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As kids, we spent countless hours arguing over very, very profound things like what would happen if an unstoppable force hit an immovable object; or could God create something too heavy for him to lift; or, could Superman get gas and, if so, would he fart, and, if so, could his gaseous explosion kill a bystander. As you can tell, even from an early age I had the makings of brilliant lawyer! All of which brings me to a FINRA Arbitration in which I was prompted to muse about whether a Pro Se public customer could win a case against a Pro Se stockbroker, or, in the alternative, could a Pro Se stockbroker successfully defend himself against a Pro Se public customer's claims?
2018 FINRA Arbitration
In a FINRA Arbitration Statement of Claim filed in November 2016 by public customer Claimant Ledermann (who represented himself pro se), he asserted breach of fiduciary duty, manipulation,
misrepresentation, omission of facts, unauthorized trading, breach of contract, margin
calls, negligence, manipulation and other trading disputes in connection with his purchase of Cleantech stock. Claimant Ledermann soughtt $413,045.11 in compensatory damages, punitive damages, interest, fees, and costs. In the Matter of the Arbitration Between Erich Ledermann, Claimant, v. Alexander Kibrik, Respondent (FINRA Arbitration Decision 16-03304 / February 27, 2018) http://www.finra.org/sites/default/files/aao_documents/16-03304.pdf
Associated person Respondent Kibrik generally denied the allegations, asserted various affirmative defenses, and sought the expungement of the mater from his Central Registration Depository record ("CRD").
When you got one pro se party, it's unlikely that a FINRA Arbitration will proceed smoothly down the road from the filing of pleadings to discovery to hearings to verdict -- more likely, you're going to need to buckle up for a wild ride. When you got a pro se Claimant and a pro se Respondent, omigod! Just consider this excerpt from the FINRA Arbitration Decision:
Respondent did not appear at the evidentiary hearing held on January 16, 2018. Upon
review of the file, the Panel determined that Respondent Alexander Kibrik had been
properly served with the Statement of Claim and received due notice of the hearing, and
that arbitration of the matter would proceed without said Respondent present, in
accordance with the Code.
On Sunday, January 14, 2018, Respondent requested that the Panel postpone the
hearing scheduled for Tuesday, January 16, 2018. On January 17, 2017, FINRA notified
the Panel of Respondent's request. By Order dated January 18, 2018, the Panel
requested that the Respondent provide proof of the event(s) that precluded him from
attending the hearing held on January 16, 2018 and prevented him from contacting
FINRA within ten (10) calendar days before the first hearing date. By email dated
January 22, 2018, Respondent responded to the Panel's inquiry.
By Order dated January 23, 2018, the Panel requested that Respondent submit
additional information and documentation to support his January 22, 2018 response. By
email dated January 29, 2018, Respondent responded to the Panel's inquiry. By Order
dated February 6, 2018, the Panel scheduled a final hearing date for February 13, 2018.
At the hearing held on February 13, 2018, Respondent filed a Motion to Dismiss,
pursuant to FINRA Rule 12206. The Panel denied Respondent's Motion to Dismiss as
untimely and without merit. . . .
Tuesday, January 16th Scheduled FINRA Evidentiary Hearing
As best I understand the somewhat imprecise recitation of the events above, there was an evidentiary hearing scheduled for January 16, 2018. Respondent Kibrik filed a request on January 14, 2018, which was a Sunday . . . yeah, a Sunday! . . .to postpone the Tuesday, January 16th hearing. Now, don't get me wrong -- crap happens and there may well have been a compelling reason to seek a postponement of a Tuesday hearing via the prior-Sunday. Frankly, Respondent Kibrik gets some credit for not waiting until Monday and doing whatever he could to give everyone advance notice. In response to his request for a postponement, the FINRA Panel of Arbitrators issued a January 18th Order requiring an explanation of the underlying events presented by Respondent as the basis for his adjournment request. On January 22nd, Respondent answered the Panel's questions -- except, on January 23rd, the Panel asked for more information and documentation, which sort of suggests that they weren't necessarily convinced of the excuses given.
Somewhat lost in the FINRA Arbitration Decision's is what the hell happened to the January 16th hearing. Did the hearing proceed in the absence of Respondent Kibrik? Was there a hearing? Buried at the end of the Decision among the listing of various fees and costs charged to the parties is the disclosure that $2,250 was assessed for two hearing sessions (@ $1,125 each) for January 16, 2018; and an additional $1,125 for the February 13, 2018 session. As such, Respondent Kibrik got hit with $4,500 in hearing session fees; and, accordingly, it appears that a January 16th hearing was held. Who attended that hearing and what transpired is never disclosed to us.
Making things even less comprehensible, the Decision doesn't explain to us why Respondent Kibrik needed a last-minute postponement of the January 16th hearing. If, in fact, it's something very personal, such as a family matter or a confidential medical emergency, I respect the appropriateness of protecting Kibrik's privacy. On the other hand, c'mon, at least indicate that 1) the Decision will not reference the explanation out of consideration for the sensitivity of the issues raised, and 2) indicate in a generic manner that it was "medical" or "domestic" matter, or whatever.
FINRA Arbitration Award: February 27, 2018
After three hearing sessions, the FINRA Panel of Arbitrators found Respondent Kibrik liable and ordered him to pay to Claimant Ledermann $413,045.11 in compensatory damages plus $6,035 in interest. Also, the Panel denied Respondent's request for an expungement.
Congrats to pro se Claimant Ledermann! He did it his way!! Now what?
The Federal Arbitration Act
Under the Federal Arbitration Act (the "FAA"), Ledermann had one year in which to confirm his nearly $420,000 FINRA Arbitration Award.
SIDE BAR: Title 9 U.S. Code Section 9: Award of Arbitrators; Confirmation; Jurisdiction; Procedure [Ed: Emphasis supplied]
If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title. If no court is specified in the agreement of the parties, then such application may be made to the United States court in and for the district within which such award was made. Notice of the application shall be served upon the adverse party, and thereupon the court shall have jurisdiction of such party as though he had appeared generally in the proceeding. If the adverse party is a resident of the district within which the award was made, such service shall be made upon the adverse party or his attorney as prescribed by law for service of notice of motion in an action in the same court. If the adverse party shall be a nonresident, then the notice of the application shall be served by the marshal of any district within which the adverse party may be found in like manner as other process of the court.
2019 SDNY Confirmation
On February 28, 2019, Ledermann filed a Petition (apparently acting pro se) with the United States District Court for the Southern District of New York ("SDNY") to confirm his FINRA Award. Erich Ledermann, Petitioner, v. Alexander Kibrik, Respondent (Memorandum and Order, SDNY, 19-CV-01961 / June 17, 2019) http://brokeandbroker.com/PDF/LedermannSDNY090617.pdf
The FINRA Arbitration Decision was rendered on February 27, 2018. Just in case you were wondering, 2018 was not a leap year -- so February 2018 ended on the 28th that year. The next leap year is 2020. All of which raises an uneasy issue about just what the hell Ledermann was doing from February 27, 2018, until February 28, 2019, which is the span between the issuance of FINRA's Arbitration Decision/Award and his filing in SDNY to confirm his Award. Talk about cutting things close! Why didn't Ledermann move to confirm months or even weeks earlier?
What A Difference A Day Makes (Or Not)
All of which presents us with a nasty problem. The FAA says you have to confirm "within one year after the award is made." Take careful note of that word "within." Now, you tell me, when Ledermann filed his petition to confirm his FINRA Arbitration Award on February 28, 2019, wasn't that literally a day late in terms of the one-year deadline as measured from February 27, 2018? In considering that very issue of whether a day late is a day too late, SDNY offered this explanation in, of all places, Footnote 1:
Ledermann's petition was thus filed one year and one day after the FINRA panel issued its award. The Second Circuit
has held "that section 9 of the FAA imposes a one-year statute of limitations on the filing of a motion to confirm an
arbitration award under the FAA." Photopaint Techs., LLC v. Smartlens Corp., 335 F.3d 152, 158 (2d Cir. 2003). However,
the Court notes that Ledermann's petition to confirm the FINRA arbitration award was received at the Daniel Patrick
Moynihan United States Courthouse on February 27, 2019 and was not delivered to the Pro Se Intake Unit until
February 28, 2019 due to internal delays. Under these circumstances, the Court finds that it is appropriate to invoke the
doctrine of equitable tolling to excuse the approximately twelve-hour delay in Petitioner's filing. Petitioner "actively
pursued his judicial remedies . . . during the statutory period." Goodman v. Port Auth. of New York & New Jersey, 850 F.
Supp. 2d 363, 381-82 (S.D.N.Y. 2012) (quoting Irwin v. Department of Veterans Affairs, 498 U.S. 89, 96 (1990)). He should
not be held responsible for a short delay caused by the Court's internal processes. See Emilio v. Sprint Spectrum L.P., No.
11-CV-3041 (JPO), 2016 WL 3748482, at *3 (S.D.N.Y. July 7, 2016) ("While equitable tolling applies ‘only in rare and
exceptional circumstances . . . it is sometimes necessary as a matter of fairness.'" (quoting Phillips v. Generations Family
Health Ctr., 723 F.3d 144, 150 (2d Cir. 2013))).
Bill Singer's Comment
Never, ever let it be said that a federal court lacks the power to bend the time-space continuum to its will. The law -- the Rule -- is that you MUST file within one year. All of which would prompt many folks to circle that date with a thick red circle and make sure that, you know, a week earlier, a month earlier, hell, a few months earlier, you file your Motion to Confirm. Then again, some folks live on the edge. How do you compute "within one year?" Generally, you would exclude the trigger date (here, February 27, 2018) and include the last day unless it's a weekend or legal holiday. In case you were wondering, February 28, 2019, was a Thursday. Now, I don't want to come off as a stickler for rules, particularly since a client of mine might want me to urge a court to exercise its discretion to invoke equitable tolling. Mindful of my unease, let me note that SDNY sort of glosses over the "twelve-hour delay." Whose fault was that delay? In a sense, if Ledermann had not literally waited until the last minute had already run out, would this "delay" have even been an issue? On the other hand, I frequently quote that lovely "quality of mercy" speech, so, okay, let's all close our eyes and hold our noses for this bit of judicial mercy.
Given a reprieve from the Grim Reaper's time-clock, Ledermann's SDNY case proceeded. Not to be left in the dark, Respondent Kibrik (apparently also acting pro se) requested dismissal of Ledermann's motion to confirm for some alleged failure to submit to binding arbitration. Failure to submit to arbitration? As in the FINRA Arbitration that went forward for three sessions for which Kibrik was charged? Ya gotta love pro se parties! SDNY found that Ledermann had, in fact, complied with his obligation to arbitrate. Although SDNY directed Kibrik to show cause as to why it should not confirm Ledermann's award, the stockbroker never responded. Not surprisingly, SDNY directed the Clerk of the Court to enter judgment in favor of Petitioner Ledermann in the amount of $419,080.11
Online FINRA BrokerCheck records as of June 21, 2019, disclose that Kibrik was first registered in 2009. Under the BrokerCheck heading "Customer Dispute - Award/Judgment" is the disclosure of Ledermann's FINRA Arbitration as reported by Kibrik's former employer FINRA member firm Garden State Securities, Inc. Also, BrokerCheck discloses under the heading "Customer Dispute - Pending," that a pending complaint seeking alleged damages of $23,125,000 was reported on January 31, 2017, by Kibrik's former employer FINRA member firm Global Emerging Capital Group, LLC.
Unfortunately for Ledermann, on June 12, 2018, FINRA indefinitely suspended Kibrik for his failure to comply with the arbitration award at issue. See "Disciplinary and Other FINRA Actions (FINRA.org / August 2018 at Page 31) http://www.finra.org/sites/ default/files/publication_file/august_2018_Disciplinary_Actions.pdf