In the Year 2525 If FINRA Arbitration Is Still Alive
March 6, 2018
In the year 2525, if man is still alive, if woman can survive, they may find that a Claimant in a 2018 FINRA arbitration had requested a postponement. In the year 3535, ain't gonna need to tell the truth, tell no lies. everything you think, do, and say. is in the pill you took today, and FINRA will find a way to notify arbitrators about a postponement request within one day. For options traders, there is the wisdom of Black & Scholes. For Wall Street regulators, there is the wisdom of Dodd & Frank. For those of us involved with FINRA arbitration, we have the wisdom of Zager & Evans.
Case In Point
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in November 2015, Claimant Ledermann, representing himself pro se, asserted breaches of fiduciary duty and contract; manipulation; misrepresentation; omission of facts; unauthorized trading; margin calls; negligence; and other trading disputes involving his alleged purcahse of Cleantech stock. Claimant Ledermann sought $413,045.11 in compensatory damages plus punitive damages, attorneys' fees, interest, and costs. In the Matter of the FINRA Arbitration Between Erich Ledermann, Claimant, vs. Alexander Kibrik, Respondent (FINRA Arbitration 16-03304, February 27, 2018).\
Respondent Kibrik, representing himself pro se, generally denied the allegations, asserted various affirmative defenses, and requested the expungement of the matter from his Central Registration Depository recoreds ("CRD").
Bending Time
In order to avoid any suggestion that I am misstating the FINRA Arbitration Panel's explanation of events, I offer this verbatim extract from the FINRA Arbitration Decision:
Respondent did not appear at the evidentiary hearing held on January 16, 2018. Upon review of the file, the Panel determined that Respondent Alexander Kibrik had been properly served with the Statement of Claim and received due notice of the hearing, and that arbitration of the matter would proceed without said Respondent present, in accordance with the Code.
On Sunday, January 14, 2018, Respondent requested that the Panel postpone the hearing scheduled for Tuesday, January 16, 2018. On January 17, 2017, FINRA notified the Panel of Respondent's request. By Order dated January 18, 2018, the Panel requested that the Respondent provide proof of the event(s) that precluded him from attending the hearing held on January 16, 2018 and prevented him from contacting FINRA within ten (10) calendar days before the first hearing date. By email dated January 22, 2018, Respondent responded to the Panel's inquiry.
By Order dated January 23, 2018, the Panel requested that Respondent submit additional information and documentation to support his January 22, 2018 response. By email dated January 29, 2018, Respondent responded to the Panel's inquiry. By Order dated February 6, 2018, the Panel scheduled a final hearing date for February 13, 2018.
At the hearing held on February 13, 2018, Respondent filed a Motion to Dismiss, pursuant to FINRA Rule 12206. The Panel denied Respondent's Motion to Dismiss as untimely and without merit.
The first cited paragraph above asserts that Respondent Kibrik did not appear at the Tuesday, January 16th evidentiary hearing.
The second paragraph takes us two days back in time to Sunday, January 14th, when Respondent apparently requested a postponement of the Tuesday, January 16th hearing. The FINRA Arbitration Decision does not disclose the manner in which Respondent submitted his Sunday, January 16th request for a postponement, e.g., mail, email, overnight courier, voicemail, fax?
The manner of submission of the postponement request aside, the FINRA Arbitration Decision states that it was only on Wednesday, January 17th that "FINRA notified the Panel" of Respondent's January 14th request.
SIDE BAR: How is it that FINRA was notified on January 14th, of a postponement request but the hearing went forward on January 16th and the Panel was only first notified of the postponement request on January 16th? I'm not suggesting any misconduct but the Decision certainly comes up short in terms of content and context. For starters, what the hell happened on Monday, January 15th, as in the day after Respondent's postponement request was received and the day before the hearing was scheduled? Moreover, why did FINRA only first notify the Panel on January 17th of Respondent's January 14th request to postpone the January 16th hearing? A number of things just don't make sense. It all comes off as a drill in "Fire, Aim, and Ready."
January 18th Order
The FINRA Arbitration Decision lurches forward, backward, and forward in time to a January 18, 2018, Order by the Panel requesting that "Respondent provide proof of the event(s) that precluded him from attending the hearing held on January 16, 2018 . . ." Did the Panel also ask FINRA to provide an explanation as to why the organization had not notified the arbitrators on Monday, January 15 and/or Tuesday, January 16 about the Sunday, January 14th postponement request? Regardless, for unstated reasons, the FINRA Arbitration Panel scheduled a final hearing for February 13, 2018, which apparently took place with Respondent in attendance. As to what explanations Respondent offered for the need to postpone the January 16th hearing and what proof he submitted, that appears to be lost for all time in the dark, deep recesses of the mysteries of FINRA's arbitration universe.
Award
The FINRA Arbitration Panel found Respondent Kibrik liable and ordered him to pay to Claimant Ledermann, $413,045.11 in compensatory damages plus $6,035.00 in interest; and $4,500 in hearing session fees. Also, the Panel denied Respondent Kibrik's expungement request.
Bill Singer's Comment
When I stumbled upon this case and noted the daily-double of two pro se litigants, I expected to read about a lot of fumbling, mumbling, and bumbling by the parties. Instead, I encountered a somewhat obtuse FINRA Arbitration Decision. As the briefest of criticisms, I will note that we have no idea as to the substantive nature of Claimant Ledermann's case against Respondent Kibrik beyond that it had something to do with Cleantech stock -- and to go one step beyond the beyond, that the arbitrators awarded the former customer over $420,000 in damages, interest, and fees. My main salvo of criticism is fired against FINRA for yet another daft bit of quality control. Did anyone at FINRA read this Decision before it was published? Did anyone bother to suggest to the arbitrators that just a tad more content and context would be helpful? Is FINRA assembling a time machine? Will there be arbitrations in the year 2525?