by Brian Mahany
It’s hard to have sympathy for banking giant Citigroup. Earlier this year, a group of investors won almost $50 million in damages against Citigroup Capital Markets. The award was made by an arbitration panel of the Financial Industry Regulatory Authority (FINRA). Most all disputes between the public and stockbrokers are required to be arbitrated.
After losing the case, Citi refused to pay requiring the victims to take their case to court. Earlier this week a federal judge in Colorado upheld the award against Citi, including $3 million in attorneys fees and $17 million in punitive damages.
Citi had attempted to get the court to vacate the award.
Arbitration awards can only be thrown out in very rare circumstances. Federal law says an award can be overturned in the case of 1) corruption or fraud, 2) partiality or corruption by the arbitration panel members, 3) misconduct or 4) where the arbitrators exceeded their powers. Courts can sometimes set aside an award if there was a “manifest disregard” of the law. A simple mistake is not enough to cause an award to be set aside, however.
The court in the Citi case said that the bank failed to show any reason why the award was unfair or should be set aside. Unless Citi attempts the appeal the case again, they will have the pay the victims their losses.
Victims of investment fraud have the right to expect that arbitration awards will be promptly paid by brokerage firms. The system is designed to give the parties a quick resolution of claims. Most cases are resolved within 1 year. By refusing to honor an arbitration award, Citi caused the victims almost another year without their money and additional time, expense and aggravation.
District Court Judge Christine Arguello left the door open to the victims submitting a supplemental request for attorneys fees. We hope they do.
If you lost money to a stockbroker give us a call. We have helped people recover millions of dollars of their hard earned money. Most cases can be handled on a contingent fee basis.
Mahany & Ertl America’s Fraud Lawyers. Offices in Milwaukee, Detroit and Portland. Services available in most locations.