The investors filed a lawsuit with FINRA`s arbitration division to recover significant losses from brokers, alleging nine pleas. The broker filed a counterclaim and demanded payment of debts and attorneys` fees. The arbitral tribunal ruled in favour of the investors and dismissed the broker`s counterclaim. The arbitrators then issued an amended arbitral award in pre-trial detention. The District Court then granted Broker`s request to set aside the amended arbitral award in favour of the investors and referred the broker`s counterclaim to a new arbitral tribunal. Investors appealed in time. The Fourth Circuit ruled that the District Court erred in setting aside the amended award if the arbitrators` liability to the broker was not manifestly contrary to law. The court stated that the imposition of liability on the basis of a contractual obligation to comply with FINRA rules was at least a contentious interpretation of the parties` contracts. In this case, the broker executed iPath S&P 500 VIX (VXX) short-term futures transactions on the margin accounts of the investors` portfolio, which is a flagrant violation of FINRA Rule 4210. Rule 4210 prohibits trading in certain high-risk securities through portfolio margin accounts, including VXX transactions. The tribunal also found that the arbitral tribunal had not manifestly disregarded the law by imposing equal damages on the investors` accounts on 19 August 2015.
Given Connecticut law, the court argued that the award placed investors in the position they would have been in if the contracts had been properly performed after August 19. Finally, the arbitral tribunal did not manifestly disregard the law by awarding legal costs to the investors. Accordingly, the tribunal set him aside and sent him back with the instruction to confirm the amended arbitral award. By using this website, you agree to security monitoring and auditing. For security reasons and to ensure that the public service remains accessible to users, this government computer system uses network traffic monitoring programs to identify unauthorized attempts to upload or modify information, or otherwise cause damage, including attempts to deny service to users. Please report your traffic by updating your user agent to include company-specific information. Unauthorized attempts to upload information and/or modify information on any part of this website are strictly prohibited and subject to prosecution under the Computer Fraud and Abuse Act of 1986 and the National Information Infrastructure Protection Act of 1996 (see 18 U.S.C. ยง 1001 and 1030). For more information, see the SEC`s Privacy and Security Policy.
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