Broker-Dealer Litigation - Greenberg Traurig LLP

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Aviles v. Charles Schwab & Co., Inc., 435 Fed. Appx. 824 (11th Cir. 2011).
The Firm sought and won an arbitration award against a former employee, Aviles, on
claims of improper solicitation of the Firm’s clients. Aviles moved to vacate the arbitration
award on the grounds that the arbitrators refused to hear material evidence when a witness
became unavailable; refused to postpone the hearing; rendered an award contrary to public
policy and were biased. The district court denied Aviles’ motion to vacate. On the issue of
material evidence, the Eleventh Circuit found that the chairperson was accommodating with
unavailable witnesses and reminded Aviles he could use telephonic testimony or file a motion for
the chairperson to issue subpoenas to acquire the evidence. On the allegation of arbitrator bias,
in order to establish “evident partiality,” the challenging party had to provide evidence of an
actual conflict of interest or identify a business or other connection that might suggest bias which
the arbitrator failed to disclose. The Eleventh Circuit held that an affidavit by another arbitrator
concerning statements made by the chairperson did not demonstrate evident partiality, but did
provide evidence of the chairperson’s misunderstanding of the law at the time of the hearing.
However, an incorrect understanding of a legal issue doesn’t demonstrate bias or hostility toward
a party and, therefore, the district court properly denied the motion to vacate the arbitration
award.
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Murray v. Citigroup Global Mkts., Inc., 2011 U.S. Dist. LEXIS 131197 (N.D. Ohio, Nov. 14,
2011).
A former employee of the Firm received a loan pursuant to a promissory note and, upon
leaving the Firm did not pay off the outstanding loan. The employee’s motion to vacate the
arbitration award was based on the grounds that the award was irrational; didn’t conform to the
party’s contract; violated public policy; and manifestly disregarded the law. The district court
stated that purported irrationality was an insufficient basis for vacating an award. The motion to
vacate was also denied because the former employee simply contested the panel’s determinations
of the facts and the court lacked the authority to re-litigate the facts of the case.
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Finkelstein v. UBS Global Asset Management (US) Inc., 2011 U.S. Dist. LEXIS 89800
(S.D.N.Y. August 9, 2011).
A former employee of the Firm filed a claim in arbitration arguing his entitlement to a
“special payment” of $6.25 million pursuant to the Firm’s ERISA-governed Separation Program.
The panel denied the employee’s claim without an explanation. The district court noted that it
was procedurally deficient of the employee to seek to vacate the arbitration award by filing a
petition, but never making a motion to vacate. On the substantive law, the employee argued that
the panel manifestly disregarded ERISA law; the award was procured through fraudulent
concealment of material evidence; and the arbitrators refused to hear material evidence. The
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