Another FINRA Arbitration Loser Sues to ‘Vacate’ Award
Another broker is trying to convince a federal judge to overturn a Financial Industry Regulatory Authority arbitration panel’s award against him in favor of his former firm, asserting that a majority of the arbitrators failed to disclose information about themselves prior to hearings that may have revealed prejudice.
Michael E. Miller, who one month ago was ordered to pay UBS Financial Services almost $167,000 on promissory note balances due when he left the firm’s Hartford office to become a private banker at TD Bank, on Friday asked a New York judge to vacate the award because two of the three arbitrators violated Finra procedures.
One arbitrator failed to mention in her required disclosure report that she represented an investor in a case against another firm in 2014 and left out specifics of the case in the oath arbitrators file before starting a hearing or rendering a decision, according to the petition to vacate the award that was filed in the southern district of New York by Bradley Schnurr, the broker’s lawyer.
The alleged omission by non-public arbitrator April C. Teveris robbed his client of the “ability to evaluate the truthfulness” of her disclosures and whether she qualified to be an arbitrator based on how much of her time and earnings as a lawyer came from representing investors because the matter was settled without public disclosure, Schnurr wrote.
A second “public” arbitrator and lawyer, Steven R. Rolnick, failed to disclose that he was a named defendant in a federal court action several years ago or to say in his Oath what securities in the case he or his family owned, thereby depriving Miller of knowing if any of them held stock in UBS.
“By FINRA issuing the Award after two of the arbitrators appear to have failed to disclose material information (whether intentional or inadvertent), it is averred that the Arbitrators exceeded their powers in determining UBS’ claims and Mr. Miller’s counterclaims [for deferred stock and money],” the petition said.
Neither Schnurr nor the two arbitrators immediately returned call for comment on the lawsuit.
Judges rarely vacate arbitration decisions, and have narrow grounds for doing so, out of deference to the Federal Arbitration Act and the desire to speed court calendars. But in recent months, several lawyers for brokers have cited problems ranging from arbitrators’ failure to properly evaluate evidence to incorrect classification of their “public” status to Finra’s misaddressing violation notices to brokers.
In Finra’s “The Neutral Corner” newsletter for arbitrators in July, the self-regulatory group urged them to update all their disclosure reports and information on social media sites and in legal databases to “minimize the likelihood of future motions to vacate” by parties claiming they lacked current information. It also reminded them that it compares information of arbitrators who are themselves brokers with Central Registration Depository records against alternative dispute resolution filings they make.
A Finra spokeswoman said she could not immediately comment on whether petitions to overturn awards have been accelerating.
I never seem to get it… we are in the financial business and should all know how to read a contract. These are iron clad forgivable loans… no way out.
Buck up, play out the clock, then move on.
Why does the industry even need forgivable loans? Pay bonuses if performance targets are hit , no strings attached, like executive comp in every other industry!
Only in America do they come up with such ways to screw and torpedo Financial Advisors the industry is a mafia type organization the FA is the peon in the entire process they are there to serve their banking masters. .the real owners are the ones who make the rules the proletarian mass are there only to serve at will
I got a million dollar check when I moved … thats “ Mr. Peon !” sir !!!
no–you simply went $1 MILLION into debt. Your balance sheet simply added some cash and added an debt. You have to REPAY that debt–and recognize any loan forgiveness as INCOME plus pay interest on the loan. So, you ‘got’ nothing …..your net worth is not more leveraged but is the exact same ‘net worth’ now as it was before…../think thru the facts sir/dee
correction–I just noticed a typo in my posting–it should has said “your net worth is MORE leveraged, but is the exact same net-worth now as it was before/…/dee
Set up your own RIA, transition practice to junior partners gradually, your lifes work is monetized as capital gains, not income. And you are in control! Much better way to go.
From my experience as a finra arbitration attorney, actions in court to vacate arbitration awards are fairly rare, and the system set up by finra in large part works. These examples of arbitrators failing to disclose matters, if key, are one possible grounds, and arbitrators should be extra careful for these reasons.