Oops! Schwab Brings Arbitration to Recover Over $1 Million Mistakenly Sent to Former Client.
FINRA Arbitration filings are generally not made public, but the Complaint in Charles Schwab & Co., Inc. v. Spadoni, No. 2:21-cv-00635-JCZ-JVM (E.D. La. Mar. 30, 2021), is an exception to the rule. In this case, Schwab is seeking a Writ of Sequestration to protect its pending FINRA arbitration claim seeking return of $1,205,536.84 mistakenly sent to an ex-client.
The allegations in the court papers filed by Schwab shed light on an unusual case, the crux of which is: 1) a computer glitch caused Schwab to mistakenly electronically submit the overpayment to Spadoni’s Fidelity account (only $82.56 of the $1.2 million was properly transferred); 2) Spadoni refused to return the money, which is no longer available despite several efforts by Schwab to locate it; and 3) Schwab has been unable to establish contact with Spadoni.
Schwab filed a FINRA arbitration alleging breach of contract and seeking return of the $1.2 million. The suit asks the Court to issue a Writ of Sequestration to stop Spadoni from dissipating the funds before a panel is constituted, thus rendering any eventual arbitration Award: “a hollow formality.”
(ed: *Schwab does the math and asserts that, under the timeframes in the Code of Arbitration Procedure, a panel will not be appointed for at least two months. **By comparison. Rule R-38 of the AAA’s Commercial Arbitration Rules allows the Association to: “appoint a single emergency arbitrator designated to rule on emergency applications.”)
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