Opinion ID: 4027030
Heading Depth: 3
Heading Rank: 1

Heading: Arbitration Proceedings before

Text: FINRA Based on those allegations, in 2010 the Goldmans initiated FINRA arbitration proceedings against Merrill Lynch, CGMI, Guariglia, and other employees of those financial institutions. They asserted claims on the following bases: securities fraud in violation of the Securities Exchange Act of 1934 (the “’34 Act”), 15 U.S.C. § 78a et seq., and Rule 10b-5, 17 C.F.R. § 240.10b-5; fraudulent misrepresentation; lack of supervision of employees; lack of suitability of investment recommendations; breach of fiduciary duty; breach of contract; and negligence. The FINRA proceedings began with mediation before a neutral named Ferdinand Pieroni, and the mediation succeeded in producing a settlement for the Goldmans with Merrill Lynch, but not with CGMI.2 The Goldmans now allege that CGMI refused to negotiate in good faith, left the mediation when the Goldmans so demanded, and then “snuck back in[] ... through a side door” to “spy” on the confidential negotiations between the Goldmans and Merrill Lynch. (Opening Br. at 9.) CGMI flatly denies those allegations, and mediator Pieroni filed a sworn affirmation before the FINRA arbitration panel declaring that CGMI did not refuse to mediate, was never asked to leave the mediation, and acted in good faith. 2 At this point and hereafter, for simplicity, we will refer to Guariglia and CGMI collectively as “CGMI.” 4 The arbitration panel took evidence and heard argument for 10 days between August 2012 and February 2014. After the Goldmans presented their full case in chief, CGMI moved to dismiss for lack of evidence. The panel granted the motion, concluding that, “[w]hile all the claims were quite stridently argued, not a single claim was proven to be true by evidence.” (App. 109.) In particular, the panel noted that the Goldmans “failed to offer a scintilla of proof” that they were subject to a margin call. (Id.) The panel thus determined that “there was no margin call” (id.), and, on October 2, 2014, it issued a final award dismissing the Goldmans’ claims and assigning administrative fees among the parties.