Awarding Individuals For Corporation’s Damage Results in Vacature of the Award


Spear Leeds & Kellogg v. Bullseye Securities, Inc., No. 5435, 2002 N.Y. App. LEXIS 1563 (N.Y. App. Div., 1Dept., 2/14/02).

Award Challenge * Vacatur of Award * Exceeding Powers * Manifest Disregard * Irrationality * Remand to Arbitrators * Rationale of Award.

Individual claimants, as a matter of law, cannot be compensated by arbitrators on a cause of action stating wrongdoing to a corporation.

The trial court vacated this NASD Award (ID #99-02963, NYC, 10/8/99), granting $1.25 million to the co-owners of Bullseye Securities, Joseph and Eva Roffler, for acts allegedly committed by a Spear Leeds employee, Joseph Schettino.

There are two problems with the Award, Spear Leeds successfully persuades the Court: first, it awards damages to the Rofflers in their individual capacities when the alleged wrongs occurred to their corporate broker-dealer; secondly, it assesses damages against Spear Leeds, presumably for the conduct of its employee, but the employee was released from any liability (“without explanation,” the Court observes).

These two defects led the lower court to vacate the Award (see SLA 2000-09 for summary) and remand “the matter for a new hearing before the [NASD].” This Court affirms on grounds that the Panel majority (“the only lawyer on the panel” dissented, the Court notes) exceeded its powers, manifestly disregarded the law, and, by rendering an “inherently inconsistent” result, evinced irrationality in its Award. “Where, as here, there is no independent basis for finding SLK solely liable for over a million dollars in damages, apart from one grounded upon the negligence of its employee, the award must be set aside as irrational….” (SLC Ref. No. 02-10-03)

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 The Securities Arbitration Commentator is the leading publication for securities arbitration news and information, and maintains the most complete database of arbitration awards availalble anywhere. For more information regarding their services, visit their website at

Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article.

The attorneys at Sallah Astarita & Cox, LLC are former SEC Staff Attorneys and brokerage firm counsel, with over 100 years of collective experience. If you have received a subpoena from the SEC, a document request from FINRA, or have a dispute with a brokerage firm, call 212-509-6544 for a free consultation. The firm represents investors and financial professionals nationwide.

Securities Attorney at Sallah Astarita & Cox | 212-509-6544 | | Website | + posts

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 -, 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.