|
The Appellate Division of the New York Supreme Court upheld an NASD arbitration award over challenges by an investor arguing that his claim was prejudiced by the composition of the arbitration panel, an inability to amend his complaint, and the unavailability of a reasoned award.
In In re Sobel, 2007 WL 269811 (N.Y. App. Div. Feb. 1, 2007), Sobel alleged that his securities broker engaged in misleading conduct and gross negligence. The dispute was submitted to NASD arbitration, and a panel of arbitrators ruled in favor of the broker. Sobel complained that the NASD procedures were unfair and moved to vacate the award. Specifically, Sobel pointed to ex parte communications by the broker that resulted in one of the neutral arbitrators being replaced by an arbitrator with an alleged conflict of interest. Also, Sobel maintained that he should have been permitted to amend his complaint, obtain certain evidence, and receive a reasoned award from the panel following arbitration.
The trial court denied Sobel's motion to vacate, and on appeal, the Court affirmed that ruling. NASD rules required that the panel include two "public" neutrals and one "industry" neutral, and there was no evidence that the newly appointed arbitrator had any previous professional dealings that would cast doubt on his impartiality. As for Sobel's procedural complaints, the Court noted that the arbitrators' decision not to issue a reasoned award did not require vacatur. See Matter of Hausknecht v. Comprehensive Med. Care of N.Y., 24 A.D.3d 778, 779 (N.Y. App. Div. 2005). Finally, the Court noted that arbitrators are generally free to exercise discretion on procedural matters. See Matter of Thompson, 245 A.D.2d 911, 913 (N.Y. App. Div. 1997).
Subscribe to a free weekly update on ADR case law and
legislation
|