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]]> Home | Message Board Home Search Arbitration Investors Brokers Finance Law Compliance Archives NASD Files Amicus Brief In Fiserv Appeal

SRO Supports Expedited Appeal, in support of customer’s request.

August 2001

The $1.7 million award of damages in this well-known Award, now on appeal to the Ninth Circuit, has become the focus of attention once again. NASD Regulation has filed an amicus curiae brief in the case, in support of the Koruga’s motion to expedite the appeal.

The reason for the request for expedition lies in the fact that Fiserv Correspondent Services, Inc., the clearing broker tagged with liability for “materially aiding” the fraudulent actions of introducing firm Duke & Co., has not paid the Korugas. Article VI, Section 3 of the NASD By-Laws has been interpreted by the NASD to require members to pay Awards within 30 days, absent a motion to vacate, and, in the event of a vacatur motion, immediately upon that motion being denied. In fact, we reported in SAA 01-18 the NASD’s suspension of a broker-dealer for non-payment of an Award during the pendency of its appeal for Ninth Circuit review of the Award (Viersen v. Baraban Secs., NASD ID #97-02538, Portland, 2/23/00).

NASD explains to the Court in its amicus Brief that it began non-summary suspension proceedings against Fiserv as well, once the district court upheld the Award (NASD ID #98-02538, Portland, 10/5/00). However, those proceedings were abandoned when Fiserv produced a supersedeas bond, which it posted to ensure payment. By so doing, Fiserv obtained a stay of enforcement of the judgment under Fed.R.Civ.P. 62(d) and the NASD Hearing Officer in the suspension proceeding ruled that Respondent Fiserv was thereby “relieved … from the obligation to pay the debt until the appeal terminated.”

In its Brief. NASD urges the Ninth Circuit to proceed with haste. “Securities arbitration claimants, like the ones in this case, are often elderly, retired, and living on a combination of fixed income and investments. Payment or delay in payment of an arbitration award can have a disproportionate impact on such claimants, and reverse the intended benefits of arbitration — the speedy , inexpensive resolution of claims.”

The SRO states its concern “that securities firms, having required their customers to execute predispute arbitration agreements as a condition of opening securities accounts, may then use the court system to delay payment of arbitration awards, even after a district court confirms them.”

(SAC Ed: Although the names have been redacted, we believe a non-summary suspension decision, dated July 21, 2001, which we found on the NASD-DR WebSite (NASD No. ARB10018), is the decision mentioned in the NASDR Brief. In tht July 21 “Order Dismissing Proceedings,” the Hearing Officer (the same one who suspended Baraban) explains that the district court order that effectively stayed the enforcement of judgment was entered in March, well before the NASD-DR notified Fiserv of the jeopardy of suspension. Thus, “the Hearing Officer finds that this proceeding was improvidently commenced” and dismisses it without prejudice.) (SAC Ref. No 01-36-01)


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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. 


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