ARBITRATORS’ DISREGARD OF CUBAN ASSETS CONTROL REGULATIONS IS GROUND FOR SETTING ASIDE AWARD
A court has vacated a FINRA arbitration award on the ground that the arbitrators exhibited manifest disregard of controlling law. Plaintiff moved to vacate the arbitration award denying its claims in FINRA proceedings that the defendant sold it Cuban bearer bonds that had been defaulted on in the wake of the 1959 communist revolution. After a two-day evidentiary hearing, the arbitators denied all of plaintiff’s claims. Plaintiff sought to vacate the defendant’s award on the ground that the arbitrators exceeded their powers, urging that they ignored the Cuban Assets Control Regulations, which prohibits transactions involving Cuban assets. The arbitration decision recognized the Regulations as applicable, but made no other mention of them, and made no findings of fact or conclusions of law regarding them. The court therefore awarded plaintiff its principal, compounded at the legal rate of interest. See More Light Investments v. Morgan Stanley DW Inc., Case No. CV 08-580 (USDC D. Ariz. July 29, 2009).
This post written by Brian Perryman.
