NYSE Arbitration Awards

Twenty New Awards, Ten Awarding Damages to Customers

Twenty Awards issued from the New York Stock Exchange’s Arbitration Department in February, ten of which awarded Claimants damages on their claims.

Three of the losing Awards and one of the winners for customer-Claimants were the ML Media Opportunity Partners disputes that have steadily flowed through the NYSE system in recent months. One of the “losing” Awards, Kotler v. Morgan Stanley, NYSE ID #2001-009204, New York, 2/25/02, was actually a Consent Award, in which mediation evidently resulted in settlement of a $250,000 claim and an expungement order in favor of two individual Respondents. Did Claimant really “settle” for a “zero” Award or does the Award misleadingly reflect a loss for the customer when a settlement amount was actually paid on this large claim?

In Boyd v. Janney Montgomery Scott, Inc., NYSE ID #2001-009004. New York, NY, 2/4/02. An expungement order is accompanied by an award to Claimant of $47,233.26, but the real twist is that the order names an individual who does not appear as a named party in the Award caption. The allegations include claims of misrepresentations and breach of duties owed by the broker, but his name does not appear in the caption of the matter and the Award refers only to a single Respondent (JMS). Do Arbitrators have the authority to issue orders that relate to non-parties to an arbitration?

Of interest among the other customer-related Awards is McLeod v. Bear Stearns Securities Corp., NYSE ID #2000-008682, Detroit, 2/25/02, in which Claimants, all of whom have won Awards against their introducing firm, collectively seek (unsuccessfully) an aggregate award of damages in the amount of $2.5 million against their former broker-dealer’s clearing firm. We cannot tell from the Award whether the Claimants shared any other cohesive attribute besides being customers of the same introducing firm.

The Arbitrator in Roth v. Salomon Smith Barney, NYSE ID #2001-008973 (Philadelphia, 2/15/02) writes a 3-paragraph explanation why he rejects claims of wrongful liquidations in the Roth account without notice and a failure to execute a short against the box order.

Finally, in Rodman & Renshaw, Inc. v. Tucker Anthony, Inc., NYSE ID #1997-006592, Chicago, 2/6/02, a raiding case involving ten former R&R employees, R&R wins a $900,000 award, including $500,000 in punitive damages. $160,000 in forum fees was assessed evenly against the two parties for 103 hearing sessions. The Panel provides an extended procedural history of the case in the “Case Summary” section, which tells us something about the case, but no justification for the punitive awards against Tucker and three individuals appears in the Award. One Arbitrator dissents, who “believed that the evidence showed that some of the individual respondents’ moral values and ethics were questionable.” He would rule, however that “[t]heir actions …did not make them liable to claimants for any of the claims.”

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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.

Securities Attorney at Sallah Astarita & Cox | 212-509-6544 | mja@sallahlaw.com | 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 - 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.