The actor Larry Hagman seems to be reprising his role as J.R. Ewing. Mr. Hagman is fighting with Citigroup over an $11.6million arbitration award he won last month. Larry Hagman who played the villainous oil tycoon J.R. Ewing in the 1980s hit TV series “Dallas recently won $11.6 million in a securities arbitration case against Citigroup. The arbitration panel award $1.6 million in compensatory damages and an additional $10 million in punitive damages to be given to a charity of Mr. Hagman’s choice.
It was the largest arbitration award an individual investor received this year and the ninth largest award ever, according to the Financial Industry Regulatory Authority (FINRA) which administered the arbitration.
Now Citi is claiming the award should be overturned based on arbitrator bias. Citi’s attorney filed a motion to dismiss the award in Los Angeles Superior Court, alleging that the chairman of the arbitration panel failed to disclose a potential conflict of interest. It should be noted that arbitration awards are rarely overturned and appealing them may have grave consequences for the appealing party…including additional damages and interest penalties. In this instance, Citi must feel they have little to lose given the size of the award as such motions are rarely successful.
According to Citi’s petition, the lead arbitrator had a potential conflict because he was once a plaintiff in a lawsuit involving the same claims and the same subject matter involved in this arbitration proceeding. The FINRA Statement of Claim included allegations of of fraud and breach of fiduciary duty and stated the Hagmans sustained losses on stocks and bonds and a life insurance policy they held with Citi.
Two years earlier, the lead Finra arbitrator sued his real estate investment partner for fraud and breach of fiduciary duty, according to Citi’s petition. The arbitrator alleged that he and his wife had ‘trusted and relied upon the investment advice of their former real estate partner with respect to almost all their life savings, Citi’s petition said. Some observers believe these are two entirely different matters and the facts are easily distinguished.
The memo filed by the Hagman’s attorneys noted that the arbitrator’s case did not involve securities investments nor did the two cases involve the same facts or parties and referred to the Motion to Overturn the award as a last ditch effort to avoid paying the huge award.
A hearing in Los Angeles Superior Court is scheduled for Dec. 17. Meanwhile, Citigroup is on the hook for paying 10 percent interest on Mr. Hagman’s award. That is good news for the Hagman’s designated charity. As arbitration awards are supposed to be binding and mostly non-appealable, this case will be watched closely by both Plaintiff’s attorneys and the securities industry. Stand by for the next episode and see if J.R. prevails again.
If you believe you lost money due to your broker or investment adviser’s breach of fiduciary duties or fraudulent acts, contact our office for a free case evaluation. Thank you.