After remand from court, arbitrators correct their award to comply with the applicable statutes.
ALLISON v. MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., NASD ID No. 01-05877 (Tampa, 2/26/04).
The Arbitrators issued an amended Award in this case, because the first time, when they tried to give the Claimant $1.00 in damages under the state securities statute, the Award was vacated.
We covered that vacatur decision in the Securities Litigation Alert, SLA 2003-38. In their Award, the Arbitrators specifically based the monetary award upon Respondents violation of the Florida Securities and Investor Protection Act and, in addition to the $1.00 in damages, granted $20,000 in attorneys fees. That created a double-whammy, because Florida-based arbitrators are not generally authorized to grant attorney fees. The Court vacated the attorney fees on those grounds.
The $1.00 damage award appears to have arisen from the Panels application of a discount for market-driven losses, but the FSIPA does not allow for such discounts and counsel advised the Panel of that fact at hearing. Thus, the three arbitrators two of whom were attorneys were plainly informed of the mandatory damage provision under the Florida Securities Act. Despite the fact that they limited their liability finding to that statute, the arbitrators awarded only a nominal compensatory figure that bore no relation whatsoever to the true size of Allisons losses. That act was a manifest disregard of the law and warrants vacatur.
The matter will be remanded to the same Panel, with directions to issue a new, amended award of such damages in accordance with Section 517.211 Florida Statutes. The new Award recites this history and the Courts instructions and indicates a request for $130,000 in damages. The Arbitrators render a precise figure of $65,699.49 in compensatory damages under the state statute and assess, in addition, $9,796.25 in costs. All fees are charged to Respondent.
Copyright 2004 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 the most complete database of arbitration awards availalble anywhere. For more information regarding their services, visit their website at www.sacarbitration.com
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.