Los Angeles, CA (June 29, 2026): The Court of Appeal of the State of California, Second Appellate District affirmed a prior million-dollar judgment of the Superior Court of Los Angeles County (Hon. Christopher K. Lui) in favor of aggrieved investor Ronald Inlow, who was represented before the trial and appellate courts by Montgomery G. Griffin of the Law Offices of Montgomery G. Griffin in Newport Beach, California. The Court of Appeal’s decision upheld a ruling by the Superior Court against financial advisors Michael Barrows and Eric Ludovico denying their petition to vacate a FINRA award of $1,035,360, made jointly and severally against them in 2023 in favor of Mr. Inlow.
In 2023, a three-member FINRA arbitration panel issued a reasoned arbitration Award finding, among other things, that: (1) Barrows and Ludovico violated federal securities laws, and (2) Barrows breached his fiduciary duty to Mr. Inlow in the sale of securities at issue.
Thereafter, Barrows and Ludovico filed a petition to vacate the arbitration award, alleging that the FINRA arbitration panel Chairperson, Stephen Marcus, had been misclassified by FINRA as a public arbitrator (instead of an industry arbitrator). However, Mr. Marcus was appointed by FINRA to serve as the panel Chairperson 12 months prior to the issuance of the award, which followed an eight-day arbitration hearing in Los Angeles. At no point during the arbitration, did Barrows or Ludovico challenge Mr. Marcus’ classification by FINRA as a public arbitrator—raising the possibility that they had waived the right to later successfully challenge the classification.
Opposing the petition to vacate, Griffin argued that Barrows and Ludovico waived their “misclassification” argument since they never complained to Chairperson Marcus or to FINRA’s Director (procedural avenues available to them under FINRA’s Code of Arbitration Procedure) about their misclassification concerns at any point during the 12 months when Mr. Marcus served on the panel. The trial court agreed with Griffin, holding that: “To allow Petitioners to withhold their objection [during the course of the arbitration proceeding] based on this disclosed information and only assert it once they were unsuccessful in the arbitration, would be to permit Petitioners to utilize an ace-in-the-hole which undermines the advantages of arbitration.” The trial court then cited to the seminal California Supreme Court case Moncharsh v. Heily & Blase (1992) 3 Cal. 4th 1 relating to the waiver doctrine as follows:
The issue would have been waived, however, had Moncharsh failed to raise it before the arbitrator. Any other conclusion is inconsistent with the basic purpose of private arbitration, which is to finally decide a dispute between the parties. Moreover, we cannot permit a party to sit on his rights, content in the knowledge that should he suffer an adverse decision, he could then raise the illegality issue in a motion to vacate the arbitrator’s award. A contrary rule would condone a level of “procedural gamesmanship” that we have condemned as “undermining the advantages of arbitration.” (Citations omitted.) Such a waste of arbitral and judicial time and resources should not be permitted. (Id. at 30.)
Mr. Inlow was also awarded his costs on appeal by the Court of Appeal. Mr. Inlow was represented during the FINRA arbitration by Kalju Nekvasil, Esq. of Goodman & Nekvasil, a boutique law firm based in St. Petersburg, FL.
Amelia Island, FL, Ritz Carlton Resort, October 20, 2025: Newport Beach-based securities attorney Montgomery G. Griffin was a featured speaker today at the Annual Meeting of the Public Investor’s Advocate Bar Association (PIABA).
