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Fourteen Awards: Three industry disputes, eleven customer disputes

One of the Customer-related Awards was against a customer, by a broker-dealer chasing an account deficit. Three were Small Claims matters and all three named Merrill Lynch as the Respondent and ML Media Opportunity Partners, LP as the product in dispute. Single Arbitrators from three different states voted “no” on liability.

A single Arbitrator in another case, Cantrell v. A.G. Edwards & Sons, Inc. (NYSE ID #2001-009111, Charlotte, 1/25/02) was appointed by agreement of the parties, even though the amount in dispute, $24, 603, exceeded the NYSE Small Claims jurisdictional amount of $10,000. The Award disposes of Claimant’s two claims separately, indicating the “failure to notify” claim is denied, but $12,692.56 is awarded on the “failure to execute” claim.

Claimant in Edwards v. Morgan Stanley (NYSE ID #2001-009006, NYC, 1/30/02) stated his case too politely, judging from a summary that complains of an “unwanted sale of stock,” but the Arbitrators follow suit when, in dismissing the claim, they “recommend that the CRD’s of individual respondents … be expunged.” This may not do it! If Arbitrators are going to bother ordering expungement in today’s climate, they will need to direct it (not just “recommend” it) and justify it, per CRD guidelines, especially in customer cases.

The Arbitrators in Magid v. Prudential Securities (NYSE ID #2000-008686, Omaha, 1/25/02) were quite direct. In granting a portion of the customers’ claim, they directed Respondents to pay an additional and separate one-third of the awarded amount in attorney’s fees, “as provided in the contingent fee arrangement.”

Among the ten customer-initiated cases, Claimants won monetary awards in five. The highest dollar award occurred in Majik Entp. v. Everen Securities (NYSE ID #2000-008495, 1/18/02) where a Phoenix-based Panel granted $600,000 in actual damages.

On the industry side, in a bonus case, the claiming broker won $650,000, plus two year’s interest at 9% (Alban-Davies v. Credit Lyonnais Securities (USA), NYSE ID #2000-008631, NYC, 1/28/02).

CIBC Oppenheimer started out to collect a promissory note from a former broker in CIBC v. Garawitz (NYSE ID #2000-008662, NYC, 12/26/01), but ended by losing on the note and paying an additional $50,000 to Respondent on a defamation claim. One of the Arbitrators dissented from the dismissal of the note claim, but he evidently concurred on the counterclaim for defamation.


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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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