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Regulation and Compliance > Federal Regulation > FINRA

FINRA Panel Awards $11.4M After First Arb Hearing via Zoom

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B. Riley Financial subsidiary Wunderlich Securities was ordered by a three-person Financial Industry Regulatory Authority Office of Dispute Resolution panel to pay a total of $11.4 million to New York-based investment firm Dominick & Dickerman and one of its executives after what FINRA said was the first arbitration award involving a virtual hearing, conducted via Zoom.

Attorneys representing Dominick & Dickerman and Michael John Campbell, a managing director at the firm, had claimed Wunderlich was guilty of common law fraud, negligent misrepresentation, violation of Section 10(b) of the Securities Exchange Act of 1934, breach of contract and violation of  FINRA Rule 2010 (governing standards of commercial honor and principles of trade), FINRA said.

The dispute arose after Wunderlich bought Dominick & Dickerman’s wealth management business in 2015, but specifics were not cited in the award, which was posted on FINRA’s website April 7.

Wunderlich and Hughes Hubbard & Reed, the law firm that represented the claimants, declined to comment.

The $11.4 million that the panel awarded included $7 million in compensatory damages for Dominick & Dickerman; $500,000 in compensatory damages for Campbell; $2.8 million in interest for Dominick & Dickerman; $201,756 in interest for Campbell; and the rest in legal and other costs and fees.

The claimants had originally requested $7 million plus interest to Dominick & Dickerman in exchange for Wunderlich common stock and warrants sold to it; $500,000 plus interest to Campbell in exchange for the common stock sold to him; and $100,000 plus interest to reimburse Dominick & Dickerman for a deposit held by Pershing for accounts refused by Wunderlich. At the close of the hearing, the claimants also requested $1.4 million in attorneys’ fees and $65,020.31 in expenses.

Hearings in the arbitration were held Dec. 17, 18 and 19 and March 3, 4, 5, 6, 10 and 12. All the hearings, except the one March 12, were held at the offices of claimants’ counsel in New York City, according to FINRA. However, with the consent of counsel for both sides and the arbitrators, the March 12 hearing was held via Zoom with counsel for the claimants, counsel for the respondents and the arbitrators all being at different locations because of “concern with the coronavirus crisis,” FINRA said.

Since then, due to COVID-19, FINRA postponed all in-person arbitration and mediation proceedings scheduled through July 3. The proceedings can be held by Zoom or teleconference meetings, but both parties have to agree, or such a meeting has to be ordered by a FINRA arbitration panel, FINRA said. There have been additional Zoom hearings since March 12, according to FINRA, but it didn’t specify how many Wednesday.


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