Schottenstein v. JP Morgan Securities, LLC, No. 1:21-cv-20521-BB (S.D. Fla Mar. 8, 2021).
A $19 million FINRA award is challenged in part based on allegedly sleeping, inattentive arbitrators at a Zoom hearing.
We reported in SAA 2021-08 (Mar. 4) on Schottenstein v. JP Morgan Securities, LLC, FINRA ID No. 19-02053 (Boca Raton, FL Feb. 5, 2021), where the Respondent broker-dealer and two brokers are found liable on the claims of constructive fraud, misrepresentation, and elder abuse in violation of Chapter 415, Fla. Statutes. The trades were executed by her grandsons. Respondents were held liable to Claimants for compensatory damages and costs totaling nearly $19 million. The Claimants are also awarded rescission of their investment by the All-Public Panel.
Brokers Claim Sleeping, Inattentive Arbitrators and No FINRA Rule Allowing Virtual Hearings
JP Morgan has already filed a cross-Motion to vacate, in Schottenstein v. JP Morgan Securities, LLC, No. 1:21-cv-20521-BB (S.D. Fla Mar. 8, 2021). Several bases are asserted in support of the challenge, two of which got our attention: “[I]n response to the Coronavirus Pandemic, the Panel, over Respondents’ objections, ordered that the hearings be held by Zoom, rather than in person. No FINRA rule, however, authorizes a panel to make such an order, and doing so contravenes the scope of the parties’ agreement to arbitrate. In addition, current Eleventh Circuit law that makes trial subpoenas in virtual arbitration hearings practically unenforceable, which deprived Respondents of key documents and witnesses at the hearing…. Finally, rather than giving these proceedings the attention they deserved, the panel instead texted, slept, and repeatedly wandered off camera. Thus, ‘the arbitrators were guilty of . . . misbehavior by which the rights of [Respondents] have been prejudiced[.]’ 9 U.S.C. § 10(a)(3).”
(ed: *We’ll certainly track this one. **On the first charge, the Alert’s Editor-in-Chief George H. Friedman authored a Letter from the Editor: Change the Code to Support Virtual Hearings in the May 8, 2020 SAA Blog.
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