Faculty Notes

Prof. Ronald Colombo Comments on FINRA Securities Arbitration Scandal

Ronald J. Colombo, Associate Dean for Academic Affairs and Professor of Law

Should Dozens of FINRA Arbitration Cases be Reopened?
By Andrew Welsch
On Wall Street
April 1, 2014


The fairness of FINRA’s arbitration process is being called into question as lawyers and clients consider legal action to obtain new hearings or revisit decisions amid allegations that a former arbitrator lied about being an attorney.

James H. Frank, the former arbitrator, who, according to FINRA, falsely claimed to be a lawyer, oversaw more than 30 cases involving more than $15 million in claims while working with the regulatory agency and its predecessor, the NASD. Those involved in cases that Frank oversaw during his 15-year tenure say they feel they were treated unfairly. …

Legal experts say it’s not clear whether these cases can be reopened, since the statute for limitations on vacating a decision is 90 days. FINRA arbitration awards are rarely, if ever, vacated after the statute of limitations has passed, experts say. …

Ronald J. Colombo, a professor at Hofstra University School of Law who also regularly serves as a FINRA arbitrator, does not expect the cases to be reopened based on Frank having falsified his credentials.

“I don’t think it can be argued that his lying about his credentials would have affected these rulings, especially since FINRA does allow non-lawyers to serve as arbitrators,” says Colombo, who prior to 2006 supervised regulatory inquiries at Morgan Stanley. “I think that’s going to be very difficult to argue.”

Read the full article.

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