This post first appeared on the Securities Arbitration Alert blog. The blog’s editor-in-chief is George H. Friedman, Chairman of the Board of Directors for Arbitartion Resolution Services, Inc.
The parties have stipulated to a Consent Order vacating a massive Award rendered against Oppenheimer by a FINRA Panel.
We borrow heavily from our past coverage, starting with our report in SAA 2022-35 (Sep. 15) that a Majority-Public FINRA Panel had hit Oppenheimer with a $36+ million Award. The arbitration arose out of losses suffered by several investors in a Ponzi scheme perpetrated by a former adviser. The claims asserted in Robinson v. Oppenheimer & Co., Inc., FINRA ID No. 21-02234 (Atlanta, GA, Sep. 6, 2022), were for: “violations of FINRA Rules; negligence; breach of fiduciary duty; violation of the Georgia RICO statute; and breach of contract. The causes of action relate to Claimants’ investments in Horizon Private Equity III.” The Claimants were each awarded almost $5.7 million in compensatory damages and almost $11.4 million in punitive and more than $14.2 million in treble damages pursuant to Georgia’s RICO statute – O.C.G.A. § 16-14-6(c) — which provides:
“Any person who is injured by reason of any violation of Code Section 16-14-4 shall have a cause of action for three times the actual damages sustained and, where appropriate, punitive damages. Such person shall also recover attorneys’ fees in the trial and appellate courts and costs of investigation and litigation reasonably incurred.”
The Award also included more than $5.3 million in attorney fees and $98,655 in costs.
Award Challenge Promised …
Our editorial comment in # 35 was: “According to media reports, Oppenheimer may challenge the Award.” We later reported in SAA 2022-36 (Sep. 22) the firm’s September 7, 2022 Form 8-K filed with the SEC stated:
“Oppenheimer intends to move to vacate the award in federal court on a number of grounds, including, but not limited to, allowing the hearing to proceed without Mr. Woods and other key parties and witnesses; prematurely rendering an award for damages while a court-appointed receiver continues to collect assets on behalf of all impacted investors, including the Claimants; issuing an award where there was evident partiality against Oppenheimer by one of the arbitrators; and allowing the hearing to proceed when the claims were ineligible for arbitration under FINRA rules that relate to statutes of limitations” (emphasis added).
… Promise Fulfilled
Oppenheimer on October 6, 2022 challenged the Award in the Georgia Superior Court, Dekalb County. The matter was Oppenheimer & Co., Inc. v. Robinson, and sought vacatur under Federal Arbitration Act (“FAA”) section 10 and O.C.G.A. § 9-9-13, or modification under FAA section 11 and O.C.G.A. § 9-9-14. The Award and challenge were referenced in the firm’s quarterly income statement.
Effort to Vacate Seemed to have Failed …
As reported in SAA 2022-10 (Mar. 9), a January 30 Form 8-K revealed that the Court decided not to upset the Award:
“In January 30, 2023, oral argument regarding Oppenheimer’s motion to vacate and Claimant’s motion to confirm was heard by a judge of the Superior Court who orally ruled to confirm the Robinson Award. Oppenheimer is considering appealing the Superior Court judge’s ruling to the Georgia Court of Appeals.[] The Robinson Award was fully reserved for by Oppenheimer in the third quarter of 2022 including accrued interest through December 31, 2022.”
… But Not Really
On March 23 the parties agreed to a Consent Order in Oppenheimer & Co., Inc. v. Robinson, No. 22CV8712 (GA Super. Mar. 23, 2023), vacating the Award. The Order picks up where our prior coverage left off:
“After the hearing, but prior to the Court’s entry of its written judgment, the parties jointly agreed to the following consent judgment, and pursuant to that consent it is hereby,[] ORDERED that Oppenheimer’s motion to vacate the arbitration award be GRANTED pursuant to O.C.G.A. 9-9-13, and U.S.C. 10 of the Federal Arbitration Act;[] IT IS FURTIIER ORDERED that Claimants’ cross motion to confirm the arbitration award be DENIED (emphasis in original).
(ed: *Wow. **Wonder what the terms of settlement were?)
