Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-07-07080/USCOURTS-caDC-07-07080-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 22, 2008 Decided July 15, 2008

No. 07-7080

JOSEPH R. KARSNER, IV,

APPELLEE

v.

PAMELA LOTHIAN AND

THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.,

APPELLEES

MELANIE SENTER LUBIN, MARYLAND SECURITIES

COMMISSIONER,

APPELLANT

Appeal from the United States District Court

for the District of Columbia

(No. 07cv00334)

John B. Howard, Jr., Deputy Attorney General, Office of the

Attorney General for the State of Maryland, argued the cause for

the appellant. Douglas F. Gansler, Attorney General for the

State of Maryland, and Kelvin M. Blake, Assistant Attorney

General, were on brief.

Charles T. Mason, III was on brief for amicus curiae Public

Investors Arbitration Bar Association.

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1

FINRA is the successor of the National Association of Securities

Dealers (NASD). In July 2007, NASD and the New York Stock

Exchange (NYSE) consolidated their “member regulation operations”

into one self-regulatory organization (FINRA). See SEC Release No.

34-56145 (July 26, 2007).

Rex A. Staples was on brief for amicus curiae North

American Securities Administrators Association, Inc.

Richard J. Magid argued the cause for appellee Joseph R.

Karsner, IV. George S. Mahaffey, Jr. was on brief.

Before: HENDERSON, Circuit Judge, and EDWARDS and

WILLIAMS, Senior Circuit Judges.

Opinion for the court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: Melanie

Lubin, the Maryland Securities Commissioner (Commissioner),

appeals the district court’s denial of her motion to intervene as

of right in an arbitration confirmation proceeding. See Karsner

v. Lothian, No. 07cv334 (D.D.C. Apr. 9, 2007) (minute order).

In the underlying arbitration, the panel had recommended—

pursuant to a settlement agreement—that a customer complaint

and the ensuing arbitration be expunged from the disciplinary

record of a securities broker-dealer who was licensed in

Maryland. See Pet. to Confirm Arbitration Award, Ex. 1 (Feb.

12, 2007). The Commissioner contends that the district court

erred in denying intervention because she has a substantial

interest in ensuring the integrity of her records. We agree and

reverse and remand for the reasons set forth below.

I.

Pamela Lothian (Lothian) was a customer of Joseph R.

Karsner, IV (Karsner), a securities broker-dealer registered both

with the Financial Industry Regulatory Authority (FINRA) and

with the State of Maryland.1

 This case arises out of a FINRA

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3

arbitration that settled the complaint Lothian lodged against

Karsner. 

A. Regulatory Background

The Securities Exchange Act of 1934, 15 U.S.C. §§ 78a et

seq. (Exchange Act), “provides a comprehensive system of

federal regulation of the securities industry.” Austin Mun. Sec.,

Inc. v. Nat’l Ass’n of Sec. Dealers, Inc., 757 F.2d 676, 680 (5th

Cir. 1985). The Maloney Act, Pub. L. No. 75-719, 52 Stat. 1070

(1938) (amending the Exchange Act, 15 U.S.C. §§ 78o et seq.),

“established extensive guidelines for the formation and

oversight of self-regulatory organizations, such as the NASD,

and the registered stock exchanges, including the New York

Stock Exchange (NYSE) and the American Stock Exchange.”

Austin Mun. Sec., 757 F.2d at 680. Pursuant to the Maloney

Act, any association of securities broker-dealers seeking to

register as a “national securities association” must “fil[e] with

the [SEC] an application for registration . . . containing the rules

of the association.” 15 U.S.C. §§ 78o-3(a). An association must

“comply with the [Exchange Act] and its own rules,” id.

§ 78s(g)(1)(A), “enforce compliance . . . by its members and

persons associated with its members,” id., and maintain

registration and disciplinary data of its members, id. § 78o-3(i).

Further, although a national securities association is a selfregulatory entity, it remains subject to the SEC’s oversight and

control. Id. § 78s(b). For example, any proposed change in the

association’s rules must be filed with the SEC and “[n]o

proposed rule change shall take effect unless approved by the

[SEC].” Id. § 78s(b)(1). The SEC may “abrogate, add to, and

delete from . . . the rules of a self-regulatory organization . . . as

the [SEC] deems necessary or appropriate to insure the fair

administration of the self-regulatory organization [or] to

conform its rules to requirements of this chapter.” Id. § 78s(c).

FINRA, as NASD’s successor, is “the only officially

registered ‘national securities association’ under [the Exchange

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2

“The CRD system serves as an electronic filing system for the

securities industry and as a means of gathering, organizing, and

retrieving information used by state (including Maryland) and federal

securities regulators.” Appellant’s Br. 5-6.

Act].” Nat’l Ass’n of Sec. Dealers, Inc. v. SEC, 431 F.3d 803,

804 (D.C. Cir. 2005). “By virtue of its statutory authority,

[FINRA] wears two institutional hats: it serves as a professional

association, promoting the interests of it[s] members . . . and it

serves as a quasi-governmental agency, with express statutory

authority to adjudicate actions against members who are accused

of illegal securities practices and to sanction members found to

have violated the Exchange Act or Securities and Exchange

Commission . . . regulations issued pursuant thereto.” Id.

(citing 15 U.S.C. § 78o-3(b)(7)). 

FINRA requires a broker-dealer member to arbitrate a

dispute with a customer if “[r]equired by a written agreement”

or “[r]equested by the customer” and “[t]he dispute arises in

connection with the business activities of the member.” NASD

Manual § 12200. Any customer dispute resulting in arbitration

is included in the member’s Central Registration Depository

(CRD)2

 record and a member “seeking to expunge information

from the CRD system arising from disputes with customers must

obtain an order from a court of competent jurisdiction directing

such expungement or confirming an arbitration award

containing expungement relief.” Id. § 2130(a). According to

Rule 2130(b), a broker-dealer member of FINRA “petitioning a

court for expungement relief or seeking judicial confirmation of

an arbitration award containing expungement relief must name

[FINRA] as an additional party and serve [FINRA] with all

appropriate documents.” Id. § 2130(b).

A broker-dealer doing business in Maryland must also

register with the Maryland Securities Division. See Md. Code

Ann., Corps. & Ass’ns § 11-401 (2007 Repl. Vol.). To register,

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3

Legacy was incorporated in California and registered as a brokerdealer in Maryland in 1996. BrokerCheck Report, Legacy Financial

Services, Inc., CRD No. 38697 (generated June 24, 2008), available

at http://brokercheck.finra.org. It appears that it is no longer doing

business as Legacy. See Bruce Kelly, Legacy Financial Close Shop:

Indie Broker-Dealer Sells Most Reps to Multi-Financial Securities,

Investment News, Sept. 3, 2007, available at 2007 WL 17582642.

the broker-dealer must agree to, inter alia, the inclusion of

relevant information (such as customer complaints and

arbitrations) in the CRD. Id. § 11-405; Md. Code Regs.

02.02.02.01. The North American Securities Administrators

Association, Inc. (NASAA) maintains and administers the CRD

database pursuant to an agreement with FINRA. See CRD

Agreement Amendment, ¶ 3(e) (Dec. 13, 1996).

B. Karsner

Karsner, a mutual fund broker-dealer registered with FINRA

and the Maryland Securities Division, was employed by Legacy

Financial Services, Inc. (Legacy) in Gambrills, Maryland.3

 On

October 19, 2004, Pamela Lothian, one of Karsner’s mutual

fund customers, began a FINRA arbitration proceeding against

Karsner and Legacy by complaining that Karsner had induced

her to invest in unsuitable investments and had negligently

managed her account resulting in losses of approximately

$104,638. Before the arbitration hearing, Lothian settled her

claims against Karsner and Legacy. Pursuant to the settlement

agreement, Lothian received $47,000 in exchange for

abandoning her claims and stipulating to the expungement of all

references to the dispute from Karsner’s CRD record. On

February 14, 2006, the arbitration panel approved the stipulated

award, dismissed with prejudice Lothian’s claims against

Karsner and Legacy and “recommend[ed] the expungement of

all reference to the . . . arbitration from Respondent Karsner’s

registration record maintained by the NASD Central

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4

Rule 24(a)(2) provides in part that the court “must permit anyone

to intervene who . . . claims an interest relating to the property or

transaction that is the subject of the action, and is so situated that

disposing of the action may as a practical matter impair or impede the

movant’s ability to protect its interest, unless existing parties

adequately represent that interest.” Fed. R. Civ. P. 24(a)(2).

Registration Depository.” Pet. to Confirm Arbitration Award,

Ex. 1.

Karsner filed a petition to confirm the Stipulated Award in

the district court on February 12, 2007, naming Lothian and

NASD as respondents. Id. ¶ 14. NASD notified NASAA of the

filing and NASAA in turn notified Commissioner Lubin. On

March 20, 2007, the Commissioner moved to intervene pursuant

to Federal Rule of Civil Procedure 24(a)(2) in order to oppose

the expungement of Karsner’s CRD record.4

 The district court

denied the motion to intervene by minute order on April 9, 2007.

Two days later, the district court granted Karsner’s petition to

confirm the Stipulated Award. Karsner v. Lothian, No. 07cv334

(D.D.C. Apr. 11, 2007).

The Commissioner then filed a motion to reconsider the

district court’s denial of intervention, which was denied by

minute order on April 27, 2007. Karsner v. Lothian, No.

07cv334 (D.D.C. Apr. 27, 2007). On May 3, 2007, the

Commissioner filed a timely notice of appeal of the denial of

intervention and simultaneously moved to stay the expungement

of Karsner’s CRD record pending the appeal. The

Commissioner did not, however, appeal the confirmation order.

Although the district court initially denied the Commissioner’s

motion to stay, Karsner v. Lothian, No. 07cv334 (D.D.C. May

30, 2007), it subsequently—again by minute order—stayed this

case and eleven others in which Karsner seeks confirmation of

arbitration awards recommending expungement. Karsner v.

Lothian, No. 07cv344 (June 13, 2007). 

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II.

Before addressing the merits, we must resolve the threshold

issues of the district court’s subject matter jurisdiction and

mootness.

A. Subject Matter Jurisdiction

The Commissioner argues that the district court lacked

subject matter jurisdiction over Karsner’s petition and that the

Court should therefore vacate the district court’s order.

Appellant’s Br. 13.

Although the Federal Arbitration Act (FAA) constitutes

federal law, “the Supreme Court has interpreted the statute as

not itself bestowing jurisdiction on the federal district courts.”

Kasap v. Folger Nolan Fleming & Douglas, Inc., 166 F.3d 1243,

1245-46 (D.C. Cir. 1999) (citing Southland Corp. v. Keating,

465 U.S. 1, 16 n.9 (1984) (FAA “creates federal substantive law

requiring the parties to honor arbitration agreements, [but] . . .

does not create any independent federal-question jurisdiction

under 28 U.S.C. § 1331 (1976) or otherwise”); Moses H. Cone

Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n.32

(1983) (cause of action under FAA requires “diversity of

citizenship or some other independent basis for federal

jurisdiction”)). Here, jurisdiction—if it exists—must be based

on 28 U.S.C. § 1332(a)(1) (“The district courts shall have

original jurisdiction of all civil actions where the matter in

controversy exceeds the sum or value of $75,000, exclusive of

interest and costs, and is between . . . citizens of different States

. . . .”). The parties’ diversity of citizenship is clear but the

amount in controversy requires us to consider a question of first

impression in our Circuit.

Other circuits have used three different approaches to this

question: the award, the demand and the remand approaches.

Under the award approach, the amount in controversy is

determined by the amount of the underlying arbitration award

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regardless of the amount sought. See, e.g., Ford v. Hamilton

Invs., Inc., 29 F.3d 255, 260 (6th Cir. 1994). Pursuant to the

demand approach, the amount in controversy is the amount

sought in the underlying arbitration rather than the amount

awarded. See, e.g., Am. Guar. Co. v. Caldwell, 72 F.2d 209, 211

(9th Cir. 1934); see also Bull HN Info. Sys., Inc. v. Hutson, 229

F.3d 321, 328-30 (1st Cir. 2000) (applying demand approach to

bifurcated arbitration proceeding). The remand approach

appears to apply if the petition includes a request to remand and

reopen the arbitration proceeding, in which case the amount in

controversy is the amount sought in the underlying arbitration.

See, e.g., Peebles v. Merrill Lynch, Pierce, Fenner & Smith Inc.,

431 F.3d 1320, 1325-26 (11th Cir. 2005).

Of the three approaches, the award approach has the least

appeal. The Sixth and Eleventh Circuits have followed the

award approach, see Ford, 29 F.3d at 260; Baltin v. Alaron

Trading Corp., 128 F.3d 1466, 1472 (11th Cir. 1997), but in

neither case was the petitioner seeking to reopen the arbitration

and thus the court had no opportunity to consider the remand

approach. Moreover, the Eleventh Circuit appears to have more

recently adopted the remand approach, explaining that “a federal

court has subject matter jurisdiction where a party seeking to

vacate an arbitration award is also seeking a new arbitration

hearing at which he will demand a sum which exceeds the

amount in controversy for diversity jurisdiction purposes.”

Peebles, 431 F.3d at 1325-26. While the award approach can

work if the petitioner seeks confirmation of an arbitration award,

it can also be inconsistent with the court’s exercise of

jurisdiction over a petition to compel arbitration. That is, the

FAA provides that the district court has jurisdiction over a

petition to compel if it “would have jurisdiction under Title 28,

in a civil action or in admiralty of the subject matter of a suit

arising out of the controversy between the parties.” 9 U.S.C.

§ 4; see also Moses Cone, 460 U.S. at 25 n.32 (“Section 4

provides for an order compelling arbitration only when the

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5

Additionally, the award approach may discourage arbitration

because it effectively punishes parties for choosing arbitration over

litigation to settle a dispute. Frost, supra p.9, at 254-55. For example,

if the claimant in arbitration seeks $100,000 and is awarded only

$50,000, a petition to confirm/vacate would be below the

jurisdictional amount. But if the claimant had instead filed suit in

federal court, jurisdiction would have existed. See 28 U.S.C. § 1332.

6

In Theis, the Ninth Circuit noted American Guaranty’s

declaration that “‘[i]t is the amount in controversy which determines

jurisdiction, not the amount of the award’” and concluded that its

federal district court would have jurisdiction over a suit on the

underlying dispute.”); Jumara v. State Farm Ins. Co., 55 F.3d

873, 877 (3d Cir. 1995) (“[T]he amount in controversy in a

petition to compel arbitration or appoint an arbitrator is

determined by the underlying cause of action that would be

arbitrated.”); cf. Webb v. Investacorp, Inc., 89 F.3d 252, 257 (5th

Cir. 1996) (“[T]he district court properly looked to the amount

of Investacorp’s claim in the underlying arbitration to determine

the amount in controversy in this action for declaratory relief.”).

The award approach would apply two different jurisdictional

tests depending on the action the petitioner seeks, resulting in

jurisdiction over a petition to compel arbitration of a claim but

not necessarily over a petition to confirm/vacate an arbitration

award arising from the same claim.5

 See Christopher L. Frost,

Welcome to the Jungle: Rethinking the Amount in Controversy

in a Petition to Vacate an Arbitration Award Under the Federal

Arbitration Act, 32 Pepp. L. Rev. 227, 261-62 (2005). 

In contrast, the demand approach has merit and has recently

been applied by two other circuit courts. For example, the Ninth

Circuit recently upheld the exercise of diversity jurisdiction over

a petition to vacate an arbitration award of $0. Theis Research,

Inc. v. Brown & Bain, 400 F.3d 659, 664-65 (9th Cir. 2005); see

also Am. Guar., 72 F.2d at 211.6 The First Circuit has observed

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holding is consistent with American Guaranty. 400 F.3d. at 663

(quoting Am. Guar., 72 F.2d at 211) (alteration in Theis).

that the demand approach recognizes the “close connection

between arbitration and subsequent enforcement proceedings”

and “carr[ies] out the federal policies in favor of arbitration.”

Bull HN Info. Sys., 229 F.3d at 329. Bull analogizes to litigation

“where the claim in a court complaint exceeds $75,000 but the

jury awards less than $75,000,” noting that “there is diversity

jurisdiction” over such a claim. Id. A contrary approach to

arbitration—for example, “where the sums at issue before the

arbitrator at the start of the arbitration exceed $75,000, [but] the

final (non-partial) award is for less than $75,000”—“could be

thought to undermine” “federal policies in favor of arbitration.”

Id. And, as noted earlier, the demand approach is consistent

with the court’s jurisdiction over a petition to compel

arbitration. The demand approach thus avoids the potential

problem (under the award approach) that the court could compel

arbitration but then lack jurisdiction to review the arbitration it

ordered. Further, unlike the award approach, the demand

approach permits the district court to exercise jurisdiction

coextensive with the “diversity jurisdiction that would have

otherwise been present if the case had been litigated rather than

arbitrated.” Bull HN Info. Sys., 229 F.3d at 329. Accordingly,

we adopt the demand approach and conclude that, because

Lothian sought $104,638.00 plus punitive damages, fees and

costs in arbitration, the $75,000-plus threshold for diversity

jurisdiction is met. Pet. to Confirm Arbitration Award, Ex. 1.

While maintaining that the district court has jurisdiction over

his petition, Karsner argues that the Commissioner must assert

an independent ground of subject matter jurisdiction to

intervene. We observed in EEOC v. National Children’s

Center, Inc., 146 F.3d 1042, 1046 (D.C. Cir. 1998), that “[p]rior

to the enactment of [28 U.S.C. § 1367], courts granted

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7

We further note our own jurisdiction to review the district court’s

denial of the Commissioner’s motion to intervene pursuant to 28

U.S.C. § 1291. See Acree v. Republic of Iraq, 370 F.3d 41, 49 (D.C.

Cir. 2004) (“The District Court’s denial of a motion to intervene is an

appealable final order.”) (citing Fund for Animals, Inc. v. Norton, 322

F.3d 728, 732 (D.C. Cir. 2003)).

intervention as of right without requiring an independent

jurisdictional basis, on the theory that such claims were within

the ancillary jurisdiction of the district courts.” Section 1367(a)

now grants the district court “supplemental jurisdiction over all

other claims that are so related to claims in the action within

such original jurisdiction that they form part of the same case or

controversy under Article III of the United States Constitution.”

28 U.S.C. § 1367(a). Section 1367(b), in turn, ousts the district

court of supplemental jurisdiction over parties “seeking to

intervene as plaintiffs under Rule 24 . . . when exercising

supplemental jurisdiction over such claims would be

inconsistent with the jurisdictional requirements of section

1332.” Id. § 1367(b) (emphasis added). Because the

Commissioner is not seeking to intervene as a plaintiff (or

petitioner)—she is instead opposing Karsner’s petition to

expunge—section 1367(b) does not bar the Commissioner’s

intervention as of right. See Aurora Loan Servs., Inc. v.

Craddieth, 442 F.3d 1018, 1025 (7th Cir. 2006) (permitting

intervention as of right despite lack of independent basis of

subject matter jurisdiction therefor because “[t]he evident

purpose of [section 1367(b)] is to prevent a two-step evasion of

the requirement of complete diversity of citizenship by a person

who, being of the same citizenship as the defendant, waits to sue

until a diverse party with which it is aligned sues the defendant,

and then joins the suit as an intervening plaintiff”). We thus

conclude that the district court possesses subject matter

jurisdiction over both Karsner’s petition and the

Commissioner’s motion to intervene.7

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B. Mootness

Before briefing the merits, Karsner moved to dismiss the

Commissioner’s appeal as moot because the Commissioner did

not appeal the district court’s confirmation order. He maintains

that even if the Court reverses the district court’s denial of the

Commissioner’s motion to intervene, “the ultimate relief sought

by Appellant—vacatur of that portion of the Arbitration Award

that called for expungement of Lothian’s claim against Karsner

from the CRD—can no longer be granted” because the

Commissioner failed to appeal the confirmation order.

Appellee’s Br. 32. 

While it would have been prudent for the Commissioner to

have appealed the confirmation order, see, e.g., Alternative

Research & Dev. Found. v. Veneman, 262 F.3d 406, 410 (D.C.

Cir. 2001); Mausolf v. Babbitt, 125 F.3d 661, 666 (8th Cir.

1997), the Commissioner’s appeal of the denial of intervention

is not doomed by her failure to do so. In Williams & Humbert

Ltd. v. W & H Trade Marks (Jersey) Ltd., 840 F.2d 72 (D.C. Cir.

1988), six individuals sought to intervene as defendants in a

trademark action. The district court denied intervention and

granted summary judgment to the plaintiff. Id. at 74. Although

the intervenors appealed the denial of intervention, they failed

to appeal the grant of summary judgment. Id. Nonetheless, this

Court considered the appeal, vacated the district court’s denial

of intervention and remanded the case, concluding that “subject

to the District Court’s ruling on the subject of timeliness, the

appellants have made out a case for intervention as of right as

defendants and counter-claimants in the proceedings.” Id. at 77.

We observed that “[a]ppellants and appellee agree that the

summary judgment is not before the Court, but that if the

[intervenors are] permitted to intervene, [they] will be in a

position to attack that judgment by proper motion.” Id. at 74

(citing Fed. R. Civ. P. 60); see also In re Vitamins Antitrust

Class Actions, 215 F.3d 26, 28 (D.C. Cir. 2000) (reviewing

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8

Rule 60(b)(4) provides that “the court may relieve a party or its

legal representative from a final judgment, order, or proceeding . . .

[if] the judgment is void.” Fed. R. Civ. P. 60(b)(4). 

9

The CRD Agreement between NASAA and NASD (now FINRA)

states that “[t]he data on CRD Uniform Forms filed with the CRD

shall be deemed to have been filed with each CRD State in which the

applicant seeks to be licensed and with [FINRA] and shall be the joint

denial of motion to intervene by individuals who opted out of

class action even though they did not appeal settlement

agreement between class and defendants). As occurred in

Williams & Humbert, the Commissioner asserts that she will file

a Rule 60(b) motion to attack the judgment as void if permitted

to intervene8 and, accordingly, the Commissioner’s appeal is not

moot. 

C. Intervention

Intervention as of right obtains if the party seeking

intervention “claims an interest relating to the property or

transaction that is the subject of the action, and is so situated that

disposing of the action may as a practical matter impair or

impede the movant’s ability to protect its interest, unless

existing parties adequately represent that interest.” Fed. R. Civ.

P. 24(a)(2). We have identified four prerequisites to intervene

as of right: “(1) the application to intervene must be timely; (2)

the applicant must demonstrate a legally protected interest in the

action; (3) the action must threaten to impair that interest; and

(4) no party to the action can be an adequate representative of

the applicant’s interests.” SEC v. Prudential Sec. Inc., 136 F.3d

153, 156 (D.C. Cir. 1998). The Commissioner’s satisfaction of

the second, third and fourth factors is straightforward: the

second factor because Maryland has a recognized property

interest in the CRD (pursuant to the agreement between NASAA

and NASD and Maryland law)9

, the third factor because the

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property of the applicant, [FINRA], and those CRD States.” CRD

Agreement Amendment, ¶ 3(e) (Dec. 13, 1996) (emphasis added).

The Commissioner is the “official custodian” of the Securities

Division’s records, see Md. Code Ann., State Gov’t § 10-611 (2004

Repl. Vol and 2007 Supp.); Md. Code Ann., Corps. & Ass’ns § 11-

405 (2007 Repl. Vol.), including broker-dealer registrations. See id.

§§ 11-404, 11-405; Md. Code Regs. 02.02.02.01. A “public record”

is defined as “any documentary material that . . . is made by a unit or

instrumentality of the State government . . . or received by the unit or

instrumentality in connection with the transaction of public business,”

Md. Code Ann., State Gov’t § 10-611.

action threatens to alter the CRD by expunging information

about Karsner and the fourth factor because neither Karsner nor

Lothian represents the Commissioner’s interest in protecting the

integrity of the CRD. 

The remaining factor, timeliness, “‘is to be judged in

consideration of all the circumstances, especially weighing the

factors of time elapsed since the inception of the suit, the

purpose for which intervention is sought, the need for

intervention as a means of preserving the applicant’s rights, and

the probability of prejudice to those already parties in the case.’”

United States v. British Am. Tobacco Austl. Servs., Ltd., 437

F.3d 1235, 1238 (D.C. Cir. 2006) (quoting United States v. Am.

Tel. & Tel. Co., 642 F.2d 1285, 1295 (D.C. Cir. 1980)).

Although we usually review a district court’s “denial of

intervention for untimeliness under the abuse of discretion

standard,” id., here we review de novo because the district court

failed to provide any findings for us to review. See Cook v.

Boorstin, 763 F.2d 1462, 1468 (D.C. Cir. 1985) (where “there

are essentially no factual findings to which to defer . . . we must

make our own determination [regarding intervention]”). Using

the British American Tobacco Australia Services factors, we

conclude that the Commissioner’s motion was timely. First, less

than one month elapsed between Karsner’s filing of his petition

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10Karsner contends that the Commissioner’s motion to intervene

was untimely because it was not filed within the FAA’s 90-day

window to file a notice to modify or vacate an arbitration award. See

9 U.S.C. § 12 (“Notice of a motion to vacate, modify, or correct an

award must be served upon the adverse party or his attorney within

three months after the award is filed or delivered.”). The

Commissioner, however, seeks the vacatur of the district court’s

confirmation order—not the arbitration award—and therefore the

FAA’s 90-day deadline is irrelevant.

11See 9 U.S.C. § 9 (“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.”) (emphases added).

in the district court and the Commissioner’s motion to intervene.

Second, the Commissioner’s intervention protects Maryland’s

interest in the integrity of its public records. Finally, the

Commissioner moved to intervene before the district court took

any action—even by minute order—and thus did not act so late

as to prejudice proceedings in that court.10

Moreover, the Commissioner asserts that if remand is

ordered, she will move under Rule 60(b)(4) to void the district

court’s confirmation order. As we have explained, however,

“[r]elief under Rule 60(b)(4) is not available merely because a

disposition is erroneous.” Combs v. Nick Garin Trucking, 825

F.2d 437, 442 (D.C. Cir. 1987). “Rather, before a judgment may

be deemed void within the meaning of the rule, it must be

determined that the rendering court was powerless to enter it.”

Id. (quotation omitted). Section nine of the FAA provides for

the judicial confirmation of an arbitration award.

11 But the

district court confirmed the arbitrators’ recommendation of

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12Interestingly, Karsner himself requested only that the arbitration

panel dismiss Lothian’s complaint and “award [him] forum fees,

attorneys’ fees and any other costs and fees incurred by [him] in

defending this action.” Pet. to Confirm Arbitration Award, Ex. 1.

expungement. An expungement recommendation, however, is

not an award and, accordingly, the district court is without

section 9 authority to “confirm” it. See Utility Audit, Inc. v.

Horace Mann Serv. Corp., 383 F.3d 683, 687 (7th Cir. 2004)

(“‘[R]ecommend’ is defined as ‘to suggest that (a particular

action) should be done.’” (quoting Cambridge International

Dictionary of English (1995))); Black’s Law Dictionary (8th ed.

2004) (defining “award” as a “final judgment or decision”).12

For the foregoing reasons, we reverse the district court’s

denial of intervention as of right. Because the confirmation

order has not been appealed, however, we must remand for

further proceedings consistent with this opinion. If on remand

the Commissioner successfully moves under Rule 60(b)(4) to

void the district court’s confirmation order, the district court

may not subsequently grant expungement relief without

identifying a source of authority—other than section 9 of the

FAA—giving it the power to do so. In this regard, NASD Rule

2130, entitled “Obtaining an Order of Expungement of

Customer Dispute Information from the [CRD],” should be

analyzed. As noted earlier, Rule 2130(a) requires a brokerdealer member of FINRA (like Karsner) to “obtain an order

from a court of a competent jurisdiction directing such

expungement or confirming an arbitration award containing

expungement relief.” NASD Rule 2130(a) (emphases added). 

Regarding the confirmation of an arbitration award “containing

expungement relief,” we do not read this language to include a

mere recommendation of expungement relief but rather the

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13In 1999, NASD issued a notice imposing a moratorium on

arbitrator-ordered expungement of information from the CRD

because, according to NASAA, “under the laws of certain states,

information filed with the CRD system is deemed to have been filed

with those states, and . . . is therefore a state record subject to all of the

regulations and protocols that apply to state records.” NASD Notice

to Members 99-09, 47-48 (Feb. 1999), available at

http://www.finra.org/RulesRegulation/NoticestoMembers. Further,

“in [NASAA’s] opinion, state laws do not currently recognize the

authority of an arbitrator to expunge a state record or do not otherwise

currently permit such expungements due to record keeping

requirements.” Id. The moratorium appears to remain in effect. See

NASD Notice to Members 04-16, 213 (Mar. 2004), available at

http://www.finra.org/RulesRegulation/NoticestoMembers (“Rule 2130

continues the requirement started with the January 1999 moratorium

that a court of competent jurisdiction must order or confirm all

expungement directives before NASD will expunge customer dispute

information from the CRD system.”); cf. Pet. to Confirm Arbitration

Award, Ex. 1 (“The Panel recommends the expungement of all

reference to the above-captioned arbitration from Respondent

Karsner’s registration record maintained by the NASD Central

Registration Depository (‘CRD’), with the understanding that,

pursuant to NASD Notice to Members 04-16, Respondent Karsner

must obtain confirmation from a court of competent jurisdiction before

the CRD [sic] will execute the expungement directive.”).

14Rule 2130 was approved by the SEC in 2003. Order Granting

Approval of NASD Proposed Rule Change Concerning the

Expungement of Customer Dispute Information From the Central

arbitration award must direct expungement.13 And if, instead,

the FINRA member asks the court itself to “direct”

expungement, Rule 2130(b) requires that NASD (now FINRA)

be named as a party unless NASD (now FINRA) waives the

requirement upon certain “affirmative judicial . . . findings.”

NASD Rule 2130(b). Moreover, although the NASD Rules

require SEC approval, see 15 U.S.C. § 78s(b),14 the Rules do not

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Registration Depository System, 68 Fed. Reg. 74,667 (Dec. 24, 2003).

come within the meaning of 15 U.S.C. § 78aa which gives a

federal court “exclusive jurisdiction of violations” of rules and

regulations promulgated under the Securities Exchange Act of

1934, 15 U.S.C. §§ 78a et seq. See Ford v. Hamilton Invs., Inc.,

29 F.3d 255, 259 (6th Cir. 1994) (“[T]he mere fact that the

arbitration was conducted before the NASD as required by the

association’s rules does not make the case one that arises out of

the federal securities laws.”).

So ordered.

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