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In a recent case, the U.S. Court of Appeals for the Second Circuit set out the standard for review of securities arbitrations in federal court. Greenberg v. Bear, Stearns & Co., No. 99-9041 (2d Cir. Aug. 7, 2000).
An unsuccessful claimant in an NASD arbitration sought to vacate the award in federal court on the basis that it violated public policy and manifestly disregarded the law. The defendant argued that there was no basis for federal subject matter jurisdiction and that, in any event, the arbitral award should easily withstand review.
The district court ruled for the defendant on the grounds that the petitioner had failed to demonstrate manifest disregard of the law in the arbitrators’ treatment of his claims.
On appeal, the Second Circuit ruled that
It ruled that, to vacate an award on the ground of manifest disregard, a reviewing court must find both that
The court ruled that the petitioner had not met his “very stringent burden” and affirmed the refusal to vacate the arbitration award.
The court’s opinion is available online at http://www.law.pace.edu/lawlib/legal/us-legal/judiciary/second-ircuit/test3/99-9041.opn.html
Copyright 2000, John M. Baker, Esq., Stradley, Ronon, Stevens & Young, LLP, 1220 19th Street, N.W., Suite 700, Washington, DC 20036 – (202) 822-9611- Fax (202) 822-0140 This article was originally posted to the FundLaw List, http://www.egroups.com/group/fundlaw. To subscribe to FundLaw, send a blank e-mail to firstname.lastname@example.org
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.
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