Faux Lawyer Invalidates FINRA Award

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Faux Lawyer Invalidates FINRA Award

The Ninth Circuit ruled an fake attorney who chaired a FINRA arbitration panel prevented Move Inc. from having a fair hearing regarding accusations Citigroup Global Markets Inc. mismanaged $131 million of the real estate company’s funds, saying the deceitful arbitrator wrongfully influenced the proceedings.

A three-judge panel found that a lower court erred in not vacating an arbitration panel’s 2009 denial of Move’s claims against Citigroup, reversing the district court’s judgment and ordering the arbitrators’ award vacated.

Move commenced arbitration proceedings in September 2008 claiming Citigroup mismanaged $131 million of Move’s funds by investing in speculative auction rate securities and alleging claims such as breach of fiduciary duty and breach of contract. Because the dispute involved a complex securities issue, Move sought to have the panel led by an experienced attorney and selected as its top choice a man named James H. Frank, who according to FINRA received a law degree from Southwestern University in 1975 and was licensed to practice law in California, New York and Florida, the Ninth Circuit said.

After six prehearing and twenty hearing sessions on Move’s case, the FINRA panel found unanimously in favor of Citigroup in December 2009. Four years later, however, Move learned that Frank had lied about being a licensed attorney and was impersonating a retired California lawyer of the same name.

“Citigroup argued that there is no evidence that Mr. Frank influenced other members of the panel or the outcome of the arbitration was affected by his participation,” the panel said. “But there is simply no way to determine whether that was the case.”

In any event, Frank’s participation was itself prejudicial to Move since under FINRA’s rules such deceit would have disqualified him as serving as an arbitrator, it said.

“Indeed, once Mr. Frank’s lies were revealed, FINRA immediately removed him from its roster,” the Ninth Circuit said. “However, because Mr. Frank’s fraudulent conduct was revealed only after the arbitration panel issued its award in favor of Citigroup, the parties received a hearing chaired by an imposter.”

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.

By |November 7th, 2016|Legal Matters|

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