passing
along SEC fees to investors; and (4) those involving misrepresenta-
tion of securities prices and the failure to provide adequate periodic
account information. Morris, 277 F. Supp. 2d at 630-31. In August
2003 the district court granted Wachovia’s motion to dismiss the
claims in the first three categories, concluding that Morris did not sat-
isfy the elements of a claim for relief under section 10(b) of the
Exchange Act. Id. at 633, 637-38. The court allowed Morris to pro-
ceed with his section 10(b) claim as to the fourth category and with
his Investment Advisers Act claim. Id. at 641-42, 644-45. Morris
moved to certify a class action for money damages under Rule
23(b)(3) based on his surviving claims. The district court concluded
that the common issues did not predominate over the individual ones
and denied certification. Morris v. Wachovia Sec., Inc., 223 F.R.D.
284, 304 (E.D. Va. 2004).

                                   B.

   Wachovia moved for summary judgment. In his brief opposing
Wachovia’s motion, Morris (through counsel) made two contentions
that the district court later determined were Rule 11(b) violations. The
first contention concerned the deposition of Charles W. Baldiswieler,
an executive at TCW Investment Management Co., one of the five
money managers Morris selected. At one point in his deposition
Baldiswieler was asked about a Wachovia questionnaire to TCW that
used the phrase "commission recapture program." J.A. 1051. Baldis-
wieler testified that the phrase could have been a reference to a "soft
                 MORRIS v. WACHOVIA SECURITIES, INC.                   5
dollar arrangement." Id. Under such an arrangement an investment
adviser directs its clients’ brokerage transactions to a broker-dealer in
exchange for products and services (other than transaction execution)
ranging from research reports to client referrals. See U.S. Securities
& Exchange Commission, Inspection Report on the Soft Dollar Prac-
tices of Broker-Dealers, Investment Advisers and Mutual Funds at
Part II.A (Sept. 22, 1998) available at http://www.sec.gov/news/
studies/softdolr.htm.

   However, Baldiswieler also testified in his deposition, "I believe
Wachovia is not a soft dollar broker. . . . I don’t believe they even
have the apparatus to do soft dollars." J.A. 1052. Morris’s brief
quoted Baldiswieler’s more tentative comment about soft dollars and
argued that "[t]he logical and reasonable inference to be drawn" from
this and other facts was that Wachovia selected only those money
managers who would help Wachovia earn trade execution income, not
those who would maximize client returns. J.A. 646. The brief never
pointed out that Baldiswieler said specifically that he did not believe
Wachovia was a soft dollar broker.

   The second problematic contention in Morris’s brief opposing sum-
mary judgment concerned the deposition of Wachovia executive Burt
White. White described himself as "the only door that gets money
managers into the Masters Program." J.A. 425. Asked whether
Wachovia had any controls or policies "to ensure that financial advi-
sors are paying attention to the portfolio construction in a way that
maximizes their returns for the investors," White replied, "I don’t
know if there are any controls or not." J.A. 1026-27. Morris’s brief
cited this testimony as supporting the assertion that "Wachovia had no
systems or controls in place to assure that the results of any research
[on money manager performance] was received by . . . any financial
advisors who were placing customers in the Masters Program." J.A.
652. White’s lack of awareness about whether there were any controls
for the review of investor accounts by Wachovia financial advisors,
however, had little bearing on the claim that the advisors had no
information about the performance records of the money managers
they were recommending.

 The district court granted Wachovia summary judgment as to all of
Morris’s remaining claims on August 2, 2004. On the same day, the
6                MORRIS v. WACHOVIA SECURITIES, INC.
district court entered an order dismissing Wachovia’s counterclaim
that had been based on Morris’s express waiver of receipt of trade
confirmation slips. A provision in the waiver purported to obligate
Morris to indemnify Wachovia for any expenses arising from
Wachovia’s actions based on the waiver. The court concluded that the
indemnity provision neither applied to Morris’s suit nor complied
with Virginia’s rule "that indemnity against one’s own wrongdoing
must be clearly set forth in the contract." J.A. 1631.

                                   C.

   Although the summary judgment and dismissal order terminated
the case on the merits, the district court did not make specific findings
"upon [the] final adjudication" as to whether all parties and lawyers
had complied with the anti-abuse requirements of Rule 11(b), as the
Reform Act requires. On August 6, 2004, Wachovia moved to alter
or amend the judgment, see Rule 59(e), to include these findings and
to obtain Reform Act sanctions against Morris for alleged Rule 11(b)
violations. See 15 U.S.C. § 78u-4(c). Morris, in turn, moved for sanc-
tions based on Wachovia’s counterclaim.

   Wachovia requested that the district court "direct [it] to submit its
affidavit of costs and attorneys’ fees incurred in defending this
action." Reply Br. at 28-29. At the sanctions hearing on November 8,
2004, the district court noted that Wachovia had not submitted any
actual evidence of its fees. Later that week Wachovia’s counsel sub-
mitted an affidavit listing the fees by generic procedural stages of the
case, for example, "Class Certification Motion" and "Document Dis-
covery." The affidavit named the lawyers or paralegals who worked
on each stage, their hourly rates, hours billed on the stage, and the
total amount billed. Morris moved to strike this affidavit as untimely
presented.

   In a memorandum opinion filed on January 28, 2005, the district
court found (as noted above) three Rule 11(b) violations by Morris’s
counsel: the unsubstantiated stock loan claim in the original and first
amended complaints, the selective citation of Baldiswieler’s testi-
mony in the brief opposing summary judgment, and the mischaracter-
ization of White’s testimony in that same brief. The district court
concluded, however, that these violations did not merit the award of
                 MORRIS v. WACHOVIA SECURITIES, INC.                   7
monetary sanctions. The court held that the other instances of miscon-
duct alleged by Wachovia were not Rule 11(b) violations and did not
merit sanctions. The court therefore denied Wachovia’s motion to
alter the judgment to impose sanctions and denied as moot Morris’s
motion to strike the fee affidavit. Finally, the court denied Morris’s
motion for sanctions, concluding that Wachovia had not violated Rule
11(b) in filing its counterclaim. Wachovia appeals and Morris cross-
appeals.

                                   II.

   Title I of the Reform Act, Pub. L. No. 104-67, 109 Stat. 737
(1995), "represents Congress’ effort to curb . . . perceived abuses" in
securities fraud suits through provisions that, among other things,
"mandate imposition of sanctions for frivolous litigation." Merrill
Lynch, Pierce, Fenner & Smith, Inc. v. Dabit, 126 S. Ct. 1503, 1511
(2006). In particular, the Act alters the consequences of Rule 11(b)
violations in private actions under the Exchange Act. See 15 U.S.C.
§ 78u-4(c). The Act nevertheless leaves Rule 11(b)’s architecture
intact. For its part, Rule 11(b) "requires that an attorney conduct a
reasonable investigation of the factual and legal basis for his claim
before filing." Brubaker v. City of Richmond, 943 F.2d 1363, 1373
(4th Cir. 1991). An overview of the Act and Rule 11(b) brings the
parties’ specific contentions into focus.

   At the end of a private securities fraud action, the district court
must evaluate on the record whether each party and lawyer complied
with Rule 11(b) "as to any complaint, responsive pleading, or disposi-
tive motion" filed. 15 U.S.C. § 78u-4(c)(1). Before finding that a
party or lawyer has violated Rule 11(b), the district court must pro-
vide the potential violator with "notice and an opportunity to
respond." Id. § 78u-4(c)(2). If the district court goes on to find a Rule
11(b) violation, the Act provides that "the court shall impose sanc-
tions" on the offender. Id. Because the sanctions "instruction comes
in terms of the mandatory ‘shall,’ which normally creates an obliga-
tion impervious to judicial discretion," Lexecon Inc. v. Milberg Weiss
Bershad Hynes & Lerach, 523 U.S. 26, 35 (1998), the district court
must impose sanctions for each violation found. Also, the Act applies
to any action with a claim arising under Chapter 2B of Title 15 of the
8                MORRIS v. WACHOVIA SECURITIES, INC.
U.S. Code, 15 U.S.C. § 78a et seq., so the Rule 11(b) inquiry is man-
datory even if other claims in the action arise under other laws.

   The Act guides the district court’s selection of a sanction. When
the abuse being punished is a Rule 11(b) violation in "any responsive
pleading or dispositive motion," the Act establishes a rebuttable pre-
sumption that the "appropriate sanction," 15 U.S.C. § 78u-4(c)(3)(A),
is "an award to the opposing party of the reasonable attorneys’ fees
and other expenses incurred as a direct result of the violation." Id.
§ 78u-4(c)(3)(A)(i). When the abuse is the "substantial failure of any
complaint" to satisfy Rule 11(b), the Act establishes a rebuttable pre-
sumption that the proper sanction "is an award to the opposing party
of the reasonable attorneys’ fees and other expenses incurred in the
action." Id. § 78u-4(c)(3)(A)(ii). These presumptions are rebutted if
the party or lawyer to be sanctioned proves either (1) that the statutory
award would "impose an unreasonable burden" on the offending party
or lawyer and that "fail[ing] to make such an award would not impose
a greater harm on the party" seeking sanctions, id. § 78u-4(c)(3)(B)(i),
or (2) that the Rule 11(b) violation being punished "was de minimis,"
id. § 78u-4(c)(3)(B)(ii). If the presumption is rebutted, then "the court
shall award the sanctions that the court deems appropriate pursuant to
[Rule 11]." 15 U.S.C. § 78u-4(c)(3)(C).

   Thus, for private securities fraud suits Congress altered the conse-
quences of a Rule 11(b) violation but did not rewrite the conventional
standards for evaluating Rule 11(b) compliance. Dellastatious v. Wil-
liams, 242 F.3d 191, 197 n.5 (4th Cir. 2001) (quoting Simon DeBar-
tolo Group, L.P. v. Richard E. Jacobs Group, Inc., 186 F.3d 157, 167
(2d Cir. 1999)). Those standards continue to apply.

   Rule 11(b) provides in part that when a lawyer "present[s] to the
court" a pleading, motion, or "other paper," the lawyer on penalty of
sanctions certifies two things "to the best of [his or her] knowledge,
information, and belief, formed after an inquiry reasonable under the
circumstances." First, the lawyer certifies that "the claims, defenses,
and other legal contentions therein are warranted by existing law or
by a nonfrivolous argument for the extension, modification, or rever-
sal of existing law or the establishment of new law." Fed. R. Civ. P.
11(b)(2). Second, the lawyer certifies that "the allegations and other
                 MORRIS v. WACHOVIA SECURITIES, INC.                   9
factual contentions have evidentiary support." Fed. R. Civ. P.
11(b)(3).

   A legal argument fails to satisfy Rule 11(b)(2) when "in applying
a standard of objective reasonableness, it can be said that a reasonable
attorney in like circumstances could not have believed his actions to
be legally justified." Hunter v. Earthgrains Co. Bakery, 281 F.3d 144,
153 (4th Cir. 2002) (punctuation omitted). "The legal argument must
have absolutely no chance of success under the existing precedent" to
contravene the rule. Id. (punctuation omitted). Factual allegations fail
to satisfy Rule 11(b)(3) when they are "unsupported by any informa-
tion obtained prior to filing." Brubaker, 943 F.2d at 1373.

   By the time a case reaches the final order stage, the district court
has acquired unique familiarity with the conduct of the parties and
their lawyers. That familiarity explains why our review of "all
aspects" of a district court’s Rule 11 determination is for abuse of dis-
cretion. In re Kunstler, 914 F.2d 505, 513 (4th Cir. 1990). Nothing
in the Reform Act’s sanctions provision changes this standard of
review. Moreover, the Supreme Court has reasoned that review of
Rule 11 decisions for abuse of discretion "discourage[s] litigants from
pursuing marginal appeals, thus reducing the amount of satellite liti-
gation." Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 404 (1990).

   A district court has abused its discretion if its decision "is guided
by erroneous legal principles" or "rests upon a clearly erroneous fac-
tual finding." Westberry v. Gislaved Gummi AB, 178 F.3d 257, 261
(4th Cir. 1999). We do not ask whether we would have come to the
same conclusion as the district court if we were examining the matter
de novo. Fellheimer, Eichen & Braverman, P.C. v. Charter Techs., 57
F.3d 1215, 1223 (3d Cir. 1995). Rather, after reviewing the record
and the reasons the district court offered for its decision, we reverse
for abuse of discretion if we form "a definite and firm conviction that
the court below committed a clear error of judgment in the conclusion
it reached upon a weighing of the relevant factors." Westberry, 178
F.3d at 261 (punctuation omitted).

                                  III.

  Wachovia first challenges the district court’s evaluation of Morris’s
complaints. 15 U.S.C. § 78u-4(c)(3)(A)(ii). Wachovia contends that,
10                MORRIS v. WACHOVIA SECURITIES, INC.
notwithstanding the district court’s conclusion to the contrary, the
complaints "substantial[ly] fail[ed]" to comply with Rule 11(b), and
this failure required the district court to presume that the appropriate
sanction was an award of Wachovia’s full attorney fees and costs. Id.
Wachovia further insists that the Rule 11(b) violation was not de
minimis. Id. § 78u-4(c)(3)(B)(ii). To prevail on its argument about
Morris’s complaints, Wachovia must show one of two things: (A) the
single Rule 11(b) violation found in the complaints (namely, the stock
loan claim, see supra part I.A.) warranted monetary sanctions, or (B)
certain other claims in the complaints were Rule 11(b) violations so
serious as to require an award of fees and costs.

                                    A.

   The district court held that "Morris’ counsel lacked a sufficient fac-
tual basis to include the stock loaning allegation in the [first amended
complaint]." J.A. 1628. The allegation, in other words, was "unsup-
ported by any information obtained prior to filing" in contravention
of Rule 11(b). Brubaker, 943 F.2d at 1373. The court then found that
this Rule 11(b) violation in the first amended complaint did not com-
pel an award of fees and costs under the Reform Act for two reasons:
(1) "the [violation’s] impact on Wachovia and the case was de minim-
[i]s," and (2) the "baseless allegation . . . d[id] not qualify as [a] ‘sub-
stantial violation[ ]’" triggering § 78u-4(c)(3)(A)(ii)’s presumption for
the sanctions sum. J.A. 1629.

   A Rule 11(b) violation in a complaint is only severe enough to acti-
vate the full attorney fees and expenses presumption if the violation
makes the complaint as a whole a "substantial failure" under Rule
11(b). Therefore, if we determine that the district court did not err in
concluding that the stock loan allegation alone did not make the first
amended complaint a "substantial failure" under Rule 11(b), we may
affirm without reaching the question whether the impact of the viola-
tion was de minimis in the context of the litigation as a whole.

   We must first consider what standard of appellate review applies
to a district court’s Reform Act determination that a complaint is a
"substantial failure" under Rule 11(b). The Act does not specify the
standard. While at first blush de novo review might appear to be
appropriate, as it is for ordinary questions of law, we conclude that
                 MORRIS v. WACHOVIA SECURITIES, INC.                  11
Reform Act "substantial failure" determinations should be reviewed
for abuse of discretion. This conclusion hews to two Supreme Court
precedents. In one case the Court explained that because trial judges
are in a better position than appellate judges to decide whether parties
or their lawyers have violated Rule 11, trial judge decisions in this
area warrant deference. Cooter & Gell, 496 U.S. at 403-05. Reform
Act "substantial failure" determinations are simply a variation of Rule
11(b) assessments. In the other case the Court adopted abuse of dis-
cretion as the standard of review for district court rulings under the
Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d), which
authorizes an award of reasonable attorney fees against the govern-
ment "unless the court finds that the position of the United States was
substantially justified." Pierce v. Underwood, 487 U.S. 552, 561-62
(1988). The EAJA is a fee-shifting statute requiring examination of
the merits of the government’s litigating position, just as the Reform
Act’s fee-shifting sanctions scheme requires examining the merits of
the complaint. Thus, the congruence between the EAJA, Rule 11, and
the Reform Act indicates that the abuse of discretion standard is
proper here.

   Under this standard we conclude that the district court did not
abuse its discretion in holding that the factually-unsupported stock
loan allegation did not turn the first amended complaint into a "sub-
stantial failure" under Rule 11(b). "[T]he ‘substantial failure’ lan-
guage requires an inquiry into whether the complaint’s Rule 11(b)
violations make the complaint as a whole ‘essentially,’ ‘without mate-
rial qualification,’ ‘in the main,’ or ‘materially’ frivolous." Gurary v.
Nu-Tech Bio-Med, Inc., 303 F.3d 212, 228 (2d Cir. 2002) (Walker,
C.J., concurring) (citing Black’s Law Dictionary 1281 (5th ed. 1979));
see also Pierce, 487 U.S. at 565 (concluding that the government’s
position is "substantially justified" under the EAJA if it is "justified
in substance or in the main—that is, justified to a degree that could
satisfy a reasonable person." (punctuation omitted)).

   Here, the stock loan allegation was only one of many claims
asserted in the first amended complaint. Wachovia does not contend
that rebutting the allegation, which was not very complex factually,
imposed any demonstrably onerous burden. The allegation did not,
moreover, figure so prominently in the case as to contaminate the first
amended complaint "in the main." So the district court did not abuse
12               MORRIS v. WACHOVIA SECURITIES, INC.
its discretion when it declined to classify the first amended complaint
as a "substantial failure" under Rule 11(b) solely because of the stock
loan claim.

                                  B.

   Wachovia next argues that the district court should have concluded
that several of Morris’s other allegations were without legal or factual
support in violation of Rule 11(b). In particular, Wachovia homes in
on four matters: (1) the pay-to-play allegation that Wachovia selected
as money managers only those who pledged to generate trading fee
income for Wachovia; (2) the allegation that Wachovia impermissibly
earned hidden fees; (3) the allegation that Wachovia earned market-
making revenue at Morris’s expense; and (4) the "fraud on the mar-
ket" allegation that would have enabled Morris to benefit from a pre-
sumption of reliance on a Wachovia misrepresentation.

   To prevail Wachovia must first show that the district court abused
its discretion in finding that none of these claims violated Rule 11(b).
If violations are established, Wachovia must next show that the court
abused its discretion in concluding that these violations did not make
the complaints as a whole "substantial failure[s]" under Rule 11(b).
Finally, the sanctions opponent (such as Morris’s counsel) could
avoid payment of the adversary’s full fees by demonstrating that the
Rule 11(b) violations found were "de minimis," but we do not reach
this last analytical step because we dispense with Wachovia’s claims
at the first two steps.

                                   1.

   Among the allegations in the second amended complaint was the
"pay-to-play" claim, namely that Wachovia allowed a money manager
to enlist in the Masters Program only if the manager promised to help
Wachovia earn stock trade, asset custody, or other fees from the man-
ager’s clients. The complaint attributed the information supporting
this allegation to a "Richmond-based investment adviser." J.A. 83.

   "[A] complaint containing allegations unsupported by any informa-
tion obtained prior to filing, or allegations based on information
                 MORRIS v. WACHOVIA SECURITIES, INC.                   13
which minimal factual inquiry would disprove, will subject the author
to [Rule 11] sanctions." Kunstler, 914 F.2d at 516 (emphasis added).
This rule also empowers the district court to sanction a party or law-
yer for "insisting [on] a position after it is no longer tenable." Fed. R.
Civ. P. 11(b) Advisory Committee’s Notes to 1993 Amendments.

   The district court did not abuse its discretion in concluding that
Morris’s lawyers had a sufficient factual basis for the pay-to-play
claim. Morris’s lawyers initially grounded the pay-to-play allegation
on information provided by Stephen M. Goddard, the anonymous
"Richmond-based investment adviser." Goddard’s deposition testi-
mony, however, came close to contradicting the allegation. In oppos-
ing summary judgment, Morris’s lawyers then relied on Matthew B.
Mooney, Goddard’s former business partner (who was also one of
Morris’s lawyers earlier in the case). Mooney testified repeatedly in
his deposition that he had personal knowledge substantiating the pay-
to-play allegation. Yet Mooney’s only claim of firsthand knowledge
was based on a hazy recollection of a meeting at which Goddard and
Wachovia employees may have discussed a variety of business deals
in addition to the Masters Program.

   The district court concluded that Mooney’s "personal knowledge"
was only hearsay and therefore insufficient to allow Morris to survive
summary judgment on the pay-to-play allegation. The court neverthe-
less determined that the testimony was sufficient to avoid a Rule
11(b) violation on the pay-to-play allegation. Because Mooney’s testi-
mony provided some (albeit vulnerable) support for the allegation,
there was no abuse of discretion in the court’s determination.

                                    2.

   The first amended complaint alleged that Wachovia charged hidden
fees each time Morris bought stocks. This claim stemmed from an
apparent discrepancy in the account statements. The price per share
as listed on the statements, multiplied by the number of shares pur-
chased, did not match the total sum charged each month. The hidden
fees claim was brought into doubt when Morris’s lawyers examined
the confirmation slips associated with each trade. The slips, unlike the
monthly statements, reported the prices charged to a full nine decimal
places. Morris had waived receipt of the slips when he opened the
14               MORRIS v. WACHOVIA SECURITIES, INC.
account, and Wachovia provided the slips to Morris’s counsel only
after the first amended complaint was filed. The second amended
complaint dropped this hidden fees claim.

   The district court acted within its discretion in holding that Mor-
ris’s lawyers were entitled to infer from the monthly account state-
ments that Morris was being charged transaction fees not previously
disclosed to him. Although Wachovia asserted that the slips, not the
monthly statements, accurately stated the fees charged when the firm
provided the slips to Morris’s lawyers, that assertion alone did not
compel Morris’s lawyers to abandon the hidden fees claim. Rather,
Morris’s lawyers were entitled to a reasonable amount of time to
investigate the assertion and the discrepancy between the slips and the
account statements. Because Morris’s lawyers dropped the claim
when their inquiry established that it was no longer tenable, the dis-
trict court did not abuse its discretion in determining there was no
Rule 11(b) violation.

                                   3.

   The first amended complaint also alleged that on some unspecified
trades Wachovia acted as a principal rather than as an agent for Mor-
ris as buyer or seller, thereby profiting directly at Morris’s expense.
Morris’s counsel based this market-making revenue claim on
Wachovia’s statement in a disclosure document that it engaged in
"transactions as agent, or where permitted by law, as principal for cli-
ents." J.A. 1095-96. This claim did not appear in the second amended
complaint.

   The district court did not abuse its discretion in concluding that the
disclosure document relied on by Morris’s lawyers provided a suffi-
cient factual basis for his market-making revenue claim. Wachovia
points to another document that said the firm would act only as agent,
not as principal, in transactions relating to the Masters Program. The
document relied on by Morris’s lawyers covered the broad range of
investment services offered by Wachovia. Even assuming that Mor-
ris’s lawyers made a mistake in drawing an inference from a general
disclosure document that was contradicted by a program-specific doc-
ument, this mistake did not compel the district court to find a Rule
                 MORRIS v. WACHOVIA SECURITIES, INC.                15
11(b) violation. The rule required some evidentiary support for the
market-making revenue claim, but it did not require perfection.

                                  4.

   With regard to Morris’s allegation that he had relied on
Wachovia’s fraudulent statements or omissions, the first amended
complaint asserted: "The fraud alleged herein consisted of the omis-
sion of material facts, accordingly reliance is presumed as a matter of
law. Alternatively, should the fraud alleged herein be construed as
misstatements the Plaintiff and the Class members rely on the ‘fraud
on the market’ doctrine." J.A. 1348. See Longman v. Food Lion, Inc.,
197 F.3d 675, 682 n.1 (4th Cir. 1999) ("[W]here material false state-
ments or omissions have been disseminated to an impersonal, well-
developed market for securities, the reliance of individual plaintiffs
on the integrity of the market price may be presumed.") (punctuation
omitted). The second amended complaint, by contrast, did not invoke
the fraud on the market theory; rather, it emphasized that Morris was
entitled to rely on Wachovia’s representations because Wachovia
owed Morris a fiduciary duty. The district court concluded that the
first amended complaint’s reference to the fraud on the market theory
did not contravene Rule 11(b)’s requirement that legal contentions be
reasonably justified. Wachovia argues that this conclusion was an
abuse of discretion.

   We agree that this case was ill-suited for the fraud on the market
theory. The case concerns alleged improprieties in an investment
advice and management program Wachovia operated. Wachovia’s
alleged misstatements about fees charged were not falsehoods that
could have been reflected in the market price of any securities. The
fee charged for a securities trade is distinct from the price of the
security being traded. The Masters Program connected Morris to
money managers in exchange for fees Wachovia charged, but the pro-
gram was not a security traded on any market (let alone, in Long-
man’s terms, an "impersonal" and "well-developed" market). The
fraud on the market theory was simply inapplicable to Morris’s claim.
Thus, when Morris’s lawyers invoked the theory in the first com-
plaint, they violated Rule 11(b)’s prohibition on legal arguments that
have "absolutely no chance of success under existing precedent."
Hunter, 281 F.3d at 153.
16               MORRIS v. WACHOVIA SECURITIES, INC.
   The next step is to determine whether this violation made the first
amended complaint a "substantial failure" under Rule 11(b). We note
that the violation concerned an essential element of the securities
fraud claim, which was the only kind of claim the first amended com-
plaint asserted. A private plaintiff’s Rule 10b-5 securities fraud com-
plaint must allege among other things that the plaintiff relied on the
misrepresentations at issue. See The Wharf (Holdings) Ltd. v. United
Int’l Holdings, Inc., 532 U.S. 588, 593 (2001) ("the plaintiff [must]
sustain damages through reliance on the misrepresentation") (citing
Basic Inc. v. Levinson, 485 U.S. 224, 243 (1988)).

   Nevertheless, Wachovia’s arguments ultimately pay insufficient
attention to the entirety of the first amended complaint. The reliance
assertion must be read in context. Morris’s lawyers did not rest this
assertion on the fraud on the market theory alone. Instead, they
expressly invoked the theory as an alternative to the primary assertion
that the investor’s reliance on Wachovia’s omissions could be pre-
sumed. The two-sentence paragraph labeled "Reliance" (quoted
above) did not specify the basis for such a presumption, but a few
paragraphs in the preceding pages did. These paragraphs stressed that
Wachovia owed fiduciary duties to Morris. The express references to
the fiduciary relationship allow the "Reliance" paragraph to be fairly
understood as arguing that reliance may be presumed in a fiduciary
relationship. This argument is supported by Supreme Court language,
thereby forestalling a successful Rule 11(b) attack. Under the federal
securities laws a duty to disclose material information may arise
"from the relationship between parties." Chiarella v. United States,
445 U.S. 222, 231 n.14 (1980). The alleged fiduciary relationship
between Morris and Wachovia was one imposing on Wachovia a duty
to disclose material information, id. at 228, and when such a duty has
"been breached" courts "dispense[ ] with a requirement of positive
proof of reliance." Basic, 485 U.S. at 243.

   The first amended complaint’s reliance allegation did not hinge,
then, on the fraud on the market theory, but could be reasonably
understood to hinge on the fiduciary relationship between Wachovia
and Morris. As a result, the frivolous invocation of the theory did not
transmute the first complaint as a whole into a "substantial failure"
under Rule 11(b). We therefore cannot conclude that the district court
committed reversible error in assessing Wachovia’s claim.
                 MORRIS v. WACHOVIA SECURITIES, INC.                    17
                                    C.

   In sum, the district court did not err in rejecting Wachovia’s four
arguments that Morris’s complaints were "substantial failures" under
Rule 11(b). In addition, because the sole instance of Rule 11(b) mis-
conduct that the district court identified in the complaints did not con-
vert them into "substantial failures" of compliance in violation of the
rule, supra part III.A., the district court was not bound to presume that
Wachovia should receive an award of its full fees and costs in the
action under 15 U.S.C. § 78u-4(c)(3)(A)(ii).

                                   IV.

   Wachovia next challenges the district court’s evaluation of Mor-
ris’s brief opposing summary judgment. Because a motion for sum-
mary judgment is a "dispositive motion," a brief opposing such a
motion falls within the ambit of the Reform Act’s sanction inquiry.
See 15 U.S.C. § 78u-4(c)(3)(A)(i) (presuming sanctions for "any
responsive pleading or dispositive motion" contravening Rule 11(b)).
Although the district court found that Morris’s lawyers drew imper-
missible inferences from the testimony of Baldiswieler and White in
their brief (see supra part I.B.), the district court declined to order any
monetary sanctions for these Rule 11(b) violations because it con-
cluded that Wachovia failed to prove the amount of its fees and costs
"incurred as a direct result of the violation[s]." 15 U.S.C. § 78u-
4(c)(3)(A)(i).

   Wachovia contends that the district court erred in allocating the
burden of proving the fee amount to the firm and in not providing it
another chance to explain what portion of its fees were fairly traced
to the Baldiswieler and White violations. In arguing that the district
court was obligated to award a fee notwithstanding any deficiencies
in its fee affidavit, Wachovia relies on isolated language from another
circuit’s precedent. See Oxford Asset Mgmt. v. Jaharis, 297 F.3d
1182, 1196 (11th Cir. 2002) ("[A] district court faced with an inade-
quate fee application must still award a reasonable fee.") (citing Nor-
man v. Hous. Auth. of Montgomery, 836 F.2d 1292, 1303 (11th Cir.
1988)).

  The Reform Act does not instruct the district court how to deter-
mine a "reasonable attorneys’ fee." Fee-shifting statutes such as the
18               MORRIS v. WACHOVIA SECURITIES, INC.
Civil Rights Attorney’s Fees Awards Act of 1976, 42 U.S.C. § 1988,
similarly speak in terms of "reasonable" attorney fees. This linguistic
similarity is "a strong indication" that the routine procedures for
determining a § 1988 fee may be used as a guide for determining a
Reform Act fee. Flight Attendants v. Zipes, 491 U.S. 754, 758 n.2
(1989). To be sure, Congress’s differing "large objectives" (including
"equitable considerations") behind different fee-shifting statutes mean
that a fee award reasonable under one statute may not be reasonable
under another. Martin v. Franklin Capital Corp., 126 S. Ct. 704, 710
(2005) (punctuation omitted). This caveat does not counsel hesitation
here, however, for nothing in the different policy aims of the Reform
Act and § 1988 suggests that a fee affidavit submitted under the
Reform Act should be excused from satisfying the same basic stan-
dards as an affidavit under § 1988. Indeed, Wachovia implicitly con-
cedes that the securities fraud and civil rights attorney fee statutes are
parallel to this extent. In the very case on which Wachovia relies,
Oxford Asset Management, the Eleventh Circuit supported its discus-
sion of fees under the Reform Act with direct citation to Norman, a
civil rights fee case.

   We thus evaluate the adequacy of the fee evidence Wachovia pre-
sented using our § 1988 precedent. In Fair Housing Council of
Greater Washington v. Landow, 999 F.2d 92 (4th Cir. 1993), we "out-
line[d] the appropriate tack a fee applicant should follow" under
§ 1988:

     First, the applicant must make every effort to submit time
     records which specifically allocate the time spent on each
     claim. Second, those records should attempt to specifically
     describe the work which the fee applicant allocated to
     unsuccessful claims so as to assist the district court in deter-
     mining the reasonableness of the fee request. In establishing
     these guidelines, we recognize that some claims may have
     such a common core of facts and legal theories so as to pre-
     vent any allocation of the fees to the applicant’s separate
     claims. However, we hereby admonish all parties that a
     blind adherence to this argument runs the risk of incurring
     a complete denial of fees.
                 MORRIS v. WACHOVIA SECURITIES, INC.                   19
Id. at 97. Applicants for fee awards under the Reform Act, no less
than those seeking awards under 42 U.S.C. § 1988, must follow this
guidance.

   We take the district court’s conclusion that Wachovia failed to
prove the fee amount attributable to the Rule 11(b) violations to mean
that the district court found Wachovia’s fee affidavit deficient on its
face. The fee affidavit in the record makes clear that Wachovia’s
counsel did nothing to "allocate the time spent on each claim" or to
"describe the work" it performed in a way that could have assisted the
court in "determining the reasonableness of the fee request." Con-
fronting these weaknesses in the fee affidavit, the district acted within
its discretion in denying the fee award. Landow, 999 F.2d at 97-98.

   Wachovia is correct that the Reform Act imposes on the district
court the duty of making specific findings regarding Rule 11(b) com-
pliance. Wachovia did not have to move for such findings. It does not
follow, however, that Wachovia had no duty to present proper docu-
mentation for its fee request. The opposite is true. The "burden . . .
of course rested with" Wachovia as fee claimant, and it simply failed
to meet that burden. Id. at 98 (quoting Buffington v. Baltimore
County, 913 F.2d 113, 128 (4th Cir. 1990)). Put another way, the
Reform Act’s requirement that the district court adopt a presumption
that the fee amount attributable to a Rule 11(b) violation is the correct
sanction does not excuse the sanctions proponent’s failure to establish
that amount. "A party seeking attorneys’ fees must present a request
from which the correct amount may be computed with reasonable dis-
patch. The failure to do this justifies a rejection of the request." In re
Cent. Ice Cream Co., 836 F.2d 1068, 1074 (7th Cir. 1987).

   Also meritless is Wachovia’s argument that it should have been
allowed to submit a more detailed fee affidavit once it learned at the
sanctions hearing that the district court needed evidence of which fees
were fairly traceable to the Rule 11(b) violations. Requiring another
round of fee submissions here would effectively encourage rather
than curtail satellite litigation over fees. Carroll v. Wolpoff & Abram-
son, 53 F.3d 626, 628 (4th Cir. 1995).

   For these reasons there was no error in the district court’s denial
of attorney fees and costs attributable to the Rule 11(b) violations in
the brief opposing summary judgment.
20               MORRIS v. WACHOVIA SECURITIES, INC.
                                  V.

   We turn to the consequences of the Reform Act’s command that
for identified Rule 11(b) violations the district court "shall impose
sanctions . . . in accordance with Rule 11." 15 U.S.C. § 78u-4(c)(2).
This statutory command continues to apply even though we hold that
the district court did not abuse its discretion in denying Wachovia
monetary sanctions in the form of partial or complete attorney fees
and costs.

   Other than establishing the baseline rule that the sanction must be
"in accordance with Rule 11," the Act does not specify an appropriate
sanction where, as here, the sanctions proponent fails to make the
threshold showings that would entitle the proponent to the presumed
award amounts specified in § 78u-4(c)(3)(A). The Act does, however,
expressly provide a rule for a closely related situation. As discussed
above, supra part II, when the sanctions opponent successfully rebuts
the presumption regarding the award amount specified by the Act,
§ 78u-4(c)(3)(B), the district court must go on to "award the sanctions
that the court deems appropriate" under Rule 11. § 78u-4(c)(3)(C).
There is no apparent reason for applying one rule to a sanctions pro-
ponent whose adversary has successfully rebutted the presumption
and another rule to a sanctions proponent who has not made the
threshold showings. Therefore, when the district court has found Rule
11(b) violations but the sanctions proponent fails to qualify for the
Act’s presumed sanctions award, the court should select the sanction
it deems appropriate under Rule 11.

   The question then becomes whether the district court, within its
discretion, appropriately sanctioned Morris’s lawyers under Rule 11.
The rule limits the sanction — which "may consist of, or include,
directives of a nonmonetary nature" — to "what is sufficient to deter
repetition" of the offending conduct. Fed. R. Civ. P. 11(c)(2). As a
nonmonetary sanction, a "court may, for example, strike a document,
admonish a lawyer, require the lawyer to undergo education, or refer
an allegation to appropriate disciplinary authorities." Hunter, 281
F.3d at 151 (emphasis added).

  Wachovia’s counsel contended at oral argument that the difference
between the Reform Act’s description of "specific findings regarding
                 MORRIS v. WACHOVIA SECURITIES, INC.                  21
[Rule 11(b)] compliance" on one hand, § 78u-4(c)(1), and "sanctions
that the court deems appropriate" on the other hand, § 78u-4(c)(3)(C),
means that a district court’s naked finding of a Rule 11(b) violation
is not by itself a sufficient Reform Act sanction. Yet neither party dis-
putes that were we to remand this case and instruct the district court
to issue a one-sentence admonition of Morris’s lawyers for violating
Rule 11(b), that admonition would be a permissible sanction.

   Such a narrow remand is the prudent course here. The implication
of the district court’s order finding Rule 11(b) violations yet denying
monetary sanctions is this: had the court understood that the Reform
Act required it to impose a sanction, it would have imposed the non-
monetary sanction that flows most naturally from its finding —
namely, admonition. An admonition will only be meaningful, how-
ever, if it is directed at the lawyers whose conduct gave rise to the
Rule 11(b) violations found. The district court is familiar with the
proceedings and filings in this case and is therefore better suited than
we are to identify those lawyers. On remand the district court should
issue a written order admonishing by name the individual lawyers
responsible for the Rule 11(b) violations that the district court identi-
fied in Morris’s complaints and in the brief opposing summary judg-
ment. We conclude that such an order is necessary to satisfy the
Reform Act’s sanction requirement in this case. (The order may be
short because the district court’s memorandum opinion dealing with
the sanctions issue fully explains the three violations.)

                                  VI.

   On cross-appeal Morris challenges the district court’s findings of
the three Rule 11(b) violations and argues further that the court
should have concluded that Wachovia’s counterclaim violated Rule
11(b)’s ban on frivolous legal arguments. After carefully examining
the district court’s conclusions that Morris’s lawyers violated Rule
11(b) in pressing the stock loan claim and in mischaracterizing
White’s testimony, we need only say that we find no abuse of discre-
tion. The court’s determination about the mischaracterization of
Baldiswieler’s testimony in the brief opposing summary judgment
warrants some discussion.

  Again, Morris’s opposition brief argued that "[t]he logical and rea-
sonable inference to be drawn" from Baldiswieler’s deposition and
22               MORRIS v. WACHOVIA SECURITIES, INC.
other facts was that Wachovia selected money managers based on
their potential for generating profits for Wachovia. J.A. 646. This
assertion rested on a portion of Baldiswieler’s testimony mentioning
the possibility that language in a communication between Wachovia
and Baldiswieler’s money management firm referred to a soft dollar
deal. The opposition brief failed to acknowledge, however, that
Baldiswieler went on to specifically testify that he did not believe
Wachovia was a party to any actual soft dollar deals. The brief thus
did not accurately represent Baldiswieler’s testimony, and the district
court’s concern about the inaccuracy was legitimate.

   We leave undisturbed the district court’s findings of the Rule 11(b)
violations because they do not constitute an abuse of discretion. Like-
wise, Morris fails to show that the district court abused its discretion
in determining that while Wachovia’s counterclaim was "on the edge
of propriety," J.A. 1631, the counterclaim was not so unsupported or
driven by an improper purpose as to constitute a Rule 11(b) violation.

                                 VII.

   The district court’s order entered January 28, 2005, is vacated to
the extent it does not impose any sanctions. The order is otherwise
affirmed. The case is remanded for the district court to enter an order
naming and admonishing the lawyers responsible for the identified
Rule 11(b) violations.

                                       AFFIRMED IN PART,
                                        VACATED IN PART,
                          AND REMANDED WITH INSTRUCTIONS
