09/29/2012 // Los Angeles, CA, USA // Keller Grover LLP // Attorney Carey Been // (press release)
Los Angeles, CA — The ugly truth behind arbitration between big business and consumers was recently exposed in a case that resulted in the two long-time arbitrators being dropped from an industry panel after ruling in favor of the consumer. The case involved Merrill Lynch, who was required to pay hundreds of thousands of dollars to the consumer. This case reveals what can happen when arbitrators “bite the hand that feeds them,” reports Los Angeles consumer protection lawyer Carey Been.
In December 2009, Robert C. Postell and his wife Joan, of Alpharetta, Georgia, filed an arbitration claim against Merrill Lynch for more than $640,000 plus attorney’s fees, because they claimed that the Merrill account broker who oversaw their accounts failed “to adequately monitor” them, as Bloomberg reported.
Postell, who was a highly successful businessman, further accused Merrill Lynch of “breach of contract” and “breach of fiduciary duty.” Merrill Lynch denied all claims.
The Financial Industry Regulatory Authority (FINRA) requires that Wall Street employees and investors sign an agreement mandating that any dispute must be resolved through arbitration that is overseen by FINRA.
According to a published report, during the final arbitration hearing Merrill Lynch’s attorney realized he was losing the case, causing him to “explode at the panel.” Merrill Lynch’s attorney claimed that the arbitrators were biased against them. Due to the explosion, the arbitration panel took a break and called FINRA executives to inform them of the allegations raised by Merrill Lynch’s attorney. FINRA advised the arbitrators to continue, and they ultimately ruled in favor of the Postells, awarding $520,000.
Just two months after the ruling, one of the three arbitrators received a letter explaining that he was “no longer being listed as an active member of FINRA’s dispute resolution roster of arbitrators.”
In January 2012, a second arbitrator was also sent a letter informing her that she had also been relieved from her duties as FINRA arbitrator. In June, the third arbitrator was relieved of his duties as well.
“This is a classic example of what is wrong with the arbitration process. There is no such thing as a ‘fair and balanced’ arbitration hearing, as evidenced by experienced arbitrators being fired for ruling against big business,” says Been, a Los Angeles consumer protection attorney. “Consumers can’t turn to the courts for help, when arbitration is contractually binding, leaving them with nowhere to turn.”
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