Non-summary suspension proceeding for non-payment of an Award recently concluded with the suspension of a broker–dealer who is currently challenging the Award before the Ninth Circuit.
Baraban Securities, nka Interfirst Capital Corporation, was held liable by a Portland-based Arbitration Panel for $53,400 in compensatory damages in February 2000 (Viersen v. Baraban Secs., NASD ID #97-02538). The Los Angeles brokerage firm moved to vacate the Award, lost in the federal district court (Securities Litigation Alert 2000-12), and appealed to the Ninth Circuit. However, with the denial of vacatur, NASD’s disciplinary machinery rolled into action, so that by June 2000 NASD was threatening to suspend ICC for non-payment of the Award.
ICC requested a hearing on the issue, asserting that it should not be suspended until all avenues of appeal were exhausted. ICC petitioned the district court for an order staying payment of the Award pending the Ninth Circuit appeal and was denied.
One ground for the denial, as we observed in SLA 2000-29, was that irreparable harm was not proved. In other words, the Court was not certain NASD procedures required ICC’s suspension, absent the stay.
Ruling in a 6-page Opinion issued April 26, 2001, NASD Hearing Officer Andrew H. Perkins adopts a “strict construction” of Article VI, Section 3 of the NASD By-Laws and holds that suspension for failure to pay an Award may proceed in two instances: “where a motion to vacate the award has not been filed[; and] where such a motion has been made and denied.” Article VI, Section 3 “does not provide similarly for a stay of the respondent’s payment obligation pending an appeal of a denial of such a motion to modify or vacate.”
Suspension of the firm was ordered “effective as of the date of the issuance of this Decision.”
Copyright 2000-2002 Securities Arbitration Commentator, Inc. P.O. Box 112, Maplewood, NJ 07040; t: 973-761-5880 f: 973-761-1504. Materials denoted with a SAC Reference No. (e.g. SAC Ref. No. 99-01-001) are on hand at SAC and may be obtained by calling the Securities Arbitration Commentator, or by email to firstname.lastname@example.org. The Securities Arbitration Commentator is the leading publication for securities arbitration news and information and maintains a complete database of arbitration awards available anywhere. For more information regarding their services, visit their website at www.sacarbitration.com
Need help with a securities law issue? Call New York Securities Lawyer at 212-509-6544 or visit the website. Representing investors and advisers across the country for over 30 years.
Mark Astarita is a nationally recognized securities attorney, who represents investors, financial professionals and firms in securities litigation, arbitration and regulatory matters, including SEC and FINRA investigations and enforcement proceedings.
He is a partner in the national securities law firm Sallah Astarita & Cox, LLC, and the founder of The Securities Law Home Page - SECLaw.com, which was one of the first legal topic sites on the Internet. It went online in 1995 and is updated daily with news, commentary and securities law related links.