October 3, 2013
Unhappy customers sue a brokerage firm and registered person and the dispute winds up in a FINRA arbitration. Not exactly a newsflash. Except for the fact that you got rules governing the conduct of arbitrations, and among the most contested of those are the ones pertaining to discovery: the often testy and contentious exchange of information and documents before the hearings begin. You'd sort of expect respondents to drag their heels, kicking and screaming, when it comes to producing materials that could compromise their defenses. As odd as it may seem, however, claimants often engage in the same tactics. In today's case, we see what happens when claimants don't abide by the discovery rules.
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in February 2012, Claimants asserted errors/charges on executions and failure to cancel. Claimants sought $107,216.76 in consequential damages plus interest, fees, expenses, and costs. In the Matter of the FINRA Arbitration Between Michael Elmameh and K.R. Services USA, LLC, Claimants, vs. Lightspeed Trading, LLC, and Jonathan Mazzola, Respondent, (FINRA Arbitration 12-00692, September 25, 2013).
Respondents generally denied the allegations, asserted various affirmative defenses, and sought the expungement of the matter from the Central Registration Depository records ("CRD") of Respondent Mazzola.
By letter dated December 12, 2012, Claimants dismissed Respondent Mazzola.
Moving At Lightspeed
On June 24, 2013, the Panel heard oral arguments on Respondent Lightspeed Trading, LLC's Motion to Dismiss. On August 19,2013, the Panel granted the motion and the further request for attorneys' fees as a sanction against Claimants for their failure to comply with the Chairperson's January 25, 2013, Discovery Order.
Black Hole Of Dismissal
The FINRA Arbitration Panel dismissed with prejudice Claimants' claims against Respondent Lightspeed Trading.
The Panel found Claimants jointly and severally liable and ordered them to pay to Respondent Lightspeed Trading, LLC attorneys' fees in the amount of $7,020.32 as a sanction for Claimant's failure to comply with the Chairperson's January 25, 2013, Discovery Order.
Finally, the Panel recommended the expungement of Respondent Mazzola's CRD, finding that he was
not employed in the division of Lightspeed Trading, LLC that handled limited orders and therefore had no involvement in any claim connected thereto.
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